SUBLICENSE AGREEMENT
AGREEMENT, made as of the 14th day of March , 1997, by and between
ACTV ENTERTAINMENT, INC., a New York corporation, having its corporate offices
at 1270 Avenue of the Americas, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("Licensor") and THE LOS ANGELES INDIVIDUALIZED TELEVISION NETWORK, INC., a
Delaware corporation having its corporate offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ("Licensee").
W I T N E S S E T H
WHEREAS, Licensor is the exclusive licensee, with right to
sublicense, of certain individualized television programming technologies (the
"Intellectual Property"), which Intellectual Property includes the Patents
listed on Exhibit A hereto (the "Patents") and proprietary technologies,
programming methods, the ACTV Programming and Coding Language, and other trade
secrets and know-how, all relating to the Intellectual Property described in the
Patents, including applications thereof, regardless of distribution or delivery
method; and
WHEREAS, Licensor wishes to grant to Licensee and Licensee wishes to
obtain from Licensor an exclusive sublicense in the Territory to use and exploit
the Intellectual Property in the distribution of individualized television
directly to home subscribers, based on the enhancement license agreement dated
December 3, 1996 between Prime Ticket Networks, L.P. (FOX Sports West) and ACTV,
Inc. (the "Fox Sports West Agreement").
NOW, THEREFORE, in consideration of one dollar ($1.00), the
foregoing premises and the mutual covenants herein contained, the parties agree
as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
(a) "ACTV Programming" shall mean programming that utilizes
the Intellectual Property, including any Improvements.
(b) "Improvements" shall mean any improvement, refinement,
enhancement or other modification of the Intellectual Property.
(c) "License" shall mean that exclusive sublicense which the
Licensor hereby grants to the Licensee to use and exploit the Intellectual
Property, including Improvements as set forth in Paragraph 6 hereof, subject to
the terms hereof.
(d) "Net Sales" shall mean subscriber and advertising revenues
received
by Licensee and its affiliates and sublicensees, if any, after payment
to Fox Sports West of subscriber and advertising fees pursuant to the Fox Sports
West Agreement (less trade discounts allowed, valid credits for claims or
allowances, refunds, returns and recalls and less taxes and other governmental
charges levied on or measured by sales and included in the billing price).
(e) "Territory" shall mean the local footprint of FOX Sports
West, which is that portion of the state of California which is south of the
northern boundaries of Monterey, San ▇▇▇▇▇▇, Fresno and Inyo Counties, plus the
State of Hawaii and ▇▇▇▇▇ County, Nevada as such may be modified from
time-to-time.
2. Grant of Rights.
(a) Subject to the terms and conditions herein contained and
for good and valuable consideration, the receipt of which is hereby
acknowledged, Licensor hereby grants to Licensee, subject to the terms hereof,
an exclusive License to use, distribute and sublicense the Intellectual Property
and Improvements throughout the Territory for individualized television based on
the FOX Sports Southwest license directly to home subscribers, through the mass
distribution systems of cable television, direct-broadcast satellite television,
broadcast television, wireless and any future broadband distribution system
located in the Territory. Licensor hereby agrees promptly to disclose to
Licensee the Intellectual Property licensed hereby.
(b) Licensee shall not sell, lease or distribute, and shall
take all steps reasonably requested by Licensor to prohibit others from selling,
leasing or distributing any television programming related to the Intellectual
Property anywhere outside the Territory without the prior written consent of
Licensor.
(c) All products, including, without limitation, television
programming, which are distributed, sold or utilized in any manner and which
incorporate in any manner all or any part of the Intellectual Property contained
within the License granted hereunder will bear the proper proprietary rights
notice, all as specified in writing by Licensor to Licensee, as shall be
sufficient, in Licensor's judgment, to protect its rights and interest in the
rights granted by Licensor to Licensee pursuant hereto. Licensee further agrees
to give proper notice of trademarks, patents and/or copyrights where applicable
in connection with the use by Licensee of any rights hereunder, as may be
specified from time-to-time by Licensor.
(d) Licensee agrees that during the term of this Agreement, it
will diligently and actively develop, promote, distribute and market ACTV
Programming in the Territory.
2
3. Consideration.
(a) In consideration for the License granted hereunder,
Licensee shall pay Licensor eight (8) percent of all Net Sales by Licensee, its
affiliates or sublicensees (except as otherwise agreed by Licensor in writing).
(b) Royalty payments shall be made within thirty (30) days of
the end of each calendar quarterly period for sales invoiced by Licensee during
such calendar quarterly period. Each commission payment shall be accompanied by
a report setting forth in reasonable detail the Net Sales during the calendar
quarter and the calculation of royalties based thereon. Licensor shall have the
right once a year and with reasonable notice to examine the books and records of
Licensee. Such examination shall take place at Licensee's principal place of
business during normal business hours.
4. Sublicense and Reservation of Rights.
(a) Licensee is only permitted to assign or sublicense the
rights hereunder granted to any third party, provided (i) such party agrees in
writing to abide by the terms and conditions of this Agreement to the extent
applicable to it and (ii) the sublicensee or assignee and the terms and
conditions of the assignment or sublicense are approved in writing by Licensor.
(b) All rights not specifically granted to Licensee hereunder
are reserved to Licensor.
5. Confidentiality. Licensee shall maintain in strict confidence and
shall not at any time whether before or after the termination of this agreement
(a) utilize for any purpose other than as permitted under this License, or
cause, enable, assist or permit anyone else to utilize, any of the Intellectual
Property or Improvements; (b) disclose to anyone any such Intellectual Property,
Improvements and/or related information (the "Confidential Information") which
is not generally available to the public unless, (i) through no act of Licensee
contrary to the obligations imposed hereby, such Confidential Information
becomes known to the public prior to the date of Licensee's disclosure, (ii)
such Confidential Information is approved for public release by Licensor, (iii)
such Confidential Information is rightfully received by Licensee from a third
party without restrictions and without breach of Licensee's obligations
hereunder, (iv) such Confidential Information is independently developed by
Licensee without breach of this Agreement, (v) such Confidential Information is
required to be disclosed by judicial or governmental proceeding subject to a
protective order or (vi) such disclosure is necessary or appropriate to the
exploitation of the License granted hereby and only then after such person or
entity to whom disclosure is to be made executes a confidentiality agreement
acceptable to Licensor. Notwithstanding the foregoing, Licensee may disclose
such Confidential Information to its employees who need to know such information
in order for Licensee to use and exploit the Intellectual Property pursuant to
the terms of this Agreement if it has taken reasonable steps to impose the
aforesaid covenants of confidentiality on said employees and to ensure that said
employees will not violate said covenants, including, but not
3
limited to, causing said employees to enter into written agreements in which
said covenants of confidentiality are effectively imposed upon them. Licensee
will copy Licensor's Confidential Information only to the extent reasonably
necessary to enable Licensee to exercise its rights under the License. In making
any such copies, Licensee agrees to produce faithfully all notices respecting
copyright, trade secrets, and other proprietary rights. Nothing contained herein
shall prevent Licensee from disclosing in general terms the nature of its
relationship with Licensor.
6. Improvements. Any improvements upon the Intellectual Property
made, conceived, invented or wholly acquired by Licensor during the term of this
Agreement, shall be included hereunder, and Licensee shall have the right to
such improvements (limited, however, by the specific terms hereof) without
payment of any additional royalty. Licensee agrees that if during the term of
this Agreement it should make, conceive, invent or acquire any improvements to
the Intellectual Property, or any component or portion thereof, it will grant,
and hereby does grant, to Licensor a royalty-free, exclusive, paid up, perpetual
license, to use such improvements, on a world-wide basis. Each party agrees to
disclose promptly to the other party all improvements so made, conceived,
invented or acquired during the term of this Agreement which are based, in whole
or in part, on any of the Intellectual Property or Improvements.
7. Representations. Licensor represents and warrants that: (i) it
has the right and authority to enter into this Agreement; (ii) to the best of
its knowledge, it is the sole owner or licensee of all Intellectual Property and
Improvements licensed hereunder and the use thereof will not violate any law or
infringe upon or violate any rights of any person, firm or corporation; (iii) it
is not a party to any other existing agreement which would prevent it from
entering into or performing its obligations under the terms of this Agreement
and (iv) to the best of its knowledge, the Patents have been validly issued,
have not been challenged and no adverse claim has been asserted.
8. Litigation. Licensee shall have the sole responsibility at its
sole cost and expense for protecting the rights granted and to be granted herein
against any third party infringement. Licensee agrees promptly and diligently to
seek to protect all rights granted and to be granted herein from and against any
infringement by third parties.
9. Insurance.
(a) During the term of this Agreement, Licensee will maintain,
at its own expense, in full force and effect, with a responsible insurance
carrier, reasonably acceptable to Licensor, such product liability insurance as
is customary for a business of the type, nature and size of Licensee.
(b) Licensee shall, from time to time upon reasonable request
by the other party, promptly furnish or cause to be furnished to Licensor, a
certificate evidencing the insurance required hereby.
4
10. Term and Termination.
(a) Unless terminated sooner by the operation of paragraphs
10(b) or (c) hereof, this Agreement shall terminate on June 30, 2003, but shall
be extended for successive one (1) year terms so long as the Fox Sports West
Agreement, or a successor thereof, is in effect.
(b) In the event that the Licensee materially defaults or
breaches any provision of this Agreement, Licensor reserves the right to
terminate this Agreement upon written notice to Licensee; provided, however,
that if Licensee, within 30 days of such written notice, cures such default or
breach, this Agreement shall continue in full force and effect as if such
default or breach had not occurred; and provided, further, should Licensee
dispute any such alleged breach of this Agreement and such dispute is either
submitted to arbitration in due course pursuant to Paragraph 18 hereof or being
resolved by the parties hereto, then there shall be no default hereunder during
the period in which the parties are in arbitration or diligently, and in good
faith, attempting to resolve such dispute; provided, that after the parties
reach an agreement or an arbitrator makes its decision, Licensee shall comply
therewith within 15 days thereof.
(c) In the event of any adjudication of bankruptcy which is
not vacated within 30 days, appointment of a receiver by a court of competent
jurisdiction who is not removed within 30 days, assignment for the benefit of
creditors or levy of execution directly involving Licensee, this Agreement shall
thereupon forthwith terminate and no longer be of any further force and effect.
(d) In the event of termination of this Agreement for any
reason whatsoever:
(i) Licensee shall deliver to Licensor all books, notes,
drawings, writings and other documents, in the possession
of Licensee or the Permitted Parties relating to the
Intellectual Property and any Improvements licensed to it
under Paragraph 2(a) hereof (except that in connection
with any Improvements made by Licensee it may retain
copies of all such items delivered to Licensor and may
continue to use any such Improvements made by it),
together with all copies of any Confidential Information.
(ii) All rights granted by Licensor to Licensee shall
forthwith revert to Licensor.
(iii) Licensor (in the event this Agreement is terminated
by reason of Licensee's default hereunder) shall continue
to be entitled to use or exploit any exclusive
royalty-free license to new developments of Licensee
granted pursuant to Paragraph 6 hereof.
5
(e) In the event of termination of this Agreement, Licensee
shall assign to Licensor, at the request of Licensor, all of its right, title
and interest in and to any contracts or agreements relating, directly or
indirectly to the Intellectual Property.
11. Notices. All notices to be given or payments made hereunder
shall be in writing and sent by hand, federal express or by registered or
certified mail, postage prepaid, addressed to the respective parties at the
addresses set forth above. All notices shall be effective upon receipt. Copies
of all notices to Licensor or Licensee shall be sent to ▇▇▇▇▇▇▇, Savage,
Kaplowitz, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
12. New York Law. This Agreement and all matters or issues
collateral thereto shall be governed by and construed and enforced in accordance
with the laws of the State of New York applicable to contacts made and performed
entirely therein.
13. Entire Understanding. This Agreement contains the entire
understanding of the parties hereto relating to the subject matter herein
contained, and supersedes any and all prior agreements or understandings
relating to the subject matter hereof. This Agreement may not be changed except
by a writing signed by the party sought to be charged therewith.
14. No Waiver. No waiver by either party, whether express or
implied, of any provisions of this Agreement or of any breach or default by
either party, shall constitute a continuing waiver or a waiver of any other
provision of this Agreement, and no such waiver by either party shall prevent
such party from enforcing any and all provisions of this Agreement or from
acting upon the same or any subsequent breach or default of the other party. No
waiver of any provision hereunder shall be effective unless it is in writing
signed by the against whom enforcement thereof is sought.
15. Separability. The provisions set forth in this Agreement shall
be considered to be separable and independent of each other. In the event that
any provision of this Agreement shall be determined in any jurisdiction to be
unenforceable, such determination shall not be deemed to affect the
enforceability of any other remaining provision and the parties agree that any
court making such a determination is hereby requested and empowered to modify
such provision and to substitute for such enforceable provision such limitation
or provision of a maximum scope as the court then deems reasonable and
judicially enforceable and the parties agree that such substitute provision
shall be as enforceable in said jurisdiction as if set forth initially in this
Agreement. Any such substitute provision shall be applicable only in the
jurisdiction in which the original provision was determined to be unenforceable.
16. Relationship of the Parties. Nothing contained herein shall be
construed to place the parties in the relationship of partners or joint
venturers and neither party shall have the power to bind or obligate the other.
6
17. Survival. Unless otherwise provided, the obligations of the
parties hereto shall survive the termination of the term of this Agreement.
18. Arbitration. All claims, demands, disputes, controversies,
differences or misunderstandings between or among the parties hereto or any
other persons bound hereby arising out of or by virtue of this Agreement, shall
be submitted to and determined by arbitration in the City of New York. If the
parties to a dispute arising out of this Agreement are unable to agree on an
arbitrator within 10 days after any party shall have given written notice to the
other that it desires to submit any issue to arbitration, then the American
Arbitration Association shall be designated by any party to appoint an
arbitrator and to arbitrate the matter under its rules. The award of the
arbitrator shall be made in writing, shall be within the scope of this
Agreement, shall not change any of its terms or conditions, shall be binding and
conclusive on all parties, and shall include a finding for the payment of the
costs of the arbitration proceeding (including reasonable attorneys' fees). It
is further agreed that judgment of a court having jurisdiction may be entered
upon the award of the arbitrator.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
ACTV ENTERTAINMENT, INC.
By:
-------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
THE LOS ANGELES INDIVIDUALIZED
TELEVISION NETWORK, INC.
By:
-------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
7