EXHIBIT 10.15
LICENSE AGREEMENT
This License Agreement (this "Agreement") is entered into as of this twenty-
ninth (29th) day of September, 1998 (the "Effective Date"), by, and between
Preview Systems, Inc., a Delaware corporation having its principal place of
business at 0000 X. Xx Xxxx Xxxx., Xxxxx 000, Xxxxxxxxx, XX 00000, XXX ("PSI"),
and Sony Marketing (Japan), Inc., a Japanese corporation having its registered
place of business at 00000 Xxxxxxxx, Xxxxxx-xx, Xxxxx, 0000000, Xxxxx ("SMOJ").
RECITALS
WHEREAS, PSI has proprietary rights to certain computer software known as the
ZipLock Electronic Software Distribution (ESD) System:
WHEREAS, PSI is willing to grant to SMOJ, and SMJI is willing to accept, certain
license rights in Japan with respect to such software, as more fully described
herein and in accordance with the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants and other
consideration contained herein, the parties agree to the following terms and
conditions, which set forth the rights, duties, and obligations of the parties:
AGREEMENT
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the following
meanings:
1.1 "Affiliate" shall mean, with respect to any a party, any corporation or
other. entity, that is directly or indirectly controlling, controlled by or
under common control with such party. For the purpose of this definition,
"control" shall mean the direct or indirect ownership of more than fifty percent
(50%) of the shares of the subject entity entitled to vote in the election of
directors (or, in the case of an entity that is not a corporation, for the
election of the corresponding managing authority). For purposes of
clarification, any entity that is owned or controlled directly or indirectly by,
Sony Corporation shall be deemed an Affiliate of SMOJ.
1.2. "Business" means (i) the marketing, distribution and support of the
Localized Software in the Territory by SMOJ in accordance with the terms and
conditions of this Agreement and (ii) the provision of electronic commerce
services (including, without limitation, electronic software distribution and/or
digital rights/goods distribution services) in the Territory using the Localized
Software.
1.3. "Business Unit" means the independent profit center within SMOJ which
shall be responsible for the operation of the Business.
1.4. "Confidential Information" means any information and/or material disclosed
hereunder by a party to the other party (whether in writing, oral, graphic.
electronic or in any other form) that is marked as (or provided under
circumstances reasonably indicating it is) confidential or proprietary, or if
disclosed orally or in other intangible form, that is identified as (or provided
under circumstances reasonably indicating it is) confidential at the time of
disclosure and summarized in a writing transmitted to the other party within
thirty (30) days of such disclosure. Confidential Information, includes,
without limitation, the terms and conditions of this Agreement; and all trade
secrets, know-how, inventions (whether or not patentable), business plans,
technical data, product ideas, techniques, processes, programs, methodologies,
algorithms, analytical routines, schematics, testing procedures, software design
and architecture, computer code, internal documentation, design and function
specifications, product requirements, personnel, contracts and other technical
or financial information or materials of the disclosing party and/or its
employees, consultants, investors, Affiliates, licensors, suppliers, vendors,
customers, clients and other persons.
CONFIDENTIAL TREATMENT REQUESTED
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OMITTED PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SEC
1.5. "Derivative Work" shall mean, with respect to any work, any revision,
modification, translation, abridgment, condensation or expansion of the work (or
any portion thereof), or any form in which the work (or any portion thereof) may
be recast, transferred or adapted, which, if prepared without the consent of the
owner of the work, would infringe or misappropriate any intellectual property
rights (including, without limitation, any copyright, patent, trademark or trade
secret) in the work. or would constitute unauthorized use or disclosure of any
Confidential Information with respect to the work.
1.6. "Distributor" means any third party (including, without limitation, any
Affiliate of SMOJ) located in the Territory and properly sublicensed hereunder
by SMOJ to distribute the Localized Software to End Users in accordance with the
terms hereof.
1.7. "Distributor Agreement" means an enforceable written agreement entered
into by SMOJ and any Distributor for the distribution of the Localized Software
by Distributor to End Users, which agreement contains terms and conditions not
materially inconsistent with and not materially less restrictive than those set
forth in this Agreement, and expressly names PSI as an intended third party
beneficiary with the right to rely on and directly enforce the terms thereof and
the form of which has been approved in advance in writing by PSI, which approval
will not be unreasonably withheld. This agreement may be in Japanese, will be
based on Japanese law, and will be consistent with similar Japanese business
practices.
1.8. "Documentation" means, with respect to any PSI product or service, PSI's
standard user documentation and related materials generally provided by PSI for
use with such product or service (including, without limitation, user manuals,
reference manuals, installation guides and other user materials), together with
all Fixes and Enhancements relating thereto.
1.9. "End User" means any third party (including, without limitation, any
Affiliate of SMOJ) located in the Territory that is properly licensed hereunder
by SMOJ to use, but not to distribute further, the Localized Software in
accordance with the End User License Agreement.
1.10. "End User License Agreement" means SMOJ's standard End User license
agreement for the Localized Software, which agreement contains terms and
conditions not materially inconsistent with and not materially less restrictive
than those set forth in this Agreement and PSI's then-current standard end user
license agreement for the non-localized version of the Localized Software, and
expressly names PSI as an intended third party beneficiary with the right to
rely on and directly enforce the terms thereof, and which agreement has been
approved in advance in writing by PSI, which approval will not be unreasonably
withheld. This agreement may be in Japanese, will be based on Japanese law, and
will be consistent with similar Japanese business practices.
1.11. "Enhancements" means, with respect to any work, any enhancements,
improvements, revisions, plug-ins, upgrades, updates, new versions, new releases
and/or other modifications (other than Fixes) to such work that are designated
as subsequent numbered releases of the same work and that may be provided by PSI
to SMOJ hereunder. Enhancements do not include any New Products.
1.12. "Fiscal Year" means any fiscal year of the Business Unit, which shall be
the twelve (12) month period beginning on April 1st and ending on the following
March 31st.
1.13. "Fixes" means, with respect to any work, any bug fixes, patches, work-
arounds and/or other error corrections to such work (other than Enhancements)
that may be provided by PSI to SMOJ hereunder.
1.14. "Gross Revenues" means, with respect to any product or service, any and
all gross amounts (including. without limitation, the fair market value of any
non-cash consideration) accrued to a party from the sale, license, distribution
and/or other transfer of the product or service, less any and all amounts paid
or credited for returns, rebates, exchanges, bad debt and/or discounts.
1.15. "Initial Term" means the initial term of this Agreement, beginning on the
Effective Date and ending on March 31, 2002.
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1.16. "License Term" means the period of time in which this Agreement is in
effect, which shall include the Initial Term, and if this Agreement is renewed
in accordance with this Agreement, any Renewal Term.
1.17. "Localized Software" means the Japanese-localized version of the ZipLock
ESD System and any New Product provided hereunder to SMOJ by PSI, which will be
marketed and distributed hereunder by SMOJ, and which includes, without
limitation, any Documentation, Fixes and Enhancements relating thereto that may
be provided hereunder in accordance with this Agreement.
1.18. "New Products" means any new products which are developed and generally
distributed by PSI during the License Term.
1.19. "Performance Criteria" means the annual minimum Gross Revenue and royalty
performance levels required for the Business Unit as set forth in Section 4 or
as otherwise determined by the parties in accordance with this Agreement.
1.20. "PSI Marks" means any trademarks, trade names, service marks and service
names of PSI relating to the Localized Software (including, without. limitation,
any New Product).
1.21. "Renewal Term" means any three-(3)-year renewal term of this Agreement
subsequent to the Initial Term, which renewal term is entered into in accordance
with the terms and conditions of this Agreement.
1.22. "Territory" means Japan.
1.23. "Warranty Period" shall mean the one (l)-year period following the date
that the Localized Software is first shipped to SMOJ.
1.24. "ZipLock ESD System" means PSI's proprietary "ZipLock ESD System"
integrated software package, which includes, without limitation, PSI's
proprietary "ZipLock Server", "ZipLock Gateway" and "ZipLock Builder" software
programs, together with all Documentation relating to the foregoing.
2. LICENSE GRANT
2.1. License Grant. Subject to the terms and conditions of this
Agreement, PSI hereby grants to SMOJ, in the Territory during the License Term,
a royalty-bearing, non-transferable and non-sublicensable (except to the extent
expressly set forth herein) license, under all of PSI's intellectual property
rights in the ZipLock ESD System and any New Product, to: (i) use the Localized
Software internally to distribute SMOJ's software products electronically to
customers in the Territory and to provide electronic commerce services to
customers located in the Territory; (ii) to reproduce, market (including all
activities normally involved in marketing a product or service, including
advertising, promotion, demonstration, etc.) and distribute (directly or
indirectly through Distributors located in the Territory) the Localized Software
to End Users, and to grant sublicenses to use the Localized Software to such End
Users pursuant to End User License Agreements; (iii) with PSI's prior written
consent, to develop Japanese-localized versions of Enhancements to the Localized
Software (including, without limitation, any New Products), provided the parties
have first agreed in writing upon applicable terms and conditions relating to
such localization of such Enhancements; and (iv) to maintain and support the
Localized Software, including, without limitation, any such localized
Enhancements. During the final year of the Initial Term or any Renewal Terms,
SMOJ will have the right to enter into one-year Distributor Agreements and End
User License Agreements, even if PSI and SMOJ have not yet agreed that this
License will be renewed. Except as expressly set forth in Sections 2.1, 2.2 or
2.3, no other right or license of any kind, whether express or implied, is
granted by PSI to SMOJ hereunder with respect to the ZipLock ESD System, the
Localized Software (including, without limitation, any New Products), or any
Enhancements to any of the foregoing; and all rights not expressly granted
herein are retained by PSI.
2.2. Exclusivity and Non-competition with Business.
2.2.1. Exclusivity. The foregoing license granted by PSI to SMOJ in
Section 2.1 shall be exclusive to SMOJ during the License Term, unless Such
exclusivity is earlier terminated in accordance with this
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Agreement. The exclusive nature of such license means that, for so long as such
license remains in effect on an exclusive basis, PSI shall not grant another
entity the right to exercise in the Territory any of the rights granted to SMOJ
pursuant to Section 2.1.
2.2.2. Non-competition with Business. During the License Term, for
so long as the license granted in Section 2.1 remains in effect on an exclusive
basis, neither party shall offer, or participate in the management of another
entity offering, any electronic software distribution and/or digital
rights/goods distribution services or products in the Territory which are
similar to those services or products which are offered through or as part of
the Localized Software. Notwithstanding the foregoing, the restrictions set
forth in the preceding sentence shall not apply to (i) preclude Sony Corporation
or Affiliates of SMOJ from developing and offering any electronic software
distribution and/or digital rights/goods distribution services or products in
the Territory which are similar to those services or products which are offered
through or as part of the Localized Software and (ii) an entity acquired by PSI
where a portion of such entity's business relates to electronic software
distribution and/or digital rights/goods distribution services or products in
the Territory, provided that PSI shall neither expand further such distribution
relationship or renew it beyond its then-current term.
2.2.3. Termination of Exclusivity and Non-competition.
(i) If Sony Corporation or an Affiliate of SMOJ develops a
product or service which is similar to any product or service offered by SMOJ
through or as part of the Localized Software and SMOJ wishes to offer and/or
distribute such product and/or service, then SMOJ, upon one hundred eighty (180)
days' prior written notice to PSI, shall have the option to offer and/or
distribute such product or service in the Territory; provided, however, in such
event, (a) PSI shall have the option to terminate immediately, the exclusive
nature of the license rights granted to SMOJ in Section 2.1 and to market, offer
and distribute the Localized Software and any of PSI's products and services in
the Territory through any third party, and (b) the non-competition provisions of
Section 2.2.2 shall no longer apply. In such event, SMOJ shall have the right to
continue to distribute the Localized Software on a nonexclusive basis for the
remainder of the then-current term, subject to SMOJ's payment of applicable
running royalties as set forth in Section 4.2 of this Agreement.
(ii) In the event that the Business Unit's actual Gross
Revenues do not meet the applicable minimum targets for Fiscal Year 1999, or
subsequently do not meet the applicable minimum targets for the first year
during a Renewal Term, SMOJ shall pay to PSI the difference between the Minimum
Running Royalty required for that Fiscal Year and the actual Running Royalty
paid to PSI during such Fiscal Year, pursuant to Section 4.3 hereof. In the
event that the Business Unit's actual Gross Revenues do not meet the applicable
minimum targets for Fiscal Years 1999 and 2000, or subsequently do not meet the
applicable minimum targets for the first two (2) years during a Renewal Term,
SMOJ shall have the option to continue the exclusive nature of the license
granted hereunder for one (1) additional year by paying to PSI the amount which
is equal to the difference between the Minimum Running Royalty required for
Fiscal Year 2000 (or for the second year during the Renewal Term, as applicable)
and the actual Running Royalty paid to PSI during such Fiscal Year, pursuant to
Section 4.3 hereof.
(iii) In the event that (1) the Business Unit's actual Gross
Revenues do not meet the applicable minimum targets for Fiscal Years 1999 and
2000, or subsequently do not meet the applicable minimum targets for the first
two (2) years during a Renewal Term, and SMOJ does not elect to continue the
exclusive nature of the license for a third year by paying to PSI the royalty
shortfall for that second year, pursuant to Section 2.2.3(ii) above; or in the
event that (2) the Business Unit's actual Gross Revenues do not meet the
applicable minimum targets for Fiscal Years 1999, 2000, and 2001, then (a) PSI
shall have the option to terminate immediately the exclusive nature of the
license rights granted to SMOJ in Section 2.1 and to market, offer and
distribute the Localized Software and any of PSI's products and services in the
Territory through any third party, and (b) the non-competition provisions of
Section 2.2.2 shall no longer apply. In such event, SMOJ shall have the right to
continue to distribute the Localized Software on a non-exclusive basis for the
remainder of the then-current term, subject to SMOJ's payment of applicable
running royalties as set forth in Section 4.2 of this Agreement.
CONFIDENTIAL TREATMENT REQUESTED
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2.3. Trademark License.
2.3.1. License Grant. Subject to the terms and conditions of this
Agreement, PSI hereby grants to SMOJ, in the Territory during the License Term,
a non-exclusive, non-transferable license to use the PSI Marks in connection
with any advertising, packaging, marketing, technical, support, instructional or
other materials related to the Localized Software. SMOJ may sublicense to any
Distributor the foregoing right to use the PSI Marks in accordance with this
Agreement. The Localized Software and any such related materials shall bear, in
a reasonably conspicuous and standard fashion, the PSI Marks.
2.3.2. Use of PSI Marks. SMOJ's and any such Distributor's use of
the PSI Marks shall be in accordance with the provisions of this section 2.3 and
PSI's then-current trademark guidelines, if any, as provided, and updated from
time to time, by PSI. SMOJ and any such Distributor shall use the PSI Marks in
a manner that does not derogate from PSI's rights in the PSI Marks, and shall
take no action that would interfere with or diminish those rights. SMOJ agrees,
and shall require any such Distributor to agree, to use the appropriate
trademark, product descriptor and trademark symbol (either "(TM)" or "(R)") as
designated by PSI, and to clearly indicate PSI's ownership of the PSI Marks on
the first occasion whenever any of the PSI Marks is first mentioned in any
advertisement, brochure, documentation or other material, or in any other manner
in connection with the Localized Software or the Business. Upon PSI's request
from time to time, SMOJ agrees, and shall require any such Distributor to agree,
to provide PSI with copies of goods and materials bearing the PSI Marks so that
PSI can verify that the quality of SMOJ's and any Such Distributor's use of such
PSI Marks is comparable to that of PSI's use thereof. In addition, as part of
the annual process to develop the Annual Operating Plan, or at any other time
following reasonable written notice from PSI, SMOJ and any such Distributor
shall provide PSI with a sample of any advertisement, packaging, brochure or
other publicly distributed documentation or material bearing a PSI Xxxx. SMOJ
and any such Distributor shall immediately suspend use of the PSI Marks if the
quality of the use of the PSI Marks is reasonably deemed interior by PSI until
SMOJ and/or such Distributor has taken such steps as PSI may reasonably require
to solve the quality deficiencies.
2.3.3. Additional Restrictions. SMOJ and any such Distributor shall
not reproduce or use the PSI Marks in any manner whatsoever other than as
expressly authorized by this Agreement or permitted by applicable law without a
license. SMOJ and any such Distributor shall not use as its own any xxxx, word
or design confusingly similar to any PSI Xxxx. SMOJ agrees, and shall require
any such Distributor to agree, that (i) all use of the PSI Marks by SMOJ will
inure to the benefit of PSI, (ii) SMOJ and any such Distributor shall not
register any PSI Marks without PSI's express prior written consent. and (iii)
PSI shall retain the exclusive right to apply for and obtain registrations for
the PSI Marks throughout the world.
2.4. Territory. The Localized Software may be installed and operated on]y
in the Territory. If SMOJ introduces any Japanese customers to PSI who install
any Localized Software outside of the Territory pursuant to a license agreement
with PSI, PSI shall pay SMOJ a referral fee equal to [*] Percent ([*]%) of the
Gross Revenues that accrue to PSI from such customers during the License Term.
2.5. Restrictions. SMOJ, its Distributors and any End User shall not,.
without the prior written consent of PSI: (1) decompile, disassemble or
otherwise reverse engineer (except to the extent expressly permitted by,
applicable law, notwithstanding a contractual obligation to the contrary) the
Localized Software or any portion thereof; (ii) modify, translate or create any
Derivative Works based upon the Localized Software; (iii) remove any copyright,
trademark or other proprietary rights notices contained on or in the Localized
Software; (iv) perform, or release the results of, benchmark tests or other
comparisons of the Localized Software with any other programs; (v) incorporate
the Localized Software or any portion thereof into any other program or product;
or (vi) use the Localized Software for any purpose other than in accordance with
the terms and conditions of this Agreement or the applicable Distributor
Agreement or End User Agreement.
3. ADDITIONAL COVENANTS
3.1. Localization and Delivery. PSI shall. [*]. localize the ZipLock ESD
System for the Territory and deliver the initial version of the Localized
Software to SMOJ by a date to be mutually agreed upon by the parties as part of
the Initial Operating Plan described in Section 3.3. In addition, during the
License Term PSI shall, [*], deliver to SMOJ [*] other than as provided in this
Agreement (i) a Japanese-localized version of the initial release
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version of each New Product, including Documentation, and (ii) a non-localized
version of any Enhancement for the Localized Software, including, without
limitation, any New Products and (iii) PSI's standard distributor agreement as
well as PSI's standard end user license agreement for the non-localized version
of the Localized Software for purposes of SMOJ's preparation of the Distributor
Agreement and the End User License Agreement. SMOJ and PSI will agree in writing
on the optimal technical responsibilities for, and other applicable terms and
conditions relating to, localization of such Enhancements for the Territory,
provided that SMOJ shall be responsible for the actual cost of such localization
with the specific optimal mechanics to be determined as part of the Annual
Operating Plan. If PSI performs the localization of such Enhancements for SMOJ,
it will charge SMOJ [*]. The parties agree that, in general, they do not want to
make changes to the Localized Software which are unique and customized to the
Japanese market or customers. However, SMOJ may request PSI to make specific
changes to the Localized Software for the unique needs of the Japanese Market
and/or customers. If both parties feel that there is compelling strategic and/or
financial justification for the customization, PSI will work with SMOJ to create
a written specification and architecture for the requested customization, and
will provide an estimate of the cost of such customization to SMOJ and/or its
customer. SMOJ or its customers shall be responsible for the cost of any such
customization. If PSI performs the customization for SMOJ, PSI will charge [*].
3.2. Independent Business Unit. SMOJ shall establish the Business Unit as
an independent profit center with SMOJ and shall operate the Business through
the Business Unit. The Business Unit shall not engage in any business activity
other than the development and operation of the Business. SMOJ shall devote
appropriate resources to aggressively develop the Business, and shall have the
right to retain all profits earned by the Business Unit in connection with the
Business; provided that the foregoing shall in no way limit SMOJ's obligation to
pay the amounts due to PSI under this Agreement. SMOJ shall use commercially
reasonable efforts to establish the Business Unit and launch the Business on or
before October 31, 1998, and in any event no later than December 15, 1998. The
initial staffing for the Business Unit shall be as set forth in the Initial
Operating Plan described in Section 3.3. SMOJ shall seek the comments of PSI in
advance regarding the manager to be appointed for the Business Unit,. but SMOJ
will have final authority for the decision on all staffing for the Business
Unit. In order to ensure appropriate access to SMOJ senior management, the
Business Unit's manager will report directly to an SMOJ General Manager or a
more senior executive.
3.3. Initial and Annual Operating Plan and Process. Within thirty (30)
days after the execution of this Agreement, the parties shall agree upon an
Initial Operating Plan for the Business Unit, which plan (a) shall set forth the
launch plan; the marketing, sales, and distribution plan; and the technical
support and training plans for the Business Unit and the Localized Software and
(b) shall cover the period from the Effective Date through March 31, 1999 (the
"Initial Operating Plan"). The current draft of the Initial Operating Plan is
set forth in attached Appendix 1 and shall include, without limitation, those
elements set forth in attached Appendix 1. Beginning in 1998, and no later than
December 31st of each year during the Term, the parties shall agree upon an
Annual Operating Plan for the Business Unit for the immediately following Fiscal
Year (an "Annual Operating Plan"). The Annual Operating Plan should include,
without limitation, product development, technical and customer support,
marketing, sales and distribution plans for developing the market for the
Localized Software, as well as target, minimum, and incentive revenue to be
earned by the Business Unit and royalty payments to be paid PSI. As part of the
annual process of developing the Annual Operating Plan, the parties (i) shall
discuss the current market, competitive, product, and distribution situation in
Japan, the US, and the rest of the world,] and (ii) [shall review in good faith
the required Performance Criteria for the Business Unit for the following Fiscal
Year.] [If there is expected to be a revenue shortfall in any Fiscal Year due
to adverse economic conditions outside of SMOJ's control, and if SMOJ continues
to aggressively market the Localized Software and develop the Business during
such Fiscal Year, then PSI will consider, in good faith, a reduction in the
Performance Criteria for such Fiscal Year. If, in connection with the
development of any Annual Operating Plan for any Fiscal Year in the Initial
Term, the parties are unable to agree upon Performance Criteria for the
immediately following Fiscal Year in the Initial Term, then the [Performance
Criteria] for such immediately following Fiscal Year will be as set forth in
Section 4.3 below.
3.4. Marketing and Distribution.
3.4.1. Marketing Efforts. SMOJ shall market and distribute the
Localized Software in the Territory in accordance with the Initial and Annual
Operating Plans and this Agreement. SMOJ will have the right to determine the
pricing of the Localized Software in the Territory.
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3.4.2. Distributor Agreement.
(i) Prior to the distribution of any Localized Software by
SMOJ to any Distributor, SMOJ and such Distributor shall enter into a
Distributor Agreement. SMOJ shall not alter the material terms of such
Distributor Agreement without the prior written approval of PSI, which approval
will not be unreasonably withheld.
(ii) SMOJ shall use commercially reasonable efforts to enforce
the terms of each Distributor Agreement with at least the same degree of
diligence that SMOJ uses to enforce similar agreements for SMOJ's products
and/or services. SMOJ shall immediately notify PSI of any breach of any material
term of any such Distributor Agreement and shall cooperate with PSI in any
action to prevent or stop unauthorized use, reproduction, distribution and/or
disclosure of the Localized Software.
3.4.3. End User License Agreement.
(i) Any distribution of the Localized Software by SMOJ in the
Territory during the License Term shall be pursuant to an End User License
Agreement. SMOJ shall not alter the material terms of such End User License
Agreement without the prior written approval of PSI, which approval will not be
unreasonably withheld.
(ii) SMOJ shall use commercially reasonable efforts to enforce
the terms of each End User License Agreement with at least the same degree of
diligence that SMOJ uses to enforce similar agreements for SMOJ's products
and/or services. SMOJ shall immediately notify PSI of any breach of any material
term of any such End User License Agreement and shall cooperate with PSI in any
action to prevent or stop unauthorized use, reproduction, distribution and/or
disclosure of the Localized Software.
3.4.4. Proper Licensing of Localized Software. SMOJ shall not
distribute or provide to, or allow any entity (including Sony Corporation or any
Affiliate of SMOJ) to use the Localized Software unless that entity has signed
and agreed to be bound by a Distributor Agreement or End User License Agreement.
3.5. Compliance With Applicable Laws. SMOJ shall (i) comply with all
laws, regulations and other legal requirements that apply to this Agreement; the
exercise of SMOJ's rights or the performance of SMOJ's duties hereunder
(including, without limitation, any rights or obligations of any Distributor or
End User); or the operation of the Business, including, without limitation, all
applicable filings, registrations, reports, licenses, permits and authorizations
(collectively, "Authorizations"); export and import control laws; and tax and
foreign exchange legislation; and (ii) advise PSI of any legislation, rule,
regulation or other law (including but not limited to any customs, tax, trade,
intellectual property or tariff law) which is in effect or which may come into
effect in the Territory after the Effective Date of this Agreement, which SMOJ
becomes aware of and considers material to the Business and which affects the
importation of the Localized Software into, or the use and the protection of the
Localized Software and the intellectual property rights within. the Territory,
or which has a material effect on any provision of this Agreement. SMOJ shall
provide PSI with the assurances and official documents that PSI periodically may
request to verify SMOJ's compliance with this Section. In the event that the
issuance of any Authorization is conditioned upon an amendment or modification
to this Agreement which is unacceptable to PSI, PSI shall have the right to
terminate this Agreement without liability or further obligation whatsoever to
SMOJ.
3.6. Training and Support. PSI shall, [*] provide to the Business Unit
personnel (i) reasonable technical, marketing and sales and business development
training (including, without limitation, maintenance service training and system
integration support training) which are necessary for SMOJ to establish the
Business and (ii) reasonable ongoing business development support. In addition,
if desired by SMOJ, PSI shall provide additional support or other services at an
agreed upon fee ([*]). The level and nature of the support which PSI will
provide [*], and the level, nature, and cost of the additional support or
services which SMOJ may desire PSI to provide at SMOJ's expense, will be agreed
to as part of the Initial and Annual Operating Plans, as determined in
accordance with Section 3.3. SMOJ shall be responsible for all engineering work
related to the installation, integration and technical support of the Localized
Software in the Territory.
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3.7. Publicity. Promptly following the execution of this Agreement, the
parties shall issue a mutually agreeable, press release inside the Territory,
and PSI shall issue a mutually agreeable worldwide press release, regarding this
Agreement. Thereafter during the Term, the parties shall reasonably cooperate
to promote the Business publicly on a regular basis. PSI may reasonably use
SMOJ's name and a description of SMOJ's use of the Localized Software on PSI's
web site and in PSI's advertising and promotional literature subject to
obtaining the prior written consent of SMOJ (which shall not be unreasonably
withheld).
3.8. Formation of Joint Venture. The parties agree to consider forming a
joint venture at the end of the Initial Term for the operation of the Business,
with the equity ownership, capitalization. and other terms to be mutually
determined at that point, if the parties decide to form such joint venture.
However, if at any time prior to the end of the Initial Term, SMOJ reasonably
requests that the ongoing running royalty rate payable to PSI hereunder (as set
forth in Section 4.2 below) be reduced from [*] percent ([*]%), then (i) the
parties shall meet to discuss an appropriate resolution, and PSI shall consider
in good faith any such request by SMOJ; and (ii) in connection with such
discussions, PSI will have the option to request that SMOJ form a joint !venture
with PSI for the operation of the Business, with the terms, equity ownership,
and capitalization to be determined at that point, and SMOJ shall consider on
good faith any such request by PSI.
3.9. Joint New Product Development and Marketing. The parties agree that
they may jointly develop new products or services, and may jointly market and
distribute those products and services outside the Territory. All rights and
responsibilities, including royalties due to PSI and SMOJ and intellectual
property rights for such products or services, will be covered by a separate
written agreement.
4. PAYMENT
4.1. Up-Front License Fee. In consideration of the licenses granted and
services provided hereunder, SMOJ shall pay to PSI (i) a non-refundable, non-
creditable, non-recoupable up-front license fee of [*] (US$[*]) and (ii) a non-
refundable, non-creditable, non-recoupable up-front payment of [*] (US$[*]) for
training and consulting services provided by PSI in connection with the launch
of the Business, in each case payable within thirty (30) days after the
Effective Date.
4.2. Running Royalties. In further consideration of the licenses granted
hereunder, SMOJ shall pay to PSI an additional running royalty ("Running
Royalty") equal to [*] Percent ([*]%) of any and all Gross Revenues received by
SMOJ in connection with (i) any distribution of any Localized Software to any
Distributor or End User (including, without limitation, any Affiliate of SMOJ),
(ii) the provision of any service offered by SMOJ through or by using the
Localized Software; (iii) any joint venture, or any service operated by SMOJ,
with any third party, including, without limitation, any other Affiliate of
SMOJ; or (iv) the operation of the Business; provided that, for any products or
services developed jointly by PSI and SMOJ pursuant to a mutually acceptable
separate written agreement as set forth in Section 3.9 above, a Running Royalty
(payable to both PSI and SMOJ) will be agreed to by the parties which reflects
the contribution of each party to the market value of such jointly developed
product or service. If any Localized Software is distributed (or any service
offered through or by using any Localized Software) to any Affiliate of SMOJ at
a price which is (or for other consideration, the fair market value of which is)
below the then-current price generally offered by SMOJ to non-Affiliated third
parties for such Localized Software or service ("Current Market Price"), then
for purposes of calculating the Running Royalty due to PSI, SMOJ shall be deemed
to have received from such Affiliate of SMOJ such Current Market Price for such
Localized Software or service.
4.3. Performance Criteria. Unless otherwise agreed by the parties, the
annual minimum Gross Revenue for the Business and Running Royalty Performance
Criteria levels for the Initial Term will be as follows:
Fiscal Year Beginning April 1 1999 2000 2001
----------------------------- ---- ---- ----
Gross Revenue $[*] $[*] $[*]
Minimum Running Royalty $[*] $[*] $[*]
Any renewal of this Agreement, as set forth in Section 10.1 shall be subject to
the prior written agreement of the parties regarding appropriate Performance
Criteria for the immediately following three-(3)-year Renewal Term.
CONFIDENTIAL TREATMENT REQUESTED
[*] PORTIONS REDACTED FROM XXXXX VERSION
4.4. Incentive Performance Criteria. The parties agree that SMOJ should
be incentivized with a reduced royalty rate for aggressively developing the
Business. Therefore, the Running Royalty payable to PSI in any given Fiscal
Year will be reduced to [*] Percent ([*]%) of any Gross Revenues actually
received by SMOJ hereunder during such Fiscal Year, which are in excess of the
following incentive revenue levels earned in that given Fiscal Year:
Fiscal year Beginning April 1 1999 2000 2001
----------------------------- ---- ---- ----
Incentive Gross Revenue $[*] $[*] $[*]
For example, if during Fiscal Year 1999, the Business Unit receives [*]
(US$[*]) in Gross Revenues, the Running Royalty paid to PSI for Fiscal Year 1999
shall total [*] (US$[*]) (i.e., [*]).
4.5. Payment. All Running Royalties required hereunder shall be paid on a
[*] basis, with payment due [*] ([*]) days after the receipt of invoice from PSI
which may be issued at the end of each [*]. All sums to be paid by SMOJ
hereunder shall be paid in U.S. Dollars and shall be remitted on or before the
applicable due date, by wire transfer to any account specified by PSI. Late
payments shall accrue interest charges from the due date through the date of
payment in full at a rate which is the lower of [*] ([*]%) per month or the
highest rate allowed by applicable law on the amount due; provided that PSI's
right to receive such interest (i) shall not constitute a forbearance or waiver
by PSI and (ii) shall not affect PSI's other rights and remedies (whether under
this Agreement or otherwise) with respect to any lateness in payment or failure
to pay. Except for any tax withheld by SMOJ on behalf of PSI as set forth in
Section 4.6 of this Agreement, no amounts shall be deducted from any Running
Royalties payable by PSI to cover returns, rebates, discounts, price protection,
or bad debts, or any costs incurred in the marketing or distribution of the
Localized Software or the operation of the Business. If the total Running
Royalty actually paid to PSI during any Fiscal Year does not equal or exceed the
annual minimum Running Royalty due to PSI for Such Fiscal Year pursuant to
Section 4.3, then SMOJ shall pay to PSI, within [*] ([*]) days after the receipt
of an invoice from PSI dated the end of such Fiscal Year, an amount equal to the
difference between the minimum Running Royalty required for such Fiscal Year and
the actual Running Royalty paid to PSI during such Fiscal Year, except in the
event that the Business Unit's actual Gross Revenues have not met the applicable
minimum targets for the first two (2) years during the Initial Term or a Renewal
Term and SMOJ elects not to continue the exclusive nature of the license granted
hereunder for one (1) additional year by paying to PSI the royalty shortfall for
the second Fiscal Year. as set forth in Section 2.2.3. If Such royalty
shortfall occurs in the third Fiscal Year of the Initial Term or any Renewal
Term, and if SMOJ pays the difference between the minimum Running Royalty
required for such Fiscal Year and the actual Running Royalty paid to PSI during
such Fiscal Year, and if the parties have agreed on the renewal conditions
described in Section 10.1,. then the license rights granted to SMOJ pursuant to
Section 2.1 shall continue on an exclusive basis for the following three (3)
year Renewal Term. As part of the Initial and Annual Operating Plan preparation
process described in Section 3.32, SMOJ and PSI will agree on the exchange rate
for payment of the Running Royalties in U.S. Dollars to PSI.
4.6. Taxes. SMOJ shall pay, and indemnify and hold PSI harmless, from.
all sales, use, value added or other duties, customs fees, levies, governmental
charges or taxes of any nature (other than taxes on PSI's net income), including
penalties and interest, and all government permit or license fees assessed upon
or with respect to the Localized Software, the Business and/or any services
rendered to SMOJ hereunder. If SMOJ is required by law to pay any tax, to make
any deduction or to withhold any amount from any sum payable to PSI by SMOJ on
behalf of PSI hereunder, SMOJ shall be and is hereby authorized to remit such
amounts to the appropriate taxing authorities and promptly furnish PSI with tax
receipts evidencing the payments of such amounts.
4.7. [*] Reports. Within [*] ([*]) days after the end of each [*], SMOJ
shall provide PSI with a written royalty report, which shall set forth the basis
for the calculation of the Running Royalty amount paid, including, without
limitation, the following information: the number of units of the Localized
Software (on a product by product basis) licensed during such [*]; a description
of the type of Localized Software (on a product by product basis) acquired by
each End User; the names of each End User and each Distributor; the gross amount
received for any use or licensing of the Localized Software; any amounts paid or
credited for returns, rebates, exchanges, bad debt and/or discounts; and any
other information reasonably requested by PSI. In addition. SMOJ shall provide
PSI with a [*] report at a reasonable level of detail (including an English
executive summary) on the technical and customer support, marketing, promotion,
distribution and other activities taken by the Business unit
CONFIDENTIAL TREATMENT REQUESTED
[*] PORTIONS REDACTED FROM XXXXX VERSION
during such prior [*] in connection with developing the Business, which report
shall include, without limitation, an explanation for any differences between
the planned activities as agreed upon in the then-current Annual Operating Plan
and the actual activities undertaken by the Business Unit during such prior
fiscal quarter. Within [*] ([*]) days after the end of each [*], PSI shall
provide SMOJ with a written referral fee report, which shall set forth the basis
for the calculation of the referral fees due SMOJ for those Japanese customers
whom SMOJ introduces to PSI and who install any Localized Software outside of
the Territory pursuant to Section 2.4 of this Agreement, including the following
information: the number of units of the Localized Software (on a product by
product basis) licensed during such [*]; a description of the type of Localized
Software (on a product by product basis) acquired by each End User; the name of
each End User; the gross amount received for any use or licensing of the
Localized Software; any amounts paid or credited for returns, rebates,
exchanges, bad debt and/or discounts.
4.8. Audit Rights. SMOJ shall keep and maintain (and shall require, as
reasonably consistent with SMOJ's normal practices for its Distributors, each of
its Distributors to maintain) full, true, and accurate books and records
containing all data reasonably required for verification of SMOJ's (and any such
Distributor's) compliance with the terms of this Agreement, including without
limitation, the quantity of Localized Software distributed (on a product by
product basis), the Gross Revenues received by the Business Unit, and the
amounts to be paid hereunder. PSI shall have the right, during normal business
hours upon at least fourteen (14) days prior notice, to audit and analyze the
relevant records of SMOJ (and any such Distributor) to verify compliance with
the provisions of this Agreement. The audit shall be conducted at PSI's expense
unless there is inadequate record keeping or the results of such audit establish
that inaccuracies have resulted in underpayment to PSI of more than [*] percent
([*]%) of the amount actually due, in which case SMOJ shall, in addition to
paying promptly all amounts due bear the expenses of the audit.
5. PROPRIETARY RIGHTS
As between PSI and SMOJ, PSI retains and shall exclusively own all right, title
and interest (including, without limitation, all patent rights, copyrights,
trademarks, trade secrets and any other intellectual property rights) in and to
the ZipLock ESD System and the Localized Software (including, without
limitation, any New Product) and any copy, Fix, Enhancement or other Derivative
Work of the any of the foregoing or any portion thereof, and SMOJ hereby assigns
to PSI all right, title and interest in and to any Enhancements or other
Derivative Works of any of the foregoing that may be developed by SMOJ unless
otherwise mutually agreed. SMOJ agrees to cooperate reasonably with PSI, [*],
in any action to evidence, maintain, enforce or defend PSI's rights in the
foregoing items. SMOJ shall not take any action to jeopardize, limit or
interfere in any manner with PSI's ownership of and rights with respect to any
of the foregoing items.
6. CONFIDENTIAL INFORMATION
6.1. Restrictions on Use and Disclosure. A party receiving any
Confidential Information ("Recipient") from the other party ("Discloser") (i)
shall hold all such Confidential Information in strict confidence, shall use and
reproduce such information only to the extent reasonably required to exercise
Recipient's rights and/or fulfill Recipient's obligations hereunder, and shall
not use such Confidential Information for any purpose other than the purposes
contemplated by this Agreement; and (ii) shall not disclose or otherwise make
available directly or indirectly, any of Discloser's Confidential Information to
any third party (including, without limitation, Sony Corporation or any other
Affiliate of SMOJ) without the prior written permission of Discloser.
Recipient, however, may disclose Discloser's Confidential Information in
confidence only to Recipient's employees and agents who have a need to know such
Confidential Information, and who are each obligated by a written agreement to
comply with confidentiality and nondisclosure obligations substantially similar
to those set forth in this Section 6, and/or to Recipient's lawyers,
accountants, banks and financing sources, who each owe a legal and binding duty
of confidentiality to Recipient. Recipient shall take all reasonable measures,
and in any event no less than the same degree of care that it uses to protect
its own confidential and proprietary information of similar nature and
importance (but no less than reasonable care), to protect the confidentiality
and avoid the unauthorized use, disclosure, publication, or dissemination of
Discloser's Confidential Information. SMOJ acknowledges and agrees that the
Localized Software constitutes and contains valuable Confidential Information
and trade secrets of PSI and its licensors, and embodies substantial creative
efforts and Confidential Information, ideas and expressions. All Confidential
Information of a Discloser shall remain the sole property of such Discloser.
CONFIDENTIAL TREATMENT REQUESTED
[*] PORTIONS REDACTED FROM XXXXX VERSION
6.2. Exclusions. The foregoing restrictions on disclosure and use set
forth in Section 6.1 shall not apply with respect to any Confidential
Information to the extent which such Confidential Information: (i) is now or
later becomes publicly known through no act or omission of Recipient; (ii) was
known by Recipient prior to receipt from Discloser; (iii) becomes known to
Recipient without confidential or proprietary restriction from a source other
than Discloser that does not owe a duty of confidentiality to Discloser with
respect to such Confidential Information or without breach of any obligation to
Discloser; or (iv) is independently developed by Recipient without the use of
the Confidential Information of Discloser. In addition, Recipient may use or
disclose Confidential Information to the extent (a) approved in advance in
writing by Discloser and/or (b) Recipient is legally compelled to disclose such
Confidential Information, provided, however, that prior to any such compelled
disclosure, Recipient shall cooperate reasonably with Discloser in protecting
against any such disclosure and/or obtaining a protective order narrowing the
scope of such disclosure and/or use of the Confidential Information.
6.3. Return of Confidential Information. Upon termination of this
Agreement, Recipient shall deliver immediately to Discloser all intellectual
property, including the Localized Software, belonging to Discloser and all
written information and material containing or constituting Confidential
Information of Discloser, including, without limitation, any copies in
Recipient's possession or control, whether prepared by Recipient or by others.
Upon Discloser's request, Recipient shall immediately deliver to Discloser all
Confidential Information of Discloser, including without limitation any copies
in Recipient's possession or control, whether prepared by Recipient or others.
Upon Discloser's request, Recipient shall promptly provide an affidavit signed
by an officer of Recipient certifying that such delivery has been made.
6.4. Remedies. Recipient acknowledges and agrees (i) that due to the
unique nature of Discloser's Confidential Information, there can be no adequate
remedy at law for any breach of Recipient's obligations hereunder, (ii) that any
such breach may allow Recipient or third parties to unfairly compete with
Discloser resulting in irreparable harm and significant injury to Discloser,
which will be difficult to estimate and ascertain; and therefore, (iii) that
upon any such breach or any threatened breach thereof, Discloser shall be
entitled to seek all immediate injunction, temporary restraining order,
attachment, and/or other appropriate equitable relief, in addition to whatever
remedies it might have at law, without the necessity of posting any bond or
security. Recipient shall notify Discloser in writing immediately upon the
occurrence (or reasonably anticipated occurrence) of any such unauthorized
release or other breach of the obligations of this Section 6.
7. WARRANTY
7.1. Warranty by PSI.
7.1.1. Limited Warranty. PSI represents and warrants only to SMOJ
that (i) PSI has full corporate power and authority to enter into this Agreement
and to perform its obligations hereunder; (ii) during the Warranty Period, the
Localized Software (including, without limitation, any New Products or
Enhancements provided by PSI to SMOJ hereunder), in the form provided by PSI to
SMOJ and when properly installed and used, will materially conform to the
applicable functional specifications for such software in effect when such
Localized Software is shipped to SMOJ; and (iii) to PSI's knowledge, the
Localized Software does not infringe on any third party U.S. or Japanese patent,
U.S. or Japanese copyright, U.S. or Japanese trademark, or U.S. or Japanese
trade secret. All warranty claims in connection with clause (ii) of the
immediately preceding sentence which are not made in writing or not received by
PSI within the Warranty Period shall be deemed waived. PSI's warranty and
obligation is solely for the benefit of SMOJ, who has no authority to extend
this warranty to any other person or entity.
7.1.2. Export Approval. The parties recognize that PSI's ability to
export its technology to SMOJ is a fundamental basis for this Agreement. PSI
has a mass market exemption from United States government export restrictions
for all elements of the ZipLock ESD System, with the exception of the ZipLock
Builder. The ZipLock Builder is subject to United States government export
restrictions. Export approval is required on a customer by customer basis, for
a specific use. Approval is based on an applicant's agreement to responsible
use and control of the encryption technology, and limits the use of the
technology to ESD, the sale and distribution of other digital goods, and related
information (such as manuals, guides, CD's, etc.). To date, PSI has received
export approval from the United States government for the ZipLock Builder for
every applicant. PSI shall use commercially reasonable efforts to obtain such
export approval from United States government for the ZipLock
CONFIDENTIAL TREATMENT REQUESTED
[*] PORTIONS REDACTED FROM XXXXX VERSION
Builder and/or other ZipLock ESD System and any New Product, if necessary, for
SMOJ, its Distributors and its End Users in accordance with the requests made by
SMOJ from time to time at PSI's cost and responsibility. SMOJ agrees to
reasonably cooperate with PSI in obtaining such approvals and to bear a portion
of the costs and application fees actually paid by PSI, provided, however, that
in no event shall the portion of the application fees which SMOJ bears exceed
$[495] for each application. The parties will cooperate with each other in
-----
obtaining export licenses for the ZipLock Builder and/or other ZipLock ESD
System and any New Product, if necessary, for SMOJ, its Distributors and its End
Users, as appropriate. While PSI does not anticipate any undue difficulty in
obtaining export approval for the ZipLock Builder and/or other ZipLock ESD
System and any New Product, if applicable, for SMOJ, its Distributors or its End
Users, the parties recognize that United States government policies and laws are
subject to change. If the United States export laws on this matter do change,
the parties agree to work together to meet the new export requirements.
7.1.3. Disclaimer. The express warranty set forth in Section 7.1.1
constitutes the only warranty made by PSI with respect to the Localized Software
and this Agreement. PSI makes no other representation or warranty or condition
of any kind, whether express or implied (either in fact or by operation of law),
with respect to the Localized Software or this Agreement. PSI expressly
disclaims all other representations or warranties, including, without
limitation, all warranties of merchantability or fitness for a particular
purpose. PSI does not warrant that the Localized Software will be error-free or
that operation of the localized software will be uninterrupted, and hereby
disclaims any and all liability on account thereof. There is also no implied
warranty of non-infringement, the sole remedy for infringement is provided in
Section 8. This Section 7.1.3 shall be enforceable to the maximum extent allowed
by applicable law.
7.1.4. Defects Not Covered by Warranties. PSI shall leave no
obligations or liability under the warranty provisions set forth in Section
7.1.1 for: (i) any use of other than the then-current, unaltered version of the
Localized Software; (ii) any enhancement or other modification of the Localized
Software except as authorized or performed by PSI; (iii) any accident,
transportation, neglect or misuse of the Localized Software; or (iv) failure to
provide a suitable installation environment, or use of the Localized Software on
any systems other than the specified hardware platform and software programs for
the Localized Software as set forth in the Documentation therefor.
7.1.5. Exclusive Remedy. If SMOJ finds what it believes to be a
material breach of the warranty set forth in Section 7.1.1. and provides PSI
with a written report during the Warranty Period that describes such material
breach in sufficient detail for PSI to be able to respond, PSI will, at PSI's
option and at no additional charge to SMOJ, repair or replace the defective
Localized Software. The foregoing is SMOJ's sole and exclusive remedy, and
PSI's sole and exclusive liability, for any breach of any express or implied
warranties hereunder. PSI MAKES NO WARRANTY THAT ALL ERRORS, FAILURES OR
DEFECTS WILL BE CORRECTED.
7.2. Warranty by SMOJ. SMOJ represents and warrants only to PSI that SMOJ
has full corporate power and authority to enter into this Agreement and to
perform its obligations hereunder.
8. INDEMNIFICATION
8.1. Indemnification by PSI. PSI agrees to indemnify, hold harmless and
defend SMOJ and its directors, officers, employees and agents from and against
any and all third party claims, suits, actions or proceedings and all damages,
costs, expenses, judgements, awards, settlements and other liabilities
relating thereto (including reasonable attorneys' fees and costs) to the
extent arising from or relating to any third party claim that SMOJ's use or
possession of the Localized Software, or the license granted hereunder,
infringes or violates any U.S. or Japanese patent, U.S. or Japanese copyright,
U.S. or Japanese trademark or U.S. or Japanese trade secret of any third
party. Should any of the Localized Software herein become or, in PSI's
opinion, be likely to become subject to such a claim, (i) PSI shall, at its
own option and expense (a) procure for SMOJ the right to continue using such
Localized Software or (b) modify the Localized Software so that it becomes non-
infringing; and (ii) pending such license or such modification by PSI, SMOJ
shall cooperate reasonably with PSI to initiate any damages relating to such
claim, including, without limitation, limiting further distribution of the
Localized Software. In the latter case, PSI and SMOJ shall modify the Minimum
Performance Criteria set forth in Section 4.3 of this Agreement to fairly
reflect the impact of SMOJ's limitation of distribution, pursuant to PSI's
request. PSI shall leave no liability for (a) any modification of the
Localized Software other than as authorized or performed by PSI, (b) any use
of other than the then-current, unaltered version of the Localized Software;
or (c) any use, operation or combination of the Localized Software with other
non-PSI programs, data, equipment or documentation if such liability would
have been avoided but for such use, operation or combination. This Section
CONFIDENTIAL TREATMENT REQUESTED
[*] PORTIONS REDACTED FROM XXXXX VERSION
8.1 states the entire liability of PSI and the exclusive remedy of PSI with
respect to infringement of any intellectual property rights, whether under
theory of warranty, indemnity or otherwise.
8.2. Indemnity by SMOJ. SMOJ shall indemnify, hold harmless and defend
PSI and its directors. officers, employees, and agents from and against any and
all claims, suits, actions or proceedings and all damages, costs, expenses,
judgements, awards, settlements and other liabilities relating thereto
(including reasonable attorneys' fees and costs) arising from or relating to any
marketing, distribution, support or other use of the Localized Software by SMOJ
or the operation of the Business; provided that SMOJ shall not be liable under
this Section 8.2 for any claim, suit, action or proceeding to the extent for
which PSI has liability under Section 8.1.
8.3. Notice; Cooperation; Control. A party ("Indemnifying Party") shall
not be obligated to indemnify, hold harmless and defend the other party
("Indemnified Party") hereunder unless (and only to the extent) the Indemnified
Party (i) promptly notifies the indemnifying Party of any claim, suit, action or
proceeding for which indemnification is sought (provided that any failure to
provide such notice shall not diminish the Indemnifying Party's obligations
under this Section 8 unless. and only to the extent that. the Indemnifying Party
is materially prejudiced as a result of any such failure to provide such prompt
notice): (ii) provides reasonable cooperation to the Indemnifying Party at the
Indemnifying Party's expense: and (iii) allows the Indemnifying Party to control
the defense and any settlement of such claim, suit, action or proceeding,
provided that (a) the Indemnified Party may, at its option and expense,
participate and appear with the Indemnifying Party in such claim, suit, action
or proceeding and (b) neither party may settle any such claim, suit, action or
proceeding without the other party's prior written approval, which will not be
unreasonably withheld or delayed.
9. LIMITATION OF LIABILITY
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY OR THE FAILURE
OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY: (I) IN NO EVENT SHALL EITHER PARTY
OR ITS SUPPLIERS BE LIABLE UNDER ANY LEGAL THEORY FOR ANY LOSS OF PROFITS OR
SAVINGS, LOSS OF BUSINESS, LOSS OF USE OR DATA, INTERRUPTION OF BUSINESS, OR ANY
INDIRECT. SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND
ARISING OUT OF OR RELATING TO THIS AGREEMENT, EVEN IF THAT PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, HOWEVER CAUSED; AND (II) IN NO EVENT
SHALL PSI'S AGGREGATE LIABILITY RELATED TO THIS AGREEMENT UNDER ANY LEGAL THEORY
EXCEED THE AMOUNTS ACTUALLY RECEIVED BY PSI HEREUNDER DURING THE PREVIOUS TWELVE
(12) MONTHS FOR THE APPLICABLE LOCALIZED SOFTWARE GIVING RISE TO SUCH LIABILITY.
10. TERM AND TERMINATION
10.1. Term; Renewal. This Agreement shall commence on the Effective Date
and, unless sooner terminated in accordance with this Agreement, shall continue
in full force and effect for the Initial Term. Thereafter, this Agreement may
be renewed by SMOJ for up to three (3) additional, successive Renewal Terms of
three (3) years each: provided that (i) SMOJ provides PSI with written notice of
SMOJ's election to renew this Agreement for all additional Renewal Term within
One hundred eighty (180) days prior to the end of the Initial Term or then-
current Renewal Term and (ii) the parties have first agreed in writing on
appropriate Performance Criteria for the immediately following Renewal Term.
10.2. Termination for Breach of Performance. If either party defaults in
the performance of any material provision of this Agreement, then the non-
defaulting party may give written notice to the defaulting party describing the
default and stating that if the default is not cured within thirty (30) days the
Agreement will be terminated. If the non-defaulting party gives such notice and
the default is not cured during the thirty (30) day period, then the non-
defaulting party may terminate this Agreement at the end of such period by
providing written notice thereof to the defaulting party. If PSI is the
defaulting party during the Initial Term of this Agreement, and does not cure
such default as provided herein, and SMOJ therefore terminates this Agreement,
then PSI shall return to SMOJ a pro rata portion of the $[*] up-front license
and service fee paid pursuant to Section 4.1 of this Agreement, where the pro
rata portion will be determined as the balance of the number of days remaining
in the Initial Term from the date of termination divided by the total number of
days in the Initial Term as contemplated by this agreement.
CONFIDENTIAL TREATMENT REQUESTED
[*] PORTIONS REDACTED FROM XXXXX VERSION
10.3. Termination for Bankruptcy. Either party may terminate this Agreement
immediately upon written notice if at any time the other party (a) becomes
insolvent; (b) fails to pay its debts or perform its obligations in the ordinary
course of business as they mature: (c) is declared insolvent or admits in
writing its insolvency or inability to pay its debts or perform its obligations
as they mature; or (d) becomes the subject of any voluntary or involuntary
proceeding in bankruptcy, liquidation, dissolution, receivership, attachment or
composition or general assignment for the benefit of creditors, provided that,
in the case of an involuntary proceeding, the proceeding is not dismissed with
prejudice within sixty (60) days after the institution thereof.
10.4. Effect of Termination. Upon any expiration or termination of this
Agreement, all licenses granted to SMOJ hereunder (and all sublicenses granted
in accordance with this Agreement) shall immediately terminate; provided that
any Distributor Agreements and/or End User License Agreements entered into by
SMOJ in accordance with this Agreement prior to the effective date of such
termination (i) shall survive for the time period set forth in the applicable
Distributor Agreement and/or End User License Agreement, provided that, and for
so long as, such Distributor or End User, as applicable, is in compliance with
the terms and conditions of such Distributor Agreement and/or End User License
Agreement and (ii) SMOJ hereby assigns all such Distributor Agreements and End
User License Agreements (including. without limitation, all of SMOJ's rights
therein) to PSI upon the effective date of any expiration or termination of this
Agreement. Within five days after expiration or any termination of this
Agreement, SMOJ shall return to PSI the original copies of the Localized
Software and all PSI Confidential Information, and shall return and account for
all copies and extracts of the foregoing, and PSI shall return to SMOJ the
original copies of all SMOJ Confidential Information and shall return and
account for all copies and extracts of the foregoing. Upon each party's
request, the other party shall provide the requesting party with a written
statement signed by an officer of the other party certifying that such return or
destruction has occurred. Termination of this Agreement by either party shall
not act as a waiver of any breach of this Agreement and shall not act as a
release of either party from any liability for breach of such party's
obligations under this Agreement. Neither party will be liable to the other for
damages of any kind which arise solely as a result of terminating this Agreement
in accordance with its terms, and termination of this Agreement by a party will
be without prejudice to any other right or remedy such party under this
Agreement or applicable law.
10.5. Survival. Sections 1, 2.3.3, 2.5, 4.2(ii), 3.4.3(ii), 4, 5, 6,
7.1.1, 7.1.4, 7.1.5, 8, 9, 10.4, 10.5, and 11 shall survive any expiration or
termination of this Agreement.
11. GENERAL PROVISIONS
11.1. Notices. Any notice, request, demand, or other communication
required or permitted hereunder shall be in writing, shall reference this
Agreement and shall be deemed to be properly given: (i) when delivered
personally; (ii) when sent by facsimile, with written confirmation of receipt;
(iii) seven (7) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) five (5) business days after
deposit with a private industry express courier, with written confirmation of
receipt. All notices shall be sent to the address set forth below (or to such
other address as may be designated by a party by giving written notice to the
other party pursuant to this Section 11.1):
If to SMOJ: If to PSI:
Sony Marketing (Japan), Inc. Preview Systems, Inc.
4-10-18 Tanakawa 0000 X. Xx Xxxx Xxxx., Xxxxx 000
Xxxxxx-xx Xxxxxxxxx, XX 00000
Tokyo, 108-0074 U. S. A.
Japan Attn: [*]
Attn: [*] Fax: [*]
Fax: [*] Phone: [*]
Phone: [*]
11.2. Assignment. This Agreement may not be assigned or otherwise
transferred, in whole or in part, whether voluntarily, by operation of law or
otherwise, by either party without the prior written consent of the other party,
provided however that if the other party refuses to so consent with respect to
the acquisition of the first party,
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the requesting party may elect to terminate this Agreement. Subject to the
preceding sentence, the rights and liabilities of the parties hereto will bind,
and inure to the benefit of, their respective assignees and successors and is
binding on the parties and their successors and assigns. Any attempted
assignment or other transfer other than in accordance with this Section 11.2
shall be null and void.
11.3. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, U.S.A., without reference
to California's conflicts of law provisions.
11.4. Arbitration. The parties agree that, should any dispute of any
nature arise between them during the term of this Agreement, they shall first
attempt in good faith to resolve any such dispute amicably through discussion
and negotiation. If a dispute cannot be resolved informally, the parties will
exchange their views in writing and will meet and confer in person or by
telephone and attempt in good faith to resolve the dispute prior to commencing
any legal action. If the foregoing process fails, any controversy or claim
arising out of or relating to this Agreement shall be settled by arbitration in
San Francisco, California, in accordance with the then-prevailing commercial
arbitration rules of the American Arbitration Association (or such other body
mutually agreeable to the parties), and applying California law and/or U.S.
federal law, if applicable. Unless otherwise agreed by the parties, the
arbitration shall be conducted in English, and all documents submitted by the
parties must be in English. Sections 11.1 (Notices) and 11.3 (Governing Law)
are incorporated herein by reference. The arbitrator(s) shall have the power to
grant injunctive or other equitable relief. Notwithstanding the foregoing, (i)
either party may seek in injunctive or other equitable relief in a court of
competent jurisdiction pending the outcome of such arbitration, and (ii) any
judgment against a party upon the decision rendered by such arbitration, and/or
any injunctive or other equitable relief granted by such arbitration, may be
entered in any court having competent jurisdiction over the party or its assets.
11.5. Attorneys' Fees. If any legal action, including, without
limitation, an action for arbitration or injunctive relief is brought relating
to this Agreement or the breach hereof, the prevailing party in any final
judgment or arbitration award, or the non-dismissing party in the event of a
dismissal without prejudice, shall be entitled to the full amount of all
reasonable expenses, including all court costs, arbitration fees and actual
attorney fees paid or incurred in good faith.
11.6. Expenses. Except as otherwise provided herein, each party will bear
its own costs and expenses relating to the negotiation of this Agreement and the
exercise of its rights and the performance of its duties hereunder, including,
without limitation, any fees and expenses of attorneys, accountants, investment
bankers, consultants and other representatives retained or used by such party.
11.7. Waiver. The waiver by either party of a breach of or a default
under any provision of this Agreement, shall be in writing and shall not be
construed as a waiver of any subsequent breach of or default under the same or
any other provision of this Agreement, nor shall any delay or omission on the
part of either party to exercise or avail itself of any right or remedy that it
has or may have hereunder operate as a waiver of any right or remedy.
11.8. Severability. If the application of any provision of this Agreement
to any particular facts of circumstances shall be held to be invalid or
unenforceable by an arbitration panel or a court of competent jurisdiction, then
(i) the validity and enforceability of such provision as applied to any other
particular facts or circumstances and the validity of other provisions of this
Agreement shall not in any way be affected or impaired thereby and (ii) such
provision shall be enforced to the maximum extent possible so as to effect the
intent of the parties and reformed without further action by the parties to the
extent necessary to make Such provision valid and enforceable.
11.9. Relationship of the Parties. Nothing contained in this Agreement
shall be deemed or construed as creating joint venture, partnership, agency,
employment or fiduciary relationship between the parties. Neither party nor its
agents by virtue of this Agreement shall have any authority of any kind to bind
the other party in any respect whatsoever, and the relationship of the parties
is, and at all times shall continue to be, that of independent contractors.
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11.10. Cumulative Remedies. The rights and remedies of either party as
set forth in this Agreement are not exclusive and are in addition to any other
rights and remedies now or hereafter provided by law or at equity.
11.11. Force Majeure. Except for the payment of monies due hereunder,
neither party shall be responsible for its failure to perform to the extent due
to unforeseen circumstances or causes beyond its control, such as acts of God,
wars, riots, embargoes, government actions, acts of civil or military
authorities, fires, floods, earthquakes, accidents, or strikes, provided that
(i) such party gives the other party prompt written notice of the failure to
perform and the reason therefor and uses its reasonable efforts to limit the
resulting delay in its performance and (ii) in no event will a failure to
perform be excused for a period of more than sixty (60) days, unless otherwise
agreed by the parties.
11.12. Construction. This Agreement has been negotiated by the parties
and shall be interpreted fairly in accordance with its terms and without any
construction in favor of or against either party.
11.13. Captions and Section Headings. The captions and section and
paragraph headings used in this Agreement are inserted for convenience only and
shall not affect the meaning or interpretation of this Agreement.
11.14. Counterparts. This Agreement may be executed (including, without
limitation, by facsimile signature) in one or more counterparts, with the same
effect as if the parties had signed the same document. Each counterpart so
executed shall be deemed to be an original, and all such counterparts shall be
construed together and shall constitute one Agreement.
11.15. Entire Agreement; Amendment. This Agreement, including the
Exhibit(s) attached hereto which are incorporated herein by this reference,
constitutes the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior or contemporaneous representations,
discussions, proposals, negotiations, conditions, agreements and communications,
whether oral or written, between the parties relating to the subject matter of
this Agreement and all past courses of dealing or industry custom. No amendment
or modification of any provision of this Agreement shall be effective unless in
writing and signed by a duly authorized signatory of each of the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by duly authorized representatives of the parties as of the Effective Date.
"SMOJ" "PSI"
SONY MARKETING (JAPAN), INC. PREVIEW SYSTEMS, INC.
By: /s/ Xxxxxxxxx Xxxxxx By: /s/ Xxxxxx Xxxxxxxx
-- ----------------------- -------------------------
Signature Signature
Name: Xxxxxxxxx Xxxxxx Name: Xxxxxx Xxxxxxxx
------------------------ -----------------------
Print or Type Print or Type
Title: Senior Managing Director Title: Chief Financial Officer
------------------------ -----------------------
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Appendix 1: Initial Operating Plan
[Attach Current Draft Of Initial Operating Plan]
1. Launch date: October 31, 1998
2. Fulltime personnel employed by SMOJ at launch of business:
- [*]
- [*]
- [*]
3. Delivery of initial Localized Software: To be determined by mutual
agreement of the parties
4. Other Business elements to be developed:
a. Sales, partner, and distribution plans
b. Marketing and promotion plans
c. Technical support plans
d. Training plans
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