EXHIBIT 10.7
TERM SHEET
FOR
TRADEMARK LICENSING AGREEMENT
Parties
The parties to the Trademark Licensing Agreement shall be Spinco and Aetna.
Definitions
All capitalized terms used in this term sheet but not otherwise defined herein
shall have the meaning set forth in the Distribution Agreement, to which this
term sheet is an exhibit.
"Marks" shall mean the intellectual property set forth on Schedule 1 hereto.
(For the avoidance of doubt, all of the rights, title and interest in and to
the mark "Aeltus" will be assigned to Aetna pursuant to the Distribution
Agreement).
Grant of License
1. Spinco will grant to Aetna a non-exclusive, transferable to the Aetna
Group only, royalty-free right to use the Marks, on the terms set forth
below and subject to the terms and conditions of the existing agreements
between certain members of the Aetna/Spinco Groups and third parties set
forth on Schedule 2 hereto (the "License").
2. During the Term (as defined below), the Aetna Group and its Affiliates
will be permitted to use the Marks in connection with the Aetna Business,
in a manner consistent with the conduct of such business and with the use
of such Marks as at the Distribution Date, provided, however, that
Acquiror may, during the Initial Term, use the Marks in connection with
the offering, sale and distribution of products of the Aetna Business
together with products of Acquiror and its other Affiliates.
3. During the Remaining Term, the Aetna Group and its Affiliates will be
permitted to use the Marks solely in association with the trademarks set
forth on Schedule 3 hereto in the combined format to be agreed upon by the
parties and set forth in the Trademark Licensing Agreement (except in
those instances where applicable law requires use of an entity's legal
name, as, for example, in the issuance of annuity contracts).
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4. Except as permitted by the proviso of Section 2 above, in no event shall
any Mark be used (i) in connection with any other business of Acquiror or
any of its Affiliates, or (ii) as a composite with another trademark
(other than (a) in association with the trademarks set forth on Schedule 3
hereto in the combined format to be set forth in the Trademark Licensing
Agreement or (b) with the trademarks of Acquiror, and in the composite
manner, as to which Spinco has given its prior written consent).
5. Notwithstanding the grant or the terms of the License, Spinco and the
Spinco Group shall retain the right to use the Marks during the Term in
connection with any action or activity, subject to the restrictions set
forth in Section 7.04 of the Distribution Agreement.
6. During the Term, Spinco will not license the Marks in a manner which would
conflict with the Aetna Business as such business is conducted at the
Distribution Date.
7. Notwithstanding the foregoing, during the Initial Term, Aetna Group may
use signs, labels, containers, stationary, forms (including policy forms)
and other printed material or matter that are in the assets or inventory
of Aetna or any Subsidiary immediately after the Distribution Time,
provided that the Aetna Group will use reasonable efforts to deplete and
discontinue use of such materials or other matter containing or bearing
any of the Marks as soon as practicable in the ordinary course of
business.
Term and Termination
1. Except as otherwise set forth in the Trademark Licensing Agreement, the
Term of the License will be three (3) years commencing on the Distribution
Date. The "Initial Term" shall be the first 18-month period following the
Distribution Date, and the "Remaining Term" shall be the 18-month period
following the Initial Term.
2. Once the Aetna Group and its Affiliates ceases the use of all Marks with
respect to a particular product or service, the License shall terminate
with respect to such product or service on the earlier of the expiry of
the Term of the License or the day which is sixty (60) days after the date
on which such use ceased.
3. Spinco may terminate the License with respect to a particular product or
service in the event of a material breach by any member of the Aetna Group
or any other Affiliate of the Aetna Group that has not been cured within
thirty (30) days (or sixty (60) days, if substantial progress is being
made at the end of such thirty (30) day period) of written notice by
Spinco.
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4. The Trademark Licensing Agreement will terminate automatically in the
event of a change of control of Aetna, sale of all or substantially all of
the Aetna Business or the occurrence of an insolvency, bankruptcy or
similar event with respect to Aetna. Such events or occurrences shall be
defined according to customary practice for an agreement of this type. For
the avoidance of doubt, an internal restructuring of the Aetna Group shall
not constitute a change of control.
No Assignment, Sublicense or Transfer
The Trademark Licensing Agreement shall not be assigned, sublicensed or
transferred by either party, in whole or in part, to any third party (other
than any member of the Spinco Group or the Aetna Group), including, without
limitation, any bankruptcy trustee, by operation of law (other than in
connection with an internal restructuring of the Spinco Group or the Aetna
Group) or otherwise.
Quality Standards
1. As a condition to the rights and the License granted by the Trademark
Licensing Agreement, the Aetna Group and its Affiliates shall both use the
Marks and operate the Aetna Business (i) at a level of quality at least as
high as that established prior to the Distribution Date; and (ii) in
compliance with all applicable laws and regulations.
2. Aetna shall, upon reasonable request by Spinco, submit to Spinco materials
bearing the Marks as Spinco may reasonably require to ensure Aetna and its
Affiliates' compliance with the obligations set forth in the Trademark
Licensing Agreement. In the event Spinco reasonably finds that such
samples are of materially lesser quality than those generated prior to the
Distribution Date, Aetna shall, upon notice from Spinco of the specific
deviations, immediately take steps which are necessary to correct the
deviation(s) of the respective items and to cure such deficiencies within
30 days; provided, however, that in the event Spinco reasonably determines
that the deviation(s) pose a threat to the validity of the Marks or to the
goodwill associated therewith, Aetna shall, upon notice from Spinco,
immediately cease and desist, and shall immediately direct its Affiliates
and Representatives to cease and desist, all use of such non- conforming
materials (and failure to do so shall be deemed to be a breach of the
Trademark Licensing Agreement for purposes of the provision to be included
therein entitling Spinco to injunctive relief). Upon execution of
appropriate confidentiality agreements, Spinco shall have the right to
inspect upon reasonable notice and during normal business hours, but no
more than twice in any calendar year, any premises of the Aetna Group or
its Affiliates where activities relating to the marketing and provision of
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services bearing the Marks are conducted, in order to ensure the quality
of such materials.
Use, Ownership and Protection of the Marks
1. The Aetna Group and its Affiliates will use the Marks in accordance with
all applicable laws and regulations and in accordance with sound trademark
and trade name usage principles. The Aetna Group and its Affiliates shall
not use the Marks in any manner that might tarnish, disparage or reflect
adversely on Spinco or the Marks.
2. Aetna will agree not to challenge the validity of Spinco's ownership of
the Marks or contest the fact that Aetna's rights are only those of a non-
exclusive licensee of the Marks.
3. After the Term, the Aetna Group and its Affiliates will not use the Marks
in any jurisdiction in connection with health care, financial services or
otherwise.
4. During the Term, Aetna will notify Spinco immediately of any conflicting
uses, infringement or unfair competition arising in connection with the
use of the Marks in the Aetna Business of which Aetna or any of its
Affiliates has actual knowledge.
Representations and Warranties
Each party will represent and warrant that it is duly organized, and has the
requisite power and authority to enter into the Trademark Licensing Agreement.
Indemnification
1. Aetna will indemnify and hold the Spinco Group harmless from and against
any liability resulting from the marketing, offering, issuance or
performance by any member of the Aetna Group or any of their Affiliates of
any products or services bearing any Mark (including any Mark as a
composite with another trademark) following the Distribution Date (other
than third party infringement claims subject to 2. below).
2. Spinco will indemnify and hold the Aetna Group and its Affiliates harmless
from and against liability resulting from Spinco's failure to have or
maintain valid rights in the Marks or any third party claim that the Marks
infringe such third party's intellectual property rights; provided that
Spinco will not indemnify the Aetna Group or its Affiliates for any
liability arising or resulting from uses of the Marks in composite with
another trademark.
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3. The indemnities referred to in the preceding two paragraphs shall be in
addition to and shall not supercede the indemnities set forth in Article 4
of the Distribution Agreement, provided that if any member of either the
Aetna Group or the Spinco Group determines that it is or may be entitled
to indemnification pursuant to the Trademark Licensing Agreement, the
procedures set forth in Sections 4.04 to 4.06 of the Distribution
Agreement shall apply and, for this purpose, such person shall be referred
to as the Indemnified Party and Aetna or Spinco, as the case may be, shall
be referred to as the Indemnifying Party.
Governing Law
New York
Other Terms and Provisions
Aetna agrees that Spinco may be irreparably injured by a breach of the
Trademark Licensing Agreement and that, in such event, Spinco shall be entitled
to injunctive relief, in addition to any other legal or equitable remedy,
without the need to post any bond or to adduce further evidence of such
irreparable harm.
Other customary terms and conditions for an agreement of this type.
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SCHEDULE 1
Please refer to Schedule D to the Distribution Agreement ("Spinco Intellectual
Property Rights"). The list of licensed marks will be derived, based on the
current use by the Aetna Business, from Schedule D.
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SCHEDULE 2
The contracts relating to the sale of Aetna Services' property-casualty
operations to an affiliate of The Travelers Insurance Group Inc. on April 2,
1996.
The contracts relating to the sale of Aetna's domestic individual life
insurance business to Lincoln National Corporation on October 1, 1998.
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SCHEDULE 3
Any Mark or Marks (as defined in the Trademark Licensing Agreement Term Sheet)
in combination with any one or more of the ING marks or categories of ING marks
set forth in 1 through 6 below, in each case in connection with any ING
financial services business or Aetna Business (as defined in the Distribution
Agreement):
1. ING
2. ING [Lion Design]
3. ING Business Unit
4. ING Division
5. ING Legal Entity
6. ING Product Name
Usage shall be subject to Spinco's approval of the format of any particular
usage, such consent not to be unreasonably withheld. Marks used in association
with any one or more ING marks may be larger than, equal to or smaller than
such ING mark or marks.
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