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EXHIBIT 10.11
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
DEVELOPMENT AND LICENSE AGREEMENT
This Development and License Agreement (the "Agreement") is made and
entered into as of this 28th day of June, 1996 between SEAGATE TECHNOLOGY, INC.,
a Delaware corporation, with offices at 000 Xxxx Xxxxx, Xxxxxx Xxxxxx,
Xxxxxxxxxx 00000 ("Seagate"), and DRAGON SYSTEMS, INC., a Delaware corporation,
with offices at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("Dragon
Systems").
WHEREAS, Dragon Systems is developing the voice recognition software
described in Exhibit A hereto; and
WHEREAS, the parties desire that Dragon Systems complete development
of, and license to Seagate, this software on the terms and conditions set forth
herein;
In consideration of the mutual promises contained herein, Seagate and
Dragon Systems agree as follows:
1. Definitions.
The following terms shall have the following meanings herein:
1.1 "Software" shall mean all current and future versions
during the term of this Agreement of the software described in Exhibit A hereto,
including all Dragon Systems New Versions of the Software and all Dragon Systems
user documentation with respect thereto.
1.2 "New Version" of the Software means each error correction,
improvement, update, new version, new release, or other modification or addition
to the Software.
1.3 "Development Task" shall mean the development of the
Software to be performed by Dragon Systems pursuant to this Agreement and
Exhibit B.
1.4 "Deliverables" shall mean the items, if any, to be
delivered by Dragon Systems to Seagate in connection with each Milestone, as set
forth in Exhibit B.
1.5 "Specifications" shall mean the technical and other
specifications for the Deliverables and Development Task, as set forth in
Exhibit B.
1.6 "Development Schedule" shall mean the schedule for
completion of the Development Task, as set forth in Exhibit B.
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1.7 "Milestone" shall mean each development milestone
identified in Exhibit B.
1.8 "Aggregate Payment Cap" for each Milestone shall mean the
amount so specified in Exhibit B. This amount specifies the maximum aggregate
amount payable by Seagate for completion of that Milestone and all prior
Milestones.
1.9 "Status Report" shall have the meaning specified therefor
in Section 2.2 below.
1.10 "Development Costs" means all direct expenses plus
certain related overhead expended towards the development of the Software by
Dragon Systems pursuant to this Agreement. Overhead is defined as engineering
overhead only (non-S, G, & A) which would encompass such expenses as facilities
overhead costs, miscellaneous equipment and supplies, equipment depreciation,
travel, and MIS support. Direct expenses shall include direct payroll expenses,
and any other direct expenses specifically related to the development of the
Software. In the event that \s\ JKB \s\SL Dragon Systems employees engage in
extraordinary travel, Seagate will be charged only such extraordinary travel
expenses as are directly attributable to the Development Task.
1.11 "Complete" or "Completion," with respect to development
of the Software, shall mean that Dragon Systems has certified and Seagate has
confirmed that development and testing of the Software have been completed by
Dragon Systems, and that the Software and related documentation are fully ready
for commercial use and distribution.
1.12 "Net Revenue" of a party with respect to a product means
(i) the aggregate license fees and other revenue received by the party from the
licensing and distribution of the product, but only from licensing and
distribution of the product and not including such ancillary revenue as fees
received from support, maintenance, installation, technical assistance, or
consulting, and not including freight, taxes, insurance, and similar ancillary
charges, less (ii) credits for refunds and returns.
1.13 "Source Code" means the source code for the Software, in
printed, machine readable, and any other form and including all existing
comments, and all test suites and technical and other documentation reasonably
necessary for a reasonably skilled programmer to understand and use the source
code.
1.14 "Affiliate" of a party means any entity which controls,
is controlled by, or is under common control with that party, where "control"
means ownership or control, direct or indirect, of more than fifty percent (50%)
of the stock or other equity interest entitled to vote for the election of
directors or equivalent governing body of the entity.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
2. Development.
2.1 Development.
(a) Dragon Systems agrees to use its best efforts to
perform the Development Task in accordance with the Specifications and task
description in Exhibit B, including without limitation completion of the
Development Task, and each Milestone, and delivery to Seagate of all applicable
Deliverables, in accordance with the Development Schedule. Upon completion of
each Milestone, Dragon Systems shall deliver to Seagate all applicable
Deliverables, including documentation, for evaluation by Seagate.
(b) Dragon Systems agrees not to engage in any work
or services on its behalf or for any other party which would jeopardize or
conflict with its obligations under this Agreement.
(c) Dragon Systems agrees to complete development of
the Software no later than [**] after Dragon Systems incurs [**] in performance
of the Development Task.
2.2 Status Reports.
Within twenty (20) days after the end of each calendar quarter, Dragon
Systems shall deliver to Seagate a written report (the "Status Report")
describing in reasonable detail the status of the development of the Software,
including without limitation the then current status of completed development,
development accomplished during the preceding calendar quarter, known problems
and the anticipated effect on the project, current and planned staffing, whether
Dragon Systems expects to meet the Development Schedule, Specifications, and
other aspects of the Development Exhibit and, if not, the variations, any other
information pertaining to the development of the Software that would reasonably
be of interest to Seagate, as well as any information specifically and
reasonably requested by Seagate. Dragon System represents and warrants that each
Status Report will be reasonably complete and accurate, and Dragon System agrees
to update each Status Report, prior to the delivery of the next quarterly Status
Report, in the event major problems or other major variations are encountered.
Dragon Systems will also respond to reasonable inquiries from time to time from
Seagate concerning the development project.
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2.3 Acceptance.
Upon delivery to Seagate of the Deliverables for each
Milestone, Seagate shall test and evaluate such Deliverables for conformity to
the Development Task description and Specifications. Seagate shall provide
Dragon Systems within fourteen (14) days after delivery of such materials with
written acceptance thereof, or a statement of defects to be corrected. Dragon
Systems shall promptly correct such defects and return the corrected
Deliverables for retesting and reevaluation, and Seagate shall within fourteen
(14) days after such redelivery provide Dragon Systems with written acceptance
or a statement of defects. The parties shall repeat this procedure until
acceptance of the Deliverables or termination of this Agreement by Seagate.
3. Ownership.
Dragon Systems will retain ownership of the Software, and no
ownership of the Software is transferred to Seagate by this Agreement. Seagate,
however, shall retain ownership of any modifications, New Versions, or other
derivative works prepared by or for Seagate, subject to Dragon Systems'
ownership of the underlying Software.
4. Software License.
4.1 Object Code. Dragon Systems grants to Seagate, under all
intellectual property rights with respect thereto, a worldwide, perpetual,
irrevocable (subject only to Section 10.2 below) license, with right to
sublicense, to reproduce, have reproduced, use, import, and distribute the
Software, alone and/or integrated with other software, products, or other items,
and directly to end users and/or through third parties. This license extends to
the Software in executable code, object code, and any other form except Source
Code. Seagate will reproduce Dragon Systems' copyright notice in any copy of the
Software or any portion thereof.
4.2 Source Code. Dragon Systems grants to Seagate a worldwide,
perpetual, irrevocable (subject only to Section 10.2 below) license to
reproduce, use, modify and otherwise prepare derivative works of the Source Code
and derivative works thereof. Seagate, however, agrees not to exercise any
rights with respect to the Source Code until it is rightfully in possession of
the Source Code. It is understood that Seagate's right to obtain and possess the
Source Code is set forth exclusively in Section 4.5 below and the escrow
agreement referenced therein. The license granted to Seagate pursuant to Section
4.1 above shall extend to any modifications, New Versions, or other derivative
works of the Software prepared by Seagate pursuant to this section. Seagate
shall own each such modification, New Version, or other derivative work, subject
to Dragon Systems' retention of ownership of the underlying Software. Seagate
shall be entitled to retain consultants or other subcontractors to exercise its
rights pursuant to this section, subject to confidentiality obligations
substantially similar to those set forth in
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Sections 9.1, 9.2, and 9.3 below. Seagate shall protect the Source Code with
precautions similar to those used for its own software source code, and shall
restrict access to the Source Code to employees, consultants, and subcontractors
with a need for such access pursuant to this Agreement.
4.3 Exclusivity. Seagate's license to distribute the Software,
pursuant to Section 4.1 above, shall be exclusive. Dragon Systems shall refer to
Seagate all customer requests for Software. Except for this exclusive license to
distribute the Software, the licenses and rights granted to Seagate in Sections
4.1 and 4.2 above shall be co-exclusive, i.e., Dragon Systems shall retain the
right itself to also exercise the rights granted to Seagate, but Dragon Systems
shall not grant, and represents and warrants that it has not granted, such
rights, or any of them, to any third party.
4.4 Object Code Delivery. Within [**] after Completion of
development of the Software, Dragon Systems shall deliver to Seagate one master
copy of the Software in object code or executable form, suitable for
reproduction and use pursuant to this Agreement. Dragon Systems shall promptly
provide to Seagate each New Version of these materials as such New Version is
created by or for Dragon Systems.
4.5 Source Code Delivery. Upon written request of Seagate,
Dragon Systems shall immediately deliver to a third party escrow company
selected by Seagate, pursuant to an escrow agreement substantially in the form
attached hereto as Exhibit E, one copy of the Source Code (in machine readable
form suitable for use by Seagate). The Source Code shall be released and
delivered to Seagate as set forth in the escrow agreement, which shall be
limited to release only if (i) Dragon Systems dissolves or liquidates, or takes
any corporate or other action to achieve dissolution or liquidation, or Dragon
Systems ceases to conduct business in the normal course, or (ii) both (A)
Dragons Systems is a debtor in a bankruptcy proceeding or other proceeding for
the general settlement of its debts, or a receiver or other official is
appointed for all or substantially all of Dragon Systems' assets, or Dragon
Systems makes a general assignment for the benefit of creditors, and (B) Dragon
Systems is unable to perform its obligations pursuant to Section 8 below. Dragon
Systems shall promptly provide to the escrow company each New Version of these
materials as such New Version is created by or for Dragon Systems. Seagate shall
be responsible for the fees of the escrow company.
5. Dragon Systems Representations, Warranties, and Indemnities.
5.1 Dragon Systems represents and warrants on a continuing basis:
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(a) Corporate Authority. Dragon Systems has the right
to enter this Agreement, is a corporation duly organized, validly existing, and
in good standing under the laws of Delaware, has the power and authority,
corporate and otherwise, to execute and deliver this Agreement and to perform
its obligations hereunder, and has by all necessary corporate action duly and
validly authorized the execution and delivery of this Agreement and the
performance of its obligations hereunder.
(b) No Conflicts. The execution, delivery and
performance by Dragon Systems of this Agreement and each other agreement,
document, or instrument now or hereafter executed and delivered by Dragon
Systems pursuant thereto or in connection herewith will not: (i) conflict with
or violate the articles or certificate of incorporation or by-laws of Dragon
Systems or any provision of any law, rule, regulation, authorization or judgment
of any governmental authority having applicability to Dragon Systems, its
employees, or its or their actions; or (ii) conflict with or result in any
breach of, or constitute a default under, any note, security agreement,
commitment, contract or other agreement, instrument or undertaking to which
Dragon Systems is a party or by which any of its property is bound. Dragon
Systems represents and warrants that it is under no obligation or restriction,
and agrees that it will not assume any obligation or restriction or take any
action, that does or would in any way interfere or conflict with, or that does
or would present a conflict of interest, concerning Dragon Systems' performance
under this Agreement or would restrict any of the rights and licenses granted to
Seagate herein.
(c) Ownership. Dragon Systems owns and will own the
Software or otherwise has and will have the right and power to grant the
licenses and other rights granted to Seagate hereunder.
(d) Independent Work. With exception of Text-to-
Speech \s\ JKB \s\SL, which may be licensed from a third party, the Software has
been and will have been independently created by Dragon Systems' employees,
agents, and consultants, and use and distribution of the Software by Seagate as
contemplated herein will not depend on the acquisition of rights from any third
party.
(e) No Infringement or Claims. To the best of Dragon
Systems' knowledge and belief, neither the Software nor the exercise by Seagate
of any of the rights granted hereunder, will infringe any intellectual property
or other right of any third party. There is no pending litigation or claim nor,
to the best of Dragon Systems' knowledge and belief, the basis for any claim,
that Dragon Systems does not own the Software or that the exercise by Seagate of
any right granted hereunder with respect thereto will infringe any intellectual
property right of any third party.
5.2 Infringement Indemnity. Dragon Systems agrees to defend
any claim or action against Seagate or any of Seagate's sublicensees or any of
their direct or indirect customers, to the extent alleging that the Software, or
any portion thereof,
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infringes any third party US. or Canadian patent, worldwide copyright, or other
intellectual property right (other than trademarks), and Dragon Systems agrees
to pay all damages awarded, or settlements entered into, in connection
therewith. Seagate agrees to notify Dragon Systems in a timely fashion of each
such claim or action, and agrees to provide to Dragon Systems reasonable
assistance (at Dragon Systems' expense) in connection therewith and to provide
to Dragon Systems the right to control the defense or settlement of the claim or
action, provided that any settlement shall be subject to the prior written
approval of Seagate, which approval shall not be unreasonably withheld. Seagate
shall be entitled to participate in the defense of any such claim or action at
its expense, provided that if Dragon Systems is financially or otherwise unable
to properly undertake the defense of the claim or action, Seagate shall be
entitled to do so at Dragon Systems' expense. If the Software, or any portion
thereof, is held to infringe any U.S. or Canadian patent, worldwide copyright,
or other intellectual property right, or its use or distribution, or the
exercise of any other right granted to Seagate, is enjoined, Dragon Systems will
use its best efforts to modify or replace the Software with equivalent,
noninfringing software, or to obtain all necessary rights with respect thereto
to enable continued use and distribution of the Software and for Seagate to
continue to exercise all rights and licenses granted to Seagate in this
Agreement. If, in Dragon Systems' reasonable judgment, the Software, or any
portion thereof, is likely to be held to infringe any U.S. or Canadian patent,
worldwide copyright, or other intellectual property right, or its use or
distribution, or the exercise of any other right granted to Seagate, is likely
to be enjoined, Dragon Systems may modify or replace the Software with
equivalent, noninfringing software, or to obtain all necessary rights with
respect thereto to enable continued use and distribution of the Software and for
Seagate to continue to exercise all rights and licenses granted to Seagate in
this Agreement. Dragon Systems shall have no liability or obligation pursuant to
this section, however, to the extent the claim or action is caused by
modification of the Software (other than by Dragon Systems) or combination of
the Software with items not supplied by Dragon Systems.
6. Seagate Representations and Warranties. Seagate represents and
warrants on a continuing basis:
6.1 Corporate Authority. Seagate has the right to enter this
Agreement, is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, has the power and authority,
corporate and otherwise, to execute and deliver this Agreement and to perform
its obligations hereunder, and has by all necessary corporate action duly and
validly authorized the execution and delivery of this Agreement and the
performance of its obligations hereunder.
6.2 No Conflicts. The execution, delivery and performance by
Seagate of this Agreement and each other agreement, document, or instrument now
or hereafter executed and delivered by Seagate pursuant thereto or in connection
herewith will not: (i) conflict with or violate the articles of incorporation or
by-laws of Seagate or any
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
provision of any law, rule, regulation, authorization or judgment of any
governmental authority having applicability to Seagate or its actions; or (ii)
conflict with or result in any breach of, or constitute a default under, any
note, security agreement, commitment, contract or other agreement, instrument or
undertaking to which Seagate is a party or by which any of its property is
bound.
7. Fees and Royalties.
7.1 Engineering Fee. Together with each Milestone delivery by
Dragon Systems pursuant to Section 2.1(a) above, Dragon Systems shall submit to
Seagate a detailed description of Development Costs incurred by Dragon Systems,
since completion of the preceding Milestone, in developing the Software pursuant
to this Agreement, substantially in the form attached hereto as Exhibit C and
signed and certified as correct by the chief financial officer of Dragon
Systems. Within [**] after Seagate's acceptance of the Milestone as complete
pursuant to Section 2.3 above, Seagate shall pay to Dragon Systems, as a
nonrefundable engineering fee, the amount of such Development Costs, plus any
such Developments Costs incurred and reported by Dragon Systems for prior
Milestones but not paid by Seagate due to the Aggregate Payment Cap, provided
that the aggregate payments by Seagate upon completion of each Milestone, for
that Milestone and all prior Milestones, shall not exceed the associated
Aggregate Payment Cap specified in Exhibit B for that Milestone. In no event
shall Seagate be obligated to pay to Dragon Systems in excess of [**] pursuant
to this section.
7.2 Software Royalty. Seagate shall pay to Dragon Systems a
royalty equal to [**] of Seagate's Software Net Revenue. These payments shall be
made within [**] after the end of each calendar quarter, based upon such Net
Revenue during that calendar quarter, and shall be accompanied by a report, in
reasonable detail, specifying the basis for the amount paid. All Software Net
Revenue and payments shall be computed in United States dollars. Net Revenue in
other currencies in any calendar month shall be converted to United States
dollars according to the rate of exchange published in the Wall Street Journal
on the last business day of that calendar month. The parties may, in their
discretion, renegotiate the above [**] royalty rate if Dragon Systems provides
to Seagate significant New Versions.
7.3 Audit Rights. Dragon Systems shall be entitled to audit
Seagate's books and records for the sole purpose of confirming the accuracy of
Net Revenue reported pursuant to Section 7.2 above. Seagate shall be entitled to
audit Dragon Systems' books and records to confirm the accuracy of Dragon
Systems' Development Costs reported pursuant to Section 2.2 or 7.1 above. Each
such audit shall be conducted in accordance with the procedures set forth in
this section. The auditing party shall be
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entitled to retain an independent public accounting firm, reasonably acceptable
to the other party, to audit the audited party's books and records solely for
the purposes set forth hereinabove. Any such audit shall be performed at the
auditing party's expense, on at least twenty (20) days' prior written notice to
the audited party, during normal business hours and, at the audited party's
option, subject to the independent accounting firm's execution of a reasonable
confidentiality agreement. The independent accounting firm shall report to the
auditing party only whether the correct Net Revenue or Development Costs, as
applicable, have been reported and/or the correct royalties have been paid, as
applicable, and, if not, the amount of the discrepancy. In no event shall the
audited party's customer names be reported to the auditing party. Audits shall
be conducted no more frequently than twice in any twelve (12) month period,
unless the preceding audit revealed a discrepancy. In the case of any
discrepancy, the appropriate adjustment in payments shall promptly be made. Any
such audit shall be performed at the auditing party's expense, unless the audit
reveals a discrepancy of more than the greater of (i) fifty thousand dollars
($50,000) or (ii) five percent (5%) between the Net Revenue or Development Costs
actually reported and those which should have been reported, in which case the
audited party shall reimburse the audit fee.
8. Software Support.
Dragon Systems agrees to provide to Seagate the Software
support set forth in Exhibit D hereto.
9. Confidential Information.
9.1 Confidential Information. The term "Confidential
Information" shall mean any information disclosed by one party to the other (i)
prior to the date of this Agreement but with respect to the subject matter
hereof, or (ii) pursuant to this Agreement, in each case which is in written,
graphic, machine readable or other tangible form and is marked "Confidential,"
"Proprietary" or in some other manner to indicate its confidential nature.
Confidential Information may also include oral information disclosed by one
party to the other pursuant to this Agreement, provided that such information is
designated as confidential at the time of disclosure and reduced to a written
summary by the disclosing party, within thirty (30) days after its oral
disclosure, which is marked in a manner to indicate its confidential nature and
delivered to the receiving party. All Source Code, however, shall be considered
Confidential Information whether or not it is so marked.
9.2 Confidentiality. Each party shall treat as confidential
(as set forth herein) all Confidential Information of the other party, and shall
not use such Confidential Information except as contemplated herein or otherwise
authorized in writing. Each party shall implement reasonable procedures to
prohibit the unauthorized disclosure or misuse of the other party's Confidential
Information and shall not intentionally disclose such Confidential Information
to any third party except for the
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purposes of this Agreement, and subject to confidentiality obligations similar
to those set forth herein. Each of the parties shall use at least the same
procedures and degree of care that it uses to prevent the disclosure of its own
confidential information of like importance to prevent the disclosure of
Confidential Information disclosed to it by the other party under this
Agreement, but in no event less than reasonable care.
9.3 Exceptions. Notwithstanding the above, neither party shall
have liability to the other with regard to any Confidential Information of the
other which:
(i) was publicly available at the time it was disclosed or
becomes publicly available through no fault of the receiver;
(ii) was known to the receiver, without similar
confidentiality restriction, at the time of disclosure;
(iii) is disclosed with the prior written approval of the
discloser;
(iv) was independently developed by the receiver without
any use of the Confidential Information; or
(v) becomes known to the receiver, without similar
confidentiality restriction, from a source other than the discloser without
breach of this Agreement by the receiver.
In addition, each party shall be entitled to disclose the other's Confidential
Information to the extent required by any order or requirement of a court,
administrative agency, or other governmental body, provided that the receiver
shall provide prompt, advance notice thereof to enable the discloser to seek a
protective order or otherwise prevent such disclosure.
9.4 Residuals. Notwithstanding anything else in this
Agreement, however, each party's employees and consultants shall be entitled to
use, without restriction (subject to the above nondisclosure obligations) or
payment and for any purpose, the other party's Confidential Information retained
in such employees' or consultants' memory as a result of exposure to such
Confidential Information pursuant to this Agreement, subject only to the other
party's patents, copyrights, and mask work rights. Nothing in this Agreement
will restrict each party's rights to assign or reassign its employees, including
without limitation those who have had access to the other party's Confidential
Information, to any project in its discretion.
10. Termination.
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10.1 Term. The term of this Agreement shall commence on the
date first set forth above and shall continue thereafter unless and until
terminated as provided in this section or elsewhere in this Agreement.
10.2 Convenience. Seagate shall be entitled to terminate this
Agreement at any time, for any reason or for no reason, on written notice to
Dragon Systems. Upon any such termination by Seagate, the rights and licenses
granted to Seagate in Section 4 shall terminate, provided that Seagate shall be
entitled to retain and use a reasonable number of copies of the Software and
related materials to support existing Software customers. Seagate must reimburse
all reasonable Development Costs incurred by Dragon prior to such termination
subject to the limits set forth in Section 7.
10.3 Default. If either party defaults in the performance of
its material obligations hereunder and if any such default is not corrected
within sixty (60) days after it shall have been called to the attention of the
defaulting party, in writing, by the other party, then the other party, at its
option, may, in addition to any other remedies it may have, thereupon terminate
this Agreement by giving written notice of termination to the other party.
10.4 Survival. The parties' rights and obligations with
respect to the following sections shall survive any termination of this
Agreement: 3, 4 (subject to Section 10.2), 5, 6, 7.2 (provided that if the
license in Section 4.1 terminates, this section shall survive only as to
Software distribution prior to the effective date of termination), 7.3, 8, 9,
10.2 (second sentence), 11, 12 (unless the licenses pursuant to Sections 4.1 and
4.2 terminate), and 13.
11. Limitation of Liability.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INCIDENTAL,
CONSEQUENTIAL, INDIRECT, OR SPECIAL DAMAGES OF THE OTHER PARTY ARISING OUT OF
THIS AGREEMENT.
12. Infringement Prosecution.
The parties shall cooperate, as set forth herein, to prosecute
any patent, copyright, trade secret, or other intellectual property infringement
action against any third party with respect to the Software, but only with
respect to third party products, items, or activities which Seagate, in good
faith, determines are competitive with, or otherwise detrimentally affect
Seagate's activities with respect to, the Software ("Infringement Action").
(a) If either Seagate or Dragon Systems (the "Notifying
Party") wishes to commence an Infringement Action, then such party shall
promptly so notify
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the other party (the "Other Party") in writing of such infringement (the
"Infringement Notice").
(b) The Other Party may, by written notice within thirty
(30) days after the Infringement Notice, elect to participate in the
Infringement Action and agree to pay one-half of the costs of such prosecution.
In such event, the parties shall jointly control and cooperate in prosecution of
the Infringement Action and shall share equally in any monetary award resulting
from such prosecution.
(c) If the Other Party does not elect to participate and
share expenses as set forth in Section 12(b):
(i) If the Notifying Party takes reasonable actions to
prosecute the infringement action within ninety (90) days after the expiration
of the thirty (30) day period specified in Section 12(b), then (A) the Notifying
Party shall have the sole right to prosecute the Infringement Action and retain
any monetary award resulting therefrom and (B) the Other Party shall, at the
Notifying Party's expense, take all actions reasonably requested by the
Notifying Party in such prosecution.
(ii) If the Notifying Party does not take reasonable
actions to prosecute the Infringement Action before the end of such ninety (90)
day period, or notifies the Other Party that it does not intend to prosecute
such infringement, then Section 12(a) shall become applicable again.
(d) If a party prosecutes an infringement and the other
party does not bear one-half the costs of such prosecution as set forth above,
then the prosecuting party shall retain the entire amount of any monetary award
resulting from such prosecution.
(e) If a party prosecuting an Infringement Action on its
own abandons the Infringement Action, then Section 12(a) above shall again apply
with respect to that infringement.
(f) Each party shall, at the other party's reasonable
expense, take all actions reasonably requested by the other party with respect
to any Infringement Action prosecuted pursuant to this section, including
without limitation the registration of copyrights (on an expedited basis if
reasonably requested by the prosecuting party), providing witnesses and
evidence, and/or joining the Infringement Action as a party plaintiff if
necessary.
13. General Provisions.
13.1 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California, without reference to
conflict of laws principles.
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13.2 All disputes arising out of this Agreement shall be
subject to the exclusive jurisdiction of the state and federal (United States
District Court for the Northern District of California) California courts, and
the parties agree and submit to the personal and exclusive jurisdiction and
venue of these courts.
13.3 Dragon Systems shall perform its obligations hereunder as
an independent contractor and shall be solely responsible for its own financial
obligations. Nothing contained herein shall be construed to imply a partnership,
joint venture, or principal and agent relationship between the parties, and
neither party shall have any right, power or authority to create any obligation,
express or implied, on behalf of the other in connection with the performance
hereunder.
13.4 At any time or from time to time on and after the date of
this Agreement, Dragon Systems shall at the request of Seagate take or cause to
be taken all such other actions, at Seagate's expense, as Seagate may reasonably
deem necessary or desirable in order for Seagate to obtain the full benefits of
this Agreement and the transactions contemplated hereby.
13.5 This Agreement shall inure to the benefit of, and shall
be binding upon, the parties hereto and their respective successors and assigns,
but neither party may assign this Agreement, by operation of law or otherwise,
without the prior written consent of the other except that (i) Seagate at any
time, and (ii) Dragon Systems only after Completion of development of the
Software, may assign this Agreement to a person into which it has merged or who
has otherwise succeeded to all or substantially all of its applicable business
and assets. Notwithstanding the foregoing, however, Seagate (and any Seagate
assignee) shall be entitled to assign this Agreement to any of its Affiliates.
13.6 Notice by either party under this Agreement shall be in
writing and personally delivered or given by registered mail, overnight courier,
or telecopy confirmed by registered mail, addressed to the other party at its
address given herein (or at such other address as may be communicated to the
other party in writing) and shall be deemed to have been served when delivered
or, if delivery is not accomplished by reason of some fault of the addressee,
when tendered.
13.7 No alteration, amendment, waiver, cancellation or any
other change in any term or condition of this Agreement shall be valid or
binding on either party unless the same shall have been mutually assented to in
writing by both parties.
13.8 The failure of either party to enforce at any time any of
the provisions of this Agreement, or the failure to require at any time
performance by the other party of any of the provisions of this Agreement, shall
in no way be construed to be a present or future waiver of such provisions, nor
in any way affect the right of either party to enforce each and every such
provision thereafter. The express waiver by either
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14
party of any provision, condition or requirement of this Agreement shall not
constitute a waiver of any future obligation to comply with such provision,
condition or requirement.
13.9 (a) If the performance of this Agreement or any
obligations hereunder is prevented, restricted or interfered with by reason of
fire or other casualty or accident, strikes or labor disputes, war or other
violence, any law, order, proclamation, regulations, ordinance, demand or
requirement of any government agency, or any other act or condition beyond the
reasonable control of the parties hereto ("Event of Force Majeure"), the party
so affected upon giving prompt notice to the other party shall be excused from
such performance to the extent of such prevention, restriction or interference;
provided that the party so affected shall use its reasonable best efforts to
avoid or remove such causes of nonperformance and shall continue performance
hereunder with the utmost dispatch whenever such causes are removed.
(b) The party suffering an Event of Force Majeure shall
notify the other party within fifteen (15) days of the occurrence of such Events
and within thirty (30) days shall furnish the other party with a recovery plan
of action. Without limiting the foregoing, a party suffering an Event of Force
Majeure shall use its reasonable best efforts to limit the impact of the Event
of Force Majeure on such party's performance of this Agreement.
13.10 If any provision in this Agreement shall be found or be
held to be invalid or unenforceable in any jurisdiction in which this Agreement
is being performed, then the meaning of said provision shall be construed, to
the extent feasible, so as to render the provision enforceable, and if no
feasible interpretation would save such provision, it shall be severed from the
remainder of this Agreement which shall remain in full force and effect. In such
event, the parties shall negotiate, in good faith, a substitute, valid and
enforceable provision which most nearly effects the parties' intent in entering
into this Agreement.
13.11 In the event of any conflict or inconsistencies between
the provisions of this Agreement and the provisions of any exhibits attached
hereto or the provisions of any documents incorporated by reference, the
provisions of this Agreement shall prevail.
13.12 Each party may disclose the existence and general nature
of this Agreement, but agrees that the specific terms and conditions of this
Agreement shall be held in confidence and may not be disclosed without the
consent of the other party, except:
(i) as required by any court or other
governmental body;
(ii) as otherwise required by law;
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15
(iii) to legal counsel of the parties;
(iv) in confidence, to accountants, banks, and
financing sources and their advisors;
(v) in confidence, in connection with the enforcement
of this Agreement or rights under this Agreement; or
(vi) in confidence, in connection with an actual or
prospective merger, acquisition or similar transaction.
14. Entire Agreement.
The terms and conditions herein contained constitute the
entire agreement between the parties and supersede all previous agreements and
understandings, whether oral or written, between the parties hereto with respect
to the subject matter hereof
SEAGATE TECHNOLOGY, INC. DRAGON SYSTEMS, INC.
By: \s\ Xxxxxxx X. Xxxxx By: \s\ Xxxxx X. Xxxxx
---------------------- --------------------
Print Name: Xxxxxxx X. Xxxxx Print Name: Xxxxx X. Xxxxx
---------------------- --------------------
Title: EVP Corporate Development Title: CEO
---------------------- --------------------
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EXHIBIT A
SOFTWARE
This Exhibit consists of a general description and specification for
the Software, attached hereto as Exhibit A-1, and a detailed description and
specification for the Software, to be attached hereto as Exhibit A-2 within
fourteen (14) days after the date of this Agreement. Exhibit A-2 will be
supplied by Dragon Systems to Seagate, for Seagate's approval, and shall be
consistent with Exhibit A-1.
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EXHIBIT A-I
SOFTWARE
The software under development provides remote telephone access to the
reports contained within the Crystal-Info software using Dragon Systems speech
recognition technology. Once a user has identified him or herself, and selected
the appropriate Crystal-Info APS, users are able to query the software as to the
available reports by means of a voice-recognition "dialog," and are able to
select an individual report for FAX transmission. Users are also able to specify
the destination as an existing pre-programmed destination, or to enter a new
phone number for this FAX transmission. Access to the system is gained by
calling a telephone line that is connected to the system that this software
operates on.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT B
DEVELOPMENT EXHIBIT
1. Development Task Description.
Dragon Systems shall develop and deliver to Seagate the Software in
accordance with Exhibit A and the Specifications.
2. Specifications.
See Exhibit A.
3. Development Schedule, Milestones and Deliverables.
Aggregate Payment
Milestones Deliverables Completion Date Cap
---------- ------------ --------------- ---
1. Initial Demonstration to August 15, 1996 [**]
operation of Seagate of first
first prototype prototype of Software
Software
2. First prototype Working version of October 15, 1996 [**]
Software system (Software (not
necessarily including
all features)
integrated with IMG
Crystal Info
software)
3. Complete Demonstration November 8, 1996 [**]
demonstration version of Software
version of suitable for
Software for demonstration at
COMDEX COMDEX
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
4. Final Functionally complete February 1, 1997 [**]
prototype final prototype
Software version of Software
5. Complete Revised Beta version April 15, 1997 [**]
revised Beta of Software
version of
Software
(release
candidate 1)
6. Complete Commercial release June 1, 1997 [**]
commercial version of Software
release version
of Software
5. Special Terms and Conditions.
It is understood that the above Schedule contemplates Software changes
as a result of potential customer and other information obtained as a
result of demonstration of the Software at COMDEX. If the parties agree
that these changes are sufficiently significant to cause a change in
the Schedule for Completion of Milestones 4, 5, and 6, then the parties
will agree on new dates for those milestones.
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EXHIBIT C
FORM OF DEVELOPMENT COSTS REPORT
A. Direct Expenses
1. Labor
Name Rate Hours Total
---- ---- ----- -----
2. Direct material costs
Item Amount
---- ------
B. Overhead Expenses
Overhead expenses will be determined by taking the total
number of salary dollars allocated to the Development Task, dividing that by the
total number of salary dollars spent by the department(s) involved in the
Development Task, and applying the resulting percentage to the total overhead
cost attributed to those department(s). Dragon Systems will provide detailed
expense summaries showing department spending for each month.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT D
SOFTWARE SUPPORT
Seagate will be responsible for all direct telephone support of its
Software customers. Dragon Systems will provide to Seagate all second line,
backup support, for the Software, during those hours when Dragon System makes
such support available to its customers (but in any event at least 9:00 a.m. -
5:00 p.m. eastern time), to enable Seagate to do so. If Seagate is unable,
notwithstanding its diligent, reasonable best efforts, to resolve any particular
customer Software problem, it shall be entitled to require direct contact for
that problem between Dragon Systems and the customer for direct resolution by
Dragon Systems.
Dragon Systems will use its diligent, reasonable best efforts to solve
each problem presented by Seagate within [**], provided that if a problem
reveals a Software error which requires program coding modifications, Dragon
Systems will use its diligent, reasonable best efforts to provide a correction
or suitable workaround within [**].
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EXHIBIT E
FORM OF SOURCE CODE ESCROW AGREEMENT
(ATTACHED)
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ESCROW AGREEMENT
This Escrow Agreement is entered into this 28th day of June, 1996,
between and among Seagate Technology, Inc. (hereinafter called "Seagate"), a
California corporation with its principal place of business at 000 Xxxx Xxxxx,
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000; Dragon Systems, Inc., (hereinafter called
"Dragon Systems"), a Delaware corporation, with its principal place of business
at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; and the "Escrow Agent" set
forth at the end of this Agreement.
WHEREAS, Dragon Systems and Seagate have entered into a Software
Development and License Agreement dated June 28, 1996 (the "License Agreement"),
whereby Seagate is authorized to reproduce and distribute, in object code form,
the Software (as defined in the License Agreement);
WHEREAS, Dragon Systems desires to provide assurance to Seagate that,
in the event of certain conditions specified in the License Agreement, access to
the source codes for the Software, and related documentation, as specified in
Exhibit 1 hereto (the "Escrow Materials") may be obtained for the purpose of
providing maintenance, support, improvement, enhancement, and other modification
of or addition to the Software;
WHEREAS, Dragon Systems desires to enter into an escrow arrangement
with Seagate to provide for the deposit of the Escrow Materials to be held by
Escrow Agent pursuant to all of the terms and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to act as escrow agent for Dragon
Systems and Seagate on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and conditions set forth herein, the parties agree as follows:
1. Appointment. Dragon Systems and Seagate hereby appoint Escrow
Agent as the escrow holder of the Escrow Materials under this Escrow Agreement,
and the Escrow Agent accepts such appointment on the terms and conditions set
forth in this Escrow Agreement.
2. Deposit of Escrow Materials. Dragon Systems agrees to deposit with
the Escrow Agent one copy of the Escrow Materials within thirty (30) days after
the date of this Agreement. Dragon Systems agrees to deposit updated versions,
if any, of the Escrow Materials [STRIKE-THROUGH TEXT]upon completion of any new
Revisions, Upgrades, etc \s\ JKB \s\SL. Escrow Agent shall hold and dispose of
the Escrow Materials only in accordance with the terms of this Escrow Agreement.
24
3. Transfer of Copy Title. Title to the physical Escrow Materials shall
vest in the Escrow Agent when material constituting the Escrow Materials comes
into possession of the Escrow Agent. The Escrow Agent shall have no rights with
respect to the intellectual property embodied in the Escrow Materials and shall
have no right to use the Escrow Materials except to hold and dispose of the
Escrow Materials as set forth herein.
4. Purpose. The Escrow Materials shall constitute a reserve to be made
available to Seagate, under the terms of this Escrow Agreement, only upon the
occurrence of one of the release conditions set forth in Section 4.5 of the
License Agreement, i.e., in the event (i) Dragon Systems dissolves or
liquidates, or takes any corporate or other action to achieve dissolution or
liquidation, or Dragon Systems ceases to conduct business in the normal course,
or (ii) both (A) Dragons Systems is a debtor in a bankruptcy proceeding or other
proceeding for the general settlement of its debts, or a receiver or other
official is appointed for all or substantially all of Dragon Systems' assets, or
Dragon Systems makes a general assignment for the benefit of creditors, and (B)
Dragon Systems is unable to perform its obligations pursuant to Section 8 of the
License Agreement.
5. Escrow Release. Subject to Sections 6, 7, and 8, the Escrow Agent
shall promptly, release and deliver the Escrow Materials to Seagate following
the receipt of written authorization, but not sooner than sixteen (16) days
following the date of such notice, from an officer of Seagate certifying that
Seagate is entitled to the Escrow Materials (the "Notice") pursuant to Section 4
above, which is not disputed by Dragon Systems in accordance with Section 6
below. Seagate shall concurrently provide a copy of the Notice to Dragon
Systems.
6. Disputed Notice. If Dragon Systems disputes the existence of the
conditions upon which the Notice is based, then Dragon Systems shall, within
fifteen (15) days following its receipt of the Notice, submit a "Counternotice"
to the Escrow Agent explaining the basis for its dispute, with a concurrent copy
to Seagate. If the Counternotice is received by the Escrow Agent and Seagate
before the close of business on the fifteenth (15th) day following receipt of
the Notice by Dragon Systems (or, if the fifteenth day is not a Seagate business
day, the first Seagate business day thereafter), then the Escrow Agent shall
withhold delivery of the Escrow Materials pending receipt of (a) a decision
evidencing the outcome of the arbitration provided for in Section 7 below, or
(b) other written instructions signed by both Seagate and Dragon Systems. Upon
receipt of said decision or other instructions, the Escrow Agent shall deliver a
copy of the Escrow Materials only in accordance with the decision or
instructions.
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7. Arbitration of Disputed Notice. Dragon Systems and Seagate agree
that, if the Counternotice is given by Dragon Systems pursuant to Section 6
above, then Seagate and Dragon Systems shall submit to the jurisdiction of the
American Arbitration Association to resolve the dispute promptly and shall
commence the hearing before a Board of Arbitrators (the "Board") in San Jose,
California, within thirty (30) days following receipt of the Counternotice by
the Escrow Agent. The Board shall consist of three (3) members selected by the
American Arbitration Association. The sole question before the Board shall be
whether there existed, at the time Seagate transmitted the Notice to the Escrow
Agent under Section 5 above, any of the conditions specified in Section 4. This
arbitration shall be governed by the then-current rules of the American
Arbitration Association. The parties agree that the decision of the Board shall
be final and binding and that this decision shall be immediately delivered to
the parties to the arbitration and to the Escrow Agent. If the Board finds that
the Notice was properly given by Seagate on the basis of the existence of a
condition specified in Section 4 above, then the Escrow Agent shall promptly
deliver the Escrow Materials to Seagate. If the Board finds to the contrary,
then the Escrow Agent shall not release the Escrow Materials. All fees and
charges by the American Arbitration Association shall be paid by the
nonprevailing party in the arbitration; each party, however, shall be
responsible for the payment of all fees and expenses connected with the
presentation of its respective case.
8. Termination. This Escrow Agreement and the escrow established
pursuant to this Escrow Agreement shall terminate upon (a) notice of such
termination by Seagate, or (b) termination of Seagate's Software license
pursuant to the License Agreement, and all materials comprising the Escrow
Materials, and title thereto, shall thereupon be returned to Dragon Systems.
9. Notices.
9.1 It is understood that the Escrow Agent will incur no
liability for acting upon any instruction, notice, direction or other document
believed by it in good faith to be genuine and to have been made, signed, sent
or presented by the person or persons authorized to perform such act under the
terms of this Escrow Agreement.
9.2 Each Notice, Counternotice, and all other notices,
instructions, deliveries and other communications required or permitted to be
given hereunder or necessary or convenient in connection herewith shall be in
writing and shall be deemed to have been given and received when personally
delivered (by overnight delivery or courier service or otherwise), when sent by
telecopy, or two (2) days after mailing if mailed by registered or certified
mail, return receipt requested, as follows (provided that notice of change of
address shall be deemed given only when actually received):
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To Escrow Agent: To the address set forth at the end of this
Escrow Agreement, and to the attention of
the person signing this Escrow Agreement on
behalf of Escrow Agent.
To Dragon Systems: To the address first set forth above.
To Seagate: To the address first set forth above.
or to such other name or address as the Escrow Agent, Dragon Systems or
Seagate, as the case may be, shall designate by notice to the other party hereto
in the manner specified in this section.
10. Liability of Escrow Agent. The duties and obligations of the Escrow
Agent shall be determined solely by the express provisions of this Escrow
Agreement, and the Escrow Agent shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this Escrow
Agreement. In the event of any controversy hereunder or with respect to any
questions as to the construction of this Escrow Agreement or any action to be
taken by the Escrow Agent, the Escrow Agent may, at its expense, consult with
counsel selected and employed by it, and the Escrow Agent shall incur no
liability for any action taken or suffered in good faith in accordance with the
opinion of such counsel. The Escrow Agent shall not be responsible in any manner
whatsoever for any failure or inability of Dragon Systems, Seagate, or for
anyone else, to perform or comply with any of the provisions of this Escrow
Agreement.
11. Governing Law; Forum Selection. This Escrow Agreement shall be
governed by the laws of the State of California, without reference to conflict
of laws principles. All disputes arising out of this Agreement, other than the
arbitration pursuant to Section 7, will be subject to the exclusive jurisdiction
and venue of the California state courts (or, if there is exclusive federal
jurisdiction, the United States District Court for the Northern District of
California), and the parties consent to the personal and exclusive jurisdiction
of these courts.
12. Entire Agreement. This Escrow Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and cannot be changed, modified, or terminated orally.
13. Validity. No action taken by the Escrow Agent in accordance with
the terms and provisions hereof shall be deemed to constitute a representation
of the Escrow Agent as to the validity or value of any documents or instructions
held by, or delivered to, it.
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14. Resignation/Replacement.
14.1 Upon sixty (60) days' prior written notice given to
Dragon Systems and Seagate, the Escrow Agent may resign. Within fifteen (15)
days after the giving of such notice, Dragon Systems and Seagate shall mutually
designate a successor Escrow Agent. Such successor Escrow Agent shall be bound
by the terms and provisions of this Escrow Agreement. In the event that no such
agreement is reached within such fifteen (15) day period, the Escrow Agent shall
continue to hold the Escrow Materials then held by it and shall take no further
actions and shall have no further obligations hereunder except as required by
the last sentence of this Section 14(a). The Escrow Agent named herein shall
cooperate with its successor in order to effectuate the transfer of its duties
to the successor Escrow Agent.
14.2 Upon notice, Dragon Systems and Seagate may replace
Escrow Agent with a successor, who shall replace Escrow Agent and be bound by
all the terms and conditions of this Agreement.
15. Fees and Expenses. Seagate agrees to pay the fees of the Escrow
Agent for its services hereunder during the term of this Agreement. Such fees
shall consist of periodical escrow maintenance charges, at Escrow Agent's
standard rates, and fees charged for carrying out its duties hereunder. In all
other cases, each party shall be responsible for its expenses incurred in
connection with this Agreement.
16. Indemnification. Seagate and Dragon Systems jointly and severally
agree to indemnify, [STRIKE-THROUGH TEXT] defend and hold harmless \s\ JKB \s\SL
\s\KY the Escrow Agent from and against any and all third party claims, suits
and other proceedings, and all judgments and other awards against the Escrow
Agent in connection therewith, in each case which may be imposed on, or incurred
by, or asserted against, the Escrow Agent in any way relating to, or arising out
of, this Agreement, or any action taken or omitted by the Escrow Agent under
this Agreement, provided that neither Seagate nor Dragon Systems shall be liable
for that portion of any such indemnification amount resulting from the Escrow
Agent's gross negligence or willful misconduct or violation by the Escrow Agent
of any terms or provisions of this Escrow Agreement. This indemnity shall be
conditioned in each case on the Escrow Agent's providing to Seagate and Dragon
Systems prompt written notice of the claim, allowing Seagate and Dragon Systems
to control the defense and settlement of the claim, and providing reasonable
assistance to Seagate and Dragon Systems in connection therewith.
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IN WITNESS WHEREOF, the parties by their duly authorized
representatives have executed this Agreement as of the date set forth above.
SEAGATE TECHNOLOGY, INC.
By: \s\ Xxxxxxx X. Xxxxx
---------------------------
Print Name: Xxxxxxx X. Xxxxx
---------------------------
Title: EVP Corporate Development
---------------------------
DRAGON SYSTEMS, INC.
By: \s\ Xxxxx X. Xxxxx
---------------------------
Print Name: Xxxxx X. Xxxxx
---------------------------
Title: CEO
---------------------------
ESCROW AGENT:
Data Securities International, Inc.
Name: Contract Administration
0000 Xxxxxxxxxx Xxxxx. Xxxxx 000
Address: Xxx Xxxxx, XX 00000
By: \s\ Xxxxxxxxx X. Xxxxx
---------------------------
10-1-96
Print Name: Xxxxxxxxx X. Xxxxx
---------------------------
Title: Senior Contracts Administrator
---------------------------
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EXHIBIT 1
ESCROW MATERIALS
1. All source code (with all comments) in machine readable form.
2. All tools necessary to build the Software, and all necessary
documentation with respect thereto.
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