1
Confidential treatment has been requested for Attachments C, D, E, G and H.
Accordingly, those portions of this Exhibit have been omitted from the filed
copy and filed separately with the Securities and Exchange Commission.
2
EXHIBIT 10.22
DEVELOPMENT AND LICENSING AGREEMENT
This Agreement is entered into as of this 1st day of April, 1995 between
IT NETWORK, Inc., a Texas corporation and its parent, Source Media, Inc., a
Delaware corporation, with their offices at 0000 Xxxxxx Xxxx Xxxx, Xxxxxx,
Xxxxx 00000 (individually, "IT Network" and "Source Media" respectively and
collectively, "ITN") of the first part; and CABLESHARE INC., an Ontario
corporation, with its office at 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxx
X00 0X0 ("Cableshare Cda.") and CABLE XXXXX XXXXXXXXXXXXX INC., a Barbadian
corporation with its office at Bridgetown, Barbados ("Cableshare Barbados");
CABLESHARE (U.S.) LIMITED, an Illinois corporation with its office at Chicago,
Illinois ("Cableshare U.S.") and CABLESHARE B.V., a Netherlands corporation
with its office at Amsterdam ("Cableshare B.V.") (collectively "Cableshare") of
the second part.
WHEREAS Cableshare has developed, owns and controls products, hardware,
software and certain technology used to provide interactive television services
and Cableshare has also provided and intends to further provide consulting and
development services related to the interactive television services; and
WHEREAS Cableshare owns certain patents issued in various countries of
the world (the "Existing Patents") as listed on Attachment A which is
incorporated into this Agreement by reference; and
WHEREAS Cableshare, utilizing such technology and patents, has created
and developed and is further developing, software, as more particularly
hereinafter defined, consisting of a series of application programs to run on
head-end server computers and other equipment selected by Cableshare as part of
a system which processes and delivers interactive television services over
channels on a cable television system to subscribers to such services and has
also designed and developed and is further developing a computer chip known as
an ASIC to be placed in set top boxes to control the addressed frame grabber
capabilities of such set top boxes in order to permit such boxes to decode and
control the display on and over the television sets of subscribers to the
interactive television services of audio and visual signals produced as part
of such services; and
WHEREAS IT Network (under its former name Audio Services, Inc.) on the
one part and Cableshare Cda. and Cableshare U.S. on the other are parties to a
license agreement dated June
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11, 1992 as amended to the date hereof (the "Existing License Agreement")
whereby, among other things, IT Network was granted a non-exclusive right to
use Cableshare technology in connection with the provision of interactive
television services to residential subscribers in the United States; and
WHEREAS ITN wishes to obtain the right on an exclusive basis to use
throughout the world such software and technology to provide interactive
television services to residential subscribers and to market such software and
technology to others to provide interactive television service to residential
subscribers, all on the terms hereinafter set forth; and
WHEREAS Cableshare is desirous of granting ITN such rights on the terms
hereinafter contained; and
WHEREAS ITN is desirous that Cableshare shall further improve such
software and technology and desires to fund Cableshare for such purpose and
Cableshare is desirous of making such improvements, all on the terms
hereinafter contained.
NOW, THEREFORE, in consideration of the mutual promises and conditions
set forth in this Agreement, ITN and Cableshare hereby agree as follows:
Article 1. DEFINITIONS AND ATTACHMENTS
1.1 Definitions
In addition to the terms defined in the recitals:
(a) "ASIC" means a computer chip developed by Cableshare which
controls the addressed frame grabber capabilities of a set top terminal device
of a subscriber to a channel of an Interactive Television Service on a cable
television system in order to permit the decoding and display over the
subscriber's television set of addressed audio and visual signals transmitted
over that channel.
(b) "Cableshare Existing Intellectual Property" means any and all
inventions, Existing Patents, any other patents, rights to patents, rights to
apply for patents, know-how, trade secrets, software, developments, proprietary
information, copyrights, trade or service marks and other intellectual property
which on the Effective Date are owned
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by Cableshare or licensed to Cableshare and which Cableshare can lawfully
license to third parties on the terms herein contained, and which are related
to or are or maybe useful in the setting up or operation of Interactive
Television Services.
(c) "Cableshare Future Intellectual Property" means any and all
inventions, patents, rights to patents, rights to apply for patents, know-how,
trade secrets, Software, developments, proprietary information, copyrights,
trade or service marks and other intellectual property developed or otherwise
acquired after the Effective Date pursuant to development work done under this
Agreement and owned by Cableshare or licensed to Cableshare after the Effective
Date, and which Cableshare can lawfully license to third parties on the terms
herein contained and which are related to or are or may be useful in the
setting up or operation of Interactive Television Services.
(d) "Cableshare Intellectual Property" means the Cableshare Existing
Intellectual Property and the Cableshare Future Intellectual Property.
(e) "Confidential Information" has the meaning ascribed thereto in
section 14.1.
(f) "Effective Date" means April 1, 1995.
(g) "Frame Grabber" means a set top terminal device which contains an
ASIC and which permits a subscriber to an interactive television channel on a
cable television system to receive and decode and display on a television set
the addressed audio and visual signals transmitted over that channel.
(h) "Golden Agreement" means a joint venture agreement dated August
25, 1995 between ITN and Golden Entertainment Company Ltd. to form a joint
venture corporation ("ICT") to market and provide interactive television
services to cable television operators in markets in the Republic of China
(Taiwan).
(i) "GTE Lawsuit" means the lawsuit brought by GTE Corporation and
GTE Mainstreet Incorporated (collectively "GTE") against Cableshare Cda. and
the lawsuit brought by Cableshare Cda. against GTE, all as more particularly
described in Attachment B.
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(j) "Hardware" means the hardware developed and owned by Cableshare
or manufactured by another person at Cableshare's request to provide
Interactive Television Services.
(k) "Head End Server Software" means the Software that runs on a Head
End Server Unit to process and deliver Interactive Television Services over a
cable television system to subscribers to such services and without limiting
the generality of the foregoing, comprises as at the date hereof, the
application and other programs more particularly described in Attachment C.
(l) "Head End Server Unit" means the equipment that processes and
delivers Interactive Television Services over a cable television system to
subscribers to such services and comprises as at the date hereof of at least
the equipment described in Attachment D.
(m) "Interactive Channel Distribution Agreement" means an agreement
(other than a Trial Systems Agreement) between ITN and a cable television
system operator for the distribution of ITN's addressed audio and visual
signals over one or more channels on the cable television system or systems
operated by such cable television operator.
(n) "Interactive Television Services" means an interactive television
system that utilizes cable television (or some other signal distribution
system), telephone lines and set-top terminals capable of receiving addressed
video and audio signals to distribute video and audio presentations to
television sets of subscribers to such services who can, using features in such
system, select, and control aspects of, the presentations that appear on their
television sets.
(o) "Management Production Workstation Software" means Software
permitting the creation of the audio and visual presentations that are to be
distributed through Interactive Television Services to subscribers to such
services comprising, as at the date hereof, the application programs more
particularly described in Attachment E.
(p) "New Patents" means any patents acquired by Cableshare relating
to or useful in the operation of Interactive Television Services except the
Existing Patents.
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(q) "Patents" means the Existing Patent and the New Patents.
(r) "Person" includes a corporation or other judicial persons as well
as an individual.
(s) "Product" means any physical embodiment of Cableshare
Intellectual Property including all hardware and all tapes and disks holding
Software and all Software and hardware documentation developed by Cableshare or
licensed to Cableshare and which Cableshare can lawfully license to third
parties on the terms herein contained and owned by Cableshare or manufactured
on behalf of Cableshare.
(t) "Projects" has the meaning ascribed thereto in section 7.1
hereof.
(u) "Residential Subscribers" means subscribers to Interactive
Television Services who receive and make use of such services in their
residences, otherwise than in the course of carrying on a business.
(v) "Software" means the computer programs, chips, object code and
source code and any related documentation.
(w) "Sublicensee" has the meaning ascribed thereto in section 4.2
hereof.
(x) "Trial Systems Agreement" means an agreement between ITN and a
cable television system operator for the distribution of ITN's interactive
channel signals on the cable television system or systems operated by such
cable television operator to fewer than 500 subscribers.
1.2 Attachments
The following are the attachments to the Agreement:
Attachment A - Existing Patents
Attachment B - GTE Lawsuit
Attachment C - Programs Constituting Head End Server Software
Attachment D - Minimum Equipment Constituting Head End Server Unit
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Attachment E - Programs Constituting Management Production
Workstation Software
Attachment F - Proposed Terms of Settlement of GTE Lawsuit
Attachment G - Constituent Elements of a Phase A two-way cable
module and a Phase B two-way cable module
Attachment H - Head End Server Software Specifications
Article 2. TERM
2.1 This Agreement shall commence on the Effective Date and shall continue
until December 31, 1996. The initial term may be renewed for successive one-
year terms at the option of ITN and Cableshare by the delivery of written
notice of renewal signed by ITN to Cableshare followed by the return by
Cableshare to ITN of such notice of renewal signed by Cableshare prior to the
date upon which this Agreement would otherwise expire. Each such renewal shall
be on the same terms and conditions contained in this Agreement except as
otherwise mutually agreed by the Parties.
Article 3. HEAD END SERVER SOFTWARE AND ASIC LICENSES
3.1 Head End Server Software Licenses
(a) Upon request at any time and from time to time by ITN in writing
(and subject to prior agreement, if and when required by section 5.4)
Cableshare shall provide a copy of Head End Server Software (together with a
backup copy) to run on the Head End Server Unit designated in the request.
(b) Such delivery shall constitute a license in perpetuity (subject
to section 13.1(d) hereof) solely in favor of ITN to use the Cableshare
Intellectual Property embodied in such Software (and any updated version
thereof as provided in section 7.4 below or otherwise provided by Cableshare)
to provide Interactive Television Services to Residential Subscribers connected
to the cable television system(s), from time to time, served by the Head End
Server Unit designated in
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such request (or any equipment which may be substituted for such Head End
Server Unit) provided that (and ITN hereby covenants and agrees that) such copy
of the Head End Server Software shall not be installed or run on any equipment
other than the equipment comprising the Head End Software Unit designated in
such request (including equipment that may be substituted for equipment, from
time to time, included in such Head End Software Unit).
3.2 ASICS
(a) Upon request at any time and from time to time by ITN (and
subject to prior agreement, if and when required by section 5.4,) Cableshare
shall as soon as reasonably possible thereafter supply, or arrange to be
supplied to ITN, Frame Grabbers each to contain an ASIC, which Frame Grabbers
are in turn to be sold to or otherwise made available to Residential
Subscribers to the Interactive Television Services operated by ITN.
(b) The delivery of Frame Grabbers containing ASICs shall constitute
a license in perpetuity (subject to section 13.1(d) hereof) in favor of ITN to
permit Residential Subscribers to an Interactive Television Service operated by
ITN to use the Cableshare Intellectual Property embodied in the ASICs contained
in such Frame Grabbers (to the extent that, while in use, it remains resident
in such ASICs) solely to process, decode and display using such Frame Grabbers
signals produced by Head End Server Units running Head End Server Software
supplied by Cableshare to ITN pursuant to section 3.1 above.
(c) ITN covenants and agrees to use best efforts to ensure that the
Frame Grabbers supplied to it pursuant to section 3.2(a) are sold or otherwise
made available only to Residential Subscribers to Interactive Television
Services operated by ITN who use it solely to process, decode and display
signals produced by Head End Server Units running Head End Server Software
supplied by Cableshare to ITN pursuant to section 3.1 above.
Article 4. MARKETING AND MARKETING LICENSE
4.1 Exclusive Marketing Rights
Cableshare hereby grants to ITN the exclusive right, for the term of
this Agreement, to market Cableshare Intellectual Property for the provision of
Interactive Television Services to Residential Subscribers; provided that
nothing herein shall restrict Cableshare from dealing in any way with
Cableshare Intellectual Property otherwise than in respect of the use of such
property in
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the provision of Interactive Television Services to Residential Subscribers and
the rights herein conferred on ITN are subject to:
(a) any and all rights that X.X. Penney Company, Inc., and
(b) any and all rights that the Government of Canada or a department
(including any requirement to obtain any consent)
may, respectively, have on the Effective Date in or in respect of the
Cableshare Intellectual Property. In furtherance of ITN's exclusive rights,
Cableshare covenants and agrees with ITN that during the term of this
Agreement, it will not itself make use of Cableshare Intellectual Property to
provide Interactive Television Services to Residential Subscribers nor, without
the prior written consent of ITN, will it license others to use Cableshare
Intellectual Property or supply to others Products, services or Software, for
the purpose of supplying Interactive Television Services to Residential
Subscribers.
4.2 Marketing License
In furtherance of ITN's exclusive marketing rights, Cableshare hereby
licenses ITN for the term of this Agreement, to sublicense others to use the
Cableshare Intellectual Property embodied in Head End Server Software (and any
updated version thereof as provided in section 7.4 below) and ASIC's upon and
subject to the terms set out below:
(a) subject to prior agreement between ITN and Cableshare as
contemplated by section 5.4 as to the appropriate license fees and other
payments to be made to Cableshare in respect of such licenses and the delivery
of the copy of the covenant referred to in paragraph (b) below, upon request at
any time and from time to time by ITN in writing:
(i) Cableshare shall provide to ITN for delivery by ITN to the
person designated in such request (the "Sublicensee") a copy of Head End
Server Software (together with a backup copy) to run on Head End Server
Unit designated in the request;
(ii) such delivery shall constitute a license in favor of ITN
to permit the Sublicensee to use the Cableshare Intellectual Property
embodied in such
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Software (and any updated version thereof as provided in section 7.4
below or otherwise provided by Cableshare) to provide Interactive
Television Services to Residential Subscribers connected to the cable
television system(s), from time to time, served by the Head End Server
Unit designated in such request (or any equipment which may be
substituted for such Head End Server Unit) provided that such copy of
the Head End Server Software shall not be installed or run on any other
equipment other than the equipment comprising the Head End Software Unit
designated in such request (including equipment that may be substituted
for equipment, from time to time, included in such Head End Software
Unit);
(iii) Cableshare shall as soon as reasonably possible thereafter
supply, or arrange to be supplied, to ITN for delivery to the
Sublicensee Frame Grabbers, each to contain an ASIC, which Frame
Grabbers are in turn to be sold to or otherwise made available to
Residential Subscribers to the Interactive Television Services to be
provided by the Sublicensee; and
(iv) the delivery of such Frame Grabbers containing ASICs
constitutes a license in perpetuity in favor of ITN to permit the
Sublicensee, in turn, to permit Residential Subscribers to Interactive
Television Services operated by such Sublicensee to use Cableshare
Intellectual Property embodied in the ASICs contained in such Frame
Grabbers (to the extent that while in use, it remains resident in such
ASICs) solely to process, decode and display using such Frame Grabbers
signals produced by Head End Server Units running the Head End Server
Software supplied by Cableshare through ITN pursuant to section
4.2(a)(i) above; and
(b) at or before the time of the request by ITN to provide the first
copy of the Head End Server Software to a particular Sublicensee, ITN will
obtain from the Sublicensee and deliver a copy thereof to Cableshare a covenant
in favor of ITN executed by such Sublicensee that each copy of the Head End
Server Software that is provided to such Sublicensee will not be installed or
run on any equipment other than the equipment comprising the Head End Server
Unit designated in the ITN request for such copy of Head End Server Software
(including any equipment which may be substituted for equipment, from time to
time, included in such Head End Server Unit) and that the Sublicensee will use
best efforts to ensure that any Frame
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Grabber provided to the Sublicensee pursuant to section 4.2(iii) above are sold
or otherwise made available solely to Residential Subscribers to Interactive
Television Services operated by the Sublicensee and solely to process, decode
and display signals produced by Head End Server Units running Head End Server
Software supplied by Cableshare through ITN to the Sublicensee pursuant to
section 4.(a)(i) above. At the request of Cableshare, ITN shall use best
efforts to enforce compliance with such covenant by the Sublicensee.
4.3 Exception
Cableshare and ITN agree to negotiate in good faith and use reasonable
commercial efforts to settle the GTE Lawsuit on the terms set out in Attachment
F. In the event that such settlement is not implemented by March 31, 1996,
notwithstanding anything herein otherwise provided, Cableshare shall have the
right to settle such lawsuit on any terms acceptable to it acting reasonably
including by means of licensing Cableshare Intellectual Property to GTE or an
affiliate thereof; provided that in the event such settlement involves
licensing Cableshare Intellectual Property to GTE or any subsidiary of GTE,
Cableshare shall use reasonable commercial efforts to bring about such
settlement on the basis of Cableshare licensing ITN to enable it to sublicense
such right to GTE.
Article 5. PAYMENTS FOR CABLESHARE INTELLECTUAL PROPERTY AND
MARKETING RIGHTS
5.1 Head End Server Software Delivered to ITN
ITN agrees to pay Cableshare for each copy (including the backup copy)
of Head End Server Software delivered by Cableshare to ITN pursuant to section
3.1 for use by ITN under an Interactive Channel Distribution Agreement, U.S.
$** payable within thirty (30) days following delivery thereof.
5.2 Frame Grabbers Delivered to ITN
ITN agrees to pay Cableshare for each Frame Grabber delivered by
Cableshare to ITN pursuant to section 3.2 hereof for use by a subscriber to
ITN's Interactive Television Service provided under an Interactive Channel
Distribution Agreement, an amount equal to Cableshare's cost thereof plus
U.S.$5.00 payable at the earlier of thirty (30) days following delivery thereof
or the date upon which Cableshare is required to make any payment in respect of
such Frame Grabber
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to the manufacturer thereof. For greater certainty, in the case where the
Frame Grabber is manufactured by a third party at the request of Cableshare,
such cost shall be the cost incurred by Cableshare to have such Frame Grabber
manufactured and delivered to the point of delivery specified by ITN including,
without limitation, all related sales taxes and customs duties payable by
Cableshare or by the manufacturer of the Frame Grabber.
5.3 Golden Agreement Payments
For all items of Head End Server Software and Frame Grabbers supplied to
meet ITN's obligations under the Golden Agreement, ITN agrees to pay
Cableshare:
(a) Cableshare's cost of Hardware supplied or arranged to be supplied
by Cableshare on the earlier of thirty (30) days following the delivery thereof
or the date upon which Cableshare is required to make any payment to the
manufacturer thereof in respect of such delivery. For greater certainty, in
the case where the hardware is manufactured by a third party or at the request
of Cableshare, such cost shall be the cost incurred by Cableshare to have such
Hardware manufactured and delivered to the point of delivery specified by ITN
including, without limitation, all related sales taxes and customs duties
payable by Cableshare to the manufacturer of the equipment; and
(b) 50% of all revenue received by ITN under the Golden Agreement for
Head End Server Unit and other Hardware or hardware sales, Head End Server
Software and other Software sales (including sublicensing thereof), set top and
Frame Grabber sales, initial and ongoing system operating licenses, annual
license fees and royalties as defined in and provided for in the Golden
Agreement net of hardware costs payable by ITN to Cableshare pursuant to
section 5.3(a) or otherwise incurred by ITN, such amounts to be payable by ITN
to Cableshare forthwith upon receipt thereof by ITN.
The foregoing constitutes the prior agreement between ITN and Cableshare as to
the appropriate license fees and other payments to be made to Cableshare for
the Golden Agreement for the purposes of section 4.2(a) of this Agreement.
5.4 Other Sales
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For all items of Head End Server Software and Frame Grabbers supplied to
ITN for use under Test Systems Agreements or for any other purpose other than
under an Interactive Channel Distribution Agreement or to Sublicensees (other
than as provided in section 5.3), ITN and Cableshare shall agree in advance of
delivery of any Head End Server Software or Frame Grabbers containing ASICs on
the amount or amounts to be paid to Cableshare in respect of such transactions.
In the case of transactions related to Test Systems Agreements, the chief
executive officer of Cableshare and Xxxxx Xxxxxxx (or such other person
designated for such purpose by ITN) shall have the authority to settle the
amount of such payments.
Article 6. OTHER PRODUCTS AND SERVICES
6.1 Management Production Work Station Software
Cableshare shall make available to ITN, or to a party designated by ITN,
Management Production Work Station Software based on its list prices and terms
of sale from time to time for such Products.
6.2 Consulting Services
Cableshare shall make available to ITN, or to a party designated by ITN,
application development, installation, training and other consulting services
which are capable of being provided by Cableshare as per accepted purchase
orders therefor at Cableshare's usual posted hourly rates plus out-of-pocket
costs incurred by Cableshare in providing such consulting services. Nothing
herein applies to the Projects contemplated by Article 7.
Article 7. DEVELOPMENT PROJECT
7.1 Projects
Cableshare will use reasonable commercial efforts to develop the
following (collectively the "Projects"):
(a) a set-top box costing less than U.S. $100.00 per box with
capabilities of a cable converter, pay television scrambler and a Frame Grabber
containing an ASIC with telephone return and audio but not including the
capabilities of a Phase A two-way
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cable module or a Phase B two-way cable module as more particularly described
in Attachment G.
(b) a Windows version of the Management Production Workstation
Software for use in an IRMX/DVI/INTEL environment and also a UNIX/JPEG/SPARC
environment;
(c) a UNIX/SPARC based interactive television head end Server with
capabilities:
(i) for an audio system to be located remotely at a telephone
company head end,
(ii) for up to ninety-six (96) simultaneous users, and
(iii) for remote access for updating content and retrieving
data, but excluding:
(iv) capabilities for more than ninety-six (96) simultaneous
users, and
(v) network management systems for updating management and
remote systems.
7.2 Cableshare Responsibilities
Cableshare's responsibility for each of the Projects shall include
project definition including applicable specifications, systems requirements,
estimated implementations costs and estimated timing, and the production of
deliverables with respect thereto.
7.3 Project Funding
The parties agree that the current cost estimate to complete all of the
Projects (including human resources, computer systems and development Software)
from April 1, 1995 is a minimum of U.S. $4,750,000. ITN shall fund
Cableshare's work on the Projects as follows:
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(a) U.S. $2,000,000 in twice monthly installments of $80,000 payable
on or before the fifteenth day and the last day of each month beginning in
April, 1995 through April, 1996;
(b) U.S. $600,000 on December 22, 1995; and
(c) U.S. $1,400,000 in monthly installments of U.S. $140,000
beginning January, 1996 through October, 1996.
Funding for the balance of the costs of the Projects, namely U.S. $750,000
based on the above estimate, and any cost overruns that may occur, shall be
agreed to as between Cableshare and ITN before September 1, 1996, failing which
agreement by such date, Cableshare may suspend work on the Projects.
7.4 Upgrades
To the extent that work on the Projects generates improvements to any
Head End Server Software theretofore delivered to ITN or a Sublicensee pursuant
to the terms of this Agreement, Cableshare shall, at the request of ITN deliver
free of charge to ITN or to such Sublicensee computer disks containing an
updated version of the Head End Server Software including a backup copy thereof
for each Head End Server Unit for which the request is made.
7.5 Ownership of Intellectual Property Derived from the Projects
Cableshare shall be the owner of all Intellectual Property including any
New Patents that result from the Projects; provided that all such Intellectual
Property shall be considered to be Cableshare Future Intellectual Property and
shall be subject to the licenses granted to ITN under this Agreement.
Article 8. VERIFICATION
8.1 Cableshare Invoices
Cableshare will permit representatives of ITN, from time to time and at
such reasonable times, as may be requested by ITN by reasonable advance notice
in writing, access to the books
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and records of Cableshare to the extent necessary to enable such
representatives to verify all invoices submitted by Cableshare to ITN pursuant
to the provisions of this Agreement.
8.2 ITN Accounts
ITN will permit representatives of Cableshare, from time to time and at
such reasonable times as may be requested by Cableshare by reasonable advance
notice in writing access to the books and records of ITN to the extent
necessary to enable such representatives to verify all amounts payable by ITN
to Cableshare pursuant to the provisions of this Agreement.
Article 9. CABLESHARE PRODUCTS AND SERVICES TERMS OF SALE
9.1 Software Documentation
All Software supplied by Cableshare pursuant to this Agreement shall be
accompanied by complete and comprehensive documentation (excluding always the
source code) necessary to operate an Interactive Television System.
9.2 Price Quotes Net of Sales Taxes and Customs Duties
All prices quoted are net of all customs duties and sales and other like
taxes.
9.3 Warranty as to No Infringement of Third Party Intellectual Property
Rights
(a) Cableshare warrants to ITN that it has the right to provide all
Hardware, Software and licenses to be provided by Cableshare hereunder, and
that no patent, copyright, trade secret or other intellectual property rights
of any third party will be infringed thereby. Cableshare shall indemnify and
save ITN harmless from any and all such claims of infringement.
(b) ITN shall give notice in writing (a "Claim Notice") to
Cableshare, as soon as is reasonably possible, of any claims asserted by third
parties for which Cableshare may be liable pursuant to paragraph 9.3(a) and
shall provide reasonable particulars thereof and shall respond on a timely
basis to Cableshare's reasonable requests for further information concerning
claims described in the Claim Notice. Cableshare, if it wishes to dispute such
claim, shall notify ITN in writing (a "Dispute Notice") as
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soon as possible, having regard to the circumstances of such claims, and in any
event, within not more than twenty (20) days following the date on which the
Claim Notice is delivered, in which event, Cableshare shall be entitled at its
sole expense to conduct all negotiations with respect thereto, to dispute and
contest any such claims and to commence, defend and carry on actions and
proceedings on behalf of ITN and in the name of ITN as Cableshare may determine
is appropriate in connection with the claims identified in the Claim Notice;
provided that Cableshare furnishes to ITN such security or other assurances as
ITN may reasonably request in connection therewith and provided further that
Cableshare shall not be entitled to settle any dispute, action or proceeding in
respect of such claims without the consent of ITN, such consent not to be
unreasonably withheld, having regard to the security and assurances given by
Cableshare in connection with such claims. Where Cableshare has given a
Dispute Notice, ITN will cooperate with Cableshare and its solicitors in any
negotiations, disputes, contestations, actions and proceedings with respect to
any such claims.
9.4 Hardware Warranties
(a) In respect of Hardware supplied under this Agreement by
Cableshare, Cableshare agrees with ITN to provide the recipient with the same
product warranty as is provided Cableshare by its component suppliers.
(b) For set-top terminals assembled by Cableshare, Cableshare
warrants the terminals will be free from defects in workmanship and material
under normal use and service for a period of ninety (90) days from the date of
installation.
(c) Defective hardware products shall be shipped at ITN's expense to
Cableshare's site 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxx X0X 0X0.
Charges for return shipment will be paid by Cableshare.
9.5 Software Warranty
Cableshare warrants that all Head End Server Software to be provided by
it hereunder shall be in accordance with the specifications provided in
Attachment H. Such warranty shall extend until 120 days after delivery.
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9.6 Disclaimer
The foregoing constitutes Cableshare's sole warranties with respect to
the Hardware and Software and other Products to be supplied by Cableshare and
there are no other representations, warranties or conditions express or implied
applicable to any of the Hardware, Software or other Products to be sold by
Cableshare to ITN hereunder. Cableshare's sole obligation in respect of any
breach of the foregoing warranties is to repair or replace the defective item
at its expense, and Cableshare's liability with respect to breach of its
obligations herein shall not exceed in aggregate the amount paid by ITN for
that product, except for claims for reimbursement by ITN against Cableshare for
damages payable by ITN for infringement of such party's intellectual property
by ITN, as a result of a breach by Cableshare of the warranty under section
9.3(a).
Article 10. INTEREST
10.1 If any Party to this Agreement shall fail to pay when due any amounts
payable to any other Party to this Agreement (including under any purchase
order issued pursuant to the terms of this Agreement), such amount shall
thereafter bear interest at a rate per annum equal to the greater of 12% or 2%
plus the prime commercial lending rate, from time to time, of Cableshare's
Canadian bankers, from time to time, calculated daily and compounded annually
on the full amount so, from time to time, unpaid. Any interest payable as
aforesaid shall be payable monthly on the first day of each and every month.
Article 11. TRADEMARKS, SERVICE MARKS
11.1 Trademark License
ITN is licensed to use the trademarks and service marks ("Marks") of
Cableshare related to Interactive Television Services, provided that Cableshare
may request that ITN provide copies of all written or graphic material in which
the Marks appear and obtain the prior consent of Cableshare, such consent not
to be unreasonably withheld or unduly delayed.
11.2 Restriction on Use
ITN shall not use the Marks for any purpose other than in accordance
with this Agreement without the prior written approval of Cableshare.
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Article 12. TERMINATION
12.1 This Agreement may be terminated:
(i) by mutual written consent of the Parties; and
(ii) by either Party (the "Terminating Party") for the non-performance
of this Agreement by the other Party including the failure to pay any amount
when due; provided that the Terminating Party gives the other Party fifteen
(15) days prior written notice and the other Party does not correct the non-
performance during that fifteen (15) day period.
Article 13. EFFECT OF THIS AGREEMENT ON THE EXISTING
LICENSE AGREEMENT AND EFFECT OF NON-RENEWAL
13.1 Effect of This Agreement on the Existing License Agreement
The provisions of the Existing License Agreement shall be suspended
while this Agreement remains in full force and effect, including any renewal
hereof. Upon any non-renewal or termination of this Agreement, the provisions
of the Existing License Agreement shall come back into full force and effect
subject to the following:
(a) Source Media shall, by signing this Agreement, become a party to
the Existing License Agreement possessing, on a joint and several basis with IT
Network, all of the rights and obligations of IT Network thereunder;
(b) the requirement under the Existing License Agreement for ITN to
achieve 3,300 set top terminals installed by June 11, 1996 is hereby waived;
(c) upon settlement of the method of funding the balance of Project
costs as contemplated by section 7.3 hereof, there shall be deducted
U.S.$2,000,000 from the amount payable by ITN to Cableshare under clause 4.06
of the Existing License Agreement for the achievement of Phase 3 as defined in
the Existing License Agreement;
(d) an account shall be taken of amounts, if any, that would
otherwise be payable under section 4.06 of the Existing License Agreement
subject to the amendment provided
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in section 13.1(b) of this Agreement, as if the Existing License Agreement had
not been suspended and such amounts shall be immediately due and payable by ITN
to Cableshare; and
(e) all rights conferred on ITN pursuant to any license granted
pursuant to section 3.1 or 3.2 hereof shall have been deemed to have been
conferred on ITN by virtue of the Existing License Agreement and be governed
thereby.
13.2 Termination and Non-Renewal not to Effect Certain Licenses and Other
Rights
Termination or non-renewal of this Agreement shall not affect:
(a) the rights of ITN under any license in favor of ITN provided in
section 3.1 or 3.2 hereof or of any Sublicensee under any license provided in
section 4.2(a)(ii) or (iv) hereof;
(b) the rights of Cableshare under any agreement in respect of
license fees and other payments payable to Cableshare entered into as
contemplated by section 5.4 unless such agreement is expressly stated to
continue only during the term of this Agreement; and
(c) the rights and obligations of GTE, ITN and Cableshare under any
settlement arrangement entered into in respect of the GTE Lawsuit.
13.3 Termination or Non-Renewal not to Effect Amounts Owing
Upon termination for any reason or non-renewal of this Agreement, all
payments under this Agreement shall be immediately due and owing to the Party
to which payment is to be made. This Agreement shall remain in full force and
effect until payment is made in full except that neither Party shall have any
obligation to perform under the Agreement other than to remit all payments due.
Article 14. CONFIDENTIAL INFORMATION
14.1 As used in this Agreement, "Confidential Information" means any non-
public or proprietary information belonging to ITN or Cableshare and shall
include, but not be limited to, all
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technical, financial and business information of a Party and models,
instructions or information concerning the Products, the compilation and
production of Cableshare Intellectual Property, names of customers or partners
(whether existing or potential), reports, plans, data, analyses, work papers or
other documents prepared by the furnishing Party (or its employees, agents or
representatives) which contain or reference such information. Confidential
Information may be in written, audio, graphic or electromagnetic form.
14.2 The term "Confidential Information" as used in this Agreements, does not
include information which:
(a) becomes available to the public other than as a result of a
disclosure by a Party to this Agreement, its affiliates, employees or agents;
(b) was available to the receiving Party on a non-confidential basis
prior to its disclosure under this Agreement;
(c) is or has been independently developed or acquired by the
receiving Party without violation of this Agreement; or
(d) becomes available on a non-confidential basis from a third party
provided that to the knowledge of the receiving Party, such third party is not
bound by a confidentiality agreement with the furnishing Party.
14.3 Use of Confidential Information
(a) Each Party agrees to hold Confidential Information received from
the other Party in strict confidence and to use the Confidential Information
only in connection with this Agreement or as authorized under this Agreement.
(b) Each Party agrees to disclose Confidential Information it
received only to its employees, agents or representatives to whom disclosure is
necessary for the purpose of performance under this Agreement.
(c) Each Party shall require any employee, agent or representative to
whom disclosure is necessary to maintain the Confidential Information in
accordance with the terms of this Agreement.
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14.4 On the earlier of the termination of this Agreement, or at the request
of a Party, the Confidential Information and all copies of such Confidential
Information, shall be returned to the furnishing Party.
14.5 The Parties agree to treat the terms and conditions of this Agreement as
Confidential Information during the term of this Agreement and for a one year
period after the expiration or termination of the Agreement, except for
disclosures required by law or authorized by the other Party.
Article 15. AUTHORITY
15.1 Each Party represents and warrants that it has the full power and
authority to enter into this Agreement and to undertake the obligations set
forth in the Agreement, and that it has not entered into any other agreement
that would make it incapable of performing the obligations under this
Agreement. Each Party further represents and warrants that the individual
executing this Agreement on behalf of the Party has full power and authority to
represent the Party and to execute this Agreement on behalf of the Party.
Article 16. ASSIGNMENT
16.1 A Party may not assign this Agreement without the prior written consent
of the other Party which consent shall not be unreasonably withheld, provided
however a Party may assign this Agreement without consent to a wholly-owned
affiliate of the Party or to an affiliate wholly-owned by the parent of the
Party so long as the assignee remains affiliated with the assigning Party. The
Party shall immediately notify the other Party of the assignment.
Article 17. NOTICE
17.1 Any notice or communication hereunder shall be sufficiently given to ITN
and Cableshare when sent by facsimile or express courier service addressed as
follows:
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(a) to ITN:
IT Network, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000
X.X.X.
Attention: Xx. X. Xxxxx Bedford
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) to Cableshare:
Cableshare Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention: Mr. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
A Party may change the address set forth in this Agreement by notice to the
other Party in accordance with Article 17.1.
Article 18. MISCELLANEOUS
18.1 Force Majeure
(a) A Party shall not be liable for any failure or delay in its
performance under this Agreement due to causes beyond its reasonable control,
excluding financial embarrassment but including, but not limited to, acts of
God, acts of civil or military authority, acts or omissions of third parties,
fires, floods, riot, war, labor shortages or disputes ("force majeure"),
provided that the Party suffering the force majeure event gives written notice
as promptly within forty-eight (48) hours after the occurrence of the force
majeure event to the other Party, and uses reasonable efforts to correct the
failure or delay in performance.
(b) The existence of a force majeure event shall not excuse any Party
from paying money due and owing under this Agreement to any other Party. As
soon as the
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force majeure event which excused the Party's performance has ceased, the Party
shall be obligated to perform all its obligations under this Agreement.
18.2 Governing Law
This Agreement shall be governed by, construed, and enforced in
accordance with the laws of the Province of Ontario, Canada and the courts of
that Province shall have exclusive jurisdiction in respect of any dispute with
respect to this Agreement.
18.3 No Other Agreements
This Agreement and Attachments set forth the entire agreement and
understanding between the Parties as to the subject matter hereof except as
otherwise expressly provided herein and merges all prior discussions between
them as to matters relevant hereto. The Parties shall not be bound by any
warranties, understandings or representations with respect to such subject
matter other than as expressly provided herein or in a writing signed with or
subsequent to the execution hereof by an authorized representative of the party
to be bound thereby.
18.4 Non-Waiver
(a) The Parties understand and agree that no failure or delay by
either Party in exercising any right, power or privilege under this Agreement
shall operate as a waiver. Waiver of any breach by either Party shall not be
construed as a waiver of subsequent breaches or as a continuing waiver of such
breach.
(b) If any provision of this Agreement is determined by a court or
legal authority to be invalid under controlling law, the provision will be
ineffective to the extent of such invalidity but the remainder of the Agreement
shall be valid and in full force and effect.
18.5 Enurement
This Agreement shall enure to the benefit of and be binding upon the
Parties hereto and their respective successors, legal representatives and
permitted assigns.
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18.6 Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF the Parties have duly executed this Agreement as of
the day and year first above written.
IT NETWORK, INC.
Per: /s/ Xxxx Xxxx
--------------------------
Title: Executive Vice President
------------------------
Per: c/s
---------------------------
Title:
-------------------------
SOURCE MEDIA INC.
Per: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Title: President
-------------------------
Per: c/s
---------------------------
Title:
-------------------------
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CABLESHARE INC.
Per: /s/ Xxxxxxx X. Israel
--------------------------
Title: President & CEO
------------------------
Per: c/s
-----------------------
Title:
------------------------
CABLE XXXXX XXXXXXXXXXXXX INC.
Per:
--------------------------
Title:
------------------------
Per: c/s
-----------------------
Title:
------------------------
CABLESHARE (U.S.) LIMITED
Per: /s/ Xxxxxxx X. Israel
--------------------------
Title: President
------------------------
Per: c/s
-----------------------
Title:
------------------------
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CABLESHARE B.V.
Per:
--------------------------
Title:
------------------------
Per: c/s
-----------------------
Title:
------------------------
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ATTACHMENT 'A'
Existing Patents Page 1 of 2
Country Patent or Application Number
United States Xxx. 4,734,764
United States Xxx. 4,941,040
United States Xxx. 5,014,125
Canada Xxx. 1,331,053
Canada Xxx. 1,284,211
Canada Appl. 2,015,912
EPC Appl. 90,108,148,9
Japan Appl. 2-115957
PCT Appl. CA94/00581
Belgium Xxx. 000000
Xxxxxx Appl. 2581281
France Appl. 2590096
Netherlands Appl. 8601109
Luxembourg Unexam. Xxx. 00000
Xxxxxxxxx Xxx. 597250
Denmark Appl. 8601932
Denmark Appl. 8700613
Denmark Appl. 8700614
Spain Unexam. Xxx. 8708273
Spain Unexam. Xxx. 8802356
Spain Xxx. 557,328
Great Britian Appl. 2216756
Great Britian Appl. 2216757
Great Britian Appl. 2217556
29
ATTACHMENT 'A'
Existing Patents Page 2 of 2
Great Britain Appl. 2174874
Finland Appl. 9000281
Finland Appl. 9000282
Finland Appl. 0000000
Xxxxx Unexam. Xxx. 1188113
Sweden Xxx. 000000
Xxxxxx Appl. 9002880
Sweden Appl. 8900029
Germany F.R. Appl. 3645247
Germany F.R. Appl. 3614361
Germany F.R. Appl. 3645306
S. Korea Xxx. 51217
S. Korea Xxx. 53495
30
ATTACHMENT B
Lawsuit in the United States District Court for the Northern District of Texas,
Dallas Division, between GTE Corporation and GTE Main Street Incorporated as
Plaintiffs and Cableshare as Defendants (Civil Action No. 3:95-CV-0490-D) and,
in the same Court, the lawsuit between Cableshare as Plaintiffs and GTE
Corporation and GTE Main Street Incorporated as Defendants (Civil Action No.
3:95-CV-1984-D)
31
ATTACHMENT F
PROPOSED TERMS OF SETTLEMENT OF THE GTE LAWSUIT
1. In consideration of the agreement of IT Network to make the payments
provided for in clause 2 below, Cableshare shall confer upon IT Network
a license of the Cableshare Intellectual Property to enable IT Network
to act as sublicensor of such property in executing a patent license
agreement (the "Patent License Agreement") with GTE ("GTE Main Street")
on the terms annexed hereto as Schedule "A" and thereby confer on GTE
Main Street the rights to Cableshare Intellectual Property to be
conferred on GTE Main Street pursuant to the terms thereof. The license
of the Cableshare Intellectual Property in favor of IT Network
hereinbefore provided shall be solely for the purpose of executing the
Patent License Agreement and shall not confer upon ITN any additional
right to use or to license other persons to use Cableshare Intellectual
Property. (Notwithstanding anything herein otherwise contained, nothing
herein shall derogate from ITN's rights under the agreement to which
this Attachment is attached or under any other agreement between
Cableshare (either individually or collectively) on the one part and IT
Network on the other.)
2. In return for Cableshare's grant of license provided in clause 1 above,
IT Network shall agree to pay Cableshare (forthwith upon IT Network's
receipt thereof) all amounts paid to ITN by GTE Main Street pursuant to
clauses 2 and 3 of the Patent License Agreement.
3. IT Network agrees that at Cableshare's request and expense, IT Network
will enforce all and any rights it may have against GTE Main Street
under the Patent License Agreement.
4. ITN and Cableshare shall forthwith upon execution of the Patent License
Agreement by the parties thereto, do all things and execute all
documents as may be necessary or desirable to dismiss the GTE Lawsuit.
