OEM/REMARKETING AGREEMENT
THIS OEM/REMARKETING AGREEMENT (this "Agreement") is effective as of
the 6th day of July 2000, by and between Eloquent Technology, Inc., a New York
corporation having offices at 2389 North Triphammer Road, Ithaca, NY 14850
(hereinafter "Supplier"), and Words +, Inc., a California corporation having
principal offices at 1220 W. Avenue J, Lancaster, CA 93534 (hereinafter "OEM").
WITNESSETH:
WHEREAS, Supplier produces a certain text-to-speech computer software program
known as ETI-Eloquence, and related application software, tools, documentation
and utilities, all of which Supplier is willing to provide to OEM on the terms
and conditions set forth herein; and
WHEREAS, OEM intends to integrate ETI-Eloquence with or otherwise offer ETI
Eloquence in conjunction with other software programs currently owned, or to be
developed or acquired by OEM in the future, so as to create EZ-Keys for Windows
and Talking Screen, the OEM Product (hereinafter "OEM Product"), and to market
such OEM Product to end-users;
NOW, THEREFORE, in consideration of the premises hereof, and the mutual
obligations herein made and undertaken, the parties hereto agree as follows:
1. Definitions. For the purposes of this Agreement, the definitions set
forth in this Section shall apply to the respective capitalized terms:
1.1 "Class A Programs." The run-time software modules required at
execution time for conversion of text-to-speech, and associated
Documentation, which run-time modules and Documentation are listed on
Exhibit A.
1.2 "Class B Programs." Those software components, including
Documentation, that are designed for use by developers in integrating
Class A Programs with other software and which consist of all software
components and Documentation other than those listed in Exhibit A. All
software components and Documentation that are not listed as Class A
Programs on Exhibit A are Class B Programs.
1.3 "Documentation." All printed or machine-readable instructions, help
files, manuals, diagrams, or specifications pertaining to the Programs.
1.4 "End-User." A customer to whom is offered a license to use one copy
of OEM Product for this single person's own use, without a right to
resell or relicense the OEM Product.
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1.5 "End-User License Agreement," or "Sublicense." The form of
agreement under which is granted to an End-User the right and license
to use Class A Programs as part of OEM Product.
1.6 "Enhancement(s)." Computer program modifications or additions,
other than Maintenance Modifications, that may be integrated with the
Programs or offered separately by Supplier and that alter the
functionality of Programs or add new functions thereto. Enhancements
may be
(a) a "Minor upgrade" which fixes bugs and may add minor
functionality;
(b) a "Major upgrade" by which major functionality is added;
(c) "Add-Ons", modules which provide added functionality, such
as a new language.
1.7 "Maintenance Modification(s)." Computer software changes to be
integrated with the Programs to correct any errors therein, but that do
not substantially alter the functionality of the Programs or add new
functions thereto.
1.8 "Marketing Territory." The Marketing Territory shall be the world.
1.9 "Object Code." Computer programs assembled or compiled in
electronic binary form on software media, which are readable and usable
by machines, but not generally readable by humans without
reverse-assembly, reverse-compiling, or reverse-engineering.
1.10 "OEM Product." A combination of ETI-Eloquence with OEM's Software
Product, to be offered by OEM, together with related services, to
End-Users.
1.11 "Programs." The Class A Programs and/or the Class B Programs,
including all Maintenance Modifications and Enhancements thereto.
1.12 "Source Code." A computer program written in a higher-level
programming language, sometimes accompanied by English language
comments. Source Code is intelligible to trained programmers and may be
translated to Object Code for operation on computer equipment through
the process of compiling.
2. OEM Certification. OEM hereby certifies and agrees that, in
consideration of the benefits of this Agreement, OEM will add significant value
to, and enhance the functionality and/or capability of, the Class A Programs by
combining the Class A Programs with other computer equipment and/or computer
software programs to produce the OEM Product, and shall offer such OEM Product
and related services, including training, installation assistance, and other
forms of customer support. OEM further certifies and agrees that it will market
the Class A Programs solely as part of OEM Product and that OEM Product will be
marketed by OEM for its own account in the normal course of its business solely
to its dealers and to End-Users having no affiliation or control relationship
with OEM. In the event that any of the foregoing representations and
undertakings prove untrue at any time during the term of this Agreement,
Supplier shall have the right to terminate this Agreement as to any or all
further shipments to OEM or as to any or all further copying and distribution of
Programs by OEM in the manner prescribed in Section 14 hereof.
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3. Supplier's Responsibilities. Subject to the terms and conditions of
this Agreement, Supplier shall:
3.1 Deliver one copy of the Programs to OEM;
3.2 Grant OEM the rights and licenses in the Programs as set forth in
Section 5 hereof;
3.3 Warrant the Programs as set forth in Section 12 hereof;
3.4 Indemnify OEM as set forth in Section 13 hereof;
3.5 Furnish to OEM without additional charge, any Minor Upgrade to the
Programs which may be released during the term of this Agreement
(although Supplier shall have no duty to release any Enhancement) and
this Agreement shall be deemed to be a license of all Minor Upgrades,
but shall not be deemed to compel Supplier to grant a license of any
Major Upgrade or Add-On. If Supplier elects to grant such a licensed,
it shall be governed by the terms of this agreement.
3.6 Supply the ETI logo in photo-ready format or on a disk, for use in
the OEM product, upon request by OEM.
4. OEM's Responsibilities. Subject to the terms and conditions of this
Agreement, OEM shall:
4.1 Combine the Class A Programs with other equipment and/or computer
software programs independently developed or procured by OEM so as to
create the OEM Product, such combination to be accomplished in such a
way as to limit to the maximum extent reasonably possible the use of
the Class A Programs by the End-User to their use within OEM Product
and not to permit the End-User to separately access the functionality
of the Class A Programs;
4.2 Market, sell, and deliver OEM Product to End-Users in the Marketing
Territory;
4.3 Present Supplier's End-User License Agreement to all ETI- Eloquence
customers;
4.4 Pay royalties for licenses granted, as set forth in Exhibit B and
Section 11 hereof,
4.5 Protect Supplier's proprietary rights in Programs as set forth in
Section 6 hereof;
4.6 Provide reseller exemption certificates to Supplier as set forth in
Section 10 hereof;
4.7 Keep confidential the terms of this Agreement, including but not
limited to the Royalty Schedule as set forth in Exhibit B to this
Agreement.
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5. Licenses Granted.
5.1 Supplier hereby grants to OEM the following rights and licenses:
5.1.a. Class A Programs. Supplier hereby grants to OEM a
nonexclusive, nontransferable right and license to copy and to
distribute copies of Class A Programs, solely for use as part
of the OEM Product and not as a separate product, directly or
through the intermediary of distributors of OEM, to End-Users
in the Marketing Territory during the term of this Agreement.
No modification or preparation of derivative works of
ETI-Eloquence whatsoever is permitted.
5.1.b. Class B Programs. Supplier hereby grants to OEM a
nonexclusive, nontransferable right and license to use the
Class B Programs, for internal use only, for purposes of
adaptation and integration of the Class A Programs to OEM
Product.
5.1.c. Version1.x Programs. [Confidential Treatment Requested]
5.2 Supplier further grants to OEM a nonexclusive, nontransferable right
and license to use the Class A Programs for marketing and demonstration
purposes and for the training of End Users or distributors of OEM.
5.3 The license granted in this Section 5 is provided by Supplier in
cooperation with International Business Machines Corporation ("IBM").
6. Confidentiality of Information; Protection and Security.
6.1 OEM shall use all reasonable efforts to protect and defend the
proprietary nature of the Programs, including Enhancements and any
derivative works of the Programs. Except as expressly provided
otherwise in this Agreement, OEM shall not copy, modify, transcribe,
store, translate, sell, lease, or otherwise transfer or distribute any
of the Programs, including Enhancements, in whole or in part, without
prior authorization in writing from Supplier.
6.2 All Programs incorporated into OEM Product shall be marked with
such copyright, patent, or other notices, proprietary legends, or
restrictions as Supplier may require.
6.3 OEM and Supplier may from time to time exchange confidential or
proprietary information. Each shall take reasonable steps to keep
confidential and shall not disclose to any other party, or use except
in furtherance of the purposes of this Agreement, any such information
which is received in a writing marked "Confidential".
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7. Expenses. It is expressly understood and agreed that neither party
is under any obligation or requirement to reimburse the other party for any
expenses or costs incurred by that party in the performance of its
responsibilities under this Agreement. Any costs or expenses incurred by either
party shall be at that party's sole risk and upon its independent business
judgment that such costs and expenses are appropriate.
8. Technical Support. Supplier shall use commercially reasonable
efforts to provide the support services for the Programs as specified in Exhibit
C ("Support Services").
9. Title.
9.1 Title to all of Supplier's Software Programs (including any
Maintenance Modifications or Enhancements) shall at all times remain
and vest solely with Supplier or its licensors. OEM agrees that it will
not claim or assert title to any such materials or attempt to transfer
any title to End-Users or any third parties.
9.2 The following copyright notice shall be placed on the documentation
of the OEM Product and such notices shall be retained on the copies
made by OEM: "This product uses the ETI-Eloquence text-to-speech system
which contains material copyrighted by Eloquent Technology, Inc. and/or
International Business Machines Corporation". Supplier agrees to take
such reasonable steps as may be necessary to preserve the copyrights to
the Supplier's Programs and any associated Documentation.
10. Reseller Exemption Certification. OEM hereby certifies that it
either holds or will acquire prior to offering for resale a valid Reseller
Exemption Certificate issued by each taxing jurisdiction or entity in the
Marketing Territory where such certificate is required as a condition for the
avoidance of applicable sales or use taxes, covering any Programs to be licensed
or sublicensed under this Agreement. Prior to any shipment of OEM Product under
this Agreement, OEM will provide Supplier with a copy of each such certificate,
thereby entitling OEM to be treated by Supplier as exempt from collection of tax
on Programs in each jurisdiction or entity from which a certificate is obtained.
OEM shall promptly notify Supplier of any additions, deletions, or changes to
such certificates. OEM shall indemnify and hold harmless Supplier from and
against any taxes, duties, tariffs, or other assessments levied by or on behalf
of any taxing jurisdiction or entity that fails to issue, or disputes the
validity or coverage of, any such exemption certificates.
11. Payment and Audit.
11.1 OEM shall pay royalties to Supplier quarterly, in accordance with
the schedule of royalties attached hereto as Exhibit B, not later than
thirty (30) days following the end of each calendar quarter.
11.2 Within thirty (30) days after the end of each calendar quarter,
OEM shall submit to Supplier a report, in a form to be supplied by
Supplier, which details the number of End Users to which the OEM
Product was licensed during the quarter (hereinafter "Royalty Report").
A Royalty Report shall be submitted for every calendar quarter during
the term of this Agreement even if no End Users are licensed to use the
OEM Product during the quarter. The Royalty Report shall be certified
by an authorized representative of OEM.
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11.3 Supplier, upon reasonable written notice, may at its election and
at its own expense cause an audit of OEM's books and records of sales
by a firm of licensed public accountants to confirm the accounting;
provided, however, that if such an audit shows that the royalty
payments actually made are less than 95% of the amounts shown to be
due, the cost of the audit shall be paid by the OEM.
11.4 All payments due under this agreement shall be paid in United
States dollars by check to:
Accounts Receivable
Eloquent Technology, Inc.
2389 N. Triphammer Rd.
Ithaca, NY 14850 USA
or by wire transfer to the following account (or such other account as
supplier may specify):
[Confidential Treatment Requested]
11.5 In the event that any national government imposes any income or
equivalent taxes on any part of the payments required by this Agreement
to be made by OEM to Supplier and requires OEM to withhold taxes from
such payment, OEM may deduct such taxes from such payments. Tax
receipts indicating payments or withholding of taxes on behalf of
Supplier shall be promptly submitted to Supplier. OEM shall cooperate
with Supplier in a determination of the propriety of imposition of any
such tax.
12. Disclaimer of Warranties.
12.1 OEM acknowledges that it has had a full opportunity to evaluate
the Programs, and accepts the Programs "as is" without warranty of any
kind.
12.2 SUPPLIER DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES AS TO THE SUITABILITY OR
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY PRODUCTS
OR PROGRAMS FURNISHED HEREUNDER OR FOR ANY OEM PRODUCT PREPARED BY OEM.
IN NO EVENT SHALL SUPPLIER BE LIABLE FOR ANY LOST OR ANTICIPATED
PROFITS, OR ANY INCIDENTAL, EXEMPLARY, SPECIAL, OR CONSEQUENTIAL
DAMAGES, REGARDLESS OF WHETHER SUPPLIER WAS ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES.
12.3 No action arising or resulting from this Agreement, regardless of
its form, may be brought by either party more than one year after the
cause of the action arises.
13. Indemnification.
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13.1 Supplier hereby indemnifies and holds harmless OEM from and
against any claims, actions, or demands alleging that the Programs
infringe any United States patent, United States trademark, or the
copyright or other trade secret light of any third party. OEM shall
permit Supplier to replace or modify any affected Programs so to avoid
infringement, or to procure the right for OEM to continue use and
remarketing of such items. If neither of such alternatives is
reasonably possible, the infringing items shall be returned to Supplier
and Supplier's sole liability shall be to refund amounts paid therefore
by OEM. Supplier shall have no obligation hereunder for or with respect
to claims, actions, or demands alleging infringement that arise by
reason of combination of non-infringing items with any items not
supplied by Supplier.
13.2 OEM hereby indemnifies and holds harmless Supplier from and
against any and all claims, actions, or demands arising with respect to
any OEM Product, with the sole exception of those matters for which
Supplier bears responsibility under Section 13.1 hereof.
13.3 The foregoing indemnities are conditioned on prompt written notice
of any claim, action, or demand for which indemnity is claimed;
complete control of the defense and settlement thereof by the
indemnifying party; and cooperation of the other party in such defense.
14. Term and Termination.
14.1 This Agreement shall remain in effect for a period of one (1) year
from the date set forth above and shall be automatically renewed for
subsequent one (1) year terms unless either party provides written
notice to the other that they wish to terminate this Agreement at least
sixty (60) days before the end of a term. In the event that such notice
is given by either party, this Agreement shall terminate on the last
day of the term during which the notice is given.
14.2 Supplier may terminate this Agreement if OEM at any time fails to
comply with the certification required under Section 2 hereof.
14.3 Should either party commit a material breach of its obligations
hereunder, or should any of the representations of either party in this
Agreement prove to be untrue in any material respect, the other party
may, at its option, terminate this Agreement, by 30 days' written
notice of termination, which notice shall identify and describe the
basis for such termination. If, prior to expiration of such period, the
defaulting party cures such default, termination shall not take place,
provided, however, that Supplier may terminate this Agreement upon 10
days' written notice for breach of the obligation to pay royalties as
provided by section 11.1 of this Agreement.
14.4 Supplier may, at its option and without notice, terminate this
Agreement, effective immediately, should OEM (1) admit in writing its
inability to pay its debts generally as they become due; (2) make a
general assignment for the benefit of creditors; (3) institute
proceedings to be adjudicated a voluntary bankrupt, or consent to the
filing of a petition of bankruptcy against it; (4) be adjudicated by a
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court of competent jurisdiction as being bankrupt or insolvent; (5)
seek reorganization under any bankruptcy act, or consent to the filing
of a petition seeking such reorganization; or (6) have a decree entered
against it by a court of competent jurisdiction appointing a receiver,
liquidator, trustee, or assignee in bankruptcy or in insolvency
covering all or substantially all of such party's property or providing
for the liquidation of such party's property or business affairs.
14.5 Termination of this Agreement shall not relieve either party of
the obligations incurred hereunder pursuant to Sections 4.7, 6, 9, 11,
12, and 13 hereof, which Sections shall survive such termination.
14.6 On termination of this Agreement, (1) OEM shall immediately
discontinue marketing OEM Product containing any Programs which are
licensed under this Agreement, and (2) at Supplier's option, return to
Supplier or destroy all Programs delivered to OEM, including all copies
thereof.
15. Limitation of Representations and Use of Name by OEM.
15.1 OEM shall make no representations concerning Supplier or any
Programs, including any Maintenance Modifications without prior
authorization in writing from Supplier.
15.2 OEM shall not license, sublicense, reproduce, reference, or
distribute the Programs except under the tradename or trademark of
Supplier without the prior written approval of Supplier, which consent
shall not be unreasonably withheld. Supplier does not warrant or
represent that the trademarks "ETI-Eloquence",
"Elocutor", "OLEcutor", "Olecutor" and "EloqTalk" will be available for
use in every jurisdiction where OEM may distribute OEM Product.
15.3 OEM shall as soon as reasonably possible submit to Supplier for
review any advertising, promotion, or publicity in which the trade name
or trademarks of the Supplier are used, or which is otherwise
undertaken pursuant to this Agreement. Supplier shall have the right to
require, at its discretion, the correction or deletion of any
misleading, false, or objectionable material from any such advertising,
promotion, or publicity.
16. Independent Contractor Status. OEM is an independent contractor
under this Agreement, and nothing herein shall be construed to create a
partnership, joint venture, or agency relationship between the parties hereto
with the sole exception that OEM acts as a licensing agent of Supplier with
respect to Class A Programs as provided herein. OEM shall have no authority to
enter into agreements of any kind on behalf of Supplier, and shall have no
further power or authority to bind or obligate Supplier in any manner to any
third party.
17. Compliance With Law. Each of the parties shall comply with all
applicable laws and regulations of governmental bodies or agencies in its
performance under this Agreement.
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18. No Assignment. OEM represents that it is acting on its own behalf
and is not acting as an agent for or on behalf of any third party, and further
agrees that it may not assign its rights or obligations under this Agreement
without the prior written consent of Supplier, which consent shall not be
unreasonably withheld. The sale or transfer of a controlling interest in OEM
shall be considered an assignment for the purposes of this paragraph. Permission
shall not be withheld for the sole purpose of raising royalty rates paid to
Supplier by OEM or its assignee, but it is expressly understood that Supplier in
its sole discretion may withhold consent to an assignment if Supplier believes
that the effect of the assignment might be to give access to the licensed
Programs to a competitor of Supplier.
19. Notices. All notices and other communications required or permitted
to be given under this Agreement shall be in waiting and shall be considered
effective when transmitted by fax and (1) transmitter has received a signal
indicating correct receipt of the fax transmission and/or (2) a copy of the
writing has been placed in the hands of a recognized international or overnight
courier service, addressed to the party, prepaid.
20. Governing Law. All questions concerning the validity, operation,
interpretation, and construction of this Agreement will be governed by and
determined in accordance with the laws of the State of New York, without
application of its conflicts of laws principle.
21. Arbitration. Should any dispute occur between the parties arising
out of or related to this Agreement, the dispute shall be settled and determined
by arbitration under the then current rules of the American Arbitration
Association. Any award in arbitration may be entered with and enforced by a
court of competent jurisdiction.
22. No Waiver. Neither party shall by mere lapse of time without giving
notice or taking other action hereunder be deemed to have waived any breach by
the other party of any of the provisions of this Agreement. Further, the waiver
by either party of a particular breach of this Agreement by the other party
shall not be construed as, or constitute, a continuing waiver of such breach, or
of other breaches of the same or other provisions of this Agreement.
23. Force Majeure. Neither party shall be in default if failure to
perform any obligation hereunder is caused solely by supervening conditions
beyond that party's control, including acts of God, civil commotions, strikes,
labor disputes, and governmental demands or requirements.
24. Severability. If any provision of this Agreement shall be held
illegal, unenforceable, or in conflict with any law of a federal, state, or
local government having jurisdiction over this Agreement, the validity of the
remaining portions or provisions hereof shall not be affected thereby.
25. No Conflict of Interest. Each of the parties represents and
warrants that it has full power and authority to undertake the obligations set
forth in this Agreement and that it has not entered into any other agreements,
nor will it enter into any other agreements, that would render it incapable of
satisfactorily performing its obligations hereunder, or place it in a position
of conflict of interest, or be inconsistent or in conflict with its obligations
hereunder.
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26. Scope of Agreement. Each of the parties hereto acknowledges that it
has read this Agreement, understands it, and agrees to be bound by its terms.
The parties further agree that this Agreement is the complete and exclusive
state of agreement and supersedes all proposals (oral or written),
understandings, representations, conditions, warranties, covenants, and all
other communications between the parties relating thereto, except for any
Non-Disclosure Agreement in effect between the parties. This Agreement may be
amended only by a writing that refers to this Agreement and is signed by both
parties.
27. Parties bound. This Agreement shall bind and inure to the benefit
of the parties, their successors and assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their authorized representatives on the date first set forth above:
ELOQUENT TECHNOLOGY, INC.
By: /S/ SUSAN HERTZ
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Dr. Susan Hertz, President
WORDS+, Inc.
By: /S/ WALTER WOLTOSZ
----------------------------------------
Walter Woltosz, Chief Executive Officer
Exhibit A through C [Confidential Treatment Requested]
