EXHIBIT 10.1
CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
ASTERISKS (*) DENOTE SUCH OMISSIONS
STRATEGIC DEVELOPMENT AND MARKETING AGREEMENT
This Strategic Development and Marketing Agreement (this "Agreement") is made
and entered into this 23rd day of November, 1998, by and between America Online,
Inc. ("AOL") and Sun Microsystems, Inc. ("Sun").
Certain terms used in this Agreement are defined in Section 24 hereof. This
agreement is confidential between the parties, provided that either party may
disclose the terms of this Agreement, and any associated collateral documents,
in order to comply with applicable laws and regulations, including securities
laws and regulations, and further provided that either party may disclose
information regarding portions of the financial provisions of this Agreement
after consulting with and obtaining the approval of the other party's Executive
Representative, which consent will not be unreasonably withheld or delayed. AOL
and Sun hereby agree as follows:
1.0 Objectives. AOL and Sun intend to cooperate in the development and marketing
of software and services in the area of electronic commerce and extended
communities and connectivity ("EC2") to businesses worldwide. The parties intend
to offer together an integrated, end-to-end solution including consumer traffic,
dial-up connectivity, network services, client software, server software,
computer systems, computer hardware, professional services, help desk and
service and support, but, subject to the terms and conditions herein, each party
would be free to offer its components in conjunction with competitive components
from third-parties. As described in this Agreement, some components of such
solution will be collaboratively developed, and some will be developed
principally or entirely by AOL or Sun. The solution offered by the parties is
expected to include traffic from AOL's multiple brands and related directory
services, configurable Netcenter or ▇▇▇.▇▇▇ services and information, AOL
network access services, AOL instant messaging functionality, Sun support
services, Sun or AOL consulting services and Netscape or AOL outsourcing
services. As described in this Agreement, some components of such solution will
be marketed and sold by both parties pursuant to collaborative marketing and
sales plans, and some components would be marketed and sold by AOL or Sun only.
The business objectives of the parties include the following:
1.1 Establish a cooperative relationship between AOL, the world's leading
internet content provider, and Sun, the world's leading network computing
platform supplier, to create and deliver the best, integrated, end-to-end
enterprise commerce solutions using, where appropriate, the Java and Jini
technology from Sun.
1.2 Sustain and grow leadership in the browser marketplace for both
consumers and the enterprise to deeply penetrate the enterprise desktop
environment.
1.3 Accelerate revenues from merchants and build deep relationships with
top merchants by speeding their adoption of electronic commerce.
1.4 Create more value from relationships with electronic commerce merchants
and customers by *** creating new services revenues.
1.5 Sustain and grow a strong electronic commerce and enterprise middleware
software and services business, including developing a leading commerce
software and service platform that enables powerful turnkey and customized
solutions.
1.6 Sustain and grow the Sun Solaris, SPARC, Java and Jini business
technologies, as the choice for enterprises and service providers
worldwide.
1.7 *** approximately 3 lines omitted ***
1.8 Establish and operate productive research and development, marketing,
sales and services to support this strategy.
2.0 Software To Be Developed. The parties intend to develop the following
products:
2.1 AOL Distributed Communicator Client. The "AOL Distributed Communicator
Client" will be a client application that will include the fullest and most
robust set of features and functions of any of the client applications to
be developed pursuant to this Section 2,*** approximately 2 lines omitted
***. The AOL Distributed Communicator Client *** will include the initial
Release of the AOL Distributed Communicator Client and all subsequent
Releases of such application. *** approximately 9 lines omitted ***
2.2 Third Party Communicator Client. The "Third Party Communicator Client"
will be a client application.*** approximately 6 lines omitted *** The
specification of the features and functions included in the Third Party
Communicator Client may be modified from time to time by AOL, after
consultation with Sun. The Third Party Communicator Client *** will include
the initial Release of the Third Party Communicator Client and all
subsequent Releases of such application that are commercially released
during the term of this Agreement.
2.3 OEM Communicator Client. The "OEM Communicator Client" will be a client
application incorporating a browser component, with features and functions
as set forth in the Collaborative Work Plans. The OEM Communicator Client
will include the initial Release of such application and all subsequent
Releases of such application that are commercially released during the term
of this Agreement.
2.4 New Browser. The "New Browser" will consist of a basic browser with
functions for browsing, rendering display of and accessing the Internet,
including enabling access to a portal, *** approximately 4 lines omitted
***. The functions and features to be included in the New Browser will be
described in more detail in the Collaborative Work Plans. The New Browser
will include the initial Release of such application and all subsequent
Releases of such application that are commercially released during the term
of this Agreement. *** approximately 3 lines omitted ***
2.5 Network Application and Server Software. The "Network Application and
Server Software" will consist of network applications and server software
as specified in the Collaborative Development Work Plans, and will include,
without limitation, an application server, email server, commerce server
and directory software, as well as other software specified in the
Collaborative Development Work Plans.
2.6 Commencement of Development. No collaborative development work shall
commence pursuant to this Agreement, and Sun shall not be provided with
access to any Netscape or AOL code, prior to the Closing Date.
3.0 Development Responsibilities.
3.1 AOL Distributed Communicator Client. AOL will develop the AOL
Distributed Communicator Client, *** approximately 4 lines omitted ***
3.2 Third Party Communicator Client. AOL will, with assistance from Sun,
develop the Third Party Communicator Client, *** approximately 6 lines
omitted ***
3.3 OEM Communicator Client. AOL will, with assistance from Sun, develop
the OEM Communicator Client,*** approximately 6 lines omitted ***
3.4 New Browser. AOL will, with assistance from Sun, develop the New
Browser, *** approximately 8 lines omitted ***
3.5 Network Application and Server Software. AOL and Sun will
collaboratively develop the Network Application and Server Software, ***
approximately 3 lines omitted ***. AOL and Sun shall cooperate and
coordinate their development efforts so that, to the extent commercially
reasonable, the Client Software shall be compatible with and support the
interfaces, protocols and APIs of the Network Application and Server
Software in the Product Suites and vice versa.
3.6 Java Technology. The parties agree to use reasonable efforts to modify
the existing Netscape browser to develop the New Browser to incorporate,
for each System Platform, the most current release available of the
complete Java Runtime Environment (JRE) on all System Platforms for which
Sun has a JRE available. The parties agree to use all reasonable efforts to
ensure that Java code executing on the JRE so invoked has the same access
privileges and capabilities as Java code running native on the operating
system and can display user interfaces within the browser window consistent
with the user experience of running Java applets today, provided that Sun
provides such JRE to AOL, *** in binary form in a fully operational and
commercially viable form. Without limiting the foregoing, AOL shall have no
obligation to incorporate into any browser any JRE provided by Sun that
fails to operate properly on the applicable System Platform for such
version of such browser due to the fault of Sun or any party other than
AOL, or *** or which would cause a material degradation in the performance
characteristics of such browser relative to competitive browsers in the
marketplace, or which cannot ***approximately 8 lines omitted*** Without
limiting the foregoing, with respect to the *** AOL shall have no
obligation to ***approximately 3 lines omitted*** Sun agrees to provide
error corrections and bug fixes for the JREs on all supported System
Platforms pursuant to its standard terms of support (but without fee to
AOL). In the event Sun fails to provide such error corrections and bug
fixes in a timely commercially reasonable manner, Sun shall, pursuant to
the TLDA entered into between AOL and Sun, provide AOL with the source
code, test suites and related development tools for such JREs and the right
to use such source code, test suites and related development tools for the
purpose of supporting and maintaining such JREs in accordance with the
TLDA. Sun agrees to use reasonable efforts to *** In order to permit the
binary JRE to be integrated into such browsers, AOL agrees to use
reasonable efforts to incorporate and support the Open Java Interface in
such browsers. AOL and Sun agree to collaborate and consult with one
another and to cooperate with one another in good faith in an effort to
define and integrate this interface into such browsers for use by the JREs
in such browsers. AOL further agrees that if such incorporation of the JRE
is successfully implemented in a version of such browser for any applicable
System Platform, AOL will incorporate such version of such browser in the
versions of the OEM Communicator Client, Third Party Client and AOL
Distributed Communicator Client for such System Platform *** If the JRE is
so incorporated in the OEM Communicator Client, Third Party Client or AOL
Distributed Communicator Client, and AOL elects to distribute any version
of such product via download, such version shall either be the JRE enabled
version of such product, or AOL will make the JRE enabled version of such
product available for download in addition to any non-JRE enabled version
of such product made available for download. If the JRE is so incorporated
in the OEM Communicator Client, Third Party Client or AOL Distributed
Communicator Client, and AOL elects to distribute any version of such
product via CD-ROM, the version of the product distributed by AOL via
CD-ROM will be such JRE-enabled version, to the extent contractually
permissible and subject to size limitations, and provided that AOL shall
have no obligation to require that its OEMs include the JRE-enabled
version. AOL shall have the right to distribute via download a smaller
version of the New Browser without the JRE, provided such version has hooks
that permit the user optionally to download and install the JRE. AOL will
consider as part of the Collaborative Development Work Plans whether to
expose to the JRE all public and private developer interfaces within the
browser (including, without limitation those in NSHTML.DLL), but shall have
no obligation to do so. AOL's obligations pursuant to this Section 3.6 are
conditioned upon Sun's granting to AOL *** any rights to Java technology
necessary to comply with this Section 3.6. In the event of any
inconsistency or conflict between this Section 3.6 or Section 9.8.1 of this
Agreement and the TLDA entered into between Sun and AOL, the terms of this
Section 3.6 and the terms of Section 9.8.1 shall control.
3.7 Intent To Develop Leading Products. The parties agree to use their
reasonable efforts to maintain the existing Netscape browser and the New
Browser as competitive alternatives to the browser component of Internet
Explorer from Microsoft, and agree that it is their intention to make all
products developed and distributed pursuant to this Agreement leading and
competitive products in their respective product categories.
3.8 JRE Bundling on CD-ROMs. On any CD-ROMs on which AOL ships the AOL
classic client and on which AOL provides installation options permitting
third party software other than AOL classic client software to be a
separate installable item, ***approximately 3 lines omitted*** AOL agrees,
subject to any third party contractual limitations, to use reasonable
efforts to co-package the latest version of the JRE with such client and to
offer to users an installation option to install such JRE, provided that
the JRE meets commercially reasonable standards making it suitable for
inclusion and installation, including without limitation reasonable quality
assurance and size limitations. AOL shall have no obligation to display
such installation option until after the user has gone through any included
registration process for any AOL Service Offering. AOL will also consider
including*** approximately 6 lines omitted ***
3.9 Design of Clients. *** approximately 7 lines omitted ***.
3.10 Third Party Components and Protocols; Divergence of Development. In
the event AOL (i) elects to use third party software or technology for core
functionality and features of the browser component of any of the Client
Software, (ii) adopts and maintains protocols or interfaces that are
inconsistent with Sun's reasonable server-dictated requirements; or (iii)
fails to support protocols or interfaces that are reasonably required by
Sun's server-dictated requirements, Sun shall have the right, but not the
obligation, to have AOL provide to Sun the source code, test suites, and
related development tools reasonably required for Sun to pursue independent
development of a browser based on the Existing Netscape Software and/or
Collaborative Software and to create client applications incorporating such
independently developed Sun browser. Any resulting products developed by
Sun shall be deemed to constitute Designated Collaborative Software for
purposes of this Agreement.
4.0 Sales and Marketing.
4.1 Customers.
4.1.1 General. In accordance with the Marketing and Sales Plan, the
parties will work together to actively market Product Suites, as
well as other related products, including Sun, Netscape, and AOL
products and services, to customers.
4.1.2 AOL Committed Sales Force. Sun acknowledges that AOL intends to
commit an AOL sales force to target sales by AOL to AOL EC
Service Opportunities. Such sales force may consist of (i) AOL
interactive marketing sales personnel and (ii) the current
Netscape Netcenter sales personnel. AOL shall bear all costs of
such committed sales force. Sun shall provide reasonable
assistance to AOL, as reasonably requested by AOL from time to
time, in connection with this AOL committed sales effort. Sun
shall provide such assistance through the sales and marketing
resources that Sun is required to provide pursuant to the
provisions of Section 4.1.3 and the Marketing and Sales Plan,
which may include access to and participation of Sun employees
who are not part of the collaborative sales team, such as Sun
technical personnel. Sun also acknowledges that AOL intends to
maintain a professional services group to support AOL EC Services
Opportunities independent of any persons providing collaborative
services pursuant to this Agreement.
4.1.3 Collaborative Sales. AOL and Sun shall each form their own
respective sales forces targeting sales of the Product Suites to
non AOL EC Service Opportunities. The AOL collaborative sales
force shall consist of AOL and Netscape enterprise sales and
marketing, professional services and technical support personnel
selected by AOL. The Sun collaborative sales force shall consist
of Sun sales personnel selected by Sun. The AOL and the Sun
collaborative sales forces shall both sell only off a common
pricelist and on standard terms and conditions, with such
pricelist and terms and conditions to be designated by the Lead
Executive for marketing and sales. Each of AOL and Sun will, as
specified in the Marketing and Sales Plan, commit specified
target levels of sales and marketing resources (personnel and a
portion of marketing budget) to the staffing and support of their
respective collaborative sales forces and coordinate the efforts
of their respective collaborative sales forces. In addition, Sun
will support the collaborative sales activities of the AOL
collaborative sales force with respect to any Sun products and
services, which may include access to and participation of Sun
employees who are not part of the collaborative team, such as Sun
technical personnel, and AOL will support the collaborative sales
activities of the Sun collaborative sales force with respect to
AOL Services Offerings, which may include access to and
participation of AOL employees who are not part of the
collaborative team, such as AOL technical personnel.
4.1.4 Sharing of Revenues Collected from Customers. Subject to the
provisions of Section 4.2, revenues from the sale or license of
products or services shall be shared as set forth below. Each
party acknowledges that these provisions are intended to reflect
how revenues are allocated and are not controlling as to which
revenues are recognized by which parties, which recognition shall
be at the sole discretion of each party in accordance with
Generally Accepted Accounting Principles.
4.1.4.1 AOL and Netscape Software and Associated Services. AOL
will receive 100% of the revenues (and pay all of the
associated cost of goods) collected from any sale or
license of AOL and Netscape products and Associated
Services, including without limitation from sales or
licenses of the AOL Distributed Communicator Client and
Associated Services (but excluding Existing Netscape
Software and Existing Netscape Software Upgrades and
Associated Services), less a sales commission equal to
*** of such revenues which shall be payable to Sun if a
Sun salesperson was primarily responsible for making the
sale of the AOL products or Associated Services.
4.1.4.2 Third Party Communicator and Existing Netscape Software
and Associated Services. AOL will receive 100% of the
revenues (and pay all of the associated cost of goods)
collected from any sale or license of the Third Party
Communicator and Associated Services and Existing
Netscape Software and Existing Netscape Software Upgrades
and Associated Services, less a sales commission equal to
*** of such revenues, which shall be payable to Sun if a
Sun salesperson not on the collaborative marketing and
sales force was primarily responsible for making the sale
of the AOL products or Associated Services.
4.1.4.3 Sun Software and Services. Sun will receive 100% of the
revenues collected (and pay all of the costs of goods)
from any sale or license of Sun software and professional
services, less a sales commission equal to *** of such
revenues, which shall be payable to AOL if an AOL
salesperson was primarily responsible for making the sale
of the Sun products or Associated Services. This Section
4.1.4.3 shall not apply to "Sun Products" as defined in
the Service Provider Agreement between the parties of
even date herewith.
4.1.4.4 Designated Collaborative Software and Services. AOL will
receive *** of the Gross Margin collected from any sale
or license of Designated Collaborative Software products
and Associated Services and Sun will receive *** of the
Gross Margin collected from such sales or licenses.
Whichever party to this Agreement enters into the sales
contract with the customer will receive the revenues from
such contract and remit *** of the Gross Margin to the
other party as provided in this Section.
4.1.4.5 Sales bonus. To the extent the amounts payable to AOL in
any quarter that are applied to the Minimum Commitment
exceed one hundred twenty-five percent (125%) of the
applicable Minimum Commitment for such quarter as set
forth in Section 4.5, Sun shall, in addition to any other
amounts payable by Sun to AOL, pay to AOL a bonus equal
to*** of the amount by which such amounts payable to AOL
exceed one hundred twenty-five percent (125%) of the
applicable Minimum Commitment for such quarter.
4.1.5 Marketing Co-op Fee. During the term of this Agreement, as
consideration for the marketing and selling of Sun products and
services and the products and services developed under the
Collaborative Activity, Sun will pay AOL a marketing co-op fee,
which shall be applied as determined by AOL. The marketing co-op
fee shall be Ten Million Dollars ($10,000,000) for the first year
following the Closing Date, Ten Million ($10,000,000) for the
second year following the Closing Date, and Ten Million Dollars
($10,000,000) for the third year following the Closing Date,
payable each year in quarterly payments as provided in Section
8.l.
4.2 Additional Revenue Determination and Allocation Provisions
4.2.1 Revenue Calculation. For purposes of determining the appropriate
revenue or Gross Margin allocation under Section 4.1.4, in cases
where a single product or service is sold, the revenues received
shall be deemed to equal the gross revenues (before sales
commission) collected from the end user or the OEM customer and
the Gross Margin shall be calculated in accordance with Section
21.20. In cases where multiple products or services are sold in a
bundled sale, the revenues per product or service will be
calculated by computing the overall discount (or ***, whichever
is lower) from list price for the bundled sale (or the aggregate
sum of the list prices for each individual component in the
bundled sale, if there is no list price for the bundled sale) and
applying that discount to the list price for the product. ***
approximately 10 lines omitted ***.
4.2.2 Special Revenue Allocations. Notwithstanding anything to the
contrary herein, including without limitation the provisions of
Section 4.1.4, AOL shall retain all collected revenues from
existing Netscape OEM and customer contracts (including without
limitation revenues collected in connection with any existing
service, development, support, maintenance, reseller, VAR, OEM
and other contracts) and existing contracts for the sale and
distribution of Existing Netscape Software and any updates,
enhancements and/or new releases thereof. As used in this Section
4.2.2, the term "existing contracts" shall mean any contracts
entered into on or before the Closing Date for the duration of
the remaining term of such contracts as well as any extensions or
renewals of the term of such contracts to the extent the customer
or OEM elects to exercise any unilateral right of extension or
renewal contained in such existing contracts. AOL and Sun each
shall retain their existing customer contracts for the Netscape
client software, with all service, maintenance and support
provided by AOL, to the extent Netscape is obligated to provide
such service, maintenance and support under existing service,
maintenance and support agreements, and all service, maintenance
and support provided by Sun, to the extent Sun is obligated to
provide such service, maintenance and support under existing
service, support and maintenance agreements. AOL and Sun will
each have the right to fulfill its respective obligations under
existing contracts, notwithstanding anything to the contrary
contained in this Agreement
4.3 Priority of Marketing by Sun. In conducting its marketing activities,
Sun shall prioritize the marketing of the following client products, where
they exist for the customer platform, in the following manner:
(a) As part of the standard Product Suites offering and any other time
Sun is marketing, distributing or selling a browser component, Sun will
give first priority to the marketing and sale of ***.
(b) If a customer indicates that it does not want ***,Sun will next
attempt to market and sell ***.
(c) If a customer indicates that it does not want ***, Sun will next
attempt to market and sell ***.
*** approximately 7 lines omitted ***
4.4 AOL Service Components and Service Offerings. AOL and Sun each agrees
actively to market, promote and support the Product Suites. Without
limiting the foregoing, Sun will actively market, promote and support the
AOL Service Components and AOL Service Offerings that are incorporated into
products comprising the Product Suites in connection with its marketing,
promotion and sales of the Product Suites, provided that Sun customers will
not be required to use or maintain any AOL Service Components included in
the Product Suites. Notwithstanding anything to the contrary herein,
including without limitation the provisions of Section 4.1.4, AOL shall
retain all collected revenues related to or derived from sales or licenses
of AOL Service Components and AOL Service Offerings. Neither Sun nor the
collaborative sales team shall have any right to sell any AOL Service
Offerings without AOL's prior written consent, and AOL shall have no
obligation to provide such consent.
4.5 Minimum Revenue Commitments by Sun. Sun will commit that, during the
term of this Agreement, the total of the net amounts paid per year to AOL
under Sections, 4.1.4.2, 4.1.4.4, 9.6.2 (including, without limitation, net
of commissions payable to Sun sales personnel) and under 4.2.2 (which
includes revenues derived by AOL from the sale of Existing Netscape
Software and Existing Netscape Software Upgrades and Associated Services),
will be not less than Three Hundred Twelve Million Dollars ($312,000,000)
for the first year following the Closing Date, Three Hundred Thirty Million
Dollars ($330,000,000) for the second year following the Closing Date, and
Three Hundred Thirty Three Million Two Hundred Fifty Thousand Dollars
($333,250,000) for the third year following the Closing Date, payable in
quarterly minimum payments the ("Minimum Commitment") as set forth in
Section 8.1.
4.6 Penetration Rate for Business Desktop. So long as certain specified
milestone deliverable dates are satisfied as set forth in the Collaborative
Development Work Plans, Sun shall use all reasonable efforts to achieve
penetration of enterprise desktops by the Third Party Communicator Client
and AOL Distributed Communicator Client as set forth in the Marketing and
Sales Plan as mutually-agreed in writing prior to the Closing Date,
including without limitation bundling the Third Party Communicator with
Sun's Solaris operating system, actively promoting the Third Party
Communicator on Sun's website, and such other actions as Sun normally takes
to promote and market its products, provided that Sun shall be relieved of
such obligations to achieve such penetration if Sun embarks on a divergent
development path with respect to the Third Party Communicator Client
pursuant to Section 3.10. If the agreed level of penetration is not
achieved, Sun will take reasonable steps (e.g., increased marketing,
promotion and salesforce incentives) to increase the penetration rate to
the required level within six months; provided that, if Sun believes that
the failure to achieve the requisite level of penetration was due to
factors beyond its reasonable control and/or that the penetration rate
shortfall cannot reasonably be remedied through increased marketing and
promotion unless additional remedial action is also taken during such six
month period, Sun will so inform AOL and the parties shall discuss Sun's
concerns and attempt to agree through good faith negotiation on an
appropriate plan to increase the penetration rate within such six month
period. Such plan may include actions by Sun and/or AOL, depending on the
circumstances. The Executive Representatives shall facilitate such
negotiation. If either Executive Representative believes that negotiation
will not succeed in a timely fashion, he or she may refer such dispute to
the two chief executive officers to resolve. The Incentive Plan referred to
in Section 13.1 will set forth the method by which Sun will provide
incentives to its sales force to achieve the requisite penetration rate.
The escalation procedures set forth in this Section 4.6 shall constitute
AOL's sole and exclusive remedy for any failure to achieve the specified
target penetration rate.
4.7 Marketing and Sales Plan. The Marketing and Sales Plan will set forth a
detailed description of how the two sales and marketing teams (i.e., the
sale forces described in Sections 4.1.2 and 4.1.3, respectively) will
collaborate, including the initial sales force compensation and incentive
plans (as further described in Section 13.1) to be implemented
independently by the parties, the goal of which will be to provide
appropriate incentives for the sales forces to meet and exceed the Minimum
Commitments.
4.8 Warranties, Indemnification and Support. Sun shall have the exclusive
right to provide and will provide all warranty and support services in
connection with sales and licenses (other than pursuant to existing
contracts as set forth in Section 4.2.2) by the collaborative sales force
and by the dedicated AOL sales force of the Product Suites, including
warranty and support services for supported Systems Platforms other than
the Sun Systems Platform, which may include Systems Platforms such as
Windows NT, HP-UX, Linux and IBM AIX. Sun will fulfill warranty and support
obligations in connection with all sales and licenses by AOL arising from
sales by the collaborative sales force and by the dedicated AOL sales force
of the Product Suites (other than pursuant to existing contracts as set
forth in Section 4.2.2). In consideration of Sun's providing such support
services, AOL will pay to Sun the sum of One Million Dollars ($1,000,000)
per month during the term of this Agreement. In addition, Sun will, at the
request of AOL, fulfill warranty and support obligations for existing
contracts as set forth in Section 4.2.2 ***. Such support services shall
include frontline technical support, including call receipt, call
screening, installation assistance, problem identification and diagnosis,
and other standard support services customarily provided by Sun's
twenty-four hour per day, seven day per week support center. Backline
escalation support shall be provided by the collaborative development team.
Sun shall defend, indemnify and hold AOL harmless from all third party
claims and allegations relating to alleged breach or failure to provide
support services or breach of support service obligations under Sun's
standard maintenance contracts under which it is obligated to support the
Product Suites. AOL will promptly notify Sun in writing of any such claim
or allegation giving Sun the sole right of defense and settlement, and will
assist Sun, at Sun's expense (except for the value of time of AOL
employees), to defend or settle such claim or allegation. AOL shall have
the right to employ separate counsel and to participate in the defense of
such claim at its own cost. Sun shall not be liable for litigation expenses
of or settlements by any third parties unless Sun agrees in writing.
5.0 Management Process for Development and Sales and Marketing.
5.1 Executive Representatives. Each party shall designate a senior
executive reporting to its chief executive officer, president or chief
operating officer as its Executive Representative to the other for the
purpose of this Agreement. AOL's initial Executive Representative shall be
▇▇▇▇▇ ▇▇▇▇▇▇▇, and Sun's initial Executive Representative shall be ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇. The Executive Representatives shall collaboratively report
quarterly in writing (which may be electronic) to both chief executive
officers on the progress of development under this Agreement and shall work
to facilitate cooperation between the parties to achieve the development
goals of this Agreement. The chief executive officers shall consult prior
to changing the Executive Representatives.
5.2 Executive Meeting. In January and July of each year, the chief
executive officers and the relevant members of their management teams
including the Executive Representatives shall meet to review the
development progress and sales and marketing progress under this Agreement.
The January meetings shall be in California hosted by Sun and the July
meetings in Virginia, hosted by AOL. The host Executive Representative
shall be responsible, in consultation with the participants and the other
Executive Representative, for organizing such meeting and establishing its
agenda.
5.3 Management Process for Client Software Development and Network
Application and Server Software Development.
5.3.1 Lead Executives. The initial Lead Executives and Deputy Lead
Executives for each major component ("MC") of the collaborative
development activity are set forth in Sections 5.3.3 and 5.3.4.
Future Lead Executives will be designated by AOL after
consultation with Sun. AOL shall have the right, after
consultation with Sun, to replace the Lead Executive for either
MC at any time if in its good faith judgement such action is in
the best interests of the parties. The Lead Executive and Deputy
Lead Executive must be replaced by a person of similar rank and
stature unless the parties otherwise agree. The Lead Executives
and Deputy Lead Executives shall not be changed prior to the
Closing Date.
5.3.2 Powers of Development Lead Executives; Deputy Lead Executives.
The Lead Executive shall maintain and revise the corresponding
Collaborative Development Work Plan for each MC in accordance
with its terms and will have the right, after consultation with
the Deputy Lead Executive, to designate the project leader for
each major project and to establish teams and team leaders for
various development projects. For each Lead Executive there shall
be a Deputy Lead Executive. The Deputy Lead Executive shall be
assigned by the party other than the party employing the Lead
Executive, after consultation with the Lead Executive. Each party
shall structure all employees and resources for each MC under the
Lead Executive or Deputy Lead Executive for that MC, and the Lead
and Deputy Lead Executives and project leaders shall direct such
resources in accordance with and to achieve the objectives of the
Collaborative Development Work Plan.
5.3.3 Client Software. The initial Lead Executive for the Client
Software MC shall be ▇▇▇▇▇ ▇▇▇▇▇▇▇. The Lead Executive for the
Client Software MC shall have the right, after consultation with
the Deputy Lead Executive, to make all decisions with respect to
the design and development of the Client Software and the New
Browser, including without limitation the features and functions
to be included in each such product design and all decisions
regarding development priorities and resource allocation.
5.3.4 Network Application and Server Software. The initial Lead
Executive for the Network Application and Server Software MC
shall be ▇▇ ▇▇▇▇▇▇. As part of the Collaborative Development Work
Plans, with the consent of each party through its Lead Executive
or Deputy Lead Executive, which consent shall not be unreasonably
withheld or delayed, the Lead Executive will establish mutually
agreeable targets for development of the Network Application and
Server Software. It is AOL's present intention not to replace the
initial Lead Executive for Network Application and Server
Software unless such development targets are missed in a material
fashion, but AOL shall have the right, after consultation with
Sun, to replace the Lead Executive for the Network Application
and Server Software MC at any time after the Closing Date. The
Lead Executive for the Network Application and Server Software
may be an employee of either party. In selecting the project
leader and team leaders for various development projects to be
undertaken in the development of the Network Application and
Server Software, the Lead Executive for the Network Application
and Server Software shall appoint a significant number of AOL
employees as project and/or team leaders.
5.3.5 Collaborative Development Work Plans. Prior to the Closing Date,
the Lead Executive and Deputy Lead Executives shall establish and
attach hereto as Schedule 5.3 the initial Collaborative
Development Work Plans for the two MCs of the initial
Collaborative Development Activity (consisting of an MC for
Client Software development and an MC for Network Application and
Server Software development), setting forth the objectives,
principal deliverables of each such MC and providing for
priorities in going forward. Changes to the principal
deliverables or priorities sections of the Collaborative
Development Work Plan for Network Application and Server Software
shall require the consent of both parties not to be unreasonably
withheld or delayed, but all other changes to such Collaborative
Development Work Plans may be made by the Lead Executive for the
applicable MC after consultation with the Deputy Lead Executive
for such MC. In making such changes, the Lead Executive must act
solely in accordance with the terms and objectives of this
Agreement.
5.3.6 Cross Platform Development. Understanding that it is the parties'
intention to offer cross platform solutions, the parties shall,
to the extent commercially reasonable, develop the Client
Software and the Network Applications and System Software to
operate on a variety of System Platforms, including the Sun
System Platform as well as other Systems Platforms including
Windows NT, IBM AIX, Linux, HP-UX and other Systems Platforms.
Any decision to support a platform other than Solaris or Windows
NT shall require a financial analysis showing a reasonably
appropriate return on investment, and in all cases all
Collaboratively Developed Software at the date of first customer
shipment must ship on Solaris.
5.3.7 Non-Disclosure; Limitations on Work on Other Development. All
individuals engaged in Collaborative Development Activities will
be prohibited from using or disclosing any confidential
information or trade secrets learned or developed in the course
of such Collaborative Development Activities other than in the
course of their work on the Collaborative Development Activities
or their work for AOL or Sun, respectively. AOL and Sun each
acknowledges that the parties may have to establish procedures
and/or enter into supplemental confidentiality agreements to
address issues that may arise in connection with Collaborative
Development Activities, such as, by way of example, the use of
confidential information of third parties which one party may not
have the right to disclose to the other party. In addition, AOL
and Sun each agrees that after it has assigned developers to the
Collaborative Development Activities, it shall use reasonable
efforts to keep such individuals assigned to the Collaborative
Development Activities, and AOL and Sun each agrees that it will
not reassign multiple employees engaged in the Collaborative
Development Activities to work on similar or competitive
development activities for other customers, clients, or strategic
partners. If AOL or Sun reassigns an individual employee to work
on similar or competitive development activities for a customer,
client, strategic partner or other third party, such party to
this agreement shall advise the customer, client, strategic
partner or other third party that such employee was involved in
similar or competitive development activities pursuant to this
Agreement and that such individual is subject to a
confidentiality and non-disclosure agreement prohibiting such
individual from using or disclosing any confidential information
or trade secrets learned or developed in the course of such
Collaborative Development Activities.
5.3.8 Protection of Software. AOL and Sun will agree on procedures so
that development is conducted in a such a manner that AOL Service
Components, other AOL and Netscape proprietary software, Sun
software, and the Collaborative Software are not inadvertently
placed in the public domain or required to be publicly disclosed
pursuant to the Mozilla Public License or Netscape Public
License. Both parties shall comply with such procedures, and
notwithstanding anything to the contrary contained in this
Agreement, in no event may a Lead Executive make any decision to
implement development in a manner inconsistent with such
procedures without the written consent of both AOL and Sun, which
either party may withhold in its sole discretion.
5.4 Management Process for Sales and Marketing.
5.4.1 Marketing and Sales Plans. An initial draft of the Marketing and
Sales Plan for the Collaborative Marketing and Sales Activity
will be mutually agreed upon prior to the Closing Date by the
Lead Executive and Deputy Lead Executive for marketing and sales,
setting forth the objectives and targets, and principal methods
for marketing and sales of the Product Suites and components
thereof. Major substantive changes to such initial Marketing and
Sales Plan shall require the consent of both parties, such
consent not to be unreasonably withheld, but any minor changes
may be made by the corresponding Lead Executive after
consultation with the Deputy Lead Executive. In making such
changes, the Lead Executive must act solely in accordance with
the terms and objectives of this Agreement. The Lead Executive
and Deputy Lead Executive shall not be changed prior to the
Closing Date.
5.4.2 Powers of Marketing and Sales Lead Executive. The Lead Executive
for Marketing and Sales shall maintain and revise the Marketing
and Sales Plan in accordance with its terms. For each Lead
Executive there shall be a Deputy Lead Executive. The Deputy Lead
Executive shall be assigned by the party other than the party
employing the Lead Executive. The Lead Executive for Marketing
and Sales, after consultation with the Deputy Lead Executive for
Marketing and Sales, shall have the right to establish projects
and teams and project and team leaders for various major sales
efforts ("SE's") of the Marketing and Sales Plan. Each party
shall structure all employees and resources of such party's
respective collaborative sales team under the Lead Executive or
Deputy Lead Executive, and the Lead Executive and Deputy Lead
Executives and their subordinates shall direct such resources in
accordance with and to achieve the objectives of the applicable
Marketing and Sales Plan.
5.4.3 Lead Executives. The initial Lead Executive for Marketing and
Sales shall be ▇▇ ▇▇▇▇▇▇. The initial Deputy Lead Executive for
Marketing and Sales shall be ▇▇▇▇▇ ▇▇▇▇▇▇▇. As part of the
Marketing and Sales Plans, AOL and Sun will establish mutually
agreeable targets for marketing and sales of the Product Suites.
It is AOL's present intention not to replace the initial Lead
Executive for Marketing and Sales unless such targets are not
met, but AOL shall have the right, after consultation with Sun,
to replace the Lead Executive for Marketing and Sales at any time
after the Closing Date. In the event replaced, the Lead Executive
and Deputy Lead Executive may only be replaced by a person of
similar rank and stature unless the parties otherwise agree. The
Lead Executive for Marketing and Sales must be an employee of
either AOL or Sun.
5.4.4 Coordination. The AOL collaborative sales force and the Sun
collaborative sales force shall coordinate their sales efforts
and endeavor to cooperate with one another to achieve maximum
sales of the Product Suites in accordance with the Marketing and
Sales Plan.
5.4.5 Cross Platform Marketing and Sales. The collaborative sales
forces of AOL and Sun will be trained and knowledgeable about and
shall, to the extent commercially reasonable, actively market and
promote the sale or license of the Product Suites on the Sun
Systems Platform, Windows NT and on a variety of other System
Platforms to which the Product Suites have been ported, which may
include IBM AIX, Linux, HP-UX and other Systems Platforms, which
marketing and promotion shall include efforts to license the
Product Suites on an OEM basis.
6.0 Other Development and Marketing Rights and Limitations.
6.1 AOL. During the term of this Agreement, AOL will market Network
Application and Server Software only to AOL EC Service Opportunities and
only to enable such opportunities. In sales to AOL EC Service Opportunities
made by AOL personnel, AOL may elect to have the sales and licensing
agreements for the goods and services sold be between the customer and AOL
or may elect to have such agreements be between Sun and the customer. AOL
shall have the unrestricted right to market and distribute the Client
Software and New Browser during and after the term of this Agreement in any
manner whatsoever, including without limitation through OEM licensing
arrangements.
6.2 Sun. During the term of this Agreement, Sun will have the right to
market, including through reseller and OEM arrangements, the Collaborative
Software through the Collaborative Marketing and Sales Activities as well
as its independent sales force, subject to the provisions of Section 4.1.4.
6.3 Sun Development. Subject to the provisions of Sections 6.6 and 6.7, Sun
is free to develop at its own expense additional client, server and
application software, functionality and features for EC2. Any such software
developed by Sun independently which is not a derivative work of the
Existing Netscape Software or the Collaborative Software and was not
developed pursuant to any Collaborative Development Work Plan shall not
constitute Collaborative Software or Designated Collaborative Software, and
Sun shall own such independent developments and all proprietary rights
therein.
6.4 AOL Development. AOL is free to develop at its own expense and to
collaborate with one or more third parties in developing additional client,
server and application software, and functionality and features for
electronic commerce and extended communities and connectivity, including
without limitation software based on and derived from the Existing Netscape
Software. Any such software developed by AOL independent of any
Collaborative Development Work Plan shall not constitute Collaborative
Software or Designated Collaborative Software, and AOL shall own such
independent developments and all proprietary rights therein.
6.5 Replacement of IE Browser. To the extent contractually permissible, AOL
will periodically evaluate replacing the browser component of Microsoft
Internet Explorer browser with the New Browser in the AOL classic online
service offering and to use the New Browser in clients for other brands
such as ICQ and CompuServe, provided that the parties acknowledge that AOL
has no present intention to make any such replacement or use and shall have
no obligation to make any such replacement or use, and that it is AOL's
present expectation that it will not seek to terminate or limit its present
agreement and may seek to renew and/or extend and expand its present
agreement with Microsoft Corporation to continue to distribute Microsoft
Internet Explorer. It is acknowledged that among the critical issues for
AOL in evaluating the merits of any such possible replacement would be ***
approximately 8 lines omitted ***
6.6 No Development or Marketing of Competitive Clients. Except as provided
in Section 3.10, for any System Platform for which AOL implements, in the
OEM Communicator Client and Third Party Communicator Client, the most
recent version of Sun's JRE pursuant to Section 3.6, Sun shall not during
the term of this Agreement, directly or indirectly through any third party,
develop, market, advertise, or distribute any software product or assist in
advertising, marketing, or distributing any software product on such System
Platform (including without limitation any other browser component)
including or bundled with features and functions which make it competitive
with a desktop client such as the client for the AOL classic online
service, AOL Distributed Communicator Client, the Third Party Communicator
Client, the OEM Communicator Client or Microsoft Internet Explorer (as it
continues to evolve away from a browser to a fully featured online desktop
client),*** approximately 11 lines omitted *** This Section 6.6 shall not
be deemed to limit or prohibit Sun from continuing to develop, market,
advertise, promote and distribute browsers that are 100% Pure Java or are
for platforms other than personal computers or workstations, subject to the
provisions of Section 4.3, nor from continuing to develop, market and
promote client software other than browsers except as provided in this
Section.
6.7 Support for Product Suites Standards. It is the intention of the
parties that all client software will support industry-standard protocols
and the standards, protocols and defaults in the Product Suites, including
without limitation the standards, protocols and defaults of the AOL
Services Components in the Product Suites, and except as provided in
Section 3.10, Sun agrees not to implement, in the Sun Systems Platform or
in other software competitive with or offering similar functionality to the
Product Suites, inconsistent or conflicting standards, protocols or
defaults, including without limitation inconsistent or conflicting with the
components, features, functionality, interfaces, protocols and APIs of the
New Browser.
6.8 Impact of License to Competing OEM. If, during the term of this
Agreement, AOL grants an OEM license to any of the network application and
server software comprising the Existing Netscape Software or any derivative
works thereof developed by AOL to any other Systems Platform suppliers,
each such transaction must be structured so that the revenues to AOL
reflect *** and in such event the Minimum Commitment as set forth in
Section 4.5 for each quarter subsequent to AOL granting such a license
shall be reduced by *** of the consideration received by AOL during the
preceding quarter pursuant to such license agreement for the rights granted
to such OEM with respect to any such software, provided that in the event
AOL receives an upfront large sum or advance pursuant to such an agreement,
the reduction arising from such amount shall be applied pro rata across all
then remaining quarterly Minimum Commitments.
6.9 Licenses by Sun. During the term of this Agreement, Sun shall structure
its license transactions for the Existing Netscape Software and Designated
Collaborative Software so that the revenues to Sun *** and Sun shall not
enter into licenses for such software intending to (a) have a material
adverse impact on the penetration rate for the business desktop as set
forth in Section 4.6 or (b) materially reduce the amounts payable to AOL
hereunder.
6.10 Resources. AOL and Sun shall each provide a minimum level of staffing
through their respective collaborative sales forces, as set forth in the
Marketing and Sales Plan, to achieve the objectives of the SE's, and AOL
and Sun shall each provide a minimum level of development staffing, as set
forth in the initial Collaborative Development Work Plans, to achieve the
objectives of the Network Application and Server Software development MC.
Sun shall be responsible for using all reasonable efforts at its expense to
provide whatever remaining resources are needed to achieve the goals of
each SE as set forth in the Marketing and Sales Plan and to achieve the
goals set forth in the Collaborative Development Work Plan for Network
Application and Server Software, but in no event will Sun be required to
provide more than the maximum levels of Sun staffing set forth in the
Marketing and Sales Plan and the Collaborative Development Work Plan for
Network Application and Server Software. Sun will provide a level of
staffing for Sun's collaborative sales force at least as large as that of
AOL's collaborative sales force, and Sun shall provide a level of staffing
for the Collaborative Development Activities at least as great as the
staffing AOL provides for the Collaborative Development Activities. Either
party may reduce its level of staffing if such party concludes that then
current and reasonably anticipated business conditions no longer justify
then current staffing levels. In the event the aggregate level of staffing
provided by AOL in any quarter for Collaborative Development Activities and
Collaborative Marketing and Sales Activities is less than ***, the
otherwise applicable Minimum Sales Commitment for the next quarter shall be
reduced by *** per person for such shortfall (i.e., for each person by
which such staffing by AOL is below ***), provided that in the event the
composition of such AOL staffing with respect to mix of salary levels
changes materially, Sun and AOL will negotiate in good faith adjustments to
such *** per person shortfall reduction.
7.0 Escalation and Dispute Resolution for Collaborative Development and
Marketing and Sales.
7.1 General. The parties shall attempt to promptly resolve through good
faith negotiation any dispute or disagreement between them directly
relating to design and development priorities and decisions and resource
allocation under the Collaborative Development Work Plan for Network
Application and Server Software and marketing and sales priorities and
decisions under the Marketing and Sales Plans. ***approximately 10 lines
omitted***
7.2 Deadlock on Major Disputes. ***approximately 48 lines omitted***
8.0 Payment Timing Provisions.
8.1 Timing. Fees payable pursuant to Section 4.1.5, 4.5 and 9.8.2 shall be
paid quarterly in advance not later than the fifth business day of the
quarter for which due, except that amounts payable pursuant to such
Sections for the first quarter shall be paid on the Closing Date, and, in
the event to first quarter is not a complete quarter, amounts payable
pursuant to such Sections for the first partial quarter and the first full
quarter shall be payable on the Closing Date. Unless otherwise specified,
other fees shall be paid no later than 45 calendar days after the end of
the quarter for which due (including fees in excess of the minimum amounts
due with respect to any quarter). No fees are payable until the quarter in
which the Closing Date occurs, and any fees for that quarter, including
minimum quarterly fees specified in this Agreement, including in Sections
4.1.5, 4.5 and 9.8.2, shall be a pro rata amount based on the number of
days remaining in such quarter. In the event the first quarter is not a
complete quarter (i.e., the Closing Date occurs other than at the beginning
of the quarter), any reductions in minimum revenues or other fees specified
in this Agreement, including in Sections 4.1.5, 4.5 and 9.8.2, shall not
apply until the second full quarter. For partial quarters at the beginning
and the end of each year of the term of this Agreement, the quarterly
amount payable shall be a prorated portion of the full quarterly amount
specified for such year, based on the number of days in such partial
quarter period. (For example, if the first anniversary of the Closing Date
is March 20, 2000, the prorated Minimum Commitment payable pursuant to
Section 4.5 for the partial period running from January 1, 2000 through
March 20, 2000 shall be the applicable prorated portion of $78,000,000,
which amount shall be due and payable on January 1, 2000, and the prorated
Minimum Commitment for the partial period running from March 21, 2000
through March 30, 2000 shall be the applicable prorated portion of
$82,500,000, which amount shall also be due and payable on January 1, 2000.
8.2 No Right To Withhold or Offset. Sun will have no right whatsoever to
withhold payment of any minimum fees or revenues provided for in Sections
4.1.5, 4.5 or 9.8.1 on the basis of any alleged right of offset or any
alleged breach by AOL of any of its obligations pursuant to this Agreement
or for any other reasons except to the extent permitted pursuant to a
final, non-appealable judgment obtained from a court of competent
jurisdiction in litigation between AOL and Sun. Notwithstanding anything to
the contrary set forth in this Agreement, in the event Sun believes that
AOL has breached any obligations under this Agreement, Sun shall have no
right to cease paying any such minimum fees and revenues, even if Sun has
terminated or purported to terminate this Agreement, and Sun's sole and
exclusive remedy shall be to litigate the dispute and to continue making
such payments during the pendency of the litigation. AOL shall be entitled
to injunctive relief to compel Sun to continue making such payments during
the pendency of such litigation.
8.3 Late Charges. In the event that either party does not receive any
amounts from the other party hereunder on or before the day upon which such
amounts are due and payable, and fails to cure such breach within ten (10)
business days following written notice from the other party, such
outstanding amounts shall thereupon be subject to payment of a late charge
which shall accrue until payment at the rate of one percent (1%) per month.
Amounts received by shall first be credited against any unpaid late charges
accrued pursuant to this Section, and accrual of such late charges shall be
in addition to and without limitation of any and all additional rights or
remedies under this Agreement or at law or in equity.
9.0 Intellectual Property Rights.
9.1 Ownership. Each party shall own all preexisting software and/or
technology which it makes available to the Collaborative Development
Activity or which it developed or develops with its own resources without
use of any intellectual property of the other party and not as part of the
Collaborative Development Activities and all proprietary rights therein. To
the extent such software and/or technology is incorporated into the
Designated Collaborative Software, it shall, to the extent so incorporated,
be subject to the provisions of Sections 9.2, 9.3 and 9.4.
9.2 Designated Collaborative Software. AOL shall own all improvements and
modifications to any preexisting software or technology of either party,
any new software and technology created through Collaborative Development
Activity to create the Client Software and/or New Browser, and all
newly-created intellectual property rights therein, whether completed or
work in progress. Sun shall own all improvements and modifications to any
preexisting software of either party and any new software and technology
created through Collaborative Development Activity to create the Network
Application and Server Software and all newly-created intellectual property
rights therein.
9.3 AOL License to Sun. AOL hereby grants to Sun and its subsidiary, Sun
Microsystems International, B.V. ("Sun International B.V.") a Software
License to all Designated Collaborative Software owned by AOL pursuant to
Sections 9.1 and/or 9.2, subject only to the payment by Sun of the amounts
provided in this Agreement. Such license shall be unrestricted as to field
of use, except for those limitations set forth in Section 6.6 and 6.7. AOL
also hereby grants to Sun a non-exclusive, perpetual, non-terminable, fully
sublicensable right under any patents issued anywhere in the world for
which AOL is or becomes the beneficial or legal owner which were reduced to
practice in the course of the Collaborative Development Activity to make,
have made, practice, have practiced, use, lease, sell and otherwise
transfer any and all inventions, methods or processes which are the subject
of any claim of any such patent.
9.4 Sun License to AOL. Sun shall grant to AOL a Software License to all
Designated Collaborative Software owned by Sun pursuant to Sections 9.1
and/or 9.2, whether written in Java or any other programming language. Such
license shall be unrestricted as to field of use. Notwithstanding the
foregoing grant to AOL, AOL's rights to the Java Platform shall be governed
solely by the TLDA executed concurrently herewith by the parties. Sun also
hereby grants to AOL a non-exclusive, perpetual, non-terminable, fully
sublicensable right under any patents issued anywhere in the world for
which Sun is or becomes the beneficial or legal owner which were reduced to
practice in the course of the Collaborative Development Activity to make,
have made, practice, have practiced, use, lease, sell and otherwise
transfer any and all inventions, methods or processes which are the subject
of any claim of any such patent.
9.5 Procedures for Litigating Proprietary Rights Claims Against Third
Parties. AOL and Sun agree to cooperate with one another and to negotiate
in good faith procedures and terms and conditions permitting each party to
pursue infringement claims against third parties with respect to the
Designated Collaborative Software and other rights licensed to one another
pursuant to this Agreement. The parties will consider and discuss whatever
arrangements might most efficiently and fairly permit such actions to be
pursued, which might include, by way of example, an assignment of an
undivided joint interest in the software at issue in order to confer
standing to ▇▇▇ on the party seeking to bring such action, an agreement by
which the other party is joined as a party plaintiff in the action with
provisions allocating the responsibilities and costs of litigating such
claims, or some other mechanism.
9.6 License to Existing Netscape Software.
9.6.1 License for Development. As of the Closing Date, as between AOL
and Sun, AOL shall own all rights in and shall grant to Sun a
Software License to the Existing Netscape Software. AOL may also
elect to grant to Sun a Software License to any Existing Netscape
Software Upgrades that AOL makes available for Collaborative
Development Activities pursuant to this Agreement. Such license
shall be subject to the limitations set forth in this Agreement
on Sun's marketing and licensing thereof during the term of this
Agreement, which shall include those limitations set forth in
Sections 6.3, 6.6 and 6.7 of this Agreement as well as
limitations during and after the term of this Agreement
permitting Sun and Sun International B.V. to use the Existing
Netscape Software (and any Existing Netscape Software Upgrades,
if any, licensed to Sun) solely for purpose of developing the New
Browser, the OEM Communicator Client, and the Designated
Collaborative Software as part of the Collaborative Development
Activity. Such licenses shall also be subject to any contractual
restrictions with third parties for the duration of such
contractual restrictions. AOL represents that concurrently with
the execution of this Agreement, AOL is obtaining from Netscape
contractual commitments requiring that Netscape cooperate with
AOL between the date of this Agreement and the Closing Date to
identify any "Encumbrances" (as defined in this Section) that may
adversely affect AOL's rights to Netscape Existing Software
and/or any components thereof as set forth below, including
without limitation AOL's rights to grant others access to source
code and sublicense such rights. Such cooperation shall include
granting AOL full access to Netscape technology licenses,
agreements by which technology rights were acquired by Netscape
and information regarding intellectual property infringement or
misappropriation claims, if any, relating to the Netscape
Existing Software and all components thereof. As used in this
Section, "Encumbrances" means any restriction or limit that would
prevent or materially limit or restrict AOL from granting
pursuant to this Agreement the applicable source and binary
access, use and distribution rights under Sections 9.6.1, 9.6.2
and 14.7 of the Agreement with respect to the Netscape Existing
Software or any component thereof ("Sun License Rights"),
including, without limitation, limitations and restrictions on
source access and sublicensing fights, as well as prohibitions or
requirements to obtain consents to assignment of rights from
Netscape to AOL upon the Closing Date where to failure to obtain
such consent would materially limit or restrict AOL's rights,
including sublicensing rights. AOL further represents that it is
obtaining from Netscape concurrently with the execution of this
Agreement contractual commitments obligating Netscape to use
reasonable efforts to remove, limit or diminish such
Encumbrances, in a priority order to be specified by AOL. After
the Closing Date, AOL shall continue such efforts. ***
approximately 4 lines omitted *** Sun and AOL will consider the
scope and impact of any such Encumbrances in determining what
work to undertake pursuant to the Collaborative Development Plans
and the products to be included in the Product Suites.
9.6.2 Reseller Rights. AOL shall grant to Sun, effective as of the
Closing Date and continuing for the term of this Agreement, (a)
the right to distribute the Existing Netscape Software in binary
form only except as set forth below; (b) the right to use the
source code for the Existing Netscape Software solely for
purposes of supporting and maintaining the binary copies
distributed to Sun customers; and (c) the right to license the
source code for the Existing Netscape Software to OEM licensees
solely for the purpose of permitting such OEM licensees to
support and maintain the binary copies distributed by such OEMs,
provided that Sun may provide such source code to OEM licensees
only pursuant to the terms of a written agreement substantially
in conformance with a form approved by AOL, which approval shall
not be unreasonably withheld or delayed, containing customary
terms and conditions to preserve the confidentiality of such
source code and containing customary limitations and disclaimers
of warranties and exclusions and limitations of liability. The
rights granted to Sun pursuant to this Section 9.6.2 with respect
to the Existing Netscape Software shall terminate upon expiration
or termination of this Agreement, except that Sun shall retain
thereafter a limited source code license to retain and use such
software solely for the support of existing customers as of such
expiration or termination.
9.6.3 Delivery. Promptly following the Closing Date, AOL will deliver
to Sun a copy of all Existing Netscape Software that is subject
to the license granted pursuant to Section 9.6.1 and 9.6.2.
9.7 Post Termination Rights. The license rights of the parties following
expiration or termination of this Agreement are set forth in Sections 14.5
and 14.7.
9.8 License Fees.
9.8.1 Payments from AOL to Sun. AOL shall pay to Sun quarterly license
fees of $5 million per quarter during the term of this Agreement
for the Sun-owned components licensed to AOL by Sun pursuant to
Section 9.4. No license fee shall be required after expiration or
termination of this Agreement for any such license rights that
survive termination. AOL may allocate up to *** of the fees under
this section to any payments required under any TLDA between Sun
and AOL, and any unused balance of such amounts not applied to
TLDA fees may be carried forward and applied to future fees under
any TLDA.
9.8.2 Payments from Sun to AOL. Sun shall pay to AOL quarterly license
fees during the term of this Agreement for the software and
trademark rights granted to Sun by AOL pursuant to Sections 9.3,
9.6 and 12, which shall be Eighty-Six Million Dollars
($86,000,000) for the first year following the Closing Date,
Ninety-Five Million Five Hundred Thousand Dollars ($95,500,000)
for the second year following the Closing Date, and Ninety-Seven
Million Dollars ($97,000,000) for the third year following the
Closing Date, payable in quarterly payments as provided in
Section 8.1. No license fee shall be required after expiration or
termination of the definitive agreement for any such license
rights that survive termination.
10.0 Netcenter.
10.1 Objectives. AOL shall develop the Netcenter to be a portal for a
variety of customers with a focus on business customers in terms of the
services, information and customization options offered.
10.2 Ownership. AOL owns and controls the Netcenter without restriction and
shall be responsible for all of its associated costs.
10.3 Portal Revenues. Notwithstanding anything to the contrary herein, AOL
shall retain all revenue, and bear all costs, related to or derived from
the Netcenter.
10.4 Promotion. Sun agrees to cooperate with AOL to make the Netcenter the
Sun default network portal for the Product Suites and to help gain
additional traffic for the Netcenter. Without limiting the foregoing, the
Netcenter will be the default home page in the New Browser, Third Party
Communicator Client and OEM Communicator Client, any client applications
developed by Sun pursuant to Section 3.10, the HotJava browser and, to the
extent practicable and commercially reasonable, the Bedouin browser or any
other thin client browser used on platforms other than personal computers
and workstations, although Sun customers shall not be required to maintain
such home page against their will. *** approximately 5 lines omitted ***
Sun shall always position the Netcenter in its meetings, promotions and
advertising no less favorably than any other portal addressed in such
meetings, promotions and advertising, if any, but the parties recognize and
agree that the objectives of this Agreement require that Sun market and
distribute the Product Suites and System Platform to other connectivity and
portal vendors without restriction, and in such cases such other
connectivity and portal vendors shall have the right to use and promote
their own home pages and/or portals in connection with the Products Suites
and System Platform.
11.0 Systems Platform.
11.1 Ownership. Sun owns and controls the Sun System Platform without
restriction and shall be responsible for all of its associated costs. Sun
shall develop the Sun System Platform to be the premiere foundation for
Product Suites customers in terms of its performance, scalability,
reliability and cost-effectiveness.
11.2 Promotion. AOL agrees to cooperate with Sun to make the Sun System
Platform the AOL preferred System Platform for Products Suites for both AOL
and AOL EC Service Opportunities. AOL shall always position the Sun System
Platform in its meetings, promotions and advertising no less favorably than
any other Systems Platform addressed in such meetings, promotions and
advertising, if any, but the parties recognize and agree that the
objectives of this Agreement may require that AOL market and distribute the
Product Suites on other System Platforms to meet customer requirements.
12.0 Branding.
12.1 Ownership. Each party shall retain all rights, title and other
interest to its brand names, service marks, trademarks and other
proprietary markings except as expressly provided otherwise in this
Agreement.
12.2 Brand Names and Trademarks. Subsequent to the execution of this
Agreement and prior to the Closing Date, AOL and Sun shall negotiate in
good faith and enter into a written trademark license, which shall include
reasonable and customary terms, including appropriate quality control
provisions, pursuant to which AOL shall license to Sun on a royalty-free,
non-sublicensable basis effective as of the Closing Date: (a) the right to
use the Netscape Communicator trademark in connection with the Third-Party
Communicator Client and related sales and marketing materials, and shall
license to Sun the right to use successors or replacements of the Netscape
Communicator trademark in connection with the Third-Party Communicator
Client and related sales and marketing materials, provided the Third-Party
Communicator Client meets the requirements for branding with such ▇▇▇▇(s);
(b) the right to use the Netscape trademarks that Netscape currently uses
as the titles for the Existing Netscape Software in connection with the
collaborative marketing and sales of the Existing Netscape Clients pursuant
to this Agreement; and (c) such other trademarks, if any, as AOL and Sun
may mutually agree. Such trademarks shall be licensed to Sun following
expiration or termination of this Agreement subject to reasonable quality
control requirements and a reasonable transition period (not to exceed
fifteen (15) months) and plan which shall be set forth in the definitive
trademark license. Such trademark license shall also provide for a
trademark license from AOL to Sun to use the Netscape Communicator
trademark, and such other trademarks, if any, as AOL and Sun may mutually
agree, for any software developed by Sun pursuant to Section 3.10, subject
to such software meeting AOL's reasonable quality control and other
transition requirements for such branding and subject to a phase-out of
Sun's use of such trademarks in connection with such products after a
reasonable transition period (not to exceed fifteen (15) months).
12.3 Branding of Collaborative Software. The branding for the Collaborative
Software shall be determined by mutual agreement of the Lead Executive and
Deputy Lead Executive for marketing and sales, and each party shall have
the right to use such marks in connection with the Product Suites and
related sales and marketing materials during the term of this Agreement.
Following any expiration or termination of this Agreement, Sun shall retain
ownership of any trademark by which the entire Product Suites are
identified, subject to transition or phase-out terms permitting continued
use by AOL for a reasonable transition period (not to exceed fifteen (15)
months), which terms and conditions shall be negotiated in good faith and
embodied in a written trademark license agreement. Following any expiration
or termination of the Agreement, Sun and AOL shall each have the
non-exclusive right to use any titles by which the individual Network
Application and Server Products in the Product Suites were identified
during the term of this Agreement, provided that AOL and Sun shall
differentiate their uses of such marks following any expiration or
termination of this Agreement by always using any such ▇▇▇▇ in connection
with a name or trademark prominently identifying AOL or Sun as the source
of such goods or services (for example, AOL Commerce Server and Sun
Commerce Server).
13.0 Employee Incentives.
13.1 economic incentives for their respective employees engaged in the
Collaborative Development Activity and collaborative marketing and sales is
essential to its success and shall create and operate an Incentive Plan
("Incentive Plan") for all employees engaged full-time in the Collaborative
Development Activity or in collaborative marketing and sales. Each party
shall bear its own expenses in connection with its respective Incentive
Plans. Compensation for the collaborative marketing and sales force will
consist of base salary with an additional commission/incentive opportunity,
and the commission incentive plan will (i) represent a significant part of
each individual's total annual compensation (base salary plus
commission/incentive plan) and (ii) support the metrics included in the
Marketing and Sales Plan. The parties commit to cooperate with one another
to complete the Incentive Plan as soon as practicable and commercially
reasonable and prior to the Closing.
13.2 Senior Managers. All senior managers and above shall receive a
significant portion of their compensation through an annual bonus program,
tied to performance under the Collaborative Development Work Plans and/or
Marketing and Sales Plans, and paid annually to those employees still
employed by either party as of the date of payment of the bonus.
13.3 Sales Representatives. All sales representatives shall receive a
significant portion of their compensation through an incentive bonus
program tied to meeting objectives under the Marketing and Sales Plans.
13.4 Pool For All Personnel. The Lead Executives and Deputy Lead Executive
from each party, respectively, may make periodic project and spot bonus
payments tied to performance under the Collaborative Development Work Plans
and/or Marketing and Sales Plans, to employees of such party from a pool of
funds of up to*** of total salaried compensation for all personnel employed
by such party in such activities.
13.5 Lead Executives and Deputy Lead Executives. At least one-half of the
total incentive compensation by MC for any Lead Executives or Deputy Lead
Executives (other than an Executive Officer of Sun or AOL, if a Lead
Executive or Deputy Lead Executive is an Executive Officer) must be
provided under the IP.
14.0 Termination.
14.1 Term. This Agreement shall terminate at midnight Pacific Daylight Time
on the date three (3) years following the Closing Date.
14.2 Early Termination. This Agreement assumes the intended merger of
Netscape and AOL. If the Closing Date does not occur on or before June 30,
1999, the parties agree to negotiate in good faith for a period of thirty
(30) days thereafter in an effort to agree on alternative terms to achieve
as much as possible the same effect as this Agreement using solely Sun
technology, provided that if the parties fail to agree on such alternative
terms within such thirty (30) day period, either party may elect to
terminate this Agreement by giving written notice to the other party.
14.3 Termination for Breach. Subject to Section 7.2 of this Agreement,
either party may terminate this Agreement for a material breach of its
terms by the other party by giving the other party written notice at least
ninety (90) days in advance of such termination date, and the Agreement
shall terminate on that date unless the breaching party has cured or
corrected such breach prior to that time, provided that such ninety (90)
day period shall be shortened to a ten (10) business day cure period
following written notice in the event of a failure to pay amounts due
pursuant to this Agreement. Without limiting the foregoing, in the event
Sun fails to pay any amounts due to AOL pursuant to this Agreement,
including without limitation minimum fees or revenues provided for in
Sections 4.1.5, 4.5 and 9.8.2, and fails to cure such breach within the ten
(10) business day cure period provided for in this Section, AOL shall have
the right, exercisable upon written notice to Sun, without limiting any of
AOL's other rights or remedies, to terminate this Agreement and all
licenses granted to Sun by AOL, including all licenses granted to Sun by
AOL pursuant to Sections 9.3, 9.6 and 12 (in which event Sun will have no
license rights pursuant to Section 14.7.1 or 14.7.2). In the event of a
termination of this Agreement and all licenses granted to Sun by AOL as a
result of Sun's failure to pay any minimum fees and revenues in a timely
manner, Sun's obligation to pay all minimum fees and revenues provided for
in Sections 4.1.5, 4.5 and 9.8.2 shall be accelerated so as to make all
such fees and revenues be due and payable immediately. Notwithstanding
anything to the contrary set forth in this Agreement, AOL shall have no
right to terminate the licenses granted to Sun by AOL pursuant to Sections
9.3, 9.6 and 12, except for a failure by Sun to pay any fees and revenues
due pursuant to this Agreement and a failure to cure such breach in a
timely manner as provided in this Section 14.3.
14.4 Limitation on AOL Right To Terminate Licenses. Except in the event Sun
fails to pay the fees payable under Sections 4.1.5, 4.5 and 9.8.2 as
required in Section 8 (the "Specified Payment Obligations"), AOL shall have
no right whatsoever to terminate or reduce Sun's license rights set forth
in Sections 9.4, 9.6.1, 9.6.2, 12.2, 12.3, 14.7.1 or 14.7.2 (the
"Licenses") on the basis of any alleged breach by Sun of any of its
obligations pursuant to this Agreement or for any other reasons, except to
the extent permitted pursuant to a final, non-appealable judgment obtained
from a court of competent jurisdiction in litigation between AOL and Sun.
Notwithstanding anything to the contrary set forth in this Agreement, in
the event AOL believes that Sun has breached any obligations under this
Agreement, other than the Specified Payment Obligations, AOL shall have no
right to terminate or reduce such licenses, even if AOL has terminated or
purported to terminate this Agreement, and AOL's sole and exclusive remedy
shall be to litigate the dispute, provided that nothing contained herein
shall be deemed to limit AOL's right to enforce the limitations set forth
in this Agreement on the scope or duration of such licenses. Sun shall be
entitled to injunctive relief to prevent AOL from terminating or limiting
such licenses in any way other than as expressly allowed in this Section.
14.5 Termination on a Change in Control. During the term of this Agreement,
if either party is acquired or if any third-party acquires effective voting
control of either party, such party shall promptly notify the other party
in writing, and the other party may terminate this Agreement effective six
(6) months after receipt of such notice; provided that if Sun terminates
this Agreement pursuant to this Section 14.4, it shall be obligated to
continue to pay all then remaining minimum payments and fees that would
have been due if this Agreement had expired on the date set forth in
Section 14.1, when and as such minimum payments and fees would otherwise be
payable pursuant to this Agreement.
14.6 AOL Post Termination License Rights. Following any expiration or
termination of this Agreement, AOL shall be free to further develop and
enhance the Designated Collaborative Software for its own account in all
respects, shall be entitled to full ownership of any AOL separately
developed code based on or derived from the Designated Collaborative
Software, including without limitation any AOL separately developed
modifications and enhancements to the Designated Collaborative Software
(such as, by way of example, the Third Party Communicator Client and AOL
Distributed Communicator Client), shall have no duty to account to or pay
Sun with respect to any use or exploitation of the Designated Collaborative
Software, and shall not be subject to any limitations on field of use with
respect to the Designated Collaborative Software. Following any expiration
or termination of this Agreement, AOL shall have no rights of any kind to
any software developed by Sun, which does not constitute Collaborative
Software or Designated Collaborative Software.
14.7 Sun Post Termination License Rights.
14.7.1 Designated Products. As used in this Agreement, "Designated
Products" means (a) any network applications and server software
included in the Product Suites or marketed and sold through
Collaborative Marketing and Sales Activities pursuant to the
Marketing and Sales Plan at any time during the term of this
Agreement, and (b) the Designated Collaborative Software. Except
as provided in Section 14.3, Sun and Sun International B.V. shall
be granted effective upon expiration or termination of this
Agreement a Software License to the Designated Products and shall
be free following any expiration or termination of this Agreement
to further develop and enhance any Designated Products for their
own respective accounts in all respects, shall be entitled to
full ownership of any Sun and Sun International B.V. separately
developed code based on or derived from the Designated Products,
including without limitation any Sun separately developed
modifications and enhancements to the Designated Products, shall
have no duty to account to or pay AOL with respect to any use or
exploitation of the Designated Products, and shall not be subject
to any limitations on field of use with respect to the Designated
Products (including without limitation those limitations set
forth in Sections 6.3, 6.6 and 6.7 of this Agreement), provided
that (a) AOL may elect to require that, within one hundred eighty
(180) days following any expiration or termination of this
Agreement, Sun cease to distribute and remove from any Designated
Products and derivative works thereafter marketed or distributed
by Sun and Sun International B.V. any or all AOL Service
Components, as specified by AOL, and (b) such license shall be
subject to any contractual restrictions with third-parties for
the duration of such contractual restrictions.
14.7.2 Third Party Communicator Client and AOL Distributed Communicator
Client. Following any expiration or termination of this
Agreement, Sun shall have no rights of any kind to the Third
Party Communicator Client or the AOL Distributed Communicator
Client or any software developed by AOL which does not constitute
Designated Software, other than a limited source code license to
retain and use such software solely for the support of existing
customers as of such expiration or termination.
14.7.3 Delivery. Promptly following expiration or termination of this
Agreement, AOL shall deliver to Sun a copy of all source code and
binary code comprising the Designated Products to the extent Sun
does not already have such code in its possession.
14.8 Purchase of Sun Products and Services Post-Termination.
14.8.1 EC2 Products and Services. For seven years after the expiration
or termination of this Agreement for any reason other than (a) a
termination by Sun arising from a material breach by AOL or (b) a
termination pursuant to Section 14.2 resulting from a failure of
the Closing Date to occur, AOL will be entitled to purchase Sun
***
14.8.2 Other Products and Services. For seven years after the expiration
or termination of this Agreement for any reason other than (a) a
termination by Sun arising from a material breach by AOL or (b) a
termination pursuant to Section 14.2 resulting from a failure of
the Closing Date to occur, AOL will be entitled to purchase ***
14.9 Post Termination Limitations. For a period of eighteen (18) months
following any termination or expiration of this Agreement (other than a
termination arising from a material breach by the other party), each party
agrees to continue to market and distribute the Network Applications and
Server Software in a manner generally consistent with the manner in which
such Network Applications and Server Software were marketed and distributed
by such party during the term of this Agreement, and each party agrees not
to sell or dispose of all or substantially all of its respective rights in
such software during such eighteen (18) month period, provided that this
Section shall not be deemed to limit or prohibit either party from selling
or disposing of such rights in connection with a merger or sale of assets
in which a third party acquires or succeeds to all or substantially all of
such party's assets, including such rights.
15.0 General Representations and Warranties.
15.1 AOL Representations and Warranties. AOL warrants, covenants and
represents to Sun that:
15.1.1 AOL has the full corporate right, power and authority to enter
into this Agreement and to perform the acts required of it
pursuant to this Agreement;
15.1.2 the execution of this Agreement and the performance by AOL of its
obligations and duties under this Agreement shall not violate any
agreement to which AOL is a party or the rights of any other
party; and
15.1.3 AOL is not relying on nor does Sun make any representations,
warranties or agreements not expressly provided for in this
Agreement.
15.2 Sun Representations and Warranties. Sun warrants, covenants and
represents to AOL that:
15.2.1 Sun has the full corporate right, power and authority to enter
into this Agreement, to perform the acts required of it;
15.2.2 the execution of this Agreement and the performance by Sun of its
obligations and duties under this Agreement shall not violate any
agreement to which Sun is a party or the rights of any other
party; and
15.2.3 Sun is not relying on nor does AOL make any representations,
warranties or agreements not expressly provided for in this
Agreement; and
16.0 No Proprietary Rights Indemnity. Neither AOL nor Sun makes any warranties
with respect to noninfringement and expressly disclaim all implied warranties of
title and against infringement. Neither AOL nor Sun shall have any obligation to
defend or indemnify the other against any third party claims of infringement or
misappropriation of any proprietary rights in any materials or technology
provided by either party to the other or developed pursuant to this Agreement.
17.0 Other Remedies Cumulative. Except where otherwise specified, the rights and
remedies granted to a party under this Agreement are cumulative and in addition
to, and not in lieu of, any other rights or remedies which the party may possess
at law or in equity, including, without limitation, rights or remedies under
applicable patent, copyright, trade secret or proprietary rights laws, rules or
regulations.
18.0 Audit Rights. AOL and Sun agree to allow mutually acceptable independent
CPA auditors, which auditors shall not be compensated on a contingency basis and
shall be bound to keep all information confidential except as necessary to
disclose discrepancies to the other party, to audit and analyze relevant
accounting records of each other to ensure compliance with all terms of this
Agreement. Any such audit shall be permitted within thirty (30) days of one
party's receipt from the other of a written request to audit, during normal
business hours, at a time mutually agreed upon. The cost of such an audit shall
be borne by the requesting party unless a material discrepancy is found, in
which case the cost of the audit shall be borne by the other party. A
discrepancy shall be deemed material if it involves a payment or adjustment of
more than five percent (5%) of the amount actually due from the paying party in
any given quarter. Audits shall occur no more frequently than once per calendar
year and shall not interfere unreasonably with the audited party's business
activities and shall be conducted in the audited party's facilities during
normal business hours on reasonable notice. An audit may cover any period;
provided that: (i) the period has not been previously audited; and (ii) the
period under audit is within a three year period immediately preceding the
commencement of the audit. A party shall promptly reimburse the other for the
amount of any discrepancy arising out of such audit which indicates that such
party is owed amounts hereunder as well as the costs of the audit, if
applicable, as provided above.
19.0 Limitation Of Liability; Exclusion of Damages; Disclaimer of Warranties.
19.1 Exclusion of Damages. NEITHER PARTY HERETO SHALL, UNDER ANY
CIRCUMSTANCES, BE LIABLE TO THE OTHER FOR CONSEQUENTIAL, INCIDENTAL,
SPECIAL OR EXEMPLARY DAMAGES, EVEN IF APPRISED OF THE LIKELIHOOD OF SUCH
DAMAGES OCCURRING.
19.2 Limitation of Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY'S
TOTAL LIABILITY OF ALL KINDS ARISING OUT OF OR RELATED TO THIS AGREEMENT
REGARDLESS OF THE FORUM AND REGARDLESS OF WHETHER ANY ACTION OR CLAIM IS
BASED IN CONTRACT, TORT NEGLIGENCE OR OTHERWISE, EXCEED THE SUM OF (a)
FIFTY MILLION DOLLARS; PLUS (b) ALL AGGREGATE AMOUNTS PAID BY SUCH PARTY TO
THE OTHER FOLLOWING NOTIFICATION TO THE OTHER PARTY OF AN ALLEGED MATERIAL
BREACH GIVING RISE TO AN ALLEGED RIGHT OF TERMINATION.
19.3 Exceptions. THE EXCLUSIONS OF DAMAGES AND LIMITATIONS OF LIABILITY SET
FORTH IN SECTIONS 19.1 AND 19.2 SHALL NOT OPERATE TO LIMIT (a) AMOUNTS
ACTUALLY DUE AND PAYABLE PURSUANT TO THE EXPRESS TERMS OF THIS AGREEMENT,
OR (b) AMOUNTS OTHERWISE RECOVERABLE BY ONE PARTY FROM THE OTHER IN AN
ACTION AT LAW OR IN EQUITY ARISING FROM THE OTHER PARTY'S INFRINGEMENT OR
MISAPPROPRIATION OF ANY PATENTS, COPYRIGHTS, TRADE SECRETS OR OTHER
PROPRIETARY RIGHTS DURING OR AFTER THE TERM OF THIS AGREEMENT, INCLUDING
WITHOUT LIMITATION INFRINGEMENT OR MISAPPROPRIATION CLAIMS ARISING FROM THE
OTHER PARTY'S BREACH OF THIS AGREEMENT.
19.4 Disclaimer of Warranties. NEITHER SUN NOR AOL MAKES ANY WARRANTIES TO
THE OTHER WITH RESPECT TO THE OPERATION OR PERFORMANCE OF ANY OF THE
SOFTWARE DEVELOPED OR LICENSED BY EITHER PARTY TO THE OTHER PURSUANT TO
THIS AGREEMENT, AND SUN AND AOL EACH HEREBY DISCLAIMS ALL SUCH WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
20.0 Miscellaneous Provisions
20.1 Notices. Any notice, consent, approval, request, authorization,
direction or other communication under this Agreement ("Notice") that is
required to be given in writing will be deemed to have been delivered and
given for all purposes (i) on the delivery date if delivered by confirmed
facsimile; (ii) on the delivery date if delivered personally to the party
to whom the same is directed; (iii) one business day after deposit with a
commercial overnight carrier, with written verification of receipt; or (iv)
five business days after the mailing date, whether or not actually
received, if sent by U.S. mail, return receipt requested, postage and
charges prepaid, or any other means of rapid mail delivery for which a
receipt is available. In the case of AOL, such notice will also be deemed
to have been delivered and given for all purposes on the delivery date if
delivered by electronic mail from an ▇▇▇.▇▇▇ email address via the U.S.
America Online brand service to screenname "▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇." Notices
shall be addressed as follows:
To Sun:
In the case of Sun, such notice will be
provided to both:
Chief Strategy Officer
Sun Microsystems, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ CUP-01
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
And
Vice President and General Counsel
Sun Software and Technology
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ CUP-01
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To AOL:
In the case of AOL, such notice will be
provided to both:
Senior Vice President for Business Affairs
America Online, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
And
Deputy General Counsel
American Online, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
20.2 Section 365(n) of Bankruptcy Code. All rights and licenses granted
under or pursuant to this Agreement by Sun to AOL or by AOL to Sun are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the
United States Bankruptcy Code, 11 U.S.C. Section 101, et seq. (the
"Bankruptcy Code"), licenses of rights to "intellectual property" as
defined under Section 101(56) of the Bankruptcy Code. The parties agree
that AOL and Sun, as licensees of such rights and licenses, shall retain
and may fully exercise all of their respective rights and elections under
the Bankruptcy Code; provided such licensee party abides by the terms of
this Agreement.
20.3 Due Diligence. In connection with the intended merger of AOL and
Netscape, AOL and Sun has each conducted certain due diligence with respect
to Netscape and its products, services, business and technology. At Sun's
request, AOL has made available to Sun certain information and analysis
learned or developed by AOL in the course of its due diligence. Neither Sun
nor AOL makes any representations or warranties to the other regarding
Netscape or any aspect of its business, products, services or technology,
and Sun and AOL each understands, acknowledges and agrees that it is
responsible for conducting whatever due diligence it may desire to conduct.
Neither AOL nor Sun makes any representations or warranties to the other
regarding the accuracy of any materials provided to either party by
Netscape or the accuracy of any analysis or conclusions which either party
may have made based on any such information provided by Netscape or the
accuracy of any such information, materials, analysis or conclusions which
AOL and Sun may have provided to the other party.
20.4 Employees. Each party shall be responsible for paying all salaries,
wages, employee benefits and associated expenses for which its own
employees are eligible under such party's employment policies, any legally
required benefits or insurance, any taxes or governmental charges payable
or subject to withholding in connection with the employment of such party,
and any expenses associated with such employees activities under this
Agreement. Each party shall have exclusive supervision and control with
respect to its own respective employees and shall have no right to
supervise, control, discipline, terminate or reassign any employees of the
other party. In the event that either party makes a reasonable and good
faith determination that an employee of the other party working on
Collaborative Development Activities or Collaborative Marketing and Sales
Activities lacks requisite skills or experience, does not work well with
other project team members, or is otherwise unsatisfactory, the parties
will consult with one another in good faith regarding whether such employee
should be replaced, provided that the final determination as to whether to
retain, reassign or terminate any employee shall be made solely by the
party employing such individual.
20.5 Non-Exclusivity. Sun and AOL agree except for any express obligations
of AOL and Sun as set forth in this Agreement, nothing in this Agreement is
intended or shall be construed to prohibit or restrict either AOL or Sun
from developing or acquiring products or services similar to or competitive
with products or services of the other party.
20.6 Waiver. The waiver by either party of a breach of or a default under
any provision of this Agreement, shall not be construed as a waiver of any
subsequent breach of the same or any other provision of the Agreement, nor
shall any delay or omission on the part of either party to exercise or
avail itself of any right or remedy that it has or may have hereunder
operate as a waiver of any right or remedy. Except as expressly provided
herein to the contrary, no amendment or modification of any provision of
this Agreement shall be effective unless in writing and signed by a duly
authorized signatory of Sun and AOL.
20.7 Costs and Expenses. Except as expressly provided herein to the
contrary, each party shall be responsible for its costs and expenses
incurred in connection with the negotiation and execution of this Agreement
and its performance hereunder.
20.8 No Partnership. No agency, partnership, joint venture, or employment
is created as a result of this Agreement and neither AOL nor AOL's agents
shall have any authority of any kind to bind Sun in any respect whatsoever,
nor shall Sun or Sun's agents have any authority of any kind to bind AOL.
20.9 Headings. The captions and section and paragraph headings used in this
Agreement are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement.
20.10 Attorneys' Fees. If any party to this Agreement brings an action
against the other party to enforce its rights under this Agreement, the
prevailing party shall be entitled to recover its costs and expenses,
including without limitation, attorneys' fees and costs incurred in
connection with such action, including any appeal of such action.
20.11 Severability. If the application of any provision or provisions of
this Agreement to any particular facts of circumstances shall be held to be
invalid or unenforceable by any court of competent jurisdiction, then: (i)
the validity and enforceability of such provision or provisions as applied
to any other particular facts or circumstances and the validity of other
provisions of this Agreement shall not in any way be affected or impaired
thereby, and (ii) such provision or provisions shall be reformed without
further action by the parties hereto and only to the extent necessary to
make such provision or provisions valid and enforceable when applied to
such particular facts and circumstances.
20.12 Entire Agreement. This Agreement, including the attachments hereto,
constitute the entire agreement between the parties concerning the subject
matter hereof and supersedes all proposals or prior agreements whether oral
or written, and all communications between the parties relating to the
subject matter of this Agreement and all past courses of dealing or
industry custom.
20.13 No Presumptions. No presumption shall arise in interpreting the
provisions of this Agreement by virtue of the role a party or its counsel
played in drafting this Agreement or any provision hereof.
20.14 Assignment and Sublicenses. This Agreement may not be assigned by
either party without the prior written consent of the other party, except
that subject to the provisions of Section 14.4 of this Agreement permitting
termination of this Agreement by either party in the event of an
acquisition or change of control of the other party during the term of this
Agreement: (a) either party shall have the right, without the other party's
consent, to assign this Agreement and its rights and obligations thereunder
to any successor of such party by way of merger or consolidation or the
acquisition of substantially all or a material portion of the business and
assets of the assigning party relating to this Agreement or the licenses
granted pursuant to the definitive Agreement (a "Successor"); and (b)
either party shall have the right, without the other party's consent, and
without limiting any of its other rights under the licenses, to sublicense
any and all licenses granted pursuant to this Agreement to any Successor.
These rights shall be retained provided that such Successor or sublicensee
shall expressly assume all of the obligations and liabilities of the
assigning or sublicensing party to the other party relating to such
definitive agreement or licenses.
20.15 Applicable Law. This Agreement shall be governed by the laws of the
State of California.
21.0 Definitions. As used in this Agreement, the following terms have the
indicated meanings:
21.1 AOL EC Service Opportunities are sales opportunities to sell to a
specific business opportunity within a commercial customer, including both
new commerce startup companies and major established companies, looking to
establish EC2 relationships with AOL, where the essence of the sale and
relationship with AOL is the provision of EC2 services (including, for
example, providing Netcenter services, Netcenter offerings and/or consumer
traffic) and the sale of the Product Suites is secondary to the
transaction.
21.2 AOL Distributed Communicator Client or AOL Distributed Communicator
Client shall have the meaning specified in Section 2.1.
21.3 AOL Service Components are software, services or linkages to AOL
Service Offerings, such as, without limitation,***, built-in software links
to AOL default home page, etc.
21.4 AOL Service Offerings means AOL service offerings providing customers
with content, electronic commerce, communication and other services, such
as, without limitation, service portions of AOL services such***, default
home page,***, remote dial-up access, AOL calendar, etc.
21.5 Associated Services means with respect to any software or hardware,
any support, maintenance, training, installation, and other professional
services associated with the applicable software or hardware and any
development and customization services associated with the applicable
software.
21.6 Client Software means the New Browser, the OEM Communicator Client,
the Third Party Communicator Client and the AOL Distributed Communicator
Client.
21.7 Closing Date means the date on which the intended merger of AOL and
Odyssey closes in accordance with the Agreement and Plan of Merger between
AOL and Odyssey.
21.8 Collaborative Development Activity means all activities contemplated
under this Agreement to be conducted under Collaborative Development Work
Plans relating to the development of certain software packages comprising
those components of the Product Suites that are to be developed
collaboratively by the parties.
21.9 Collaborative Development Work Plans shall have the meaning specified
in Section 5.3.5.
21.10 Collaborative Marketing and Sales Activity means all activities
contemplated under this Agreement related to collaborative marketing and
sales of the Product Suites, including all activities under the Marketing
and Sales Plans.
21.11 Collaborative Software means all software developed through
Collaborative Development Activity, including without limitation the OEM
Communicator Client, the Third Party Communicator Client, the New Browser
and the Network Application and Server Software. Collaborative Software
does not include the Netcenter, the AOL Distributed Communicator Client,
the AOL Service Components, the AOL Service Offerings, or the Sun Systems
Platform. Collaborative Software does not include the Existing Netscape
Software except to the extent that such Existing Netscape Software is
modified or enhanced through Collaborative Development Activity to create a
derivative work based on such Existing Netscape Software.
21.12 Designated Collaborative Software means the Collaborative Software
other than the Third Party Communicator Client.
21.13 Designated Products shall have the meaning specified in Section
14.7.1.
21.14 Deputy Lead Executives for collaborative development activity shall
have the meaning specified in Section 5.3.
21.15 Deputy Lead Executive for collaborative marketing and sales activity
shall have the meaning specified in Section 5.4.
21.16 EC2shall have the meaning specified in Section 1.0.
21.17 Executive Representative shall have the meaning specified in Section
5.1.
21.18 Existing Netscape Software means all Netscape client and server
software (including without limitation development tools, tests and other
development components) in existence as of the Closing Date, and any
maintenance upgrades and new releases of such software, if any, which were
already in progress at Netscape, provided such upgrades or releases are
completed and either scheduled to be commercially released by AOL or
actually released by AOL within a period of three (3) months following the
Closing Date. Existing Netscape Software does not include any software
developed pursuant to Collaborative Development Activity contemplated under
this Agreement and does not include the Third Party Communicator Client or
AOL Distributed Communicator Client.
21.19 Existing Netscape Software Upgrades means all updates, modifications,
enhancements and new releases of the Existing Netscape Software, if any,
which AOL elects to develop based on the Existing Netscape Software, which
AOL develops outside of Collaborative Development Activities and that
therefore do not constitute Collaborative Software pursuant to this
Agreement.
21.20 Gross Margin means gross revenues booked by a party in connection
with the sale and or licensing of software and/or Associated Services less
(a) such party's Cost of Goods associated with such software and/or
Associated Services and (b) sales commissions paid by such party in
connection with the sale or licensing of such software and/or Associated
Services. For purposes of this definition, "Cost of Goods" means, with
respect to software, costs of goods calculated in accordance with Generally
Accepted Accounting Principles. For purposes of this definition, "Cost of
Goods" means, with respect to Associated Services, all personnel and
associated costs of providing such services, calculated in accordance with
generally accepted accounting principles.
21.21 Java Platform means the Java Virtual Machine and, with respect to any
particular level or implementation of Java technology, such as, by way of
example, the Java Development Kit or Personal Java, those Java classes
required in the Sun specification for such level or implementation of the
Java Platform technology.
21.22 JRE shall have the meaning specified in Section 3.6.
21.23 Lead Executives for collaborative development shall have the meaning
specified in Section 5.3.
21.24 Lead Executive for collaborative marketing and sales shall have the
meaning specified in Section 5.4.
21.25 Marketing and Sales Plan shall have the meaning specified in Section
5.4.1.
21.26 MC shall have the meaning specified in Section 5.3.1.
21.27 Minimum Commitment shall have the meaning specified in Section 4.5.
21.28 New Browser shall have the meaning specified in Section 2.4.
21.29 Netcenter means the web site(s) operated and branded by Netscape as
it may change from time to time, but which currently includes web site
hosting, search engine capabilities, free email, and a variety of content
channels covering sports, finance, entertainment and other topics and
service offerings.
21.30 OEM Communicator Client shall have the meaning specified in Section
2.3.
21.31 Product Suites means suites of products and services assembled and
marketed pursuant to the Marketing and Sales Plan, which may include the
Third Party Communicator Client, the OEM Communicator Client, the New
Browser, the Network Application and Server Software, and any other
software assembled and marketed pursuant to the Marketing and Sales Plan,
as well as communication services, directory services, commerce servers,
application servers, electronic mail, electronic collaboration software,
web servers, proxy servers and other related software.
21.32 Release means, with respect to any software product, the first
commercially released version of such product and any subsequent
commercially released versions of such product incorporating modifications,
updates, enhancements, corrections, patches and/or improvements.
21.33 SDK shall have the meaning specified in Section 2.4.
21.34 SE shall have the meaning specified in Section 5.4.2.
21.35 Software License means a non-exclusive, irrevocable, perpetual,
worldwide, royalty-free license, which (except as otherwise specified in
this Agreement) survives termination of this Agreement, to use, modify,
publish, reproduce, distribute, transmit, display and perform, through any
and all methods and technologies now known or hereafter invented, in source
or binary form, in whole or in part, alone or with other software or
technology including the right to sublicense such rights through multiple
tiers of distribution and being subject only to the provisions specifically
contained in this Agreement on license fees during the term of this
Agreement and permitted fields of use during and after the term of this
Agreement, as applicable.
21.36 Systems Platform means those platforms comprising software and
hardware on which the Product Suites operate, whether Sun's or a third
party's and shall include, as applicable, Microsoft windows NT, HP-UX, IBM
AIX and Linux in addition to Sun's software and hardware.
21.37 Third Party Communicator Client shall have the meaning specified in
Section 2.2.
21.38 TLDA means the Technology License and Distribution Agreement entered
into between Sun and AOL concurrently herewith.
21.39 Sun Systems Platform means the Sun software and Sun hardware on which
the Product Suites operate.
IN WITNESS WHEREOF, the parties have executed this Strategic Development and
Marketing Agreement this 23rd day of November, 1998.
AMERICA ONLINE, INC.
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President, Business Affairs
SUN MICROSYSTEMS, INC.
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Strategy Officer