EXHIBIT 10.7
DEVELOPMENT AND LICENSE AGREEMENT
This Development and License Agreement (the "Agreement") is effective as of
March 2, 1998 (the "Effective Date") and made by and between ATI Technologies
Inc.("ATI"), an Ontario corporation, with a principal place of business at 00
Xxxxxxxx Xxxxxx Xx., Xxxxxxxxx, Xxxxxxx, X0X 0X0 and Quadrant International,
Inc. ("QI"), a Pennsylvania corporation located at 000 Xxxxx Xxxxxx Xxxxxxx,
Xxxxxxx, Xxxxxxxxxxxx 00000 X.X.X.
RECITALS
ATI is in the business of developing integrated circuits and more
specifically graphics and multimedia controller integrated circuits.
QI is the owner of a software DVD product currently marketed by QI under the
brand name CINEMASTER.
ATI wishes to license rights to QI's current and future software DVD products
and QI desires to grant such rights to ATI.
NOW THEREFORE, intending to be legally bound and in consideration of
the mutual promises herein, and other good and valuable consideration, the
receipt, adequacy and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Definitions. The following definitions apply to this Agreement:
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1.1. "ATI Affiliate" means a company or entity which ATI effectively owns
or controls, directly or indirectly, more than fifty (50%) of the
voting stock or ownership interest therein.
1.2. "AC-3 Licensee" shall mean anyone licensed by Dolby Laboratories
Licensing Corporation ("Dolby"), a corporation organized under the
laws of the State of New York, having its principle place of business
at 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, to
manufacture products containing digital audio coding technology known
as Dolby AC-3 .
1.3. "ATI Trademarks" shall mean ATI's trademarks, service marks and
logos.
1.3. "CSS Compliant" shall mean a DVD product which complies with CSS
Specifications.
1.4. "Entity" shall mean the organization to administer CSS currently
being established by MEI, Toshiba and other DVD industry members.
1.5. "CSS Licensee" shall mean anyone that enters into a CSS License
agreement with MEI or the Entity to the extent such agreement is
valid and in effect. ATI and QI are CSS Licensees.
1.6. "CSS" shall mean Contents Scramble System developed by MEI and
Toshiba to provide protection for the contents of digital versatile
discs (DVD discs) as described in CSS Specifications.
1.7. "CSS Specification" shall mean the documentation relating to CSS
entitled "CSS Specifications", including Procedural Specifications
and Technical Specifications, that MEI makes available to a CSS
Licensee.
1.8. "Derivative" shall mean (a) for copyrightable or copyrighted
material (including materials subject to mask work rights), a work
which is based upon one or more pre-existing works, such as a
revision, modification, translation, abridgment, condensation,
expansion, collection, compilation, or any other form in which such
pre-existing works may be recast, transformed, or adapted; (b) for
patentable or patented materials, any adaptation, addition,
improvement, or combination based on a preexisting work; and (c) for
material subject to trade secret protection, any new material,
information, or data relating to and derived from such existing
trade secret material, including new material which may be
protectable by copyright, patent, or other proprietary rights.
1.9. "Deliverables and Development Schedule" shall mean the mutually
agreed upon deliverables and schedule as described in the Marketing
Requirements Document set out in Exhibit A and as revised from time
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to time by mutual written agreement of the parties.
1.10. "Documentation" shall mean user manuals and other written materials
that relate to QI's Software DVD, including materials useful for
design (for example, logic manuals, flow charts, and principles of
operation), and machine-readable text or graphic files subject to
display or print-out which comply with CSS, Dolby and Macrovision
license requirements. The definition of "Documentation" excludes
those written materials that might otherwise come within the
definition but for which QI is prohibited from providing to ATI
because QI is contractually bound with one or more third parties not
to disclose such materials due to their confidential nature.
1.11. "Dolby Certified" shall mean the design approval and performance
testing by Dolby of an AC-3 product to be manufactured by an AC-3
Licensee.
1.12. "Dolby Royalties" shall mean royalties payable to Dolby pursuant to
an AC-3 license by an AC-3 Licensee.
1.13. "Version" shall mean new versions of software incorporating new or
next generation acceleration features in ATI integrated circuit
products. Other maintenance modifications or revisions to correct
any mistake, problem or defect causing incorrect or non-functioning
of the software, or new releases that improve functions, add new
functions or features or improve performance by changes in system
design or coding not directly related to ATI acceleration hardware
shall not be deemed such new versions.
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1.14. "Intellectual Property Rights" shall mean (a) all Patent Rights; (b)
all trade secret rights arising under the laws of any jurisdiction;
(c) all United States and foreign semiconductor mask work rights and
registrations for such rights; and (d) all copyright rights and all
other literary property and author rights, whether or not
copyrightable, and all copyrights and copyrighted interests,
including any renewals thereof but will not include any rights in
any trademarks, trade names, service marks, logos and the goodwill
associated therewith. "Patent Rights" shall mean all United States
and foreign letters patent and applications for letters patent,
industrial models, industrial designs, utility models, certificates
of invention, and other indicia of invention ownership, including
any such rights granted upon any reissue, division, continuation or
continuation-in-part applications now or hereafter filed.
1.15. "Level 1 Support" shall mean support for End Users relating to
program usage, program and hardware compatibility and program
requirements
1.16. "Level 2 Support" shall mean technical support which is back-up for
Level 1 Support and isolates problems and defects relating to
program and hardware compatibility and program requirements.
1.17. "Level 3 Support" shall mean development and manufacturing support
to fix program defects.
1.18. "Macrovision" shall mean Macrovision Corporation, a Delaware
corporation, having its principal place of business at 0000 Xxxxxxx
Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000.
1.19. "Macrovision Certified" shall mean the provision of a certificate by
Macrovision evidencing testing and approval.
1.20. "Microsoft Certified" shall mean the provision of a certificate by
Microsoft evidencing WHQL (Windows Hardware Quality Labs) qualified
and/or approved.
1.21. "Object Code" shall mean the machine readable form computer
programming code as opposed to the human readable form of computer
programming code.
l.22. "Project Manager" shall mean the primary contact person designated
by each party in writing, who will coordinate the activities of the
parties hereunder. Each party may change its designated Project
Manager from time to time during the term of this Agreement by
written notice.
1.23. "QI Software DVD" shall mean software DVD developed by QI and
currently marketed under the brand name Cinemaster and all
subsequent versions and modifications thereof and enhancements and
Derivatives thereto and tools, including diagnostic tools and
utilities used in QI's software DVD build process.
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1.24. "Accelerated Software DVD" shall mean QI Software DVD including
motion compensation or any other form of hardware assisted
acceleration provided by a graphics component.
1.25. "Unaccelerated Software DVD" shall mean QI Software DVD not
including motion compensation or any other form of graphics hardware
assisted acceleration.
1.26. "Hardware DVD" shall mean an ATI board and supporting software
including QI's DVD application software or a Derivative thereof used
in combination with the IBM CD1. 1 MPEG2 decoder.
1.27. "Source Code" shall mean the human readable form computer
programming code and related system level documentation, including
all comments and any procedural code such as job control language.
1.28. "Shippable Software DVD" shall mean a version of the QI Software DVD
which is CSS Compliant and has been Dolby Certified, Macrovision
Certified, Microsoft Certified and meets any further certification
obligations, including DVD, imposed as a requirement to provide DVD
products and has met and passed all of ATI's internal quality
assurance tests and qualifications.
1.29. "Video Encoder Software" shall mean QI's real-time software video
encoder engine as set out in Schedule A.
1.30. "Xxxxx" shall mean Xxxxx Development Hard & Software Engineering
GmbH, a German corporation located at Xxxxxxxxxxx 00, Xxxxxxxxx X
00000 Xxxxxxx.
1.31 As used herein, the terms "sale," "sell," or "sold" in the context
of a copy of any software product hereunder means the sale, or other
disposition, of a license for a copy of such software but shall not
include samples or upgrades provided to correct any mistake, problem
or defect in the software.
2. Responsibilities and Obligations.
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2.1. Upon execution of this Agreement, QI shall provide ATI with the
current version of QI Software DVD in Object Code form. QI shall
work with ATI in accordance with the Deliverables and Development
Schedule to provide future enhanced versions of the QI Software DVD.
2.2. The parties shall assist each other in testing and certifying the QI
Software DVD as required under the parties' respective CSS License
agreements.
2.3. QI shall deliver to ATI, as early as possible, but not later than
April 30th, 1998, Shippable Software DVD and supporting
Documentation for ATI to sell and distribute in accordance with the
terms of this Agreement.
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2.4. During the term of this Agreement QI will deliver to ATI the Source
Code for QI Software DVD. The first delivery of such Source Code
will be made promptly after ATI has made its first royalty payment
to Ql hereunder. The parties acknowledge and agree the Source Code
contain trade secrets and proprietary information of third parties;
and that QI is contractually bound not to disclose the Source Code
to others, including ATI. Accordingly, QI will not deliver to ATI
such portions of the Source Code that contain or comprise trade
secrets or proprietary information of any third parties unless the
license with said third party permits delivery to ATI. QI will
deliver to ATI, from time to time, only such portions of the Source
Code for QI Software DVD that does not contain or comprise trade
secrets or proprietary information of any third parties.
2.5. QI shall promptly provide to ATI any Derivatives, improvements,
modifications, enhancements, or bug fixes made to QI Software DVD or
Shippable Software DVD during the term of this Agreement.
2.6. ATI shall provide Xxxxx 0 and Level 2 Support to ATI customers. QI
shall provide, at no additional charge, Level 3 Support directly to
ATI for Shippable Software DVD for the full term of the Agreement.
In the event of a critical bug or problem severely restricting the
operations of an OEM or reseller, QI will make best efforts to fix
the problem within two business days. In the event that QI is unable
to fix the problem within such two business days, QI will provide
ATI with a written detailed plan, including a schedule and outlining
the problem and possible resolutions.
2.7. If either party's CSS License requires any modification or
enhancement to the Shippable Software DVD, QI shall modify the
Shippable Software DVD currently being distributed by ATI, as soon
as reasonably possible, to ensure the software is CSS Compliant
within the time period required by both parties' CSS License and the
CSS Specifications.
2.8. During the term of this Agreement, QI shall designate an appropriate
number of its engineering staff members to work with ATI in
accordance with the Development Schedule.
2.9. The Project Managers shall schedule formal meetings at mutually
agreeable times during the term hereof, to be attended by personnel
of each party, to discuss the status of the Deliverables and
Development Schedule.
2.10. QI shall use best efforts to obtain rights to sublicense any third
party rights encompassed within the Deliverables and/or
Documentation to ATI.
3. Ownership.
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Intellectual Property Rights arising, developed or delivered hereunder shall be
owned as follows: Intellectual Property Rights originated, discovered or
developed by ATI, shall be owned by ATI, and Intellectual Property Rights
originated, discovered or developed by QI shall be owned by QI.
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Intellectual Property Rights originated, discovered or developed jointly by both
parties ("Jointly Owned Intellectual Property") shall be jointly owned and each
party shall have the unrestricted right under Jointly Owned Intellectual
Property to make, use, sub-license and/or sell any product anywhere in the
world, in Object Code form only, without any restriction by the other party.
Both parties agree to execute without further consideration any and all further
documents or assurances as may be necessary to effect the above or to assist one
party in protecting (including the filing of patents) the Jointly Owned
Intellectual Property. To the extent that any ATI owned Intellectual Property
Rights or any Jointly Owned Intellectual Property Rights comprise or contain
derivative works based on owned Intellectual Property Rights, then ATI will pay
to QI a Royalty for the sale of each copy of such work a royalty in accordance
with Section 7. For purposes of the foregoing sentence, and for purposes of
Section 7 of this Agreement, a `derivative work', shall be as defined by, and
interpreted under, the Copyright Act of 1976, as amended, 17 U.S.C. (S) 101.
4. License Grants.
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4.1 ATI and QI hereby grant to each other a world-wide, non-exclusive
license under Intellectual Property Rights covering the manufacture,
development, importation, offer for sale, sale, modification, or use
of Derivatives of QI Software DVD, Shippable Software DVD, Video
Encoder Software and/or Hardware DVD, but only for sale or
distribution in Object Code form.
4.2 QI hereby grants ATI a world-wide, non-exclusive, license under the
QI Intellectual Property Rights to use, reproduce and modify QI
Software DVD, Shippable Software DVD, Video Encoder Software,
Hardware DVD and Documentation for the purpose of supporting and
developing existing and future ATI and QI products.
4.3 QI hereby grants ATI a world-wide, non-exclusive (subject to the
exclusivity provisions set out below), license under QI Intellectual
Property Rights to make, import, offer for sale and sell the
Shippable Software DVD, QI Software DVD, Video Encoder Software and
Hardware DVD but solely in Object Code. ATI has the right to
sublicense ATI Affiliates the right to import, offer for sale and
sell such Shippable Software DVD, QI Software DVD, Video Encoder
Software and Hardware DVD.
4.4 ATI and ATI's permitted sublicensees may only sell or distribute any
software hereunder comprising Shippable Software DVD, QI Software
DVD, Video Encoder Software and Hardware DVD, and Derivatives of the
foregoing, in such manner that ATI would have the ability to account
for, and does in fact account for, the exact number of such copies
of the software sold or distributed so that the appropriate royalty
payments may be made to QI hereunder.
4.5 ATI will only permit independent contractors to have access to the
Source Code if QI has given its prior written approval to have such
access, and the independent contractor has signed a non-disclosure
agreement. ATI shall be primarily
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responsible for all unauthorized uses and/or disclosures of such
Source Code by any employee or independent contractor of ATI,
notwithstanding the fact that such person may have signed non-
disclosure, non-competition and or other agreement with QI.
5. Exclusivity.
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For each new Version of the Accelerated Software DVD that QI develops and
delivers to ATI, ATI shall have a limited period of exclusivity, during which QI
will not sell such Version of the Accelerated Software DVD to third parties (the
"Exclusivity Period") as set forth in this Section. The Exclusivity Period for
each new Version of the Accelerated Software DVD shall extend from the date that
ATI first sells or ships Shippable Software DVD incorporating such new Version
until either six (6) months thereafter, or the date that ATI first sells or
ships Shippable Software DVD incorporating the next new Version, whichever is
earlier. The parties agree that with respect to the first Version of the
Accelerated Software DVD that QI is delivering to ATI hereunder, the Exclusivity
Period shall not extend beyond October 1, 1998. ATI has the option of
terminating its right to have such Exclusivity Periods, on written notice to QI
at any time up to sixty (60) days prior to the end of the first year of the
first term of this Agreement. In the event of timely termination of its right
to have such Exclusivity Periods as set forth in the preceding sentence, ATI
will not be obligated to prepay a minimum royalty during the second year of the
first term of this Agreement. Except as set forth in Section 7.7, QI agrees
that during each respective Exclusivity Period, QI will not sell, license or
distribute the Shippable Software DVD incorporating such new Version of QI
Software DVD to any third party. The parties acknowledge and agree that
Versions of QI Software DVD that incorporate Unaccelerated Software DVD shall
not be subject to any Exclusivity Period.
ATI shall, for the term of this Agreement, have the exclusive right to market
and sell QI Software DVD for use in association with ATI graphics components.
For (3) three months after QI delivers a Shippable Software DVD capable of
running on a Windows NT operating system ("NT Software DVD"), ATI shall have
exclusivity during which time QI shall not sell or license the NT Software DVD
to any other third party.
6. Right of First Refusal.
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ATI and QI each acknowledge that it is their respective intentions to work
together on an ongoing basis to build a mutually beneficial business
relationship. ATI and QI acknowledge that there may be future projects under
which the parties could collaborate including but not limited to digital TV
decoding. QI agrees to discuss any QI initiated future development projects with
ATI to assist the parties in determining whether future collaboration or teaming
between the parties is possible. Prior to QI entering into a license or
development agreement with any third party relating to any future development,
product or project, initiated by QI, QI shall notify ATI of the potential of
such a transaction at least thirty (30) days prior to QI entering into such an
agreement ("Negotiation Period"). During such Negotiation Period, QI agrees to
negotiate in good faith with ATI an agreement or license relating to such future
development, product or project. QI's obligation under this section shall
terminate upon the termination of this Agreement. Notwithstanding the foregoing,
QI shall have no obligation to advise ATI of any
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future development projects with third parties in situations where such project
discussions were not initiated by QI. The parties acknowledge that QI currently
has existing business relationships and projects either underway or under
consideration with various third parties. The parties further acknowledge that
much of the information concerning such existing business relationships and
projects involve confidential information. Accordingly, notwithstanding the
foregoing, QI shall have no obligation to advise ATI at any time about the
existence of, or any other information relating in any way to, any of QI's
existing business relationships with third parties or about projects underway
with, under consideration with such third parties.
7. Financial Terms.
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7.1. Royalty Payments by ATI. During the term of this Agreement and at
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all times ATI shall pay QI royalties based on ATI's sale of each
copy of Shippable DVD Software, or any derivative work of Shippable
DVD Software and Hardware DVD, within thirty (30) days after the end
of each calendar quarter (ending on March 31, June 30, September 30
and December 3 1), for the sale of Hardware DVD, Shippable DVD
Software, or such derivative work, during such quarter. The royalty
rate shall be as follows:
Cumulative Volume Royalty Per Copy
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less than 15 million $0.50 (for each copy sold up to the
first 15 million)
greater than 15 million $0.25 (for each copy sold in excess of
the first 15 million copies)
Notwithstanding the foregoing, upon both parties agreement, in the event that an
ATI customer demands royalties of less than $1.00 (in the case where ATI is
paying to QI royalties of $0.50) or royalties of less than $0.50 (in the case
where ATI is paying to QI royalties of $0.25), both parties may agree to split
the royalty payment by the customer equally between ATI and QI.
ATI will be responsible for Dolby Royalties or any other royalties arising out
of the DVD or CSS forum payable on Shippable DVD Software sold by ATI.
7.2. During the term of this Agreement and at all times thereafter, ATI
shall pay QI royalties based on ATI's sale of each copy of Video
Encoder Software, or any derivative work of Video Encoder Software,
within thirty (30) days after the end of each calendar quarter
(ending on March 31, June 30, September 30 and December 31), for
sale of Video Encoder Software, or such derivative work, during such
quarter. The royalty rate shall be as follows:
Cumulative Volume Royalty Per Unit
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less than 15 million $0.50 (for each copy sold up to the
first 15 million)
greater than 15 million $0.25 (for each copy sold in excess of
the first 15 million copies)
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7.3. Minimum Prepaid Royalties. At the end of each calendar quarter
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during the first year of royalty payments, commencing on the date
that Shippable Software DVD is provided to ATI by QI, ATI shall pay
to QI, a minimum prepaid royalty payment of seven hundred fifty
thousand dollars ($750,000). At the end of each three (3) month
period during the second year of royalty payments, ATI shall pay to
Quadrant, a minimum prepaid royalty of nine hundred thousand dollars
($900,000). These royalties shall be credited towards the royalties
earned during such calendar quarter. In the event that the royalties
for any calendar quarter plus credits from previous quarters exceed
the actual royalties earned during such calendar quarter, such
excess royalties will be credited towards future royalties in the
following calendar quarters. After the conclusion of the eighth
quarter, ATI will not be required to make minimal royalty payments.
7.4. ATI may apply $125,000 of the minimum prepaid royalty due in each of
the first four (4) quarters of the first year of royalty payments to
purchase further equity in Quadrant in the form of convertible
preferred stock and warrants such further equity shall also
constitute prepaid royalties by ATI and shall reduce ATI's minimum
prepaid royalty accordingly. Provided that ATI is still obligated to
pay a minimum prepaid royalty, ATI may further apply $500,000 of the
minimum prepaid royalty due twenty-four (24) months after ATI is
first provided with a Shippable Software DVD to purchase further
equity in Quadrant in the form of convertible preferred stock and
warrants.
7.5 Favoured Pricing for ATI and ATI Customers. Under the terms of this
------------------------------------------
Agreement, QI agrees that ATI and ATI customers shall be provided
with a no less favourable royalty rate than QI may grant or has
granted to any other entity. In the event that QI has licensed any
version of its QI Software DVD at a more favorable royalty rate
and/or on terms more favorable than those described herein, ATI
shall be automatically entitled to the same royalty rate and/or
terms granted by QI to the other entity.
7.6 The parties acknowledge that there may arise situations where an OEM
of ATI would like to incorporate QI's Accelerated Software DVD that
is then currently subject to the ATI's Exclusivity Period in a
product line that does not include ATI graphics technology. In such
situations, ATI may, within its discretion, waive its right to
exclusivity during the relevant Exclusivity Period and permit QI to
sell that Version of QI's Accelerated Software DVD to such OEM, and
in such event, QI will pay to ATI a reverse royalty,during the
Exclusivity Period, equal to the lesser of: (a) fifty cents
($0.50) per copy of the Accelerated Software DVD incorporating
such Version sold to the OEM during such Exclusivity Period, or
(b) fifty percent (50%) of the license fees received by QI from
the OEM attributable to QI's Accelerated Software DVD
incorporating such Version that is sold during such Exclusivity
Period. QI shall make such reverse royalty
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payments to ATI on a quarterly basis, with respect to applicable
sales during the preceding calendar quarter.
7.7 Records and Reports.
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ATI shall maintain complete, clear and accurate records of the number of copies
of Shippable Software DVD and QI Software DVD sold or otherwise disposed of by
either ATI or QI. On a calendar quarterly basis, ATI shall provide QI with a
written summary, broken out by month, of the number of copies sold in such
calendar quarter.
QI shall maintain complete, clear and accurate record(s) of the number of copies
of Accelerated Software DVD sold to OEM(s) pursuant to Section 7.7. On a
calendar quarterly basis, QI shall provide ATI with a written summary, broken
out by month, of the number of copies sold in such calendar quarter, but only if
there were applicable copies sold to OEM(s) during the relevant calendar
quarter.
7.8 Audit. Each party shall have the right during the term of this
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Agreement and for one (1) year thereafter, and QI shall have the
right after termination of this Agreement for so long as ATI is
obligated to make royalty payments to QI hereunder, to have an
inspection and audit of the records maintained by the other party
conducted by a mutually agreeable third party auditor, which
inspection and audit shall be conducted during regular business
hours at the other party's offices, upon seven (7) days notice and
in such a manner as not to interfere with normal business
activities. This audit right shall be limited to twice per year
unless a discrepancy is shown. The party requesting the audit shall
be responsible for the fees and costs of such audit. In the event an
audit reveals an underpayment of fees and/or royalties of more than
five percent (5%), the delinquent party shall promptly pay the other
Party the amount of any such underpayment and the costs of such
audit. Such audit will be conducted under a confidentiality
agreement wherein only the amount of any overpayment or underpayment
may be disclosed.
7.9 U.S. Currency. All payments specified herein are in U.S. dollars
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and all payments made hereunder will be made in U.S. dollars.
8. Warranties.
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8.1 QI represents and warrants that it has no actual knowledge that QI's
Software DVD infringes any valid Intellectual Property Right of any
third party.
8.2 QI represents and warrants that the Shippable Software DVD shall be
free of any known viruses.
8.3 QI represents and warrants that QI either owns the copyright in the
Shippable Software DVD or has been licensed to grant the rights and
licenses granted hereunder to ATI.
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8.4 QI represents and warrants that the Shippable Software DVD shall be
Year 2000 compliant in that it shall provide and/or receive data
within and between the 20/th/ and 21/st/ centuries, provided that
all hardware, software and firmware used with the Shippable Software
DVD properly exchanges accurate date data with it. QI shall be
liable for direct damages in the event of a breach of this express
warranty.
8.5 QI represents and warrants that QI is a CSS Licensee and that the
Shippable Software DVD, when provided to ATI, shall be CSS
Compliant.
8.6 QI represents and warrants that QI is an AC-3 Licensee and the
Shippable Software DVD, when provided to ATI, meets all the
technical, marketing and other requirements imposed by Dolby on its
AC-3 Licensees.
8.7 ATI and QI represent and warrant that they are a CSS Licensee and
will at all times perform within the scope of its duties under the
CSS License agreement.
8.8 ATI represents and warrants that there will be no unauthorized
disclosure or use of any Source Code by ATI, or any employee or
contractor of ATI, and that no unauthorized party shall have access
to copies of any Source Code in ATI's possession or control.
8.9 QI represents and warrants that it does not have any agreements with
Xxxxx to prevent the disclosure of Source Code of the QI Software
DVD to ATI and further that QI has the right to grant licenses under
Xxxxx Intellectual Property Rights subsisting in the QI Software DVD
to ATI under the terms of this Agreement.
9. Confidentiality.
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"Confidential Information" means any information provided to either party by the
other party in connection with this Agreement, including this Agreement, which
is confidential and proprietary to the disclosing party and conspicuously marked
as confidential at the time provided by the disclosing party. Any information
provided orally by a party is presumed to be non-confidential, unless designated
as confidential at the time of disclosure and summarized in a written notice
within fifteen (15) calendar days of such oral disclosure. All Source Code is
hereby deemed Confidential Information. Each party shall hold in confidence all
Confidential information during the term of this Agreement and at all times
thereafter. Each party agrees to take precautions to prevent any unauthorized
disclosure or use of Confidential Information, and such precautions will be
consistent with the precautions used to protect such party's own confidential
information, but in no event less than reasonable care. The obligations of the
parties hereunder shall not apply to any materials or information which a party
can demonstrate, through documented evidence (a) is now, or hereafter becomes,
through no act or failure to act on the part of the receiving party, generally
known or available; (b) is known by the receiving party at the time of receiving
such information as evidenced by its records; (c) is hereafter furnished to the
receiving party by a third party, as a matter of right and without restriction
on disclosure; (d) is independently developed by the receiving party without any
breach of this Agreement; or (e) is the subject of a written permission to
disclose provided by the disclosing party. Notwithstanding any other provision
of this Agreement, disclosure of Confidential Information shall not be
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precluded if such disclosure: (a) is in response to a valid order of a court or
other governmental body of the United States or Canada or any political
subdivision thereof; provided, however, that the responding party shall first
have given notice to the other party hereto so that such other party may attempt
to prevent such disclosure and if disclosed, the responding party shall have
made a reasonable effort to obtain a protective order requiring that the
Confidential Information so disclosed be used only for which the order was
issued and be treated as confidential and under seal; (b) is otherwise required
by law; or (c) is otherwise necessary to establish rights or enforce obligations
under this Agreement, but only to the extent that any such disclosure is
reasonably necessary.
10. Excluded Damages.
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IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER ARISING OUT OF CONTRACT,
TORT, STRICT LIABILITY OR OTHERWISE, RESULTING FROM OR RELATED TO THIS AGREEMENT
(WHETHER OR NOT SUCH PARTY KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF ANY
SUCH DAMAGES). THIS SECTION WILL APPLY NOTWITHSTANDING ANY OTHER PROVISIONS OF
THIS AGREEMENT.
11. Indemnification.
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11.1 Each party agrees to defend, indemnify and hold harmless the other
party and its officers, directors, employees, agents and contractors
("Indemnitees") from and against any and all claims, actions,
liabilities, obligations, damages, losses, demands, recoveries,
deficiencies, costs or expenses, including without limitation,
reasonable attorneys fees and expenses, which an Indemnitee may
suffer or incur connected with, resulting from or arising out of
such party's breach of its representations, warranties and/or
covenants made in this Agreement.
11.2 QI agrees to defend, indemnify and hold harmless ATI from and
against any and all claims, actions, liabilities, obligations,
damages, losses, demands, recoveries, deficiencies, costs or
expenses, including without limitation, reasonable attorneys fees
and expenses, which ATI may suffer or incur connected with,
resulting from or arising out of the infringement or
misappropriation of a third party Intellectual Property Right by the
materials supplied by QI, including the Shippable DVD Software. The
foregoing indemnity will not apply to any infringement or
misappropriation claim arising from (a) any modifications to the
Shippable DVD Software wherein the claim arises as a result of such
modification and the modification was made by parties other than QI,
or (b) any combination of any Shippable DVD Software with other
products or components where there would be no infringement absent
such use with such other products or components.
11.3 The indemnification provisions set forth herein are predicated on
the indemnitee giving prompt written notice of any claim for which
indemnification is required, tender the defense of any such claim to
the indemnifying party, providing full cooperation for such defense
at the indemnifying party's expense, and not settling
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without the indemnifying party's prior written approval, not to be
unreasonably withheld. The indemnitee may participate in any such
defense or settlement with counsel of its own choosing at its own
expense.
12. Trademarks and Logos.
--------------------
QI agrees that the Shippable Software DVD to be marketed and sold by ATI shall
be sold and marketed under ATI Trademarks. QI agrees to prominently xxxx, with
ATI Trademarks, as identified and approved by ATI, the Shippable Software DVD,
Documentation and packaging to be sold and distributed by ATI. QI acknowledges
and agrees that QI trademarks and brand name will not be used in association
with the above product. ATI agrees not to remove any copyright notices, which
will acknowledge the copyrights of both parties, from any version of the
Shippable Software DVD.
QI recognizes ATI's ownership and title to the ATI Trademarks and the goodwill
attaching thereto. QI agrees not to contest or take any action to contest the
ATI Trademarks, or to use, employ or attempt to register any trademark which is
confusingly similar to the ATI Trademarks.
14. Co-Marketing.
------------
The parties agree to provide reasonable assistance to each other, within each
party's sole discretion, in the promotion, marketing and advertising of the
other parties DVD products.
15. Term and Termination.
--------------------
15.1 Term. Unless otherwise terminated under this Section, this
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Agreement shall commence on the Effective Date and shall continue
for an initial term of two (2) years. This Agreement will be
automatically extended for one (1) year terms, unless written notice
of its intention of non-renewal from one party is received by the
other no later than (60) days prior to the end of the initial or
extended term.
15.2 Termination of Agreement. This Agreement may be terminated at any
------------------------
time by a party: (a) for material breach of this Agreement by the
other party, if such breaching party does not cure such breach
within thirty (30) days after receiving written notice thereof; and
(b) for a repeated breach of this Agreement by the other party, if
such breaching party does not cease committing such repeated
breaches within thirty (30) days after receiving written notice
thereof.
15.3 Survival. The rights and obligations contained in the following
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sections shall survive any termination or expiration of this
Agreement: Section 3, Section 4, Section 8.7, 8.8, Section 9,
Section 10, Section 11, Section 12, and Section 16. 1, Section 16.2,
Section 16.3, Section 16.4, and Section 16.8. In the event the
Agreement is terminated, licenses granted to ATI under this
Agreement shall survive along with ATI's obligations as set out in
Section 7.1, 7.2, 7.3, 7.8 and 7.9. ATI's obligations under Sections
2.4 and 4.5 shall also survive any termination of this Agreement.
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15.4 Upon termination of this Agreement for any reason, each party shall
have all rights and remedies available to it in law or in equity
with respect to the other party.
16. General Provisions
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16.1 Export Control. Both parties agree to comply strictly and fully
--------------
with all export control laws and regulations of both the United
States and Canada.
16.2 Public Announcements. No press release or public notice relating to
--------------------
this Agreement may be made by either party without receiving the
other party's prior written consent. If requested by one party, the
other party shall promptly supply the other party with copies of all
public statements and of all publicity and promotional material
relating to this Agreement and the sale and promotion of QI's
Software DVD.
16.3 Assignment. Neither party may assign this Agreement, or any of its
----------
rights or obligations under this Agreement to any third party
without the other party's written consent. Notwithstanding the
foregoing, either party shall have the right to assign or transfer
this Agreement in the case of a merger, acquisition or sale of
substantially all of such party's assets.
16.4 Governing Law. This Agreement shall be governed by and interpreted
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in accordance with the laws of the Commonwealth of Pennsylvania,
excluding its choice of law rules. The parties hereby agree that any
dispute regarding the interpretation or validity of, or otherwise
arising out of, this Agreement shall be subject to the exclusive
jurisdiction of the Pennsylvania state and Federal courts if legal
action is commenced by ATI, and in the Ontario Provincial Courts of
Canada or Canadian Federal Court if legal action is commenced by QI,
and the parties agree to submit to the personal and exclusive
jurisdiction and venue of these courts. The parties hereby expressly
waive any right to a jury trial and agree that any proceeding
hereunder shall be tried by a judge without a jury. The parties
exclude the application of the United Nations Convention on
Contracts for the International Sale of Goods, even if otherwise
applicable.
16.5 Headings. The paragraph headings appearing in this Agreement are
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inserted only as a matter of convenience and in no way define,
limit, construe or describe the scope or extent of such paragraph,
or in any way affect such agreements.
16.6 Counterparts. This Agreement may be executed simultaneously in two
------------
or more counterparts, each of which will be considered an original,
but all of which together will constitute one and the same
instrument.
16.7 Notices. Any notice required under this Agreement shall be given in
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writing and shall be deemed effective upon delivery to the party to
whom addressed by (a) express courier, upon written verification of
actual receipt, (b) facsimile, upon confirmation of receipt
generated by the sending device, or (c) five days after
14
sending, via certified mail, return receipt requested. All notices
shall be sent to the applicable address on the cover page hereof or
to such other address as the parties may designate in writing, with
a copy to the legal department of such party.
16.9 Amendments. Any amendments to this Agreement must be in writing and
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executed by the authorized representatives of the parties.
16.10 Severability. The illegality or unenforceability of the whole or
------------
any part of the provisions of this Agreement will not affect the
continued operation of the remaining provisions of this Agreement.
16.11 Waiver. The failure of either party at any time to insist upon
------
strict performance of any of the terms and conditions contained in
this Agreement will not be deemed a waiver of its right at any time
thereafter to insist upon strict performance.
16.12 Relationship of the Parties. Nothing in this Agreement shall
---------------------------
constitute, nor shall any party represent that there is any
relationship of employer and employee, principal and agent or
partnership between the parties as a result of this Agreement.
16.13 Force Majeure. Neither party will be responsible for delays or
-------------
failures in performance resulting from acts beyond the control of
such party, including, without limitation, acts of God, riots, acts
of war, epidemics, fire, earthquakes or other natural disasters.
16.14 Entire Agreement. This Agreement and the exhibits hereto are the
----------------
complete agreement of the parties relating to the subject matter
hereof. This Agreement supersedes and governs any other prior or
collateral agreements or understandings, whether written or oral
with respect to the subject matter hereof
16.15 Escrow. Upon ATI's request, QI shall place the Source Code of the
------
QI Software DVD in escrow. The choice of the escrow agent and the
instructions given will be mutually agreed upon by both parties.
IN WITNESS WHEREOF, the authorized representatives of the parties have executed
this Agreement as of the date last signed below.
ATI QI
ATI Technologies Inc. Quadrant International, Inc.
By: /s/ Xxx X. Xxx By: /s/ Xxxxxxx X. Xxxxx
Print Name: Xxx X. Xxx Print Name: Xxxxxxx X. Xxxxx
Title: Vice President Title: President
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Date: March 18, 1998 Date: March 18, 1998
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