Amended And Restated Technology License And Advertising Agreement

EXHIBIT 10.14


AMENDED AND RESTATED
TECHNOLOGY LICENSE AND ADVERTISING AGREEMENT


This Agreement amends and restates in its entirety the Technology License and Marketing Agreement dated as of August 10, 1998, and entered into by and among: Amazon.com, Inc., a Delaware corporation ("Amazon.com"), Amazon.com D, Inc., a Delaware corporation ("Amazon.com D"), and drugstore.com, inc., a Delaware corporation ("Company"), all effective as of August 10, 1998. Amazon.com and Company are sometimes referred to herein collectively as the "Principal Parties" and each individually as a "Principal Party." The Principal Parties and Amazon.com D are sometimes referred to herein collectively as the "Parties" and individually as a "Party." The Parties agree as follows:


Section 1. Definitions


Whenever used in this Agreement with initial letters capitalized, the following terms will have the following specified meanings:


"Affiliate" means, with respect to a Party, any Person that, directly or indirectly, Controls, or is Controlled by, or is under common Control with, such Party.


"Amazon.com Competitor" means any Third Party engaged, directly or indirectly, in the development, marketing or sale of products or services that compete with any products or services then produced or marketed by Amazon.com or which Amazon.com is then preparing to produce or market.


"Amazon.com IPR" means any and all IPR owned or licensable by Amazon.com D or Amazon.com during the Support Period.


"Amazon.com License" means the license granted by Company to Amazon.com D and its Affiliates under Section 5.1.


"Amazon.com Licensed Field of Use" means (a) the online promotion and sale of goods or services, and/or (b) the online provision of related information; but does not include the online promotion or sale of prescription drugs or the operation of a Drugstore Business.


"Amazon.com Made Derivative" means any Derivative of the Company Technology made by Amazon.com or its Affiliates in the exercise of the Amazon.com License.


"Amazon.com Technology" means all of the following which Amazon.com D has the right, or which Amazon.com would have the right, to license to Company without Amazon.com D or Amazon.com violating any contractual obligation owing to, or any IPR of, any Third Party: (a) all software (in both source and object code forms) and other technology used by Amazon.com in the operation of its business, including order processing, procurement, payment, accounting and distribution, but only if and to the extent owned or


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licensable (without cost to Amazon.com or Amazon.com D) by Amazon.com during the Support Period; and (b) all Amazon.com IPR embodied in such software and other technology; provided, however, that the Amazon.com Technology shall not include, without limitation, any database, customer data or information or other business information.


"Company Competitor" means any Third Party that is, or is actively attempting to become, principally and primarily known for engaging in a Drugstore Business and whose principal and primary business is a Drugstore Business.


"Company IPR" means any and all IPR owned or licensable by Company during the Support Period.


"Company License" means the license granted by Amazon.com D to Company under Section 4.1.


"Company Licensed Field of Use" means (a) the online retail sales of prescription drugs, over-the-counter drugs, vitamin and fitness supplements, natural remedies, body care products and durable medical goods, (b) the online retail sales of other goods and services to the extent they are typically marketed and sold as part of the operation of a Drugstore Business, and (c) the online provision of information relating to the goods and services described in (a) and (b), above; provided that, in each case, the goods, services and information are provided directly under the Company's brand or a similar brand that is primarily known and marketed as the brand of a Drugstore Business; and provided further that the Company Licensed Field of Use does not include, without limitation, the promotion or sale (or supporting or facilitating the promotion or sale) of books, video or music products, or the provision or operation of any gift center (e.g., a web site or other online service (or portion thereof designed to facilitate the giving of gifts) except for low volume sales that are merely incidental to the promotion and sale of the goods and services described in (a) and (b), above, and which, in the aggregate, do not generate gross revenues for any calendar quarter that exceed three percent (3%) of the total gross revenues of Company and its Affiliates from all online sales of products and services for that quarter (excluding revenues from the sale of such products and services through separately negotiated Amazon.com affiliate arrangements).


"Company Made Derivative" means any Derivative of the Amazon.com Technology made by Company in its exercise of the Company License.


"Company Site" means the Company site on the World Wide Web to be developed by Company and located at www.drugstore.com (and any successor, mirror or Affiliate sites), and through which Company will engage in an online Drugstore Business.


"Company Technology" means all of the following which Company has the right to license to Amazon.com D and its Affiliates under the Amazon.com License without violating any contractual obligation owing to, or any IPR of, any Third Party: (a) all software (in both source and object code forms) and other technology used by Company in the operation of its


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business, including order processing, procurement, payment, accounting and distribution, but only if and to the extent owned or licensable (without cost to Company) by Company during the Support Period; and (b) all Company IPR embodied in such software and other technology; provided, however, that the Company Technology shall not include, without limitation, any database, customer data or information or other business information.


"Competitive Amazon.com Acquisition" means Amazon.com becoming Controlled by, or its assignee or successor to the Amazon.com License becoming Controlled by, any Company Competitor.


"Competitive Company Acquisition" means Company becoming Controlled by, or its assignee or successor to the Company License becoming Controlled by, any Amazon.com Competitor.


"Confidential Information" means the existence and terms of this Agreement and all trade secrets, know-how and nonpublic information which relates to research, development, trade secrets, know-how, inventions, source codes, technical data, software programming, concepts, designs, procedures, manufacturing, purchasing, accounting, engineering, marketing, merchandising, selling, business plans or strategies and other proprietary or confidential information, protectable under the laws of the United States or any other jurisdiction or country.


"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether by contract or through the ownership of voting securities, including, without limitation, the ownership of more than fifty percent (50%) of the equity, partnership or similar interest in such Person.


"Derivative" means (a) any enhancement, improvement, modification, translation, abridgment, expansion, compilation or "derivative work" (as defined in the U.S. Copyright Act, as amended from time to time), (b) any improvement that falls within the claim of any patent, or (c) any work that embodies, incorporates or uses any Confidential Information or for which any Confidential Information was used in the development of such work.


"Development Period" means the period commencing on the date of this Agreement and ending on the earlier of (a) thirty (30) days after the Launch Date and (b) June I , 1999.


"Drugstore Business" means a business (a) principally known and marketed as a drugstore (as that term is commonly used and understood) and (b) principally engaged in the retail marketing, offering, sale and distribution of prescription drugs and over-the-counter drugs. A Drugstore Business may also engage in the retail offering, sale and distribution of vitamins and fitness supplements, natural health remedies, body care products, durable medical goods, and products and services typically marketed and sold as part of the operation of a drugstore. Examples of Drugstore Businesses as of the date of this Agreement are Payless, Rite-Aid and CVS, as they exist on the date of this Agreement.


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"IPR" means any copyright, patent, trade secret, moral right or other intellectual property or proprietary right of any kind, whether arising under the laws of the United States or any other nation, state or jurisdiction (including, but not limited to, any foreign equivalents thereto). IPR does not include any Trademarks.


"Launch Date" means the date on which Company begins commercial operation of the initial Company Site.


"Launch Period" means the period commencing on the Launch Date and ending ninety (90) days after the Launch Date.


"Minor Amazon.com Competitor" means any Amazon.com Competitor with respect to which (a) the products and services of Amazon.com that compete with the products and services of such Amazon.com Competitor generate and comprise less than five percent (5%) of Amazon.com's total revenue from the sale of products and services during the most recently completed fiscal year, or (b) the competing products and services of the Amazon.com Competitor are merely incidental to the Amazon.com Competitor's business (for example, an insurance company's sale of shirts branded with its logo would be incidental to its business as a provider of insurance).


"Minor Company Competitor" means any Company Competitor with respect to which the products and services of Company that compete with the products and services of such Company Competitor generate and comprise less than five percent (5%) of Company's total revenue from the sale of products and services during the most-recently completed fiscal year.


"Person" means any individual, corporation, partnership, limited liability company, trust, association or other entity or organization, including any governmental or political subdivision or any agency or instrumentality thereof.


"Support Period" means the period commencing on the date of this Agreement and ending on the tenth anniversary of the date of this Agreement.


"Third Party" means any Person that is not a Party or an Affiliate of a Party.


"Trademarks" means all common law or registered trademark, service mark, trade name and trade dress rights and similar or related rights arising under any of the laws of the United States or any other country or jurisdiction, whether now existing or hereafter adopted or acquired.


Section 2. Company Site Development


2.1 Project Manager


Following execution of this Agreement, Amazon.com will appoint and maintain in place throughout the Development Period a technical project manager to coordinate its efforts


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under this Agreement relating to the development of the Company Site. Amazon.com may change its appointed technical project manager from time to time upon notice to Company.


2.2 Project Assessment


During the Development Period, the parties will perform a project assessment, in such manner and at such times as the Parties mutually agree upon in writing, to determine the mix of Amazon.com Technology and Third Party technology to be incorporated into the Company Site.


2.3 Technical Consulting


During the Development Period, Amazon.com will provide to Company up to an average of twenty (20) hours per week of technical consulting (as established by the Parties based on their reasonable determination as to the required level of support), in such manner and at such times as the Parties mutually agree upon in writing, to assist Company in the development of the Company Site.


2.4 Executive Search


Following the execution of this Agreement, Amazon.com will provide to Company reasonable assistance in identifying an individual to serve as the initial chief technology officer of Company, in such manner and at such times as the Parties mutually agree upon in writing.


Section 3. Company Site Launch


3.1 Project Manager


Following execution of this Agreement, Amazon.com will appoint and maintain in place throughout the Launch Period a project manager to coordinate its efforts under this Agreement relating to advertising on the Company Site. Amazon.com may change its project manager from time to time upon notice to Company.


3.2 Marketing Consulting


During the Launch Period, Amazon.com will provide to Company up to an average of twenty (20) hours per week of marketing consulting (as established by the Parties based on their reasonable determination as to the required level of support), in such manner and at such times as the Parties mutually agree upon in writing, to assist Company in the planning for the launch of the Company Site.


3.3 Advertising Placements


During the Launch Period, Amazon.com will provide to Company the advertising placements identified in the attached Exhibit A.


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Section 4. Company License


4.1 Grant


4.1.1 Subject to the terms and conditions set forth in this Agreement, Amazon.com D hereby grants to Company and its Affiliates (other than an Affiliate who is also an Amazon.com Competitor) a limited, nontransferable (except as permitted under Section 11.2), fully paid, royalty-free, nonexclusive worldwide license, under the Amazon.com IPR, to do the following: (a) make, copy and use the Amazon.com Technology in the conduct of Company's or its Affiliates' business within the Company Licensed Field of Use; and (b) develop and make Derivatives from and of the Amazon.com Technology and use such Company Made Derivatives in the conduct of Company's or its Affiliates' business within the Company Licensed Field of Use.


4.1.2 Prior to the execution of this Agreement, Amazon.com has furnished to Company a copy of the fully executed license agreement between Amazon.com and Amazon.com D under which Amazon.com has granted to Amazon.com D such rights of Amazon.com in and to the Amazon.com Technology and Amazon.com IPR as are necessary, required and appropriate for Amazon.com D to grant Company the Company License under Section 4.1.1. Thereafter, Amazon.com shall execute and deliver to Amazon.com D (with a copy to Company) such further documents as may be required to ensure that the foregoing rights are held by Amazon.com D as and to the extent contemplated in this Agreement. If the Company License is (other than on account of any termination of the Company License in accordance with the provisions of this Agreement) found to be invalid, Amazon.com hereby grants to Company a license to the Amazon.com Technology and Amazon.com IPR on the same terms and conditions as the Company License. Amazon.com hereby guarantees all present and future obligations of Amazon.com D under this Agreement.


4.2 Reservation of Rights


Amazon.com D and Amazon.com reserve ownership of the Amazon.com Technology. Except for the Company License, no right, title or interest in, to or under any of the Amazon.com Technology is granted, created, assigned or otherwise transferred to Company pursuant to or by virtue of this Agreement. Without limiting the generality of the foregoing, Company shall not without Amazon.com D's prior written consent, given or withheld in Amazon.com D's sole discretion: (a) sublicense to any Third Party the right to use or make Derivatives of the Amazon.com Technology, except for contractors of Company who have a need for such rights in order to provide work-for-hire services to Company and who agree in writing to be bound by all restrictions, limitations and requirements of this Agreement relating to the use of or other dealings with the Amazon.com Technology; or (b) use all or any portion of the Amazon.com Technology or any Company Made Derivative outside of the Company Licensed Field of Use.


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4.3 Third-Party Rights


Company acknowledges that the Company License is subject to any and all applicable rights of Third Parties in and to the Amazon.com Technology. The Amazon.com Technology is licensed to Company under the Company License only to the extent that Amazon.com is legally and contractually entitled to license the same, through Amazon.com D, to Company. Company shall comply with all Third Party restrictions and limitations on use of the Amazon.com Technology that are made known to Company.


4.4 Compliance With Laws


In exercising the Company License, Company shall comply with all applicable laws, rules, regulations, orders and other requirements of any governmental authority having jurisdiction. Without limiting the generality of the foregoing, Company shall comply with all such requirements relating to the import, export or re-export of any Amazon.com Technology or other items subject to this Agreement (including, but not limited to, requirements under the U.S. Export Administration Act, regulations of the Department of Commerce or its successors, executive orders and other export controls of the United States of America). Company shall not import, export or re-export, or authorize the import, export or re-export of, any such items in violation of any such requirement.


4.5 Advertising Restrictions


4.5.1 At all times during the Support Period, ...