Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
Exhibit 10.28
STRATEGIC DEVELOPMENT & LICENSE AGREEMENT
This Strategic Development & License Agreement (the "Agreement") is entered
into and effective as of July 28, 1999 (the "Effective Date") by and between
Microsoft Corporation, a Washington corporation located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Microsoft") and Engage Technologies, Inc., a Delaware
corporation located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Company").
Introduction
Pursuant to the terms of this Agreement, Company intends to license to Microsoft
the current and a certain upcoming commercial release of Company's AdManager
software and to develop for and license to Microsoft certain proprietary
features and functionality for such software.
Agreement
1. Definitions
1.1 "Affiliate" means, with respect to any legally recognizable entity, any
other such entity directly or indirectly Controlling, Controlled by, or
under common Control with such entity. "Control," as used in this
definition, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a legally
recognizable entity, whether through ownership of voting shares, by
contract, or otherwise. Where such entity is a partnership, limited
liability company, corporation, or similar entity and has partners,
members, or shareholders with equal ownership interests or equal control
interests, by contract or otherwise, then each such partner, member, or
shareholder will be deemed to possess, directly or indirectly, the power to
direct or cause the direction of the management and policies of that
entity.
1.2 "Company AdManager Product" means the following two (2) versions of
Company's commercially available AdManager software: (a) Version 4.0.x;
and (b) the Subsequent Release Deliverable (or the substitute version of
such Subsequent Release which shall be a Deliverable under the
circumstances set forth in Section 10.4(c)). The "Company AdManager
Product" also includes Error Corrections and any software provided to
Microsoft by Company as part of support and maintenance services. Company
AdManager Product does not include any localized version of the AdManager
software.
1.3 "Company Licensed Materials" means the Deliverables, Error Corrections, and
all other software technology, know-how and other materials that Company
provides to Microsoft in the course of performing Services under this
Agreement.
1.4 "Confidential Information" means: (i) the Source Code for the Deliverables;
(ii) any business or technical information including, but not limited to,
information relating to either party's products, product plans, designs,
costs, prices and names, finances, marketing plans, business opportunities,
personnel, research development or know-how; and (iii) the terms and
conditions of this Agreement (but excluding the fact and nature of this
Agreement). "Confidential Information" shall not include information that:
(i) is or becomes generally known or available by publication, commercial
use or otherwise through no fault of the receiving party; (ii) is known and
has been reduced to tangible form by the receiving party at the time of
disclosure and is not subject to restriction; (iii) is independently
developed or learned by the receiving party through its own independent
research and without reference to or use of the other party's Confidential
Information; (iv) is lawfully obtained from a third party that has the
right to make such disclosure; or (v) is made generally available by the
disclosing party without restriction on disclosure. The party invoking
these exclusions has the burden of proving the applicability to the
particular facts.
1
Microsoft and Engage Confidential & Proprietary
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
1.5 "Core Technologies", each a "Core Technology" means the following
components of the Company AdManager Product:
. [**] used in building and analyzing content [**] to fulfill contractual
assignments.
. [**] criteria to determine the proper content to deliver.
. [**] reporting of content activity within the system's reach.
. [**] mechanism that maintains [**] in a distributed environment.
. [**] used for [**] within the system.
1.6 "Deliverables" means each version or component of the Company AdManager
Product (including without limitation new features and functionality
designed for use with Version 4.0.x as the same are described in the
Specifications) that Company is obligated to deliver to Microsoft under
this Agreement. The Deliverables include the Documentation and the Source
Code and Object Code versions of all of the foregoing versions and
components of the Company AdManager Product.
1.7 "Derivative Technology" means: (i) for copyrightable or copyrighted
material, any translation (including translation into other computer
languages), portation, modification, correction, addition, extension,
upgrade, improvement, compilation, abridgment or other form in which an
existing work may be recast, transformed or adapted; (ii) for patentable or
patented material, any improvement thereon; and (iii) for material which is
protected by trade secret, any new material derived from such existing
material which extends, upgrades, improves or adapts such existing
material, including new material which may be protected by copyright,
patent and/or trade secret.
1.8 "Distribute" means to sublicense, rent, lease, sell, transfer, transmit and
otherwise distribute, directly and indirectly and including through further
sublicenses.
1.9 "Documentation" means the user guide provided by Company as part of the
Deliverables.
1.10 "Error(s)" means defect(s) in a Deliverable which prevent it from
performing in accordance with the Specifications.
1.11 "Error Corrections" means modifications provided by the Company to correct
Errors.
1.12 "Intellectual Property" means all intellectual property rights throughout
the world, whether existing under statute or at common law or equity,
including but not limited to (i) copyrights, trade secrets, trademarks,
patents, inventions, designs, logos and trade dress, mask works and any
other intellectual property rights as defined by Article 2 of the World
Intellectual Property Organization Convention of July 1967; and (ii) any
application or right to apply for or renew any of the rights referred to in
(i).
1.13 "Microsoft Ad Server Software" means (i) [**] the Company AdManager Product
that is delivered by Company as a Deliverable under this Agreement, or (ii)
[**] pursuant to this Agreement [**] the Company AdManager Product [**] for
use with Version 4.0.x as the same are described in the Specifications)
[**] of the Company Ad Manager Product pursuant to the Copyright Act of
1976 [**].
1.14 "Microsoft Federated Partner Site" means a third party web site or other
online site or service that is either branded or co-branded under a valid
existing agreement by Microsoft (where "co-branding" is intended to include
without limitation licensed use of a compound ▇▇▇▇ such as "MSNBC"), or is
licensed under a valid existing agreement by Microsoft or a Microsoft
Affiliate [**].
1.15 "Object Code" means machine-executable computer software code in binary
form.
1.16 "Schedule" means the development and implementation schedule for
completion of the development Services referred to in Section 2.1, as set
forth in Exhibit A.
1.17 "Services" means Company's delivery of the development work product
described in Exhibit A, onsite consulting services, and support and
maintenance services, all as provided to Microsoft pursuant to this
Agreement.
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
1.18 "Source Code" means computer software code in human-readable, high-level
language form which, when compiled or assembled, becomes the Object Code of
a software program. Source Code also includes all logic diagrams, flow
charts, and developer comments, in their most recent versions which are
available from within the Company at the date of the applicable delivery,
concerning all of the Deliverables and software required to be delivered
under this Agreement.
1.19 "Specifications" means the specifications for certain of the Deliverables,
which specifications are attached to this Agreement as Exhibit A.
1.20 "Spin-Off Product" means a software product that does not qualify as
Microsoft Ad Server Software but that includes a substantial portion of any
of the Core Technologies.
1.21 "Subsequent Release" means the first new commercial release of the Company
AdManager Product that occurs on or after Company's delivery to Microsoft
of all Phase II Deliverables
1.22 "The Microsoft Network" (or "MSN") means The Microsoft Network online
service as operated on Microsoft proprietary and/or Internet platforms,
including without limitation ▇▇▇.▇▇▇.▇▇▇ and related web sites, whether or
-----------
not located under different domain names (e.g., ▇▇▇▇▇▇▇.▇▇▇), and further
including without limitation MSN-branded sites that are hosted and/or
managed by third parties and MSN-branded or co-branded web pages that are
part of a third party's site, provided that such third party sites or pages
are branded or co-branded with an MSN brand pursuant to a valid existing
agreement with Microsoft or an Affiliate of Microsoft. The Microsoft
Network further includes all subsequent versions or upgrades of any of the
foregoing which may be available from time to time in any online
environment, provided that such subsequent versions or upgrades continue to
meet the definition set forth above.
1.23 "Use Restriction Period" means the period beginning as of the Effective
Date and lasting until the later of (i) the [**] year anniversary of the
Effective Date and (ii) the [**] year anniversary of the date specified in
Exhibit A for Company's delivery of the Phase II Deliverables.
1.24 "Version 4.0.x" means the most recent U.S. version of the Company AdManager
product that Company has commercially released as of the Effective Date.
3
Microsoft and Engage Confidential & Proprietary
2. Development and Additional Services
2.1 Phases. Company will perform development in two phases in order to develop
------
and deliver, in accordance with the Specifications, Deliverables comprising
customized features and functionality in Source Code form that are interoperable
with Version 4.0.x. Phase I begins as of the Effective Date and will conclude
upon Microsoft's acceptance of the Phase I Deliverables, as such Deliverables
are defined in Exhibit A. Phase II will begin upon completion of Phase I (or at
any earlier time that Company may elect to begin relevant development) and will
conclude upon Microsoft's acceptance of the Phase II Deliverables, as such
Deliverables are defined in Exhibit A. Company will also deliver the Subsequent
Release to Microsoft following completion of Phase II, as further described in
Exhibit A. Company agrees to deliver the Subsequent Release in Source Code and
Object Code form to Microsoft upon its commercial release, regardless of whether
Microsoft is receiving support and maintenance services (as described in Section
2.6) from Company as of the date of such release. Company, at its sole
discretion, may elect to include all, some or none of the Deliverables described
by the Specifications in the Subsequent Release and/or any other release of the
Company AdManager Product.
2.2. Services. Company will perform the development Services referred to above
--------
in accordance with the Schedule and pursuant to the Specifications and this
Agreement. Subject to Section 2.5, Company may retain independent contractors
with relevant knowledge and experience to perform such Services, provided that
Company will consider in good faith any Microsoft request that Company cease
using any independent contractor(s) who are not adequately performing the
applicable Services.
2.3 Acceptance.
----------
(a) Version 4.0.x, the Subsequent Release and all software required to be
delivered as part of Company's support and maintenance services are
deemed accepted upon delivery.
(b) For Deliverables as described on Exhibit A that are comprised of software
Source Code, Company shall deliver and Microsoft shall evaluate proposed
final versions of each such Deliverable and Microsoft shall submit a
written acceptance or rejection to Company within five (5) weeks after
Microsoft's receipt thereof. Acceptance shall be in writing and shall not
be withheld if a Deliverable performs substantially in accordance with
the Specifications. If Microsoft identifies Errors in any Deliverable
before acceptance, then Company shall correct such Errors within ten (10)
business days following receipt of notice of such Errors from Microsoft
and Microsoft shall thereafter submit a written acceptance or rejection
to Company concerning such Error Correction within ten (10) business days
of delivery of a requested Error Correction.
(c) For Deliverables that are comprised of Documentation or reports, if any,
Microsoft shall evaluate a proposed final version of such Deliverable
within two (2) weeks of its receipt of any such Deliverable. In the
event that it requires corrections, Microsoft shall specify the
corrections needed and Company shall deliver an amended version of such
Deliverable within five (5) days following receipt of notice of such need
for corrections from Microsoft.__Acceptance of Deliverables of this type
shall not be unreasonably withheld.
(d) If Company fails to deliver any Deliverable within the dates specified in
the Schedule, or if any Errors discovered before acceptance in the
Deliverables described in Exhibit A cannot be eliminated in the
correction periods specified in Section 2.3(b) or (c), as applicable,
then Microsoft may notify Company in writing of Company's breach of this
Agreement, in which case Company shall cure the breach as soon as
possible but in no event later than twenty (20) days from receipt of such
notice. If Company fails to cure the breach within such period, then
Microsoft, at its option, may: (i) retain the Deliverable (including any
applicable Documentation) with rights as set forth in Section 3, and
terminate this Agreement for cause in accordance with Section 10.2(b),
whereupon Microsoft will have no further obligations to request or use
any development, consulting, or support or maintenance services from
Company in connection with this Agreement; or (ii) extend the correction
period.
(e) If a Deliverable is not accepted or rejected in writing by the last day
of the applicable period described in Sections 2.3(a)-(c) , the
Deliverable shall be deemed accepted.
2.4 Design Review & Specifications Changes. Company understands that there may
--------------------------------------
be additions, deletions or other changes which may affect the Specifications at
any time during the performance of the development Services referred to in
Section 2.1. Such changes shall not add new functionality not
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
contemplated by Exhibit A unless otherwise mutually agree in writing by the
parties. Upon notice of any such changes by Microsoft, which notice may be made
only in writing (including, for this purpose, in an email communication) to the
attention of Company's General Counsel, Company and Microsoft will work together
to make any necessary changes to the Specifications, and Company shall alter
such Services in order to accommodate any such changes to the Specifications;
provided, however, that with respect to any change to the Specifications that is
required solely by Microsoft, Company will be entitled to charge and Microsoft
agrees to pay additional fees of [**] for any incremental development work that
results from such change to the Specifications. The Schedule set forth on
Exhibit A shall be adjusted appropriately to take into account changes to the
Specifications.
2.5 Onsite Consulting Services. During the term of this Agreement or as
--------------------------
otherwise set forth in Section 10.4(c)(ii), Company shall make mutually agreed
members of its senior engineering staff available to provide Microsoft personnel
with such consulting Services as Microsoft may request with respect to the
Deliverables for the purposes and within the parameters set forth in Exhibit A.
The parties anticipate that Microsoft will desire to receive up to [**] to
include at least [**] of services) of such onsite consulting Services, and
Company agrees to provide such level of Services upon request (and no more),
provided that the precise dates on which Company will provide such consulting
Services shall be in compliance with Exhibit A and subject to the reasonable
approval of each party and that nothing herein shall be deemed to require that
Microsoft engage Company for such Services. Company will provide the consulting
Services requested by Microsoft hereunder at Microsoft's Redmond, Washington
headquarters unless the parties mutually agree on another arrangement.
Microsoft shall pay all reasonably incurred travel and living expenses of
Company personnel performing work at Microsoft facilities. The parties agree
that Company may fulfill its consulting Services obligations under this Section
2.5 by providing the services of any of [**] (the "Senior Company Engineers"),
at Company's discretion. If one or more of such Senior Company Engineers is no
longer employed by Company, the parties will endeavor to mutually agree upon
qualified replacement senior engineers whom Company may use to provide
consulting Services to Microsoft hereunder.
2.6 Support and Maintenance. For a period of [**] after the Effective Date
-----------------------
(or, if Company delivers its initial Deliverables more than three (3) days after
Company receives the payment due to Company under Section 4.1(a), then for a
period of [**] after such initial delivery by Company hereunder), Company will
provide software support and maintenance Services for the Deliverables
(including, for purposes of clarification, both commercial release versions of
the Company AdManager Product provided by the Company to Microsoft hereunder and
modifications and Error Corrections thereof developed by Company pursuant to
this Agreement) in accordance with the Support and Maintenance Plan attached
hereto as Exhibit B. Microsoft shall have the right to renew such software
support and maintenance Services from Company for an additional period of [**]
following such initial year by giving Company written notice of such renewal at
least forty-five (45) days prior to the expiration of the initial one (1) year
term and paying the additional fee set forth in Section 4.3.
2.7 The ongoing consulting Services and the support and maintenance Services
shall be performed in a professional manner and shall be of a high grade,
nature, and quality. Microsoft agrees that any claimed deficiency by Company in
performing the consulting Services and the support and maintenance Services
under this Agreement shall not constitute a breach under this Agreement unless
such deficiency is not cured within thirty (30) days of written notice thereof
by Microsoft to Company.
5
Microsoft and Engage Confidential & Proprietary
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission.
Asterisks denote omissions
3. License Grants
In consideration of the payments set forth in Section 4, Company hereby grants
to Microsoft the following perpetual, nonexclusive, irrevocable (subject to
Section 10.4(a)), sub-licensable (subject to the restrictions set forth
herein), royalty-free (subject to the restrictions and royalty provisions set
forth in Sections 3.4, 3.5 and 3.6), worldwide (subject to Section 3.10) rights
and licenses, under all of Company's applicable Intellectual Property, except
for trademarks, tradenames, trade dress, logos, or any other distinguishing
marks or features which serve to identify the source or provider of the product
or service with the exception of the user interface which may contain elements
which constitute trade dress.
3.1 Development License: Microsoft may use, copy, edit, format, modify,
-------------------
translate and otherwise create Derivative Technology from the Company Licensed
Materials, including both Source Code and Object Code forms of all software
included therein, and may use independent contractors to undertake such
development on Microsoft's behalf as work for hire (i.e., transfer of all
Intellectual Property rights to Microsoft), subject to written agreements
containing confidentiality requirements consistent with this Agreement.
Microsoft agrees to maintain, as part of any version of the Microsoft Ad Server
Software developed by or for Microsoft pursuant to the foregoing license, the
open profile API as contained in the Deliverables delivered by Company to
Microsoft hereunder, until the [**] anniversary of the date specified [**],
whereupon Microsoft may but will not be obligated to modify such open profile
API. Microsoft will not be obligated to implement any future versions of such
open profile API software code beyond the version that Company includes as a
Phase II Deliverable.
3.2 Commercial Use and Distribution License: Subject to the restrictions and
---------------------------------------
conditions set forth in Sections 3.3 through 3.11, Microsoft may use, market,
Distribute, and otherwise commercially exploit the Company Licensed Materials
and Derivative Technology thereof, including without limitation in order to
serve advertisements and provide other functions and services for any and all
web sites and online services.
3.3 License Limitations. Microsoft may exercise the license rights set forth
-------------------
in Section 3.2 only under one of two conditions: (a) in accordance with the
provisions of Sections 3.4, 3.5 and 3.6 with respect to the Microsoft Ad Server
Software or a Spin-Off Product, as applicable, and (b) to the extent Microsoft
exercises such license rights only with respect to combinations of software code
from the Company Licensed Materials (or Derivative Technology thereof) with any
other software code and then subject to the further condition that the resulting
software combinations do not meet the definition of Microsoft Ad Server Software
or a Spin-Off Product.
3.4 Limitations on Use for Ad Serving by Microsoft and its Affiliates.
-----------------------------------------------------------------
(a) If Microsoft or an Affiliate of Microsoft uses the Microsoft Ad Server
Software to serve advertisements on behalf of any third party web site or
online service (including without limitation any Microsoft Federated
Partner Site or portion thereof) other than as part of The Microsoft
Network during the Use Restriction Period, Microsoft agrees to pay
Company a royalty equal to [**] of Microsoft's Applicable Gross Revenues,
except as provided in Sections 3.4(b) and (c). As used herein,
"Applicable Gross Revenues" means cash revenues or other value received
by Microsoft (by barter or otherwise) or a Microsoft Affiliate as payment
for the provision of services that are provided by means of the Microsoft
Ad Server Software during the Use Restriction Period, less any agency
commissions or other revenue sharing payments that Microsoft is obligated
to pay to third parties in respect of such cash revenues or value.
Barter, giveaways and other transactions not involving cash payment shall
be valued at Microsoft's then-current average charge for the service
provided. Company acknowledges that Microsoft currently does not have
procedures in place to identify, track and report such non-cash
transactions as of the Effective Date, and Company agrees that if
Microsoft, having acted diligently and in good faith, fails timely to
report barter transactions which give rise to Applicable Gross Revenues
under this Agreement, Company shall be entitled to collect royalties on
Applicable Gross Revenues for such transactions, but Company shall not be
entitled to receive any late fees in respect of such royalties pursuant
to Section 4.6, unless and until Company has notified Microsoft
specifically of its obligation to pay royalties with respect to
Applicable Gross
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
Revenues from the barter transaction in question, and Microsoft has
thereafter failed to pay applicable royalties within sixty (60) days of
receiving such a notice.
(b) Notwithstanding the terms of Section 3.4(a), if Microsoft elects, during
the Use Restriction Period, to participate in [**] its direct successors
(which as of the Effective Date would entail providing to Company [**]
with The Microsoft Network [**], authorizing Company to use such data for
the sole purpose of [**] making substantially all such [**] through the
[**] network), then Microsoft shall have no obligation to pay any royalty
on Microsoft's Applicable Gross Revenues which relate to services
provided during the time that Microsoft is participating as specified
above in such profiling network.
(c) Also notwithstanding anything to the contrary in Section 3.4(a),
Microsoft shall have no obligation to pay any royalties to Company with
respect to the following activities during the Use Restriction Period
(i.e., revenues associated with the following activities shall not be
deemed to be "Applicable Gross Revenues"):
(i) Serving advertisements for any web site or online service owned or
operated by a member of the [**] or any direct successor or version
thereof but only as long as [**] Microsoft.
(ii) Serving advertisements for any portion of The Microsoft Network, any
web site or online service of a Microsoft Affiliate, or any
Microsoft Federated Partner Site or portion thereof.
(iii) Serving advertisements on behalf of advertisers and/or advertising
agencies to any third party site or service, worldwide.
3.5 Distribution License: Microsoft may Distribute the Microsoft Ad Server
--------------------
Software only in accordance with the following terms and conditions:
(a) Subject to the exceptions set forth in Section 3.5(c), Microsoft may not
Distribute the Microsoft Ad Server Software in Object Code form until the
[**] (the period before such date being referred to herein as the
"Initial Distribution Restriction Period").
(b) Following the Initial Distribution Restriction Period, Microsoft may
Distribute the Microsoft Ad Server Software in Object Code form in its
sole discretion, provided, however, that for [**] after the expiration of
such Initial Distribution Restriction Period, Microsoft will pay Company
a [**] royalty based on Net Receipts received by Microsoft during such
[**] period in consideration of any Distribution by Microsoft of the
Microsoft Ad Server Software other than as provided in Section 3.5(c).
As used herein, "Net Receipts" means the value of any royalties, fees, or
other sums received by Microsoft from such Distribution (subject to the
exceptions set forth in Section 3.5(c)), less applicable returns,
rebates, applicable freight and sales or use taxes payable by Microsoft.
In the event Microsoft engages in any applicable Distribution of the
Microsoft Ad Server Product that constitutes a barter or a promotional
give-away or a "loss leader" transaction (as determined by reference to
the fair market value of the Microsoft Ad Server Product), Microsoft
agrees to pay a [**] royalty based on "imputed standard Net Receipts" for
such software product.
(c) Notwithstanding anything to the contrary in Section 3.5(a) or (b),
Microsoft may Distribute the Microsoft Ad Server Software in Object Code
form to Microsoft Affiliates and Microsoft Federated Partner Sites at any
time, including without limitation during the Initial Distribution
Restriction Period, for use solely in serving advertisements for sites
and services owned and/or operated by such Microsoft Affiliates or
Microsoft Federated Partner Sites. Further, Microsoft shall have no
obligation to pay royalties to Company pursuant to Section 3.5(b) with
respect to any Distribution by Microsoft of Microsoft Ad Server Software
to any Microsoft Affiliate pursuant to the foregoing sentence.
Microsoft agrees to pay Company a one-time fee of [**] with respect to
each Microsoft Federated Partner to which Microsoft or a Microsoft
Affiliate
7
Microsoft and Engage Confidential & Proprietary
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
Distributes the Microsoft Ad Server Software during the Use
Restriction Period defined in Section 3.4(a).
(d) Microsoft shall not Distribute the Source Code of the Microsoft Ad Server
Software, Company AdManager Product, or the Deliverables, except to a
Microsoft Affiliate or as expressly set forth in Section 3.1 with respect
to independent contractors; provided, however, that Microsoft may
Distribute insubstantial amounts of Source Code from the Deliverables as
part of Source Code versions of Microsoft products that do not constitute
Microsoft Ad Server Software or Spin-Off Products, and subject to the
same confidentiality and license restrictions as apply to the Microsoft
Source Code that is part of such Distribution. In the event Microsoft
desires to lift such restrictions on the use of such Source Code in the
future, Company agrees to give good faith consideration to such request
and to discuss with Microsoft possible arrangements to accommodate both
parties' concerns.
3.6 Spin-Off Products. In the event Microsoft (a) intends to use any Spin-Off
-----------------
Product during the Use Restriction Period (other than use of a Spin-Off Product
by or on behalf of the entities permitted in Section 3.4(c)), or (b) intends to
Distribute any Spin-Off Product during the Initial Distribution Restriction
Period or for [**] after expiration of such period (other than Distribution of a
Spin-Off Product to one of the entities permitted in Section 3.5(c)), then the
parties shall negotiate in good faith with respect to royalties to be paid by
Microsoft for such use or Distribution as applicable of the Spin-Off Product,
taking into account both the proportionate value of the Core Technology or
Technologies included in the Spin-Off Product as a portion of the overall
Company AdServer Product, and the proportionate value of the Core Technology or
Technologies that is included in the Spin-Off Product as a portion of such Spin-
Off Product; provided however that the royalty for use shall not exceed that
specified in Section 3.4(a) and the royalty for Distribution shall not exceed
that specified in Section 3.5(b).
3.7 Terms of Distribution. Microsoft may Distribute the Microsoft Ad Server
---------------------
Software only pursuant to licenses that contain disclaimers of warranties and
liability on behalf of Microsoft and its suppliers, and subject to reservations
of rights in intellectual property that are equivalent to the terms of licenses
of Microsoft-developed software products. During the Initial Distribution
Restriction Period and for [**] after the expiration of such Initial
Distribution Restriction Period, and unless otherwise agreed by the parties,
Microsoft shall restrict licensees of the Microsoft Ad Server Software from
using it for service bureau purposes (i.e., using the software for the purpose
of serving ads to third parties in exchange for fees or other value). Upon
request from Company, Microsoft will provide Licensee with a copy of each form
of license agreement then used or intended to be used by Microsoft with respect
to the Microsoft Ad Server Software.
3.8 Ownership. Except as expressly licensed to Microsoft in this Agreement,
---------
Company retains all right, title and interest in and to the Company Licensed
Materials; provided, however, that subject to the licenses granted and the
restrictions set forth in this Section 3 and Company's ownership of the
underlying Company Licensed Materials and Company Ad Server Software and all
Intellectual Property rights associated therewith, Microsoft shall own all
right, title and interest in and to any Derivative Technology of the Company
Licensed Materials created by or for Microsoft.
3.9 Scope of Patent Licenses. For purposes of clarification, the foregoing
------------------------
license grants include a license (without the right to grant sublicenses other
than to third parties as permitted by this Section 3) under any patents now or
hereafter owned, controlled or licensed by Company (which patents are embodied
in or arise from a Deliverable) having an earliest effective filing date prior
to the [**] the date on which Company delivers the Subsequent Release to
Microsoft, to the extent necessary (i) to exercise any license right granted in
Section 3; and (ii) to combine the MS Ad Server Software with any hardware and
software.
3.10 Territorial Restrictions. Notwithstanding any other provision of this
------------------------
Agreement, Microsoft shall not, without the prior written consent [**]: (i)
install or otherwise use the Microsoft Ad Server Software, Company AdManager
Product, or any Derivative Technology of Company AdManager Product that is
competitive with the Company Ad Manager Product [**] except that Microsoft may
install and use any of the foregoing [**] solely for the purposes of The
Microsoft Network and Microsoft Affiliates[**], and web sites located outside
[**]; or (ii) Distribute any of the foregoing to any person or entity located
[**] or to any person or entity located outside [**] with knowledge that such
person or entity intends to redistribute
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
any of the foregoing to any person or entity located [**] for purposes of
competing directly with [**]. This Section 3.10 shall not restrict Microsoft
from using the Microsoft Ad Server Software outside for any purpose [**]. An
uncured breach of subsection (ii) of this provision shall constitute a material
breach of this Agreement and shall cause irreparable harm to the Company that
cannot be remedied with money damages; accordingly, Company shall be entitled to
injunctive relief against the conduct causing the breach in addition to other
remedies.
3.11 Source Code Security. Microsoft agrees to apply substantially the same
--------------------
security policies and procedures with respect to maintaining the confidentiality
of the Company Source Code licensed under this Agreement as Microsoft applies to
Source Code of technologies that Microsoft has developed and implemented in The
Microsoft Network, including, without limitation restrictions on copying, access
and location of the Company Source Code and any copies permitted to be made. As
of the Effective Date, security measures applied to Source Code used in
operating The Microsoft Network include storage on a central server; limiting
access according to two levels of security (a read/write access level and a read
only access level, with the read/write level of access being provided on the
most restricted basis).
3.12 This Agreement shall be binding on all Microsoft Affiliates to which the
rights and benefits and obligations of this Agreement are extended as provided
for in this Agreement. Microsoft assumes full responsibility and accountability
for the compliance of its Affiliates with the terms and conditions of this
Agreement.
4. Payment Obligations
4.1 Source Code License Fee. Microsoft agrees to pay a guaranteed,
-----------------------
nonrefundable license fee of [**] in consideration of the license rights set
forth in Section 3, including without limitation the development license rights
as to the Source Code form of Company's Deliverables. Microsoft will pay such
fee in three parts, in accordance with the following payment schedule:
(a) Microsoft will pay [**] promptly following the Effective Date, and
Microsoft agrees that Company will be obligated to deliver (via secure FTP
connection) to Microsoft the Source Code for Version 4.0.x within twenty-
four (24) hours of receiving such initial payment from Microsoft.
(b) Microsoft will pay [**] within thirty (30) days after (i) Microsoft
receives the initial Phase I Source Code delivery from Company (as further
specified in Exhibit A), and (ii) Company has delivered to Microsoft an
invoice for such amount, whether or not the final Phase I Source Code is
accepted or not.
(c) Microsoft will pay a final payment of [**] within thirty (30) days
after Microsoft receives (i) the initial Phase II Source Code delivery
from Company (as further specified in Exhibit A), and (ii) Company has
delivered to Microsoft an invoice for such amount, whether or not the
final Phase II Source Code is accepted or not.
4.2 Development Fee. In consideration of Company's provision of Services
---------------
comprised of development in order to deliver_the Phase I and Phase II
Deliverables, Microsoft will pay Company a fee of [**], in accordance with the
following payment schedule: Microsoft will pay this fee in [**], each payable in
advance within thirty (30) days of Microsoft's receiving an invoice from Company
for such fee; provided, however, that in the event Company fails timely to
deliver Phase I Deliverables that meet the acceptance criteria described in
Section 2.3, then Microsoft shall have no obligation to pay any monthly payments
for Company's development Services from the date on which Company is obligated
to deliver such Phase I Deliverables until Microsoft accepts such Phase I
Deliverables. Thereafter, Microsoft shall pay any withheld fees immediately and
pay all remaining monthly fees hereunder on a monthly basis (i.e., payments
shall resume and shall continue to be paid monthly until Microsoft has paid a
total of [**] pursuant to this Section 4.2). Company may issue the initial
invoice for such fees on or after the Effective Date.
9
Microsoft and Engage Confidential & Proprietary
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
4.3 Support and Maintenance Fee. Microsoft will pay Company [**] in
---------------------------
consideration of receiving support and maintenance Services in accordance with
Section 2.6 and Exhibit B for [**] after the Effective Date (or, if Company
delivers its initial Deliverables more than three (3) days after Microsoft makes
the payment due to Company under Section 4.1(a), then for a period of [**] after
such initial delivery by Company hereunder). Microsoft will pay this fee [**],
each payable in advance within thirty (30) days of Microsoft's receiving an
invoice from Company for such fee. Company may issue the initial invoice for
such fees on or after the Effective Date. At Microsoft's sole discretion,
Microsoft may renew its right to receive such support and maintenance Services
for an additional period of [**] upon written notice to Company at least forty-
five (45) days before the expiration of such initial support term, and subject
to payment by Microsoft of an additional [**] in accordance with the same
payment procedures as apply to the initial term.
4.4 Fees for Onsite Consulting Services. Company will be entitled to invoice
-----------------------------------
Microsoft on a monthly basis for any onsite consulting Services provided in
accordance with this Agreement, at a rate of [**] for the Services of Senior
Company Engineers who have been authorized by Microsoft pursuant to Section 2.5
to provide such services. In no event shall Company invoice, or Microsoft be
obligated to pay, for any onsite consulting Services which represent Services
that Company must provide as part of its support and maintenance obligations to
Microsoft pursuant to Section 2.6 and Exhibit B. Microsoft agrees to pay
Company all amounts properly shown in invoices for such Services within thirty
(30) days of their receipt.
4.5 Fees for Other Consulting Services. Company will be entitled to invoice
-------------------------------------
Microsoft on a monthly basis for any other consulting Services provided at the
request of Microsoft pursuant to Section 2.4 at a rate of [**]. In no event
shall Company invoice, or Microsoft be obligated to pay, for any consulting
Services which represent Services that Company must provide as part of its
support and maintenance obligations to Microsoft pursuant to Section 2.6 and
Exhibit B. Microsoft agrees to pay Company all amounts properly shown in
invoices for such Services within thirty (30) days of their receipt.
4.6 Royalties and Other Payments Under Section 3. Within forty-five (45) days
--------------------------------------------
after the end of each calendar quarter with respect to which Microsoft owes
Company any royalties or fees based on Applicable Gross Receipts, Net Receipts,
or licenses to Microsoft Federated Partner Sites as set forth in Sections 3.4-
3.6, Microsoft will furnish Company payment of such fees together with a
statement describing such fees for the quarter then ended. Each such statement
shall contain information sufficient to discern how the payment from Microsoft
to Company was computed. Any payment not made when due shall bear interest at
the rate of one percent (1%) per month until paid.
4.7 Additional Consideration. Microsoft will make available to Company at no
------------------------
charge run of site advertising opportunities for products and services selected
by Company, subject to the terms described in this Section 4.7 on The Microsoft
Network equivalent in value to [**] (as calculated with reference to the
Microsoft standard rate card in effect at the time such advertising is
fulfilled). Microsoft will fulfill such advertising commitment within the [**]
after the Effective Date, and the precise timing and placement of such
performance shall be at Microsoft's discretion. The parties will cooperate in
good faith to develop administrative procedures to facilitate Company's use of
such advertising inventory. The parties may, by mutual agreement, use such
inventory to support [**] advertising. All advertising proposed for inclusion
on The Microsoft Network will be subject to Microsoft's standard specifications
and standard terms and conditions.
5. Audits
5.1 Record-Keeping. Microsoft agrees to keep, all proper, complete and
--------------
accurate records and books of account and all proper, complete and accurate
entries therein relating to the Distribution and use of Microsoft Ad Server
Software, and Microsoft's Applicable Gross Revenues and Net Receipts in
connection therewith, sufficient to establish the basis of payments owed by
Microsoft pursuant to Section 4.6 of this Agreement.
5.2 Audit Right. Company may cause an audit to be made, at its expense, of
-----------
Microsoft's applicable records in order to verify statements provided to Company
under Section 4.6 and to determine amounts due under Sections 3.2 and 3.3. Any
such audit shall be conducted only by an independent certified public accountant
(other than on a contingency fee basis) after prior written notice to Microsoft,
and shall be
conducted during regular business hours at Microsoft's offices and in such a
manner as not to interfere with Microsoft's normal business activities. In no
event shall an audit with respect to any payment statement commence later than
eighteen (18) months from the date of the statement involved, nor shall the
audits be made hereunder more frequently than once annually unless the Company
has reasonable grounds to believe that any royalty payments have been
understated, nor shall any period be audited more than once. The results of any
such audit shall be subject to the nondisclosure obligations set forth in
Section 7. In the event that Company makes any claim against Microsoft with
respect to any such audit, Company hereby agrees to make available to Microsoft,
upon request, its records and reports pertaining to the audit and any such
records and reports prepared for Company by its accountant(s). If the audit
reveals an underpayment regarding a period of more than five percent (5%),
Microsoft shall pay the fees and expenses for the audit.
6. No Obligation/Independent Development
Notwithstanding any other provision of this Agreement, Microsoft shall have no
obligation to use, market, sell or otherwise Distribute the Company AdManager
Product or any Derivative Technology thereof, either alone or in any Microsoft
product or service. Except as provided in Section 7, nothing in this Agreement
will be construed as restricting Microsoft's ability to acquire, license,
develop, manufacture or distribute for itself, or have others acquire, license,
develop, manufacture or distribute for Microsoft, similar technology performing
the same or similar functions as the technology contemplated by this Agreement,
or to market and distribute such similar technology in addition to, or in lieu
of, the technology contemplated by this Agreement, provided that such technology
does not use any of the Company's Intellectual Property.
7. Confidentiality
7.1 Each party shall protect the other's Confidential Information from
unauthorized dissemination and use with the same degree of care that such party
uses to protect its own like information, which in no event shall be less than
reasonable care. Neither party will use the other's Confidential Information
for purposes other than as contemplated by this Agreement. Neither party will
disclose to third parties the other's Confidential Information without the prior
written consent of the other party, with the exception that either party may
disclose Confidential Information received from the other party in accordance
with judicial or other governmental order, and provided that the party that
receives such an order shall give the party whose Confidential Information would
be subject to such disclosure at least five (5) business days' advance notice
prior to making any disclosure pursuant to such order, and shall comply with any
applicable protective order or equivalent. In addition, the parties agree to
cooperate in good faith to review and mutually agree upon a procedure for
addressing the contents of any disclosure of Confidential Information that
either party believes in good faith is required by the rules of the Securities
and Exchange Commission. Except as expressly provided in this Agreement, no
ownership or license rights are granted in any Confidential Information.
7.2 The parties' obligations of confidentiality under this Agreement shall not
be construed to limit either party's right to independently develop or acquire
products without use of or access to the other party's Confidential Information.
Further, either party shall be free to use for any purpose the residuals
resulting from access to or work with such Confidential Information, provided
that such party shall maintain the confidentiality of the Confidential
Information as provided herein. The term "residuals" means information in non-
tangible form, which may be retained in the unaided memory by persons who have
had access to the Confidential Information, including ideas, concepts, know-how
or techniques contained therein. Neither party shall have any obligation to
limit or restrict the assignment of such persons or to pay royalties for any
work resulting from the use of residuals. However, the foregoing shall not be
deemed to grant to either party a license under the other party's copyrights or
patents. _
8. Warranties
8.1 Company. Company warrants, represents and covenants that:
-------
(a) It has the full power to enter into this Agreement and grant the license
rights set forth herein;
11
Microsoft and Engage Confidential & Proprietary
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
(b) It has not previously and will not grant any rights in the Company
Licensed Materials to any third party that are inconsistent with the
rights granted to Microsoft herein [**]; it being understood, however,
that the Company may grant similar or identical rights to third parties
for identical or similar purposes;
(c) The Company Licensed Materials do not and will not infringe any copyright
or trade secret right held by any third party.
(d) Company does not have knowledge of any third party patent or trademark
that is infringed by or accused of infringement by Version 4.0.x.
(e) The Intellectual Property embodied in the Deliverables described on
Exhibit A will be created by employees of Company within the scope of
their employment and under obligation to assign inventions to Company, or
by independent contractors (i.e., a third party temp or other individual)
or independent contractor organizations approved by Microsoft, which
approval shall not be unreasonably withheld or delayed, who or which are
under written agreement with Company to develop, complete, or assist with
the development or completion of the Deliverables described in Exhibit A
and to assign all rights in the Deliverables described in Exhibit A to
Company.
(f) Company will cooperate with Microsoft and provide all necessary
information in a prompt manner in accordance with its Year 2000 readiness
policy should Microsoft have any inquiries regarding the Year 2000
readiness of Company or any of the information or technology that is the
subject of this Agreement.
(g) Company warrants that (i) the [**] components of the Version 4.0.x Source
Code delivered to Microsoft will [**] in the standard Microsoft [**]
environment which is substantially similar to that currently in use by
Company, and (ii) the [**] components of the Subsequent Release Source
Code delivered to Microsoft will [**] in Company's standard [**]
environment (or if such [**] environment is not then comprised of
standard commercially available tools and technologies, in the standard
Microsoft [**] environment existing at the time of the delivery of the
Phase II Deliverables). The Company's sole obligation and Microsoft's
sole and exclusive remedy for a breach of the warranty in clause (i) or
(ii) hereof shall be for Company promptly to remedy the applicable
Deliverable at no charge to Microsoft until such a subsequent delivered
version satisfies the applicable warranty set forth in this clause.
8.2 Microsoft. Microsoft warrants and represents that it has the full power to
---------
enter into this Agreement, and has taken the necessary steps to authorize the
execution of this Agreement by the person signing it.
8.3 DISCLAIMER. EXCEPT AS EXPRESSLY STATED IN THIS SECTION 8, NEITHER PARTY
-------------
MAKES ANY WARRANTIES, EXPRESS OR IMPLIED BY OPERATION OF LAW OR OTHERWISE, WITH
RESPECT TO SUCH PARTY'S SERVICES, CONFIDENTIAL INFORMATION, DELIVERABLES, OTHER
LICENSED MATERIALS, OR PERFORMANCE UNDER THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
9. Indemnity
9.1 Indemnity. Company shall, at its expense, defend any claim or action
---------
brought against Microsoft, and/or Microsoft's subsidiaries, affiliates,
directors, officers, employees, agents and independent contractors, (a) which,
if true, would constitute a breach of a warranty by Company in Section 8.1(a)-
(e); (b) alleging that any of the Company Licensed Materials violates the
Intellectual Property (except for patents and for intellectual property rights
that are of a nature that is not recognized in the domestic laws of the United
States (e.g., certain forms of moral rights); or (c) alleging any infringement
of a patent; and Company will indemnify and hold Microsoft harmless from and
against any costs, damages and fees reasonably incurred by Microsoft, including
but not limited to fees of attorneys and other professionals, that are
attributable to such claim, subject to the limitation set forth in Section 11.4.
Microsoft shall: (i) provide Company reasonably prompt notice in writing of any
such claim or action, but in any case sufficient notice to respond reasonably to
pleadings, and permit Company, through counsel selected by the Company and
acceptable to Microsoft (with such acceptance not to be unreasonably withheld),
to answer and defend such claim or action; and (ii) provide Company information,
assistance and authority, at Company's expense, to help Company to defend such
claim or action. Microsoft will not settle any claim without the Company's
written permission and Company will not be responsible for any settlement made
by Microsoft without Company's written permission, which will not be
unreasonably withheld.
9.2 Duty to Correct. Notwithstanding Section 9.1, should the Deliverables or
---------------
any portion thereof appear likely to be held to infringe any third party
intellectual property or other proprietary right and Microsoft's exercise of its
license rights under this Agreement appear likely to be enjoined, in whole or in
part, Company shall notify Microsoft and at Company's expense may elect to: (i)
procure for Microsoft the right to continue exercising its rights in the
Deliverables or portion thereof, as applicable, as licensed in this Agreement;
or (ii) replace or modify the Deliverables or portion thereof with a version
that is non-infringing, provided that the replacement or modified version
substantially meets the Specifications (if applicable) to Microsoft's reasonable
satisfaction. If Microsoft's exercise of its license rights is enjoined, the
Company must endeavor immediately to implement either (i) or (ii) above. If (i)
or (ii) cannot be achieved by the Company on commercially reasonably terms, then
in addition to any damages or expenses payable by Company under Section 9.1,
Company shall refund to Microsoft such portion of the fees paid to Company by
Microsoft under this Agreement as reasonably reflects the proportionate value of
the infringing portion of the Deliverables and the license to such portion shall
terminate in full.
9.3 Exceptions. The Company shall have no obligation to defend or indemnify
----------
Microsoft with respect to any claims, or damages awarded, against Microsoft
based upon Microsoft's (i) combination, operation or use of the Deliverables
with any non-Company software programs(s), apparatus or data if the claim would
have been avoided had such combination, operation or use not occurred and such
contribution, operating or use is not within the intended scope of use of the
Deliverables, or (ii) use of a previous version of any of the Deliverables if,
after Company has (x) notified Microsoft of a potential infringement claim, and
(y) delivered to Microsoft an updated non-infringing version of the affected
Deliverable that meets all applicable specifications under this Agreement,
Microsoft has not within a commercially reasonable period thereafter substituted
use of such updated version for the earlier version.
9.4 Microsoft Indemnity Obligations. Microsoft shall, at its expense,
-------------------------------
indemnify, hold harmless and defend Company from and against any and all
damages, costs and expenses, including reasonable attorney's fees incurred by
the Company in connection with any claim against the Company (i) arising from a
claim which if true would represent a breach of Microsoft's warranty in Section
8.2, (ii) by a customer of Microsoft relating to such customer's relationship
with Microsoft (and not to any relationship which the Company may have with such
customer), or (iii) with respect to any claim based upon Microsoft's
combination, operation or use of the Company Licensed Materials with any non-
Company software programs(s), apparatus or data if the claim would have been
avoided had such combination, operation or use not occurred.
9.5 Sole and Exclusive Remedy. The provisions of Sections 9.1, 9.2 and 9.3
-------------------------
constitute Microsoft's sole and exclusive remedy in connection with this
Agreement for third party claims of infringement of Intellectual Property.
13
Microsoft and Engage Confidential & Proprietary
10. Termination
10.1 Term. The term of this Agreement shall commence as of the Effective Date
----
and shall continue for one (1) year.
10.2 Termination by Microsoft.
------------------------
(a) Microsoft shall have the right to terminate this Agreement in the
event Company breaches Section 8.1(g). Termination of this Agreement
pursuant to this Section 10.2(a) must be exercised within thirty (30)
days of delivery of Version 4.0.x of the Source Code and shall be
effective upon written notice from Microsoft to the Company of such
termination and the return to the Company of the entire Deliverable,
together with all copies, notes and other materials generated by
Microsoft based on the Deliverable.
(b) Microsoft also shall have the right to cancel Phase II of the
development Services and terminate this Agreement if Company fails to
deliver Phase I Deliverables that are accepted by Microsoft pursuant
to Section 2.3 and Exhibit A. As set forth in Section 2.3(e),
Microsoft may terminate this Agreement under this Section 10.2(b) only
if Company fails to deliver required Deliverables following notice of
breach and an opportunity to cure. Termination of this Agreement
pursuant to this Section 10.2(b) shall be effective upon written
notice from Microsoft to the Company of such termination.
10.3 Termination By Either Party For Cause. In addition to Microsoft's rights
-------------------------------------
of termination under Section 10.2 and 12.5, either party may suspend performance
and/or terminate this Agreement immediately upon written notice at any time if:
(a) The other party is in material breach of any material warranty, term,
condition or covenant of this Agreement, other than those contained in
Section 7, and fails to cure that breach within thirty (30) days after
written notice thereof; or
(b) The other party is in material breach of Section 7.
10.4 Effect of Termination.
---------------------
(a) In the event of termination of this Agreement for any reason, Sections 1,
3, 4.1, 4.6, 5, 6, 7, 8, 9, 10, 11 and 12 shall survive, with the
exception that Section 3 shall not survive if the breach relates to (i) a
willful and substantial material breach initiated by a senior manager at
Microsoft (i.e., General Manager or higher) of the license grants or
restrictions or confidentiality provisions in Section 3 or 7 of this
Agreement or the acquiescence by any such senior manager with actual
knowledge in such violation, which breach is not cured by Microsoft
within thirty (30) days after written notice thereof; (ii) failure by
Microsoft to make a payment due under Section 4.1 within thirty (30) days
after receiving notice of breach of such payment obligation; or (iii) in
the event Microsoft terminates this Agreement pursuant to Section
10.2(a), in which case Section 3 and Section 4.1 shall also terminate.
Otherwise, for purposes of clarification, all licenses granted by Company
to Microsoft under this Agreement will survive any termination of this
Agreement in accordance with their terms and Company's sole remedies with
respect to breach by Microsoft of this Agreement (including without
limitation material breach of the license restrictions and payment
provisions of Sections 3 and 4) shall be to pursue injunctive relief
(including without limitation specific performance) and/or monetary
damages; the sole exception to such survival of all license rights shall
be as set forth above.
(b) Following any termination of this Agreement, Microsoft will have no
further payment obligations to Company under this Agreement except as
follows:
(i) Except in the event of a termination by Microsoft pursuant to Section
10.2(a), Microsoft will pay any Source Code license fee payments
under Section 4.1 that Microsoft has not previously paid to Company
within forty-five (45) days of such termination (notwithstanding the
payment schedule set forth in Section 4.1). Microsoft will have no
further payment obligations to Company under Section 4.1 if it
terminates this Agreement pursuant to Section 10.2(a).
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission
Asterisks denote omissions.
(ii) Microsoft will pay any amounts properly invoiced by Company for
onsite consulting services provided by Company in accordance with
Section 2.5 or other services provided by Company at Microsoft's
request in accordance with Section 2.4, before the date of such
termination.
(iii) Microsoft will pay all amounts that may become due to Company under
the terms of Sections 3.4-3.6 in accordance with the terms of such
provisions and with Section 4.6.
(c) Following any termination or expiration of this Agreement, Company will
have no obligation to provide additional Deliverables or Services to
Microsoft, with the following limited exceptions:
(i) In the event that this Agreement expires and Company has failed to
deliver the Source Code form of the Subsequent Release, then
Company's sole obligation, and Microsoft's exclusive remedy with
respect to such failure, shall be delivery by the Company of the
Source Code form of Company's next commercial release of the
AdManager software product when available, which release will be
deemed, but only under such circumstances, to constitute the
Subsequent Release described in Exhibit A; and
(ii) In the event that Company delivers an acceptable form of the Phase II
Deliverables or the Subsequent Release within forty-five (45) days of
the end of the term or at any time thereafter, then upon request from
Microsoft, Company will provide onsite consulting services to
Microsoft as Described in Section 2.5 and Exhibit A with respect to
the Source Code of its next commercial release of the Company
AdManager Product as delivered to Microsoft pursuant to Section
10(c)(i) above for a period of thirty (30) days after the expiration
of this Agreement.
(d) Neither party shall be liable to the other for damages of any sort
resulting solely from terminating this Agreement in accordance with its
terms (provided, however, that either party may pursue damages from the
other party based on breach of this Agreement, but Microsoft agrees that,
its sole and exclusive remedy for (i) a breach by the Company of Section
8.1(g) is limited to the amount of fees under Section 4.1 actually paid
by Microsoft to Company, and (ii) the failure of the Company to deliver
Phase I or Phase II Deliverables is to terminate this Agreement subject
to the provisions of Section 10.4(a)-(c).
11. Limitation Of Liabilities
11.1 NEITHER PARTY SHALL BE LIABLE FOR ANY COVER, INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, EVEN IF SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.
11.2 The Company's aggregate liability for claims arising in connection with
this Agreement shall in no event exceed the following maximums:
(a) Claims arising in connection with nondelivery of the Deliverable
referred to as Version 4.0.x of the Company AdManager Product: [**], or
the aggregate fees actually paid under Section 4.1, whichever is less.
(b) Claims arising in connection with the Services and Deliverables
described in Sections 2.1 - 2.4: Amounts paid Company under Section 4.2
or damages actually incurred, whichever is less.
(c) Claims arising in connection with Services described in Section 2.5:
Amounts paid under Section 4.4, or damages actually incurred, whichever is
less.
(d) Claims arising in connection with Section 2.6: Amounts paid under
Section 4.3 for the period to which the payment relates, or damages
actually incurred, whichever is less.
15
Microsoft and Engage Confidential & Proprietary
11.3 THE PROVISIONS OF SECTION 11.1 AND 11.2 ABOVE SHALL HAVE NO APPLICATION TO
SECTIONS 3, 7 AND 9.
11.4 Company's aggregate liability to Microsoft pursuant to Section 9.1 with
respect to patent infringement claims, other than patent infringement
claims concerning Version 4.0.x of which Company has knowledge as of the
Effective Date (for which there are no limitations), shall be limited to
[**] or amounts actually incurred by Microsoft, whichever is less.
12. General
12.1 Notices. All notices and requests in connection with this Agreement shall
-------
be deemed given as of the day they are received either by messenger, delivery
service, or in the United States of America mails, postage prepaid, certified or
registered, return receipt requested, and addressed as follows:
To Company: To Microsoft:
Engage Technologies, Inc. Microsoft Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
Attention:
Phone: Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: Copy to:
Microsoft Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Law & Corporate Affairs
Fax: Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as a party may designate pursuant to this notice
provision.
12.2 Independent Contractors. Company and Microsoft are independent
-----------------------
contractors, and nothing in this Agreement shall be construed as creating
an employer-employee relationship, a partnership, or a joint venture
between the parties.
12.3 Taxes.
-----
(a) The amounts to be paid by Microsoft to Company herein do not include
any foreign, U.S. federal, state, local, municipal or other
governmental taxes, duties, levies, fees, excises or tariffs, arising
as a result of or in connection with the transactions contemplated
under this Agreement including, without limitation, (i) any state or
local sales or use taxes now or hereafter imposed on the provision of
goods and services to Microsoft by Company under this Agreement, (ii)
taxes imposed or based on or with respect to or measured by any net or
gross income or receipts of Company, (iii) any franchise taxes, taxes
on doing business, gross receipts taxes or capital stock taxes
(including any minimum taxes and taxes measured by any item of tax
preference), (iv) any taxes imposed or assessed after the date upon
which this Agreement is terminated, (v) taxes based upon or imposed
with reference to Company's real and/or personal property ownership
and (vi) any taxes similar to or in the nature of those taxes
described in (i), (ii), (iii), (iv) or (v) above, now or hereafter
imposed on Company (or any third parties with which Company is
permitted to enter into agreements relating to its undertakings
hereunder) (all such amounts, together with any penalties, interest or
any additions thereto, collectively "Taxes"). Microsoft is not liable
for any Taxes incurred in connection with or
related to the sale of goods and services under this Agreement, and
all such Taxes shall be the financial responsibility of Company,
provided that Microsoft shall pay to Company Collected Taxes in
accordance with Section 12.3(b) below. Company agrees to indemnify,
defend and hold Microsoft harmless from any Taxes (other than
Collected Taxes) or claims, causes of action, costs (including,
without limitation, reasonable attorneys' fees) and any other
liabilities of any nature whatsoever related to such Taxes.
(b) Any sales or use taxes described in Section 12.3(a)(i) above that (i)
are owed by Microsoft solely as a result of entering into this
Agreement and the payment of the fees hereunder, (ii) are required to
be collected from Microsoft by Company under applicable law, and (iii)
are based solely upon the amounts payable under this Agreement (such
taxes the "Collected Taxes"), shall be stated separately as applicable
on Company's invoices and shall be remitted by Microsoft to Company,
and as required Company shall remit to Microsoft official tax receipts
indicating that such Collected Taxes have been paid by Company.
Microsoft may provide to Company an exemption certificate acceptable
to the relevant taxing authority (including without limitation a
resale certificate) in which case Company shall not collect the taxes
covered by such certificate. Company agrees to take such steps as are
requested by Microsoft to minimize such Collected Taxes in accordance
with all relevant laws and to cooperate with and assist Microsoft, all
at Microsoft's request and expense, in challenging the validity of any
Collected Taxes or taxes otherwise paid by Microsoft. Company shall
indemnify and hold Microsoft harmless from any Collected Taxes,
penalties, interest, or additions to tax arising from amounts paid by
Microsoft to Company under this Agreement, that are asserted or
assessed against Microsoft to the extent such amounts relate to
amounts that have already been paid to or collected by Company from
Microsoft under this section. If any taxing authority refunds any tax
to Company which Microsoft originally paid to Company, or Company
otherwise becomes aware that any tax was incorrectly and/or
erroneously collected from Microsoft, or Company otherwise receives an
economic benefit (such as an audit offset) as the result of
incorrectly and/or erroneously receiving Collected Taxes from
Microsoft, then Company shall promptly remit to Microsoft an amount
equal to such refund, incorrect collection or tax benefit as the case
may be plus any interest thereon.
(c) If any taxes are required to be withheld on payments made by Microsoft
to Company by any U.S. (state or federal), Canadian (federal or
provincial) or foreign government, Microsoft may deduct such taxes
from the amount owed Company and pay them to the appropriate taxing
authority. Microsoft will use reasonable efforts to secure and deliver
to Company an official receipt for any taxes withheld. Microsoft will
use reasonable efforts to minimize such taxes to the extent
permissible under applicable law.
(d) This tax section shall govern the treatment of all taxes arising as a
result of or in connection with this Agreement notwithstanding any
other Section of this Agreement.
12.4 Governing Law. This Agreement shall be governed by the laws of the State
-------------
of New York as though entered into between New York residents and to be
performed entirely within the State of New York. In any action or suit to
enforce any right or remedy under this Agreement or to interpret any provision
of this Agreement, the prevailing party shall be entitled to recover its costs,
including reasonable attorneys' fees.
12.5 Assignment. Neither party may assign this Agreement, or any rights or
----------
obligations hereunder, whether by contract or by operation of law, except in
connection with an assignment to an Affiliate or a sale of substantially all its
assets or substantially all the assets of its ad-serving product division (or,
in the case of Microsoft, of The Microsoft Network), and provided that any
permitted assignee shall assume all of the assignor's obligations under this
Agreement after such assignment and that the assignor shall thereafter have no
rights under this Agreement, but shall remain liable for the performance of the
assignee's obligations._
12.6 Solicitation Restrictions. Microsoft agrees that its MSN group (including
-------------------------
both its Advertising Operations/Technologies and LinkExchange units, and their
respective successors, if any) and its Commerce Server development group (and
its direct successors, if any) (collectively, the "Restricted Microsoft
17
Microsoft and Engage Confidential & Proprietary
Groups") will not solicit or hire any Company employee or consultant to Company
who (a) has performed Services under this Agreement and (b) is named on a list
to be provided in writing by Company to Microsoft within sixty (60) days after
the Effective Date, which list shall not include more than fifteen (15) names
(each such individual being referred to herein a "Restricted Company Employee"),
during the period between the Effective Date and the two (2) year anniversary of
the date on which Company is obligated to deliver the Phase II Deliverable
pursuant to Exhibit A (the "Restricted Period"), and subject to the exception
that Microsoft may hire any such Restricted Company Employee six (6) months or
more after he/she has terminated employment with Company, except pursuant to an
arrangement with Microsoft providing for employment in six (6) months. The
Company may add names to (but not remove names from) the list from time to time,
the Company agrees not to modify any names from the list once the list has 15
names. Company agrees to inform all Restricted Company Employees of the
restrictions set forth in this paragraph promptly after delivering the list of
Restricted Company Employees to Microsoft. Microsoft agrees to deliver copies of
the list of Restricted Company Employees to the Director of Human Resources
promptly after deliver of the list, or any permitted additions thereto, to
Microsoft. In the event Company believes that Microsoft has hired a Restricted
Company Employee in a manner that violates this Section 12.6, Company shall
promptly notify Microsoft's Human Resources director of such hire, and
thereafter Microsoft shall take prompt good faith action to remedy such error.
Company may not pursue other remedies with respect to such a breach without
initially following such escalation procedure and allowing Microsoft to correct
its error within a forty-five (45) day period thereafter. By way of further
clarification, the Restricted Microsoft Groups may not hire a Restricted Company
Employee from another division or group of Microsoft during the Restricted
Period, regardless of whether the initial hiring by Microsoft of such Restricted
Company Employee was compliant with the terms of this paragraph.
12.7 Construction. If for any reason a court of competent jurisdiction finds
------------
any provision of this Agreement, or portion thereof, to be unenforceable, that
provision of the Agreement will be enforced to the maximum extent permissible so
as to effect the intent of the parties, and the remainder of this Agreement will
continue in full force and effect. Failure by either party to enforce any
provision of this Agreement will not be deemed a waiver of future enforcement of
that or any other provision. This Agreement has been negotiated by the parties
and their respective counsel and will be interpreted fairly in accordance with
its terms and without any strict construction in favor of or against either
party.
12.8 Injunctive Relief. The parties acknowledge and agree that any violation by
-----------------
Microsoft of Section 3 or 12.6, or by either party of Section 7, may cause
significant and irreparable harm to the other party for which money damages are
inadequate. Accordingly, the non-breaching party shall be entitled to
injunctive relief in such event, subject, however, to the limitations set forth
in Section 12.6.
12.9 Entire Agreement. This Agreement does not constitute an offer by either
----------------
party and it shall not be effective until signed by both parties. This Agreement
constitutes the entire agreement between the parties with respect to the
Services and all other subject matter hereof and merges all prior and
contemporaneous communications as to such subject matter. It shall not be
modified except by a written agreement dated subsequent to the date of this
Agreement and signed on behalf of Company and Microsoft by their respective duly
authorized representatives.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
Effective Date written above.
-----------------------------------------------------------------------------------------
MICROSOFT CORPORATION ENGAGE TECHNOLOGIES, INC.
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By: s/s ▇▇▇▇ ▇▇▇▇▇ By: s/s ▇▇▇▇▇▇▇ ▇. Royal
-----------------------------------------------------------------------------------------
Name (print): ▇▇▇▇ ▇▇▇▇▇ Name (print): ▇▇▇▇▇▇▇ ▇. Royal
-----------------------------------------------------------------------------------------
Title: VP Consumer Commerce Title: CFO
-----------------------------------------------------------------------------------------
Date: July 28, 1999 Date: July 28, 1999
-----------------------------------------------------------------------------------------
SPECIFICATIONS; SCHEDULE; AND
DESCRIPTION OF DELIVERABLES
Project Overview:
Company will provide Microsoft with Deliverables based on Microsoft's
requirements specified in Table A-1 (including the notes thereto). Company will
deliver Source Code and Object Code versions of each such Deliverable, and will
provide on-site consulting related to the same throughout the two-phase project.
Schedule.
All work specified in this document will be targeted for the Microsoft Windows
NT 4.0 operating system (most current release service pack) running on the 32-
bit Intel i86 Pentium Processor platform.
Resource requirements:
Company will ensure that Senior Company Engineers (as defined in Section 2.5 of
the Agreement) will be the primary developers of the Deliverables. These Senior
Company Engineers will be responsible for presenting all the code during the
Code Reviews, as specified in Table A-2.
19
Microsoft and Engage Confidential & Proprietary
EXHIBIT B
SUPPORT AND MAINTENANCE PLAN
Maintenance Problem Severity and Resolutions.
(a) Premium Support. Company agrees to provide the following support and
maintenance services to Microsoft for the period described in Section 2.6
of this Agreement.
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Deliverable Premium Level Support Specifications
-----------------------------------------------------------------------------------------------
Technical Expertise Senior Resources
-----------------------------------------------------------------------------------------------
Response (call back) . 15 minute call back for Severity 1 and 2 calls (as
defined below)
. 60 minute call back for Severity 3 and 4 (as defined
below)
-----------------------------------------------------------------------------------------------
Time to begin problem resolution . 60 minutes for Severity 1 and 2 (as defined below)
. 1 business day for Severity 3 and 4 (as defined below)
-----------------------------------------------------------------------------------------------
Availability 24 x 7 by telephone or, for Severity 1 and 2, as defined
below, beeper
-----------------------------------------------------------------------------------------------
Queue Priority for Call Back Highest
-----------------------------------------------------------------------------------------------
Knowledge of Customer Known environment, applications and business sensitivities
Environment
-----------------------------------------------------------------------------------------------
Fault Management Reporting Problem report within 24 hours of problem resolution for
Severity 1 and 2 calls (as defined below)
-----------------------------------------------------------------------------------------------
Service Activity Review Hardware/Software monthly review
-----------------------------------------------------------------------------------------------
Account Management Escalation/coordination of resources
-----------------------------------------------------------------------------------------------
Product Engineering Elevations Priority by problem severity
-----------------------------------------------------------------------------------------------
Proactive Support: . Proactive Patch Reporting
. Notification of known problems and fixes
. Monthly call review
. O/S upgrade impact planning
-----------------------------------------------------------------------------------------------
(b) Severity Levels Defined.
Severity 1 - Critical Business Impact. The Software, regardless of the
environment or product usage, has complete loss of service or resources and work
cannot reasonably continue.
Severity 2 - Serious Business Impact. The Software, regardless of the
environment or product usage, has significant or degraded loss of service or
resources.
Severity 3 - Minor Business Impact. The Software, regardless of the environment
or product usage, has minor loss of service or resources.
Severity 4 - No Business Impact. The Software is in full work mode; there is not
work being impeded at this time. Information is requested or reported.
(c) Software Upgrade Support. Company agrees to provide assistance in upgrades
in the form of Release Notes, technical consulting, and on-site support as
deemed necessary by Microsoft. Both parties will work in good faith to perform
software upgrades which minimize any advertising service outages.