1
Exhibit 10.14
INTERNATIONAL SOFTWARE DISTRIBUTION AGREEMENT
SYNCHRONICITY, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇
Telephone: ▇▇- ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇- ▇▇▇-▇▇▇-▇▇▇▇
This International Software Distribution Agreement (the "Agreement") is made and
entered into effective as of the 28th day of December, 1999 (the "Effective
Date"), by and between Synchronicity, Inc., a Massachusetts corporation having
its principal place of business as shown above ("Synchronicity"), on the one
part, and Itochu Corporation, a Japanese corporation with its Tokyo office at
▇-▇ ▇▇▇▇-▇▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ("ITC"), and Itochu Techno
Science Corporation, a Japanese corporation with its principal place of business
at ▇▇-▇ ▇▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ("Distributor"; together
with ITC collectively, "Distributor"), on the other part.
SECTION 1: DEFINITIONS
1.1. "Authorized Hardware/Software Configurations" are set forth
in Exhibit B.
1.2. "Authorized Reseller" is a subdistributor of Distributor's
right to market and distribute Products in the Territory who
has signed an agreement with Distributor sufficient to fulfill
Distributor's obligations to Synchronicity hereunder (except
any payment obligations of Distributor to Synchronicity which
shall be always honored and discharged by Distributor).
1.3. "End User" is any customer acquiring one or more copies of a
Product for the customer's own internal use.
1.4. "Evaluation Copies" are copies of the Products which will
automatically cease to function upon the expiration of a
stated period, i.e. which include a "Time Bomb," and which are
subject to the license granted in Section 3.1 of this
Agreement.
1.5. "First Line Support" is the activity of communicating with End
Users by telephone on the use, operation, installation,
configuration and implementation of the Products, assisting
End Users in the use and interpretation of Product
documentation, and passing on reports of errors and suspected
errors in the Products for Second Line Support.
1.6. "License Agreement" is an End User license agreement written
by Distributor in Japanese language with terms at least as
protective of Synchronicity's interests as the terms in
Synchronicity's end user license agreement as shown in Exhibit
A.
1.7. "Products" are those software products shown in Exhibit C, in
their most current versions, and the Japanese localized
version of the Products as developed by the parties in
accordance with Section 2 of this Agreement, including (i) its
modifications, enhancements, corrections or upgrades to the
Products to be furnished by Synchronicity to Distributor
hereunder; and (ii) documentation and any other related
materials described in Exhibit C attached hereto.
Synchronicity may amend Exhibit C of this Agreement from
Page 1
2
time to time upon ninety (90) days' prior written notice to
Distributor as updates or new releases of the Products are
provided.
1.8. "Second Line Support" is the maintenance activity to be
provided by Synchronicity to Distributors in connection with
the Products (i) bug fixing, modifying and correcting errors
in the Products and (ii) hot line support that will include,
without limitation in support of Distributor efforts to
support their End Users and, (iii) the release of updates and
upgrades of the Products for Distributor's provision of the
First Line Support to the End User.
1.9. "Support Agreement" is an annual support agreement to be
entered into by and between Distributor and the End User
written by Distributor in Japanese language with terms at
least as protective of Synchronicity's interest as
Synchronicity's Domestic support agreement shown in Exhibit I.
It also provides Product support of the Products through First
Line Support by Distributor.
1.10. "U.S. Version" is any Product based on English Language and
intended for distribution by Synchronicity in the United
States.
1.11 "Territory" is the country of Japan.
SECTION 2: DEVELOPMENT OF JAPANESE VERSION
2.1. When and if so agreed upon in writing by the parties to this
Agreement, Distributor, with the cooperation of Synchronicity,
will undertake efforts to localize the Products for the
Japanese market, in accordance with a separate Localization
Development, Marketing and Distribution Agreement.
SECTION 3: GRANT OF RIGHT TO MARKET
3.1. Synchronicity hereby grants, and Distributor hereby accepts,
an exclusive, non-transferable right and license to use for
the purposes specified hereunder, sublicense, market,
distribute and support the Products to Authorized Resellers
and End Users located in the Territory for the End User's
internal use only and only pursuant to an effective written
License Agreement, that is signed or otherwise accepted by End
User in a manner chosen by Distributor. Synchronicity also
grants to Distributor an exclusive, non-transferable license
to use (and to sublicense its Authorized Resellers to use) of
up to ten (10) copies of the Products necessary for
evaluation, demonstration and training purposes in accordance
with the License Agreement (the "Not-for-Resale Copies"). The
Not-for-Resale Copies shall not count towards any sales
benchmarks or royalty payments due Synchronicity.
Synchronicity shall not appoint any other entity as a
distributor in Japan and shall not distribute the products in
Japan directly or indirectly during the term of this
agreement.
3.1.1 Synchronicity and Distributor have established target
revenue plan for the Products during the period
commencing from the Effective Date and ending on
December 31, 2001 as set forth in Exhibit E attached
hereto and incorporated herein by reference (the
"Revenue Plan"), and Distributor shall use
commercially reasonable efforts to meet the Revenue
Plan. Notwithstanding anything contained herein to
the contrary and for avoidance of doubts,
Synchronicity and Distributor acknowledge and agree
that the Revenue Plan shall not be construed
Page 2
3
as creating any legally binding obligation of
Distributor to purchase those amount of the Products.
3.2. In order to be eligible for the Product Support set forth in
Section 4 or the Product warranty set forth in Section 8, the
Products must be run on Authorized Hardware/Software
Configurations.
3.3. The Products are supplied to Distributor solely for the
purposes set forth in this Agreement. Distributor is
authorized to use and distribute the Products to Authorized
Resellers and End Users solely for such purposes, and may not
reproduce or modify the Products except as otherwise
specifically provided herein. Distributor shall have no right
to market or service products developed by Synchronicity other
than the Products in Exhibit C.
3.3.1. During the term of this agreement Synchronicity shall
notify Distributor of the release of any new
Synchronicity product. Distributor shall have thirty
(30) days from the date of such notice to enter into
an amendment to this Agreement which adds the new
product to Exhibit C.
3.3.2. If the parties do not enter into a mutually agreed
upon amendment to this Agreement, as provided in
Section 3.3.1 above, within the thirty (30) day
period, Synchronicity shall have no further
obligation to Distributor with respect to such
product and shall have no restriction on its
development or distribution for or within Japan or
otherwise.
3.4. Distributor acknowledges that its rights under this Agreement
are exclusive only within the geographic borders of Japan.
Synchronicity reserves the right to license Products to other
agents, distributors, value added resellers, original
equipment manufacturers, end users and other parties, located
outside Japan, provided, however, that Synchronicity shall not
appoint any other distributors, value added resellers, system
integrators or original equipment manufactures for
distribution of the Products in the Territory and shall not
distribute, market or license the Products to the End User,
directly or indirectly, in the Territory during the term of
this Agreement.
3.5 Distributor may engage any Authorized Reseller in the
Territory to market and resell the Products to the End User
located within the Territory; provided, however, that
Distributor shall (i) cause Authorized Reseller to abide by
all the terms, conditions and provisions of this Agreement to
be performed on the part of Distributor (except any payment
obligations of Distributor to Synchronicity which shall be
always honored and discharged by Distributor) and (ii) be
responsible to Synchronicity for any act or omission of its
Authorized Reseller in violation of any such terms,
conditions, or provisions of this Agreement.
SECTION 4: PRODUCT SUPPORT AND TECHNICAL TRAINING
4.1. Distributor agrees to provide First Line Support to End-Users
of the Products. The Support Agreement must, among other
things, clearly state that the agreement is assignable to
Synchronicity (or Synchronicity's designee) upon termination
of Distributor's right to provide First Line Support to End
User.
4.2. Distributor agrees to provide the marketing, sales, technical
support and staffing for the Products as set forth on Exhibit
D
Page 3
4
* Confidential Information has been omitted pursuant to Rule
406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission. The
locations of the omitted materials have been indicated with
asterisks.
4.3. Synchronicity will provide support to Distributor by
telephone, fax, the Internet or electronic mail during
Synchronicity's normal business hours for the purposes of
supporting End Users and Authorized Resellers. Distributor
will designate two (2) primary contacts to handle all contact
with Synchronicity.
4.4. Synchronicity shall make available all upgrades, updates and
enhancements specified in the end user licensing agreement for
US version Products.
4.5. Synchronicity shall provide Second Line Support to
Distributor.
SECTION 5: PRICE, PAYMENT TERMS, AND RECORDS
5.1. In consideration of the exclusive license granted to
Distributor described in Section 3 above, Distributor shall
pay to Synchronicity a pre-payment license fee (the
"Pre-Payment License Fee") for the Products in the amount of *
Dollars (USD *) with a payment structure as follows:
(i) *Dollars (USD *) payable within 45 days of completion
of this agreement, receipt of which is hereby
acknowledged by Synchronicity.
(ii) * Dollars (USD *) payable by March 31, 2000.
(iii) * Dollars (USD *) payable by June 30, 2000.
(iv) * Dollars (USD *) payable by September 29, 2000.
(v) * Dollars (USD *) payable by December 29, 2000.
(vi) * Dollars (USD *) payable by March 30, 2001.
(vii) * Dollars (USD *) payable by June 29, 2001.
(viii) * Dollars (USD *) payable by September 28, 2001.
(ix) * Dollars (USD *) payable by December 29, 2001
The Pre-Payment License Fee shall be applied as a credit
against all future license fees for the Products payable by Distributor
to Synchronicity pursuant to Section 5.2 of this Agreement.
Page 4
5
* Confidential Information has been omitted pursuant to Rule
406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission. The
locations of the omitted materials have been indicated with
asterisks.
5.2. The license fees to be paid by Distributor for Products shall
be determined by reference to Synchronicity's US Domestic
Pricing and Configuration Schedule, set forth in Exhibit B
hereto, less a * discount. The prices set forth in Exhibit B
may be amended from time to time by Synchronicity upon ninety
(90) days' prior written notice. All Not-for-Resale Copies of
Products used by Distributor or its Authorized Resellers for
evaluation, demonstration, support and training shall not be
subject to a fee. The license fee for other internal use of
the Products (other than evaluation, demonstration, support
and training) shall be in accordance with Exhibit B. In
addition, distributor will be granted the right to convert
remaining inventory of DesignSync and ProjectSync licenses
held on December 31, 1999 to other product license types of
equal cost as specified in Exhibit C.
5.3. If there is an increase in prices set forth in Exhibit B
attached hereto, then all End User orders for Products
received by Distributor and not yet shipped prior to the
effective date of the price increase are not subject to such
price increase. And, if Distributor shall deliver to
Synchronicity a copy of the quotation furnished to its
potential End Users no later than five (5) business days after
the receipt of notice for the price increase and Distributor
has received firm order from such End Users within ninety (90)
days after the effective date of such price increase, ex-price
shall apply to such orders. If there is a price decrease then
all End User orders for a Products received by Distributor and
not yet shipped prior to the effective date of the price
decrease will be subject to such price decrease.
5.4. All payments to Synchronicity shall be in U. S. dollars, and
are due within thirty (30) days after receipt of an invoice
issued by Synchronicity for the full amount owed for the
delivered Products. Except for the withholding income tax
assessed by the Japanese tax officer on the payments by
Distributor to Synchronicity hereunder, payments will be
conducted via cable transfer of funds to the bank account
specified by Synchronicity. Prices listed are exclusive of any
shipping costs, import duties, sales, use, value-added,
privilege, excise, or similar taxes or duties levied upon
Synchronicity, or any other charges or assessments established
by any government agency in Japan, that are based upon
licensing of the Products pursuant to this Agreement, all of
which shall be paid by Distributor. Synchronicity acknowledges
and agrees that the payment pursuant to this Agreement shall
be subject to the withholding income tax based on (i) Sections
161-7-2, 178, 179-1, and 212 of the Income Tax Laws of Japan,
and (ii) Article 14 of the Tax Convention between U.S.A. and
Japan (the "USA/Japan Tax Convention"). Distributor shall (i)
withhold such tax from the payment to Synchronicity, (ii) pay
such tax to the Japanese tax authority on behalf of
Synchronicity, and (iii) transmit to Synchronicity an official
tax receipt issued by the Japanese tax authority after such
tax payment. Synchronicity shall execute and deliver to
Distributor an appropriate application form and Distributor
shall execute such application form and file it with a
competent tax office in Japan in order to reduce an applicable
tax rate of withholding income tax in accordance with the
USA/Japan Tax Convention.
5.5. Distributor shall prepare and maintain complete and accurate
books and records documenting the licensing and servicing of
Products and any compensation received therefrom.
5.6. During the term of this Agreement and for a period of one year
thereafter, Synchronicity shall have the right, at its expense
and upon reasonable notice, to examine or have examined by an
accountant Distributor's books and records in connection with
the distribution of the Products under this Agreement during
the Distributor's normal business hours and without
interrupting Distributor's business no more than once
annually, in order to determine and verify performance under
this Agreement.
Page 5
6
5.7. In the event that Distributor at any time during the term of
this Agreement has outstanding payables to Synchronicity more
than one hundred twenty (120) days past due aggregating to 10%
of the total account balance, Synchronicity may elect, at its
discretion, to send notice of default of this contract to
Distributor and it shall be considered a material breach of
this Agreement. Additionally, any funds due Synchronicity from
Distributor over ninety (90) days past due will be subject to
an annual interest rate of 18%.
SECTION 6: SALES COLLATERAL AND TRADEMARKS
6.1. Synchronicity will provide Distributor with up-to-date
electronic copies of all sales collateral, documentation, or
other promotional materials for Distributor's use in marketing
the Products. Distributor may purchase printed versions of
these materials as required at Synchronicity's reproduction
costs plus reasonable ▇▇▇▇-up for administrative overhead.
Synchronicity may prohibit the use of any materials, which
include trademarks, which Synchronicity has not successfully
registered in Japan. Such materials may not be changed or
modified without the prior consent of Synchronicity.
6.2. All packaging, documentation and promotional materials
prepared by Distributor shall be subject to Synchronicity's
prior written approval, which approval shall be given within
five (5) business days after receipt of a sample and shall not
be unreasonably withheld. Synchronicity will provide
Distributor with copies of appropriate trademarks, trade
names, logos and identifying slogans (hereafter the "Marks"),
as described in Exhibit H attached hereto, in a format
suitable for incorporation into Distributor's packaging,
documentation and promotional materials so approved. Such
Marks may vary from the Marks utilized by Synchronicity in
jurisdictions other than the Territory.
6.3. Distributor will not remove, alter, cover, or obfuscate any
copyright notice, ▇▇▇▇ or other proprietary rights, notice
placed by Synchronicity on the Products or any copy or portion
thereof. Distributor acknowledges that the Marks used by
Synchronicity or by Distributor in relation to the Products,
whether registered or not registered, belong exclusively to
Synchronicity. Distributor will, during the term of this
Agreement, use the Marks solely in connection with the
promotion and marketing of the Products and Synchronicity
hereby grants to Distributor, during the term of this
Agreement, a non-exclusive, nontransferable right to use and
reproduce the Marks solely for the purposes of promoting and
marketing the Products as authorized herein. Distributor will
accompany each use of the Marks with a conspicuous notation
that the Marks are owned by Synchronicity and any other
proprietary legend that Synchronicity determines reasonably
necessary to protect its rights herein. Distributor shall not
use the Marks in conjunction with the promotion or marketing
of services to be performed by Distributor except to the
extent necessary to indicate Synchronicity as the source of
training materials and only with Synchronicity's prior written
approval of such use. Distributor will not register any of the
Marks or any other ▇▇▇▇, sign, symbol, design, device or
trademark used in relation to the Products. All rights which
may accrue to Distributor in relation to the Marks or any
other ▇▇▇▇, sign, symbol, design, device or trademark used in
relation to the Products are understood to be the property of
Synchronicity, and Distributor agrees that, at Synchronicity's
request, Distributor will, at Synchronicity's expense, take
reasonable steps as are necessary to perfect such rights.
6.4. Distributor hereby acknowledges that Synchronicity has the
exclusive rights to license the use of the Marks and that by
reason of Distributor's use of the Marks under this Agreement,
it shall not acquire ownership of the Marks or any part
thereof. All use of the marks by Distributor shall inure to
Synchronicity's benefit.
Page 6
7
6.5. Upon termination of this Agreement, Distributor shall cease
all use of the Marks, except as necessary under Section 11.3.3
SECTION 7: OTHER DISTRIBUTOR OBLIGATIONS
7.1. In addition to other terms and conditions set forth in this
Agreement, Distributor agrees as follows:
7.1.1. By the fifteenth working day following the close of
each quarter, Distributor shall supply to
Synchronicity the following reports for the previous
calendar month: all shipments of Products to
Authorized Resellers and End Users; all orders
received for Products; all Authorized Resellers and
End User training conducted using Synchronicity
training materials; and consulting engagements
conducted using Synchronicity Process methodology.
7.1.2. By the fifteenth working day following the close of
each quarter, Distributor shall promptly supply to
Synchronicity all new End User, for the purposes of
the calendar quarter, identifying information,
including name, location, division or group, name of
primary technical contact, all Passport
identification information as specified in the
License Agreement and a copy of the executed License
Agreement.
7.1.3. Distributor shall promptly inform Synchronicity in
writing of all inquiries for the Products outside the
Territory.
7.1.4. Distributor shall not export the Products in
violation of the export control laws of the United
States or of any other country, and agrees to
indemnify Synchronicity for any breach of this
warranty.
SECTION 8: SYNCHRONICITY WARRANTY AND INDEMNITY
8.1. Synchronicity hereby warrants that it has the right to enter
into this Agreement and to grant the licenses and distribution
rights hereunder. Synchronicity agrees, at its expense, to
defend or, at its option, to settle any and all claim, action,
suit or proceeding brought against Distributor or ITI USA (as
defined in Section 13 below) Authorized Reseller and/or End
User (collectively, "Indemnitee") alleging that the
Distributor's use of the Products pursuant to this Agreement
infringes any United States or Japanese patents, copyrights,
trade marks, trade names or any other proprietary rights of
any third party, and to indemnify Indemnitee against any and
all claims, actions, suits, proceedings, losses, damages,
liabilities and expenses (including attorneys' fees) assessed
against Indemnitee or incurred by Indemnitee arising out of
such infringement, provided: (a) Distributor notifies
Synchronicity promptly and in writing that any such claim,
action or suit is threatened or has been brought; (b)
Synchronicity has the right to assume the defense of such
claim, action or suit with counsel selected by Synchronicity;
and (c) Synchronicity receives Distributor's full and complete
cooperation in the defense of such claim, action or suit.
Synchronicity shall have no liability for costs incurred or
settlements made without its consent.
8.2. In the event of any such claim, action or suit, Synchronicity
shall have the right, at its option, to either:
Page 7
8
8.2.1. procure for Distributor and its End Users the right
to continue using and selling the Products,
8.2.2. modify the Products so that they are non-infringing
to the extent that such functions of the Products are
maintained, or
8.2.3. withdraw the Products.
8.3. In the event any Product is withdrawn, Distributor agrees to
cooperate with Synchronicity in the retrieval of such Product.
Synchronicity's sole liability to Distributor in such event
shall be to refund all amounts paid by Distributor to
Synchronicity for such Product.
8.4. Synchronicity does not warrant that the functions contained in
a Licensed Program will meet an End User's requirements or
that the operation of a Product will be error free. For ninety
(90) days from the date of delivery of the Products to End
Users by Distributor and provided that Products are run
exclusively on Authorized Hardware/Software Configurations,
Synchronicity warrants that the Products will perform as
described in the License Agreement in Exhibit A. If the
Product fails to perform as warranted, Distributor shall
notify Synchronicity of the problem with specificity, and
Synchronicity shall make reasonable efforts to remedy the
problem. If Synchronicity's efforts to remedy a problem are
unsuccessful, Distributor acknowledges and agrees that
Synchronicity's sole and exclusive obligations hereunder to
Distributor and its Authorized Resellers and End Users will be
limited to the replacements of defective media of the Product,
or to a refund to Distributor of the license fee paid by
Distributor pursuant to Section 5.2 above. Before returning
the Product to Synchronicity for replacement, Distributor must
first obtain a return merchandise authorization (RMA) from
Synchronicity's technical support function. Furthermore,
Synchronicity does not warrant any part of any Product that is
derived or licensed from a third party licensor if such third
party has not warranted, assumed liability of or provided
support to Synchronicity for such third party product.
8.5. THE FOREGOING LIMITED WARRANTY OF SYNCHRONICITY IS IN LIEU OF
ALL OTHER WARRANTIES OF SYNCHRONICITY, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PRODUCTS, INCLUDING WITHOUT LIMITATION,
WARRANTIES OF TITLE, NONINFRINGEMENT, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
8.6. Notwithstanding anything in this Section 8, Synchronicity
shall not be liable for any damages caused by:
8.6.1. any claim of infringement resulting in any way from
operating Products on other than Authorized Hardware/
Software Configurations;
8.6.2. the use of the Products with infringing software or
data, or from modifications made to the software by
Distributor pursuant to the development effort set
forth in Section 2 of this Agreement.
8.6.3. any modification of the Products provided by
Synchronicity by any person other than Synchronicity
without Synchronicity's approval.
8.7. THIS SECTION 8 STATES THE ENTIRE LIABILITY OF SYNCHRONICITY
FOR PATENT, COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL
PROPERTY RIGHT INFRINGEMENT OR FOR ANY BREACH OF WARRANTY,
EXPRESS OR IMPLIED.
Page 8
9
8.8. EXCEPT FOR AMOUNTS PAYABLE PURSUANT TO SECTION 8.1 OF THIS
AGREEMENT, SYNCHRONICITY AGREES TO INDEMNIFY DISTRIBUTOR
AGAINST CLAIMS RESULTING FROM SYNCHRONICITY'S BREACH OF THE
WARRANTIES SET FORTH IN THIS SECTION 8, BUT IN NO EVENT SHALL
SYNCHRONICITY BE LIABLE TO DISTRIBUTOR OR TO ANY END USER FOR
ANY LOSS OF PROFITS, LOSS OF DATA, OR LOSS OF USE OF HARDWARE,
OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF DISTRIBUTOR, ANY END USER OR ANY OTHER THIRD PARTY.
No action may be brought by Distributor against Synchronicity
beyond two (2) years after the cause of action has arisen or
should have arisen.
SECTION 9: DISTRIBUTOR WARRANTY AND INDEMNITY
9.1. Distributor hereby warrants that it has the right to enter
into this Agreement. Distributor agrees to indemnify
Synchronicity against any and all losses, damage or liability
assessed against Synchronicity or incurred by Synchronicity
arising out of or in connection with any claim that any
portion of the Products developed by Distributor pursuant to
Section 2 hereunder (but not the portions of the Products that
remain unmodified from the Products delivered by Synchronicity
hereunder) infringe a patent, trademark, copyright or other
intellectual property right, provided: (a) Synchronicity
notifies Distributor promptly and in writing that any such
claim, action or suit is threatened or has been brought; (b)
Distributor has the right to assume the defense of such claim,
action or suit with counsel selected by Distributor; and (c)
Distributor receives Synchronicity's full and complete
cooperation in the defense of such claim, action or suit.
Distributor shall have no liability for costs incurred or
settlements made without its consent.
9.2. Distributor agrees to indemnify Synchronicity against any and
all losses, damage or liability assessed against Synchronicity
or incurred by Synchronicity arising out of or in connection
with any claim asserted against Synchronicity with respect to
Distributor's sales, marketing, support, distribution or
services of the Products hereunder, provided: (a)
Synchronicity notifies Distributor promptly and in writing
that any such claim, action or suit is threatened or has been
brought; (b) Distributor has the right to assume the defense
of such claim, action or suit with counsel selected by
Distributor; and (c) Distributor receives Synchronicity's full
and complete cooperation in the defense of such claim, action
or suit. Distributor shall have no liability for costs
incurred or settlements made without its consent. Nothing in
this Section shall effect Synchronicity's liability to
Distributor pursuant to Section 8 of this Agreement.
9.3. THIS SECTION 9 STATES THE ENTIRE LIABILITY OF DISTRIBUTOR FOR
PATENT, COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY
RIGHT INFRINGEMENT OR FOR ANY BREACH OF WARRANTY, EXPRESS OR
IMPLIED.
9.4. DISTRIBUTOR AGREES TO INDEMNIFY SYNCHRONICITY AGAINST CLAIMS
RESULTING FROM DISTRIBUTOR'S BREACH OF THE WARRANTIES SET
FORTH IN THIS SECTION 9, BUT IN NO EVENT SHALL DISTRIBUTOR BE
LIABLE TO SYNCHRONICITY FOR ANY LOSS OF PROFITS, REVENUE OR
BUSINESS OR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF SYNCHRONICITY. No action may be brought by
Synchronicity against Distributor beyond two (2) years after
the cause of action has arisen or should have arisen.
Page 9
10
SECTION 10: PROPRIETARY & CONFIDENTIAL INFORMATION
10.1. Distributor recognizes that Synchronicity is the owner of the
Products licensed under this Agreement, the results of the
development performed hereunder by or on behalf of either
party, and all copies thereof, and of all copyright, trade
secret, patent and other intellectual or industrial property
rights therein, all of which are valuable property of
Synchronicity. To the extent necessary for Synchronicity to
own the entire right, title and interest in and to the results
of any development performed by Distributor under Section 2
hereof, in relation to the Products, Distributor does hereby
assign and agree to assign to Synchronicity, all that right,
title and interest in and to any such development, such
assignment occurring as soon as capable of taking place in law
or equity. Distributor shall obligate all persons employed or
engaged by Distributor to perform any such development under
Section 2 hereof to provide to Distributor, which shall supply
to Synchronicity at no additional charge, all such
assignments, rights and covenants as are deemed appropriate by
Synchronicity to assure and perfect such assignment.
10.2. Distributor shall take all reasonable measures to assist
Synchronicity in maintaining its proprietary rights. Such
measures shall include using diligent efforts to prevent End
Users from copying or using the Products outside the scope of
this Agreement or the License Agreement. In the event of any
violations or suspected violations of such provisions,
Distributor shall immediately notify Synchronicity and
Distributor will, at Synchronicity's expense, assist
Synchronicity in enforcing Synchronicity's proprietary
interest in the Products.
10.3. Distributor hereby acknowledges and agrees that Synchronicity
in any case has the right to enforce and protect its own
rights in the Products directly against any and all parties,
including, without limitation, End Users.
10.4. Except as specifically provided in this Agreement, neither
Distributor nor any End User is authorized to modify, enhance
or otherwise change the Products, including documentation and
any other related materials described in Exhibit C, without
the prior written consent of Synchronicity.
10.5. Distributor shall not cause or permit disclosure, copying,
display, loan, publication, transfer of possession (whether by
sale, exchange, gift, operation of law or otherwise) or other
dissemination of the Products, in whole or in part, to any
third party, except as permitted in this Agreement.
10.6. In any distribution of the Products, Distributor will preserve
and respect Synchronicity's copyright, trade secret, patent,
proprietary and/or other legal notices contained on or in
copies of the Products.
10.7. Distributor will maintain appropriate records relating to the
disposition and use of all copies of Products.
10.8. Distributor shall not disassemble or reverse compile any
Product or portion thereof, nor create any derivative works
thereof other than those specifically provided for hereunder,
except as permitted by applicable law, and to the extent that
Synchronicity is not permitted by such law to exclude or limit
such rights. Neither shall Distributor bypass any security
device provided with the Products.
10.9. Each party shall keep confidential any confidential or
proprietary information of the other party received from the
other party in writing and appropriately marked to indicate
its confidential or proprietary nature. If the disclosure is
oral, the information disclosed shall
Page 10
11
be identified as confidential and/or proprietary at or prior
to such oral disclosure, and the information disclosed is
reduced to writing and transmitted to the other party within
thirty (30) days of such oral disclosure. Neither party shall
have the obligation of confidentiality set forth in this
Section 10.9 if the confidential or proprietary information is
or becomes:
(i) already known to receiving party; or
(ii) publicly available through no fault of receiving
party; or
(iii) independently developed by receiving party without
access to such information; or
(iv) required to be disclosed pursuant to any statutory or
regulatory provision or court order.
(v) received by receiving party without confidential
obligations or restrictions on use.
SECTION 11: TERM AND TERMINATION OF AGREEMENT
11.1. The term of this Agreement shall enter into full force and
effect on the Effective Date and shall remain in force through
the Satisfactory Delivery Date and ends on December 31, 2001.
This Agreement shall automatically extend on a year to year
basis unless either party shall give written notice of
non-renewal to the other party, for cause or without cause,
not less than ninety (90) days prior to the expiration of the
then current term.
11.2. This Agreement may be terminated as follows:
11.2.1. Except as otherwise herein provided, either party may
terminate this Agreement upon the other party's
failure to cure a default (including the failure to
make any of the prepayments or payments provided for
in Section 5) under this Agreement within thirty (30)
days of receipt of notice of default. Notwithstanding
the foregoing, Synchronicity may terminate this
Agreement immediately, upon written notice to
Distributor, if Distributor violates any terms and
conditions of or relating to Synchronicity's
proprietary rights or to United States export control
laws.
11.2.2. If either party shall have ceased business, been
adjudged bankrupt or insolvent under the laws of any
relevant jurisdiction, made an assignment for the
benefit of creditors, or filed, or had filed against
it, a petition of bankruptcy, reorganization or other
insolvency proceeding, the other party may terminate
the Agreement upon written notice.
11.2.3. If there should be any transfer of a controlling
interest in Distributor, Synchronicity may terminate
this Agreement upon thirty (30) days' written notice,
where such change, in the judgment of Synchronicity,
substantially impairs Distributor's ability to
perform its obligations pursuant to this Agreement.
11.2.4. If either party chooses to terminate this Agreement
as set forth in Section 11.1 above.
Page 11
12
11.3. Upon termination or expiration of this Agreement, the duties
and rights of the parties shall be as follows:
11.3.1. Distributor's right and license to market the
Products shall terminate and, except as provided
herein, Distributor shall immediately stop marketing
and using the Products, and shall cease to provide
Authorized Resellers and End Users with First Line
Support. Distributor shall immediately return to
Synchronicity all Products as well as all technical
and marketing materials relating to the Products and
all copies thereof. Distributor shall promptly return
to Synchronicity any confidential information
belonging to Synchronicity.
11.3.2. Within ninety (90) days of termination or expiration
of this Agreement, a duly authorized officer of
Distributor shall certify in writing that all
Products and all technical and marketing materials
relating to the Products have been returned to
Synchronicity.
11.3.3. Distributor shall have ninety (90) days to complete
sales to potential Authorized Resellers and End Users
contacted by Distributor prior to the date of
termination or expiration of this Agreement. During
this time, Synchronicity shall continue to provide
Distributor with Second Line Support in accordance
with Section 4 in order to assist Distributor in
completing sales to potential Authorized Resellers
and End Users contacted by Distributor prior to the
termination or expiration date.
11.3.4. Within ninety (90) days of termination or expiration
of this Agreement, Distributor shall pay
Synchronicity all sums due and owing under this
Agreement on or prior to the effective date of such
termination. IN NO EVENT SHALL EITHER PARTY BE
REQUIRED TO PAY THE OTHER PARTY ANY DAMAGES OR
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING
OUT OF THE TERMINATION OR EXPIRATION OF THIS
AGREEMENT.
11.3.5. All Product Support Agreements relating to the
Products between Distributor and End Users in effect
at the time of termination or expiration of this
Agreement shall at Synchronicity's request be
assigned by Distributor to Synchronicity (or its
designee), which shall thereupon assume the
performance of Distributor's First Line Support
obligations to each End User that has paid all fees
and charges due pursuant to such Product Support
Agreement (but not to any End User that has not paid
all such fees and charges).
11.3.6. Termination or expiration of this Agreement shall not
terminate or cancel any sublicense to the Products
granted by Distributor or Authorized Resellers to End
User hereunder prior to the termination or expiration
of this Agreement.
SECTION 12: GENERAL PROVISIONS
12.1. The parties agree to cooperate fully in exchanging all
consents, information and documents which may be reasonably
necessary in fulfilling the terms of this Agreement, including
such information and documents required under Japanese laws
and regulations.
12.2. This Agreement shall not create and shall not be construed as
creating any relationship of agency, partnership, joint
venture, or employment between the parties. Synchronicity and
Distributor enter this Agreement as and shall remain
independent parties.
Page 12
13
12.3. Neither party shall have the right or authority to assume,
create or enlarge any obligation or commitment on behalf of
the other party and shall not represent itself as having the
authority to obligate or bind the other party in any manner
except as provided for in this Agreement.
12.4. All notices or other communications given by either party to
the other under this Agreement shall be in writing and shall
be personally delivered or sent by registered or certified
mail, return receipt requested, to the other party at this
address set forth above or such other address as a party may
subsequently designate in writing. Notices shall be effective
upon receipt.
12.5. Neither party may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the
prior written consent of the other party. No assignment,
delegation, transfer or any attempt thereof in violation of
the foregoing shall be effective without such prior written
consent of the other party. This Agreement shall be binding
upon and inure to the benefit of the parties and their
respective successors, administrators, heirs, and assigns.
12.6. This Agreement, including all referenced and attached
Exhibits, supersedes all prior and contemporaneous agreements,
representations, negotiations, and understandings, including
oral representations, between the parties relating to this
Agreement, and is intended by the parties as a complete and
exclusive statement with respect to the subject matter hereof.
This Agreement may be modified only in a written instrument
executed by the authorized representatives of the parties. In
case of any discrepancy between this Agreement and any other
documents, the terms of this Agreement shall prevail.
12.7. No waiver of any provision of this Agreement shall be
effective unless in writing and signed by the authorized
representative of a party against whom the waiver is sought to
be enforced. Waiver of breach of any provision of this
Agreement on any occasion shall not be deemed a waiver of that
provision or of any other provision on any other occasion, nor
shall such waiver affect the right of either party to
terminate this Agreement. The remedies herein reserved shall
be cumulative and additional to any other remedies in law or
equity.
12.8. Because unauthorized use or transfer of the Products, or any
information contained therein, may diminish substantially the
value of such materials and irrevocably harm Synchronicity, if
Distributor breaches any of its obligations under this
Agreement, Synchronicity (without limiting its other rights or
remedies) shall be entitled to injunctive and/or equitable
relief, in addition to other remedies afforded by law, to
protect its interests.
12.9. In case of a dispute arising from the interpretation or
enforcement of patents, trademarks or copyrights, the parties
agree to submit to the exclusive jurisdiction of the United
States District Court for the District of Massachusetts,
located in Boston, Massachusetts, USA. All other disputes
shall be submitted exclusively to the rules then in effect of
Conciliation and Arbitration of the International Chamber of
Commerce. Such arbitration shall be held in the city and
country where the respondent resides. The arbitrator(s) shall
decide the matters submitted to them based upon the evidences
presented and the terms of this Agreement and arbitrator(s)
shall issue a written award which shall state the basis of the
award and include findings of fact and conclusions of law. The
award of the arbitration shall be final, non-appealable and
binding upon the parties and their respective successors and
permitted assigns. Judgment upon the award may be entered in
any court having the jurisdiction thereof. This Agreement will
not be governed by the United Nations Convention of Contracts
for the International Sale of Goods, the application of which
is hereby expressly excluded.
Page 13
14
12.10. The provisions of Sections 1, 6.3, 6.4, 6.5, 7, 8,9, 10, 11.3
and 12 shall survive the termination of this Agreement;
provided, however, that, Section 10.9 shall survive for three
(3) years thereafter.
12.11 Neither party shall be liable hereunder by reason of any
failure or delay in the performance of its obligations
hereunder on accounts of strikes, riots, fires, flood, storm,
explosions, acts of God, war, governmental action, labor
conditions, earthquakes, or any other cause which is beyond
the reasonable control of such party.
12.12 This Agreement shall be governed by and construed in
accordance with laws of Commonwealth of Massachusetts, without
regard to conflicts of law provisions.
12.13 If any provision of this Agreement shall be held invalid or
unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall nevertheless continue in
full force and effect. All Section headings are provided for
the convenience or references only and shall not be construed
otherwise.
SECTION 13: PURCHASE ORDER AND DELIVERY
13.1. All orders for the Products issued by Distributor are subject
to acceptance by Synchronicity and shall not be binding until
the written acceptance of Synchronicity is delivered to
Distributor, which acceptance shall not be unreasonably
withheld or delayed.
13.2 Synchronicity must accept an order of Distributor within five
(5) business days after its receipt as long as the order is
consistent with the terms of this Agreement. Unless otherwise
expressly agreed to by Synchronicity and Distributor in
advance, all printed and other terms contained in purchase
orders, order acknowledgments, price list for the Products and
invoices contrary to this Agreement are hereby excluded and
shall be of no force and effect.
13.3 Delivery of the Products ordered by Distributor hereunder
shall be F.O.B. Marlboro, Massachusetts, USA and all risk of
loss of and damages to the Products shall pass to Distributor
upon delivery by Synchronicity to a carrier designated by
Distributor. The term "F.O.B." shall be construed in
accordance with Massachusetts Uniform Commercial Code Chapter
106 Section 2-319.
SECTION 14: ITOCHU TECHNOLOGY INC.
14. Synchronicity acknowledges and agrees that Distributor may
engage ITOCHU TECHNOLOGY INC. ("ITI"), a Delaware corporation
with its office currently located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or any successor entity to act as an
order processing agent acting for and on behalf of Distributor
with its authority including, without limitation, to receive
shipment, place orders and effect payments from, with and to
Synchronicity, respectively, on behalf of Distributor.
Distributor shall be responsible to Synchronicity for any act
or omission of ITI regarding its activities contemplated
herein.
Page 14
15
SECTION 15: SYNCHRONICITY'S OBLIGATION
15.1 Synchronicity shall make the reasonable commercial efforts to
keep Distributor informed of United States' market trends, and
competitive products with respect to the Products and other
pertinent information which may aid Distributor in promoting
the Products.
15.2 Synchronicity shall keep Distributor informed of
Synchronicity's technical developments and new products and
shall make the reasonable commercial efforts to provide such
information in advance of the initial introduction of such
products.
15.3 Synchronicity shall be solely responsible for the design,
development, production and performance of the Products and
for the legal protection of its trademarks, tradenames,
copyrights and patents.
15.4 Synchronicity shall provide to Distributor the names and the
addresses of end user prospects within the assigned Territory,
which Synchronicity had received as a result of advertising,
trade shows, and referrals by present end users or cooperative
marketing partners.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as of the day and year indicated above in Marlboro, Massachusetts, USA
AGREED AND ACCEPTED AGREED AND ACCEPTED
SYNCHRONICITY, INC. ITOCHU TECHNO SCIENCE CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ Hito Satake
-------------------------------- ----------------------------------
Title: Title:
----------------------------- -------------------------------
Date: Date:
------------------------------ --------------------------------
AGREED AND ACCEPTED
ITOCHU CORPORATION
By: /s/ Eizo Koyayashi
--------------------------------
Title:
-----------------------------
Date:
------------------------------
Page 15
