Exhibit 10.4
[Sonic Solutions]
Logo
DISTRIBUTION AGREEMENT
This Agreement, dated for reference the 27th day of February, 2001 (the
"Effective Date"), is entered into by Sonic Solutions ("Sonic"), a California
corporation with a place of business at 101 Rowland Way, Novato, California,
94945 and Daikin Industries, Ltd. ("Distributor"), a Japanese corporation with a
place of business at Tokyo Opera City Building, 20-2, 3-chome, Nishi-Shinjuku,
Shinjuku-ku, Tokyo, 163-14, Japan
NOW THEREFORE this Agreement witnesses that in consideration of the mutual
covenants herein contained, the parties hereby covenant and agree as follows:
1. DEFINITIONS
Unless the context requires otherwise, in this Agreement, the following terms
shall have the meanings set out below:
(a) "affiliate" means, in respect of any person, any other person directly
or indirectly controlling, directly or indirectly controlled by, or
under the direct or indirect common control of such person; a person
shall be deemed to control a corporation if the person is in a
position to elect or cause another person or persons to elect a
majority of the board of directors of the corporation;
(b) "Confidential Information" means all technical, financial, legal,
business opportunities, corporate, marketing, product, personnel,
supplier, Marketing Partner, customer and other information, in
whatever form or media, that is not generally known to the public,
that is either marked or otherwise identified as confidential prior to
its disclosure, or would generally be considered confidential in the
DVD trade generally;
(c) "Daikin Documentation" means the localized version of the
Documentation created by Distributor;
(d) "Documentation" means any user or technical manuals supplied to End
Users with the Software;
(e) "End Users" means any person who directly or indirectly accepts a
sublicense for Software for its own internal use, and not for the
purpose of resale or sublicensing;
(f) "Front-line Support" means providing a point of contact for End Users
and Marketing Partners, responding to operational and basic technical
questions regarding the Software for End Users and Marketing Partners
entitled to warranty or post-warranty support under section 9 of the
Agreement, providing assistance in the installation of new versions of
Software to End Users entitled to post-warranty support, performing
basic diagnostics on problems reported by End Users or Marketing
Partners entitled to warranty or post-warranty support and if unable
to resolve any problem revealed by the diagnostics without access to
the source code for the Software or additional technical expertise,
providing the results of the diagnostics to Sonic to facilitate
Sonic's resolution of the problem;
(g) "Initial Term" shall have the meaning set out in paragraph 11.1;
(h) "Integrated Software" means Software licensed by Sonic for the
purposes of being used as part of an Integrated Product;
(i) "Integrated Product" means a product in which the Software is embedded
or otherwise incorporated, or a combination of the Software and other
products sold as a single unit, which product or unit has a list price
of more than twice the then current list price of the Software;
(j) "Marketing Partners" means distributors, resellers and retailers;
(k) "new versions" when used in the context of Software means new
commercial releases to issue in accordance with paragraph 6.1;
(l) "Required Purchase Orders" means those purchase orders that
Distributor is required to issue in accordance with paragraph 6.1;
(m) "Services" means consulting, training, installation and Front Line
Support services for the Software;
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(n) "Software" means the executable code for the DVD software products
identified in Schedule "A" to this Agreement, as amended from time to
time, including versions of this software localized for the Territory
and any bug fixes, updates or new versions thereof supplied under this
Agreement;
(o) "Standalone Software" means the Software licensed as a standalone
item;
(p) "Territory" means the territory identified in Schedule "A"; and
(q) "Time and Materials Basis" means payment calculated by multiplying
Sonic's then prevailing hourly rate for the personnel performing a
task by the number of hours spent performing the task, plus any
expenses related to that performance. Such expenses include, but are
not limited to, charges for parts and materials consumed or used in
the performance of the task and travelling expenses. Travelling
expenses shall include actual expenses and an hourly rate for travel
time. The current hourly rates for Sonic's personnel are set out in
Schedule "A".
2. GRANT OF RIGHTS
2.1 Exclusive Right to Distribute Software in Territory and Non-Exclusive Right
to Distribute Specified Integrated Products Worldwide. Subject to the terms
and conditions set out in this Agreement, Sonic grants Distributor the
exclusive right to promote, market, and distribute the Software and
Documentation either as a Standalone Software or as Integration Software to
Marketing Partners and End Users in the Territory, to embed or otherwise
incorporate Software in an Integrated Product and to promote, market and
distribute the Software and Documentation as part of the Integrated Product
to End Users and Marketing Partners in the Territory and to grant its
Marketing Partners the non-exclusive right to do so. Sonic further grants
to Distributor the non-exclusive right to embed or otherwise incorporate
Software in an Integrated Product and to promote, market and distribute the
Software and Documentation as part of an Integrated Product to End Users
and Marketing Partners worldwide, and to grant Distributor's Marketing
Partners the right to do so, provided that Sonic has authorized this scope
of distribution for the specific Integrated Product. Sonic may permit Sonic
distributors for other territories to distribute a specific Integrated
Product in the Territory, provided that Distributor has authorized this
distribution for the particular Integrated Product. Any distribution rights
granted by Sonic for Integration Software outside of the Territory shall
reflect this restriction on the ability to distribute, sell or license the
Integrated Product within the Territory.
2.2 Good Faith Determination of Scope of License. If Distributor delivers
notice to Sonic of an opportunity to distribute an Integrated Product
outside the Territory, Sonic shall not unreasonably withhold or delay its
approval of the opportunity and shall act in good faith in determining
whether to allow Distributor to pursue same. If Sonic delivers notice to
Distributor of an opportunity to distribute an Integrated Product inside
the Territory, Distributor shall not unreasonably refuse or delay its
approval of the opportunity and shall act in good faith in determining
whether to allow Sonic to pursue same.
2.3 Distribution Conditions. Subject to paragraph 5.1, Distributor shall not
alter the Software, its packaging or the Sonic license agreement included
with the Software. Distributor acknowledges that the Software is
distributed to End Users subject to the terms of the applicable End User
license for the Software.
2.4 Copies of Software Licensed for Internal uses. Sonic hereby grants to
Distributor and Marketing Partners the right to use the Software and
Documentation, other than the Daikin Documentation, provided by Sonic under
paragraph 4.1, for promotions, demonstrations, training, sales support and
Front Line Support of the Software.
2.5 Limitations on Rights Granted. Distributor acknowledges and agrees that the
Software and Documentation contain valuable Confidential Information that
is proprietary to Sonic.
2.6 Distribution Managers. Each of Sonic and Distributor shall appoint a
distribution manager who shall have the primary responsibility for the
implementation of the Agreement and shall facilitate communication between
the parties. Each distribution manager shall have the authority to make day
to day decisions under the Agreement. Sonic's distribution manager shall be
located at Sonic's corporate headquarters in Novato, California. The
initial distribution managers shall be Dr. Panos Nasiopoulos for Sonic and
Mr. Kiyoshi Nakajima for Distributor.
3. DISTRIBUTOR OBLIGATION
3.1 Distributor Obligations. Distributor shall, at its own cost, use
commercially reasonable efforts to promote, market, distribute and provide
Front Line Support for the Software. Without limiting the foregoing and
subject to the terms and conditions of this Agreement, Distributor shall:
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(a) Provide Sonic with forecasts of Software requirements itemized by type
of software product on or before the first day of each calendar
quarter;
(b) Within 15 days following the end of each calendar month, provide Sonic
with a sales report setting out an itemized list of the type of
software licensed in the month, identifying the End User or Marketing
Partner that ordered the Software and where the Distributor has access
to information about an End User for an order placed by a Marketing
Partner, identifying that End User, and such other information
relating to Distributor's performance of its obligations hereunder, as
Sonic requests, acting reasonably;
(c) Provided that Distributor remains the exclusive distributor for the
Territory, within a reasonable period of Sonic delivering the initial
form or subsequent versions of the Documentation to Distributor,
provide Sonic with a copy of the corresponding version of the Daikin
Documentation;
(d) Supply a sufficient number of trained and knowledgeable people to
adequately support the End Users of the Software and the Marketing
Partners;
(e) Provide Front Line Support to End Users and Marketing Partners for
Software in the Territory;
(f) Pay the monies due to Sonic hereunder in accordance with the terms of
this Agreement;
(g) Deliver notice to Sonic of any complaints relating to the Software
received by Distributor and require Marketing Partners to do the same;
(h) Promptly report any changes in ownership, management or control of
Distributor, including without limitation, the merger, consolidation
or sale of all or substantially all of Distributor's assets; and
(i) Maintain a link to the Sonic website and permit Sonic to maintain a
link to Distributor's website in accordance with the web linking
policy set out in Schedule "B".
3.2 Compliance with Law. Distributor shall:
(a) obtain, at its own expense, all necessary permits, licenses and any
other authorization necessary to market, import, or sell the Software
and its Integrated Products in the Territory. Notwithstanding the
foregoing, Sonic shall, upon request by Distributor, provide
Distributor with any information about the Software it reasonably
requires from Sonic to obtain these permits, licenses and
authorizations; and
(b) represent Sonic and the Software accurately and fairly and shall not
engage in any misleading or unethical business practices.
3.3 Daikin Documentation. Distributor hereby grants to Sonic the non-exclusive,
non-transferable and non-assignable right to reproduce the Daikin
Documentation solely for the purposes of supplying Distributor
Documentation along with the Software. If at any time Distributor ceases to
be the exclusive distributor of Software in the Territory, Sonic may
purchase all right, title and interest in and to the Daikin Documentation
and to any associated intellectual property rights by paying to Daikin
$25,000 U.S. This provision shall survive termination of the Agreement.
3.4 Services. Except as expressly set out in this Agreement, Distributor shall
be responsible for the provision of Services directly to End Users.
4. SONIC'S OBLIGATIONS
4.1 Delivery of Software. Upon execution of this Agreement, Sonic shall deliver
to Distributor twenty five executable copies of each type of Software and
associated Documentation for the purposes set out in paragraph 2.4. Upon
Distributor notifying Sonic of the identity of a Marketing Partner, Sonic
shall make five copies of the Software available to that Marketing Partner
for the purposes set out in paragraph 2.4 at 30% of the then current
Japanese list price for the Software. Distributor agrees that it is a
condition of the provision of these copies of the Software and
Documentation that they not be for re-sale, loaning, leasing, renting, time
sharing, transfer or other uses by third parties and further agrees that
Sonic may make its delivery of the Software described herein to Marketing
Partners subject to their agreeing to this condition.
4.2 Support. Sonic shall provide Distributor with ongoing sales and technical
information and assistance regarding the Software. Sonic shall provide
technical support for Software for End Users and Marketing Partners in
accordance with section 9, below, and shall ensure that it dedicates
sufficient resources to such support to enable Distributor to satisfy the
requirements of End Users and Marketing Partners. Sonic shall make training
courses on the Software available for at least two of Distributor's
employees at no additional
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cost to Distributor (other than the cost of travel and lodging) on the
existing Software and on new versions of the Software prior to their
becoming commercially available.
4.3 Complaints. Sonic shall promptly deliver notice to Distributor of any
complaints it receives related to Distributor's activities under this
Agreement.
4.4 Software Development Plans. At the commencement of each quarter, Sonic
shall meet with Distributor and discuss its Software development plans.
4.5 Changes to Software Products and Specifications. Sonic may not discontinue
any Software or the trade name of any Software without Distributor's prior
written consent. If Distributor gives its consent to such a change, unless
otherwise agreed in writing by Distributor, the change shall not become
part of any commercially available product for at least 90 days from the
date the Distributor consents to the change. The parties agree that
following the Initial Term or in any distribution agreement entered into by
the parties after April 30 of 2002, Sonic will be permitted to discontinue
an item of Software or a trade name for the Software provided that Sonic
gives Distributor at least 90 days written notice of Sonic's decision to do
so and continues to provide support for the Software for at least one year
after it is discontinued.
4.6 Changes in Control. Sonic shall promptly report to Distributor any changes
in ownership, management or control of Sonic, including without limitation,
the merger, consolidation or sale of all or substantially all of Sonic's
assets.
4.7 Promotional Brochures. Sonic shall provide to Distributor, at no additional
cost, with technical information about the Software and the electronic
version of any marketing materials for the Software published by Sonic. To
the extent possible Sonic shall provide such information in advance of the
initial production or license of the Software or any new versions thereof.
5. ORDERING
5.1 Placing Orders. Distributor shall issue the Required Purchase Orders and
may issue other purchase orders for Software from time to time. Purchase
orders are not binding on Sonic until accepted by Sonic. Sonic shall accept
each Required Purchase Order and shall use all reasonable commercial
efforts to accept any other purchase order issued hereunder. Each purchase
order shall be in writing, incorporate this Agreement by reference, set out
the Software ordered and the number of copies thereof, indicate whether it
is anticipated to be Standalone Software or Integration Software, and
include the ship-to-address and the required delivery date (which date
shall not be less than 14 calendar days from the date the purchase order is
delivered to Sonic). Purchase orders shall be delivered to the address set
out on the face page of this Agreement or to such other address as Sonic
may from time to time notify Distributor. Sonic acknowledges that its
delivery of packaged software products may be inappropriate for certain
types of Integration Software distributions and agrees to work in good
faith with Distributor to develop mutually acceptable processes for such
distributions.
5.2 Delivery of Software. Unless otherwise specifically agreed by the parties,
Software and Documentation shall be delivered to Distributor packaged and
ready for shipment to End Users or Marketing Partners as the case may be.
It shall be delivered to Distributor, FCA (Free Carrier) Novato, the ship-
to address specified on the applicable purchase order (Incoterms 2000
apply).
5.3 Ability to Cancel Purchase Orders. Distributor may cancel a purchase order
other than a Required Purchase Order, at no charge, at any time up to ten
calendar days prior to the required delivery date.
5.4 Exchange of Standalone for Integrated Software. The parties acknowledge
that it may be difficult to estimate the relative requirements for
Standalone Software and Integration Software. Sonic agrees that at any time
prior to Distributor shipping an item of Standalone Software or of
Integration Software to an End User or Marketing Partner, Distributor may
exchange any Standalone Software purchased hereunder for an item of
Integration Software or exchange any Integration Software purchased
hereunder for an item of Standalone Software.
6. FEES
6.1 Minimum Value of Purchase Orders to be Issued. Sonic shall supply the
Software to Distributor at the current Japanese list prices set out in
Schedule "A" less a 45% discount. Distributor shall issue to Sonic purchase
orders for at least the minimum amounts set out below in accordance with
the schedule set out
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below. Distributor shall pay Sonic the amounts owing under these purchase
orders by way of wire transfer, made at the time the purchase order is
issued, to a bank account specified by Sonic:
(a) On the Effective Date, (Yen) 70,000,000 for the four calendar months
ending June 30, 2001;
(b) On or before June 28, 2001, (Yen) 70,000,000 for the three months
ending September 30, 2001;
(c) On or before September 27, 2001, (Yen) 60,000,000 for the three months
ending December 31, 2001;
(d) On or before December 27, 2001, (Yen) 60,000,000 for the four months
ending April 30, 2002.
If the value of purchase orders issued for Software for a period set out in
(a)-(d) above exceeds that required by that sub-paragraph, the minimum
value of Software required to be ordered in the subsequent period shall be
reduced by the amount of this excess. If Sonic reduces the U.S. list price
set out in Schedule A (the "US List Price") for any item of Software by
more than 15%, any of the payments set out above that have not yet been
paid (the "Guaranteed Payments") , shall be reduced in accordance with the
following formula. Each item of Software in Schedule C has a total monetary
amount (the "Amount") associated with it based on the Distributor's current
sales forecast for the Initial Term (summing the amounts for the first 12
months and the additional two months in Schedule C). The percentage
reduction for a Guaranteed Payment would be:
(a) the percentage reduction of the US List Price for the Reduced Software,
times (b) the Amount for the Reduced Software; divided by (c) Two Hundred
Sixty Million, Eighteen Thousand Five Hundred Yen ((Yen)260,018,500). The
parties further agree that Sonic may not increase the price of any item of
Software unless Distributor agrees to the increase. Failure to place and
pay for purchase orders as set out in this section 6.1 shall entitle Sonic
to either terminate this Agreement or to terminate Distributor's status as
the exclusive distributor of Software for the Territory as provided in
paragraph 2.1.
6.2 Right of Set Off. Distributor shall have the right to set off any monies
owed by Sonic to Distributor, against those monies owed by Distributor to
Sonic under this Agreement.
6.3 Taxes and Duties. Distributor shall be responsible for the payment of all
taxes or duties, (except taxes on the income of Sonic) associated with the
supply of Software or Services under this Agreement.
6.4 Time of Invoice. Except for the Required Purchase Orders, Sonic shall
invoice Distributor for Software at the time of shipment for Standalone
Software, at the time the licenses are authorized for Integrated Software,
and at the time of completion of performance for any Services contracted
for by Distributor.
6.5 Date Payment Due. Except for the payments due under Required Purchase
Orders, Distributor shall pay all properly issued invoices that are
received on or before the last business day of any month by the last
business day of the following month.
6.6 Right to Audit Licenses for Integration Software. Distributor shall keep
records while this Agreement remains in effect, and for a period of two
years thereafter, identifying by version and serial number of the
Integration Software, the End User or Marketing Partner to whom the license
for the Software was granted, and the date of grant. Sonic may conduct, or
engage a qualified auditor to conduct, an independent audit of these
records and any related financial/accounting/business records of
Distributor. Such audit shall occur, if at all, during the normal business
hours of Distributor, and only after written notice has been delivered to
Distributor at least three business days in advance of the audit. If an
audit reveals an underpayment of license or support fees, then Sonic may
submit an invoice to the Distributor in the amount of the underpayment
together with supporting documentation for its claim, and Distributor shall
pay such invoice within 30 days of receipt of same. If the underpayment
exceeds, $5000, then Distributor shall also pay for the cost of the audit.
6.7 Establishment of End User License Fees. Distributor may, in its sole
discretion, determine the fee for which it is prepared to license Software
to End Users or its Marketing Partners.
6.8 Late Payment. Notwithstanding any other remedies available to Sonic, if
Distributor fails to pay any amount due under this Agreement within 30 days
of it becoming due and payable, Sonic may charge interest on the
outstanding balance at a rate of 1.0% per month.
7. OWNERSHIP
7.1 No Transfer of Ownership Rights in Software. Distributor acknowledges and
agrees that title to and ownership of Sonic Software and of any copyright,
trade secret, trade-mark, or patent rights, or any other intellectual
property rights related thereto, are and shall remain the exclusive
property of Sonic, and that
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nothing in this Agreement shall convey to Distributor or to any Marketing
Partner, or End User any ownership right, interest or title in or to the
Software or to any intellectual property rights related thereto.
Distributor acknowledges and agrees that the source code for the Software
is Confidential Information.
8. TRADE-MARKS
8.1 No Alteration of Trademarks. Distributor shall not in any way alter,
deface, remove, cover up, or mutilate in any manner whatsoever, any
trademark, serial or model number, symbol, brand or trade name which Sonic
may attach or affix to, or make a part of any of the Software.
8.2 License for Trademarks. Distributor is authorized by Sonic to use the
trademarks, trade names, logos and designations Sonic uses for the Software
in connection with Distributor's advertisement, promotion and distribution
of Software. Distributor's use of such trademarks, trade names, logos, and
designations will be in accordance with Sonic's then current policies as
communicated to Distributor from time to time, including but not limited to
trademark usage and co-operative advertising policies. Distributor agrees
not to use any Sonic trademark, trade name, logo or designation in
connection with any non-Sonic product, other than Integrated Products.
9. SUPPORT
9.1 Warranty. Sonic shall provide a written limited warranty with each item of
Software supplied hereunder. For the Initial Term the warranty shall
provide that the Software shall operate in accordance with the functional
specifications in the Documentation for a period of 90 days following its
shipment to the End User. If a Marketing Partner licenses Integration
Software from Sonic for the purpose of embedding it or otherwise
incorporating it into another product, Sonic shall warrant that the copy of
the Integration Software supplied to the Marketing Partner shall operate
substantially in accordance with its specifications for a period of 90
days. Sonic shall use reasonable efforts to resolve any problem identified
with the Software that is covered by warranty and that Distributor is
unable to resolve, and will keep Distributor apprised of the status of the
problem in accordance with any problem resolution process agreed upon by
the parties. If Sonic is unable to provide a fix or workaround for the
problem within one month of being notified of the problem, Sonic shall
refund to Distributor the fees that Distributor has paid to Sonic for each
affected End User or Marketing Partner. Sonic makes no other warranty,
condition or representation in relation to the Software either express or
implied, including without limitation any warranty, condition or
representation of fitness for a particular purpose, merchantability,
noninfringement or durability.
9.2 Post Warranty Support. Within 30 days of this Agreement being executed by
the parties, the parties shall mutually agree upon a form of post warranty
maintenance agreement that Distributor may enter into with End Users and
Marketing Partners to provide new versions of the Software and post
warranty operational and technical support for the Software. Upon entering
into any such agreement, Distributor shall provide notice to Sonic of the
identity and contact information of the End User or Marketing Partner as
the case may be. For each such Marketing Partner or End User Distributor
shall pay to Sonic the annual support fee set out in Schedule "A" less a
discount of 45%. Distributor shall pay support fees due under this
Agreement by the end of the month following the month in which Distributor
receives payment for the applicable support period. In consideration of
this payment, Sonic shall perform all technical support beyond Front Line
Support in accordance with the terms of the maintenance agreement and to
the extent not inconsistent with that agreement with any problem resolution
process agreed to by the parties. Except to the extent inconsistent with
the applicable maintenance agreement, Sonic shall ensure that Daikin
receives new versions of the Software or the password it requires to
download new versions of the Software from Sonic's website, within 30 days
of the new version becoming commercially available. Without limiting the
generality of the foregoing, provided that the fees described above have
been paid to Sonic, Sonic shall use reasonable commercial efforts to
resolve problems identified to Distributor by an End User or Marketing
Partner that has entered into a post warranty maintenance agreement with
Distributor, that are not resolvable by Front Line Support and that
preclude the Software from substantially operating in accordance with the
Documentation.
10. CONFIDENTIALITY
10.1 Limited Disclosure of Confidential Information. Each of the parties shall
maintain in confidence any Confidential Information of the other party
which it receives or becomes apprised of as the direct or indirect result
of this Agreement and shall refrain from using this Confidential
Information or from
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disclosing same to any third person including any agent, affiliate,
consultant, or subcontractor, other than as required to fulfil the purposes
of this Agreement, without the other party's prior written authorization.
This obligation shall not apply to the extent that the receiving party can
establish that the Confidential Information:
(a) is or becomes generally known to the public through no fault of the
receiving party;
(b) is known to the receiving party before the date of its disclosure by
the other party, as evidenced by the written records of the receiving
party;
(c) is disclosed, lawfully and not in breach of any contractual or other
legal obligation, by a third person; or
(d) is required by law to be disclosed provided that notice of this
requirement is delivered to the party seeking to prevent the
disclosure of the Confidential Information so that it may contest this
potential disclosure.
10.2 Limited Copying of Confidential Information. Except as required to fulfil
the purposes of this Agreement, neither party shall directly or indirectly
cause or permit any Confidential Information of the other party to be
copied or otherwise reproduced. Any such copy shall be marked confidential
and, when appropriate, marked as proprietary to the disclosing party.
10.3 No Transfer of Rights to Confidential Information. Nothing in this
Agreement shall confer upon the receiving party any right, title, interest
or license in any Confidential Information except as expressly stated in
this Agreement.
10.4 Terms of Agreement. The terms of the Agreement are confidential, and
neither party shall disclose them to any third party without the other
party's consent, which shall not be unreasonably withheld or delayed.
10.5 Return of Confidential Information. The receiving party shall promptly
purge all Confidential Information from its computer systems and return to
the disclosing party, upon termination of this Agreement, all Confidential
Information and any copies of Confidential Information (except Software
being sublicensed to an End User under an outstanding purchase order) in
written or other tangible form in the possession or control of Distributor,
its agents, affiliates, consultants or subcontractors.
10.6 Compliance of Officers, Employees etc. Each of the parties shall take all
reasonable steps to ensure compliance of its directors, officers, and
employees with the confidentiality provisions of this Agreement, including
without limitation upon request by the other party, causing any such person
involved in the sale or servicing of the Software to enter into the other
party's standard non-disclosure agreement. Each party shall protect the
other party's Confidential Information to at least the same extent it
protects its own confidential information, and shall take any step which
the other party reasonably requests to ensure compliance with this section.
10.7 This section shall survive termination or expiration of this Agreement.
11. TERM AND TERMINATION
11.1 Term. This Agreement comes into effect on the Effective Date specified on
the face page, and unless terminated as provided below, shall continue in
effect until April 30, 2002 (the "Initial Term"). The Agreement shall
automatically renew thereafter for successive one year terms (but for
greater certainty, not including the Required Purchase Orders) unless
terminated by either party by delivering notice to the other party of its
decision to terminate the Agreement no less than 45 days prior to the
effective date of termination. The parties agree to meet at least 90 days
prior to the end of the term to negotiate in good faith the terms under
which both would be prepared to enter into a distribution agreement for the
then following fiscal year.
11.2 Termination for cause. Either party (the "Terminating Party") may terminate
this Agreement by giving written notice to the other party, effective
immediately upon receipt or on the date set forth in the notice, if any of
the following occurs:
(a) the other party files, or has filed against, it, a voluntary or
involuntary petition of bankruptcy which is not thereafter dismissed
within sixty days, or the other party is unable to pay any of its
debts as they fall due for a period of sixty days, or a receiver,
administrator, or the local equivalent thereof, is appointed of all or
a substantial part of the other party's assets; or
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(b) the other party breaches any term or condition of this Agreement, the
Terminating Party gives the other party written notice requiring the
breach to be cured within thirty days of receipt of the notice and the
party in breach fails to cure the breach within that period.
11.3 Other Remedies. Any termination of this Agreement for cause shall be
without prejudice to any other rights or remedies either party may be
entitled to under this Agreement, or at law. Without limiting the
foregoing, Distributor acknowledges and agrees that a breach of the
trademark, and confidentiality sections of this Agreement, or of any
license granted hereunder, would cause Sonic irreparable harm, and that
Sonic shall be entitled to immediately seek relief by way of a temporary or
permanent injunction in the event of such a breach.
11.4 Effect of Termination. Upon termination of this Agreement, Distributor
shall, and shall require its Marketing Partners to, immediately cease to
exercise the rights granted to it under this Agreement. Without limiting
the foregoing, unless Sonic indicates otherwise in writing, Distributor
shall, and shall ensure that each of its Marketing Partners:
(a) immediately cease to use, promote, market, distribute, reproduce, or
support the Software;
(b) return to Sonic any Confidential Information in their possession or
control; and
(c) discontinue the use of all trademarks and or trade names of Sonic by
removing at their own expense, all signage containing any of the same,
and cease using any form of advertising materials and any other form
of communication identifying Distributor as a distributor of the Sonic
products and any type conduct that might suggest the same.
Upon termination of this Agreement, Sonic shall honour all outstanding
purchase orders and all binding quotes and proposals issued by Distributor
prior to the effective date of termination (provided that Sonic authorizes
the quote or proposal at the time it is issued), shall return any of
Distributor's Confidential Information in its possession or control, shall
discontinue all use of Distributor's trademarks or trade names and any form
of advertising materials or other form of communication identifying
Distributor as a distributor of Sonic products, and work in good faith with
Distributor to provide ongoing maintenance services to End Users.
12. INDEMNITY
12.1 Sonic's Indemnity. Sonic shall indemnify, defend and hold harmless
Distributor and its directors, employees, consultants and independent
contractors against any third party claims and any costs, loss, damage,
expenses, lawyer's fees (including disbursements), or liability (including
amounts paid in settlement) that result from any such third party claims
that arise from the grossly negligent or wrongful acts of Sonic, unfair
competition conducted by Sonic with respect to the Software or from a claim
that the Software infringes any patent, copyright, trade secret or other
intellectual property right of a third party. Notwithstanding the
foregoing, Sonic shall not have any liability for a third party claim that
results from the integration of the Software into the Integration Product,
or the modification, use or combination of the Software in a manner not
contemplated by the Documentation or specified or otherwise agreed upon by
Sonic. Daikin shall provide reasonable information and assistance to Sonic
at Sonic's expense in defence in any such proceeding.
12.2 Distributor's Indemnity. Distributor shall indemnify, defend and hold
harmless Sonic, its directors, employees, consultants and independent
contractors against any third party claims, and any costs, loss, damage,
expenses, lawyer's fees (including disbursements),or liability (including
amounts paid in settlement) that results from any such third party claims
where the claim arises from the grossly negligent or wrongful acts of
Distributor. Sonic shall provide reasonable information and assistance to
Distributor at Distributor's expense in defence in any such proceeding.
12.3 This section shall survive termination of this Agreement.
13. LIMITATIONS ON LIABILITY
13.1 WITH THE EXCEPTION OF THE INDEMNITIES SET OUT IN SECTION 12, NEITHER PARTY
NOR THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS OR EMPLOYEES SHALL BE
LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL,
EXEMPLARY OR INDIRECT DAMAGES, EVEN IF THEY HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH LOSS, INCLUDING WITHOUT LIMITATION, LOSS OF BUSINESS
REVENUE OR EARNINGS, LOST DATA, LOST PROFITS, OR A FAILURE TO REALIZE
EXPECTED SAVINGS.
PAGE 9
13.2 WITH THE EXCEPTION OF THE INDEMNITIES SET OUT IN SECTION 12, NEITHER
PARTY'S LIABILITY TO THE OTHER PARTY IN CONNECTION WITH THIS AGREEMENT, NOR
THE LIABILITY OF THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS OR
EMPLOYEES, SHALL EXCEED THE TOTAL AMOUNT OF FEES PAID BY DISTRIBUTOR TO
SONIC UNDER THIS AGREEMENT DURING THE 12 MONTHS IMMEDIATELY PRECEDING THE
EVENT GIVING RISE TO THE LIABILITY.
13.3 THE LIMITATIONS, EXCLUSIONS AND DISCLAIMERS SHALL APPLY WHETHER AN ACTION,
CLAIM OR DEMAND ARISES FROM A BREACH OF WARRANTY OR CONDITION, BREACH OF
CONTRACT, NEGLIGENCE, STRICT LIABILITY OR ANY OTHER KIND OF CIVIL LIABILITY
CONNECTED WITH THIS AGREEMENT.
13.4 Some jurisdictions do not allow limitations or the exclusions of certain
types of damages. In the event that the laws of any such jurisdiction are
deemed applicable to this Agreement, the above limitations or exclusions
may be limited or deemed inapplicable.
13.5 This section shall survive termination of this Agreement.
14. GENERAL
14.1 Notice. All notices, reports, request and demands made under this Agreement
shall be in writing and shall be sufficiently given or delivered if
delivered to the other party by hand, double registered (or any other form
of mail that provides a return receipt), facsimile (with confirmation of
receipt provided by the recipient and a copy sent by first class mail,
postage prepaid) or electronic courier to the addresses specified on the
face page of this Agreement, or to such other address, fax number or e-mail
address as the parties designate by written notice from time to time.
Notice shall be deemed to have been received at the time of delivery.
14.2 Force Majeure. If either of the parties becomes unable to carry out the
whole or any part of its obligations under this Agreement for any reason
beyond its reasonable control including acts of God, acts of governmental
authorities, strikes, war, riots or any other cause of such nature ("Event
of Force Majeure"), then the performance of the obligations of the affected
party (the "Affected Party") shall be excused during the continuance of any
inability so caused, but such inability shall, as far as possible, be
remedied with all reasonable dispatch. Either party shall give immediate
notice to the other party upon becoming aware of an Event of Force Majeure.
If an Event of Force Majeure continues for a period exceeding three months
or such other period as is mutually agreed to by the parties, the other
party may terminate this Agreement by giving the Affected Party at least
seven days written notice of its intention to do so.
14.3 Entire Agreement. This Agreement constitutes the entire agreement of the
parties, and supersedes all prior agreements, proposals, discussions,
correspondence, or communication relating to the subject matter hereof.
This Agreement shall not be modified or amended except in writing signed by
authorized representatives of both parties. No standard form or set of
terms and conditions printed on, or contained in, any document submitted by
either party to the other subsequent to the execution of this document
shall be sufficient to effect a variation, unless such document is executed
by both parties.
14.4 Severability. If any court finds any part of this Agreement to be invalid
or unenforceable, that part shall be severed from this Agreement and its
invalidity or unenforceability shall not in any way affect the remaining
provisions of this Agreement, which shall continue in full force and
effect.
14.5 Assignment. Neither party may assign this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld, however Sonic may assign its rights hereunder in connection with
the merger or consolidation with, or the sale of all or substantially all
of its assets to, another entity.
14.6 Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the state of California, excluding rules of private
international law that lead to the application of the laws of any other
jurisdiction. The United Nations Convention on Contracts for the
International Sale of Goods (1980) shall not apply. The courts of the state
of California shall have non-exclusive jurisdiction to hear any matter
arising in connection with this Agreement.
14.7 Nature of Relationship. This Agreement shall not create or be construed as
creating a joint venture, co-ownership, partnership, or agency relationship
between Sonic and Distributor. Neither party shall have authority to or
shall hold itself out as having any authority to incur, assume or create,
orally or in writing,
PAGE 10
any liability, obligation or undertaking of any kind in the name of, or on
behalf of, or in any way binding upon, the other.
14.8 Survival. Sections 1, 7, 9.1, 10, 11, 12, 13 and 14 shall survive the
termination or expiration of this Agreement.
14.9 Headings. The headings are not intended to be full or precise descriptions
of the test to which they refer and shall not be considered part of this
Agreement.
14.10 Counterpart Clause. This Agreement may be executed in counterparts, or
facsimile counterparts, each of which when executed by either of the
parties shall be deemed to be an original and such counterparts shall
together constitute one and the same Agreement.
The parties executed this Agreement on the dates set out below. Each party
represents and warrants that its respective signatory is duly authorized to
execute this Agreement on its behalf.
SONIC SOLUTIONS: DAIKIN INDUSTRIES, LTD.:
By /s/ Clay Leighton By /s/ Kiyoshi Nakajima
------------------------------ -----------------------------------
Name A. Clay Leighton Name Kiyoshi Nakajima
---------------------------- ---------------------------------
Title Chief Financial Officer Title General Manager
--------------------------- --------------------------------
Date February 27, 2001 Date February 27, 2001
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Attachments: Schedules
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