Exhibit 10.20
EXECUTION COPY
JOINT VENTURE AGREEMENT
/s/ O.K.
This Joint Venture Agreement is dated as of April 2, 2001, by and among
Color Kinetics Incorporated, a Delaware corporation having its principal place
of business at 00 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, U.S.A.
("Color Kinetics"), Yamagiwa Corporation, a Japanese corporation having its
principal place of business at 0-0-0 Xxxxxxxxx, Xxxxxxx-xx, Xxxxx 000-0000,
Xxxxx ("Yamagiwa"), ALS Incorporated, a Japanese corporation and a majority
owned subsidiary of Yamagiwa, having its principal place of business at 00-0
Xxxxxxxx, Xxxxxxx-xx, Xxxxx 000-0000, Xxxxx ("ALS"), and Color Kinetics Japan
Incorporated, a Japanese corporation having its principal place of business at
00-0 Xxxxxxxx, Xxxxxxx-xx, Xxxxx 000-0000, Xxxxx ("CKJ").
/s/ K.O.
WHEREAS, Color Kinetics develops, manufacture and distributes digital
lighting products; and
WHEREAS, prior to the Effective Date, ALS has been the distributor of
Color Kinetics' products in Japan; and
/s/ K.O.
WHEREAS, Color Kinetics and ALS have mutually agreed to pursue
continued marketing, distribution and support of the Products in Japan through a
joint venture between them rather than by ALS acting as Color Kinetics'
distributor, and Color Kinetics and ALS have formed CKJ as a joint stock
corporation under the laws of Japan, for the purpose of marketing, distributing
and supporting the Products in Japan, developing, designing, marketing,
distributing and supporting localized Products in Japan, and if Color Kinetics,
in its sole discretion, so approves in accordance with Section 7 hereof and the
JV Distributorship Agreement, the manufacturing of localized Products and
marketing, distributing and supporting such localized Products in markets other
than the Japanese market;
/s/ G.M.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledge, the Parties agree as
follows:
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/s/ Tetsu Konagaya /s/ Xxxxxxx Xxxxxx /s/ Xxxxxxx Xxxxxx /s/ Xxxxxx X. Xxxxxxx
1. Definitions. For the purposes of this Agreement, the following terms
shall have the following meanings:
"Applicable Law" means, with respect to a Party, any domestic or
foreign, federal, state or local statue, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority applicable to such Party or
to its properties, business or assets.
"Articles of Association" means the Articles of Association of CKJ
written in the Japanese language and attached hereto as EXHIBIT A-1, as amended
from time to time. For the convenience of the parties an English translation of
the Articles of Association is attached hereto as EXHIBIT A-2.
"Board" means the board of directors of CKJ as from time to time
constituted.
"Business Plan" means the [three (3)] year business plan of CKJ, which
includes a budget and managerial plan, attached hereto as EXHIBIT B, as from
time to time amended:
"Change in Control" means (a)(i) the issuance of stock by a Party or by
any entity controlling a Party (for purposes of this definition "Controlling
Entity"); (ii) the sale or transfer of the stock of a Party or by a Controlling
Entity; (iii) the reorganization, merger or other combination of a Party or a
Controlling Entity with or into another entity; the result of any of which is
that the shareholders of the Party or the Controlling Entity immediately prior
to the stock issuance or consummation of the sale, transfer, reorganization,
merger or other combination, cease to own more than 50% of the voting stock of
the Party or the Controlling Entity as the case may be, or do not own more than
50% of the voting stock of the surviving entity, after the stock issuance or
consummation of the sale, transfer, reorganization, merger or other combination,
or (b) the sale of all or substantially all of the assets of a Party or a
Controlling Entity.
"CKJ" has the meaning given it in the preamble to this Agreement.
"Confidential Information" means any business and product plans,
product specifications, strategies, trade secrets, financial projections,
customer lists, and related documentation, intellectual property or other
information, tangible or intangible, of an individual or entity which is
maintained as confidential by such individual or entity or which enables such
individual or entity to maintain a competitive advantage over competitors who do
not have access to such information.
"Effective Date" means the date of this Agreement.
"Governmental Approvals" means all approvals, consents, authorizations,
and similar actions from all Governmental Authorities that are required in order
to consummate the transactions contemplated hereunder or under any of the
Related Agreements.
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"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, court, government or self-regulatory organization, commission,
tribunal, or any regulatory, administrative or other governmental agency, or
subdivision, department or branch of any of the foregoing.
"Independent Accounting Firm" means an internationally recognized, or
an affiliate of an internationally recognized, audit firm qualified under the
Japanese Certified Public Accountants Act, Law Xx. 000, 000X, as amended.
"Distributorship Agreement" has the meaning given it in Section 5.1.
"JV Share(s)" means share(s) of common stock of CKJ.
"Party(ies)" means any or all of Color Kinetics, ALS, Yamagiwa and CKJ
and any transferee of their respective interests in CKJ and this Agreement as
permitted by this Agreement.
"Percentage Interest" means, with respect to a Party, the percentage
issued and outstanding JV Shares held by such party.
"Product(s)" has the meaning given it in the JV Distributorship
Agreement.
"Shareholders" means Color Kinetics and ALS.
2. Incorporation.
2.1 Formation of CKJ. Prior to the Effective Date, the Parties have
caused the formation of CKJ for the purposes of marketing, distributing and
supporting the Products in Japan.
2.2 The Name of CKJ. The name of CKJ shall be "Color Kinetics Japan
K.K." and shall be set forth in the Articles of Association. Use by CKJ of the
xxxx "Color Kinetics" shall be subject to the provisions of the JV
Distributorship Agreement.
2.3 Articles of Association. The Articles of Association of CKJ are
hereby incorporated herein and made a part hereof. In the event of any ambiguity
or conflict arising between the terms and conditions of this Agreement and those
of the Articles of Association, to the extent legally permissible under
Applicable Law, the terms and conditions of this Agreement shall prevail.
2.4 Capital Contributions.
(a) The authorized capital of CKJ is Y40,000,000 represented
by 800 shares of JV Shares with a par value of Y50,000 per share. As of the
Effective Date, the ownership of JV Shares is as follows:
PARTY NUMBER OF SHARES CONSIDERATION
Color Kinetics 400 Y20,000,000
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ALS 400 Y20,000,000
(b) CKJ may, at any time and from time to time, borrow
additional funds from ALS in accordance with CKJ's capital needs as set forth in
the Business Plan and as determined by the Board. Any such outstanding loan
shall bear interest at the prevailing market rate determined among city banks in
Japan for a comparable loan from time to time. Any such loan must be repaid in
full prior to any distribution by CKJ to the Shareholders of profits or capital.
(c) Unless otherwise agreed by the Shareholders, each of Color
Kinetics and ALS shall hold fifty percent (50%) of the issued and outstanding JV
Shares. In the event that CKJ issues new JV Shares or other securities of CKJ,
each of the Shareholders shall have the right to purchase such shares or other
securities with cash or other consideration as the Board may determine in an
amount that is proportionate to its respective Percentage Interest.
2.5 Stock Certificates. The JV Shares shall be evidenced by a stock
certificate issued by CKJ. Such stock certificates shall bear a legend
disclosing that such JV Shares are subject to certain restrictions on transfer.
3. Management of CKJ.
3.1 Meetings and Resolutions of Shareholders.
(a) Meetings of the shareholders of CKJ may be held in person
in Tokyo, Japan or at such other place as the Shareholders may agree and, to the
extent permitted under Applicable Law, by any other means determined by the
Board. Ordinary general meetings of shareholders shall be held within three (3)
months of the fiscal year end. The notice of ordinary meetings shall be provided
in English at least thirty (30) days prior to the scheduled date of the meeting.
The Board, Color Kinetics and ALS shall each have the right from time to time to
call an extraordinary general meeting of shareholders. The notice of
extraordinary meetings shall be provided in both Japanese and English at least
fourteen (14) days prior to the scheduled date of the meeting.
(b) All meetings of the shareholders shall be conducted in
both English and Japanese, and CKJ shall provide, and bear all costs in
connection with providing, a professional translator to assist in conducting the
meetings. In principle, all meetings of shareholders shall be held where the
head office of CKJ is located. Shareholders may discuss the agenda for any
shareholders' meeting in advance through one or more televised conferences and
the discussions and tentative decisions made at such conferences shall be
resolved at shareholders' meetings.
(c) The quorum required for a shareholders meeting shall be
shareholders representing in person or by proxy, not less than two-thirds (2/3)
of the total number of issued and outstanding JV Shares.
(d) Unless otherwise required by the laws of Japan or
otherwise provided herein, no shareholders' resolutions shall be effective
unless adopted by the affirmative vote of
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shareholders holding more than seventy-five percent (75%) of JV Shares present,
in person or by proxy, at a meeting of shareholders.
(e) Notwithstanding anything to the contrary in this Agreement
or in the Articles of Association, but subject to compliance with Applicable Law
and without derogating from any provision of this Agreement or the Articles of
Association that requires a greater majority vote (including unanimous vote or
agreement), resolutions with respect to the following matters may be adopted
only by the affirmative vote of shareholders representing, in person or by
proxy, not less than seventy five percent (75%) of the total number of JV Shares
outstanding:
(i) Any change in the capitalization of CKJ;
(ii) Any amendment to the Articles of Association;
(iii) Any merger consolidation, spin-off or any other
similar transaction involving CKJ, or a sale of all
or substantially all of the assets of CKJ;
(iv) Any increase or reduction of capital;
(v) Determination of compensation of directors and
auditors;
(vi) Any distribution to the shareholders, including the
declaration or distribution of dividends and stock
dividends;
(vii) Issuance of any JV Shares or any other security of
CKJ;
(viii) Granting to any person other than the Shareholders of
CKJ the right to purchase JV Shares or any other
security of CKJ, except for stock options to
employees of CKJ;
(ix) Any borrowing in excess of an aggregate principal
amount of Y100,000,000;
(x) Any change to the Business Plan, and approval of new
business plans and operating budgets;
(xi) Appointment of any representative director and the
Chief Financial Officer;
(xii) Dissolution or liquidation of CKJ.
3.2 Election of Directors and Statutory Auditors.
(a) Unless otherwise mutually agreed upon by the Shareholders,
CKJ shall be managed by a Board of Directors composed of four (4) directors, and
each Shareholder shall have the right to nominate two (2) directors. Each
Shareholder may, at any time and from time to time, with or without cause,
remove from office any director nominated by such Shareholder and nominate a new
director in his/her place. Color Kinetics initially nominates Xxxxxx X. Xxxxxxx
and Xxxxx X. Xxxx as the directors nominated by Color Kinetics, and ALS
initially nominates
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Xxxxxxx Xxxxxx and Tetsu Konagaya as the directors nominated by ALS. By January
1, 2003 the Board shall appoint an individual with experience and expertise in
the Japanese market in the area of CKJ's business, to attend Board meetings in
an advisory, non-voting capacity.
(b) If a vacancy occurs on the Board for any reason, a new
director shall be nominated by the Shareholder that nominated the director whose
office has been vacated, and an election to fill the vacancy shall be held at a
shareholders' meeting to be called without delay. A director may be removed,
with or without cause, at any time by the Party that nominated him.
(c) The Chairman of the Board (the "Chairman") shall be
elected each year by the Board from among the directors then in office. The
Chairman for fiscal years 2001 and 2002 shall be nominated by ALS, and for
fiscal year 2003 by Color Kinetics, in its discretion. Beginning with fiscal
year 2004, ALS shall nominate the Chairman for every even fiscal year (including
2004) and Color Kinetics shall nominate the Chairman for every odd year
(beginning with 2005).
(d) CKJ shall have one (1) statutory auditor who shall be
jointly nominated and elected by the Shareholders.
(e) Each Shareholder agrees to exercise its voting rights as
shareholder of CKJ and take all required action as to ensure the immediate
election or removal, as the case may be, of the directors nominated or removal,
as the case maybe, by the other Shareholder as provided in this Section 3.2.
Each Shareholder shall and agrees to cause the election of Xxxxxx X. Xxxxxxx and
Xxxxx X. Xxxx as the directors initially nominated by Color Kinetics, and
Xxxxxxx Xxxxxx and Tetsu Konagaya as the directors initially nominated by ALS.
(f) Except as set forth in Section 3.3 with respect to Xxxxxxx
Xxxxxx, during the first year of CKJ's operation, the directors and the
statutory auditor shall not be entitled to any compensation in connection with
their membership on the Board or the services rendered by them to CKJ; provided,
however, that CKJ shall reimburse each director and the statutory auditor for
all reasonable out-of-pocket expenses in connection with attendance at and
participation in Board meetings, including, without limitation, any expenses for
travel, accommodation and meals. Beginning with the second year of CKJ's
operation, the Board shall determine the appropriate compensation for the
directors and for the statutory auditor and shall submit it to the shareholders'
approval.
3.3 Representative Director and Officers. Xxxxxxx Xxxxxx shall serve
as the representative director and the President of CKJ. Concurrently with the
execution hereof, CKJ and Xxxxxxx Xxxxxx are entering into an Directorship
Agreement in the form attached hereto as EXHIBIT C pursuant to which Xxxxxxx
Xxxxxx will be employed by CKJ as its President for a period of one (1) year
following the Effective Date. After the first year in office, Xxxxxxx Xxxxxx
shall continue to serve as a representative director of CKJ until the Board
replaces him with another representative director.
3.4 Meetings and Resolutions of the Board.
(a) Meetings of the Board shall be held in person, and, to the
extent permitted under Applicable Law, by televised conference or any other
means determined by the Board.
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Televised conference means a conference through the usage of a telecommunication
device which enables instantaneous conveyance of voice and images of each
shareholder present at a meeting and precise and simultaneous communication
between or among the users. Board meetings shall be conducted in both English
and Japanese, and CKJ shall provide, and bear all costs in connection with
providing, a professional translator to assist in conducting the meetings.
(b) Unless otherwise determined by a unanimous vote of the
Board, a regular meeting of the Board shall be held at least once every fiscal
quarter, at a date and time determined by the Board. In the first two (2) years
of CKJ's operation, two (2) regular Board meetings shall be held in person in
Tokyo, Japan and two regular Board meetings shall be held by televised
conference or any other means determined by the Board in accordance with Section
3.4(a). Notice of each meeting shall be provided in English at least fourteen
(14) days prior to the scheduled date of the meeting.
(c) A special meeting of the Board may be held, at any time
and from time to time, when called by any director. Notice of each meeting shall
be provided in both Japanese and English at least fourteen (14) days prior to
the scheduled date of the meeting.
(d) The quorum required for a meeting of the Board shall be
three (3) members of the Board.
(e) Except as provided in Section 3.4(g) below, when a quorum
is present at a meeting, resolutions and actions of the Board shall require the
affirmative vote of a majority of the members of the Board then in office.
(f) When any issue cannot be resolved by the Board at two (2)
consecutive meetings, the chief executive officers of Color Kinetics and ALS
shall consult between themselves in a good faith attempt to resolve such issue.
Except as provided in Section 3.4(g), if the chief executive officers of Color
Kinetics and ALS can not resolve such issue within thirty (30) days, the
Chairman shall have the casting vote.
(g) Notwithstanding anything to the contrary in this Agreement
or in the Articles of Association, but subject to compliance with any Applicable
Law and without derogating from any provision of this Agreement or the Articles
of Association that requires a greater majority vote (including unanimous vote
or agreement), resolutions with respect to the matters set forth in Section 3.1
(e) shall require the unanimous affirmative vote of the Board.
3.5 Location of Offices. Yamagiwa will lease to CKJ an appropriate
office space at a reasonable rent, which will be agreed upon by the parties
through good faith consideration, within the Yamagiwa Building at 00-0 Xxxxxxxx,
Xxxxxxx-xx, Xxxxx. However, at any time after December 31, 2001 the Board may
determine that CKJ shall move its offices to another location in Tokyo.
3.6 Statement of Policy.
(a) The business affairs of CKJ shall be carried on and
conducted in a sound, prudent and constructive manner for the purpose of
building a successful corporation.
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(b) Unless otherwise agreed by the Shareholders, CKJ's
business activity shall be limited to (i) marketing, distribution and support of
the Products in the Territory, (ii) manufacturing of power supply products for
the Products, (iii) developing, designing, marketing, distributing and
supporting localized Products in the Territory, and (iv) if Color Kinetics, in
its sole discretion, so approves in accordance with Section 7 hereof and the JV
Distributorship Agreement, the manufacturing of localized Products and
marketing, distributing and supporting such localized Products in markets
outside the Territory.
3.7 Day to Day Operation. The day-to-day operations of CKJ shall be
managed by the representative director and officers nominated and elected in
accordance with Sections 3.3. Such operations shall be conducted in accordance
with the Articles of Association, this Agreement, the Distributorship Agreement,
the Business Plan and the operating and capital budgets approved by the Board.
3.8 Budgeting, Accounting and Reporting Obligations.
(a) CKJ's initial operating budget (for fiscal 2001 through
2003) is included in the Business Plan attached as EXHIBIT B. Each year the
Board shall approve the budget for the succeeding year prior to the commencement
of the succeeding year.
(b) CKJ's fiscal year shall initially be the twelve (12) month
period ending December 31.
(c) In addition to any reports to be prepared and provided to
the shareholders pursuant to any Applicable Law or the Articles of Association,
CKJ shall provide each Shareholder with the following reports and statements to
the parties in English within the time periods set forth below or an interim
version of any such report or statement to any of them within thirty (30) days
of receipt of request:
(i) Within ten (10) days after the closing of each month,
balance sheet, profit and loss statement and cash flow statement. Each such
document shall be provided in a form and format acceptable to the receiving
Shareholder.
(ii) Within fourteen (14) days after the closing of each
quarter, balance sheet, profit and loss statement and cash flow statement. Each
such document shall be provided in a form and format acceptable to the receiving
Shareholder.
(iii) Within forty-five (45) days after the end of each
fiscal year, balance sheet, profit and loss statement and cash flow statement.
Each such document shall be provided in a form and format acceptable to the
receiving Shareholder.
(d) The Board shall designate an Independent Accounting Firm
to audit the financial statements of CKJ on an annual basis. The annual
accounting report of CKJ shall be audited at the expense of CKJ by its
Independent Accounting Firm in accordance with the laws of Japan.
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(e) Each Shareholder shall, upon reasonable written notice to
CKJ, have access to CKJ's books, records, procedures, employees and similar
sources of data and information concerning CKJ's business and financial
operations.
(f) CKJ shall provide to each Shareholder full access to the
books and records of CKJ, and shall provide to each Shareholder the accounting
information such Shareholder required to comply with its own financial reporting
requirements.
(g) CKJ shall designate Ueno Branch of Daiwa Bank as the bank
at which CKJ maintains its bank accounts or such other bank as the Board may
otherwise designate.
3.9 Confidentiality Obligation. CKJ shall require each employee,
independent contractor, consultant and any other person who will have access to
Confidential Information of CKJ or of any Party, to enter into a confidentiality
agreement in substantially the form attached hereto as EXHIBIT D, or such other
form as may be approved from time to time by the Board.
3.10 Dividends. Unless duly determined by the Board and permitted by
Japanese laws, CKJ shall not pay dividends but shall reinvest its profits in its
business.
3.11 Employment.
(a) The Parties agree that CKJ's employees shall consist of
employees to be seconded from Yamagiwa, employees recruited and directly hired
by CKJ, and employees permanently transferred from Yamagiwa to CKJ in accordance
with Section 3.11(b).
(b) As soon as practicable after CKJ commences operations,
Yamagiwa will second to CKJ the Yamagiwa employees listed on Schedule 3.11(a)
hereto (the "Seconded Employees"). Each Seconded Employee shall be employed by
CKJ pursuant to and in accordance with a secondment agreement among CKJ,
Yamagiwa and the Seconded Employee, in a form approved by the Board. During the
period until December 21, 2003, the Seconded Employees shall be entitled to
receive from CKJ substantially the same salaries and benefits they received from
Yamagiwa prior to their secondment to CKJ. Yamagiwa shall remain fully
responsible and liable for any and all salaries and benefits, and any and all
payments required by any Applicable Law, in connection with the Seconded
Employees' employment with Yamagiwa and the termination thereof. Yamagiwa agrees
to indemnify, defend, and hold harmless CKJ and Color Kinetics, and their
respective directors, officers, employees, agents, successors and assigns from,
against and with respect to any claim, liability, obligation, loss, damage,
assessment, judgment, cost and expense (including, without limitation,
reasonable attorneys' and accountants' fees) of any kind or character, arising
out of or in any manner incident, relating or attributable to the employment by
Yamagiwa of the Seconded Employees and the termination thereof. By six (6)
months prior to xxx xxx xx 0000, XXX, Xxxxxxxx and each Seconded Employee may
determine, through mutual consultation among them, whether the Seconded Employee
will be transferred to CKJ and become a permanent employee of CKJ.
(c) The Parties agree that CKJ will adopt a stock option plan
pursuant to Japanese law, to allow CKJ to provide its employees, officers,
directors and consultants incentives by affording them an opportunity to acquire
or increase their proprietary interest in CKJ. The option plan shall be adopted
and administered by the Board, which shall have the
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authority, among other things and without limitation, to determine the number of
options granted to each optionee, to set the exercise price and determine the
duration of the option. The Parties agree that of CKJ's employee, only full-time
employees originally recruited and hired by CKJ and the employees permanently
transferred from Yamagiwa to CKJ as of such transfer shall be entitled to
receive stock options in CKJ, and that the Seconded Employees shall not be
granted stock options in CKJ. The Parties further agree that unless otherwise
determined by a unanimous vote of the Board, any stock options granted by CKJ
shall vest over a period of four (4) years (as to 25% on the first anniversary
and thereafter in 12 equal quarterly increments of 6.25% each). The inception of
the stock option program shall be in compliance with the Japanese laws, and each
Shareholder shall cooperate in providing information necessary for such
inception.
4. Rights and Obligations of the Parties.
4.1 Financing. There shall be no obligation of any of the Parties to
provide additional capital contributions to CKJ, in the form of equity or
otherwise, except for the additional funding in the form of the loans from ALS
as specified in Section 2.4. Unless the Shareholders otherwise agree, any
additional equity contributions that the Shareholders make shall be made pro
rata by each Shareholder on the basis of their initial equity investment in CKJ.
4.2 Other Contributions of the Parties.
(a) As more specifically provided for in the JV
Distributorship Agreement, Color Kinetics shall provide CKJ certain
technological and business information and know-how in order to assist CKJ in
the marketing, distribution and support of Products in Japan.
(b) ALS will provide CKJ with relevant information on market
needs, support the CKJ's marketing efforts, will assist CKJ in locating
potential strategic and OEM partners and establishing and developing business
with them, and will assist CKJ in implementing strategic sales activities.
(c) Yamagiwa will assert its control over ALS, its majority
owned subsidiary, to assure that ALS complies with its rights and obligations
under this Agreement, including, without limitation, the obligation to provide
CKJ additional financing as provided in Section 2.4.
4.3 Non-transferability of Shares.
(a) No Shareholder may sell, assign, transfer, exchange, gift,
devise, pledge, hypothecate, encumber or otherwise alienate or dispose of, with
consideration or otherwise, any JV Shares or other security of CKJ, to any third
party ("Transfer"), except in accordance with this Agreement. Any such purported
transfer in violation of any provision of this Agreement and all actions by the
purported transferor and transferee in connection therewith shall be of no force
or effect and CKJ shall not recognize such purported transfer for any purpose,
including without limitation for purposes of dividend and voting rights.
(b) Except as set forth in Section 4.3(c), no Shareholder
shall Transfer any JV Shares or any other security of CKJ without the prior
written consent of the other Shareholder, which consent shall not be
unreasonably withheld or delayed.
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(c) The restrictions on Transfer set forth in this Section 4.3
shall not apply to a Transfer by a Shareholder (i) to any person or entity who
holds not less than seventy five percent (75%) of the voting stock of such
Shareholder (for purposes of this Section 4.3, a "Controlling Entity"), (ii) to
any entity which not less than seventy five percent (75%) of its voting stock is
held by a Controlling Entity, or (iii) to any person or entity in connection
with the sale of all or substantially all of the assets of such Shareholder to
such person or entity (each of the transferees under this Section 4.3(c), a
"Permitted Transferee"); provided, however, that in any such event the JV Shares
or other security of CKJ so transferred in the hands of each such Permitted
Transferee shall remain subject to this Agreement, and each such Permitted
Transferee shall so acknowledge in writing and agree to be bound by all of the
terms and conditions hereof and assume the obligations of the selling
Shareholder hereunder as a condition precedent to the effectiveness of such
transfer.
4.4 Confidentiality.
(a) Each Party understands that in the course of administering
the joint venture, each Party may have access to other Parties' Confidential
Information and/or Confidential Information of third parties for which another
Party is responsible for maintaining confidentiality. All Confidential
Information provided by a Party (the "Disclosing Party") to the other Party
(the "Receiving Party") or to CKJ or to which the Receiving Party or CKJ gains
access pursuant to this Agreement shall be deemed Confidential Information and
shall be maintained as confidential by the Receiving Party and CKJ. The
Receiving Party agrees to take reasonable precautions to guard the
confidentiality of such Confidential Information and to limit access to the
materials and Confidential Information to those Receiving Party's employees who
need such access to administer CKJ. Each Party hereby confirms that it has
contractual agreements with its employees which obligates all such employees to
respect and protect the Confidential Information of its business associates. The
Receiving Party further agrees to immediately return all written Confidential
Information of the Disclosing Party upon termination of this Agreement or
immediately upon request by the Disclosing Party. The Parties shall not disclose
any of the Confidential Information of CKJ or of any Disclosing Party to any
third party or otherwise other than for the purpose of performing this Agreement
without the prior written consent of CKJ or such Disclosing Party, as the case
may be. The Receiving Party shall not disclose or use any of the Confidential
Information of the Disclosing Party in connection with doing business with or
providing any services to any third party without the prior written consent of
the Disclosing Party. In the event of a breach of any of the foregoing
provisions, the Receiving Party agrees that the harm suffered by the Disclosing
Party would not be compensable by monetary damages alone and, accordingly, that
the disclosing Party shall, in addition to other available legal or equitable
remedies, be entitled to an injunction against such breach.
(b) The obligations of the Receiving Party specified in
Section 4.4(a) shall not apply, and the Receiving Party shall have no further
obligations, with respect to any Confidential Information to the extent that:
(i) such Confidential Information is generally known to the
public at the time of disclosure to the Receiving Party or becomes generally
known through no wrongful act on the part of the Receiving Party;
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(ii) is in the Receiving Party's possession at the time of
disclosure free of restrictions on disclosure otherwise than as a result of
Receiving Party's breach of any legal obligation;
(iii) becomes known to the Receiving Party through
disclosure by sources other than the Disclosing Party having the legal right to
disclose such Confidential Information;
(iv) is independently developed by the Receiving Party
without reference to or reliance upon the Confidential Information;
(v) is required to be disclosed by the Receiving Party to
comply with the Applicable Laws or governmental regulations, provided that the
Receiving Party provides prior written notice of such disclosure to the
Disclosing Party and takes reasonable and lawful actions to avoid and/or
minimize the extent of such disclosure.
(c) Within fifteen (15) days after expiration or termination
of this Agreement, each Receiving Party shall promptly (i) return to the
Disclosing Party all such Disclosing Party's Confidential Information, and (ii)
to the extent any such Confidential Information or other materials cannot be
returned, erase or destroy all copies of such Confidential Information. In
addition, an authorized representative of the Receiving Party shall certify in
writing to the Disclosing Party that the Receiving Party has complied with the
requirements of this Section 4.4(c).
(d) The obligations under this Section 4.4 shall survive
termination or expiration of this Agreement.
5. Distribution Agreements.
5.1 JV Distributorship Agreement. Concurrently with the execution
hereof, Color Kinetics and CKJ are entering into an Distributorship Agreement,
pursuant to which Color Kinetics is granting to CKJ exclusive distribution
rights in Japan for the Products in substantially the form of EXHIBIT E (the "JV
Distributorship Agreement").
5.2 Termination of Current Distributorship Agreement. Upon execution of
the JV Distributorship Agreement, the Color Kinetics Incorporated
Distributorship Agreement dated February 2, 2000 between Color Kinetics and ALS
will automatically terminate; provided, however, that the provisions of Sections
4, 7, 8, 9, 10, 11, 14, 17.3, 17.4, 18 and 19 such Distributorship Agreement
shall survive the termination thereof.
6. Training and Support.
6.1 It is the parties' intention that CKJ will design and develop
localized Products for the Japanese market, as more fully described and provided
for in Section 7 hereof and the JV Distribution Agreement. For that purpose and
in order to assist CKJ to better understand the design and technical aspects of
the Products, CKJ will send qualified technical personnel to attend training at
Color Kinetics' facilities in Massachusetts. CKJ and Color Kinetics will agree
on the timing of such training, the technical personnel to attend such training
and the required
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training period. Color Kinetics shall provide the training free of charge and
shall also bear all reasonable out-of-pocket costs and expenses associated with
accommodation and meals of such technical personnel while in training with Color
Kinetics.
6.2 CKJ shall, from time to time, at its own expense, attend training
sessions generally provided by Color Kinetics for its distributors and resellers
as requested by Color Kinetics. CKJ will use commercially reasonable efforts to
ensure that all appropriate personnel attend and actively participate in such
training sessions. If, at CKJ's request, training sessions are held otherwise
than at Color Kinetics' main facilities in the USA, CKJ shall reimburse Color
Kinetics for all additional costs and expenses associated with provision of the
training outside of Color Kinetics' Massachusetts facility.
6.3 Upon request of CKJ, Color Kinetics shall assist CKJ in its support
of the Products. In no event will Color Kinetics be obligated to provide
installation, training or support services directly to sub-distributors or
customers.
7. Intellectual Property.
7.1 Intellectual Property Rights. Except as expressly set forth in this
Section 7 and without derogating from any other provision of this Agreement or
the JV Distributorship Agreement, Color Kinetics and its licensors shall retain
all right, title and interest in the intellectual property embedded in and
pertaining to the Products throughout the world, including without limitation,
patent, copyright, trademark and trade secret rights. Except as expressly set
forth in the JV Distributorship Agreement, neither this Agreement, nor any
license of Products hereunder shall be construed as granting to CKJ any license
or other right in or to any patent, copyright, trademark, trade secret or other
proprietary right of Color Kinetics or its licensors.
7.2 Development by CKJ. Without derogating from any other provision of
this Agreement or the JV Distributorship Agreement, so long as the JV
Distributorship Agreement is in effect and CKJ complies with all of CKJ's
obligations thereunder, in the event CKJ or any of its directors, officers,
employees or consultants, develops any idea, improvement, invention, innovation,
development, specification, application, technology, product or any other
intellectual property right ("Development") that in any way is derived from,
based upon, or related or pertaining to any Product or any of Color Kinetics'
technology or intellectual property rights, Color Kinetics will be the sole and
exclusive owner of any such Development and the provisions of Section 7.1 shall
apply to any such Development. If Color Kinetics, in its sole discretion, wishes
to pursue such Development, the parties shall conduct good faith negotiations to
reach an agreement between them as to the manufacturing, marketing,
distribution, sale and support by CKJ in the Territory of each product developed
based on such Development, and appropriate royalties to be paid for the sale of
such product outside the Territory.
7.3 Development with Third Parties. Without derogating from any other
provision of this Agreement or the JV Distributorship Agreement, so long as the
JV Distributorship Agreement is in effect and CKJ complies with all of CKJ's
obligations thereunder, in the event that CKJ wishes to develop or pursue any
Development with any third party, then CKJ shall provide Color Kinetics with a
proposal which includes the identity of such third party, a description, as
detailed as possible, of the suggested Development, and any other information
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related to such Development deems relevant to Color Kinetics. If Color Kinetics,
in its sole discretion, wishes to pursue such Development, the parties and such
third party shall conduct good faith negotiations to reach an agreement among
them as to the ownership of such Development, and the manufacturing, marketing,
distribution, sale and support in the Territory and outside the Territory of
each product developed based on such Development, and appropriate royalties to
be paid for the sale of such product in the Territory and outside the Territory.
7.4 Use of Marks. So long as this Agreement is in effect, and CKJ
complies with all of CKJ's obligations hereunder, CKJ shall have the right to
use Color Kinetics' trademarks listed on Exhibit C of the JV Distributorship
Agreement (each a "Xxxx" and together the "Marks") in the Territory in
connection with the marketing, distribution, sale and support of the Products.
CKJ shall not use any Xxxx other than as specifically permitted by the
immediately preceding sentence, shall not remove the Marks from any Product
furnished by Color Kinetics and shall not make any use of any Marks in
connection with any goods or services other than the Products. So long as the JV
Distributorship Agreement is in effect and thereafter, CKJ shall not adopt,
register or make any use of any trademark or brand name that is confusingly
similar to any Xxxx. All rights in the Marks shall, at all times during the term
of the JV Distributorship Agreement and thereafter, be and remain the sole
property of Color Kinetics, and all goodwill and other benefits associated
therewith are hereby assigned to, and shall inure to, Color Kinetics. CKJ agrees
to assist in the registration of the Marks in the Territory in the name of Color
Kinetics, in renewal and maintenance of such registration and in such recording
of CKJ as a registered user as Color Kinetics may reasonably request. Any costs
incurred by CKJ and approved in advance by Color Kinetics in connection with
such registration, maintenance and recording shall be at Color Kinetics'
expense. CKJ also agrees to comply with any guidelines covering the use of Color
Kinetics' corporate name, logo(s), or trademarks that Color Kinetics provides to
its distributors. The most recent guidelines are provided as Exhibit D to the JV
Distributorship Agreement.
8. Representations and Warranties.
8.1 Representations and Warranties of Color Kinetics. Color Kinetics
hereby represents and warrants to ALS and Yamagiwa, as follows:
(a) Corporate Organization, Etc. Color Kinetics is a
corporation duly organized and validly existing under the laws of the State of
Delaware.
(b) Authorization, Etc. Color Kinetics has full corporate
power and authority to enter into this Agreement and the JV Distributorship
Agreement and to carry out the transactions contemplated hereby and thereby.
Color Kinetics has taken all action required by law, its Certificate of
Incorporation or otherwise to authorize the execution, delivery and performance
of this Agreement and the JV Distributorship Agreement. Each of this Agreement
and the JV Distributorship Agreement is the valid and binding obligation of
Color Kinetics, subject to receipt of necessary Governmental Approvals,
enforceable against it in accordance with its respective terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditor's rights,
and the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
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(c) No Violation. Neither the execution and delivery by Color
Kinetics of this Agreement and the JV Distributorship Agreement nor the
consummation of the transactions contemplated hereby and thereby, will (i)
conflict with or result in a breach of any provision of the Certificate of
Incorporation or By-laws of Color Kinetics, (ii) conflict with or result in a
breach of any term, condition, or provision of, or constitute a default under,
or give rise to any right of termination, cancellation or acceleration with
respect to, or result in the creation of any lien, charge or encumbrance upon
any property or assets of Color Kinetics pursuant to, or otherwise require the
consent of any person under, any agreement or obligation to which Color Kinetics
is a party or by which any of its properties or assets may be bound, or (iii)
violate or conflict with any Applicable Law applicable to Color Kinetics or any
of its properties or assets, subject to obtaining the requisite Governmental
Approvals.
(d) Consents and Approvals of Governmental Authorities. Except
for the Governmental Approvals listed in EXHIBIT F, no consent, approval or
authorization of, or declaration, registration with, any Governmental Authority
is required to be obtained by Color Kinetics in connection with the execution,
delivery, and performance of this Agreement and the JV Distributorship
Agreement, and the consummation of the transactions contemplated hereby and
thereby.
(e) Regulatory Applications. The information provided by Color
Kinetics for use in the applications for the Governmental Approvals will not
contain any untrue statement of a material fact of omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
8.2 Representations and Warranties of ALS and Yamagiwa. ALS and
Yamagiwa hereby, jointly and severally, represent and warrant to Color Kinetics,
as follows:
(a) Corporate Organization, Etc. Each of ALS and Yamagiwa is a
corporation duly organized and validly existing under the laws of Japan.
(b) Authorization, Etc. Each of ALS and Yamagiwa has full
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. Each of ALS and Yamagiwa has taken all action
required by law, its Articles of Association or otherwise to authorize the
execution, delivery and performance of this Agreement. This Agreement is the
valid and binding obligation of each of ALS and Yamagiwa, enforceable in
accordance with its terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditor's rights, and the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) No Violation. Neither the execution and delivery by either
ALS or Yamagiwa of this Agreement nor the consummation of the transactions
contemplated hereby by either ALS or Yamagiwa, will (i) conflict with or result
in a breach of any provision of the Articles of Association of either ALS or
Yamagiwa, (ii) conflict with or result in a breach of any term, condition, or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien,
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charge or encumbrance upon any property or assets of ALS or Yamagiwa pursuant
to, or otherwise require the consent of any person under, any agreement or
obligation to which ALS or Yamagiwa is a party or by which any of their
respective properties or assets may be bound, or (iii) violate or conflict with
any Applicable Law applicable to ALS or Yamagiwa or any of their respective
properties or assets.
(d) Consents and Approvals of Governmental Authorities. Except
for the Governmental Approvals listed in EXHIBIT G, no consent, approval or
authorization of, or declaration, registration with, any Governmental Authority
is required to be obtained by ALS or Yamagiwa in connection with the execution,
delivery, and performance of this Agreement, and the consummation of the
transactions contemplated hereby.
(e) Regulatory Applications. The information provided by ALS
and Yamagiwa for use in the applications for the Governmental Approvals will not
contain any untrue statement of a material fact of omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(f) Initial Business Plan. ALS and Yamagiwa prepared the
initial Business Plan and warrant that it was prepared in good faith using
reasonable assumptions and that ALS and Yamagiwa believe it accurately reflects
the costs to be associated with CKJ's business.
9. Adjustment to Relationship.
9.1 Performance Targets. The performance targets for CKJ for fiscal
years 2001, 2002 and 2003 are as set forth on EXHIBIT H (the "Trial Period").
Six (6) months prior to the expiration of the Trial Period and each Additional
Period (as defined below), if any, the Shareholders shall commence good faith
negotiations to mutually agree on new performance targets for CKJ and on the
period during which such performance targets will apply (each such period, an
"Additional Period"). The performance targets for the Trial Period and for any
Additional Period, as such performance targets may from time to time be modified
by the Shareholders in accordance with the terms of this Agreement, are
hereinafter referred to as the "Performance Targets."
9.2 If Performance Targets Are Not Met. Notwithstanding anything to the
contrary in this Agreement, if, with respect to any fiscal year of CKJ,
beginning with fiscal year 2002, CKJ does not meet one or more of the
Performance Targets for such fiscal year (each, a "Default Fiscal Year"), the
following shall apply:
(a) The Shareholders shall negotiate in good faith for a
period of thirty (30) days after the net revenue of CKJ for the Default Fiscal
Year is determined (the "Negotiation Period") in order to determine whether the
business of CKJ should be restructured and revised Performance Targets and
Minimum Purchases under the JV Distributorship Agreement for the fiscal year
immediately succeeding the Default Fiscal Year should be adopted.
(b) If the Shareholders reach an agreement in accordance with
Section 9.2(a) within the Negotiation Period, such agreement shall apply, and
the Performance Targets set forth herein and Minimum Purchases under the JV
Distributorship Agreement shall be deemed amended to the extent the Shareholders
so agree.
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(c) If the Shareholders fail to reach an agreement in
accordance with Section 9.2(a) within the Negotiation Period, then:
(i) Color Kinetics shall have the option (the "CK Option"),
but not the obligation, to purchase all, but not less than all, of the JV Shares
or other securities of CKJ owned by ALS (the "ALS Holdings"), exercisable by a
written notice to ALS during a period of sixty (60) days after the end of the
Negotiation Period (the "CK Option Term"). The total aggregate purchase price
for all of ALS Holdings shall be equal to the amount invested by ALS in the
equity of CKJ plus interest thereon at a rate of twelve percent (12%) per annum,
accruing from the date each such equity investment was made. Following delivery
of the notice of exercise of the CK Option, Color Kinetics shall purchase and
ALS shall sell all of ALS Holdings at the purchase price determined in
accordance with the forgoing and on a date no later than ten (10) business days
after the date of such notice. On such date, payment of the purchase price shall
be made concurrently with the delivery by ALS to Color Kinetics of certificates
representing all of ALS Holdings and any other document or instrument of
transfer reasonably requested by Color Kinetics.
(ii) If Color Kinetics does not exercise the CK Option
within the CK Option Term, ALS shall have the option (the "ALS Option"), but not
the obligation, to purchase all, but not less than all, of the JV Shares or
other securities of CKJ owned by Color Kinetics (the "CK Holdings"), exercisable
by a written notice to Color Kinetics during a period of sixty (60) days after
the end of the CK Option Term (the "ALS Option Term"). The total aggregate
purchase price for all of CK Holdings shall be equal to the amount invested by
Color Kinetics in the equity of CKJ plus interest thereon at a rate of twelve
percent (12%) per annum, accruing from the date each such equity investment was
made. Following delivery of the notice of exercise of the ALS Option, ALS shall
purchase and Color Kinetics shall sell all of CK Holdings at the purchase price
determined in accordance with the forgoing and on a date no later than ten (10)
business days after the date of such notice. On such date, payment of the
purchase price shall be made concurrently with the delivery by Color Kinetics to
ALS of certificates representing all of CK Holdings and any other document or
instrument of transfer reasonably requested by ALS.
(iii) In the event that neither Color Kinetics nor ALS
exercise the respective options granted to them in this Section 9.2, the Parties
shall cause the dissolution and liquidation of CKJ.
9.3 If Performance Targets Are Not Agreed Upon. If the Shareholders
fail to agree on the term of any Additional Period or on the Performance Targets
for such Additional Period at least four (4) months prior to the expiration of
the Trial Period or the then Additional Period, the provisions of Section 9.2(c)
shall apply; provided, however, that for purposes of this Section 7.3, the CK
Option Term shall be a period of two (2) months commencing four (4) months prior
to the expiration of the Trial Period or the then Additional Period, as the case
may be, and the ALS Option Term shall be a period of two (2) months commencing
upon expiration of the CK Option Term.
9.4 Other Buyout Options.
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(a) Without derogating from the provisions of Sections 9.1,
9.2 and 9.3 or from any right or remedy to which Color Kinetics may be entitled
under this Agreement, the JV Distributorship Agreement or Applicable Law, if ALS
or Yamagiwa is in material breach of this Agreement (including, without
limitation, if ALS or an Affiliate violates the non-competition provisions in
Section 10) or the JV Distributorship Agreement, or if CKJ is in material
breach, caused indirectly by ALS or Yamagiwa, of the JV Distributorship
Agreement, and such breach is not cured within thirty (30) days after ALS or
Yamagiwa, as the case may be, receives written notice thereof from Color
Kinetics, or if ALS or Yamagiwa has made a material misrepresentation with
respect to any material condition, warranty, representation or agreement
contained in this Agreement or the JV Distributorship Agreement, then Color
Kinetics shall have the option, but not the obligation, to purchase all, but not
less then all, of the ALS Holdings, exercisable by a written notice to ALS,
during a period of ninety (90) days following the later of (A) when Color
Kinetics first learns about such breach, if the breach is not curable, or (B)
the expiration of the thirty (30) days notice period referred to above, if the
breach is curable.
(b) Without derogating from the provisions of Sections 9.1,
9.2 and 9.3, if Color Kinetics is in material breach of this Agreement or the JV
Distributorship Agreement, and such breach is not cured within thirty (30) days
after Color Kinetics receives written notice thereof from ALS, or if Color
Kinetics has made a material misrepresentation with respect to any material
condition, warranty, representation or agreement contained in this Agreement or
the JV Distributorship Agreement, then ALS shall have the option, but not the
obligation, to purchase all, but not less then all, of the CK Holdings,
exercisable by a written notice to Color Kinetics, during a period of ninety
(90) days following the later of (A) when ALS first learns about such breach, if
the breach is not curable, or (B) the expiration of the thirty (30) days notice
period referred to above, if the breach is curable.
(c) The total aggregate purchase price for all of the CK
Holdings or ALS Holdings, as the case may be, for purposes of this Section 9.4,
shall be equal to the respective amount invested by Color Kinetics or ALS, as
the case may be, in the equity of CKJ, with no interest thereon. Following
delivery of the notice of exercise of the option, the Shareholder exercising the
option shall purchase and the other Shareholder shall sell all of the CK
Holdings or ALS Holdings, as the case may be, at the purchase price determined
in accordance with the forgoing and on a date no later than ten (10) business
days after the date of such notice. On such date, payment of the purchase price
shall be made concurrently with the delivery by the selling Shareholder to the
purchasing Shareholder of certificates representing all of the CK Holdings or
ALS Holdings, as the case may be, and any other document or instrument of
transfer reasonably requested by the purchasing Shareholder.
10. Non-competition and by ALS, Yamagiwa or any Affiliate. Without derogating
from the provisions of any Applicable Law (including, without limitation, any
law relating to the protection of patent rights or intellectual property), as
long as ALS or any Affiliate (as defined herein) of ALS or Yamagiwa holds any
shares or other securities of CKJ, and for a period of one (1) year after ALS or
any such Permitted Transferee no longer holds any shares or other securities of
CKJ, neither ALS, nor Yamagiwa nor any Affiliate of ALS or Yamagiwa shall,
directly or indirectly, participate as owner, stockholder, manager, agent or
consultant in any business, firm or corporation which is in competition with CKJ
or Color Kinetics, or which intends at any time to compete with CKJ or Color
Kinetics, or which otherwise develops,
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manufactures, markets, distributes or sells any products that Color Kinetics in
its reasonable discretion considers to be a competitive product to any products
of Color Kinetics. For purposes of this Section 10, an "Affiliate" means an
individual or an entity controlling, under common control with, or controlled
by, ALS or Yamagiwa.
11. Term and Termination. This Agreement shall commence on the Effective Date
and shall remain in full force and effect as long as Color Kinetics and ALS, or
any of their respective Permitted Transferees, own any JV Shares. In the event
that Color Kinetics or ALS acquires all the issued and outstanding JV Shares
pursuant to the terms of Section 9, this Agreement shall terminate automatically
at that point; provided, however, that the expiration or termination of this
Agreement shall not release any Party from any liability, duty, or obligation
which at the time of expiration or termination has already accrued to the other
Party or which thereafter may accrue in respect of any act or omission prior to
such expiration or termination.
12. Miscellaneous.
12.1 Force Majeure. No Party shall be liable for failure to perform,
whether in whole or in part, its obligation under this Agreement if such failure
is caused by any event or condition not existing as of the date of this
Agreement and not reasonably within the control of the affected Party,
including, without limitation, by fire, flood, typhoon, earthquake, explosion
strikes, unavoidable accidents, war (declared or undeclared), acts of terrorism,
sabotage, embargoes, acts of Governmental Authorities, or any cause beyond the
reasonable control of the effected Party; provided that the affected Party
promptly notifies the other Parties of the occurrence of the event of force
majeure and takes all reasonable steps necessary to resume performance of its
obligations so interfered with.
12.2 Assignment. Except as provided in Section 4.3, neither this
Agreement nor any of the rights and obligations created hereunder may be
assigned, transferred, pledged, or otherwise encumbered or disposed of, in whole
or in part, whether voluntary or by operation of law, or otherwise, by any Party
without the prior written consent of the other Party. No such unconsented
assignment shall relieve the assigning Party of any of its obligations
hereunder. This Agreement shall inure to the benefit of and be binding upon the
parties, permitted successors and assigns.
12.3 Survival. The obligations of the parties with respect to Sections
4.4 (Confidentiality), 7.1 (Intellectual Property Rights), 10 (Noncompetition),
11.2 (Nonsolicitation), 12.3 (Survival), 12.4 (Notices), 12.6
(Non-solicitation), 12.7 (Dispute Resolution; Arbitration), 12.8 (Expenses),
12.9 (Entire Agreement), 12.10 (Modification), 12.12 (Severability; Validity),
12.13 (No Waiver), 12.14 (Governing Law), 12.15 (Language), 12.17 (Headings) and
12.18 (Construction and Reference) shall survive the termination of this
Agreement.
12.4 Notices. All notices and communication required, made or permitted
hereunder shall be in writing and shall be delivered by hand or by an
internationally recognized courier service such as FedEx, UPS, DHL, addressed:
If to Color
Kinetics: Color Kinetics Incorporated
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00 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000, X.X.X.
Attn: Chief Executive Officer
If to ALS: 00-0 Xxxxxxxx
Xxxxxxx-xx
Xxxxx 000-0000, XXXXX
Attn: President
If to Yamagiwa: 0-0-0 Xxxxxxxxx
Xxxxxxx-xx
Xxxxx 000-0000, XXXXX
Attn: President
Each such notice or other communication shall for all purposes
hereunder be treated as effective or as having been given as follows: (i) if
delivered in person, when delivered, and (ii) if sent by a recognized courier
service, on the date shown in the written confirmation of delivery issued by
such delivery service. Either Party may change the addresses and/or addresses to
whom notice may be given by giving notice pursuant to this Section 12.4 and such
change of address shall become effective seven (7) days after such notice is
given.
12.5 Export Control. Without in any way limiting the provisions of this
Agreement, each of the Parties agrees that no products procured from or
technical information disclosed by the other party or CKJ under this Agreement
are in tended to or shall be exported or re-exported, directly or indirectly, to
any destination restricted or prohibited by Applicable Law without necessary
authorization by the Governmental Authorities.
12.6 Non-solicitation. During the term of this Agreement and for two
(2) years following the termination of this Agreement, neither Color Kinetics,
ALS nor Yamagiwa shall employ or solicit for employment any person employed by
CKJ, without the prior written consent of Color Kinetics (if ALS or Yamagiwa
wish to employ such employee) or Yamagiwa (if Color Kinetics wishes to employ
such employee).
12.7 Dispute Resolution; Arbitration.
(a) Prior to pursuing arbitration with respect to any dispute
arising hereunder, the chief executive officers of the Parties (or a direct
report appointed by them) shall meet to seek an amicable resolution of such
dispute. No Party shall be entitled to make and bring a claim in arbitration
unless it has attempted for a period of thirty (30) days from written notice of
such dispute to reach such amicable solution.
(b) After expiration of the thirty (30) day period referred to
in Section 12.7(a), any and all disputes arising under or affecting this
Agreement shall be resolved exclusively by confidential arbitration pursuant to
(A) the Rules of International Arbitration of the American Arbitration
Association then in effect, in Boston, Massachusetts, if the arbitration is
initiated by ALS or Yamagiwa and (B) the rules of the Japan Commercial
Arbitration Association (Kokusai Shoji Chusai Kyokai) then in effect, in Tokyo,
Japan, if the arbitration is initiated by Color
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Kinetics. Each of the Parties shall designate one (1) arbitrator and the two (2)
arbitrators so designated shall select the third arbitrator. Arbitration
proceedings shall be conducted in English. The award rendered by the arbitrator
shall include costs of arbitration, reasonable attorneys' fees, and reasonable
costs for expert and other witnesses. The judgment upon award of the arbitrators
shall be final and binding and may be enforced in any court of competent
jurisdiction, including any court of competent jurisdiction in the United States
or Japan, and each of the Parties hereto unconditionally submits to the
jurisdiction of such court for the purpose of any proceeding seeking such
enforcement. Nothing in this Agreement shall be deemed as preventing any Party
from seeking injunctive relief (or any provisional remedy) from any court having
jurisdiction over the Parties and the subject matter of the dispute as necessary
to protect any Party's name, proprietary information, trade secrets, know-how,
or any other proprietary rights. Subject only to the provisions of the
Applicable Law, the procedure described in this Section 12.7 shall be the
exclusive means of resolving disputes arising under or affecting this Agreement.
(c) All papers, documents or evidence, whether written or
oral, filed with or presented to the panel of arbitrators shall be deemed by the
Parties and by the arbitrators to be Confidential Information. Except as may be
required to comply with any Applicable Law, no Party or arbitrator shall
disclose in whole or in part to any other person any Confidential Information
submitted in connection with the arbitration proceedings, except to the extent
reasonably necessary to assist counsel in the arbitration or preparation for
arbitration of the dispute. Confidential information may be disclosed (i) to
attorneys, (ii) to Parties, and (iii) to outside experts requested by either
Party's counsel to furnish technical or expert services or to give testimony at
the arbitration proceedings, subject, in the case of such experts, to execution
of a legally binding written statement that such expert is fully familiar with
the terms of this Section, agrees to comply with the confidentiality terms of
this Section 12.7(c) and will not use any Confidential Information disclosed to
such expert for personal or business advantage.
12.8 Expenses. Except as otherwise expressly provided hereunder,
each Party will pay its own expenses incident to the negotiation, preparation,
and performance of this Agreement and the transactions and documents
contemplated hereby, including but not limited to the fees and expenses of its
respective accountants and counsel. Each Party will indemnify and hold harmless
the other Party against any claims of any nature by any finders, consultants, or
other parties retained by it or claiming any such relationship.
12.9 Entire Agreement. This Agreement and the JV Distributorship
Agreement embody the entire agreement and understanding between the Parties with
respect to the subject matter hereof, superseding, as of the Effective Date, all
previous and contemporaneous communications, representations, agreements and
understandings, whether written or oral, in existence on the date this Agreement
is executed, including, without limitation, that certain Term Sheet dated
January 17, 2001. Neither Party has relied upon any representation or warranty
of the other Party except as expressly set forth herein or in the JV
Distributorship Agreement.
12.10 Modification. This Agreement may not be modified or amended,
in whole or in part, except by a writing executed by duly authorized
representatives of the Parties.
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12.11 Announcement. Neither Party shall announce the existence of
this Agreement or any relationship hereunder prior to a time mutually determined
by ALS and Color Kinetics. Neither Party shall unreasonably withhold its consent
to a time proposed by the other Party.
12.12 Severability, Validity. In the event that any provision of
this Agreement shall be determined to be unenforceable by reason of its
extension for too great a period of time or over too large a geographic area or
over too great a range of activities, it shall be interpreted to extend only
over the maximum period of time, geographic area or range of activities as to
which it may be enforceable. If, after application of the preceding sentence,
any provision of this Agreement shall be determined to be invalid, illegal or
otherwise unenforceable by a court of competent jurisdiction, the validity,
legality and enforceability of the other provisions of this Agreement shall not
be affected thereby. Except as otherwise provided in this Section 12.12, any
invalid, illegal or unenforceable provision of this Agreement shall be
severable, and after any such severance, all other provisions hereof shall
remain in full force and effect, and shall be construed and interpreted in a
manner that corresponds as far as possible with the intentions of the Parties as
expressed in this Agreement.
12.13 No Waiver. Except to the extent that a Party hereto may have
otherwise agreed in writing no waiver by that Party of any condition of this
Agreement or breach of any other condition or subsequent or prior breach of the
same or any other obligation or representation by any other Party, nor any
forbearance by the first Party to seek a remedy for noncompliance or breach by
any other Party shall be deemed to be a waiver by the first Party of its rights
and remedies with respect to such noncompliance or breach.
12.14 Governing Law. The validity, construction, performance and
enforceability of this agreement shall be governed in all respects by the laws
of Japan applicable to agreements negotiated, executed and performed in Japan.
12.15 Language. This Agreement, the JV Distributorship Agreement and
the Exhibits hereto and thereto, except the Articles of Association, are in the
English language, which language shall be the controlling language in all
respects. The Articles of Association are in the Japanese language, which
language shall be controlling in all respects. Any translation hereof in
Japanese language shall be for accommodation only, and shall not be binding upon
the Parties. All communications and notices to be made or given pursuant to this
Agreement shall be in the English language unless otherwise expressly provided
herein.
12.16 No Agency. This Agreement shall not constitute an appointment
of either Party as the legal representative or agent of the other Party, nor
shall either Party have any right or authority to assume, create, or incur in
any manner any obligation or other liability of any kind, express or implied,
against, in the name or on behalf of, any other Party. Nothing herein or in the
transactions contemplated by this Agreement shall be construed as, or deemed to
be, the formation of a partnership by or among the Parties.
12.17 Headings. The section and other headings contained in this
Agreement are for convenience of reference only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.
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12.18 Construction and Reference. Words used in this Agreement,
regardless of the name or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context may require.
12.19 Governmental Approvals. Each of the parties shall use its best
efforts to obtain all Governmental Approvals and shall cooperate with any other
Party in good faith.
12.20 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall
be deemed to constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY DELETED]
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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their duly authorized representatives on the date set forth above.
COLOR KINETICS INCORPORATED YAMAGIWA CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Tetsu Konagaya
------------------------------- ----------------------------
Name: Xxxxxx X. Xxxxxxx Name: Tetsu Konagaya
Title: President & CEO Title: President
Date: April 5, 2001 Date: April 2, 2001
COLOR KINETICS JAPAN INCORPORATED ALS INCORPORATED
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxx
------------------------------- ----------------------------
Name: Xxxxxxx Xxxxxx Name: Xxxxxxx Xxxxxx
Title: President Title: President
Date: April 2, 2001 Date: April 2, 2001
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