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Exhibit 10.18
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
AGREEMENT
SONY CONSUMER AUDIO/VIDEO PRODUCTS GROUP
SONY ELECTRONICS INC.
RESELLER AGREEMENT
ARTICLE I
PARTIES TO THIS AGREEMENT
This Agreement is entered into and effective as of May 15,1998 ("Effective
Date") by and between:
Sony Consumer Audio/Video Products Group Dragon Systems, Inc.
Diversified Markets and 320 Nevada Street
Sony Electronics Inc. Newton, MA 02160
One Sony Drive
Park Ridge, NJ 07656
(hereinafter referred to as the "SEL") (hereinafter referred to as the
"Reseller")
ARTICLE II
PREMISES OF THIS AGREEMENT
WHEREAS, SEL is engaged in the sale and distribution (or, in the case of
software, license) of various kinds of electronics products and accessories;
and,
WHEREAS, the Reseller desires to purchase and/or license certain of such
products and accessories for resale to Customers (as defined below).
NOW, THEREFORE, by reason of the foregoing premises, and in consideration of the
mutual covenants set forth in this Agreement, the parties agree as follows:
ARTICLE III
TERM/RESELLER CLASSIFICATION/DEFINITIONS
(a) TERM: This Agreement shall commence as of the Effective Date and expire on
March 31, 1999 (the "Term") unless earlier terminated in accordance with Section
11.0.
(b) RESELLER CLASSIFICATION: Reseller hereby represents and agrees that it will
resell only the Products (iii) by adding value to, but not modifying, the
Products as described in the Product and Market Schedule attached hereto and
defined below.
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RESELLER HEREBY ACKNOWLEDGES THAT SEL IS RELYING ON THE ABOVE REPRESENTATION AND
AGREEMENT AS A FACTOR IN DECIDING TO ENTER INTO THIS AGREEMENT AS WELL AS TO
DETERMINE RESELLER'S CLASS OF TRADE, THE PRODUCTS SEL IS WILLING TO SELL THE
RESELLER, THE PRICES FOR SAME AND THE WARRANTY APPLICABLE TO THE PRODUCTS AS TO
THE RESELLER AND THE END-USERS.
(c) BUNDLE: Pursuant to Article III (c), "Bundle" shall refer to only the
combination of the Product and the Value-Added Component in a physical package
which is sold as a single unit.
(d) CUSTOMERS: The term "Customer(s)" is defined and limited to those third
party business entities not affiliated with the Reseller within a particular
customer classification and/or market as set forth in the Product and Market
Schedule through which Reseller distributes the Bundles.
(e) PRODUCT AND MARKET SCHEDULE: The Product and Market Schedule, attached
hereto as Article VI and made a part hereof, in addition to defining the
Products and Customers, may contain terms and conditions in addition to or
different from the General Terms and Conditions set forth in Article IV. In the
event of a conflict between the terms and conditions of Article IV and the terms
and conditions of the Product and Market Schedule, the terms and conditions of
the Product and Market Schedule shall control.
(f) PRODUCTS: The term "Product(s)" shall be defined and limited to those
products, accessories and software of SEL set forth in the Product and Market
Schedule.
(g) SALE/RESALE: The term "Sale" or "Resale" (in any tense or form) whenever
used in this Agreement shall mean license in the case of software Products. The
term "Resale" (in any tense or form) shall also mean lease.
(h) THE SONY GROUP: The term "Sony Group" shall mean SEL, Sony Corporation of
America, Sony Corporation (Tokyo, Japan) and all subsidiaries and affiliates of
said companies.
(i) VALUE-ADDED COMPONENT: The term "Value-Added Component" shall mean the
product or component created, owned and/or obtained or licensed by Reseller that
must be included in the Bundle as set forth in the Product and Market Schedule.
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ARTICLE IV
GENERAL TERMS AND CONDITIONS
SECTION 1.0 SCOPE OF THIS AGREEMENT
1.1 RESALE LIMITATION: SEL agrees to sell, and the Reseller agrees to purchase,
the Products from SEL for resale only to the Customers upon the terms and
conditions set forth in this Agreement.
1.2 NON-EXCLUSIVE: The Reseller acknowledges that its right to resell the
Products under this Agreement is non-exclusive, and that SEL reserves the right
to sell and distribute any of its products to any customers in the world, and to
appoint any third party to do so, without giving the Reseller notice thereof and
without incurring any liability to the Reseller therefor. Further, nothing
herein shall be deemed to preclude the Reseller from selling brands of
electronics products and accessories that are competitive with the Products.
1.3 STATUS AS INDEPENDENT CONTRACTOR: The relationship established between SEL
and the Reseller by this Agreement is that of a vendor to its vendee and nothing
herein contained shall be deemed to establish or otherwise create a relationship
of principal and agent between SEL and the Reseller. The Reseller represents
that it is an independent contractor who will not be deemed an agent of SEL for
any purpose whatsoever and neither the Reseller nor any of its agents or
employees will have any right or authority to assume or create any obligation of
any kind, whether express or implied, on behalf of SEL. This Agreement is not a
franchise agreement and does not create a franchise relationship between the
parties and if any provision of this Agreement is deemed to create a franchise
between the parties, then this Agreement will be deemed null and void and will
automatically terminate as if such provision had been deemed unenforceable by a
court as provided in Section 12.8.
SECTION 2.0 ACCESS AND AUDIT
In order to verify the Reseller's compliance with this Agreement, the Reseller
shall give SEL reasonable access to the Reseller's facilities during normal
business hours to make inspections of the Reseller's premises and to audit the
books and records of the Reseller relating to the Products purchased by the
Reseller, including the right to make copies of or abstracts from such books and
records.
SECTION 3.0 SALE OF THE PRODUCTS
3.1 TERMS: SEL shall sell the Products to the Reseller upon the terms and
conditions set forth in this Agreement.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
3.2 PRICES: SEL shall sell the Products to the Reseller at the prices and/or
fees set forth on the Products and Market Schedule attached to the Agreement and
made a part hereof subject to adjustment as provided in Section 3.3. SEL may
increase or decrease the price of the Products by giving the Reseller notice and
such new pricing will apply to all of the Reseller's orders received by SEL
after the effective date set forth in such notice. The Reseller may terminate
this Agreement by giving SEL notice within [**] days after the issuance of any
such price increase to the extent of any orders not yet shipped by SEL. If SEL
offers price, payment or promotional discounts or other special pricing or
similar programs to other value-added resellers, integrators or bundlers who
compete with the Reseller for the Customers in the Market (as both Market and
Customer are described in the Product and Market Schedule), then SEL will make
such offer(s) available to the Reseller. SEL will use commercially reasonable
efforts to provide the Reseller with forty-five (45) days notice of any such
change.
3.3 ADJUSTMENTS: If the prices at which the Products are sold hereunder
represent a price which has been reduced based on a representation by the
Reseller that the Reseller would make certain volume purchases, and the Reseller
fails to make purchases in the volumes represented, SEL may in its sole
discretion adjust prices to the otherwise prevailing prices for the number of
items actually purchased, and the Reseller will pay SEL the difference promptly
upon receipt of SEL's invoice therefor. If the Reseller resells any of the
Products to any party other than the Customers or to any party on a stand-alone
basis (i.e., not within a System) the Reseller shall pay SEL an adjustment
charge equal to the difference between the price charged the Reseller for such
Products and the then-current single lot list price of SEL for such Products.
3.4 ALLOCATIONS: SEL may, in its sole discretion, allocate its inventory of the
Products.
3.5 DISCONTINUATION/CHANGES TO PRODUCTS: SEL may, in its sole discretion,
discontinue the sale of any of the Products and any parts/accessories thereto
(except where continued availability is required by law) and make such changes
affecting their form, fit or function as it, in its sole discretion, determines,
by giving the Reseller prior notice thereof but without incurring any liability
to the Reseller therefor. SEL will use commercially reasonable efforts to
provide such notice at least [**] days in advance. If, because of any
discontinuance or change to the Products affecting their form, fit or function,
the Reseller does not wish to purchase same or any of the other Products covered
by this Agreement, then the Reseller may terminate this Agreement by giving SEL
notice thereof within [**] days of SEL's notice to it. SEL agrees that for any
outstanding orders of the Reseller it will provide Products which are greater
than or equal to the discontinued Product in form, fit and function at the same
or lesser price subject to availability and the provisions of Section 3.4 above.
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3.6 TAXES: The Reseller shall bear the cost of any taxes (exclusive of taxes
based on the net income of the Sony Group), levies, duties and fees of any kind,
nature or description whatsoever applicable to any of the Products supplied by
SEL to the Reseller. The Reseller will pay SEL all such sums upon demand unless
the Reseller provides SEL, at the time of the submission of its purchase orders,
tax exemption certificates or licenses acceptable to the appropriate taxing
authorities.
3.7 PURCHASE ACCEPTANCE/CONTROLLING TERMS: SEL shall have the right in the
exercise of its sole and absolute discretion to reject any purchase order,
either in whole or in part, placed by the Reseller, and no purchase order shall
be binding upon SEL unless accepted by SEL in writing or by delivery of Products
in whole or partial fulfillment thereof.
Anything herein to the contrary notwithstanding, unless otherwise expressly
agreed to in writing by SEL, any shipment of Products to the Reseller in whole
or partial fulfillment of any purchase order placed by the Reseller shall not be
deemed to constitute an acceptance by SEL of any of the terms and conditions of
such purchase order, except as to the identification of the Products, and the
quantities involved. All such purchase orders shall be governed by the
provisions of this Agreement.
SECTION 4.0 TRADEMARKS
The Reseller acknowledges the validity of trade names and trademarks of the Sony
Group ("Trademarks'") and that it shall NOT, as a result of this Agreement, have
any right to or interest in any tradenames or trademarks owned, used or claimed
now or in the future by the Sony Group. Notwithstanding the foregoing, Reseller
shall have the right to use relevant Trademarks in conjunction with the
authorized sale of the Bundle, subject to SEL's prior written approval for each
particular use, which approval shall not be unreasonably withheld.
SECTION 5.0 SHIPMENTS
5.1 SHIPMENTS: The Reseller shall bear all costs and expenses incident to SEL's
shipment of the Products to it, except in the case of any shipment which
qualifies for prepaid freight under SEL's program then in effect. SEL shall
select the method of shipment and the carrier. SEL will ship the Products only
to locations in the continental United States, including Alaska.
5.2 TITLE AND RISK OF LOSE: Title to all of the Products sold by SEL to the
Reseller shall pass upon SEL's delivery thereof to the carrier. Risk of loss or
damage to any of the Products in transit, without regard to whether SEL paid the
shipping charges therefor or whether any third party is designated as consignee
thereof, is the Reseller's, whose responsibility it will be to file claims with
the carrier.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
5.3 TIME OF DELIVERY: Delivery dates set forth in any Reseller order or other
purchasing documents, or any confirmation thereof by SEL, shall be deemed to be
estimated only and subject to SEL's then current leadtimes for the Products. The
Reseller will not be excused from payment of any amounts it owes (invoices for
Products sold are only issued upon shipment) to SEL or from the performance of
any of its other obligations under the terms and conditions hereof as a result
of, and SEL will not be liable to the Reseller for damages resulting from, SEL's
failure to meet any of those dates. However, if SEL's delay in shipment or
delivery of any ordered Products exceeds by thirty (30) days such first
estimated date, then either party may cancel any Reseller order or part thereof
not previously fulfilled by giving the other written notice thereof and without
incurring any liability to the other therefor.
5.4 SEPARATE TRANSACTION: Each Reseller order for the Products under this
Agreement shall be deemed a separate transaction and each shipment of the
Products by SEL will constitute a separate sale, obligating the Reseller to pay
therefor, whether such shipment be in whole or only in partial fulfillment of
such order.
5.5 SHIPMENTS AFTER EXPIRATION: SEL's acceptance or shipment of any order from
the Reseller for Products after the termination or expiration of this Agreement
will not be construed as a renewal or extension of this Agreement nor as a
waiver of termination or expiration of this Agreement. Any such acceptance or
shipment shall be deemed an accommodation only.
5.6 STOP SHIPMENTS: SEL may, in its sole discretion, cancel any Reseller orders
previously accepted by SEL or delay the delivery of any of the Products covered
thereby if the Reseller defaults in any of its obligations under this Agreement
or if SEL reasonably believes that the Reseller may do so for or with respect to
any past or pending Reseller order.
SECTION 6.0 CREDIT; PAYMENT AND INDEBTEDNESS
6.1 MAINTENANCE OF CREDIT LINE: The Reseller shall maintain a credit line
sufficient to support its purchases of the Products and to pay any indebtedness
to SEL when due. SEL may, in its sole discretion, either generally or with
respect to any specific Reseller order, vary, change or limit the amount or
duration of credit allowed to the Reseller. The Reseller will make available to
SEL such statements of its financial condition as SEL may, from time to time,
reasonably request.
6.2 PAYMENT TERM: Unless otherwise provided in the Product and Market Schedule,
payment terms are net [**] days from the date of SEL's invoice; invoices are
issued only on the date of shipment.
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6.3 UNAUTHORIZED DEDUCTIONS: The Reseller shall not make deductions of any kind
from any monies it owes to SEL unless the Reseller has received an official
credit memorandum from SEL authorizing such deduction.
6.4 DEFAULT; ACCELERATION OF OBLIGATIONS AND CHARGE FOR LATE PAYMENT: The
Reseller's payment for the Products shall be considered past due if it is not
received by SEL by the due date shown on SEL's invoice. If any payment is past
due, then in addition to any other remedy available to SEL under this Agreement
or at law therefor, SEL may declare, by giving the Reseller notice thereof, (a)
all of the liabilities and obligations of the Reseller to SEL, whether then due
or not, to be immediately due unless the past due payment is received by the
time specified in the notice; and/or, (b) impose a finance charge on all amounts
past due or declared due by (a) above equal to the lesser of one and one half
percent (1-1/2%) per month or the maximum allowed by law and charge the Reseller
for SEL's reasonable expenses of collection therefor, including but not limited
to, attorneys' and experts' fees and court costs.
6.5 E.D.I. TRANSACTIONS: If and to the extent that the parties elect to use
electronic communication lines known as Electronic Data Interchange ("EDI") to
allow for the transmission of purchase orders and/or invoices for Products,
and/or to undertake other EDI transaction sets as may be agreed to in writing
between the parties, the terms and conditions of this Agreement shall apply to
such transactions. EDI will be transmitted either directly or through a
third-party servicer ("Provider"). If a Provider's services are utilized, unless
agreed to otherwise in writing, each party will pay the cost to set up and
maintain its own mailbox, the cost of all sends and receives to and from its own
mailbox and any other costs associated with its own mailbox. Upon proper receipt
of any EDI transmission, the receiving party shall promptly and properly
transmit a functional acknowledgment that an EDI transmission was received.
Neither the receipt nor acknowledgment of an EDI transmission shall constitute
an acceptance by the Company of any order placed by the "J" Account. Each party
shall take all necessary steps to provide for reasonable security to ensure that
all access and usage of its EDI system are properly authorized. Either party may
discontinue the utilization of EDI services upon thirty (30) days' prior written
notice to the other party.
SECTION 7.0 REPRESENTATIONS AND WARRANTIES
7.1 LIMITED WARRANTY: SEL'S WARRANTY FOR THE PRODUCTS SHALL BE AS SET FORTH IN
THE PRODUCT AND MARKET SCHEDULE.
7.2 COMPATIBILITY: SEL HEREBY DISCLAIMS AND EXCLUDES ANY REPRESENTATIONS OR
WARRANTIES THAT THE PRODUCTS ARE COMPATIBLE WITH ANY COMBINATION OF PRODUCTS NOT
FURNISHED BY
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SEL WHICH THE RESELLER OR ANY PURCHASER OR END USER MAY CHOOSE TO CONNECT TO THE
PRODUCT EXCEPT FOR THOSE EXPRESSLY APPROVED IN WRITING BY SEL.
7.3 MUTUAL: Each party represents and warrants to the other that (i) it has the
right and power to enter into and fully perform the obligations it has
undertaken in this Agreement; (ii) it is not under any obligations, contractual
or otherwise, to any other entity that might conflict, interfere, or be
inconsistent with any of the provisions of this Agreement; and (iii) it shall
comply with all federal, state and local laws, rules and regulations necessary
for it to perform its obligations under this Agreement.
7.4 INTELLECTUAL PROPERTY INDEMNIFICATION:
(a) SEL'S INDEMNITY OF THE RESELLER: SEL agrees to protect, defend,
hold harmless and indemnify the Reseller from and against any and all
liabilities, damages and actions arising out of any claim that the Products
infringe any patent, trademark or copyright of third parties. Such indemnity,
however, is specifically exclusive of any such claims which arise or result from
the use or misuse of Products; alteration of the Products as furnished by SEL;
use of the Products in combination with apparatus and software not delivered or
furnished by SEL; processes or methods allegedly performed by the Products; use
of the Products furnished by SEL in the manner for which the same were neither
designed nor contemplated; or a patent, trademark or copyright in which the
Reseller or an affiliate or subsidiary of the Reseller has any direct or
indirect interest by license or otherwise. This indemnification and hold
harmless provision shall extend only to damages and costs assessed against the
Reseller embodied in a final judgment by a court of competent jurisdiction
holding that such Products constitute a patent, trademark or copyright
infringement or damages and costs incurred by the Reseller as a result of a
settlement entered into with the prior written consent of SEL. SEL shall not be
responsible for any loss of profits or the Reseller's incidental or
consequential damages or losses.
SEL will be promptly notified by The Reseller of any suit or threat of suit as
to which SEL may have obligations under the above provisions and be given
reasonable opportunity to defend the same. The Reseller shall reasonably
cooperate with SEL with regard to the defense of any suit or threatened suit and
SEL shall have authority to settle or otherwise dispose of any such suit or
threatened suit, and to appeal any judgment which may be entered. This indemnity
shall be effective with respect to all Products sold by SEL to the Reseller on
or after the date set forth above and shall continue until terminated by written
notice by SEL to the Reseller upon ten (10) days prior notice. Termination of
this indemnity shall not affect its applicability as to Products sold by SEL to
the Reseller prior to the termination date thereof.
(b) THE RESELLER'S INDEMNITY OF SEL: The Reseller agrees to protect,
defend, hold harmless and indemnify SEL from and against any and all
liabilities,
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
damages and actions arising out of any claim that the software or other products
of the Reseller bundled with or sold in conjunction with the Products or in
connection with this Agreement ("Reseller Goods") infringe any patent, trademark
or copyright of third parties. Such indemnity, however, is specifically
exclusive of any such claims which arise or result from the use or misuse of
Reseller Goods; alteration of the Reseller Goods as furnished by the Reseller,
use of the Reseller Goods in combination with apparatus and software not
delivered or furnished by the Reseller other than the Products; processes or
methods allegedly performed by the Reseller Goods; use of the Reseller Goods
furnished by the Reseller in the manner for which the same were neither designed
nor contemplated; or a patent, trademark or copyright in which SEL or an
affiliate or subsidiary of SEL has any direct or indirect interest by license or
otherwise. This indemnification and hold harmless provision shall extend only to
damages and costs assessed against SEL embodied in a final judgment by a court
of competent jurisdiction holding that such Reseller Goods constitute a patent,
trademark or copyright infringement or damages and costs incurred by SEL as a
result of a settlement entered into with the prior written consent of the
Reseller. The Reseller shall not be responsible for any loss of profits or SEL's
incidental or consequential damages or losses.
The Reseller will be promptly notified by SEL of any suit or threat of suit as
to which the Reseller may have obligations under the above provisions and be
given reasonable opportunity to defend the same. The Reseller shall reasonably
cooperate with SEL with regard to the defense of any suit or threatened suit and
SEL shall have authority to settle or otherwise dispose of any such suit or
threatened suit, and to appeal any judgment which may be entered. This indemnity
shall be effective with respect to all Products sold by SEL to the Reseller on
or after the date set forth above and shall continue until terminated by written
notice by SEL to the Reseller upon ten (10) days prior notice. Termination of
this indemnity shall not affect its applicability as to Products sold by SEL to
the Reseller prior to the termination date thereof.
SECTION 8.0 PRODUCT INDEMNITIES
8.1 BY THE RESELLER: The Reseller shall indemnify and hold harmless all members
of the Sony Group and their respective officers, directors and employees from
and against any claims, suits, liabilities, losses, fines, penalties, damages
and expenses (including reasonable attorneys' and experts' fees and costs)
arising from or incident to the Reseller's software and/or the Reseller's breach
of its obligations or responsibilities under this Agreement including, without
limitation on the foregoing, its obligations under Section 1.3 of this Article
IV and Article VI.
8.2 BY SEL: SEL shall provide to the Reseller a Broad Form Vendors Endorsement
Certificate of Insurance in an amount of [**] evidencing SEL's product liability
insurance which Certificate names the Reseller as an additional insured under
said policy. Said policy will provide that the Reseller will be given ten (10)
days notice of
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termination of said policy. In the event that SEL's insurance carrier does not
defend and indemnify any third party action pursuant to any obligation said
insurance carrier may have undertaken as a result of its issuance of such
Certificate of Insurance, or in the event any third party claim exceeds the
insurance limits set forth in this paragraph, SEL agrees to protect, defend,
hold harmless and indemnify the Reseller against any and all liabilities,
damages and actions, directly and solely arising out of any personal injury or
property damage to a third party from its use of the Products sold by SEL to the
Reseller. SEL's obligation to defend the Reseller in connection with such
indemnity, however, shall terminate with respect to such a claim in the event
SEL obtains and furnishes to the Reseller information that reasonably supports
the conclusion that the Reseller altered the Products or made warranties or
representation not expressly permitted in writing by SEL.
SECTION 9.0 LIMITATION ON LIABILITY
EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 7.0 AND 8.0, THE LIABILITY OF EITHER
PARTY, IF ANY, AND THE OTHER PARTY'S SOLE AND EXCLUSIVE REMEDY FOR DAMAGES FOR
ANY CLAIM OF ANY KIND WHATSOEVER WITH RESPECT TO ANY ORDER FOR, OR DELIVERY OF,
THE PRODUCTS OR WITH RESPECT TO ANY OF THE PRODUCTS COVERED THEREBY, AND
REGARDLESS OF THE LEGAL THEORY OR THE DELIVERY OR NON-DELIVERY OF THE PRODUCTS,
SHALL NOT BE GREATER THAN THE ACTUAL PURCHASE PRICE OF THE PRODUCTS WITH RESPECT
TO WHICH SUCH CLAIM IS MADE, WITH THE EXCEPTION OF INTEREST OR LATE PENALTIES
DUE IN RESPECT OF PAYMENT FOR PRODUCTS SHIPPED AND DELIVERED TO RESELLER. UNDER
NO CIRCUMSTANCES WILL SEL BE LIABLE TO THE RESELLER FOR ANY SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO,
COMPENSATION, REIMBURSEMENT OR DAMAGES ON ACCOUNT OF THE LOSS OF PRESENT OR
PROSPECTIVE PROFITS, EXPENDITURES, INVESTMENTS OR COMMITMENTS, WHETHER MADE IN
THE ESTABLISHMENT, DEVELOPMENT OR MAINTENANCE OF BUSINESS REPUTATION OR
GOODWILL, FOR LOSS OF DATA, COST OF SUBSTITUTE PRODUCTS, COST OF CAPITAL, AND
THE CLAIMS OF ANY THIRD PARTY, OR FOR ANY OTHER REASON WHATSOEVER.
SECTION 10.0 TERMINATION
10.1 TERMINATION FOR CAUSE: Either party may immediately terminate this
Agreement by giving the other notice if such other party:
a) defaults in the payment of any monies it owes to the other when due
and such default continues for a period of ten (10) days after notice thereof;
or,
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b) defaults in the performance of any of its obligations under any of
the terms or conditions of this Agreement other than as provided in subsection
(a) above, which default is not remedied within thirty (30) days after notice
thereof; or,
c) defaults in the performance of an of its obligations under the terms
and conditions of this Agreement which default by its nature, cannot be
remedied; or,
d) engages directly or indirectly in any attempt to defraud the party
issuing such notice; or,
e) issues any press release, advertising, brochure or other release of
information to any of the Customers, the trade or the general public concerning
or in any way referring to this Agreement or any other agreement or relationship
between the parties without the prior written approval of the party issuing such
notice; or,
(f) is unable to pay any and/or all of its debts as they become due or
becomes insolvent or ceases to pay any and/or all of its debts as they mature in
the ordinary course of business, or makes an assignment for the benefit of its
creditors; or,
g) is liquidated or dissolved or if any proceedings are commenced by,
for or against it under any bankruptcy, insolvency, reorganization of debts or
debtors relief law, or law providing for the appointment of a receiver or
trustee in bankruptcy.
SEL may also immediately terminate this Agreement by notice: 1) pursuant to
Section 10.3; or 2) upon the occurrence of, or the Reseller's failure to give
notice of, any of the events referenced in Section 11.1 (a) - (c).
10.2 REMEDIES FOR BREACH: If the Reseller defaults in its obligations under the
terms and conditions of this Agreement, then SEL may, in addition to any other
remedy available to it hereunder or at law therefor, suspend or cease further
shipments of the Products to the Reseller for a period of time specified in a
notice to the Reseller.
10.3 SET-OFF: If the Reseller defaults with respect to this Agreement or any
other agreement(s) with SEL including, but not limited to, the Reseller's
failure to pay any monies when due either pursuant to this Agreement or any
other such agreement, then SEL may, in its sole discretion, setoff against any
monies due and owing the Reseller such sum or sums of money due and owing from
the Reseller to SEL pursuant to this Agreement or such other agreement(s),
and/or to terminate this Agreement.
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10.4 SURVIVING OBLIGATIONS AND LIMITATIONS: Neither the termination nor
expiration of this Agreement nor the termination of any of the agreements
referred to in this Section shall release either party from the obligation to
pay any monies that may be owing to the other party or operate to discharge any
liability that had been incurred by either party prior to any such termination
or expiration.
10.5 ORDER PROCEDURE AFTER NOTICE OF TERMINATION: During the period between SEL
giving the Reseller notice of this Agreement's termination and the effective
date of such termination, all Reseller orders not then fulfilled and all new
Reseller orders for the Products that are accepted by SEL will be shipped to the
Reseller only on a cash in advance basis.
SECTION 11.0 NOTICES
11.1 CHANGE IN STATUS: The Reseller shall give SEL immediate notice in writing
of:. (a) any transaction effecting a change in control of the Reseller or a
transfer of fifty (50) percent or more of the Reseller's assets if the Reseller
is a corporation; or, (b) any change in the respective interests of the
partners, if the Reseller is a partnership; or, (c) any transaction affecting
the ownership of any part of the business, if the Reseller is an individual
proprietorship.
11.2 CHANGE IN NAME OR ADDRESS OF THE RESELLER: Each party shall give the other
prompt notice in writing of any change in the: (a) name of the party, or, (b)
address of the party principal office from that first set forth above.
11.3 METHOD OF TRANSMISSION: Any notices given under this Agreement shall be in
writing and will be deemed to have been sufficiently given when delivered by
hand or sent by facsimile transmission (which is acknowledged by the recipient),
overnight courier service or by certified or registered mail, postage and other
charges prepaid, to the parties at the addresses first above written or as
subsequently changed by notice duly given. The date of mailing any written
notice will be deemed the date on which such notice is given unless otherwise
specified in the notice.
SECTION 12.0 GENERAL
12.1 EXPORT: The Reseller shall not export the Products covered by this
Agreement in violation of U.S. export laws and regulations. The Reseller will be
solely responsible for compliance with and the obtaining of any required export
licenses.
12.2 ASSIGNMENT: Neither party may assign or otherwise transfer this Agreement
or any interest or right hereunder or delegate the performance of any of its
obligations hereunder to any third party without the prior written consent of
the other party, except that SEL may assign its accounts receivable generated by
this Agreement upon commercially reasonable notice thereof to the Reseller. Any
such attempted
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assignment, transfer or delegation without the prior written consent of the
other, will be deemed null and void and result in the immediate termination of
this Agreement without necessity of any notice.
12.3 WAIVERS: Waiver by either party of any default, or either party's failure
to enforce any of the terms and conditions of this Agreement shall not in any
way affect, limit or waive such party's right thereafter to enforce and compel
strict performance of every term and condition hereof.
12.4 NON-EXCLUSIVENESS; REMEDIES: Any specific right or remedy provided in this
Agreement shall not be exclusive but will be cumulative of all other rights and
remedies set forth herein and allowed at law.
12.5 LITIGATION: In the event of any litigation between the parties with respect
to this Agreement, the prevailing party (the party entitled to recover costs of
suit at such time as all appeals have been exhausted or the time for taking such
appeals has expired) shall be entitled to recover reasonable attorneys' and
experts' fees, and costs in addition to such other relief as the court may
award.
12.6 HEADINGS: The headings of Articles and Sections in this Agreement are for
convenience and reference only, and they shall in no way define, limit, or
describe the scope of the provisions or be considered in the interpretation,
construction or enforcement hereof.
12.7 GOVERNING LAW AND VENUE:
This Agreement shall be interpreted, construed and enforced in accordance with
the local law of the State of New Jersey.
If SEL initiates any litigation against the Reseller, it shall only bring such
action or suit in the federal or state court with appropriate jurisdiction over
the subject matter established or sitting in the State of Massachusetts. If the
Reseller initiates any litigation against SEL, it shall only bring such action
or suit in the federal or state court with appropriate jurisdiction over the
subject matter established or sitting in the State of New Jersey. The parties
shall not raise in connection therewith, and hereby waive, and any defenses
based upon the venue, the inconvenience of the forum, the lack of personal
jurisdiction, or the like in any such action or suit brought in such states.
THE PARTIES HEREBY WAIVE TRIAL, BY JURY IN CONNECTION WITH ANY ACTION OR SUIT
UNDER THIS AGREEMENT OR OTHERWISE ARISING FROM THE REIATIONSHIP OF THE PARTIES
HERETO.
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12.8 INVALIDITY: If and to the extent that any term or condition of this
Agreement is specifically determined by any court to be in whole or in part
invalid or unenforceable, then this Agreement shall be immediately terminated
upon such determination. However, such termination will not operate to discharge
either party from the obligation to pay the other party any sum due such other
party or discharge any liability that had been incurred prior thereto.
12.9 SURVIVAL: Any provision herein which by its nature is indicated or intended
to extend beyond the expiration or termination of this Agreement shall survive
any expiration or termination of this Agreement.
12.10 GOVERNMENT CONTRACTS: No provision required in any United States
government contract or subcontract related thereto shall be deemed a part of
this Agreement, or be imposed upon or binding upon SEL, and this Agreement will
not be deemed an acceptance of any government provisions that may be included or
referred to in any Reseller order or other purchasing document.
SECTION 13.0 FORCE MAJEURE
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY DELAY IN THE PERFORMANCE OF
ANY OF ITS OBLIGATIONS HEREUNDER DUE TO ANY CAUSE BEYOND SUCH PARTY'S REASONABLE
CONTROL OR DUE TO ACTS OF GOD, ACTS OF CIVIL OR MILITARY AUTHORITIES, FIRES,
LABOR DISTURBANCES, FLOODS, EPIDEMICS, GOVERNMENTAL RULES OR REGULATIONS, WAR,
RIOT, DELAYS IN TRANSPORTATION OR SHORTAGES IN RAW MATERIALS OR OTHER PRODUCTS.
THIS SECTION SHALL NOT RELIEVE OR RELEASE EITHER PARTY FROM ITS OBLIGATION TO
MAKE PAYMENT WHEN DUE OF ANY MONIES WHICH EITHER PARTY MAY OWE TO THE OTHER.
ARTICLE V
INCORPORATION/ ENTIRETY OF AGREEMENT
This Agreement supersedes, terminates and otherwise renders null and void any
and all prior written and/or oral agreements between the Reseller and SEL with
respect to the matters herein expressly set forth, except that nothing herein
contained shall be construed as intended to relieve or release either party from
its obligation to make payment of any monies which either party may owe to the
other party. This Agreement represents and incorporates the entire understanding
of the parties hereto with respect to the matters herein expressly set forth and
each party acknowledges that there are no warranties, representations, covenants
or understandings of any kind, nature or description whatsoever made by either
party to the other, except as are herein expressly set forth. This Agreement may
be modified only by a written instrument signed by the
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parties to this Agreement, which instrument makes specific reference to this
Agreement and the changes to be made hereto.
The Reseller hereby warrants and represents that the individual executing this
Agreement is duly authorized and empowered to bind the Reseller. This Agreement
shall be subject to acceptance by SEL through its execution in the space
provided below by an authorized representative only.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first above written.
Reseller: SEL:
DRAGON SYSTEMS, INC. SONY CONSUMER AUDIO/VIDEO GROUP
SONY ELECTRONICS INC.
By: \s\ Janet M. Baker By: \s\ Arthur Halloran
---------------------------- ------------------------------
(Authorized Signature) (Authorized Signature)
Print Name: Janet M. Baker Print Name: Arthur Halloran
---------------------------- ------------------------------
* Title: President Title: Vice President
---------------------------- ------------------------------
* Execution of this Agreement: If the Reseller is a corporation, indicate
the office of the person signing the Agreement on behalf of the
corporation. If the Reseller is a partnership, the same should be
signed by a general partner, who should so indicate by use of the word
"General Partner". If the Reseller is an individual proprietorship, the
same should be indicated by use of the title "Sole Proprietor".
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ARTICLE VI
PRODUCT AND MARKET SCHEDULE
With DRAGON SYSTEMS, INC. ("Reseller")
Dated as of May 15,1998 ("Effective Date")
1. CLASSIFICATION. Pursuant to Article III (b) of this Agreement, the Reseller
agrees that it will only sell the Products by adding value to them as described
below and reselling same to Customers in the manner set forth in this Schedule.
2. PRODUCTS. Pursuant to Article III (f) "Products" shall include and mean only
the following:
MZ-R50 Minidisc recorder units and other Minidisc products as
SEL may authorize from time to time.
3. VALUE-ADDED COMPONENT. Pursuant to Article III (i), the "Value-Added
Component" shall mean only Dragon's speech recognition software utilized in
(a) Dragon NaturallySpeaking Mobile Suite for Legal;
(b) Dragon NaturallySpeaking Mobile Suite for Medical; and
(c) Dragon NaturallySpeaking Mobile Suite
4. SPECIAL MARKETING REQUIREMENTS.
(a) The Reseller agrees that it shall only sell the Products as part of
the Bundle described above. In all instances, the packaging, MZ-R50 advertising
and related marketing materials for the Bundle must clearly and conspicuously
state; (i) the then current MZ-R50 (or other Product) MSRP as provided by SEL
and (ii) that the MZ-R50 (or other Product) is being included in the Bundle as a
special promotional offer. In addition, the Reseller agrees that it shall
sticker both the Products and the Value-Added Component in each Bundle to
indicate that they are not to be sold separately.
(b) Notwithstanding the foregoing, the Reseller may sell the MZ-R50
Product to end-user customers of the Reseller who have previously purchased
Dragon NaturallySpeaking Deluxe or Professional versions, including Legal,
Medical, Business Products and other products as our mutually agreed on a
one-for-one purchase basis.
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(c) The Reseller may promote the availability of the Bundle on the
Internet only on its Website, and may sell it on the Internet or its Website
(i.e. takes orders for the Bundle via the Internet or its Website). The Reseller
may not promote or offer for sale the MZ-R50 by itself on the Internet or its
Website, but may advise purchasers of its Dragon NaturallySpeaking Mobile
Products of the availability of an upgrade subject to SEL's prior review and
approval of such upgrade offer.
5. APPROVALS. Prior to distributing the Bundle, the Reseller must obtain SEL's
written approval of the packaging and any representations the Reseller may wish
to make regarding the Product. In addition, neither party will issue any press
releases or other publicity (including on the Internet or any on-line method)
regarding this Agreement or the relationship between the parties without the
prior written approval of the other party, which shall not be unreasonably
withheld.
6. ADDITIONAL RESELLER RESPONSIBILITIES. The Reseller
(a) will ensure that the Value-Added Components work properly with the
Products prior to distributing the Bundles;
(b) will sell the Product with Product-related materials in a mutually
acceptable manner,
(c) shall not sell the Products in any manner other than in the Bundle,
except as provided in 4.(b) above. In the event the Product is sold unbundled by
the Reseller or any of its Customers in violation hereof, the Reseller shall be
liable to SEL for the full retail price of the Bundle. In addition, SEL shall
have the, right to terminate this Agreement pursuant to Section 10.1 (b).
(d) shall not accept returns of Bundles from its Customer and shall
require that its Reseller Customer not accept returns from end-users unless all
components of the Bundle are returned. Notwithstanding the foregoing, SEL shall
not accept any returns from the Reseller, but shall provide its limited warranty
to end-users as per Section 10 below;
(e) will maintain and enforce on a commercially-reasonable basis, the
Reseller's Customer agreements for the Bundle that are consistent with the
Reseller's obligations hereunder, including contractual provisions that
(i) such Customer not sell the components of the Bundle
separately or in any manner other than as received from the Reseller;
(ii) such Customer shall be liable to the Reseller for the
full retail price of the Product plus any cost of collection in the event it is
sold unbundled;
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(iii) such Customer shall maintain proof of bundled sale for
two years;
(iv) such Customer shall allow the Reseller and/or SEL to
access an Customer's records for two years from the date of sale of Bundles to
verify compliance;
(v) such Customer shall bind its distributors/resellers of the
Bundle of this Paragraph 6 (e); and
(vi) sales of the Bundle may be suspended and Bundles recalled
if any such reseller is in breach of these requirements;
(f) will obtain and/or maintain customer service support functions
sufficient to meet all reasonable inquiries and needs of end-user Bundle
purchasers. SEL will provide a one-time training session for up to [**] people
at [**] to the Reseller at the Reseller's facilities.
7. PRICES. The price for the Products shall be as notified to the Reseller by
SEL from time to time. All pricing is subject to increase and/or adjustment in
accordance with Sections 3.2 and 3.3 of Article IV of this Agreement. All
pricing is F.O.B. [**]. Current payment terms are [**] days subject to the
provisions of Section 6.0 of Article IV of this Agreement.
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8. CUSTOMER/MARKET DEFINITION. Pursuant to Article III (e), the Reseller agrees
that it will only sell the Products to individuals, the government or resellers
who directly reach business/medical/legal professionals located in the United
States of America. The Reseller will require reseller customers to sell the
Bundle as such and not separately and that its end-user customers are purchasing
such Bundles for their use and not for resale.
9. WARRANTY
DIVISION'S LIMITED WARRANTY. SEL's warranty for each of the Products
shall be to the end-user only as set forth in SEL's Limited Warranty Card
enclosed with or accompanying the Products. If any Products are not accompanied
by warranty cards, SEL's then-current warranty applicable to those Products will
apply.
10. SERVICE. The Reseller will direct all of its customers and end-users of the
Bundle to contact the Reseller through the Reseller's toll-free number regarding
all end-user Bundle performance inquiries, complaints and claims to determine
whether the performance problem relates to the Value-Added Component or the
Product. If the Product appears to be involved, the Reseller only then will
refer said end-user to SEL by a mechanism to be determined by the parties.
DRAGON SYSTEMS, INC. SONY CONSUMER AUDICI/VIDEO GP.
(Name of Reseller) SONY ELECTRONICS INC.
By: \s\ Janet M. Baker By: \s\ Arthur Halloran
---------------------------- ------------------------------
(Authorized Signature) (Authorized Signature)
Print Name: Janet M. Baker Print Name: Arthur Halloran
---------------------------- ------------------------------
Title: President Title: Vice President
---------------------------- ------------------------------
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