AGREEMENT
This Agreement is made as of the 19th day of June, 1998 by and between VOICE IT
Worldwide, Inc., a Colorado corporation with a principal place of business in
Fort Xxxxxxx, Colorado ("VOICE IT") and Dragon Systems, Inc. having its
principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
("DRAGON").
The following are the terms and conditions under which VOICE IT sells and
licenses a certain VOICE IT product (hereinafter referred to as "PRODUCT") to
DRAGON.
1. APPOINTMENT/PRODUCT
VOICE IT hereby appoints DRAGON as an authorized reseller for the PRODUCT
specified in the attached Exhibit B and made a part of this Agreement.
2. TERM
2.1 This Agreement shall become effective on the date stated above and,
unless terminated as herein provided, shall continue in full force and
effect on a year to year basis.
3. ADDED VALUE
3.1 DRAGON certifies that, in the regular course of its business, the
PRODUCT purchased hereunder will be significantly enhanced by
integrating computer products that are manufactured, marketed, and
supported by DRAGON. Notwithstanding the previous sentence, DRAGON may
sell the PRODUCT to its installed base of customers as an upgrade
without including its ADDED VALUE.
4. TERRITORY
4.1 Except as set forth in Exhibit A, DRAGON will have the NON-EXCLUSIVE
right to market, sell, and promote the PRODUCT on a worldwide basis.
4.2 Except as set forth in Exhibit A, VOICE IT expressly reserves the
right to market, solicit sales, sell, lease, rent or otherwise dispose
of the PRODUCT to others in the Territory, including, but not limited
to, VOICE IT national accounts, commercial customers, or other
resellers.
5. PRICE AND PAYMENT TERMS
5.1 Prices for the PRODUCT purchase/licensed under this Agreement shall be
as specified in Exhibit B to this Agreement. VOICE IT warrants that
the prices charged to DRAGON shall not exceed the lowest prices
offered to any other customer purchasing the same or similar products
for the same or similar quantities. In the event VOICE sells or offers
to sell the same or similar products for less than the price paid by
DRAGON, then VOICE IT shall immediately credit DRAGON for the amount
of any difference in price from the time the lower price was first
offered.
5.2 Prices are exclusive of all sales, use and like taxes. DRAGON shall
pay all taxes associated with the sale and licensing of all VOICE IT
PRODUCTS purchased or licensed under this Agreement, exclusive of
taxes based on Voice IT's income.
5.3 Subject to VOICE IT's credit approval, payment is due within
forty-five (45) days from the date of shipment, except for the initial
order of 46,000 units which shall have payment terms in accordance
with Section 5.4 below.
5.4 Within forty-five (45) days of the execution of this Agreement, DRAGON
will make an advance payment to VOICE IT in the amount of one hundred
thousand dollars ($100,000). This advance will be credited from the
initial payment due from DRAGON. To assist VOICE IT in delivering the
initial payment due from DRAGON. To assist VOICE IT in delivering the
initial 23,000 units, DRAGON will post a commercial letter-of-credit
in the amount of one million, seven hundred fifty thousand dollars
($1,750,000). This will be a sight draft for the initial 23,000 units.
The second 23,000 units shall have payment terms of thirty (30) days
from the date of shipment. Any fees associated with obtaining the
letter-of-credit shall be the responsibility of VOICE IT.
6. PURCHASE ORDERS, SHIPMENT AND CHANGES
6.1 All PRODUCTS shall be delivered to one location designated by DRAGON,
on an F.O.B. origin basis upon transfer to a common carrier. All
transportation, insurance, rigging and drayage charges shall be paid
by VOICE IT.
6.2 Upon execution of this Agreement, DRAGON will submit a non-cancelable
purchase order for an initial quantity of forty-six thousand (46,000)
units of PRODUCT to be delivered in September, October, November and
December of 1998. Thereafter, DRAGON may submit non-cancelable orders
on a monthly basis for delivery with a ninety (90) day lead time.
DRAGON will provide VOICE IT with a rolling, non-binding 6 month
forecast on a monthly basis.
6.3 If any order is delayed and not shipped within ten (10) days from the
original schedule ship date, then DRAGON may cancel such order and
will have no liability for any payment for such order. If any order is
not shipped within twenty-five (25) days from the original scheduled
ship date, DRAGON may cancel the Agreement immediately. DRAGON's
rights of cancellation in this section shall no t apply in the event
of circumstances beyond the control of VOICE IT, such as "acts of
God". Upon such cancellation and termination, in addition to any other
rights DRAGON may have as stated in this Agreement or at law or in
equity, DRAGON shall be refunded the amount of any advance payments
not repaid.
7. RELATIONSHIP
7.1 DRAGON's relationship to VOICE IT will be that of an independent
contractor engaged in purchasing and licensing PRODUCTS for resale to
DRAGON's end-user customers. DRAGON and its employees are not agents
for legal representatives of VOICE IT for any purpose and have no
authority to act for, bind or commit VOICE IT.
7.2 Any commitment made by DRAGON to its customers with respect to
quantities, delivery, modifications, interfacing capability,
suitability of software, or suitability in specific applications will
be DRAGON's sole responsibility. DRAGON has not authority to modify
the warranties contained in this Agreement or to make any other
commitment on behalf of VOICE IT, and DRAGON will indemnify and defend
VOICE IT from any liability, suit or proceeding for any such modified
warranty or other commitment by DRAGON.
7.3 DRAGON has the right to determine its own resale prices, and no VOICE
IT representative will require that any particular price by charged by
DRAGON or grant or withhold any treatment to DRAGON based on DRAGON's
pricing policies. DRAGON agrees that it will promptly report directly
to a VOICE IT officer any effort by VOICE IT personnel to interfere
with its pricing policies.
7.4 This Agreement applies only to the PRODUCT listed on the Exhibit B
attached hereto. DRAGON acknowledges that VOICE IT may market products
other than those listed on said Exhibit B without making them
available to DRAGON.
8. LIMITATION OF LIABILITY
8.1 VOICE IT and DRAGON may not institute any action in any form arising
out of or in any way connected with this Agreement more than eighteen
(18) months after the cause of action has arisen.
8.2 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY
SPECIAL, INDIRECT, INCIDENTAL, RELIANCE OR CONSEQUENTIAL DAMAGES,
INCLUDING BUT NOT LIMITED TO, ANY DAMAGES RESULTING FROM LOSS OF USE,
DATA OR PROFITS, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR
OTHERWISE.
9. INDEMNITY
9.1 VOICE IT will defend DRAGON against a claim that a PRODUCT supplied
hereunder infringes any patent, copyright, or other proprietary right
of a third party. VOICE IT will indemnify DRAGON and hold it harmless
from and against any loss, liability and any costs, expenses and
reasonable attorneys' fees awarded, provided that: DRAGON promptly
notifies VOICE IT in writing of the claim; VOICE IT has sole control
of the defense and all related settlement negotiations; and DRAGON
provides VOICE IT complete information concerning the claim.
9.2 VOICE IT's obligation hereunder is conditioned on DRAGON's agreement
that if any PRODUCT becomes or in VOICE IT's opinion is likely to
become the subject of such a claim, DRAGON will permit VOICE IT, at
its option and expense either to procure the right for DRAGON to
continue using the PRODUCT or to replace or modify the same so that it
becomes non-infringing.
10. QUALITY
10.1 VOICE IT agrees to deliver defect fee materials to DRAGON at all
times, which will conform to the specification contained in Exhibit C.
VOICE IT agrees to provide relevant outgoing inspection, quality, and
reliability data upon DRAGON's request.
10.2 All PRODUCTS delivered shall have received all necessary governmental
approvals.
11. WARRANTY
11.1 VOICE IT warrants (1) that title to all PRODUCTS delivered to DRAGON
under this Agreement shall be free and clear of all liens,
encumbrances, security interests or other claims; (2) that all
PRODUCTS shall be free from defects in material, workmanship, and
design for a period of nine (9) months from the date of delivery; (3)
that all PRODUCTS shall conform to applicable specifications,
drawings, samples and descriptions provided by VOICE IT shall operate
on a reliable and stable basis and shall be of merchantable quality
and suitable for the purpose intended, per the relevant
specifications; and (4) all PRODUCTS shall be new and unused. VOICE IT
warrants that it shall make all necessary changes to the PRODUCTS to
enable said PRODUCTS to comply with all federal, state and local laws,
rules and regulations, free of charge, provided such changes are
technically feasible in VOICE IT's reasonable judgment. In the event a
PRODUCT is defective under this warranty, DRAGON shall have the option
of having VOICE IT, at VOICE IT's expense, (1) promptly repair or
replace the defective PRODUCTS; or (2) issue a credit for the full
purchase price of the defective PRODUCTS. The warranty for replaced or
repaired PRODUCTS will be the same as the original warranty for the
PRODUCTS. The foregoing warranty shall not apply for failures or
defects in PRODUCTS due to accident, neglect, misuse or unauthorized
modification.
12. TERMINATION
12.1 Either DRAGON or VOICE IT may terminate this Agreement if the other
party commits a breach of any obligation hereunder which is not
remedied within thirty (30) days of receipt of written notice
specifying such breach.
12.2 EITHER PARTY shall have the right to terminate this Agreement
immediately in the event that THE OTHER PARTY becomes insolvent, or
has filed against it a petition under any bankruptcy code (or any
similar petition under any insolvency law of any jurisdiction),
proposes any dissolution, liquidation, composition, financial
reorganization or recapitalization with creditors, makes assignment or
trust mortgage for the benefit of creditors, or if a receiver,
trustee, custodian or similar agent is appointed or takes possession
with respect to any property or business of that party.
12.3 Each party acknowledges that the other has made no commitments
regarding duration or renewal of this Agreement beyond those expressly
stated herein. Either party may terminate this Agreement or any
purchase order placed pursuant to this Agreement, with or without
cause, at any time upon ninety (90) days written notice.
12.4 Termination of this Agreement shall not affect any of either party's
pretermination obligations hereunder. Orders shipped after the term of
this Agreement shall be subject to all terms and conditions of this
Agreement. Any termination of this Agreement shall be without
prejudice to the enforcement of any un-discharged obligation existing
at the time of termination.
12.5 In the event that this Agreement is terminated by DRAGON for material
breach or per Section 6.3 of the Agreement or VOICE IT is unable or
unwilling to fulfill any of its obligations hereunder, VOICE IT will
promptly provide DRAGON with all necessary information, including but
not limited to manufacturing plans, product design drawings, and
intellectual property licenses as well as access to Vendors to allow
DRAGON, or its designee, to manufacture and distribute the PRODUCTS.
DRAGON will pay VOICE IT a license fee equal to twelve percent (12%)
of DRAGON's actual production costs of DRAGON or its designee
manufacture the PRODUCTS. DRAGON will obtain title to all work in
process for any orders it has placed and which have not been shipped
at the time of termination. All material will be paid for by DRAGON at
the lesser of VOICE IT's actual cost or fair market value.
13. NOTICES
13.1 All notices or other communications given by either party to the other
under this Agreement shall be in writing and shall be personally
delivered or sent by registered or certified mail, return receipt
requested, to the other party at its address set forth below or such
other address as a party may subsequently designate in writing. The
date of personal delivery or the date of mailing, as the case may be,
shall be deemed to be the date on which such notice is given.
DRAGON: with copy to:
Dragon Systems, Inc. Xxxx & Xxxx
000 Xxxxxx Xx. 00 Xxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx Attention: Xxxxxxx Xxxxxxxxxx
VOICE IT: with copy to:
Voice It Worldwide, Inc. Xxxxxx X. Xxxxxxxxx, P.C.
0000 Xxxxxxxx Xxxxx, Xxxxx X 0000 XXX Xxxxxxx, Xxxxx 000
Xx. Xxxxxxx, XX 00000 Xxxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
14. GENERAL PROVISIONS
14.1 Neither party may assign or transfer this Agreement, except in
conjunction with the sale or transfer of all or substantially of the
assets of a party. Either party will advise the other of any change in
its ownership, control or operating arrangements.
14.2 Either party's failure to enforce any provisions of this Agreement
will not be deemed a waiver of that provision or of the right to
enforce it in the future.
14.3 This Agreement, including the attached Exhibits, contains the entire
and only understanding between the parties and supersedes all prior
agreements either written or oral relating to the subject matter
hereof. DRAGON hereby gives notice of objection to any additional or
inconsistent terms set forth in any purchase order or other document
issued by VOICE IT and VOICE IT agrees that any shipments made by
VOICE IT shall be governed exclusively by the terms and conditions of
this Agreement. No modifications of this Agreement will be binding on
either party, unless made in writing and signed by persons authorized
to sign agreements on behalf of DRAGON and VOICE IT.
14.4 No United States Government procurement regulations will be deemed
included hereunder or binding on either party, unless specifically
accepted in writing and signed by both parties.
14.5 If any part of this Agreement shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment will not affect or
nullify the remainder of this Agreement, but the effect thereof will
be confined to the part immediately involved in the controversy
adjudged.
14.6 Neither VOICE IT nor DRAGON shall be liable for its failure to perform
hereunder due to contingencies beyond its reasonable control,
including, but not limited to, strikes, riots, wars, fire, acts of
God, or acts in compliance with any law or government regulation.
14.7 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts. Any lawsuit relating to
any matter arising under, or related to this Agreement, initiated by
or on behalf of VOICE IT against DRAGON, its employees, ex-employees,
officers, agents, or affiliates shall be initiated in the appropriate
state or Federal Court serving Middlesex County in the Commonwealth of
Massachusetts.
Any lawsuit relating to any matter arising this Agreement initiated by
DRAGON may be initiated in a state or Federal Court located in the
Commonwealth of Massachusetts or in any court having jurisdiction over
the matter, and accordingly, Licensee irrevocably consents to the
jurisdiction and to the service of process, pleadings, and notices in
connection with any and all actions and processes initiated in a state
or Federal court located in the Commonwealth of Massachusetts.
14.8 In the event that either VOICE IT or DRAGON brings suit against the
other party for any matter arising out of or in connection with this
Agreement, and the party which is sued is ultimately adjudicated to
not have liability, then the party bringing suit agrees to pay the
other party's reasonable attorneys' fees and litigation costs.
14.9 Any terms of the agreements between VOICE IT and Applied Voice
Recognition, Inc. and VOICE IT and Hexaglot are specifically excluded
from applying to any provisions in this Agreement.
14.10Paragraph titles are for reference purposes only and shall not
control or alter the meaning of this Agreement as set forth in the
text.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as of the day and year indicated above.
DRAGON SYSTEMS, INC. VOICE IT Worldwide, Inc.
By:/s/Xxxxx Xxxxxx By:/s/Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxx Xxxxxx Xxxxxxxxx
Chief Executive Officer Chief Executive Officer
EXHIBIT A
During the initial term of this Agreement, there shall be a Limited
Exclusivity as follows:
VOICE IT agrees that it will not make the PRODUCT available for
bundling to any major competitor (including, but not limited to, IBM,
and L&H) of DRAGON's in the retail market for a period of one year
from the date of first shipment under this Agreement. Notwithstanding
the previous sentence, VOICE IT may:
1. Offer products under the VOICE IT brand name with any other software into
the retail distribution channel.
2. Offer products under a non-DRAGON brand name to any software supplier in a
non-retail environment.
3. Offer products under the VOICE IT brand name as a stand-alone product to
VARs of any software supplier.
4. Offer upgrade solutions involving products to current owners of any voice
to text software.
DRAGON may offer upgrade solutions involving the PRODUCT to current owners of
any voice to text software.
DRAGON agrees that it will not manufacture products that utilize confidential
technology disclosed by VOICE IT to DRAGON pursuant to the Non Disclosure
Agreement signed between the parties.
For the Limited Exclusively to be effective, DRAGON must purchase a minimum of
5,000 units per month beginning in April 1999.
EXHIBIT B
PRODUCT:
Hand-held voice recorder with functionality meeting or exceeding the
functionality of VOICE IT Model No. ____________ which tested by DRAGON,
including Cable and Speech Link Software (master to be provided to DRAGON upon
completion).
The PRODUCT will be provided with a custom color exterior, DRAGON's logo on the
unit, and DRAGON's name on the screen at no extra charge. (Artwork to be
mutually agreed upon)
Pricing:
Price
Monthly Volume Annual Volume Per Unit
5,000 to 7,000 50,000 to 90,000 $ 80
7,501 to 10,000 90,001 to 120,000 $ 78
10,001 to 12,500 120,001 to 150,000 $ 77
12,501 to 15,000 150,001 to 180,000 $ 76
15,001 to 17,500 180,001 to 210,000 $ 75
17,501 to 20,000 210,001 to 240,000 $ 74
Over 20,000 Over 240,000 $ 73
EXHIBIT C
Technical Specifications
The PRODUCT will be DRAGON-certified and will conform to the following
requirements: