DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this "Agreement") is made
and entered into this ___ day of March, 1998, by and between AltaVista
Technology Inc., a California corporation with its principal executive offices
located at 0000 Xxxx Xxxxxx, Xxxxx 000; Xxxxxxxx, XX 00000 ("AVT"), and Kuni
Research International Corporation, a Corporation incorporated in Japan with its
principal executive offices located at Ebodori Xxxxxx Xxxxxxxx, 00X, 0-0-0
Xxxxxxx, Xxxxx-Xx, Xxxxx, Xxxxx ("Kuni").
RECITALS
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WHEREAS, AVT. which operates a division known as "Magic Bit", provides a
multimedia email tool to send personalized Valentine cards complete with
pictures, audio and text on-line throughout the World Wide Web;
WHEREAS, AVT's technological core is the ME-Mail(TM) engine (i.e.,
Multimedia E-mail) which allows any ME-Mail message to be sent directly to an
end user or sent to the Magic Bit web server where it will instantly be
converted into a series of web pages and posted "live" on the Internet;
WHEREAS, AVT is the registered owner of all right, title, and interest in
and to the trademarks and any and all trade dress, labels, and designs
associated therewith, together with the goodwill of the business symbolized
thereby in connection with the Products (as defined below);
WHEREAS, Kuni has substantial resources for the localization, advertising
and promotion of AVT's Products in the Territory;
WHEREAS, Kuni desires to obtain from AVT, and AVT is wining to grant to
Kuni and its affiliates, an exclusive right and license in the AVT products and
services for the purposes of enabling Kuni to distribute the AVT Products (as
defined below) and services in the Territory; and
WHEREAS, AVT and Kuni mutually desire to enter into this Agreement,
pursuant to which AVT grants certain rights to Kuni for the localization,
translation, production, distribution, packaging and marketing of the Products
(as defined below) in accordance with the provisions hereof.
NOW, THEREFORE, in consideration of the foregoing promises and the mutual
representations and agreements set forth herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
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AGREEMENT
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1. Definitions. For the purposes of this Agreement, the following
terms shall have the respective meanings indicated below:
"Affiliate" shall mean any corporation, limited liability company,
partnership or other entity (collectively, an "Entity"): (1) that is controlled
by or controls a party (collectively, a "Controlled Entity"); or (2) that is
controlled by or controls any such Controlled Entity, in each instance of clause
(1) or (2) for so long as such control continues. For purposes of this
definition, "control" shall mean the possession, directly or indirectly, of
power to direct or cause the direction of the management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise). Without limiting the foregoing, joint control of an
Entity with one or more other persons or Entities shall be deemed to constitute
control for purposes
hereof,
"Code" means computer programming code. If not otherwise specified, Code
shall include both Object Code and Source Code. Code shall include Maintenance
Modifications and Upgrades thereto if, when, and to the extent such Maintenance
Modifications and/or Upgrades are delivered to Kuni by AVT under this Agreement
or under any other agreement or arrangement between the parties.
"Competitive Products" means any products that are competitive with the
Products or Kuni Derivative Works.
"Confidential Information' means any data or information, oral or written,
treated as confidential that relates to either party's (or, if either party is
bound to protect the confidentiality of any other person's information, such
other person's) past, present, or future research, development or business
activities, including any unannounced products and services, and including any
information relating to services, developments, inventions, processes, plans,
proposals, projects, financial information, customer and supplier lists,
forecasts and projections. Confidential Information shall also include the
terms of this Agreement. Notwithstanding the foregoing, Confidential
Information shall not be deemed to include information that (1) is publicly
available or in the public domain at the time disclosed; (2) is or becomes
publicly available or enters the public domain through no fault of the party
receiving such information; (3) is rightfully communicated to the recipient by
persons not bound by confidentiality obligations with respect thereto; (4) is
already in the recipient's possession free of any confidentiality obligations
with respect thereto at the time of disclosure; (5) is independently developed
by the recipient; or (6) is approved for release or disclosure by the disclosing
party without restriction.
"Corporate License Agreements" means the AVT form corporate license
agreements set forth in Exhibit B1 hereto granted to corporate End Users to
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reproduce and install the Kuni Derivative Works for internal use as may be
amended by AVT from time to time;
"Dealer" means and includes all subdistributors, dealers, authorized
sublicensees, agents or other representative of K@, other than End Users.
"Derivative Work" means a work that is based upon one or more preexisting
works, such as a revision, modification, translation, abridgement, condensation,
expansion, of any other form in which such preexisting works may be recast,
transformed, or adapted, and that, if prepared without authorization of the
owner of the copyright in such preexisting work, would constitute a copyright
infringement. For the purposes hereof, a Derivative Work shall also include any
localization of a pre-existing product.
"Development Environment" means any devices, programming or documentation,
including compilers and higher level languages used by AVT for the development,
maintenance, and implementation of the Products, but only to the extent that the
device, programming, or documentation so used would be necessary for the
preparation of the Kuni Localized Japanese Versions, the Kuni Derivative Works
and Maintenance Modifications and Upgrades thereof.
"Documentation" means user manuals and other written materials that relate
to the Products. Documentation shall include Maintenance Modifications and
Upgrades thereto, if, when, and to the extent such Maintenance Modifications
and/or Upgrades are delivered to Kuni by AVT under this Agreement or under any
other agreement or arrangement between the parties.
"End User(s)" means any person or entity that obtains copies of the Kuni
Derivative Works solely to fulfil its own internal data processing needs.
"End User License Agreement" means the AVT form End User license agreements
set forth in Exhibit B2 hereto granted to End Users to use the Kuni Derivative
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Works -solely to fulfil their own internal data processing needs as may be
amended from time to time by AVT.
"Intellectual Property Rights" means the intangible legal rights or
interests evidenced by or embodied in (1) any idea, design, concept, technique,
invention, discovery, or improvement, regardless of patentability, but including
patents, patent applications, trade secrets and know-how; (2) any work of
authorship, regardless of copyrightability, but including copyrights and any
moral rights recognized by law; and
(3) any other similar rights, including trademarks, in each case on a
worldwide basis.
"Kuni Bundle" means a bundle or package sold or distributed by Kuni in a
single sales transaction comprising any of the Products or Kuni Derivative Works
and any other Kuni Product(s).
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"Kuni Derivative Work" means a Japanese Localized Version packaged with other
material that is created by Kuni and approved in advance by AVT.
"Kuni Localized Japanese Versions" means versions of the Products localized
by Kuni, to the extent necessary or appropriate, to operate solely on Japanese
language localized computers and operating systems used in the Territory.
"Kuni Products' means all current and future products distributed or to be
distributed by Kuni.
"Licensed Marks" means "AVT" and any and all trade dress, labels, and
designs associated therewith, together with the goodwill of the business
symbolized thereby in connection with the Products.
"Maintenance Modifications" means modifications, Upgrades or revisions made
by AVT to the Products that correct errors or support new releases of operating
systems.
"Minimum Revenue Quota" means ten percent (10%) of AVT's Net Revenue
generated within the United States for that Product during the preceding six (6)
month period.
"Net Revenue" means revenue less returns and taxes withheld under Section
3.6 of this Agreement.
"Object Code" means Code in machine-readable form.
"Other Products" shall mean any product other than any of the Products
created, developed, localized or licensed by AVT.
"Products" means those AVT software products listed in Exhibit A.
"Royalties" shall have the meaning ascribed to it in Section 3.1 hereof.
"Source Code' means Code in human readable programming languages plus all
related development documents.
"Territory" shall not mean or include any specific geographical or physical
to and include all dialects or variations of the Japanese, Chinese and Korean
languages, individually or collectively.
"Upgrade" means revised versions of the Products that result in (1)
substantial performance, structural or functional improvements or additions,
including the substantial redesign or replacement of any part of the Source Code
and (2) a change in the Version number (including any changes to the number to
the right of the decimal point) of the Product.
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2. Grant of License
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2.1 License. Subject to all of the terms and conditions set forth in
this Agreement, AVT hereby grants to Kuni, and Kuni hereby accepts from AVT,
non-transferable licenses to engage in the following activities:
(a) to create the Kuni Localized Japanese Versions of the Products set
forth on Exhibit A ("Localization License");
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(b) to distribute physical packages of the Kuni Derivative Works to End
Users and to Dealers in the Territory for further distribution to other End
Users or Dealers in the Territory (the "Package Distribution License");
(c) to reproduce the Kuni Derivative Works in physical packages for the
sole purpose of exercising its license under Section 2.1 (b) (the Package
Reproduction License');
(d) to place the Kuni Derivative Works on one or more servers owned or
controlled by Kuni and to electronically transmit copies of such Kuni Derivative
Works to End Users in Territory (the "Electronic Transmission License");
(e) to grant licenses to End Users to reproduce and install the Kuni
Derivative Works for internal use pursuant to the terms and conditions of the
Corporate License Agreements and End User License Agreements; and
(f) to use the Licensed Marks solely in connection with and solely to
the extent reasonably necessary for, the marketing, distribution, and support of
the Kuni Derivative Works in the Territory.
2.2 Mutual Right to Enter Into OEM Arrangements. Kuni and have a
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co-exclusive right to enter into OEM arrangements with third-parties world-wide
with respect to the Products. Each to this Agreement may exercise such right
provided that the other party gives its prior written agreement that the
exercise of such right is consistent with the terms of this Agreement. Such
prior written agreement to the exercise of such right shall not be unreasonably
withheld by ether non-exercising party.
2.3 Exclusivity. (a) During the term of this Agreement, AVT shall not
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grant (i) any similar rights to license and/or support, whether exclusive or
non-exclusive, to any person or entity to use, display, reproduce, modify, and
customize, for the purpose of developing, creating, operating, maintaining,
marketing, promoting, distributing, or otherwise commercially exploiting a
version of any Product that is customized, or localized for the Territory (i.e.,
the Kuni Localized Japanese Versions) or (ii) any similar rights to license,
localize or support other versions of the Products for use on Japanese, Korean
or Chinese language localized computers and operating systems used in the
Territory, to any other person or entity.
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2.4 Independent Contractor Relationship. The relationship of AVT and
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Kuni established by this Agreement is of licensor licensee or independent
contractors and nothing in this Agreement shall be construed: (i) to give either
party the power to direct or control the daily activities of the other party, or
(ii) to constitute the parties as principal and agent, employer and employee,
partners, joint ventures, co-owners or otherwise as participants in a joint
undertaking. AVT and Kuni understand and agree that, except as specifically
provided for in this Agreement, AVI does not xxxxx Xxxx the power or authority
to make or give any agreement, statement, representation, warranty or other
commitment on behalf of AVT, or to enter into any contract or otherwise incur
any liability or obligation, express or implied, on behalf of AVT, or to
transfer, release or waive any right, title or interest of AVT. Likewise, AVT
and Kuni understand and agree that, except as specifically provided for in this
Agreement, Kuni does not grant AVT the power or authority to make or give any
agreement, statement, representation, warranty or other commitment on behalf of
Kuni, or to enter into any contract or otherwise incur any liability or
obligation, express or implied, on behalf of Kuni, or to transfer, release or
waive any right title or interest of Kuni.
2.5 Reservation of Rights. All rights not specifically granted to Kuni
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hereunder are reserved by AVT. Except as provided in this Agreement, Kuni shall
have no right whatsoever to utilize, receive, review, or otherwise have access
to the source code for the Products distributed by AVT in object code form only.
2.6 Changes in products and Support. AVT reserves the right at any
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time without liability or prior notice to (i) determine what constitutes each
Product, including, but not limited to its features, characteristics,
documentation and related materials; (ii) discontinue its distribution of any or
all Products or discontinue distribution of any Product to the retail channel,
which may include, but not be limited to, discontinuation due to the grant to a
third party of the copyright or exclusive distribution or marketing rights to
one or more Products; (iii) change or terminate any of the features of the
Products, or (iv) change or terminate the level or type of support or service
which AVT makes available for each Product.
2.7 Other Products. In the event that AVT creates, develops,
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localizes, obtains or licenses any Other Product, the parties agree that AVT
will automatically grant to Kuni non-transferable licenses to engage in the
those activities set forth in Section 2.3 above with respect to such Other
Product and upon the acceptance by Kuni, at its sole option of those
non-transferable licenses, such Other Product shall become a Product and, as a
result, each of the parties hereto shall enjoy all of the rights and obligations
created hereunder with respect to that new Product. In the event that Kuni
determines not to accept such non-transferable license to distribute the Other
Product, then Kuni shall notify AVT in writing and AVT shall be entitled to
license such Other Product for distribution in the Territory to a third party
that which is acceptable to Kuni.
2.8 Affiliates of Kuni. Kuni may transfer, assign, or sublicense the
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rights and licenses granted hereunder to one or more of its Affiliates, and each
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such Affiliate may correspondingly transfer, assign, or sublicense such rights
and licenses to any other subsidiaries of Kuni, provided in each case that such
Affiliates agree to be bound by the terms of this Agreement.
2.9 Ancillary Rights. The rights and licenses granted hereunder shall
include the right and license to copy and display all pictorial, graphic, or
audio-visual works created as a result of the development or preparation of the
Products, even if such pictorial, graphic, or audio-visual works are created by
or with other programming or through other means, provided, however, that it is
understood by the parties hereto that AVT is not transferring any rights to Kuni
pertaining to any third party content of AVT in using a Product.
2.10 Patent Rights. AVT further grants to Kuni, its successors, and
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assigns, and any sublicensees and customers, a world-wide. royalty-free,
irrevocable and non-exclusive immunity from suit under any patents owned or
licensable by Kuni at any time during the term of this Agreement and solely with
respect to any changes made by Kuni to AVT's Products pursuant to this
Agreement, as necessary for Kuni to exercise any other rights and licenses
granted under this Agreement.
3. Royalties and Payments.
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3.1 Royalties. Kuni shall pay AVT a royalty payment (the "Royalties")
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of twenty percent (20%) of its Net Revenue derived from its exercise of the
license rights set forth in Section 2 above. If Kuni is distributing any
Product or Kuni Derivative Work in a Kuni Bundle, the Royalty payable by Kuni to
AVT shall be calculated as follows:
where: r is the Royalty payable by Kuni to AVT
a is the AVT Web Site List Price of the Product(s) or Kuni
Derivative Work(s),
b is the total AVT Web List Price of all the Kuni Products in
the Kuni Bundle, including the Product(s) and the Kuni
Derivative Work(s), and
c is the total Net Revenue received by Kuni from the sale and
distribution of the Kuni Bundle.
(b) AVT has represented to Kuni that AVT has entered into distribution
agreements with each of Hewlett Packard Company, Arcsoft, Inc., SyQuest
Technology, Inc., Creative Labs, Inc., New Media Corporation, Sony Inc., Seattle
Filmworks, Inc and Visioneer, Inc. Furthermore, each party hereto recognizes
that such party may enter into binding distribution agreements with
manufacturers (collectively, "OEMs") and software development companies
(collectively, "Developers"), and that certain provisions of such OEMs and/or
Developers may come into conflict with the
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restrictions set forth in Section 2.3 above (collectively, the "Developers
Agreements"). In such event the parties agree that notwithstanding the formula
set forth in subparagraph (a) above, upon the sale, distribution or marketing of
any Kuni Localized Version of any Product by any OEM or Developer in the
Territory then (i) if the proceeds of such sale are recouped by Kuni then Kuni
shall be obligated to disburse to AVT an amount equal to twenty percent (20.0%)
of the moneys earned by Kuni under such Developers Agreements from the sale of
any Kuni Localized Version of any Product in the Territory and (ii) if the
proceeds of such sale are recouped by AVT then AVT shall be obligated to
disburse to Kuni an amount equal to eighty percent (90.0%) of the moneys earned
by AVT under such Developers Agreements from the sale of any Kuni Localized
Version of any Product in the Territory.
3.2 Guarantee of Minimum Revenue. Kuni agrees that during each
successive six (6) month period after the effective date of this Agreement, it
will achieve the Minimum Revenue Quota. If Kuni fails to achieve the Minimum
Revenue Quota in any six month period, AVT will give Kuni notice thereof and
Kuni may, within 30 days of receipt of such notice, elect to make payment to AVT
of such shortfall. In the event that Kuni elects not to make such shortfall
payment, AVT may terminate the exclusivity portion of this Agreement (Section
2.3) upon giving Kuni thirty days written notice thereof and Kuni shall become a
non-exclusive distributor of the AVT Products in the Territory with the right
(i) to continue to distribute the Products in the Territory for the duration of
the Agreement or (ii) terminate the Agreement and the provisions of Section 11.2
shall apply.
3.3 Kuni shall pay to AVT the Royalties together with a statement
detailing such payment within thirty (30) days after the end of-each calendar
quarter ending March 31, June 30, September 30 and December 31 during the term
of this Agreement.
3.4 Promotional Materials and Advertising. Kuni shall use its
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commercially reasonable efforts to maximize customer sales of the Products by
providing marketing support, product promotion, and local customer service,
including a Japan-based sales training program and Japanese-language literature
for the Kuni Derivative Work.
3.5 Currency. Kuni shall pay AVT the Royalties in United States
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currency, in cash or demand draft, at AVT's United States offices. In the event
that the Royalties payable to AVT hereunder are determined on the basis of the
suggested list prices in the currency of Japan, the rate of exchange shall be
the rate in effect on the date such payment is due. In the event that any
currency controls imposed by the government of Japan do not allow payment to be
made by Kuni to AVT in United States dollars, Kuni shall notify AVT of the same
immediately, and if so instructed by AVT, deposit all monies due to AVT to AVT's
account in a bank in Japan of AVT's choice. If any currency legislation or
exchange controls under applicable law preclude Kuni from making payments to AVT
in United States dollars for a period exceeding ninety (90) days, AVT shall have
right to terminate this Agreement; provided, however, that such
8
termination shall not relieve Kuni of its Payment Obligations hereunder.
Notwithstanding the foregoing, AVT shall have the unqualified right, at any time
or times, to notify Kuni in writing to make any Royalty payment due and payable,
or any part thereof, to be paid to AVT in an alternative manner, form or
currency, and Kuni shall comply with such notice subject to Kuni's necessary
compliance with the laws of Japan and/or any other applicable laws.
3.6 Withholding. In the event that Kuni is required to taxes on amounts
payable to AVT in accordance with this Agreement put laws and regulations of
Japan, Kuni shall be entitled to deduct and withhold( unless AVT shall furnish
to Kuni duly executed forms sufficient under the laws of Japan to exempt sums
payable to AVT hereunder from such taxes, in withhold herein provided, Kuni
shall furnish AVT with a certificate of deduction an and a true copy of the
governmental receipt establishing the payment thereof. Kuni shall further
obtain and furnish to AVT on a timely basis official tax receipts or such other
evidence of payment as AV-r may be required to submit in order to establish
AVT's right to a foreign tax credit with respect to its United States federal
income tax liability.
4. Duties of AVT
4.1 Delivery of Products and Development Environment. AVT shall deliver
to Kuni a complete and updated version of the Products including all Source Code
to the Code portion of the Products and the Development Environment within
thirty (30) days after the execution of the Agreement.
4.2 On-going Training AVT shall provide to Kuni's software engineers
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reasonable on-going support and training during the term of this Agreement. In
particular, Kuni's software engineers must be trained concerning any Upgrades to
the Products within thirty (30) days of such implementation, Such training shall
be provided at the offices of AVT and in the event that Kuni requires such
initial training to be conducted in Japan instead, Kuni shall be responsible for
any additional costs of conducting such training in Japan.
4.3 Third Party Assistance. AVT shall have no objection to the
provision of technical assistance regarding the Products to Kuni by a third
party not located within the United States. Kuni shall contract directly with
such third Party and shall be responsible for all payments to the third party
for such technical assistance.
4.4 On-going commitment. AVT shall during the term of this Agreement,
provide Kuni with timely supply of high quality Upgrades or Maintenance
Modifications to the Products. AVT shall further use its commercial best
efforts to provide new products and develop product improvements and extensions
5. Duties of Kuni.
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5.1 Development of Japanese Localized Versions. Kuni shall use
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reasonable efforts to obtain and use Code necessary for the use, production and
development of the Japanese Localized Versions of the Products and the Kuni
Derivative Works. The Japanese Localized Versions and the Kuni Derivative Works
shall be based upon the Products or well known standards and techniques used for
the Products that have been published by AVT.
5.2 Marketing Materials Kuni shall use best efforts to publicize and
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market the Kuni Derivative Works, including the creation and distribution of,
among other things, Japanese literature and customary marketing and promotional
materials therefor. Without limiting the generality of the foregoing, Kuni will
advertise the Kuni Derivative Works in appropriate media and participate in
trade shows, conferences, expositions, and promotional seminars, all with due
consideration for the local marketing environment in Japan. Kuni shall conduct
its marketing activities in a lawful manner with the highest standards of fair
trade, fair competition, and business ethics, and shall cause its employees to
do the same.
5.3 Personnel. Kuni shall use reasonable efforts to train salesmen and
customer support personnel in the maintenance, support and use of the Products
including providing at least one (1) manager or specialist whose duties shall be
solely to manage and service the Products.
5.4 Program Reproduction and Distribution. Kuni shall be responsible
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for reproduction (including all costs related thereto) of the Kuni Derivative
Works, as well as the AVT End User license agreement, registration card and such
other inserted materials as may be reasonably requested by AVT. From time to
time as reasonably requested by AVT, Kuni shall provide to AVT (Attention:
Business Development) sample packages and promotional materials relating
thereto, so that AVT can verify that the quality of Kuni's reproduction, use of
AVT's trademarks, and application of the proprietary notices required hereunder,
is comparable to that of AVT's own reproduction and use or otherwise complies
with the terms hereof. Kuni agrees to treat all AVT Products at least as
favorably as it treats any other products distributed by Kuni that are
competitive with any AVT Product. Specifically, Kuni agrees that it will not
market or promote any AVT Product or any other product in a manner that states
or could be reasonably interpreted to imply that the AVT Product is inferior or
secondary to the other product. For example, Kuni will not market or promote
any other product as "preferred", "premier', "primary" or the like as compared
with the AVT Products.
5.5 After Sales Support. Kuni shall have the sole responsibility for
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all after sales and support services for the Kuni Derivative Works distributed
by Kuni, and shall provide comprehensive technical assistance to the End Users
thereof. Kuni shall perform and provide to End Users such warranty and other
maintenance services as reasonably specified by AVT from time to time.
5.6 Quarterly Reports. Kuni shall provide AVT with quarterly
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financial reports with respect to the calculation and payment of the Royalties
by Kuni
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together with the payment of Royalties to which it relates. In addition to such
financial reports, Kuni shall provide AVT with a list of all registered End
Users of the Kuni Derivative Works, so far as such information is available to
Kuni. Kuni shall also provide AVT with a written or oral summary of its
marketing activities with respect to the Kuni Derivative Works, of competing
products and activities in the Territory, and, upon the reasonable request of
AVT, any additional information concerning the distribution of Kuni Derivative
Works within the Territory.
5.7 Competing Products. For the term of this Agreement, Kuni will
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refrain from distributing, marketing or promoting any Competitive Products,
provided, however, that nothing in this Section 5.7 shall prohibit or restrict
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Kuni from distributing any Competitive Products that are packaged or "bundled"
with other products such as personal computers, printers, add-on boards, modems,
and other computer hardware or with value added application, utility or software
or with books and other publications of any other entity with whom (i) Kuni has
an existing relationship, or (ii) with whom Kuni forms a relationship after the
execution of this Agreement if at the time that such relationship is formed,
such entity is not the owner or developer of a Competitive Product.
6. Proprietary Protection. Kuni acknowledges that the Source Code
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Documentation and the Development Environment consist of Confidential
Information of AVT. Kuni shall treat the Confidential Information in confidence
and shall not use, copy, or disclose them, nor permit any of its personnel to
use, copy, or disclose them, for any purposes that are not specifically
contemplated by this Agreement,
7. Representations and Warranties.
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7.1 Right and Authority. AVT represents and warrants that (i) it is the
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owner of the Products, including, without limitation, the Code, Documentation,
and Development Environment, including all intellectual property rights therein
under copyright, patent, trademark, @e secret, and other applicable law; (ii) it
has the fall and sufficient right and authority to grant the rights and licenses
granted here, (iii) the Code and Documentation have not been published under
circumstances that have caused loss of any U.S. or other patent or copyright
therein; and (iv) the Code, Documentation and Development Environment, to the
best of AVT's knowledge, do not infringe any patent, copyright or other
intellectual property right of any third party.
7.2 Adequacy of Source Code and Development Environment. AVT
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represents and warrants that, to the best of its knowledge, (i) the Source Code,
it and the Development Environment delivered to Kuni are and shall be
understandable and usable by trained computer-programming personnel; (ii) such
Code does not involve any proprietary languages or programming components that
such personnel could not reasonably be expected to understand; and (iii) such
Source Code, Documentation and the Development Environment include all of the
devices, programming and documentation necessary used by AVT in the development
of the products.
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7.3 Conformity, Performance and Compliance. AVT represents and
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to the best of its knowledge, (i) the Code and Documentation to be delivered to
AVT hereunder have been prepared in a workmanlike manner and with professional
diligence and skill: (ii) such Code and Documentation will function on the
machines and with operating systems for which they are designed and (iii) the
Code and Documentation when delivered to Kuni conform to their specifications in
all material respects, and are free from defects in materials and workmanship.
7.4 Scope of Warranty and Representations.
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(a) Except as set forth in this Section 7.1, 7.2, 7.3 and in Section
12.1 hereof, AVT makes no warranties or representations as to the performance of
the Product(s) to Kuni or to any other person, except as set forth in AVTs form
limited warranty (the "Limited Warranty") which is included with Alta Vista's
End User product packages. AVT reserves the right to change the warranty and
service policy set forth in such Limited Warranty, or otherwise, at any time,
without further notice and without liability to Kuni or any other person.
(b) AVT does not warrant the output of the Product(s) to meet the
standards or requirements that may be applicable to any End User's business.
Except as herein provided, AVT does not make or give any representation or
warranty with respect to the usefulness or the efficiency of the Product(s), it
being understood that the degree of success with which equipment, software
programs and materials can be applied to data processing is dependent upon many
factors, many of which are not under AVT's control.
7.5 Kuni Representation. Kuni represents and warrants that it has had
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a fall opportunity to test the operation of each Product and to verify that such
Product runs properly on Japanese operating platforms. AVT makes no
representation or warranty that the Product(s) will run on Japanese operating
platforms or that the Product(s) will run on the Japanese operating platforms
fully in accordance with the End User Documentation specifications.
8. Audit Rights. Each party shall have the right during the term of
this Agreement, to engage an independent auditor to review the books and records
of the other party to determine the accuracy of the Royalties set forth above
and otherwise to verify the audited party's Net Revenue for the purpose of
verifying the auditing and the audited parties' performance of their obligations
hereunder, upon five (5) days written notice to the party to be audited. The
cost of such audits shall be home by the auditing party. Any audit shall be
conducted during customary business hours at any premises where the relevant
books and records may be located. In addition, each party agrees to maintain
accurate books and records concerning all transactions relating to their
respective obligations and duties under this Agreement for a period of two (2)
years following the expiration or termination of this Agreement. Each party
shall have the right for up to two (2) years after the termination of this
Agreement, to audit the other party's books and records.
12
9. Intellectual Property Rights
------------------------------
9.1 Owndership of Intellectual Property Rights. Kuni acknowledges AVT's
-------------------------------------------
exclusive right, title and interest in and to any and all Intellectual Property
Rights in and to the Products and Licensed Marks, and Kuni will not at any time
do or cause to be done any act or thing impairing or tending to impair any part
of said right, title and interest. Kuni acknowledges and agrees that all of
such Intellectual Property Rights shall remain the exclusive property of AVT.
AVT agrees that Kuni shall own all right, title and interest in and to any and
all Intellectual Property Rights in or relating to any software or other
materials added to the Products that were necessary to create the Kuni Localized
Japanese Versions or Kuni Derivative Works ("New Kuni Matter"). Upon the
expiration or termination of this Agreement, AVT may at its option, purchase any
or all of the New Kuni Matter at a price (the "Purchase Price") to be determined
as set forth herein,
Purchase Price=x(1.15)^a
-------------------------
WHERE X IS THE AGGREGATE COST INCURRED BY KUNI IN DEVELOPING CREATING THE NEW
KUNI MATTER AND A IS THE NUMBER OF ROUNDED UP TO A WHOLE NUMBER, OF THE TERM OF
THIS AGREEMENT PRIOR TO TERMINATION.
9.2 Copyright Notices. Kuni agrees to include AVT's copyright notices
-------------------
and/or trademark notices in the Kuni Derivative Works and shall not market or
license the Products under any other name, sign or logo. Kuni also agrees that
during the term of this Agreement or at any time thereafter it will not register
or use any of AVT's trademarks or trade names or any word, symbol or design
confusingly similar thereto, as part of its corporate name.Kuni will assist AVT
in obtaining registration of the tradenames and trademarks in AVT's name or, if
necessary, Kuni's rights to make use of AVT's tradenames and trademarks as part
of Kuni's marketing activities.
10. Prosecution and Defense of Infringement Claims
---------------------------------------------------
10.1 Notice and Prosecution of Infringement of Licensed Marks . AVT and
--------------------------------------------------------
Kuni shall each provide the other with prompt notice of any apparent
infringement of the Licensed Marks including any Kuni Derivative Work thereof,
any petition to cancel any registration of any of the Licensed Marks, or
attempted use of or any application to register any xxxx confusingly similar to,
or a colorable imitation of, any of the Licensed Marks of which it becomes
aware. AVT shall have primary responsibility to:
(a) Institute and prosecute any actions for such infringement of the
Licensed Marks;
(b) Defend any petition to cancel any registration of any of the
Licensed Marks; and
13
(c) Oppose any attempted use of or any application to register any xxxx
confusingly similar to, or a colorable imitation of, any of the Licensed Marks.
Any damages and costs recovered through such proceedings shall belong
-------
exclusively to AVT and AVT shall be solely responsible for all costs and
expenses (including attorney's fees) of prosecuting such actions; provided,
however, that if AVt recovers damages in an action for infringement of the
Licensed Marks, Kuni shall be entitled to receive an equitable share of the
damages recovered and, provided it exercises such entitlement, Kuni shall be
obligated to contribute its proportionate share of the costs and expenses
(including attorney fees) incurred in connection with the recovery of damages,
which sums shall be deducted from such recovered damages and paid to AVT. Kuni
shall provide AVT with reasonably requested assistance in connection with such
proceedings, and AVT shall reimburse Kuni's reasonable out-of-pocket costs of
providing such assistance. AVT shall keep Kuni informed of the status of any
proceeding and supply Kuni with any reasonably requested documents regarding
such proceedings.
10.2 Kuni Right to Institute Infringement Actions. In the event AVT
does not institute and prosecute any action for infringement of the Licensed
Marks, defend any petition to cancel any registration of any of the Licensed
Marks, or oppose any attempted use of or any application to register any xxxx
confusingly similar to, or a colorable imitation of, any of the Licensed Marks
within a reasonable period of time (having due regard for the protection of the
Licensed Marks), Kuni shall have the right to do so, but only in the Territory,
but shall not be obligated to, either in its own name or in the name of AVT.
Any damages or costs recovered through such proceeding shall belong exclusively
to Kuni, and Kuni shall be solely responsible for all costs and expenses
(including attorney's fees) of prosecuting such proceeding. If Kuni elects to
prosecute an alleged infringement, Kuni shall obtain AVT's approval before
entering into any compromise, settlement or stipulation with respect to such
proceeding, which approval AVT shall not unreasonably withhold.
11. Term and Termination.
----------------------
I1.1 Term of Agreement and Renewal. This Agreement shall become
------------------------ --------
effective on the first day that it has been executed by both parties and, unless
sooner terminated hereunder, shall remain in force for a period of five (5)
years. This Agreement may be further renewed for such period as the parties may
mutually agree. Nothing contained herein shall be interpreted as requiring
either party to renew or extend this Agreement. Notwithstanding other
provisions of this Section 11, or any other provisions of this Agreement, and in
addition to any other rights to terminate set forth in this Agreement, this
Agreement may be terminated prior to the expiration of its stated term as set
forth below.
14
11.2 Termination. Either party may also terminate this Agreement, by
giving written notice to the other party upon the occurrence of any of the
following events:
(a) Material breach of this Agreement by either party;
(b) The enactment of any law, decree, or regulation by any governmental
unit within the Territory or the United States which would impair or restrict
(i) the right of either party to terminate or elect not to renew this Agreement
as herein provided, (ii) either party's right, title or interest in the
Intellectual Property Rights as provided herein, or (iii) AVT's rights to
receive the royalties as set forth in Section 3 of this Agreement; or
(c) Upon the acquisition of direct or indirect control of Kuni by any
person which manufactures or markets products competing or likely to compete
with the Products or the Kuni Derivative Works.
11.3 Automatic Termination. This Agreement terminates automatically,
---------
with no further action by either party, if a receiver is appointed for either
party or its property, either party makes an assignment for the benefit of its
creditors, any proceedings are commenced by, for or against either party under
any bankruptcy, insolvency or debtor's relief law or either party is liquidated
or dissolved.
11.4 Effect of Termination.
-----------------------
(a) Upon the expiration or termination of this Agreement, regardless of
the cause thereof, the parties shall abide by and uphold any rights or
obligations accrued or existing on the date of termination or expiration, and
the parties agree to continue to cooperate with each other and to carry out an
orderly termination of their relations.
(b) Without limiting the generality of Section 11.4(a), within thirty
(30) days after such termination or expiration, (i) Kuni shall pay to AVT all
sums then due and owing, (ii) the due date of all outstanding invoices, if any,
will automatically be accelerated so that they become due and payable on the
effective date of termination, even if longer terms had been provided
previously, (iii) Kuni shall promptly pay to AVT any other sums that shall
become subsequently due and owing as they become due and owing, and (iv) all
orders for the Product or portions thereof remaining undelivered to Kuni as of
the effective date of termination shall automatically be cancelled, unless Kuni
is obligated to deliver such order to a Dealer or End User under an existing
written purchase order.
(c) Upon such termination or expiration, (i) Kuni will cease all
display, advertising and use of the Licensed Marks and will not thereafter use,
advertise or display any of the Licensed Marks; (ii) Kuni shall discontinue
marketing and reproduction of the Kuni Derivative Works and shall promptly
return and make no
15
further use of property, materials and other items and all copies thereof
belonging to AVT relating to this Agreement, and (iii) Kuni shall destroy all
copies of Kuni Derivative Works reproduced hereunder and not yet distributed,
and shall furnish to AVT an affidavit signed by an officer of Kuni certifying
that, to the best of its knowledge, such return or destruction, has been fully
effected. Notwithstanding the foregoing, and provided Kuni fulfils its
obligations specified in this Agreement with respect to such materials, Kuni may
continue to use and retain copies of the Kuni Derivative Works and the Products
to the extent, but only to the extent, necessary to support the Kuni Derivative
Works rightfully distributed to End Users by Kuni prior to the termination of
this Agreement. Upon such termination or expiration, and upon AVT's request,
Kuni shall return any confidential information provided by AVT hereunder.
(d) Notwithstanding termination or expiration of this Agreement, Or any
Addendum hereto, all End User License Agreements which have been properly
granted pursuant to Section 2.1(e) of this Agreement prior to such termination
or expiration shall survive.
(e) Upon expiration or termination of this Agreement, for any reason
whatsoever, neither party shall have any further obligations to the other party
other than those set forth in this Section 11. Without limiting the
generality of the foregoing, neither party shall not be liable to the other
party for, and each party hereby expressly waives all rights to, compensation or
damages of any kind, in connection with the expiration or termination of this
Agreement, whether on account of the loss by such party of present or
prospective profits, commissions, anticipated orders, expenditures, investments,
or commitments made in connection with this Agreement, goodwill created, or on
account of any other reason whatsoever.
12. Indemnification.
---------------
12.1 Scope of AVT's Indemnification. AVT hereby indemnifies and holds
-------------------------------
harmless Kuni, its successors and assigns, including any customers, from any
loss, liability, claim or damage regarding the Code, Documentation or
Development Environment supplied hereunder, based on any actual or alleged
infringement of a patent, copyright, @e secret, or other intellectual
proprietary right of any third party. If such claim arises, or if in AVT's
judgment is likely to arise, Kuni agrees to allow AVT, at AVT's option, to
procure the right for Kuni to continue to exercise its rights and licenses
granted herein, or to replace or modify them in a functionally equivalent manner
so they become noninfringing. The foregoing remedial actions, however, shall
not relieve AVT of its indemnity obligations with respect to any loss,
liability, or damage that may be incurred with respect to the Products unless
such loss, liability or damage arises from or is based upon (a) use of other
than the current unaltered release of any of the Products, or (b) the
combination, operation or use of any of the Products with equipment, data or
programming not supplied by AVT, if such loss, liability or damage would have
been avoided but for such use, operation or combination.
16
12.2 Scope of Kuni's Indemnification. Kuni shall indemnify and hold AVT
-------------------------------
and its shareholders, managers, officers, directors, agents and employees
harmless against any and all losses, damages, liabilities, costs and expenses
(including reasonable attorneys' fees) resulting from (i) any breach by Kuni of
this Agreement or any duty, warranty or obligation hereunder; (ii) any breach by
any Dealer of the sub-license and subdistribution agreement with Kuni or any
duty, warranty or obligation thereunder; (iii) any claim that may be made by
reason of any act or omission of Kuni or any of its shareholders, managers,
officers, directors, agents, employees subdistributors and representatives; or
(iv) any claim of any Dealer made against AVT for any reason whatsoever.
13. Miscellaneous.
-------------
13.1 Survival of Warranties. The warranties. representations, and
------------------------
covenants of the parties hereto contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of the parties hereto.
13.2 Successors and Assigns. Neither party hereto may assign this
------------------------
Agreement or any of its rights or obligations hereunder (including without
limitation its rights and duties of performance) to any third party Or entity,
and this Agreement may not be involuntarily assigned or assigned by operation of
law or change of control, without the prior written consent of the other party,
which consent shall be given or withheld by such non-assigning party in the
exercise of its sole discretion. The foregoing shall be interpreted as
including, but not being limited to, the right of AVT to withdraw from the
market one or more Products in Exhibit A attached hereto from this Agreement.
---------
This Agreement shall be binding upon and inure to the benefit of each of the
parties hereto and, except as otherwise provided herein, its respective legal
successors and permitted assigns, Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any right, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
13.3 Governing Law. This Agreement shall be governed by and construed
--------------
under the laws of the State of California.
13.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.5 Titles and Subtitles. The titles and subtitles used in this
----------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
13.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively
17
given upon personal delivery to the party to be notified or five (5) days
following deposit with the United States Post Office, or ten (10) days following
deposit with the Japanese Postal Service, as applicable, by registered or
certified mail, postage prepaid and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other party.
13.7 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finder's or broker's fee or commission in connection with this
transaction.
13.8 Expenses/Attorneys' Fees. Each party shall pay all costs and
--------------------------
expenses that it incurs with respect to the negotiation, execution, delivery,
and performance of this Agreement. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which such party may be
entitled.
13.9 Amendments and Waivers. Any term 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
with the written consent of each of the parties hereto. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), and each future holder
of all such securities.
13.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision was so excluded and shall be enforceable in accordance with its
terms. WITHOUT LIMITING THE FOREGOING, IT IS EXPRESSLY UNDERSTOOD AND AGREED
THAT EACH AND EVERY PROVISION OF THIS AGREEMENT WHICH PROVIDES FOR A LMTATION OF
LIABILITY, DISCLAIMER OF WARRANTIES OR EXCLUSION OF DAMAGES IS INTENDED BY THE
PARTIES TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER PROVISION AND TO BE
ENFORCED AS SUCH. FURTHER, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT IN THE
EVENT ANY REMEDY HEREUNDER IS DETERMINED TO HAVE FAILED OF ITS ESSENTIAL
PURPOSE, ALL LIMITATIONS OF LIABILITY AND EXCLUSION OF DAMAGES SET FORTH HEREIN
SHALL REMAIN IN FULL FORCE AND EFFECT.
13.11 Entire Agreement. This Agreement and the documents referred to
-----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
18
13.12 Confidentiality. Each of AVT and Kuni hereby agrees to maintain
---------------
the confidentiality of the terms and conditions of this Agreement and of the
facts, contentions, and allegations of the parties related to this Agreement,
and shall not disclose, discuss, or comment on the same to any third party
except as may be necessary for the implementation of this Agreement or as may be
otherwise required by the order of any judicial or administrative tribunal, or
as may be required to comply with applicable laws, regulations or requirements
of any self regulatory organization.
13.13 Arbitration. In the event of any future dispute, controversy or
claim between the parties arising from or relating to this Agreement, its
breach, or any matter addressed by this Agreement, it will be resolved through
binding confidential arbitration to be conducted by the American Arbitration
Association in San Francisco, California, pursuant to its Commercial Arbitration
Rules, and judgment upon the award Tendered by the Arbitrator(s) may be entered
by any court having jurisdiction of the matter. This paragraph shall not alter
the right of the parties hereto to seek and obtain injunctive relief from a
court of law.
13.14 Freely Executed. In entering into this Agreement, the parties
----------------
represent and warrant that they do so freely and voluntarily, after having had
the opportunity to meet and confer with their respective attorneys regarding the
contents and legal effect of this Agreement.
13.15 English Version to be conclusive. This Agreement is in the
------------------------------------
English language only, which language shall be controlling in all respects, and
all versions hereof in any other language shall not be binding on the parties
hereto. All communications and notices to be made or given pursuant to this
Agreement shall be in the English language.
13.16 Governmental Approvals. Kuni undertakes full responsibility for
-----------------------
obtaining all Japanese governmental approvals necessary for each party to
perform its obligations hereunder. Kuni agrees to indemnify AVT against any and
all claims, demands, actions, proceedings, investigations, losses, liabilities,
costs or expenses suffered or incurred by AVT wising out of or relating to any
failure (whether intentional or unintentional) by Kuni or any of its customers
to obtain any such governmental approvals.
19
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date xxxx
above written.
"AVT"
ALTAVISTA TECHNOLOGY, INC.
a Califomia corporation
By: /S/ Xxxx Xxxxxxxx
-------------------------
Xxxx Xxxxxxxx, President:
"KUNI"
KUNI RESEARCH NTERNATIONAL CORPORATION
a Japan corporation
By: /S/ Xxxx Xxxxxxx
-------------------------
Xxxx Xxxxxxx, President
20
EXHIBIT A
---------
List of Products
All past, current and future AVT multimedia email and web authoring software,
including, without limitation, Howdy!, the multimedia Internet postcard maker.
------
2. WebCannon, AVT's Web site authoring software
3. All Other Web Sites that host images that AVT Code creates
21
EXHIBIT DI
----------
Corporate License Agreement
22
EXHIBIT-B2
---------
End User License Agreement
23
