Exhibit 10.11
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT ("AGREEMENT") is made and entered into as
of the 28th day of May, 1998, by and between SmartDisk Corporation, a Delaware
corporation (the "COMPANY"), and Xxxxxxx International Systems Corporation, a
Florida corporation ("DISTRIBUTOR").
In consideration of the mutual promises herein contained and subject to
the following terms and provisions, the parties do hereby agree as follows:
1. APPOINTMENT AND ACCEPTANCE
The Company appoints Distributor as a non-exclusive
distributor for the Products in the Territory (as such terms are defined in
Section 2) and Distributor accepts such appointment. Distributor's distribution
rights include the right to combine the Products with other products to create
combined products ("COMBINED Products") for distribution and the right to
appoint, by written agreement only, subdistributors and dealers
("SUBDISTRIBUTORS") for distribution of Products and Combined Products; provided
that the Company's proprietary rights are as fully protected under each such
written appointment as they are under this Agreement. In addition, Distributor
shall have the right to solicit orders for Products to carry a label of a third
party Subdistributor ("PRIVATE LABEL PRODUCTS") pursuant to the procedure set
forth in Section 2.3 below.
2. PRODUCTS AND TERRITORY
2.1 PRODUCTS. Distributor shall be a distributor for those of
the Company's products listed on attached Exhibit A and all updates,
enhancements and modifications thereto (individually, a "PRODUCT" and
collectively, the "PRODUCTS"). The Company may from time to time, by written
notice to Distributor, make updates, enhancements and modifications to the
Products without otherwise affecting the terms of this Agreement although
Company may only do so upon sixty (60) calendar days written notice to
Distributor.
2.2 ADDITIONAL PRODUCTS. For any additional product
("ADDITIONAL PRODUCT") developed by the Company which contains substantially
similar functionality as the Products, but does not constitute an update,
enhancement or modification of any Product, the Company will discuss with, and
offer to Distributor in writing, the right to distribute such Additional Product
in the Territory at a purchase price specified by the Company and, unless
otherwise specified by the Company, upon such other terms as are set forth
herein with respect to the Products. For each Additional Product, the Company
shall commence such discussion and offer with Distributor no later than any
other discussion with or offer to any other distributor for such Additional
Product. Within thirty (30) days, or such longer period as the parties may agree
upon in writing, after receipt of any offer of appointment from the Company
pursuant to this Section 2.2, Distributor shall notify the Company in writing
whether Distributor elects to accept or reject such offer. Failure by
Distributor to give any notice within such period shall constitute a rejection
by Distributor of such offer. In the event Distributor accepts any such offer of
appointment, the Additional Product(s) accepted shall become Product(s) under
this Agreement and shall be governed by the terms and conditions hereof
applicable to the Products, except that the terms and conditions of the
Company's written offer shall govern to the extent they supplement or modify the
terms and conditions of this Agreement. In the event Distributor rejects any
Company offer of appointment, Distributor shall have no rights with respect to
the Additional Product covered by such rejected offer. The Company shall have no
obligation to make any further offer of appointment to Distributor for an
Additional Product for which Distributor has rejected an initial offer of
appointment, including at the time that any distribution arrangement with
another distributor for such Additional Product expires. Notwithstanding any of
the foregoing, and as an exception thereto, in the event that the Company offers
any such Additional Product to any other distributor or third party on terms or
conditions more favorable than those offered to Distributor, the Company shall
reoffer such Additional Product to Distributor on such more favorable terms and
conditions.
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The Company's obligation hereunder to offer Distributor the right to distribute
Additional Products shall only be applicable for such periods as Distributor is
in compliance with all of the terms and provisions of this Agreement.
2.3 PRIVATE LABEL PRODUCTS. In the event that a Subdistributor
desires to purchase Private Label Products, Distributor shall submit a written
notice to the Company (the "PLP NOTICE") which shall include the subject Product
and any modifications thereto requested by the Subdistributor, the proposed
private label name, a description of such Subdistributor's business and its
intended distribution of the Private Label Product. To the extent that such
Subdistributor meets the minimum purchase quantities and other conditions set
forth in the Company's Private Label Products Distributor Price List ("PLP PRICE
LIST") then in effect the Company agrees to accept and process all such Private
Label Products ordered by Distributor. All such Private Label Products shall
become Products under this Agreement and shall be governed by the terms and
conditions set forth in the PLP Price List then in effect and, to the extent not
in conflict with such PLP Price List, this Agreement as applicable to Products.
2.4 TERRITORY. Distributor shall sell and solicit orders for
the sale of the Products, and shall permit its Subdistributors to sell and
solicit orders for the sale of the Products only within the geographic area set
forth on Exhibit B (the "TERRITORY").
3. DISTRIBUTOR'S SALES DUTIES
During the term of this Agreement, Distributor shall be
responsible for the following:
3.1 REASONABLE COMMERCIAL EFFORTS. Distributor shall use its
reasonable commercial efforts to solicit orders and sell the Products within the
Territory and to develop the full sales potential for the Products within the
Territory consistent with ethical business practices and in a manner that will
reflect favorably on the Products and on the good will and reputation of the
Company.
3.2 SUPPORT AND TRAINING COMMITMENT. The Company hereby grants
Distributor the right and confers upon Distributor the obligation to pass
through to the end-user the warranty established by the Company for the
Products. The Company reserves the right to modify the form of Product warranty
from time to time upon written notice to Distributor. Distributor shall provide
all Subdistributor and end-user support, as well as Subdistributor training, for
the Products which Distributor distributes. The Company shall provide limited
engineering support directly to Distributor for those issues which Distributor
cannot, after reasonable efforts, manage through its own engineering efforts.
Notwithstanding anything set forth herein, Distributor shall encourage all
end-user customers to bring their claims for Product support and warranty to the
relevant Subdistributor, and shall instruct all Subdistributors to bring their
claims for Product support and warranty to Distributor.
3.3 SALES MATERIALS. Distributor shall create appropriate
sales promotion and advertising materials for the Products. Distributor's sales
promotion and advertising material shall be subject to the Company's prior
written consent which shall not be unreasonably withheld. Distributor shall
provide the Company with not less than fourteen (14) calendar days prior
delivery of copies of the sales promotion and advertising material to be
approved by the Company. Failure of the Company to accept or reject such
materials on or before the fourteenth (14th) calendar day after receipt by the
Company thereof shall be deemed acceptance of such materials.
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3.4 GOVERNMENTAL REGULATIONS AND REGULATORY COMPLIANCE.
Distributor shall comply with all laws, regulations and orders of government,
and with all other governmental requirements applicable to its sales activities
with respect to the Products in the Territory. The Company shall furnish
Distributor with such assistance and cooperation as may reasonably be requested
in connection with compliance with such governmental requirements. All
registrations and permits required for the sale and distribution of the Products
shall be filed by Distributor in the name of, for the benefit of and at the
expense of the Company. In the event any registration or permit must be filed in
the name of any entity other than the Company because of requirements of
applicable law, Distributor agrees promptly upon termination or expiration of
this Agreement to assign or cause to be assigned to the Company or its designee,
without charge, every such registration or permit to the fullest extent
assignable. Distributor shall also obtain, at its own expense, any import
license, foreign exchange license, foreign exchange permit, or other permit or
approval it may need for the performance of its obligations under this
Agreement. Distributor further agrees to maintain and to provide the Company
with such records and reports as the Company deems necessary or advisable to
enable the Company to satisfy and conform to all regulatory requirements
relating to the sale of the Products. In particular, Distributor agrees to
maintain and to provide the Company with product liability and traceability,
quality assurance and defect incident reports in such form as may be requested
by the Company from time to time. Distributor will immediately report to the
Company all defects in the Products discovered by or reported to Distributor in
sufficient detail to enable the Company to take corrective action.
4. PRICE AND TERMS OF SALE
4.1 PRICE. All purchases of Products, or Private Label
Products, by Distributor shall be at the prices then in effect pursuant to the
Company's Distributors Price List ("DISTRIBUTORS PRICE LIST") or PLP Price List,
as appropriate. The Company may adjust its Distributors Price List and PLP Price
List from time to time upon giving Distributor written notice thereof at least
sixty (60) calendar days in advance of the effective date of any such change and
the new prices will be effective as to all Product orders accepted by the
Company after the effective date as specified in such notice and to all orders
accepted by the Company prior to the effective date to the extent of any
Products specified to be shipped more than ninety (90) days after the effective
date of such price change.
4.2 PLACEMENT OF ORDERS. Distributor shall place orders with
the Company by facsimile, e-mail or airmail. All orders for the purchase of
Products from the Company hereunder are subject to approval and acceptance by
the Company at the Company's home office. The Company may fill any order it
accepts in whole or partial shipments.
4.3 ACCEPTANCE OF ORDERS. Upon receipt of a purchase order,
the Company shall check the contents of the order and notify Distributor of the
Company's acceptance or rejection within ten (10) calendar days of receipt
thereof specifying, with respect to each accepted order, the estimated shipment
date for each Product with respect to each accepted order. In the event the
Company does not notify Distributor of rejection of an order within such ten
(10) day period, the order shall be deemed accepted.
4.4 PURCHASE ORDER FORMS. It is understood that Distributor
may use its standard purchase order forms with respect to its purchase of
Products for resale hereunder, which purchase orders may specify, among other
things, the description and quantities of the Products ordered, the method of
shipment, the requested shipment dates, and the destination to which such
Products shall be shipped. Such forms shall be used for convenience only and any
terms or provisions thereof which are inconsistent with or in addition to
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those contained in this Agreement shall have no force or effect whatsoever as
between the parties hereto, irrespective of whether or not the Company might
otherwise be deemed to have accepted such form by reason of its execution or
acknowledgment thereof.
4.5 PAYMENTS. All payments due to the Company by Distributor
under this Agreement shall be payable in accordance with the terms set forth in
the Distributors Price List then in effect.
4.6 TAXES AND ASSESSMENTS. In addition to payments for
Products and other charges, Distributor assumes and agrees to pay (or provide
the Company with a certificate of exemption acceptable to the appropriate taxing
authorities prior to shipment) and to indemnify and hold the Company harmless
from all export charges and import duties and any and all sales, use, excise or
other taxes or assessments imposed upon or applicable to any sale to Distributor
hereunder by any governmental authority. If any taxes or assessments are
required to be withheld from payments to the Company, Distributor will pay the
Company an amount which, after such withholding, equals the original amount due
under this Agreement, and will provide the Company with official tax receipts or
other evidence of payment of such withheld taxes or assessments sufficient to
substantiate a claim by the Company for credit against United States federal
income tax.
4.7 SHIPMENT; TITLE AND RISK OF LOSS. All sales of Products to
Distributor will be F.O.B. the Company's manufacturing facility in the
Philippines or any other manufacturing facility designated by the Company, and
Distributor agrees to pay all costs and charges for transportation, brokerage,
handling and insurance of the Products from the point of shipment. Title to
Products will pass to Distributor upon delivery to a common carrier. Delivery of
bills of lading before or after the Products arrive at the initial delivery
point will not affect the place of delivery of the Products. Upon delivery of
the Products to a common carrier, risk of loss or damage to the Products shall
pass to Distributor. All Products will be drop-shipped at Distributor's expense
to Distributor's customers as indicated in Distributor's purchase orders.
5. TERM OF AGREEMENT AND TERMINATION
5.1 TERM. Subject to earlier termination as provided in this
Section 5, the term of this Agreement shall extend from the date hereof through
December 31, 2001. This Agreement shall be automatically renewed for successive
periods of twelve (12) months thereafter unless either party hereto sends a
written notice to the other not less than sixty (60) calendar days before the
expiration of the initial term of this Agreement or any renewal thereof stating
that such party is not renewing this Agreement.
5.2 TERMINATION BY EITHER PARTY. Either party may terminate
this Agreement as follows:
5.2.1 In the event of a material default by either
party in the performance of its duties, obligations or undertakings under this
Agreement, the non-defaulting party shall have the right to give written notice
to the defaulting party advising such party of the specific default involved
and, if within thirty (30) calendar days after such notice, the defaulting party
shall not have remedied such default, the other party shall have the
unconditional right, in addition to any other rights and remedies it may have,
to terminate this Agreement immediately upon giving written notice to the
defaulting party.
5.2.2 At any time by giving written notice of such
termination in the event the other party becomes insolvent or institutes or
permits to be instituted against it any proceedings seeking receivership,
trusteeship, bankruptcy, reorganization, arrangement, readjustment of debt,
assignment for the benefit of
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creditors, or other similar proceedings under any applicable law.
5.3 TERMINATION OF RIGHTS AND OBLIGATIONS. Upon termination of
this Agreement for any reason:
5.3.1 All amounts owed by Distributor to the Company
shall become immediately due, except in the case of expiration of the term of
this Agreement, in which case all amounts owed shall be paid in accordance with
Section 4.7, and all unfilled orders of Products for purchase by Distributor
specifying shipment dates beyond sixty (60) days after termination shall be
deemed terminated without liability on the part of either party;
5.3.2 The right of Distributor to act as a
distributor for the Company shall cease, and Distributor shall immediately
discontinue all use of the Company's trade names and trademarks, and Distributor
shall return to the Company all price lists, catalogs, sales literature,
operating and service manuals, advertising literature and other materials
relating to the Products, except that, notwithstanding the foregoing,
Distributor shall have the right, for a reasonable period not to exceed ninety
(90) days, to sell any Products remaining in inventory;
5.3.3 Except to the extent of selling its remaining
inventory of Products as permitted by Section 5.3.2, Distributor shall not
thereafter represent or hold itself out as being an authorized distributor for
the Company's Products or engage in any practices which might make it appear
that Distributor is still such an authorized distributor; and
5.3.4 Distributor shall transfer to the Company any
rights it may have to any trademarks or trade names of the Company and
Distributor shall assign to the Company, or its nominee, any registrations or
other governmental permits with respect to the Products except to the extent a
Combined Product carries a trademark which is distinct from the Products, or if
such assignment is not permitted by law, Distributor shall cooperate in the
cancellation of such registrations and permits standing in its name and the
reissuance thereof to the Company or its nominee.
5.4 NO REVIVAL OR WAIVER. The acceptance by the Company of
orders after notice of termination is given hereunder shall be separate
transactions and shall not operate as a renewal or revival of this Agreement or
as a waiver of any provision hereof.
5.5 NO LIABILITY. The Company shall have no obligation to
Distributor by reason of the expiration or termination, in compliance with the
provisions of Section 5.2, of this Agreement or the Company's non-renewal of
this Agreement at the expiration of the initial term or any extension thereof,
and Distributor hereby agrees not to assert any claim by reason of such
expiration or termination of this Agreement. Neither party, by reason of the
termination of this Agreement, shall be liable to the other because of any loss
of anticipated sales or prospective profits or because of expenditures or
investments related to the performance of this Agreement or the goodwill created
in the course of performance hereunder.
5.6 NO RELEASE. No termination of this Agreement shall in any
manner whatsoever release, or be construed as releasing, any party from any
liability to the other arising out of or in connection with a party's breach of,
of failure to perform, any covenant, agreement, duty or obligation contained
herein.
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5.7 SURVIVAL. The provisions of Sections 3.5, 4.5, 4.6, 4.7,
4.8, 4.9, 5, 6, 7.2, 7.4, 8, 9, 10, 11 and 12 will survive the expiration or
termination of this Agreement.
6. WARRANTIES
6.1 PRODUCT WARRANTY. Products shall be covered by the
Company's standard product warranty then in effect for each such Product. The
Company may change its product warranty for a Product from time to time upon
giving Distributor written notice thereof at least thirty (30) days in advance
of the effective date of any change together with a copy of the new product
warranty which will be effective as to all subject Products shipped after the
effective date specified in such notice. Distributor shall not make any product
warranty to its customers of the Products other than the Company's product
warranty then in effect with respect to such Product. Distributor shall pass the
Company's warranty through to its customers as set forth in Section 3.2 above.
6.2 THE COMPANY OPTION. The Company shall, at its option,
replace, repair or issue credit to Distributor for any confirmed defective
Products sold by the Company to Distributor under this Agreement and covered
under the warranty period.
6.3 EXCLUSIVE REMEDY. In case of breach of the product
warranties issued by the Company in accordance with Section 6.1 above,
Distributor's or its customers' exclusive remedy against the Company, and the
Company's sole liability, shall be, as set forth in Section 6.2. Distributor or
its customers shall prepay return transportation charges to the Company's
designated site. If the returned Product is found defective by the Company under
the terms of the warranty and the Company elects to repair or replace the
defective Product, the Company will prepay return transportation charges to
Distributor or its customers, as appropriate. The Company shall have a
reasonable time to make repairs, replace or issue credit with respect to
Products found to be defective. All replaced parts will become the property of
the Company on an exchange basis. Any replacement or spare parts will be new or
equivalent parts which, at the time of installation, meet the Company functional
specifications then applicable to new parts.
6.4 LIMITATION. The Company's warranty will not apply to a
Product if its correction, repair or replacement is required due to: (i) natural
disasters, including fire, smoke, water, wind, earthquakes or lightning, (ii)
electric power failures, (iii) the failure to maintain appropriate environmental
conditions, (iv) the neglect, misuse or other than the ordinary use of the
Product, or (v) attempted repairs or alterations by persons other than those
employed by the Company. Under these circumstances, the Company may charge
Distributor or its customers for the correction, repair or replacement on a
time-and-materials basis at the Company's then-current rates.
6.5 DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION
6, ALL WARRANTIES, CONDITIONS, REPRESENTATIONS, INDEMNITIES AND GUARANTEES,
WHETHER EXPRESS OR IMPLIED, ARISING BY LAW, CUSTOM, PRIOR ORAL OR WRITTEN
STATEMENTS BY THE COMPANY OR OTHERWISE (INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE OR OF
UNINTERRUPTED USE) ARE HEREBY OVERRIDDEN, EXCLUDED AND DISCLAIMED.
6.6 NO CONSEQUENTIAL DAMAGES. THE COMPANY WILL NOT BE LIABLE
TO DISTRIBUTOR OR ITS CUSTOMERS AND DISTRIBUTOR WILL NOT BE LIABLE TO THE
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COMPANY FOR ANY CONSEQUENTIAL, INDIRECT, PUNITIVE, SPECIAL OR INCIDENTAL
DAMAGES, WHETHER FORESEEABLE OR UNFORESEEABLE, BASED ON CLAIMS OF DISTRIBUTOR,
OR ITS CUSTOMERS, OR THE COMPANY, AS THE CASE MAY BE, (INCLUDING, BUT NOT
LIMITED TO, CLAIMS FOR LOSS OF GOODWILL, PROFITS, INVESTMENTS, USE OF MONEY,
LOSS OF USE OF THE COMPANY'S PRODUCTS; INTERRUPTION IN USE, STOPPAGE OF OTHER
WORK OR IMPAIRMENT OF OTHER ASSETS, OR LABOR CLAIMS), ARISING OUT OF BREACH OF
EXPRESS OR IMPLIED WARRANTY, BREACH OF CONTRACT, MISREPRESENTATION, NEGLIGENCE,
STRICT LIABILITY IN TORT OR OTHERWISE, EXCEPT ONLY IN THE CASE OF DEATH OR
PERSONAL INJURY WHERE AND SOLELY TO THE EXTENT THAT APPLICABLE LAW REQUIRES SUCH
LIABILITY.
6.7 DISTRIBUTOR INDEMNITY. If Distributor makes any warranty
or representation inconsistent with or in addition to the warranties stated in
this Section 6, Distributor shall, at its own expense, defend, indemnify and
hold the Company harmless from any claim to the extent it is based upon such
inconsistent or additional warranty or representation.
7. TRADEMARKS AND TRADE NAMES
7.1 VALIDITY AND DISTRIBUTOR REGISTRATION. Distributor
recognizes the validity of the Company's trademarks and trade names as set forth
on Exhibit C attached hereto, (the "COMPANY TRADEMARKS"), acknowledges that the
same are the property of the Company, and agrees not to infringe upon, harm or
contest the rights of the Company in the Company Trademarks. Distributor further
agrees, if requested by the Company and at the Company's expense, to register or
otherwise obtain protection in the Territory for the Company Trademarks on
behalf and for the benefit of the Company.
7.2 OWNERSHIP. All Company Trademarks are and will remain the
exclusive property of the Company, whether or not specifically recognized or
registered under applicable law. Distributor will not take any action that
jeopardizes the proprietary rights of or acquire any right to the Company
Trademarks, except the limited use rights specified in this Section 7.
Distributor will not register, directly or indirectly, any trademark, service
xxxx, trade name, copyright, company name or other proprietary or commercial
right which is identical or confusingly similar to the Company Trademarks.
7.3 USE. Distributor shall have the right to use in the
Territory all the Company Trademarks as well as other trademarks which are or
may be owned by the Company during the term of this Agreement in connection with
the Products for the exclusive purpose of advertising and promoting the Products
in the Territory. All advertisements and promotional materials will (i) clearly
identify the Company as the owner of its trademarks, (ii) conform to the
Company's then-current trademark and logotype guidelines and (iii) otherwise
comply with any local applicable notice or marking requirement. Before
publishing or disseminating any advertisement or promotional materials bearing a
trademark of the Company, Distributor will deliver a copy of the advertisement
or promotional materials in the English language to the Company for approval,
which approval shall not be unreasonably withheld. If the Company gives
Distributor written notice that the proposed use of its trademark is
inappropriate within ten (10) calendar days from the date of submission by
Distributor, Distributor will not place the advertisement or promotional
materials in circulation.
7.4 RETURN OF MATERIALS. Distributor agrees that upon
termination of this Agreement for any reason it will destroy or return to the
Company any advertising, stationery or other materials bearing any
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of the Company's trade names or trademarks.
7.5 INFRINGEMENT. Distributor will immediately notify the
Company if it learns (i) of any potential infringement of a Company trademark by
a third party or (ii) that the use of a the Company trademark may infringe the
proprietary rights of a third party. The Company will determine the steps to be
taken under these circumstances in accordance with Section 8.2 below.
8. INTELLECTUAL PROPERTY RIGHTS
8.1 COMPANY'S RIGHTS. The Company is the sole author and
exclusive owner, or authorized licensee of the Products and all intellectual
property rights therein. The Products do not and will not throughout the term of
this Agreement infringe upon any patent, copyright, trade secret or other
proprietary right held by any third party and there is no such claim or pending
or threatening action with respect thereto.
8.2 COMPANY'S OBLIGATIONS. The Company will indemnify and hold
harmless Distributor from and against all claims, actions, damages, costs and
expenses (including attorneys fees) arising out of any actual or threatened
claim of infringement of any proprietary right, including copyrights,
trademarks, patent rights and trade secrets, arising out of the Products (but
not attributable to any product with which a Product is combined to form a
Combined Product.) This obligation will be subject to the following terms and
conditions:
(i) The obligation will arise only if Distributor gives the
Company prompt notice of the infringement claim and grants the Company, in
writing, exclusive control over its defense and settlements;
(ii) This obligation will cover the Products only in the form
as shipped to Distributor by the Company or its agents, and will not cover any
correction, modification, improvement, enhancement or addition to any Product
made by anyone other than the Company without the Company's prior written
authorization;
(iii) This obligation will not cover any claim that any
Product infringes any third party's rights as used in combination with any
hardware or software not supplied by the Company if that claim could have been
avoided by the use of that Product in combination with other hardware or
software;
(iv) Without limiting the Company's general obligation of
indemnification, and in addition thereto, if an infringement claim is asserted,
or if the Company believes one likely, the Company will have the right and the
obligation to do any of the following: (a) procure a license from the person(s)
claiming or likely to claim infringements; or (b) modify the Product to avoid
the claim of infringement; or (c) suspend the Agreement with respect to such
Product until the infringement claim has otherwise been resolved. If the Company
modifies any Product to avoid a claim of infringement, the Company will have no
obligation to indemnify Distributor with respect to unmodified Products
distributed by Distributor after the Company has supplied the modification to
Distributor; and
THE FOREGOING STATES THE COMPANY'S EXCLUSIVE AND ENTIRE OBLIGATION WITH RESPECT
TO ANY CLAIMS OF INFRINGEMENT OF PROPRIETARY RIGHTS OF ANY KIND.
8.3 DISTRIBUTOR'S INDEMNIFICATION. Distributor will indemnify
and hold harmless the Company from and against all claims, actions, damages,
costs and expenses (including attorneys fees) arising out of any actual or
threatened claim of infringement of any proprietary right, including copyrights,
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trademarks, patent rights and trade secrets, arising out of the inclusion of any
product not supplied by the Company and combined with the Product for
distribution as a Combined Product. Distributor's obligation to indemnify the
Company will arise if the Company gives Distributor prompt notice of the claim
and cooperates and consults fully with Distributor in its defense and/or
settlement. If such an infringement claim is asserted, or if Distributor
believes one likely, Distributor will have the right, but no obligation, to
procure a license from the person claiming or likely to claim infringement.
9. RECALL. In the event of a recall of any of the Products, Distributor
shall cooperate fully with the Company in promptly contacting any purchasers
that the Company desires to be contacted and promptly communicating to such
purchasers the information and instructions the Company desires to be
transmitted. Costs related to the shipment or replacement of the Products
incurred in connection with such recall shall be borne by the Company.
10. CONFIDENTIAL INFORMATION. Each party agrees that it will treat
accordingly all verbal and written communications from the other party which are
designated, or which should reasonably be regarded in the normal commercial
view, as constituting business secrets or proprietary information, and will
impose upon its employees and agents the same obligations with respect to the
other party's proprietary information as it employs with respect to its own
confidential information, but in no event less than a reasonable degree of care.
The provisions of this Section shall survive the termination of this Agreement.
11. INDEPENDENT CONTRACTOR.
11.1 NO AUTHORIZATION. Distributor shall be an independent
contractor hereunder. Distributor is not authorized to: (i) enter into
agreements for or on behalf of the Company; (ii) create any obligation or
responsibility, express or implied, for or on behalf of the Company; (iii)
accept payment of any obligation due or owed to the Company; (iv) accept service
of process for the Company; or (v) bind the Company in any manner whatsoever,
except for Distributor's right to pass to its customers and end-users the
Company's product warranties for the Products as set forth herein. Distributor
shall not list, print, or display the Company's name in such manner as to
indicate or imply that there is an employer-employee or a principal-agent
relationship between the Company and Distributor.
11.2 CONTROL OF DISTRIBUTOR. Subject to its compliance with
all applicable laws and regulations and except as otherwise provided herein,
Distributor shall have control over the manner and means of performing its
obligations under this Agreement. All expenses incurred by Distributor in
connection with the performance of its obligations hereunder shall be borne
solely by Distributor. Distributor shall be responsible for appointing its own
employees, agents and representatives, who shall be compensated by Distributor.
12. MISCELLANEOUS PROVISIONS.
12.1 SALES AND LICENSES. All Products delivered hereunder are
licensed as provided herein. All references in this Agreement to the "sale" or
"purchase" of Products signify only the delivery of the Product in question
subject to the terms set forth in this Agreement. Distributor shall acquire no
rights with respect to the Products other than the right to distribute such
Products and provide related support, as provided herein.
12.2 MOST FAVORED NATIONS. In no event shall the Company offer
any other distributor or
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third party customer any terms or conditions more favorable than those set forth
in this Agreement.
12.3 GOVERNING LAWS. The internal laws of the State of
Delaware, U.S.A., regardless of any choice of law principles, shall govern the
validity of this Agreement, the construction of its terms and the interpretation
and enforcement of the rights and duties of the parties. THE PARTIES AGREE THAT
THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS
SHALL NOT APPLY TO THIS AGREEMENT AND ITS APPLICATION IS HEREBY EXPRESSLY
EXCLUDED.
12.4 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto or their respective permitted successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
12.5 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
12.6 ENTIRE AGREEMENT. This Agreement, the exhibits hereto,
the documents referenced herein and the exhibits thereto, constitute the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous agreements
or understandings, inducements or conditions, express or implied, written or
oral, between the parties with respect hereto and thereto. The express terms
hereof control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
12.7 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against any party
whose signature appears thereon, and all of which together shall constitute one
and the same instrument.
12.8 OTHER REMEDIES. Any and all remedies herein expressly
conferred upon a party shall be deemed cumulative with, and not exclusive of,
any other remedy conferred hereby or by law on such party, and the exercise of
any one remedy shall not preclude the exercise of any other.
12.9 AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only by a writing signed by the parties. The waiver by a
party of any breach hereof for default in payment of any amount due hereunder or
default in the performance hereof shall not be deemed to constitute a waiver of
any other default or succeeding breach or default.
12.10 ATTORNEYS' FEES. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party shall be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including, without limitation, costs,
expenses and
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Distribution Agreement
Page 11
fees on any appeal). The prevailing party shall be the party entitled to recover
its costs of suit, regardless of whether such suit proceeds to final judgment. A
party not entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in calculating the
amount of a judgment for purposes of determining if a party is entitled to
recover costs or attorneys' fees.
12.11 NOTICES. Whenever any party hereto desires or is
required to give any notice, demand or request with respect to this Agreement,
each such communication shall be in writing and shall be given or made by
telecopy, telegraph, cable, mail or other delivery and telecopied, telegraphed,
cabled, mailed or delivered to the intended recipient at the addresses specified
below:
If to the Company: SmartDisk Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
with a copy to: Xxxxx & XxXxxxxx
000 Xxxxxx Xxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: J. Xxx Xxxxxx, Esq.
If to Distributor: Xxxxxxx International Systems Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
with a copy to: Xxxxxxxxx Xxxxx Morosoli & Maser LLP
000 Xxxx Xxxx Xxxx, Xxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
Except as may be otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telecopier with
verified receipt by the receiving telecopier, when personally delivered, four
(4) days after being delivered to an overnight air courier (E.G. DHL, or Federal
Express) upon proof of delivery, or, in the case of a mailed notice, five (5)
days after being deposited in the United States mail certified or registered
mail, postage prepaid. Either party may change its address for such
communications by giving notice thereof to the other party in conformance with
this section.
12.12 CONSTRUCTION OF AGREEMENT. This Agreement has been
negotiated by the respective parties hereto and their attorneys and the language
hereof shall not be construed for or against any party. A reference in this
Agreement to any Section shall include a reference to every Section the number
of which begins with the number of the Section to which reference is
specifically made (E.G., a reference to Section 5.8 shall include a reference to
Sections 5.8.1 and 5.8.1.1). The titles and headings herein are for reference
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Distribution Agreement
Page 12
purposes only and shall not in any manner limit the construction of this
Agreement which shall be considered as a whole. A reference to a Schedule,
Exhibit or Section means a Schedule, Exhibit or Section of this Agreement,
unless the context expressly otherwise requires.
12.13 PRONOUNS. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the person, persons, entity or entities may require.
12.14 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby, and to carry into effect the intents
and purposes of this Agreement.
12.15 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions
of this Agreement are intended nor shall be interpreted to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder or partner of any party hereto, or any other
person, unless specifically provided otherwise herein and, except as so
provided, all provisions hereof shall be personal solely between the parties to
this Agreement.
12.16 FORCE MAJEURE. Except as to the timely payment by
Distributor of the purchase price of Products purchased by it hereunder for
which the Company shall have the right to terminate this Agreement in accordance
with Section 6.2 or invoice Distributor for same, no failure or omission to
carry out or observe any of the terms, provisions or conditions of this
Agreement shall give rise to any claim by one party against the other or be
deemed to be a breach of this Agreement if the same is caused by or arises out
of one or more of the following conditions: acts of God; acts, regulations or
laws of any government; war; civil commotion; destruction of production
facilities or materials by fire, earthquake or storm; labor disturbances;
epidemic; failure of public utilities or of suppliers; or any other event,
matter or thing wherever occurring and whether or not of the same class or kind
as those set forth above, which is not reasonably within the control of the
party affected thereby. However, the parties hereto shall endeavor to avoid,
remove or cure all such conditions. Any party temporarily excused from
performance hereunder by such conditions shall resume performance promptly when
such conditions are removed or cured. Any party claiming any such conditions as
an excuse for delay in performance hereunder shall give prompt notice in writing
thereof to the other party.
12.17 COMPLIANCE WITH LAWS. The parties acknowledge and agree
that this Agreement and the rights and obligations of the parties hereunder are
subject to all applicable laws and regulations of governmental entities having
jurisdiction over any aspects of this Agreement.
12.18 ASSIGNMENT. Except as provided in this Section, neither
party to this Agreement shall assign or otherwise transfer any of its rights or
obligations under this Agreement to any third party, and any such attempt at
assignment shall be void. However, the Company shall have the right to assign
this Agreement, without the prior approval of Distributor, to any successor of
all or substantially all of its business and assets at the time of assignment,
provided that such successor undertakes to fulfill all the obligations of the
Company under this Agreement. Additionally, both the Company and Distributor
shall have the right to assign this Agreement or delegate its obligations
hereunder to any affiliate by giving written notice, provided that such party
guarantees the obligations to be performed by such affiliate. For purposes of
this Agreement, the term "AFFILIATE" shall mean any corporation or business
entity controlled by, controlling or under common control
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Page 13
with the Company or Distributor.
12.19 FOREIGN RESHIPMENT LIABILITY. THIS AGREEMENT IS
EXPRESSLY MADE SUBJECT TO ANY LAWS, REGULATIONS, ORDERS OR OTHER RESTRICTIONS ON
THE EXPORT FROM THE UNITED STATES OF AMERICA OF TECHNICAL INFORMATION OR
PRODUCTS WHICH MAY BE IMPOSED FROM TIME TO TIME BY THE GOVERNMENT OF THE UNITED
STATES OF AMERICA. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE
CONTRARY, DISTRIBUTOR SHALL NOT EXPORT OR REEXPORT, DIRECTLY OR INDIRECTLY, ANY
TECHNICAL INFORMATION OR PRODUCTS TO ANY COUNTRY OR DESTINATION OR PERMIT ITS
TRANSHIPMENT TO ANY COUNTRY OR DESTINATION FOR WHICH SUCH GOVERNMENT OR ANY
AGENCY THEREOF REQUIRES AN EXPORT LICENSE OR OTHER GOVERNMENTAL APPROVAL AT THE
TIME OF EXPORT WITHOUT FIRST OBTAINING SUCH LICENSE OR APPROVAL.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
SMARTDISK CORPORATION XXXXXXX INTERNATIONAL SYSTEMS
CORPORATION
By: /s/ XXXXXXX XXXXXXXXX By: /s/ XXXXXXX X. XXXXXXXXX
--------------------- ------------------------
Name: XXXXXXX XXXXXXXXX Name: XXXXXXX X. XXXXXXXXX
Title: SECRETARY Title: PRESIDENT
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EXHIBIT A
LIST OF PRODUCTS
NAME OF PRODUCT
FlashPath
Smarty
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EXHIBIT B
TERRITORY
WORLDWIDE EXCEPT:
Australia
Burma/Myanmar
China/Hong Kong
Indonesia
Japan
Korea
Laos
Malaysia
Micronesia
New Zealand
Papua/New Guinea
Philippines
Singapore
Taiwan
Thailand
Vietnam
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EXHIBIT C
COMPANY TRADEMARKS
FlashPath
Smarty
SmartDisk
