DISTRIBUTION AGREEMENT
This Distribution Agreement ("Agreement") is made and entered into
effective as of May 26, 2000,("Effective Date") by and between Acceleration
Software International Corporation, a Washington corporation ("Developer"),
and Sourcenext Corporation, a Japanese corporation ("Distributor").
RECITALS
A. Distributor is in businesses related to development, distribution and
sale of software and other technology-related products (including
computer-related products and services), and, with their shareholders other
parties, may form other related entities to further engage in such business.
B. Developer and Distributor desire that Distributor distribute certain
of Developer's existing and future software and other technology in specified
geographic areas, and desire to enter into a flexible agreement providing for
such distribution, subject to future identification of the specific software
or other technology, the geographic areas of distribution, pricing, volumes
and other matters as may be determined by the parties as the necessity arises.
IN CONSIDERATION OF THE MUTUAL PROMISES CONTAINED HEREIN, THE PARTIES AGREE AS
FOLLOWS:
1. Definitions.
1.01 "Software" shall mean the software product(s) described in Exhibit A
(as defined below), and upgrades or other modifications to such specific
product (but not other products sold or otherwise distributed with or in
connection with such product), as determined in the discretion of Developer.
1.02 "Software Copy" shall mean an object code copy of the Software,
together with a copy of any user manual or other documentation or materials
which are (or, if none, ordinarily would be) customarily supplied to End Users
by Developer with the Software, packaged for retail sale.
1.03 "End User" shall mean, in the case of Software, any third party
which obtains a Software Copy to fulfill its own computer aided instruction or
tool needs, or, in the case of Technology, any third party which obtains the
Technology in a form suitable to fulfill its needs.
1.04 "Territory" shall mean the geographic area identified in Exhibit A.
1.05 "Localization" shall mean modification of Software or Software
Copies ("Localized Software") or Technology ("Localized Technology") to meet
the needs of non- English speaking End Users in the Territory. This may
include code changes, additions and alterations
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to the feature set, changes in the data, translation, or new art or new
packaging, with the intent to provide more culturally acceptable Software or
Technology to End Users speaking a principal language in use in the Territory.
1.06 "Sale" or "Selling" or "Purchase" or "Purchasing" of Software,
Software Copies or Technology shall mean, with respect to the intellectual
property rights related to such Software or Technology, the grant or
acquisition, respectively, of a license to use the Software or Technology.
With respect to tangible property, such terms shall be accorded their common
meanings. In either case, such terms shall (i) include all sales, licenses,
transfers or other dispositions for value, (ii) include use by Distributor,
and (iii) be deemed a sale not later than when recorded as such on the books
and records of Distributor which are maintained for financial statement
purposes.
1.07 "Exhibit A" shall mean each such Exhibit attached to and made a part
of this Agreement as of this Agreement's Effective Date, and each such Exhibit
subsequently executed by the parties and so made a part of this Agreement as
of the Effective Date specified in such subsequent Exhibit. Each such Exhibit
A shall be construed, together with this Agreement, as a separate and distinct
agreement between the parties, without taking into account or considering any
such other Exhibit A, such that performance or default in connection with any
one such Exhibit A shall not determine or affect performance or default as
construed in connection with any such other Exhibit A. In the event of any
conflict between the terms and conditions of any such Exhibit A and this
Agreement considered without such Exhibit A, the terms and conditions of
Exhibit A shall take precedence and control.
1.08 "Affiliate" shall mean any entity fifty percent (50%) or more of the
value or control of which is owned, directly or indirectly, by Distributor, or
their shareholders, or any combination of such parties, or any entity which
owns, directly or indirectly, fifty percent (50%) or more of the value or
control of such entities or their shareholders.
1.09 "Technology" shall mean the technology described in Exhibit A. For
purposes of this Agreement, "technology" shall be construed in its broadest
sense to include any information of actual or potential commercial use or
value relating to or arising out of the business of Developer, regardless of
whether patented, copyrighted or otherwise protected by law, and including but
not limited to computer and other programs, trade secrets, procedures,
concepts, processes, methodology, design data, computer software,
specifications, research, inventions or know-how, any of which may include or
be incorporated within or utilized in connection with either tangible or
intangible property or services, or some combination of such property and
services. Such technology may be of various forms or kinds which may, in
various cases, be distributed, licensed, provided or otherwise used.
"Potential Technology" for purposes of Section 8.09 shall be deemed to include
(i) any technology which Developer is developing or considering developing,
and as to which Developer has given Distributor notice of such development,
and (ii) all performance-enhancement computer utility software, specifically
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including that relating to CD-ROM drive, hard drive and other storage media.
In interpreting this Agreement in connection with Technology (as distinguished
from Software or Software Copies), a broad interpretation shall be applied to
all terms and conditions to effect the intent of the parties that this
Agreement apply to future transactions in connection with such Technology, in
accordance with any Exhibit A made a part of this Agreement after the
Effective Date.
2. Appointment and Authority of Distributor.
2.01 Appointment as Distributor for Territory. Subject to the terms and
conditions set forth in this Agreement, Developer hereby appoints Distributor
as Developer's distributor for the Software and/or the Technology in the
Territory, as specified in Exhibit A, and Distributor hereby accepts such
appointment. "Distributor," "distribution" and similar terms shall be
construed as appropriate for the circumstances in cases in which Technology is
marketed, sold, or provided in connection with services or tangible property.
The parties contemplate that Developer may appoint Distributor, and
Distributor may accept appointment as Developer's distributor, with respect to
other or additional Software and/or Technology in the Territory or other
territories, which appointment and acceptance, if any, shall be pursuant to
additional Exhibit(s) A in substantially the form attached, as executed by the
parties and made a part of this Agreement.
2.02 Exclusive Distributor. For so long as Distributor is performing in
compliance with this Agreement (including complying with any Minimum
Performance Requirements, as defined in Section 10.03), Developer shall not
grant any other party rights to distribute Localized Software or Localized
Technology in the Territory. Distributor acknowledges that Developer is not
prohibited from distributing in the Territory Software or Technology using
Developer's website(s) which have not been localized as long as reasonable
effort is made to prevent usage of such software on Japanese language
machines, but Developer will not make any Localized Software or Localized
Technology available in the Territory.
2.03 OEM Sales and Site Licenses. In addition to distribution of Software
Copies provided for in Section 2.01, Distributor shall have the right to
distribute the Software to either (i) a computer hardware manufacturer or
seller desiring to bundle the Software with computer hardware (an "OEM Sale")
or (ii) a user desiring a license to use the Software on more than one (1)
computer owned, operated and used by such user in such user's place of
business without acquiring individual Software Copies for use on each such
computer (a "Site License", as further interpreted within the ordinary meaning
of the term). Such Software shall consist of CD-ROM discs (i) which have been
acquired from Developer for, and only for, such respective use, (ii) which are
packaged in a form not suitable for normal retail distribution to End Users,
and (iii) which are sold only in the Territory and for use or resale only in
the Territory. In the case of any other OEM Sale or Site License not including
an individual CD-ROM disc, Distributor shall further have the right to
negotiate the preliminary business terms of any such sale or license,
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on a case-by-case basis, for review, further negotiation, and execution of a
definitive agreement by Developer (who shall have the sole right to enter into
any such agreement), in which case Distributor shall be compensated as
provided in Exhibit A.
2.04 Responsibilities of Distributor. Distributor shall, at its cost,
prepare localized versions of the Software and Software Copies or the
Technology, and shall market and distribute Software Copies and Technology in
the Territory, including marketing and distribution in the Territory for
resale. Distributor shall use its best efforts to pursue aggressive sales
policies and procedures (including marketing) to realize the maximum sales
potential for the Software or Technology, and to establish and promote
Developer's business name, trademarks, brandnames, and similar attributes, in
the Territory. Distributor shall not distribute or market the Software Copies
or the Technology outside the Territory.
2.05 Independent Contractors. The relationship of Developer and
Distributor established by this Agreement is that of independent contractors,
and nothing contained in this Agreement shall be construed to (i) give either
party the power to direct or control the day-to-day activities of the other,
(ii) constitute the parties as partners, joint ventures, co-owners or
otherwise as participants in a joint or common undertaking. All financial
obligations associated with Distributor's business are the sole responsibility
of Distributor. All sales and other agreements between Distributor and its
customers are Distributor's exclusive responsibility and shall have no effect
on Distributor's obligations under this Agreement. Distributor shall be solely
responsible for, and shall indemnify and hold Developer free and harmless
from, any and all claims, damages or lawsuits (including Developer's
attorneys' fees) arising out of the acts of Distributor, its employees or its
agents. Distributor shall not constitute, and shall take no action which would
cause it to be treated as, a "permanent establishment" of Developer within the
meaning of the tax laws of any country.
3. Production of Software, Software Copies and Technology.
3.01 CD-ROM Discs and Other Media. In the case of Software, except as
otherwise specifically provided in Exhibit A, Developer shall, at its cost and
at a facility of its selection, reproduce the object code of Software onto
CD-ROM discs (including labeling and artwork) in a form suitable for packaging
and distribution to End Users at Developer's cost and at a facility of
Developer's selection. Localized Software will be reproduced by Developer from
a master copy of the Software (including a master of labeling and artwork)
which has been Localized and provided by Distributor at Distributor's cost. As
circumstances may require or make advantageous (as determined in the
discretion of Developer), in particular in the case of Technology, Developer
may reproduce and provide to Distributor Software or Technology in other media
or form. Under no circumstances shall Distributor replicate or otherwise
duplicate Software or Technology, on CD-ROM discs or otherwise, or obtain such
replicated or duplicated Software from any source other than Developer.
Possession by Distributor of a "Gold Disc" or other medium commonly used
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to replicate or duplicate software shall not be construed as evidence that
Distributor has any right to replicate or duplicate Software.
3.02 Documentation and Packaging. Distributor shall produce all
documentation, packaging and other items customarily supplied to End Users,
and shall assemble such items, all at Distributor's cost. Five (5) such copies
shall be provided to Developer not less than sixty (60) days after
commencement of production for Developer's reference library.
3.03 Mutual Assistance. Distributor and Developer shall cooperate and
provide reasonable and timely assistance to one another in connection with
preparation of Localized Software or Technology.
4. End User Restrictions.
Except as otherwise provided under applicable law:
4.01 Only a personal, non-transferable, and non-exclusive right to use
Software or Technology (on a single designated system shall be granted to each
End User.
4.02 Developer retains all rights in and title to Software and
Technology, including the media on which it is provided, and in and to all
copies, and no title to the Software or such media is transferred to either
Distributor or any End User.
4.03 The End User may not copy the Software or Technology (except in the
case of Software ,except for one (1) copy for backup purposes and only as
necessary to use the Software on such End User's designated system), and all
such copies shall contain all copyright and other proprietary notices or
legends of Developer on the Software as delivered to the End User.) No copies
of the Software documentation may be made by the End User.
4.04 Developer shall not be liable to the End User for any general,
special, direct, indirect, consequential, incidental, or other damages arising
out of the license to use the Software .
4.05 Software shall be provided to the End User subject to a
"shrink-wrap" or other appropriate license agreement, which shall be subject
to approval by Developer under Section 3.02.
5. Restrictions on Distributor.
Distributor agrees (i) in the case of Software, not to reverse assemble,
decompile, or otherwise attempt to derive source code from the Software, and,
if source code is provided, to use such code solely for necessary localization
purposes, not to disclose such code to persons other than those with a need to
know for such purposes (and then only subject to a non-disclosure agreement
approved in advance by Developer), and to return or destroy all copies of such
source code immediately upon the earlier of completion of localization or the
request of Developer; (ii) in the case of Technology, not to attempt to
determine any Confidential
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Information (within the meaning of Section 14) from the Technology, (iii) to
comply with all export, re-export, and anti-boycott, restrictions and
regulations of the Department of Commerce or other United States agency or
authority, and not to transfer, or authorize the transfer, of the Software or
Technology to a prohibited country or otherwise in violation of any such
restrictions or regulations, and (iv) to comply with all other laws, foreign
and domestic, in connection with the Software and Technology.
6. Payment.
6.01 Payment Amount. Distributor agrees to pay Developer the amounts set
forth in Exhibit A.
6.02 Timing of Payments. In the case of Software or Technology, payment
to Developer for which is dependent upon delivery to Distributor of CD-ROM
discs or other media or tangible property, Payment shall be made prior to
release to Distributor of such property, except as otherwise specified in
Exhibit A. In other cases, including percentage royalties or amounts dependent
upon or affected by Distributor's gross receipts, net income, or other
factors, payment to Developer shall be made not later than thirty (30) days
after the end of the month in which such event occurs or such amounts may be
reasonably determined. All payments required to be made to Developer pursuant
to this Agreement shall be made to Developer in the State of Washington, USA,
at its office or at such banking institution as Developer may direct from time
to time, in immediately available funds, in legal tender of the United States
of America.
6.03 Audit Rights. Distributor shall maintain accurate books and records
pertaining to the production and distribution of Software or Technology,
including packaging, documentation, artwork, and all other components of the
Software Copies or Technology in whatever form distributed, and similar rights
as to Software or Technology sold in other than the form of Software Copies.
Developer's designated auditors shall have the right, upon reasonable request
and during ordinary business hours, to examine such books and records, and the
physical inventory of Software Copies. Developer shall be entitled to exercise
such right to examine upon the end of each calendar quarter with respect to
the first year of the term of this Agreement (including each applicable
Exhibit A), and shall thereafter be entitled to exercise such right upon the
end of each calendar semi-annual period or, if more frequent, upon the end of
any calendar quarter following any such examination in which it is determined
that any underpayment of five percent (5%) or more was made by Distributor to
Developer. Such examination shall be at Developer's expense, unless the
examination reflects an underpayment of five percent (5%) or more of the
amount that should have been paid for the period audited, in which case
Distributor shall bear the expense of such audit. Interest of one and one-half
percent (1.5%) per month shall paid on payments not timely made.
6.04 Transactions with Affiliates. All transactions by Distributor with
Affiliates shall be at fair market prices for comparable
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transactions between unrelated parties, including a reasonable profit on such
transactions. In any case where payment by Distributor to Developer is a
percentage royalty based upon Distributor's receipts, or is otherwise
dependent upon or affected by Distributor's sales price or other amount
received, for purposes of determining Distributor's payment to Developer,
Distributor's sales price or other amount received from an Affiliate shall be
disregarded, and instead shall be deemed to be the amount received from the
first non-Affiliate making such payment.
6.05 Bundled Transactions. In any case where payment to Developer by
Distributor is a percentage royalty or is otherwise dependent upon or affected
by Distributor's gross receipts, sales price, net income or other amount
received with respect to a Bundled Transaction, for purposes of determining
Distributor's payment to Developer, such amount received shall be deemed to
include all gross receipts received in connection with such Bundled
Transaction, without regard to the allocation or characterization of the gross
receipts as relating to the Software or Technology or to other aspects of the
transaction. For purposes of this Agreement, "Bundled Transaction" shall mean
any transaction in which Distributor receives payment for Software or
Technology and other property or services in a single integrated transaction,
and "gross receipts" shall mean the total amount realized, without reduction
for cost of sales, returns or allowances, or expenses of any kind.
6.06 Security Interest. Distributor hereby grants Developer a security
interest in accounts or other amounts receivable by Distributor in connection
with the sale of the Software or Technology or Software Copies. Distributor
further agrees that in event of a default in payment of amounts due Developer
which is not cured within fifteen (15) days as provided in Section 10.04,
Developer may take all reasonable action to perfect such security interest
(or, where appropriate, take comparable action under the laws of a
jurisdiction other than the U.S.). Distributor shall assist Developer in
taking any such action, including by executing documents reasonably requested
by Developer to do so.
7. Developer's Warranty.
7.01 Warranty. Developer warrants that the Software provided to
Distributor by Developer in connection with Localization by Distributor
will conform to the Software or Technology then being distributed by
Developer. Developer further warrants that upon delivery, and for sixty
(60) days thereafter, the media on which the Software or Technology is
delivered will be free of defects in material and workmanship. Should any
such defects appear in material and workmanship appear during the
warranty period, Developer shall, as its sole obligation, replace such
defective copy upon its prompt return to Developer.
7.02 Limitation of Liability and Remedies. EXCEPT AS SET FORTH ABOVE,
DEVELOPER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND
SPECIFICALLY EXCLUDES ANY WARRANTY THAT ANY SERVICES, MATERIALS OR
PRODUCTS FURNISHED BY DEVELOPER ARE FIT FOR ANY PARTICULAR PURPOSE AND
FURTHER SPECIFICALLY EXCLUDES ANY IMPLIED
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WARRANTIES OF MERCHANTABILITY. THE STATED WARRANTIES, COVENANTS AND
REMEDIES SET FORTH IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER OBLIGATIONS
OR LIABILITIES ON THE PART OF DEVELOPER FOR DAMAGES OR OTHER RELIEF,
INCLUDING, BUT NOT LIMITED TO, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES
THAT IN ANY WAY ARISE OUT OF OR IN CONNECTION WITH THE USE AND/OR THE
PERFORMANCE OF SUCH SERVICES, MATERIALS OR PRODUCTS FURNISHED BY
DEVELOPER. IN NO EVENT SHALL ANY LIABILITY OF DEVELOPER TO DISTRIBUTOR
PURSUANT TO THIS AGREEMENT EXCEED THE AMOUNT RECEIVED BY DEVELOPER FROM
DISTRIBUTOR WITH RESPECT TO THE TECHNOLOGY (INCLUDING SOFTWARE) GIVING
RISE TO THE LIABILITY.
8. Additional Obligations of Distributor.
8.01 Estimated Distribution Date. Except as otherwise provided in Exhibit
A, upon receipt of Developer's localization kit, Distributor shall, within one
(1) week, provide Developer with an estimated distribution date for the
related Software or Technology.
8.02 Promotion of Software or Technology. Distributor shall, at its own
expense, vigorously promote the distribution of the Software or Technology
within the Territory. Such promotion shall include, but shall not be limited
to, advertising the Software or Technology in publications within the
Territory, participating in trade shows, establishing appropriate distribution
channels and merchandising programs, and directly soliciting orders from
customers for Software or Technology.
8.03 Technical Support. Distributor shall provide the level of technical
support for all Localized Software or Technology equivalent in all material
respects to that which Developer provides its distributors and End Users,
within the U.S. Developer shall provide second level technical support to
Distributor, eg. provide technical support to Distributor employees in
English.
8.04 Marketing and Sales Materials. Distributor shall be responsible to
produce appropriate sales and marketing materials. The presence of technical
feature descriptions in marketing materials and product packaging not approved
in writing by Developer shall not obligate Developer.
8.05 No Assignment. Distributor shall not assign or otherwise transfer its
rights or obligations under this Agreement.
8.06 Governmental Approvals. Distributor shall advise Developer of any
governmental permits or approvals required to consummate the transactions
contemplated by this Agreement, shall obtain such permits or approvals, and
shall provide evidence thereof to Developer.
8.07 Registration of Users. Distributor shall include a registration form
in Software Copies, shall use its best efforts to obtain the registration of
End Users.
8.08 Market Data. Distributor shall provide Developer with
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market data relating to the Software or Technology, including (i) aggregated
quarterly sell through numbers of Software or Technology, and (ii) any other
information of benefit to Developer in cooperating with Distributor and
developing modifications to the Software or Technology or new products.
8.09 Other Products or Services. Distributor acknowledges that in the
course of the performance of this Agreement, certain valuable confidential and
proprietary information will be furnished by Developer to Distributor and
because of the unique nature of such information, it is necessary to provide
for non-competition obligations in order to protect such information. In light
of the above, during the term of this Agreement and, at the discretion of
Developer exercisable by notice to Distributor not later than the non-renewal
or other termination of this Agreement, for a period of six (6) months after
such non-renewal or other termination, other than Localized Software or
Localized Technology that Distributor has unlimited exclusive rights to,
Distributor shall not, without the express written approval of Developer,
commence marketing, distribution, sale or other providing of any technology
(as such term is described in Section 1.09, including computer software) or
other product or service which is directly competitive or substantially
similar in purpose or use to the extent that there are flow chart
similarities, with the Software or Technology or Potential Technology (as
defined in Section 1.09). The parties acknowledge that breach of this Section
would cause irreparable damage to Developer, for which Developer would not
have an adequate remedy for damages, such that, in the event of any such
breach, in addition to other remedies, Developer may apply to a court to
specifically enforce the provisions of this Section.
9. Additional Obligations of Developer.
9.01 New Developments. Developer shall provide Distributor reasonable
notice of new developments in connection with the Software or Technology.
9.02 Marketing Assistance. Developer shall provide Distributor with
market data which is obtained by Developer and relates to the Software or
Technology, and which may benefit Distributor in distributing the Software or
Technology.
10. Term, Renewal and Termination.
10.01 Term. The Effective Date of this Agreement is as set forth above,
and the Effective Date of each subsequent Exhibit A is as set forth in such
Exhibit. The term of this Agreement shall be one (1) year, commencing with its
Effective Date, and the term with respect to each subsequent Exhibit A shall
be one (1) year, commencing with its respective Effective Date, in either case
unless renewed or terminated earlier under the provisions of this Section 10.
10.02 Automatic Renewal and Extended Term. In any case in which Exhibit A
includes Minimum Peformance Requirements (as defined in Section 10.03) and
Developer has not granted to any third party rights to distribute
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Localized Software or Localized Technology under its option to do so under
Section 10.03, the term of this Agreement shall be automatically renewed for
an additional period of one (1) year upon the end of each one (1) year term.
This Agreement shall not so automatically renew where no Minimum Performance
Requirements are so included in Exhibit A. Further, Exhibit A may specifically
provide for a term of more than one (1) year, including a perpetual term (an
"Extended Term"), in connection with, among other terms and conditions, for an
advance or other lump-sum royalty or other payment. Such Extended Term shall
be provided only by specific language to that effect, and shall not otherwise
be implied or construed from the terms of this Agreement or any Exhibit A. In
the case of any Extended Term, Exhibit A shall be deemed to include annual
Minimum Performance Requirements for the duration of such Extended Term, and
such deemed Requirements shall be deemed to be met on an annual basis for the
duration of such Extended Term.
10.03 Conversion to Non-Exclusive Distributorship. In the event
Distributor fails to meet payment obligations in Exhibit A, Developer shall
have the option to distribute Localized Software or Localized Technology in
the Territory that Distributor does not have unlimited exclusive rights to,
notwithstanding the provisions of Section 2.02. Such option may be exercised
by giving notice to Distributor of Developer's desire to grant such rights at
any time within eleven (11) months after the end of any period in which
Distributor fails to make a required payment. The fact that after such failure
Distributor makes such payment shall not affect Developer's option or grant of
rights. Such rights may be granted for the remainder of the term of this
Agreement or such longer period as Developer shall desire.
10.04 Retention, Return and Transfer of Materials and Intellectual
Property Rights. Distributor agrees that other than localized trademarks, all
Software or Technology, trademarks, trade names, packaging trade dress,
patents, other intellectual property rights, (including all derivative works
and enhancements) samples, literature and sales aides of every kind shall
remain the property of Developer, regardless of whether provided by Developer
to Distributor or whether created, developed, modified or otherwise obtained
by Distributor. Distributor shall not make or retain any copies of any
confidential items or information which may have been entrusted to it.
Distributor's license to use trademarks, service marks, tradenames, packaging
trade dress, or other intellectual property rights used in connection with
Localized Software or Localized Technology that Distributor has unlimited
exclusive rights to, shall survive termination of this Agreeement. Effective
upon the termination of this Agreement, for Localized Software or Localized
Technology that Distributor does not have unlimited exclusive rights to,
Distributor shall cease to use all trademarks, service marks, tradenames,
packaging trade dress, or other intellectual property rights used in
connection with Software or Technology by either Distributor or Developer.
10.05 Breach and Termination. Prior to terminating this Agreement,
requesting arbitration, filing suit or taking similar action upon a breach of
this Agreement by either party, the non-breaching party shall give the breaching
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party notice of the basis for asserting such breach. If the breaching party
fails to cure such breach within thirty (30) days, and the breach is a material
breach, the non-breaching party may terminate this Agreement. If the breach is
the non-payment of amounts due under this Agreement, the breach shall be deemed
to be a material breach, and the breaching party shall have fifteen (15) days
to cure such breach.
10.06 Waiver of Liability on Termination. Should this Agreement or any
portion thereof expire, be terminated or not be renewed at any time for any
reason, neither party will be liable to the other because of such expiration,
termination or non-renewal for reimbursement of costs or expenses or for
damages on account of the loss of prospective profits, anticipated sales,
goodwill or on account of expenditures, inventory, investments, leases or
commitment in connection with the business of Developer or Distributor, or for
any other reason whatsoever flowing from such termination or expiration.
Termination shall not, however, relieve either party of any obligation
incurred before termination or of liability for breach of any of the
provisions of this Agreement. Distributor hereby specifically waives, to the
maximum extent permitted by law, any claims for compensation damages arising
out of the termination or expiration of this Agreement in accordance with its
terms.
11. Property Rights.
11.01 Ownership. Distributor agrees that other than localized trademarks,
Developer owns all right, title and interest in the Software or Technology now
or hereafter subject to this Agreement, and in all patents, trademarks, trade
names, inventions, copyrights, know-how, trade secrets, and any other
proprietary information relating to the design, operation or maintenance of
the Software or Technology, and all marketing, sales or other promotional
materials, trade dress, and artwork utilized in connection with the Software
or Technology. Other than localized trademarks, Distributor shall not record
or file or otherwise attempt to establish ownership of such items in
Distributor's name. The use by Distributor of any of these property rights is
authorized only for the purposes set forth in this Agreement, and upon
termination of this Agreement for any reason such authorization shall cease
except for Localized Software or Localized Technology that Distributor has
unlimited exclusive rights to, shall survive termination. Software source code
shall be disclosed by Developer to Distributor only in Developer's sole
discretion.
11.02 Trademarks. Distributor shall distribute Software or Technology
using only localized trademarks, localized tradenames and localized
servicemarks.
12. Indemnification of Developer. Distributor will defend, indemnify and
hold Developer harmless from and against any and all actions, damages,
liabilities, costs, and expenses (including but not limited to attorney's fees)
incurred by Developer as a result of (i) any false or misleading statement made
by Distributor to any customer or potential customer; (ii) any breach by
Distributor of any terms or conditions set forth in this Agreement, or of any
representations or warranties made by Distributor under this Agreement, (iii)
any action taken by Distributor in the
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performance of this Agreement which is not authorized by Developer, or (iv)
infringement or violation with respect to the Territory of any patents,
copyrights, trade secrets, or other proprietary or intellectual property
rights by any product owned by Developer which is localized or distributed by
Distributor.
13. Indemnification of Distributor. Developer warrants that as of the
Effective Date of any Exhibit A attached to this Agreement, the Software or
Technology specified in such Exhibit A does not infringe upon any copyrights
or trade secrets of any third party. Developer agrees, at its own expense, to
defend and indemnify Distributor, if necessary, against any actions,
liabilities, costs, damages, claims, losses and expenses (including but not
limited to attorney's fees) arising out of Developer's breach of this
warranty.
14. Confidentiality. Distributor acknowledges that it may acquire
information which is proprietary or confidential to Developer, including
technology within the meaning of Section 1.09, or financial, product, sales or
marketing information (collectively, and in whatever form, "Confidential
Information"). Distributor agrees to hold such Confidential Information in
strict confidence and not to copy, reproduce, sell, assign, license, market,
transfer or otherwise disclose such information to third parties or to use such
information for any purposes without the express written consent of Developer,
and to advise Distributor's employees, agents, and representatives of their
obligation to keep such information confidential. Distributor shall use
reasonable efforts to identify and prevent any unauthorized use or disclosure of
Confidential Information, and shall advise Developer in the event Distributor
learns or has reason to believe that any person has violated or intends to
violate the terms of this Agreement, and will cooperate in seeking injunctive
relief against such person. Distributor shall have the right to disclose
Confidential Information to its employees, agents and third party consultants
who have a need to know such information in the course of localization,
marketing or distribution of the Software or Technology, provided that each such
person signs a nondisclosure agreement with respect to such information to
protect its confidentially.
15. Arbitration, Jurisdiction and Venue. Except as provided below, any
dispute or claim between the parties shall be finally settled by binding
arbitration in Seattle, Washington under the Rules of the American Arbitration
Association by a single arbitrator who is knowledgeable about the development,
distribution, and licensing of computer software or technology, as appropriate.
In resolving all such disputes, the arbitrator shall apply the law of the State
of Washington as more fully set forth in Section 16. Developer may, however, at
its option, seek a temporary restraining order, preliminary injunction,
permanent injunction and any other form of equitable relief from any court
having jurisdiction over the subject matter and personal jurisdiction over
Distributor. Distributor hereby consents to and submits to the jurisdiction of
federal and state courts located in the State of Washington. Should any such
action be commenced in the State of Washington, Distributor agrees not to
assert, and hereby waives, any defenses based on improper venue, inconvenience
of the forum, lack of personal jurisdiction or
<PAGE>
sufficiency of service of process or the like. Distributor hereby appoints
the Secretary of State of the State of Washington as Distributor's agent for
service of process.
16. Choice of Law. This Agreement shall be governed by and construed under
the laws of the State of Washington without regard to conflict of laws
principles or the U.N. Convention on Contracts for the International Sale of
Goods.
17. Legal Expense. The prevailing party in any legal action or arbitration
brought by one party against the other arising out of this Agreement shall be
entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses, including court costs and reasonable
attorney's fees.
18. Entire Agreement: Amendment. This Agreement constitutes the entire
agreement of the parties relating to its subject matter and supersedes any prior
agreements, written or oral. This Agreement may be revised or amended only in a
writing executed by the parties.
19. Notices.
Any notices or other communications given in connection with this
Agreement will be validly given if in writing, and will be effective upon
personal delivery or upon delivery if sent by recognized carrier or by
facsimile transmission, with confirmation of the time and date of delivery, to
the following or such other person as the party may respectively designate in
the manner set forth in this Section:
If to Developer: Acceleration Software International Corp.
1223 N.W. Finn Hill Road
Poulsbo, WA 98370, United States
FAX 360-598-2450
If to Distributor: Sourcenext Corporation
Dai 17 Ara Bldg 1-3-3
Shinkawa, Chuo-Ku, Tokyo
Japan 104-0033
IN WITNESS WHEREOF, the parties have entered into this Agreement
effective as of the date provided above.
"Developer" "Distributor"
Acceleration Software Int. Corp. Sourcenext Corporation
a Washington corporation a Japanese corporation
by /s/ Clint Ballard by /s/ Noriyuki Matsuda
--------------------------- ------------------------------
Clint Ballard, C.E.O. Noriyuki Matsuda, President
<PAGE>
Exhibit "A" to Distribution Agreement Dated May 26, 2000
1. Effective Date. May 26, 2000 for this Exhibit A.
2. Territory. Japan
3. Extended Term. This Exhibit A shall prevail over any provision conflicting
or supplementing the terms hereof contained in any document, including the
Distribution Agreement and all prior agreements. In spite of any provision in
the Distribution Agreement, the Distributor will obtain and purchase the
unlimited and exclusive distribution right of each Software, set forth 4.
herein, when the distributor pays each completion payment. And once the
Distributor obtained the unlimited right on certain Software, it shall not
decease by any reason including any nonpayment or default of the Distribution
Agreement or the Exhibit A. The term shall initially be for 2 years, with an
automatic 1 year extension on each anniversary date starting May __, 2002,
unless written notice is given prior to the anniversary date.
4. Software or Technology. The Software shall consist of Prior SKUs and
24 future Developer's SKUs as follows:
Prior SKUs shall include dTime95, SuperFassst95, Phantom95, McCache,
SuperFassst98, Webcelerator98, Phantom98, dTime98, dTimeMac, MP3 Win, MP3 Mac,
Phantom2000, Suite98, Webcelerator2000 and any future SKUs for which the
completion payment is received. Distributor shall be granted the exclusive
right, for an unlimited period of time and unlimited number of copies to
create, manufacture and distribute the Prior SKUs and Future SKUs (1), (2) and
(3) in the Territory.
In the event that the 24 Future SKUs are not delivered within 24 months,
Developer agrees to complete the 24 Future SKUs as long as the monthly
payments are extended for a mutually agreed upon time or a mutually agreeable
contract extension or new contract can be entered into.
Future SKUs:
(1) SuperFassst2000/d-Time2000 bundle, by June 30, 2000
(2) Suites 2000 (Phantom+Webcelerator+SuperFassst/d-Time), by June 30, 2000
(3) Onzon
(4) through (16) TBD: approximately half of these SKUs will be application
products of a similar scope to Onzon's current specification and the remaining
SKUs will be new versions of existing products or significant new products,
eg. Superfassst/dTime. The specific products will be determined based on the
Japanese market and the difficulty of implementation to achieve the 2 year
schedule. New versions of existing products are NOT eligible for a TOP PRODUCT
bonus.
(17) through (24) TBD Suite SKUs: These SKUs will be products that are simply
combinations of existing products or portions of existing products and are
made by repackaging what already exists. These are NOT eligible for a TOP
PRODUCT bonus.
5. Trademarks and Package design. Package design shall be made in accordance
with Distributor's current standard design concept. Distributor may use its
own original trademarks, which has / shall be recorded with the Japanese
Patent Office in the name of and at the expense of
<PAGE>
the Distributor, who shall own all rights relating to such trademarks during
and after termination of the Distribution Agreement.
6. Payment.
Monthly payment: There shall be 24 guaranteed consecutive monthly payments of
$75,000 for $1.8 million dollars, starting June 7th. All guaranteed payments
are Developer revenue on the due date. Each payment is due on the 7th of the
month. Completion payment: An additional $75,000 will be earned as revenue
upon delivery of each new future SKU master and such completion payments shall
be made on the next monthly payment date for an additional $1.8 million
dollars. Upon receipt of each completion payment of $75,000, the SKU shall
become part of the Prior SKUs and obtain the benefits listed above in section
4.
Up to five TOP PRODUCT bonuses of US $400,000 (four hundred thousand dollars)
can be earned only by new applications or significant new products.
"http://www2.laox.co.jp" has a weekly "BusinessSoft" best sellers list for
software products in Japan. Each week that a SKU is in the Top 10 of this
list, or comparable list, it shall earn two points and each week that it is
#11 to #20 on this list it shall earn one point toward being a TOP PRODUCT. A
SKU shall be deemed to be a "TOP PRODUCT" after it accumulates 18 such points
and the bonus shall be paid within 30 days after the 18th point is earned. A
SKU can earn such points only during the 28 weeks following its initial
appearance on the list. In the event that only monthly rankings are available,
the point values earned are quadrupled. Only non-Suite SKUs are eligible for a
TOP PRODUCT bonus, with a maximum possible bonus of two million dollars. In
the event that a product is released that is categorized outside of the
"BusinessSoft" category, the appropriate category's best sellers list shall be
used.
Developer understands that it will only receive 90% of the payment directly
and that the remaining 10% shall be sent to the tax authorities and become a
tax credit for the Developer.
In the event of a delay of any payment by 3 days, interest of 0.05% per day
compounded daily will accrue immediately. After a delay of 15 days, all unpaid
amounts will become due immediately and all Developer obligations shall cease.
7. Incorporation into Distribution Agreement. This Exhibit A is hereby made a
part of the Distribution Agreement dated May __, 2000, between Acceleration
Software and Sourcenext, including but not limited to Sections 15 and 16
providing that disputes shall be settled by binding arbitration in, and
according to the laws of, the State of Washington, U.S.A., and the parties
executing below hereby agree to be bound by the terms and conditions of such
Agreement.
"Developer" "Distributor"
Acceleration Software Int. Corp. Sourcenext Corporation
a Washington corporation a Japanese corporation
by /s/ Clint Ballard by /s/ Noriyuki Matsuda
----------------------------- --------------------------------
Clint Ballard, its C.E.O. Noriyuki Matsuda, its President
