DEVELOPMENT AGREEMENT
Confidential treatment has been requested for portions
of this
document. This copy of the document filed as an Exhibit omits the confidential
information subject to the confidentiality request. Omissions are designated
by
the symbol [...***...]. A complete version of this document has been filed
separately with the Securities and Exchange Commission.
This
Development Agreement (“Agreement”), dated as of March 30, 2005 (the “Agreement
Date”), is between M-Systems Flash Disk Pioneers Ltd., an Israeli company having
its principal place of business at Central Park 2000, 7 Atir Xxxx Xx., Xxxx
Xxxx, 00000, Xxxxxx (“M-Systems”), and PowerHouse Technologies Group, Inc., a
Delaware corporation having its principal place of business at 0000 Xxxxxx
Xxxxx, Xxxxx 000, Xxx Xxxxx XX 00000 (“PowerHouse”). M-Systems and PowerHouse
may be referred to individually as a “Party” or collectively as
“Parties”.
| 1. |
INTRODUCTION
|
| 1.1. |
PowerHouse
is engaged in the development of mobile computing
software;
|
| 1.2. |
M-Systems
has developed and sells a “flash based” key chain storage device known as
the DiskOnKey®
(“DiskOnKey”);
|
| 1.3. |
M-Systems
desires PowerHouse to perform certain development work to modify
technologies of PowerHouse to operate in and in conjunction with
M-Systems
USB Drives (as such term is defined below);
and
|
| 1.4. |
M-Systems
further desires to receive and PowerHouse desires to grant to MSystems
the
right to use and distribute the Migo Products (as such term is defined
below) to be used in, together and in conjunction with M-Systems
USB
Drives subject to the terms and conditions of this
Agreement.
|
ACCORDINGLY,
in
consideration of the mutual covenants and promises contained herein, the Parties
agree as follows:
| 2. |
DEFINITIONS
|
As
used
in this Agreement, the following capitalized terms shall have the following
meanings:
| 2.1. |
Associated
Company means
any corporation, company or other legal entity, where more than fifty
percent (50%) of the voting power of which is, now or hereafter,
owned or
controlled, directly or indirectly by a Party hereto, or jointly
by the
Parties hereto; provided, however, that any corporation, company
or other
legal entity shall be an Associated Company of a Party only for as
long as
such ownership or control exists.
|
| 2.2. |
Intellectual
Property Rights means
rights in patents (including reissues, divisions, continuations,
continuation-in-part, and extensions thereof), utility models, and
registered and unregistered designs including copyrights, trade secrets
and any other form of protection afforded by law to inventions, models,
designs or other Information, and applications therefor including
without
limitation, patents, trademarks, copyrights and trade secrets relating
to
the Development Projects and that are: (i) owned or controlled by
a Party
or an Associated Company, and (ii) exist prior to the beginning of
the
Development hereunder or result from activities that are independent
from
said Development, and (iii) developed by each party pursuant to this
Agreement in the course and as part of the Development Project.
PowerHouse’s Intellectual Property Rights includes without limitation all
PowerHouse Technology. M-Systems’ Intellectual Property Rights includes
without limitation all M-Systems
Technology.
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| 2.3. |
Business
Day means
any day other than a Saturday, a Sunday or any day, which
is otherwise an official bank holiday in the United States of America.
|
| 2.4. |
Confidential
Information
means all Information disclosed to one Party by the
other Party that is marked or designated Confidential or Proprietary
or,
in the case of verbal disclosures, which are summarized in a writing,
marked or designated Confidential or Proprietary and furnished within
thirty days to the Party
receiving such Confidential Information; provided that the lack of
such
summary in writing shall not derogate from the qualification of oral
information as a Confidential Information hereunder.
|
| 2.5. |
Development
Projects
means the development work to be performed by each Party in accordance
with the work allocation and time schedule as set forth in a Statement
of
Work, and any mutually agreed modifications or extensions thereof,
with
the aim to develop Software Applications, as defined below.
|
| 2.6. |
Escrow
Agent
shall mean such party as agreed upon between the parties.
|
| 2.7. |
Escrow
Agreement
shall mean a separate agreement to be executed by PowerHouse, M-Systems
and the Escrow Agent in the form attached hereto as Exhibit
E,
which agreement shall embody the appropriate escrow terms for deposit
of
the Source Code.
|
| 2.8. |
Information
means
circuits, protocols, drawings, specifications, samples, models, processes,
procedures, instructions, technology, applied development engineering
data, reports, and all other technical or commercial information,
data and
documents excluding any Intellectual Property Rights related to such
Information, which is (i) owned or controlled by a Party, and existing
prior to the beginning of the Development under this Agreement, or
(ii)
resulting from activities of a Party that are independent from the
Development under this Agreement or (iii) developed as part of and
in the
course of the Development Projects.
|
| 2.9. |
Migo
Personal
shall mean the Migo USB Drive software product offered by PowerHouse
as of
the Agreement Date for all currently supported platforms and all
currently
provided functionality, with the exception of the Outlook synchronization
feature. The Migo Personal shall contain an upgrade mechanism which
shall
be defined by both parties and fully managed and operated by PowerHouse;
provided, however, that the upgrade mechanism will permit upgrade
only to
the same Migo software and functionality as Migo Professional.
|
| 2.10. |
Migo
Products
shall mean the Migo Personal, the Migo Professional and/or the
Migo
Upgrade.
|
| 2.11. |
Migo
Professional
shall mean the Migo USB Drive software product offered by PowerHouse
as of
the Agreement Date for all currently supported software platforms
and all
currently provided functionality, including the Outlook synchronization
feature.
|
| 2.12. |
Migo
Upgrade
shall have such meaning as described in Section 3.3.
|
| 2.13. |
M-Systems
Customers
shall mean purchasers or licensees of M-Systems USB Drives and/or
technology, as relevant, whether labeled under M- System’s name or under
M-Systems partners’, resellers’ or OEM’s names.
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| 2.14. |
M-Systems
Technology
shall mean, without limitation, DiskOnKey designs and technology
(as more
fully described in Exhibit
A).
|
| 2.15. |
M-Systems
USB Drives shall
mean USB Drives manufactured by or on behalf of M-Systems or by its
Associated Companies, partners, resellers or OEM’s utilizing the M-Systems
Technology.
|
| 2.16. |
PowerHouse
Technology
shall mean the technology described in Exhibit
B.
|
| 2.17. |
Statement
of Work
means a plan for the Development Projects under this Agreement as
set out
in the Product Development Plan and includes product specifications,
a
development schedule, deliverables, acceptance criteria.
|
| 2.18. |
U3
shall mean U3 LLC, a Delaware limited liability company under
authorization of the members of U3 Group, which includes M-Systems
and
SanDisk Corporation, and has developed a next generation USB flash
drive
technology.
|
| 2.19. |
U3 Drives
shall mean a USB Drive which complies fully with the U3 specifications.
|
| 2.20. |
U3 Software
shall mean software products, solely to the extent such software
products
run on a U3 Drive, where such software products comply with all portions
of the Software and U3 Related Products Agreement to be entered into
by a
software provider and U3.
|
| 2.21. |
USB
Drive means
any removable data storage products comprised of a nondetachable
fixed USB
connector (i.e., not connected via a cable of any length) and embedded
flash, or other, memory for data storage, contained within a single
integrated shell package.
|
| 2.22. |
Migo
XXXX
means the End User License Agreement included with each Migo Product.
|
| 3. |
BUSINESS
COLLABORATION
|
M-Systems
shall promote the Migo Products in accordance with the following guidelines:
| 3.1. |
PowerHouse
will develop the Migo Products and will adapt them to run as U3 Software
in accordance with U3 guidelines and pursuant to the terms of the
Software
and U3 Related Products Agreement to be entered into by PowerHouse
and U3.
|
| 3.2. |
PowerHouse
hereby grants M-Systems and its Associated Companies a worldwide,
transferable license to market, distribute, promote, offer for sale,
offer
for re-sale and sell the Migo Products as an integrated part of M-Systems
USB Drives only, and to use and display the trademarks, names, service
marks, and logos of PowerHouse related to the Migo Products or in
connection with such M-Systems USB Drives only. In consideration
for such
license, PowerHouse shall be entitled to receive and M-Systems shall
pay
to PowerHouse a fee of [ * * * ] per unit of Migo Professional
bundled with an M-Systems USB Drive sold to an M-Systems Customer.
For the
avoidance of doubt, the right and license for the Migo Personal and
Migo
Upgrade as provided in this Agreement shall be at no cost to M-Systems.
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| 3.3. |
M-Systems
shall offer Migo Products to M-Systems Customers. The Migo Professional
may be offered to M-Systems Customers in the initial form of the
Migo
Upgrade. The Migo Upgrade shall contain full functionality of the
Migo
Professional; however, the version will degrade to the Migo Personal
version at the end of a 45-day period. During such 45-day period,
the
end-user shall have the option to purchase a license directly from
PowerHouse in order to maintain the full functionality of the Migo
Professional. Such upgrade mechanism shall be fully managed and operated
by PowerHouse. The purchase by end-users may be made by way of a
link to
designated web site owned or hosted by PowerHouse (“Custom Landing Page”).
Such Custom Landing Page shall not be available to the general public
or
to other PowerHouse customers or potential customers and shall be
designated solely to M-Systems Customers.
|
| 3.4. |
M-Systems,
to the extent commercially practicable, will promote the Migo Upgrade
as
the primary Migo Product to M-Systems Customers. Furthermore, M-Systems
will actively
promote PowerHouse’s interests with M-Systems’ Customers, aiming at
allowing PowerHouse
to market its Migo Product upgrades directly to M-Systems’
Customers
end-user base. PowerHouse will provide M-Systems with its recommended
marketing messages in order to promote the bundling of the Migo Products
with the M-Systems USB Drives.
|
| 3.5. |
PowerHouse
will make such changes to the trademark labeling included in the
Migo
Products as an M-Systems Customer reasonably deems necessary for
such
M-Systems Customer to promote the Migo Products. M-Systems Customers’
promotional and packaging materials which include the Migo brand
name must
be submitted to PowerHouse for approval, which approval shall not
be
unreasonably withheld.
|
| 3.6. |
PowerHouse
will provide first level support for all Migo Products directly to
M-Systems and M-Systems Customers and their end-users, for 30 days
from
the date of the first use of the software by the end user. With respect
to
any M-Systems Customer who chooses to provide first level support
itself
to its end-users, PowerHouse will provide training and second level
support as may be required by such M-Systems Customer and accepted
by
PowerHouse. PowerHouse will provide training 3 times per year at
PowerHouse’s location. If the training is requested at other locations,
there will be charges associated with the training in amounts determined
by PowerHouse and which will be borne by the M-Systems Customer.
In the
case where PowerHouse is providing the level-1 support, if it is
determined that the problem is not related to Migo Products, M-Systems
will pay PowerHouse for providing such first line of support. A process
and the fee structure will be established prior to the product launch.
Without derogating from the preceding sentence, PowerHouse shall
provide
M-Systems and M-Systems Customers with such upgrades, features, technical
support and maintenance services as it provides to its other customers
generally and without special negotiation of terms and conditions.
Upgrades for this purpose shall be considered fixes and enhancements
to
the existing product and will not include new features or functionality
that may be marketed and sold by PowerHouse as value added products.
|
| 3.7. |
Exclusivity.
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|
3.7.1.
Other
than for those customers and with respect to those products listed
next to
their names in Exhibit F, during the Term of this Agreement, PowerHouse
shall not provide any other party and any other party’s customers with
services or applications for USB Drives provided or similar to those
provided to M-Systems Customers as set forth in this Agreement, and
shall
not bundle, or allow to be bundled. The Migo Products (or variations
thereof) with any other USB Drive other than M-Systems’ USB Drives.
Exhibit F may be amended upon the mutual written agreement of the
parties.
|
|
Notwithstanding
anything to the contrary contained elsewhere in this Agreement
or any
exhibit or schedule hereto, the exclusivity set forth above shall
not be
deemed to restrict or limit in any manner the full and complete
right of
PowerHouse to market, sell, license and distribute Migo
Products:
|
| (a) |
for
use in connection with (1) MP3 players, (2) Cell/smart phones, (3)
PDAs,
(4) SIM cards, (5) USB watches and/or (6) memory cards in devices
marketed
by PowerHouse or others (other than standalone USB Drives), if PowerHouse
offers M-Systems a 30-day right of first refusal to acquire the rights
for
any such device on the terms offered to the first third party acquiring
rights for any such device from PowerHouse and M-Systems does not
exercise
such right; and
|
| (b) |
to
PowerHouse customers who or which acquire Migo Products (including
USB
Drives on which Migo Products are installed) directly from PowerHouse.
|
|
3.7.2.
For the avoidance of any doubt M-Systems shall be entitled in
its sole and
absolute discretion to market and sell the M-Systems USB Drives,
either
directly or indirectly, without the Migo Products, and, except
as
expressly provided herein, PowerHouse shall have no right or
claim under
this Agreement or otherwise for loss of profit, loss of revenues
or the
like.
|
| 3.8. |
Beginning
on the date (the “English Language Start Date”) which is two months after
the Migo Products have been approved for English Language Gold
Release
pursuant to section 4.5, M-Systems shall bundle with M-Systems
USB Drives,
a minimum of [ * * * ] Migo Products (without regard to product mix)
per month.
|
|
Beginning
on the date (the “International Start Date”) which is the date on which
Migo Products have been approved for International Gold Release
pursuant
to section 4.5 (a) the schedule in the preceding sentence shall
no longer
be applicable and the following schedule shall
apply:
|
|
(a)
|
During
the first 90-day period following the International Start Date,
M-Systems
shall bundle with M-Systems USB Drives an average of at least [
* * *
] Migo Products (without regard to product mix) per
month.
|
| (b) |
During
the second 90-day period following the International Start Date,
M-Systems
shall bundle with M-Systems USB
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Drives
an
average of at least [ * * * ] Migo Products (without regard to product mix)
per month.
| (c) |
During
the third 90-day period following the International Start Date and
during
each subsequent 90-day period, M-Systems shall bundle with M-Systems
USB
Drives an average of at least [ * * * ] Migo Products (without regard
to product mix) per month.
|
In
the
event the M-Systems fails to meet the commitment in this Section 3.9 and does
not cure such failure after 30 days written notice, the exclusivity provisions
in Section 3.8 shall cease until such time as M-Systems meets the commitment
herein.
| 3.9. |
Notwithstanding
anything else to the contrary in this Agreement (other than the last
paragraph of this Section), and without derogating from Section 3.7
above,
in no event shall PowerHouse sell any Migo Product to any third party
or
any third party’s customers (collectively, a “PowerHouse Customer”) at
price lower than M-Systems’ price under this Agreement, regardless of
sales volume, use or application, including without limitation those
customers listed on Exhibit F. If the price that PowerHouse
charges/charged a PowerHouse Customer is less than the prices charged
to
M-Systems pursuant to the terms herein, then PowerHouse will make
those
prices available to M-Systems, after the time of availability of
those
prices to the PowerHouse Customer PowerHouse will inform M-Systems
in
writing within ten (10) working days after the end of each month
whether
any PowerHouse Customer has purchased any Migo Product from PowerHouse
at
a price lower than the price for the same Migo Product acquired by
M-Systems during the relevant month M-Systems shall be entitled to
a price
adjustment equal to the difference between the price of Migo Product
sold
to M-Systems minus the price Migo Product sold to the other PowerHouse
Customer multiplied by number of units purchased by M-Systems during
the
relevant month. Such price adjustment by PowerHouse due to M-Systems
shall
be made in the form of a credit against future purchases of Migo
Product
to be made at any time Buyer’s
discretion.
|
Notwithstanding
anything to the contrary contained elsewhere in this Agreement or any exhibit
or
schedule hereto, the restrictions and price adjustments set forth above shall
not be deemed applicable to or with respect to any sales or licenses of Migo
Products:
| (a) |
for
use in connection with (1) MP3 players, (2) Cell/smart phones, (3)
PDAs,
(4) SIM cards, (5) USB watches and/or (6) memory cards in devices
marketed
by PowerHouse or others (other than standalone USB Drives), if PowerHouse
offers M-Systems a 30-day right of first refusal to acquire the rights
for
any such device on the terms offered to the first third party acquiring
rights for any such device from PowerHouse and M-Systems does not
exercise
such right; and
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| (b) |
to
PowerHouse customers who or which acquire Migo Products (including
USB
Drives on which Migo Products are installed) directly from PowerHouse.
|
| 4. |
DEVELOPMENT
|
| 4.1. |
The
parties will appoint technical representatives to coordinate technological
cooperation between the parties (the “Technical Team”). The Technical Team
will be responsible for discussing and overseeing the integration
between
Migo Products and M-Systems USB
Drives.
|
| 4.2. |
PowerHouse
and M-Systems will disclose to each other Information to the extent
necessary for implementing Development Projects in accordance with
a
Product Development Plan. The Product Development Plan and any amendments
thereof, once mutually agreed upon by the Parties will be incorporated
by
reference into this Agreement as an Addendum and shall constitute
a part
hereto. The initial Product Development Plans is attached as Exhibit
C
of
this Agreement.
|
| 4.3. |
The
specific goal of the Development Project is to develop software
applications required to bundle the Migo Products with M-Systems
USB
Drives and to provide M-Systems Customers with the Migo Products
as set
forth herein (the “Software
Applications”).
|
| 4.4. |
In
implementing Development Projects, PowerHouse and M-Systems will
cooperate
fully to accomplish the work allocated to each party within the time
schedule as set forth in the Product Development Plan. The parties
acknowledge that the time schedules of a Statement of Work in a Product
Development Plan are best estimates as of the time of its preparation
and,
unless otherwise agreed in writing, neither Party shall be liable
for any
delays in accomplishing the development work therein. Each of PowerHouse
and M-Systems will be responsible for their respective development
responsibilities and bear its own development costs, in accordance
with a
Product Development Plan. Each Party will complete its development
responsibilities and achieve its milestones in accordance with the
schedule. For each day a Party is late in achieving a milestone,
then the
deadlines for the other Party’s outstanding milestones will be extended
one day. If for any reason the development does not proceed in accordance
with the schedule, either Party may request a meeting to discuss
the
delay. If such a meeting is requested, the Parties shall meet and
discuss
in good faith mechanisms to expedite development and avoid further
delays,
and will make necessary adjustments to the Product Development schedule.
|
| 4.5. |
Without
derogating from the preceding section, it is the intent of the parties
that PowerHouse shall deliver a final (post QA) U3 compliant version
of
each of the Migo Products by no later than 3 weeks following release
of
final U3 LaunchPad software. M-Systems shall confirm to PowerHouse
when
each Migo Product has passed M-Systems’ internal acceptance tests and is
U3 compliant. Versions M-Systems approves for release shall be known
as
“Gold Releases”. Initially, the Migo Products will be prepared for release
in the English Language (the “English Language Gold Release”). The English
Language Gold Release shall be completed by no later than 3 weeks
following release of final U3 LaunchPad software. Subsequently, a
version
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will
be
prepared for international release in English, French, German, Italian and
Spanish Languages (the “International Gold Release”).
| 4.6. |
Each
Party shall be responsible for its respective expenses and liabilities
arising in connection with the Development Project(s) including
any travel
or other expenses incurred by employees of that Party in connection
therewith.
|
| 5. |
REFERRAL
FEE
|
| 5.1. |
For
any upgrade purchased by an end-user of M-Systems or an M-Systems
Customers
through the Custom Landing Page as described in Section 3.3, M-Systems
shall be entitled to [ * * * ] of all fees collected by PowerHouse
net of expenses from the e-commerce provider and taxes charged and
passed
through.
|
| 6. |
AUDIT
RIGHTS
|
| 6.1. |
Exchange
of Report; Audit Rights. Within no later than 30 days after the end of
each month, each party shall provide the other with a written report
in
the form attached as Exhibit
D
of
this Agreement and which will include the calculation of all Referral
and
License Fees due to the other, as applicable. PowerHouse’s written report
shall include a breakdown of upgrades per M-Systems Customer. Based
on the
report each party shall invoice the other for the Referral or License
Fees,
as applicable (“Invoice”). If the Parties do not agree with any of the
reports, the Parties will use all reasonable efforts to settle disputes
by
mutual agreement. If any dispute is not so settled, the disputing
party
may exercise its right to audit as set forth in sub-section 6.5 below.
In
the event such audit verifies an underpayment error, the audited
party
shall promptly pay the auditing party for the full amount of any
underpayment verified in the audit. Any such discrepancy discovered
as a
result of such audit, will be reflected in the following report and
rectified and payment shall be made net within 30 days from receipt
of
audit report.
|
| 6.2. |
Payment
of Referral and License Fees. Referral Fees based on upgrades through
the Custom Landing Page shall accrue upon each successful download
of the
upgrade. Such Referral Fee shall be non-refundable regardless of
the
length of subscription to such upgrade. Payment of Referral and License
Fees shall be made by the relevant party net within thirty (30) days
of
the Invoice. If there is any discrepancy in the report for any month,
as
described in Section 6.1, any required reconciliation in payments
shall be
made within 15 Business Days of the resolution of any disputes.
|
| 6.3. |
Late
Payments. Payments not received in accordance with this Section 6
shall be subject to a late payment charge of one and one-half percent
(1.5%) per month or the highest amount permitted by law, whichever
is
less, commencing on the date such payment became
due.
|
| 6.4. |
Taxes.
All fees payable by one party to the other under this Agreement are
on an
exclusive basis and do not include all current and future applicable
taxes
and duties, including, but not limited to, Value Added Tax, sales
tax, if
applicable to such payments, which shall be added to such fees, or
paid
directly by the party paying such fees, as applicable. Notwithstanding
the
aforesaid, any income or other tax which a party is required by law
to pay
or withhold on behalf of the other party with respect to any amounts
payable to such other party under this Agreement may be deducted
from the
amount of
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payments,
provided, however, that in regard to any such deduction, the deducting party
shall upon request furnish to the other party such certificates and other
evidence of deduction and payment thereof as such other party may properly
require. Stamp tax, if any, shall be borne equally by the parties.
| 6.5. |
Each
party shall keep complete and accurate records pertaining to any
license
fee pursuant to Section 3.2 or upgrade purchased pursuant to Section
3.3,
as relevant, which will be sufficient to verify full compliance with
this
Agreement. Each party shall be entitled to have the books and records
of
the other party audited by one of the “nationally recognized independent
public accountants qualified under PCAOB guidelines”. Any such audit shall
be conducted during normal business hours and shall include the right
to
review and copy all records that contain information bearing upon
the
audited party’s compliance with the terms of this Agreement. Such records
shall be maintained for at least five years after their date of creation.
The cost of such audit shall be paid by the auditing party provided
that
if the audit shows an underpayment of more than 5% by the audited
party,
the audited party shall bear the costs of such audit.
|
| 7. |
INTELLECTUAL
PROPERTY RIGHTS
|
| 7.1. |
Ownership.
PowerHouse owns the PowerHouse Technology and the PowerHouse
Intellectual Party Rights. M-Systems owns the M-Systems Technology
and the
M-Systems Intellectual Property Rights. Without derogating from the
preceding sentences, to the extent that any improvements are made
in the
course of development of the Software Applications to either M-Systems
Technology or PowerHouse Technology, such improvements shall be owned
solely by the party who owns the relevant
Technology.
|
| 7.2. |
No
Implied Licenses. No license or right is granted by either Party to
the other, by implication or by estoppel, or otherwise to any patents,
inventions, or other property right, other than the licenses and
rights
expressly granted in this Section.
|
| 8. |
CONFIDENTIAL
INFORMATION
|
| 8.1. |
Each
Party agrees not to use Confidential Information disclosed to it
by the
other Party for its own use or for any purpose except the Development
Projects as set forth in this Agreement. Confidential Information
shall
not be disclosed to third parties or to either Party’s employees or
consultants except employees or consultants who are required to have
the
Confidential
Information in order to carry out the Development Projects, management
associated with the employees carrying out the Development Projects,
attorneys and accountants, and senior management of the Parties,
provided
that such parties are subject to written confidentiality obligations.
Each
Party agrees that it will take all reasonable steps which are customary
in
the industry in which the Parties operate to protect the secrecy
of and
avoid disclosure or use of Confidential Information in order to prevent
the Confidential Information from falling into the public domain
or the
possession of unauthorized persons. Each Party agrees to notify the
other
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Party
in
writing of any misuse or misappropriation of Confidential Information which
may
come to the Party’s attention.
| 8.2. |
The
confidentiality obligations imposed under Section 8.1 shall not apply
to
Information which:
|
| 8.2.1. |
is
generally available to the public prior to disclosure under this
Agreement; or
|
| 8.2.2. |
is
generally known to the receiving Party prior to the disclosure under
this
Agreement as evidenced by written and dated material;
or
|
| 8.2.3. |
through
no fault of the receiving Party becomes part of the public domain
after
disclosure under this Agreement; or
|
| 8.2.4. |
is
disclosed to the receiving Party by any third party having a bona
fide
right to do so; or
|
| 8.2.5. |
is
approved for release by the written authorization of the disclosing
Party;
or
|
| 8.2.6. |
is
disclosed pursuant to the requirement of a government agency or by
operation of law after the disclosing Party has been given at least
thirty
(30) days notice and an opportunity to object to such
disclosures.
|
| 8.2.7. |
is
independently developed by the receiving Party without use of the
disclosing Party’s Confidential
Information.
|
| 8.3. |
Each
Party shall immediately notify the other Party of any private or
governmental request for the Confidential Information or any other
information or documents relating to this Agreement.
|
| 8.4. |
Each
Party shall have the right to participate in any other Party’s response to
any such request. In the event that a Party receives any subpoena
or other
legal process requiring the production of information, documents,
data,
work papers, reports, or other materials relating to Confidential
Information or to this Agreement, then the Party
shall:
|
| 8.4.1. |
give
the other Party, if possible, the opportunity to participate in quashing,
modifying, or otherwise responding to any compulsory process in an
appropriate and timely manner; and
|
| 8.4.2. |
cooperate
fully with the other Party’s efforts to narrow the scope of any such
compulsory process, to obtain a protective order limiting the use
or
disclosure of the information sought, or in any other lawful way
to obtain
continued protection of the Confidential
Information.
|
| 8.5. |
If
either Party becomes aware of the loss, theft, or misappropriation
of the
other Party’s Confidential Information which is in its possession, such
Party shall notify the other Party in writing within ten (10) Business
Days of its discovery of the loss, theft, or misappropriation of
such
Confidential Information.
|
| 9. |
TERM
AND TERMINATION
|
| PowerHouse-M-Systems Agreement 30.3.05 |
Page 10
|
| 9.1. |
This
Agreement shall have a term of three years and may not be terminated
for
the convenience of either Party. However, either Party may terminate
this
Agreement in the event of a breach or default by the other Party
(the
“breaching Party”). The Party alleging a breach or default (the
“non-breaching Party”) shall provide a written notice of termination to
the breaching Party specifying the facts and circumstances relating
to the
alleged breach or default as set forth above; provided; however,
that this
Agreement shall not be terminated if the specified breach or default
is
remedied or cured within thirty (30) days after notice of breach
or
default is provided. If such specified breach or default is not
remedied
or cured within thirty (30) days after notice of breach or default
is
provided, and the breaching Party does not dispute that it has
breached or
defaulted and that the breach or default is material, then termination
shall take effect upon expiration of the thirty-day period.
Notwithstanding anything to the contrary in this Section 9.1, breaches
for
non-payment of any fees due and payable must be cured within 10
days of
notice of such breach.
|
| 9.2. |
If
at any time during the term of this Agreement, (i) a Party becomes
insolvent; or (ii) a Party admits in writing its insolvency or
inability
to pay its debts or perform its obligations as they mature; or
(iii) a
party becomes subject to any voluntary or involuntary proceedings
in
bankruptcy, liquidation, dissolution, receivership, attachment
or
composition or general attachment for the benefit of creditors,
provided
that if such condition is assumed involuntarily it has not been
dismissed
with prejudice within thirty (30) days after it begins; the other
Party
may terminate this Agreement upon thirty days advanced written
notice.
|
| 9.3. |
In
the event of termination of this Agreement by either Party, each
Party
shall immediately discontinue use of the Confidential Information
received
from the other Party, and within five (5) days after termination,
each
Party shall provide to the other Party a certification that the
originals
and all copies of such Confidential Information, regardless of
form, have
been returned to the disclosing Party or else destroyed.
|
| 9.4. |
Sections
5, 6, 7, 8, 9.4, 10, 11, 12 and 13 shall survive the termination
of this
Agreement for any reason
whatsoever.
|
| 10. |
LIABILITY
AND INDEMNITY
|
| 10.1. |
Each
party shall, at its own expense, indemnify, defend and hold the
other
party and its Associated Companies (“Indemnified
Parties”)
harmless from any and all claims, allegations, demands, liabilities,
losses, damages, awards, judgments or settlements, including all
reasonable costs and expenses related thereto including attorney’s fees
(“Claims”),
that may be asserted, granted, imposed or brought against any Indemnified
Party directly arising from or in connection with any Claims that
the
indemnifying party’s technology or products infringe any copyright,
patent, trade xxxx, trade secret or other intellectual property
right.
|
| 10.2. |
As
between M-Systems, PowerHouse and each M-Systems Customer, M-Systems
will
not be responsible for anything related to the Migo Products or
of any
losses, damages or expenses incurred by M-Systems Customers in
|
|
PowerHouse-M-Systems
Agreement 30.3.05
|
Page
11
|
| connection with the use of the Migo Products. PowerHouse shall be the sole party responsible for such losses damages or expenses. |
| 10.3. |
As
between M-Systems, PowerHouse and each M-Systems Customer, PowerHouse
will
not be responsible for anything related to the products or technology
of
M-Systems or of any losses, damages or expenses incurred by M-Systems
Customers in connection with the use of the M-Systems products
or
technology. M-Systems shall be the sole party responsible for such
losses
damages or expenses.
|
| 10.4. |
PowerHouse
shall, at its own expense, indemnify, defend and hold M-Systems
and its
Associated Companies harmless from any and all Claims, that may
be
asserted, granted, imposed or brought against M-Systems and its
Associated
Companies arising from or in connection with any Claims brought
by
M-Systems Customers in connection with the Migo Products, excluding
claims
for loss of data or loss of profits.
|
| 10.5. |
M-Systems
shall, at its own expense, indemnify, defend and hold PowerHouse
and its Associated Companies harmless from any and all Claims,
that may be
asserted, granted, imposed or brought against PowerHouse and its
Associated Companies arising from or in connection with any Claims
brought
by third parties in connection with the M-Systems products, excluding
claims for loss of data or loss of profits.
|
| 11. |
REPRESENTATIONS
AND WARRANTIES
|
| 11.1. |
PowerHouse
represents and warrants that it has all the rights necessary to
enter into
this Agreement and to perform its obligations hereunder.
|
| 11.2. |
PowerHouse
represents and warrants that to the best of its knowledge it has
all
necessary rights in, and to, all copyrights, patents and other
proprietary
rights associated with the PowerHouse Technology.
|
| 11.3. |
M-Systems
represents and warrants that it has all the rights necessary to
enter into
this Agreement and to perform its obligations hereunder.
|
| 11.4. |
M-Systems
represents
and warrants that to the best of its knowledge it has all necessary
rights
in, and to, all copyrights, patents and other proprietary rights
associated with the M-Systems Technology.
|
| 11.5. |
Warranty
Disclaimers. EXCEPT AS EXPRESSLY WARRANTED IN THIS AGREEMENT, THE
PARTIES DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, ORAL
OR
WRITTEN, INCLUDING, WITHOUT LIMITATION, (A) ANY WARRANTY THAT THE
ANY
TECHNOLOGY IS ERROR-FREE, WILL OPERATE WITHOUT INTERRUPTION, OR
IS
COMPATIBLE WITH ALL EQUIPMENT AND SOFTWARE CONFIGURATIONS; (B)
ANY
WARRANTY OF MERCHANTABILITY; AND, (C) ANY WARRANTY OF FITNESS FOR
A
PARTICULAR PURPOSE. NEITHER PARTY IS LIABLE TO THE OTHER FOR ANY
INDIRECT,
INCIDENTAL,
SPECIAL, OR CONSEQUENTIAL DAMAGES, INCLUDING THE LOSS OF PROFITS,
REVENUE,
DATA, OR USE OR COST OF PROCUREMENT OF SUBSTITUTE GOODS INCURRED
BY ANY
PARTY OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT
OR
BASED ON A WARRANTY, EVEN IF ANY
|
|
PowerHouse-M-Systems
Agreement 30.3.05
|
Page
12
|
PARTY
OR
THIRD PARTY HAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
| 11.6. |
LIMITATION
OF LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IN NO
EVENT SHALL EITHER PARTY’S LIABILITY TOWARDS THE OTHER PARTY CAUSED BY ANY
BREACH OF ANY WARRANTY IN THIS AGREEMENT EXCEED THE GREATER OF
(i) THE
AGGREGATE CONSIDERATION PAYABLE BY M-SYSTEMS TO POWERHOUSE HEREUNDER;
OR
(ii) US$ 1,000,000.
|
| 12. |
SOURCE
CODE ESCROW
|
| 12.1. |
The
Parties agree to appoint within sixty (60) days of the date the
software
applications are delivered
pursuant to the Statement of Work an Escrow Agent or such other
escrow
agent as is a mutually acceptable and to execute the Escrow
Agreement.
|
| 12.2. |
The
parties agree that the Escrow Agent must be independent and located
outside of the USA and Israel.
|
| 12.3. |
M-Systems
and PowerHouse acknowledge and accept the terms of the Escrow Agreement
and agree on behalf of themselves to be bound by the provisions
therein.
|
| 12.4. |
Any
breach
of
this Section 12 by the Parties shall be considered a material breach
of
this Agreement.
|
| 12.5. |
If
the Deposit Materials, as defined in the Escrow Agreement, are
not
deposited with the Escrow
Agent according to the terms of the Escrow Agreement within ten
(10) days
from the Agreement Date (provided that the Escrow Agreement was
signed
during such period), M-Systems shall have the right to terminate
this
Agreement forthwith without any liability and without limitation
to any
other rights M-Systems may have.
|
| 12.6. |
Without
limitation to any terms of the Escrow Agreement, PowerHouse shall,
within
thirty
(30) days of the date of signature of the Escrow Agreement, provide
to the
Escrow Agent one copy of the Deposit Materials and shall thereafter
during
the term of this Agreement, simultaneously with the delivery of
Updates to
M-Systems, also provide to the Escrow Agent in source code format
(1) copy
of such Update.
|
| 12.7. |
The
Escrow Agent will deliver the Deposit Materials to M-Systems only
under
the circumstances defined in the Escrow Agreement.
|
| 12.8. |
The
costs of the Escrow Agent shall be borne by M-Systems.
|
| 12.9. |
The
provisions of the Escrow Agreement shall survive the termination
or
expiration of this Agreement regardless of the reasons therefor,
and shall
terminate upon termination of the Escrow Agreement according to
its terms.
|
| 13. |
GENERAL
PROVISIONS
|
| 13.1. |
Choice
of Law. This Agreement shall be construed under, and interpreted
in
accordance with, the laws of the State of California and of the
United
States of America without giving
effect to the principles of conflicts laws. In the event of any
lawsuit or
other proceeding to enforce the provisions of this Agreement, the
prevailing Party shall be entitled to recover its reasonable
|
|
PowerHouse-M-Systems
Agreement 30.3.05
|
Page
13
|
|
attorney’s fees and expenses. Whenever
possible, each provision of this Agreement will be interpreted
so as to be
effective and valid under applicable law, but if any provision
is held to
be invalid under applicable law, either in whole or in part, the
provision
will be ineffective only to the extent of such invalidity, and
the
remaining provision of this Agreement shall remain in full force
and
effect. The failure by either Party to enforce any of the terms
and
conditions of this Agreement shall not constitute a waiver of such
Party’s
right thereafter to enforce that or any other terms and conditions
of this
Agreement.
|
| 13.2. |
Limitation
on Liability. Neither Party shall be liable to each other in contract,
tort or otherwise, whatever
the cause thereof, for any loss of profit, business or goodwill
or any
indirect, special, consequential, incidental or punitive cost,
damages or
expense of any kind, howsoever arising under or in connection with
this
Agreement.
|
| 13.3. |
Assignment.
Neither M-Systems nor PowerHouse shall assign any of its rights
or
privileges hereunder
without the prior written consent of the other party, such consent
not to
be unreasonably withheld.
|
| 13.4. |
Independent
Contractors. The relationship of M-Systems and PowerHouse shall be
that of independent contractors. There is no relationship of agency,
partnership, joint venture, employment or
franchise between the Parties. Neither Party has the authority
to bind the
other or to incur any obligation on behalf of the other Party or
to
represent itself as the other’s agent or in any way that might result in
confusion as to the fact that the Parties are separate and distinct
entities.
|
| 13.5. |
Non-Solicitation.
Each of PowerHouse and M-Systems agree that during the term of
this
Agreement, and for a period of 12 months thereafter, it shall not
induce
or solicit any employee of the other or its Associated Companies
to leave
his or her employment therewith.
|
| 13.6. |
Notices.
All communications relating to and notices required under this
Agreement
shall be directed as:
|
Communications
and Notices to PowerHouse:
PowerHouse
Technologies Group, Inc.
000
Xxxx
Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxx, XX 00000 XXX
Attn:
General Counsel
Fax:
0-000-000-0000
Communications
and Notices to M-Systems:
M-Systems
Flash Disk Pioneers Ltd.
Central
Park 2000, 7 Atir Xxxx Xx., Xxxx Xxxx, 00000, Xxxxxx
Attention:
General Counsel
Fax:
000-000-0-000-0000
Unless
specifically set forth otherwise, all notices or communications of any kind
made
or required to be given pursuant to this Agreement shall be in writing and
delivered to the other Party at the address set forth above, unless either
Party
gives notice to the other party of a change of address. All notices or
communications shall be made by hand delivery, established overnight courier
service, facsimile or prepaid certified mail return receipt
|
PowerHouse-M-Systems
Agreement 30.3.05
|
Page
14
|
|
requested. Notices shall be
deemed
delivered upon receipt if delivered by hand, overnight courier
service or
facsimile, or five Business Days after dispatch if by certified
mail.
|
| 13.7. |
Integration.
This Agreement contains the entire agreement of the Parties. No
promise,
inducement, representation or agreement, other than as expressly
set forth
herein, has been made to or by the Parties hereto. All prior agreements
and understandings related to the subject matter hereof, whether
written
or oral, including without limitation the LOI, are expressly superseded
hereby and are of no further force or effect.
|
| 13.8. |
Binding
Agreement. This Agreement shall be binding upon and inure to the
benefit of PowerHouse and M-Systems, and their respective Associated
Companies.
|
| 13.9. |
Publicity.
Neither party shall issue any press release relating to this Agreement
or the transactions contemplated hereby without prior notice to,
consultation with, and the consent of the other party. Concurrently
with
the execution of this Agreement, the Parties shall issue a joint
press
release to be mutually agreed upon.
|
| 13.10. |
Amendment.
This Agreement cannot be altered, amended or modified in any respect,
except by a writing duly signed by both Parties.
|
| 13.11. |
No
Strict Construction. The normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting Party
shall
not be employed in the interpretation of this Agreement.
The headings contained in this Agreement are intended solely for
ease of
reference and shall be given no effect in the construction of
interpretation of this Agreement.
|
| 13.12. |
Execution.
This Agreement may be executed in counterparts by the Parties,
each of
which shall be deemed an original, and which together shall constitute
one
and the same instrument, having the same force and effect as if
a single
original had been executed by all the Parties.
|
| 13.13. |
Currency.
All payments required under this Agreement shall be made in the
currency
of the United States of America.
|
| 13.14. |
Jurisdiction.
Any litigation arising out of or relating to this Agreement shall
be
conducted
in
the Superior Court of the State of California in and for San Mateo
County
or the United States District Court for the Northern District of
California. Each of the parties consents to the exclusive jurisdiction
of
such courts and to venue in such courts.
|
| 13.15. |
Export
Restrictions. M-Systems will not export or re-export the Migo
Products, any part thereof, or any process or service that is the
direct
product of the Migo Products (the foregoing collectively referred
to as
the “Restricted Components”) to any country, person or entity
subject to U.S. export restrictions. M-Systems specifically agrees
not to
export or re-export any of the Restricted Components (i) to any
country to
which the U.S. has embargoed or restricted the export of goods
or
services, which currently include, but are not necessarily limited
to
Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria, or to any
national
of any such country, wherever located, who intends to transmit
or
transport the Restricted Components back to such country; (ii)
to any
person or entity who you know or have reason to
|
|
PowerHouse-M-Systems
Agreement 30.3.05
|
Page
15
|
know
will
utilize the Restricted Components in the design, development or production
of
nuclear, chemical or biological weapons or (iii) to any person or entity who
has
been prohibited from participating in U.S. export transactions by any federal
agency of the U.S. government. M-Systems warrants and represents that neither
the U.S. Bureau of Export Administration nor any other U.S. federal agency
has
suspended, revoled or denied its export privileges.
IN
WITNESS WHEREOF,
the
parties have caused this Agreement to be signed by their duly authorized
representatives as of the Agreement Date.
| M-Systems Flask Disk Pioneers Ltd. | Power House Technologies Group Inc. | |||
| By: |
/s/
Illegible
|
By: |
/s/
Xxx Xxxxxx
|
|
|
Its:
|
VP
|
Its:
|
CEO
|
|
|
Date:
|
30/03/05
|
Date:
|
3/29/05
|
|
EXHIBITS
Exhibit
A
- M-Systems Technology
Exhibit
B
- Power House Technology
Exhibit
C
- Product Development Plan
Exhibit
D
- License/Referral Fee Report
Exhibit
E
- Escrow Agreement
Exhibit
F
- Exclusivity Exceptions
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
Page
16
EXHIBIT
A - M-SYSTEMS TECHNOLOGY
EXHIBIT
B - POWERHOUSE TECHNOLOGY
|
TRADEMARKS
|
||||
|
Trademark
|
Reg.
Date
|
Reg.
No.
|
||
|
MIGO
|
Filed
on August 18, 2003
|
Application
No. 78/288,619
(applicant:
Forward Solutions,
Inc.)
|
||
|
POCKETLOGIN
|
September
17, 2003
|
78/219,213
(applicant:
First
Person
Software, Inc.)
|
||
|
PATENTS
|
||||
|
Title
|
Date
Issued
|
Patent
No.
|
||
|
System
and method
for transferring
personalization
information
among
computer
systems.
|
Filed
May 8, 2003 by Xxxxx Xxxxx Xxxxxx and
Xxxxxxxxxxx
Xxxxx Xxxxxxx
|
Serial
No.
10/435,070
|
||
|
COPYRIGHTS
|
||||
|
None.
|
||||
EXHIBIT
B
Page
1
EXHIBIT
C - PRODUCT DEVELOPMENT PLAN
SEE
MRD
EXHIBIT
C
Page
1
EXHIBIT
D - LICENSE/REFERRAL FEE REPORT
EXHIBIT
D
Page
1
EXHIBIT
E - ESCROW AGREEMENT
EXHIBIT
E
Page
1
SOFTWARE ESCROW
AGREEMENT
This
Escrow Agreement (“Agreement”) is made as of this day of ________ by and between
PowerHouse Technologies Group, Inc., a Delaware corporation, with offices at
0000 Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx XX 00000 (“Producer”),
______________________ (“Escrow Agent”) and M-Systems Flash Disk Pioneers
Limited, an Israeli corporation with offices at Central Park 2000, 7 Atir Xxxx
Xx., Xxxx Xxxx, 00000, Xxxxxx (“Licensee”).
Preliminary
Statement. This Agreement is made pursuant to the Development Agreement
attached thereto between Producer and Licensee (the “Development Agreement”)
dated __________________, a copy of which is attached hereto. Capitalized terms
not defined in the Agreement shall have the meaning ascribed to them in the
Development Agreement. Producer intends to deliver to Escrow Agent a sealed
package containing magnetic tapes, disks, disk packs, or other forms of media,
in machine readable form, and the written documentation prepared in connection
therewith (the “Deposit Materials”) for the Producer Product(s). Producer
desires Escrow Agent to hold in strict confidence the Deposit Materials, and,
upon the occurrence of one or more events as provided in Paragraph 4 hereof,
deliver the Deposit Materials (or a copy thereof) to Licensee, in accordance
with the terms hereof.
Now,
therefore, in consideration of the foregoing, of the mutual promises hereinafter
set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1.
Delivery
by Producer. Producer shall be solely responsible for delivering to Escrow
Agent the Deposit Materials as soon as practicable after the execution of the
Development Agreement. Escrow Agent shall hold the Deposit Materials in
accordance with the terms hereof and shall have no obligation to verify the
completeness or accuracy of the Deposit Materials. Escrow Agent shall deposit
and preserve all Deposit Materials in a locked, secured, and environmentally
safe location within its facilities. Escrow Agent shall, at all times, retain
the Deposit Materials in strictest confidence and shall not open, release or
disclose the Deposit Materials, except as expressly set forth in this Escrow
Agreement.
2.
Duplication;
Updates.
| (a) |
Escrow
Agent may duplicate the Deposit Materials by any means in order to
comply
with the terms and provisions of this Agreement, provided that Licensee
shall bear the expense of duplication. Alternatively, Escrow Agent,
by
notice to Producer, may reasonably require Producer to promptly duplicate
the Deposit Materials.
|
| (b) |
Deposit
Updates. Updates to the Deposit Materials will take place when the
original Deposit Materials are updated with new versions or major
revision
releases which are required to be delivered to Licensee or a customer
or
end-user of Licensee as set forth in the Development Agreement. All
Deposit Updates shall be listed on a new Exhibit B and the new
Exhibit B shall be signed by Producer. Each Exhibit B will
be held and maintained separately within the escrow account. All
references in this Agreement to the Deposit Materials shall include
the
initial Deposit Materials and any updates.
|
3. Notification
of Deposits. Simultaneous with the delivery to Escrow Agent of the Deposit
Materials and each update thereto, as the case may be, Producer shall deliver
to
Escrow Agent and to Licensee a written statement specifically identifying all
items so deposited and stating that the Deposit Materials, so deposited have
been inspected by Producer and are complete and accurate in all material
respects. Escrow Agent shall, within ten (10) business days of receipt of any
Deposit Materials or updates, send notification to Producer and Licensee that
it
has received from Producer such Deposit Materials or updates.
4.
Delivery
by Escrow Agent
4.1
Release by Escrow Agent to Licensee. Escrow Agent shall release the
Deposit Materials, or a copy thereof, to Licensee in the event of one (1) or
more of the following events:
(a)
The
CEO
or Chairman of Producer notifies Escrow Agent in writing, accompanied by a
Board
Resolution of Producer authorizing the same, to effect such release and delivery
to Licensee at a specific address, the notification being accompanied by a
check
payable to Escrow Agent in the amount of one hundred dollars ($100.00); or
(b)
Escrow
Agent receives from Licensee, with a copy sent to Producer written notification,
a written statement that (a) Producer has ceased all business operations,
voluntarily or involuntarily, (b) Producer has been adjudicated as bankrupt,
or;
has had a receiver or trustee appointed for all or substantially all of its
property and such receiver has not been dismissed within sixty (60) days of
appointment; and as a result thereof ceases to perform its maintenance and
support obligations in accordance with the Development Agreement as a result
thereof, (c) Producer has filed a voluntary petition for reorganization,
arrangement or bankruptcy and as a result thereof ceases to perform its
maintenance and support obligations in accordance with the Development Agreement
as a result thereof, (d) Producer has made an assignment for the benefit of
creditors all or substantially all of its assets; provided, however, that at
least ten (10) days prior to Escrow Agent’s anticipated release of the Deposit
Materials to Licensee, Escrow Agent shall provide written notice of such
intention to Producer specifying (i) the intended date of release to Licensee
and (ii) a copy of Licensee’s written statement under this Section 4.1(b); or
(c) A
written
order from a court of appropriate jurisdiction that the Deposit Materials be
released and delivered to Licensee.
4.2
For
any
release of Deposit Materials to Licensee, Licensee will provide Escrow Agent
with specific delivery instructions and an initial check payable to Escrow
Agent
in the amount of one hundred dollars ($100) (collectively a “Delivery Demand”).
4.3 If
the provisions of Paragraph 4.1 (a) or 4.1 (c) are satisfied, Escrow Agent
shall, within two (2) business days after receipt of the notification or order,
deliver the Deposit Materials in accordance with the Delivery Demand.
4.4
If
the
provisions of Paragraph 4.1(b) are met, Producer shall have ten (10) days from
the date on which Producer receives the written notice from Escrow Agent
described in such section (“Objection Period”) to notify Escrow Agent of its
objection (“Objection Notice”) to the release of the Deposit Materials to
Licensee and to request that the issue of Licensee’s entitlement to a copy of
the Deposit Materials be submitted to an expedited arbitration in accordance
with the following provisions:
(a)
If
Producer shall send an Objection Notice to Escrow Agent during the Objection
Period, the matter shall within ten (10) days of Producer’s Objection Notice, be
submitted to, and settled by arbitration by, a panel of three (3) arbitrators
in
accordance with the rules of the American Arbitration Association. The
arbitrators shall apply California Law and
render their decision in writing. At least one (1) arbitrator shall be
reasonably familiar with the computer software industry. The decision of
the
arbitrators shall be confidential, binding and conclusive on all parties
involved, and judgment upon their decision may be entered in a court of
competent jurisdiction. All costs of the arbitration incurred by Escrow
Agent,
including reasonable attorneys’ fees and costs, shall be paid by the party which
does not prevail in the arbitration; provided, however, if the arbitration
is
settled prior to a decision by the arbitrators, the Producer and Licensee
shall
each pay 50% of all such costs unless the withdrawing party shall otherwise
agree. As between Producer and Licensee all costs of the arbitration incurred
by
the prevailing party, including
reasonable
attorneys’ fees and costs, shall be paid by the party which
does not prevail in the arbitration unless the arbitrators shall otherwise
dictate in their written arbitration decision.
(b)
Producer
may, at any time prior to the commencement of arbitration proceedings, notify
Escrow Agent that Producer has withdrawn the Objection Notice. Upon receipt
of
any such notice from Producer, Escrow Agent shall reasonably promptly deliver
the Deposit Materials to Licensee in accordance with the instructions specified
in the Delivery Demand.
(c)
If,
at
the end of the Objection Period, Escrow Agent has not received an Objection
Notice from Producer, then Escrow Agent shall reasonably promptly deliver the
Deposit Materials to Licensee in accordance with the instructions specified
in
the Delivery Demand. Both Producer and Licensee agree that Escrow Agent shall
not be required to deliver such Deposit Materials until all such fees then
due
Escrow Agent have been paid.
(d)
If,
prior
to the end of the Objection Period, Escrow Agent has received an Objection
Notice from Producer, then Escrow Agent shall not release the Deposit Materials
to Licensee unless (i) Producer consents thereto or (ii) the arbitration has
been completed and the arbitrators have issued an order authorizing the release
of the Deposit Materials. Both Producer and Licensee agree that Escrow Agent
shall not be required to deliver such Deposit Materials until all such fees
then
due Escrow Agent have been paid.
4.5
Escrow
Agent shall release and deliver the Deposit Materials to Producer upon
termination of this Agreement in accordance with Paragraph 7 hereof.
4.6
Licensee
acknowledges and agrees that, in the event that the Deposit Materials are
released to Licensee under this Agreement, Licensee’s sole right to the Deposit
Materials shall be to use the Deposit Materials to the extent necessary to
internally (within Licensee) perform the maintenance and support required of
Producer under the Development Agreement. Without limiting the generality of
the
foregoing, Licensee shall have no right to license, sublicense, sell, assign
or
otherwise distribute the Deposit Materials in any manner. In addition, Licensee
agrees to hold the Deposit Materials in strict confidence, to protect the
Deposit Materials to the same extent as Licensee protects its most sensitive
and
proprietary information and not to permit the use or disclosure of any of the
Deposit Materials to any person or entity or for any purpose other than for
the
internal uses provided in this Paragraph 4.5.
5.
Indemnity.
With the exception of misrepresentation, negligence or intentional misconduct
on
the part of Escrow Agent, its directors, officers, agents, employees or
stockholders, Producer and Licensee shall, jointly and severally, indemnify
and
hold harmless Escrow Agent and each of its directors, officers, agents,
employees and stockholders (“Escrow Agent Indemnities”) absolutely and forever,
from and against any and all claims, actions, damages, suits, liabilities,
obligations, costs, fees, charges, and any other expenses whatsoever, including
reasonable attorneys’ fees and costs, that may be asserted against any Escrow
Agent Indemnitee in connection with this Agreement or the performance of Escrow
Agent or any Escrow Agent Indemnitee hereunder. IN NO EVENT SHALL PRODUCER
OR
LICENSEE BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES EVEN IF PRODUCER OR LICENSEE SHALL HAVE BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES.
6.
Disputes
and Interpleader.
(a)
Escrow
Agent may submit any dispute under this Agreement to any court of competent
jurisdiction in an interpleader or similar action.
(b)
Escrow
Agent shall perform any acts ordered by any court of competent jurisdiction,
without any liability or obligation to any party hereunder by reason of such
act.
7.
Term
and Renewal.
(a) The
term
of this Agreement shall be identical to the term of the Development Agreement
and shall terminate upon the termination of the Development Agreement unless
earlier terminated by the parties pursuant to this Section 7.
(b) Licensee
and Producer may agree to terminate this Agreement, at any time, by mutual
written agreement.
(c) Escrow
Agent may terminate its obligations under this Agreement upon ninety (90) days
prior written notice to Licensee.
(d)
In
the
event of termination of this Agreement in accordance with Paragraph 7 hereof,
Producer shall pay all fees due to Escrow Agent. Upon such termination, Escrow
Agent shall return all Deposit Materials in its possession to Producer by no
later than 10 days from the termination date of this Agreement.
8. Fees.
Licensee shall pay to Escrow Agent the applicable fees in accordance with
Exhibit A as compensation for Escrow Agent’s services under this Agreement. The
first year’s fees are due upon receipt of the signed Agreement or Deposit
Materials, whichever comes first, and shall be paid in U.S. Dollars.
(a)
Payment.
Escrow Agent shall issue an invoice to Licensee following execution of this
Agreement (“Initial Invoice”) and in connection with the performance of any
additional services hereunder. Payment is due upon receipt of invoice. All
fees
and charges are exclusive of, and Licensee is responsible for the payment of,
all sales, use and like taxes. Escrow Agent shall have no obligations under
this
Agreement until the Invoice has been paid in full by Licensee.
9.
Ownership
of Deposit Materials. The parties recognize and acknowledge that ownership
of the Deposit Materials shall remain with Producer at all times.
10. Notices.
The parties hereto acknowledge that notices and service of legal process shall
be considered to be validly delivered if received by the appropriate party
by
personal hand delivery, overnight mail service or certified or registered mail,
return receipt requested, postage prepaid, at the addresses set forth below,
unless a party notifies the others in writing of a different address.
To
Licensee:
M-Systems
Flash Disk Pioneers Limited
Central
Park 2000, 7 Atir Xxxx Xx.
Xxxx
Xxxx, 00000, Xxxxxx
Attn:
General Counsel
To
Producer:
PowerHouse
Technologies Group, Inc.
000
Xxxx
Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx
Xxxx, XX 00000
To
Escrow Agent:
___________
___________
11.
Miscellaneous.
(a)
Remedies.
Except for material breach, misrepresentation, negligence or intentional
misconduct, Escrow Agent shall not be liable to Producer or to Licensee for
any
act, or failure to act, by Escrow Agent in connection with this Agreement.
Any
liability of Escrow Agent regardless of the cause shall be limited to the fees
exchanged
under this Agreement. Escrow Agent will not be liable for special, indirect,
incidental or consequential damages hereunder.
(b)
Natural
Degeneration; Updated Version. In addition, the parties acknowledge that as
a result of the passage of time alone, the Deposit Materials are susceptible
to
loss of quality (“Natural Degeneration”). It is further acknowledged that Escrow
Agent shall have no liability or responsibility to any person or entity for
any
Natural Degeneration provided Escrow Agent complies with this Escrow Agreement.
(c)
Permitted
Reliance and Abstention. Escrow Agent may rely and shall be fully protected
in acting or refraining from acting upon any notice or other document believed
by Escrow Agent in good faith to be genuine and to have been signed or presented
by the proper person or entity. Escrow Agent shall have no duties or
responsibilities except those expressly set forth herein.
(d)
Independent
Contractor. Escrow Agent, Producer and Licensee are independent contractors,
and are not employees or agents of the other.
(e)
Amendments.
This Agreement shall not be modified or amended except by another agreement
in
writing executed by the parties hereto.
(f)
Entire
Agreement. This Agreement, including all exhibits hereto, supersedes all
prior discussions, understandings and agreements between the parties with
respect to the matters contained herein, and constitutes the entire agreement
between the parties with respect to the matters contemplated herein. All
exhibits attached hereto are by this reference made a part of this Agreement
and
are incorporated herein.
(g)
Counterparts;
Governing Law. This Agreement may be executed in counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same Agreement. This Agreement shall
be
construed and enforced in accordance with the laws of the State of California
without regard to its conflict of law principles.
(h)
Confidentiality.
Escrow Agent will hold and release the Deposit Materials only in accordance
with
the terms and conditions hereof, and will maintain the confidentiality of the
Deposit Materials. In the event of release of the Deposit Materials to Licensee
in accordance with this Agreement, Licensee undertakes to maintain the
confidentiality of the Deposit Materials in accordance with the license granted
in this Agreement and in accordance with the confidentiality undertaking
contained in the Development Agreement.
(i)
Notices.
All notices, requests, demands or other communications required or permitted
to
be given or made under this Agreement shall be in writing and shall be delivered
by hand or by commercial overnight delivery service which provides for evidence
of receipt, or mailed by certified mail, return receipt requested, postage
prepaid. If delivered personally or by commercial overnight delivery service,
the date on which the notice, request, instruction or document is delivered
shall be the date on which delivery is deemed to be made, and if delivered
by
mail, the date on which such notice, request, instruction or document is
received shall be the date on which delivery is deemed to be made. Any party
may
change its address for the purpose of this Agreement by notice in writing to
the
other parties as provided herein.
(j)
Survival.
Paragraphs 5, 6, 8, 9, and 11 shall survive any termination of this Agreement.
(k) No
Waiver. No failure on the part of any party hereto to exercise, and no delay
in exercising any right, power or single or partial exercise of any right,
power
or remedy by any party will preclude any other or further exercise thereof
or
the exercise of any other right, power or remedy. No express waiver or assent
by
any party hereto to any breach of or default in any term or condition of this
Agreement shall constitute a waiver of or an assent to any succeeding breach
of
or default in the same or any other term or condition hereof.
(l) Severability.
All terms and conditions of this Agreement are severable. If any term or
provision, or any portion thereof, of this Agreement is held to be invalid,
illegal or unenforceable, the remaining portions shall not be affected.
IN
WITNESS WHEREOF each of the parties has caused its duly authorized officer
to
execute this Agreement as of the date and year first above written.
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Escrow
Agent
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By:
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Title:
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Print
Name:
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Address:
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Producer
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PowerHouse Technologies Group, Inc. | ||||
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By:
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Title:
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||||
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Print
Name:
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Address:
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Licensee
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M-Systems Flash Disk Pioneer Limited | ||||
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By:
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Title:
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||||
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Print
Name:
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Address:
|
Central
Park 2000, 7 Atir Xxxx Xx., Xxxx Xxxx, 00000, Xxxxxx
|
||||
ESCROW
EXHIBIT A
FEE
SCHEDULE
[TO
BE COMPLETED]
ESCROW
EXHIBIT B
B1.
Product Name:
___________
Prepared
and Confirmed by: ________________________________________________
Title:
_________________________________________ Date:
___________________
Signature:
_______________________________________________________________
Type
of deposit:
X
Initial
Deposit
Special
Instructions: ___________________________________________
Items
Deposit:
|
Quantity
|
Media
Type
|
Description
of Material
|
|||
|
A)
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|||||
|
B)
|
|||||
|
C)
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|||||
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D)
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|||||
|
E)
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|||||
|
(please
copy page as necessary)
|
EXHIBIT
F - EXCLUSIVITY EXCEPTIONS
[
* * * ]
EXHIBIT
F
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PowerHouse-M-Systems
Agreement 30.3.05
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Page
2
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