DISTRIBUTION AGREEMENT
This Distribution Agreement ("Agreement") is made and entered into
effective as of November 9, 1996,("Effective Date") by and between Acceleration
Software International Corporation, a Washington corporation ("Developer"), and
Pointe Control, a Washington corporation ("Distributor").
RECITALS
A. Distributor is in businesses related to development, distribution and
sale of software and other technology-related products (including
computer-related products and services), and, with their shareholders other
parties, may form other related entities to further engage in such business.
B. Developer and Distributor desire that Distributor distribute certain of
Developer's existing and future software and other technology in specified
geographic areas, and desire to enter into a flexible agreement providing for
such distribution, subject to future identification of the specific software or
other technology, the geographic areas of distribution, pricing, volumes and
other matters as may be determined by the parties as the necessity arises.
IN CONSIDERATION OF THE MUTUAL PROMISES CONTAINED HEREIN, THE PARTIES AGREE
AS FOLLOWS:
1. Definitions.
1.01 "Software" shall mean the software product(s) described in Exhibit A
(as defined below), and upgrades or other modifications to such specific product
(but not other products sold or otherwise distributed with or in connection with
such product), as determined in the discretion of Developer.
1.02 "Software Copy" shall mean an object code copy of the Software,
together with a copy of any user manual or other documentation or materials
which are (or, if none, ordinarily would be) customarily supplied to End Users
by Developer with the Software, packaged for retail sale.
1.03 "End User" shall mean, in the case of Software, any third party which
obtains a Software Copy to fulfill its own computer aided instruction or tool
needs, or, in the case of Technology, any third party which obtains the
Technology in a form suitable to fulfill its needs.
1.04 "Territory" shall mean the geographic area identified in Exhibit A.
1.05 "Localization" shall mean modification of Software or Software Copies
("Localized Software") or Technology ("Localized Technology") to meet the needs
of non-English speaking End Users in the Territory. This may include code
changes, additions and alterations to the feature set, changes in the data,
translation, or new art or new packaging, with the intent to provide more
culturally acceptable Software or Technology to End Users speaking a principal
language in use in the Territory.
1.06 "Sale" or "Selling" or "Purchase" or "Purchasing" of Software,
Software Copies or Technology shall mean, with respect to the intellectual
property rights related to such Software or Technology, the grant or
acquisition, respectively, of a license to use the Software or Technology. With
respect to tangible property, such terms shall be accorded their common
meanings. In either case, such terms shall (i) include all sales, licenses,
transfers or other dispositions for value, (ii) include use by Distributor, and
(iii) be deemed a sale not later than when recorded as such on the books and
records of Distributor which are maintained for financial statement purposes.
1.07 "Exhibit A" shall mean each such Exhibit attached to and made a part
of this Agreement as of
this Agreement's Effective Date, and each such Exhibit subsequently
executed by the parties and so made a part of this Agreement as of the Effective
Date specified in such subsequent Exhibit. Each such Exhibit A shall be
construed, together with this Agreement, as a separate and distinct agreement
between the parties, without taking into account or considering any such other
Exhibit A, such that performance or default in connection with any one such
Exhibit A shall not determine or affect performance or default as construed in
connection with any such other Exhibit A. In the event of any conflict between
the terms and conditions of any such Exhibit A and this Agreement considered
without such Exhibit A, the terms and conditions of Exhibit A shall take
precedence and control.
1.08 "Affiliate" shall mean any entity fifty percent (50%) or more of the
value or control of which is owned, directly or indirectly, by Distributor, or
their shareholders, or any combination of such parties, or any entity which
owns, directly or indirectly, fifty percent (50%) or more of the value or
control of such entities or their shareholders.
1.09 "Technology" shall mean the technology described in Exhibit A. For
purposes of this Agreement, "technology" shall be construed in its broadest
sense to include any information of actual or potential commercial use or value
relating to or arising out of the business of Developer, regardless of whether
patented, copyrighted or otherwise protected by law, and including but not
limited to computer and other programs, trade secrets, procedures, concepts,
processes, methodology, design data, computer software, specifications,
research, inventions or know-how, any of which may include or be incorporated
within or utilized in connection with either tangible or intangible property or
services, or some combination of such property and services. Such technology may
be of various forms or kinds which may, in various cases, be distributed,
licensed, provided or otherwise used. "Potential Technology" for purposes of
Section 8.09 shall be deemed to include (i) any technology which Developer is
developing or considering developing, and as to which Developer has given
Distributor notice of such development, and (ii) all performance-enhancement
computer utility software, specifically including that relating to CD-ROM drive,
hard drive and other storage media. In interpreting this Agreement in connection
with Technology (as distinguished from Software or Software Copies), a broad
interpretation shall be applied to all terms and conditions to effect the intent
of the parties that this Agreement apply to future transactions in connection
with such Technology, in accordance with any Exhibit A made a part of this
Agreement after the Effective Date.
2. Appointment and Authority of Distributor.
2.01 Appointment as Distributor for Territory. Subject to the terms and
conditions set forth in this Agreement, Developer hereby appoints Distributor as
Developer's distributor for the Software and/or the Technology in the Territory,
as specified in Exhibit A, and Distributor hereby accepts such appointment.
"Distributor," "distribution" and similar terms shall be construed as
appropriate for the circumstances in cases in which Technology is marketed,
sold, or provided in connection with services or tangible property. The parties
contemplate that Developer may appoint Distributor, and Distributor may accept
appointment as Developer's distributor, with respect to other or additional
Software and/or Technology in the Territory or other territories, which
appointment and acceptance, if any, shall be pursuant to additional Exhibit(s) A
in substantially the form attached, as executed by the parties and made a part
of this Agreement.
2.02 Exclusive Distributor. For so long as Distributor is performing in
compliance with this Agreement (including complying with any Minimum Performance
Requirements, as defined in Section 10.03), Developer shall not grant any other
party rights to distribute Localized Software or Localized Technology in the
Territory. Distributor acknowledges that certain of Developer's other
distributors are not prohibited from distributing in the Territory Software or
Technology which has not been localized, but Developer will not make any
Localized Software or Localized Technology available to such distributors with
respect to the Territory.
2.03 OEM Sales and Site Licenses. In addition to distribution of Software
Copies provided for in Section 2.01, Distributor shall have the right to
distribute the Software to either (i) a computer hardware manufacturer or seller
desiring to bundle the Software with computer hardware (an "OEM Sale") or (ii) a
user desiring a license to use the Software on more than one (1) computer owned,
operated and used by such user in such
2
user's place of business without acquiring individual Software Copies for
use on each such computer (a "Site License", as further interpreted within the
ordinary meaning of the term). Such Software shall consist of CD-ROM discs (i)
which have been acquired from Developer for, and only for, such respective use,
(ii) which are packaged in a form not suitable for normal retail distribution to
End Users, and (iii) which are sold only in the Territory and for use or resale
only in the Territory. In the case of any other OEM Sale or Site License not
including an individual CD-ROM disc, Distributor shall further have the right to
negotiate the preliminary business terms of any such sale or license, on a
case-by-case basis, for review, further negotiation, and execution of a
definitive agreement by Developer (who shall have the sole right to enter into
any such agreement), in which case Distributor shall be compensated as provided
in Exhibit A.
2.04 Responsibilities of Distributor. Distributor shall, at its cost,
prepare localized versions of the Software and Software Copies or the
Technology, and shall market and distribute Software Copies and Technology in
the Territory, including marketing and distribution in the Territory for resale.
Distributor shall use its best efforts to pursue aggressive sales policies and
procedures (including marketing) to realize the maximum sales potential for the
Software or Technology, and to establish and promote Developer's business name,
trademarks, brandnames, and similar attributes, in the Territory. Distributor
shall not distribute or market the Software Copies or the Technology outside the
Territory.
2.05 Independent Contractors. The relationship of Developer and Distributor
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct or control the day-to-day activities of the other, (ii)
constitute the parties as partners, joint ventures, co-owners or otherwise as
participants in a joint or common undertaking. All financial obligations
associated with Distributor's business are the sole responsibility of
Distributor. All sales and other agreements between Distributor and its
customers are Distributor's exclusive responsibility and shall have no effect on
Distributor's obligations under this Agreement. Distributor shall be solely
responsible for, and shall indemnify and hold Developer free and harmless from,
any and all claims, damages or lawsuits (including Developer's attorneys' fees)
arising out of the acts of Distributor, its employees or its agents. Distributor
shall not constitute, and shall take no action which would cause it to be
treated as, a "permanent establishment" of Developer within the meaning of the
tax laws of any country.
3. Production of Software, Software Copies and Technology.
3.01 CD-ROM Discs and Other Media. In the case of Software, except as
otherwise specifically provided in Exhibit A, Developer shall, at its cost and
at a facility of its selection, reproduce the object code of Software onto
CD-ROM discs (including labeling and artwork) in a form suitable for packaging
and distribution to End Users at Developer's cost and at a facility of
Developer's selection. Localized Software will be reproduced by Developer from a
master copy of the Software (including a master of labeling and artwork) which
has been Localized and provided by Distributor at Distributor's cost. As
circumstances may require or make advantageous (as determined in the discretion
of Developer), in particular in the case of Technology, Developer may reproduce
and provide to Distributor Software or Technology in other media or form. Under
no circumstances shall Distributor replicate or otherwise duplicate Software or
Technology, on CD-ROM discs or otherwise, or obtain such replicated or
duplicated Software from any source other than Developer. Possession by
Distributor of a "Gold Disc" or other medium commonly used to replicate or
duplicate software shall not be construed as evidence that Distributor has any
right to replicate or duplicate Software.
3.02 Documentation and Packaging. Distributor shall produce all
documentation, packaging and other items customarily supplied to End Users, and
shall assemble such items, all at Distributor's cost. Such items shall be
provided to Developer not less than fifteen (15) days prior to commencement of
production for Developer's review and approval, and production shall not be
commenced until approved in writing by Developer, except that failure by
Developer to approve or disapprove within fifteen (15) days shall be deemed to
be approval.
3.03 Mutual Assistance. Distributor and Developer shall cooperate and
provide reasonable and timely
3
assistance to one another in connection with preparation of Localized Software
or Technology.
4. End User Restrictions.
Except as otherwise provided under applicable law:
4.01 Only a personal, non-transferable, and non-exclusive right to use
Software or Technology (on a single designated system shall be granted to each
End User.
4.02 Developer retains all rights in and title to Software and Technology,
including the media on which it is provided, and in and to all copies, and no
title to the Software or such media is transferred to either Distributor or any
End User.
4.03 The End User may not copy the Software or Technology (except in the
case of Software ,except for one (1) copy for backup purposes and only as
necessary to use the Software on such End User's designated system), and all
such copies shall contain all copyright and other proprietary notices or legends
of Developer on the Software as delivered to the End User.) No copies of the
Software documentation may be made by the End User.
4.04 Developer shall not be liable to the End User for any general,
special, direct, indirect, consequential, incidental, or other damages arising
out of the license to use the Software .
4.05 Software shall be provided to the End User subject to a "shrink-wrap"
or other appropriate license agreement, which shall be subject to approval by
Developer under Section 3.02.
5. Restrictions on Distributor.
Distributor agrees (i) in the case of Software, not to reverse assemble,
decompile, or otherwise attempt to derive source code from the Software, and, if
source code is provided, to use such code solely for necessary localization
purposes, not to disclose such code to persons other than those with a need to
know for such purposes (and then only subject to a non-disclosure agreement
approved in advance by Developer), and to return or destroy all copies of such
source code immediately upon the earlier of completion of localization or the
request of Developer; (ii) in the case of Technology, not to attempt to
determine any Confidential Information (within the meaning of Section 14) from
the Technology, (iii) to comply with all export, re-export, and anti-boycott,
restrictions and regulations of the Department of Commerce or other United
States agency or authority, and not to transfer, or authorize the transfer, of
the Software or Technology to a prohibited country or otherwise in violation of
any such restrictions or regulations, and (iv) to comply with all other laws,
foreign and domestic, in connection with the Software and Technology.
6. Payment.
6.01 Payment Amount. Distributor agrees to pay Developer the amounts set
forth in Exhibit A, plus shipping to points outside of the continental U.S., if
any. Such amounts specified shall be net of any withholding or similar tax
imposed by the taxing jurisdiction in which Distributor does business or with
respect to which or from which payments to Developer are made, and net of any
customs duty, tariff or similar charge.
6.02 Timing of Payments. In the case of Software or Technology, payment to
Developer for which is dependent upon delivery to Distributor of CD-ROM discs or
other media or tangible property, Payment shall be made prior to release to
Distributor of such property, except as otherwise specified in Exhibit A. In
other cases, including percentage royalties or amounts dependent upon or
affected by Distributor's gross receipts, net income, or other factors, payment
to Developer shall be made not later than thirty (30) days after the end of the
month in which such event occurs or such amounts may be reasonably determined.
All payments required to be made to Developer pursuant to this Agreement shall
be made to Developer in the State of Washington, USA, at its office or at such
4
banking institution as Developer may direct from time to time, in immediately
available funds, in legal tender of the United States of America.
6.03 Audit Rights. Distributor shall maintain accurate books and records
pertaining to the production and distribution of Software or Technology,
including packaging, documentation, artwork, and all other components of the
Software Copies or Technology in whatever form distributed, and similar rights
as to Software or Technology sold in other than the form of Software Copies.
Developer's designated auditors shall have the right, upon reasonable request
and during ordinary business hours, to examine such books and records, and the
physical inventory of Software Copies. Developer shall be entitled to exercise
such right to examine upon the end of each calendar quarter with respect to the
first year of the term of this Agreement (including each applicable Exhibit A),
and shall thereafter be entitled to exercise such right upon the end of each
calendar semi-annual period or, if more frequent, upon the end of any calendar
quarter following any such examination in which it is determined that any
underpayment of five percent (5%) or more was made by Distributor to Developer.
Further, Distributor shall require its third party suppliers, vendors and
customers (including printers, manufacturers, distributors, and resellers) to
allow Developer to examine books and records and physical inventories of such
parties pertaining to the production, distribution and sale of Software or
Technology. Such examination shall be at Developer's expense, unless the
examination reflects an underpayment of five percent (5%) or more of the amount
that should have been paid for the period audited, in which case Distributor
shall bear the expense of such audit. Interest of one and one-half percent
(1.5%) per month shall paid on payments not timely made.
6.04 Transactions with Affiliates. All transactions by Distributor with
Affiliates shall be at fair market prices for comparable transactions between
unrelated parties, including a reasonable profit on such transactions. In any
case where payment by Distributor to Developer is a percentage royalty based
upon Distributor's receipts, or is otherwise dependent upon or affected by
Distributor's sales price or other amount received, for purposes of determining
Distributor's payment to Developer, Distributor's sales price or other amount
received from an Affiliate shall be disregarded, and instead shall be deemed to
be the amount received from the first non-Affiliate making such payment.
6.05 Bundled Transactions. In any case where payment to Developer by
Distributor is a percentage royalty or is otherwise dependent upon or affected
by Distributor's gross receipts, sales price, net income or other amount
received with respect to a Bundled Transaction, for purposes of determining
Distributor's payment to Developer, such amount received shall be deemed to
include all gross receipts received in connection with such Bundled Transaction,
without regard to the allocation or characterization of the gross receipts as
relating to the Software or Technology or to other aspects of the transaction.
For purposes of this Agreement, "Bundled Transaction" shall mean any transaction
in which Distributor receives payment for Software or Technology and other
property or services in a single integrated transaction, and "gross receipts"
shall mean the total amount realized, without reduction for cost of sales,
returns or allowances, or expenses of any kind.
6.06 Security Interest. Distributor hereby grants Developer a security
interest in accounts or other amounts receivable by Distributor in connection
with the sale of the Software or Technology or Software Copies. Distributor
further agrees that in event of a default in payment of amounts due Developer
which is not cured within fifteen (15) days as provided in Section 10.04,
Developer may take all reasonable action to perfect such security interest (or,
where appropriate, take comparable action under the laws of a jurisdiction other
than the U.S.). Distributor shall assist Developer in taking any such action,
including by executing documents reasonably requested by Developer to do so.
7. Developer's Warranty.
7.01 Warranty. Developer warrants that the Software provided to Distributor
by Developer in connection with Localization by Distributor will conform to the
Software or Technology then being distributed by Developer. Developer further
warrants that upon delivery, and for sixty (60) days thereafter, the media on
which the Software or Technology is delivered will be free of defects in
material and workmanship. Should any such
5
defects appear in material and workmanship appear during the warranty period,
Developer shall, as its sole obligation, replace such defective copy upon its
prompt return to Developer.
7.02 Limitation of Liability and Remedies. EXCEPT AS SET FORTH ABOVE,
DEVELOPER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND
SPECIFICALLY EXCLUDES ANY WARRANTY THAT ANY SERVICES, MATERIALS OR PRODUCTS
FURNISHED BY DEVELOPER ARE FIT FOR ANY PARTICULAR PURPOSE AND FURTHER
SPECIFICALLY EXCLUDES ANY IMPLIED WARRANTIES OF MERCHANTABILITY. THE STATED
WARRANTIES, COVENANTS AND REMEDIES SET FORTH IN THIS AGREEMENT ARE IN LIEU OF
ALL OTHER OBLIGATIONS OR LIABILITIES ON THE PART OF DEVELOPER FOR DAMAGES OR
OTHER RELIEF, INCLUDING, BUT NOT LIMITED TO, SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES THAT IN ANY WAY ARISE OUT OF OR IN CONNECTION WITH THE USE AND/OR THE
PERFORMANCE OF SUCH SERVICES, MATERIALS OR PRODUCTS FURNISHED BY DEVELOPER. IN
NO EVENT SHALL ANY LIABILITY OF DEVELOPER TO DISTRIBUTOR PURSUANT TO THIS
AGREEMENT EXCEED THE AMOUNT RECEIVED BY DEVELOPER FROM DISTRIBUTOR WITH RESPECT
TO THE TECHNOLOGY (INCLUDING SOFTWARE) GIVING RISE TO THE LIABILITY.
8. Additional Obligations of Distributor.
8.01 Estimated Distribution Date. Except as otherwise provided in Exhibit
A, upon receipt of Developer's localization kit, Distributor shall, within one
(1) week, provide Developer with an estimated distribution date for the related
Software or Technology. This distribution date must be within two (2) calendar
months after receipt of the localization kit. Failure to meet such distribution
date shall be a material breach within the meaning of Section 10.04.
8.02 Promotion of Software or Technology. Distributor shall, at its own
expense, vigorously promote the distribution of the Software or Technology
within the Territory. Such promotion shall include, but shall not be limited to,
advertising the Software or Technology in publications within the Territory,
participating in trade shows, establishing appropriate distribution channels and
merchandising programs, and directly soliciting orders from customers for
Software or Technology.
8.03 Technical Support. Distributor shall provide the level of technical
support for all Localized Software or Technology equivalent in all material
respects to that which Developer provides its distributors and End Users, within
the U.S.
8.04 Marketing and Sales Materials. Distributor shall be responsible to
produce appropriate sales and marketing materials, all of which are subject to
advance approval of Developer. In the event Developer fails to approve or
disapprove of any such materials within fifteen (15) days after submission to
Developer by Distributor with a request for approval, such materials shall be
deemed approved. Developer shall cooperate and provide reasonable assistance to
Distributor in connection with preparation of such materials.
8.05 No Assignment. Distributor shall not assign or otherwise transfer its
rights or obligations under this Agreement.
8.06 Governmental Approvals. Distributor shall advise Developer of any
governmental permits or approvals required to consummate the transactions
contemplated by this Agreement, shall obtain such permits or approvals, and
shall provide evidence thereof to Developer.
8.07 Registration of Users. Distributor shall include a registration form
in Software Copies, shall use its best efforts to obtain the registration of End
Users, and shall provide all such End User Registration information to Developer
promptly (and in any event within thirty (30) days) after the end of each
calendar quarter. Distributor shall similarly use its best efforts to identify
customers of Technology and make such information available to
6
Developer.
8.08 Market Data. Distributor shall provide Developer with market data
relating to the Software or Technology, including (i) monthly numbers of
Software or Technology sold to other distributors, resellers, and End Users,
and, where feasible, the identity of the parties to whom sold, (ii) marketing
and merchandising programs completed and planned, (iii) names of distributors
and resellers offering the Software and Technology, and (iv) any other
information of benefit to Developer in cooperating with Distributor and
developing modifications to the Software or Technology or new products. In
particular, Distributor shall give Developer notice of all Software or
Technology "bugs" promptly upon discovery and, in the case of severe bugs,
within forty-eight (48) hours after discovery.
8.09 Other Products or Services. Distributor acknowledges that in the
course of the performance of this Agreement, certain valuable confidential and
proprietary information will be furnished by Developer to Distributor and
because of the unique nature of such information, it is necessary to provide for
non-competition obligations in order to protect such information. In light of
the above, during the term of this Agreement and, at the discretion of Developer
exercisable by notice to Distributor not later than the non-renewal or other
termination of this Agreement, for a period of six (6) months after such
non-renewal or other termination, Distributor shall not, without the express
written approval of Developer, commence marketing, distribution, sale or other
providing of any technology (as such term is described in Section 1.09,
including computer software) or other product or service which may tend to be
directly or indirectly competitive or similar in purpose or use with, or
otherwise related to, the Software or Technology or Potential Technology (as
defined in Section 1.09), as determined in Developer's discretion. The parties
acknowledge that breach of this Section would cause irreparable damage to
Developer, for which Developer would not have an adequate remedy for damages,
such that, in the event of any such breach, in addition to other remedies,
Developer may apply to a court to specifically enforce the provisions of this
Section.
9. Additional Obligations of Developer.
9.01 New Developments. Developer shall provide Distributor reasonable
notice of new developments in connection with the Software or Technology.
9.02 Marketing Assistance. Developer shall provide Distributor with market
data which is obtained by Developer and relates to the Software or Technology,
and which may benefit Distributor in distributing the Software or Technology.
10. Term, Renewal and Termination.
10.01 Term. The Effective Date of this Agreement is as set forth above, and
the Effective Date of each subsequent Exhibit A is as set forth in such Exhibit.
The term of this Agreement shall be one (1) year, commencing with its Effective
Date, and the term with respect to each subsequent Exhibit A shall be one (1)
year, commencing with its respective Effective Date, in either case unless
renewed or terminated earlier under the provisions of this Section 10.
10.02 Automatic Renewal and Extended Term. In any case in which Exhibit A
includes Minimum Peformance Requirements (as defined in Section 10.03) and
Developer has not granted to any third party rights to distribute Localized
Software or Localized Technology under its option to do so under Section 10.03,
the term of this Agreement shall be automatically renewed for an additional
period of one (1) year upon the end of each one (1) year term. This Agreement
shall not so automatically renew where no Minimum Performance Requirements are
so included in Exhibit A. Further, Exhibit A may specifically provide for a term
of more than one (1) year, including a perpetual term (an "Extended Term"), in
connection with, among other terms and conditions, for an advance or other
lump-sum royalty or other payment. Such Extended Term shall be provided only by
specific language to that effect, and shall not otherwise be implied or
construed from the terms of this Agreement or any Exhibit A. In the case of any
Extended Term, Exhibit A shall be deemed to include annual Minimum Performance
Requirements
7
for the duration of such Extended Term, and such deemed Requirements shall be
deemed to be met on an annual basis for the duration of such Extended Term.
10.03 Conversion to Non-Exclusive Distributorship. In the event Distributor
fails to meet Minimum Peformance Requirements for any period in which such
Requirements are provided for in Exhibit A, Developer shall have the option to
grant to any third party rights to distribute Localized Software or Localized
Technology in the Territory notwithstanding the provisions of Section 2.02. Such
option may be exercised by giving notice to Distributor of Developer's desire to
grant such rights at any time within eleven (11) months after the end of any
period in which Distributor fails to meet such Requirements. The fact that after
such failure Developer meets such Requirements shall not affect Developer's
option or grant of rights. Such rights may be granted for the remainder of the
term of this Agreement or such longer period as Developer shall desire. Failure
by Distributor to meet any of such Minimum Performance Requirements shall not,
however, constitute a breach of this Agreement. "Minimum Performance
Requirements" for purposes of this Agreement shall mean any such requirements
specifically described as such on Exhibit A.
10.04 Retention, Return and Transfer of Materials and Intellectual Property
Rights. All Software or Technology, trademarks, trade names, packaging trade
dress, patents, other intellectual property rights, (including all derivative
works and enhancements) samples, literature and sales aides of every kind shall
remain the property of Developer, regardless of whether provided by Developer to
Distributor or whether created, developed, modified or otherwise obtained by
Distributor. Immediately upon termination of this Agreement, Distributor shall
ship or transfer to Developer, as Developer may direct, all such items in its
possession (or ownership, if any), at Developer's expense. Distributor shall
further execute any and all such documents as Developer may request in order to
convey and transfer title to any such property to Developer. Distributor shall
not make or retain any copies of any confidential items or information which may
have been entrusted to it. Effective upon the termination of this Agreement,
Distributor shall cease to use all trademarks, service marks, tradenames,
packaging trade dress, or other intellectual property rights used in connection
with Software or Technology by either Distributor or Developer.
10.05 Breach and Termination. Prior to terminating this Agreement,
requesting arbitration, filing suit or taking similar action upon a breach of
this Agreement by either party, the non-breaching party shall give the breaching
party notice of the basis for asserting such breach. If the breaching party
fails to cure such breach within thirty (30) days, and the breach is a material
breach, the non-breaching party may terminate this Agreement. If the breach is
the non-payment of amounts due under this Agreement, the breach shall be deemed
to be a material breach, and the breaching party shall have fifteen (15) days to
cure such breach.
10.06 Waiver of Liability on Termination. Should this Agreement or any
portion thereof expire, be terminated or not be renewed at any time for any
reason, neither party will be liable to the other because of such expiration,
termination or non-renewal for reimbursement of costs or expenses or for damages
on account of the loss of prospective profits, anticipated sales, goodwill or on
account of expenditures, inventory, investments, leases or commitment in
connection with the business of Developer or Distributor, or for any other
reason whatsoever flowing from such termination or expiration. Termination shall
not, however, relieve either party of any obligation incurred before termination
or of liability for breach of any of the provisions of this Agreement.
Distributor hereby specifically waives, to the maximum extent permitted by law,
any claims for compensation damages arising out of the termination or expiration
of this Agreement in accordance with its terms.
11. Property Rights.
11.01 Ownership. Distributor agrees that Developer owns all right, title
and interest in the Software or Technology now or hereafter subject to this
Agreement, and in all patents, trademarks, trade names, inventions, copyrights,
know-how, trade secrets, and any other proprietary information relating to the
design, operation or maintenance of the Software or Technology, and all
marketing, sales or other promotional materials, trade dress, and artwork
utilized in connection with the Software or Technology. Distributor shall not
record or file or otherwise attempt to establish ownership of such items in
Distributor's name. The use by Distributor of any of these property
8
rights is authorized only for the purposes set forth in this Agreement, and
upon termination of this Agreement for any reason such authorization shall cease
except to the extent necessary for Distributor to provide maintenance to its
existing customers for the Software or Technology. Software source code shall be
disclosed by Developer to Distributor only in Developer's sole discretion. The
parties agree that their mutual intention is that after any termination of this
Agreement (or after Distributor's rights under this Agreement become
non-exclusive), Developer shall have all legal rights, and shall be allowed, to
continue manufacture, distribution and sale of the Software or Technology in the
form and manner which the Software or Technology were so manufactured,
distributed and sold during the term of this Agreement.
11.02 Trademarks. Distributor shall distribute Software or Technology using
only trademarks, tradenames and servicemarks expressly authorized in writing by
Developer ("Trademarks"). Distributor shall assist Developer in selecting local
Trademarks, the sole owner of which shall be Developer. Distributor admits the
validity of, and agrees not to challenge, any Trademarks and agrees that all
rights that may be acquired by use of Trademarks shall inure to the sole benefit
of Developer. Where Developer, in its sole discretion, deems it appropriate,
Distributor shall be recorded as a registered user of Trademarks, and will
cooperate with Developer to be so recorded. Distributor shall not use the
Trademarks or any part thereof as part of its name, and shall not use any
similar name, trademarks, service xxxx or other designation similar to the
Trademarks. Distributor agrees not to register any trademarks similar to the
Trademarks, and to assign any such registrations to Developer. If any
application for registration which is or has been filed by Distributor relates,
as determined in the sole discretion of Developer, to a xxxx which is similar,
deceptive or misleading with respect to any of the Trademarks, Distributor shall
reimburse Developer for all cost and expenses of any opposition or related
proceedings, including attorneys fees, brought by Developer or its authorized
representative to challenge, oppose or cancel such application or registration.
In the event Distributor learns of any actual or threatened infringement of a
Trademark or any passing- off, or any third party alleges that any Trademark is
liable to cause deception or confusion to the public, Distributor shall
immediately notify Developer, and Distributor shall provide reasonable
assistance to Developer if Developer determines to commence or defend
proceedings. Any such proceeding, and any recovery in such proceeding, shall be
equally divided between Developer and Distributor. Nothing in this Agreement
shall be construed to require Developer to defend or enforce the Trademarks.
Distributor shall comply with all applicable laws and regulations pertaining to
the proper use and designation of the Trademarks in the Territory, and shall
notify Developer promptly (and in any event within thirty (30) days) of any law
or regulation which is inconsistent with any provision of this Agreement. Upon
request, Distributor agrees to assist Developer in the filing and recording of
Developer's trade names, copyrights, patents and trademarks in Territory.
12. Indemnification of Developer. Distributor will defend, indemnify and
hold Developer harmless from and against any and all actions, damages,
liabilities, costs, and expenses (including but not limited to attorney's fees)
incurred by Developer as a result of (i) any false or misleading statement made
by Distributor to any customer or potential customer; (ii) any breach by
Distributor of any terms or conditions set forth in this Agreement, or of any
representations or warranties made by Distributor under this Agreement, (iii)
any action taken by Distributor in the performance of this Agreement which is
not authorized by Developer, or (iv) infringement or violation with respect to
the Territory of any patents, copyrights, trade secrets, or other proprietary or
intellectual property rights by any product owned by Developer which is
localized or distributed by Distributor.
13. Indemnification of Distributor. Developer warrants that as of the
Effective Date of any Exhibit A attached to this Agreement, the Software or
Technology specified in such Exhibit A does not infringe upon any copyrights or
trade secrets of any third party. Developer agrees, at its own expense, to
defend and indemnify Distributor, if necessary, against any actions,
liabilities, costs, damages, claims, losses and expenses (including but not
limited to attorney's fees) arising out of Developer's breach of this warranty.
14. Confidentiality. Distributor acknowledges that it may acquire
information which is proprietary or confidential to Developer, including
technology within the meaning of Section 1.09, or financial, product, sales or
marketing information (collectively, and in whatever form, "Confidential
Information"). Distributor agrees to hold such Confidential Information in
strict confidence and not to copy, reproduce, sell, assign, license, market,
transfer
9
or otherwise disclose such information to third parties or to use such
information for any purposes without the express written consent of Developer,
and to advise Distributor's employees, agents, and representatives of their
obligation to keep such information confidential. Distributor shall use
reasonable efforts to identify and prevent any unauthorized use or disclosure of
Confidential Information, and shall advise Developer in the event Distributor
learns or has reason to believe that any person has violated or intends to
violate the terms of this Agreement, and will cooperate in seeking injunctive
relief against such person. Distributor shall have the right to disclose
Confidential Information to its employees, agents and third party consultants
who have a need to know such information in the course of localization,
marketing or distribution of the Software or Technology, provided that each such
person signs a nondisclosure agreement with respect to such information to
protect its confidentially.
15. Arbitration, Jurisdiction and Venue. Except as provided below, any
dispute or claim between the parties shall be finally settled by binding
arbitration in Seattle, Washington under the Rules of the American Arbitration
Association by a single arbitrator who is knowledgeable about the development,
distribution, and licensing of computer software or technology, as appropriate.
In resolving all such disputes, the arbitrator shall apply the law of the State
of Washington as more fully set forth in Section 16. Developer may, however, at
its option, seek a temporary restraining order, preliminary injunction,
permanent injunction and any other form of equitable relief from any court
having jurisdiction over the subject matter and personal jurisdiction over
Distributor. Distributor hereby consents to and submits to the jurisdiction of
federal and state courts located in the State of Washington. Should any such
action be commenced in the State of Washington, Distributor agrees not to
assert, and hereby waives, any defenses based on improper venue, inconvenience
of the forum, lack of personal jurisdiction or sufficiency of service of process
or the like. Distributor hereby appoints the Secretary of State of the State of
Washington as Distributor's agent for service of process.
16. Choice of Law. This Agreement shall be governed by and construed under
the laws of the State of Washington without regard to conflict of laws
principles or the U.N. Convention on Contracts for the International Sale of
Goods.
17. Legal Expense. The prevailing party in any legal action or arbitration
brought by one party against the other arising out of this Agreement shall be
entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses, including court costs and reasonable attorney's
fees.
18. Entire Agreement: Amendment. This Agreement constitutes the entire agreement
of the parties relating to its subject matter and supersedes any prior
agreements, written or oral. This Agreement may be revised or amended only in a
writing executed by the parties.
19. Notices.
Any notices or other communications given in connection with this Agreement
will be validly given if in writing, and will be effective upon personal
delivery or upon delivery if sent by recognized carrier or by facsimile
transmission, with confirmation of the time and date of delivery, to the
following or such other person as the party may respectively designate in the
manner set forth in this Section:
If to Developer: Acceleration Software International Corporation
0000 X.X. Xxxx Xxxx Xxxx
Xxxxxxx, XX 00000, Xxxxxx Xxxxxx
FAX 000-000-0000
If to Distributor: Pointe Control, Inc.
X.X.Xxx 0000
Xxxxx Xxxx, XX 00000, Xxxxxx Xxxxxx
10
IN WITNESS WHEREOF, the parties have entered into this Agreement effective as of
the date provided above.
"Developer" "Distributor"
Acceleration Software Int. Corp. Point Control, Inc.
a Washington corporation a Washington corporation
by /s/ Xxxxx X. Xxxxxxx by /s/ Xxxxxx Xxxxxxx
------------------------------ ---------------------------------
Xxxxx X. Xxxxxxx, its C.E.O. Xxxxxx Xxxxxxx, its Managing Director
11
Amendment to Exhibit "A" effective January 20, 1999 to Distribution Agreement
Dated November 9, 1996
Effective Date. October 14th, 1999 for this Exhibit A.
---------------
Territory. Japan
----------
Software or Technology. The Software shall consist of Developer's products
----------------------- called:
1. d-Time '98 (done)
2. MP3 App for '98 (done)
3. d-Time iMacintosh (done)
4. MP3 App for iMacintosh (done)
5. Compilation product comprising existing versions of: (done)
d-Time '98, SuperFassst! '98, Webcelerator '98, Phantom '98
6. TBD 7. TBD 8. TBD 9. TBD 10. TBD
Payment. Payment to Developer shall be a guaranteed additional US
$1,050,000 (one million fifty thousand dollars) plus an additional US $400,000
(four hundred thousand dollars) bonus for each of the products 4. through 10.
that achieves a "TOP PRODUCT" (as defined below) status according to the
following schedule:
1. November 7th, 1999 $ 150,000
2. December 7th, 1999 $ 150,000
3. January 7th, 2000 $ 150,000
4. February 7th, 2000 $ 150,000
5. March 7th, 2000 $ 150,000
6. April 7th, 2000 $ 150,000
7. May 7th, 2000 $ 150,000
Sub-Total: $1,050,000
"xxxx://xxx.xxx-xxxx.xx.xx" has a weekly "System and Utilities" best sellers
list for software products in Japan. Each week that a product is in the Top 10
of this list, or comparable list, shall earn two points and each week that it is
#11 to #20 on this list shall earn one point toward being a TOP PRODUCT. A
product shall be deemed to be a "TOP PRODUCT" after it accumulates 18 such
points and the bonus shall be paid within 30 days after the 18th point is
earned. A product can earn such points only during the 28 weeks following its
initial appearance on the list. Products 4. to 10. are eligible for a TOP
PRODUCT bonus, with a maximum possible bonus of two million dollars. In the
event that a product is released that is categorized outside of the "Sytem and
Utilities" category, the appropriate category's best sellers list shall be used.
Upon receipt by Developer of all of the above payments according to the schedule
above, an Unlimited License of the Software will be granted. All payments are an
irrevocable obligation of Pointe Control and Source. In the event of a delay of
any payment by 3 days, all unpaid amounts become due immediately with interest
of 0.05% per day compounded daily to accrue immediately. Both parties agree that
at the sole discretion of the Developer, other remedies can be chosen, which may
include but not be limited to, immediate termination, conversion to
non-exclusive, recalculation of amounts due based on units manufactured, etc.
In the event that the 10 SKU's cannot be delivered by May 7th, 2000,
Acceleration Software will continue to work to complete them without any more
payments than the above. In the event that the 10 SKU's are delivered ahead of
12
schedule, a new agreement will be entered into to cover SKU's beyond the 10 from
this agreement. In such a scenario, there would be overlapping payment streams
from this agreement and the new agreement.
Alternative Source of Payment. Both parties agree to let Huge Incorporated have
the option to make the monthly and bonus payments instead of Pointe Control and
each such payment shall remove Pointe Control's obligation for that specific
payment. In the event that Developer receives all remaining payments from Huge
Incorporated, all parties agree that Huge Incorporated shall be the one granted
the Unlimited License for all of the Software.
Incorporation into Distribution Agreement. This Exhibit A is hereby made a part
of the Distribution Agreement dated November 9, 1996, between Acceleration
Software and Pointe Control, including but not limited to Sections 15 and 16
providing that disputes shall be settled by binding arbitration in, and
according to the laws of, the State of Washington, U.S.A., and the parties
executing below hereby agree to be bound by the terms and conditions of such
Agreement.
"Developer" "Distributor"
Acceleration Software Int. Corp. Pointe Control
a Washington corporation a Washington corporation
by /s/ Xxxxx Xxxxxxx by /s/ Xxxxxx Xxxxxxx
------------------------------- -------------------------------------
Xxxxx Xxxxxxx, its C.E.O. Xxxxxx Xxxxxxx, its Managing Director
13
