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EXHIBIT 10.9
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
DRAGON RECIPROCAL LICENSE AGREEMENT
This Agreement made as of the 25th day of January, 1998 by and between
DRAGON SYSTEMS, INC. ("DRAGON") having its principal place of business at 320
Nevada Street, Newton, MA 02160 and COREL CORPORATION having its principal place
of business at 1600 Carling Avenue, Ottawa, Ontario K1Z 8R7, and its
wholly-owned subsidiary COREL CORPORATION LIMITED (collectively "COREL") having
its principal place of business at Europa House, 3rd Floor, Harcourt Street,
Dublin 2, Ireland.
BACKGROUND:
1. COREL designs, manufactures and markets productivity software among
other things.
2. DRAGON has developed and markets certain speech recognition software.
3. COREL desires to license such speech recognition software for
distribution together with its productivity software and DRAGON is
willing to grant COREL a license to such speech recognition software
for distribution together with COREL's productivity software subject to
the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual promises, covenants and
obligations contained herein, the parties agree as follows:
1. INTERPRETATION
1.1 Definitions. As used herein:
1.1.1 "Agreement" means this Dragon Reciprocal License Agreement,
including any schedules and exhibits attached hereto.
1.1.2 "Customer" means any Distributor or End User.
1.1.3 "COREL Product" means the versions of COREL's business
application software product entitled "Corel WordPerfect" as
set out in Schedule "A" hereto.
1.1.4 "Distributor" means any third party which acquires possession
of an Integrated COREL Product for distribution to an End
User, sub-distributor, or reseller.
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1.1.5 "Documentation" means the user manuals, handbooks and other
written materials relating to the DRAGON Software provided by
DRAGON to COREL hereunder.
1.1.6 "Effective Date" means the date first set out above.
1.1.7 "End User" means any third party licensed by DRAGON or any of
its subsidiaries to use the Software pursuant to the terms of
an End User License.
1.1.8 "End User License" means DRAGON's End User License Agreement
as modified by DRAGON from time to time.
1.1.9 "Integrated COREL Product" means any COREL Product that
incorporates or is bundled with the DRAGON Software.
1.1.10 "OEM" means an original equipment manufacturer and refers to
hardware vendors that hard-bundle Integrated COREL Products
with computer hardware for resale to sub-distributors,
resellers or End Users. For clarity, "hard-bundle" means that
the software application must be sold as part of the complete
system being sold at the time of its original sale and not
merely as one among other software applications from which the
consumer may choose to have included as part of the system
(ie. "soft-bundle").
1.1.11 "Person" means any an individual, corporation, partnership, a
trust, an unincorporated organization, the government of a
country or any political subdivision thereof, or any agency or
department of any such government, and the executors,
administrators or other legal representatives of an individual
in such capacity.
1.1.12 "Corel Reciprocal License Agreement" shall have the meaning
set out in Section 6.2.
1.1.13 "DRAGON Software" means the object code version of the
computer software described in Schedule "A" hereto, along with
accompanying Documentation.
1.1.14 "Term" means the period of time from the Effective Date
through to the conclusion of this Agreement as provided in
Section 12.1.
1.1.15 "Trade-marks" means the trade names, trade-marks and logos
related to the DRAGON Software.
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2. GRANT OF LICENSE
2.1 License. Subject to the terms and conditions hereof, DRAGON hereby
grants to COREL and COREL accepts from DRAGON a world-wide, non-exclusive,
non-transferable license to reproduce and distribute the DRAGON Software in
object code format incorporated in or bundled only as part of an Integrated
COREL Product. In addition to any other restrictions set out in this Agreement,
the foregoing license shall be subject to the bundling and distribution
restrictions set out in Schedule "A" hereto.
2.2 Distributors. COREL shall have the right to appoint Distributors and
sublicense to them the right to distribute the Integrated COREL Product;
provided that COREL shall ensure that any such distribution of the Integrated
COREL Product by its Distributors is in compliance with and in accordance with
the terms of this Agreement.
2.3 OEM. COREL shall have the right to appoint OEMs and sublicense to them
the right to reproduce and distribute the English (U.S.) version of the
Integrated COREL Product in the United States and Canada only; provided that
COREL shall ensure that any such reproduction and distribution of the Integrated
COREL Product by OEMs is in compliance with and in accordance with the terms of
this Agreement and, in particular, shall be restricted to hard-bundled
distribution as described in Section 1.1.10. No version of the Integrated COREL
Product other than the English (U.S.) version may be distributed by an OEM
without the written approval of an authorized representative of DRAGON.
2.4 Trade-marks. Subject to the terms and conditions hereof, DRAGON hereby
grants to COREL and COREL accepts from DRAGON, a world-wide, royalty-free,
non-exclusive license to use the Trade-marks solely in the form provided by
DRAGON to COREL and only in connection with the reproduction, manufacturing,
marketing and distribution of any Integrated COREL Product.
2.4.1 Non-alteration. COREL agrees not to obstruct, remove,
interfere with, or in any way alter the Trade-marks. COREL
acknowledges and agrees that DRAGON retains all of its right,
title and interest in the Trade-marks, and all use of the
Trade-marks by COREL shall enure to the benefit of DRAGON.
2.4.2 Mark Policies and Standards. COREL shall display the
Trade-marks in accordance with DRAGON's guidelines for using
trade-marks as set out in Schedule "B" hereto or as otherwise
in effect from time to time and as provided to COREL.
Notwithstanding the foregoing, any change by DRAGON to its
trade-mark guidelines which affects
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COREL's usage shall not apply retroactively to COREL's past
usage which conformed with the then current guidelines and
DRAGON shall permit COREL a reasonable period of time in which
to conform with the new guidelines. DRAGON retains the right
to specify and approve the quality and standards of all
materials on which the Trade-marks are displayed and to
inspect from time to time samples of such materials. Failure
of COREL to adhere to such standards of quality shall be
grounds for DRAGON to terminate COREL's rights to use such
Trademarks.
2.4.3 Validity and Enforceability of Marks. COREL shall not at any
time during or after this Agreement assert any claims or
interest in or to anything which may adversely affect the
validity or enforceability of any of the Trade-marks. COREL
shall not register, seek to register, or cause to be
registered any of the Trade-marks without DRAGON's prior
written consent.
2.4.4 Infringement and Further Assurances. COREL agrees to promptly
notify DRAGON of any claim, action, suit, proceeding, or
litigation that is instituted by any Person against it
involving the Trade-marks. COREL agrees to report all
infringement or improper or unauthorized use of the
Trade-marks which come to the attention of COREL, and to
reasonably assist DRAGON in protecting same, but COREL
acknowledges and agrees that only DRAGON shall have the right
to bring any action, claim or suit in connection with any such
infringement. COREL agrees to execute all reasonable documents
and further assurances required by DRAGON to register or
protect DRAGON's rights in the Trademarks.
2.4.5 Term. The license to use the Trade-marks herein shall be
contemporaneous and coterminous with this Agreement and is
granted solely for the purposes of this Agreement. Subject to
COREL's right to sell off inventory of COREL Product in which
the DRAGON Software is incorporated as set out in Section
12.1.1, if this Agreement is terminated or is assigned
otherwise than as is provided herein, the rights to use the
Trade-marks granted herein shall immediately end and be of no
further force or effect and COREL shall not thereafter use,
advertise or display any name, trademark, trade name,
designation or logo which is, or any part of which is, to any
extent similar to, or confusing with any of the Trade-marks.
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3. OWNERSHIP
3.1 DRAGON Software. Except for the rights granted to COREL under this
Agreement, DRAGON shall retain all right, title and interest, including
intellectual property rights in the DRAGON Software.
3.2 Proprietary Rights Notices. COREL agrees not to obstruct, remove,
interfere with, or in any way alter any proprietary rights notices that appear
in the DRAGON Software and to reproduce any such notices in all copies of the
DRAGON Software that are bundled with Integrated COREL Products.
4. RESPONSIBILITIES OF COREL
4.1 End User License. COREL shall ensure that each copy of the DRAGON
Software is distributed with a copy of the End User License. COREL shall not
alter the End User License.
4.2 Restrictions. COREL shall reproduce the DRAGON Software only in the
form provided by DRAGON and shall not alter the DRAGON Software or any part
thereof. COREL shall not reverse engineer, decompile or disassemble the DRAGON
Software and agrees not to permit anyone else to do so.
4.3 Stand Alone Distribution. COREL shall not, nor shall COREL permit any
of its Distributors, to distribute the DRAGON Software other than incorporated
into or bundled as part of an Integrated COREL Product.
4.4 Support for Customers. COREL shall be solely responsible for providing
all maintenance and technical support to End Users of Integrated COREL Product
distributed through the retail sales channel. COREL shall be solely responsible
for providing all maintenance and technical support to End Users regarding the
COREL Product portion of Integrated COREL Product distributed through the OEM
sales channel. All such maintenance and technical support shall be provided by
COREL in accordance with COREL's standard procedures as they may be changed by
COREL from time to time. COREL shall have no maintenance or technical support
obligations regarding the DRAGON Software portion of the Integrated COREL
Product distributed through the OEM sales channel. DRAGON shall have no
maintenance or technical support obligations regarding the DRAGON Software
portion of the Integrated COREL Product distributed through the retail and OEM
sales channels.
4.5 Packaging and Marketing Materials. COREL shall be solely responsible
for the design, production and reproduction of all packaging and marketing
material for the Integrated COREL Products; provided that any such packaging or
marketing materials prepared by or for COREL shall advertise the DRAGON Software
as being available only as a bundled product within an Integrated COREL Product
and shall
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quote only the bundled price, without disclosing a separate price for the DRAGON
Software, unless required by law. In addition, the front panel of any packaging
for the Integrated COREL Products shall prominently display the Trademarks of
DRAGON.
4.6 Up-Sell Piece. COREL shall include in each copy of Integrated COREL
Product a coupon or other marketing insert that provides End Users with
information regarding other products marketed and distributed by DRAGON. The
form and content of such coupon or insert shall be as agreed upon by the parties
from time to time.
4.7 Joint-marketing Efforts. The parties shall cooperate in joint-marketing
opportunities regarding the Integrated COREL Product.
4.8 Registered User Base. COREL shall provide DRAGON with access to its
database of registered End Users of COREL WordPerfect products for the purpose
of a mailing for the marketing of any products which are not substantially
competitive to the core functionality of any product marketed by COREL
("Competitive Products"). For clarity, only wordprocessing, spreadsheet,
presentation and database products marketed and distributed by Microsoft
Corporation, Lotus/IBM Corporation, and Star Software shall be considered to be
Competitive Products. Dragon products which only include macro level support or
other features which support Competitive Products shall not be considered
Competitive Products. Such access shall be indirect only, through DRAGON or it's
third party mailing house. DRAGON shall bear all costs associated with producing
the insert and mailing such insert to COREL's registered users, except for the
access fee generally changed by COREL to third parties, which is hereby waived
by COREL, and shall be restricted to one mailing per calendar quarter. DRAGON
shall not be entitled to use the information relating to COREL's registered End
Users for any other purpose. COREL shall be entitled to approve all materials
sent to its registered user base; such approval not to be unreasonably withheld.
4.9 Compliance with Laws. COREL shall comply with all laws, rules, and
regulations existing with respect to the Integrated COREL Product and the
performance by COREL of its obligations hereunder existing in the jurisdictions
where COREL carries on activities under this Agreement and where the Integrated
COREL Product is resold or distributed from time to time. COREL shall not export
the Integrated COREL Product unless such export complies with any applicable
export laws and regulations as they apply to the Integrated COREL Product. In
particular, COREL shall not export or re-export the Integrated COREL Product,
either directly or indirectly, to countries which the United States has
prohibited export, including, but not limited to Cuba, Iran, Iraq, Libya and
North Korea. COREL shall impose the same obligation on its Distributors.
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4.10 Quality Assurance. COREL agrees to implement and maintain quality
assurance programs in keeping with industry standards and practices with respect
to its reproduction and distribution of the Integrated COREL Products.
4.11 Microphone. Each copy of Integrated COREL Product shall be distributed
by COREL, its Distributors or its OEMs together with a microphone certified by
DRAGON for use with the DRAGON Software.
5. RESPONSIBILITIES OF DRAGON
5.1 Gold Masters. To enable COREL to exercise the licenses granted under
Section 2.1 hereof, DRAGON shall deliver the gold masters of the media for the
DRAGON Software to COREL in accordance with the delivery schedule set out in
Schedule "A" hereto.
5.2 Support for Customers. DRAGON shall have no responsibility for
providing maintenance and technical support to End Users regarding the DRAGON
Software portion of Integrated COREL Product distributed by COREL through the
retail and OEM sales channel; provided that DRAGON shall provide COREL and OEMs
with second-level technical support in order to assist COREL or OEM in providing
technical support to End Users of Integrated COREL Product distributed through
the OEM sales channel.
5.3 Support to COREL. During the term of this Agreement, DRAGON shall
provide free of charge bug fixes, and reasonable telephone and facsimile support
in respect of the DRAGON Software to assist COREL in the implementation of the
DRAGON Software for COREL's purposes.
6. CONSIDERATION
6.1 Payment. In consideration of the grant to COREL of the licenses to the
DRAGON Software hereunder, COREL agrees to pay DRAGON the amounts set out in
Schedule "C" hereto ("Royalty Schedule"). Except as set out in the Royalty
Schedule, COREL shall not be obligated to pay any license fee, royalties or
other payments to DRAGON in consideration of the licenses to the DRAGON Software
granted hereunder.
6.2 Reciprocal License Agreement. As further consideration of the grant to
COREL of the licenses to the DRAGON Software hereunder, COREL has entered into a
software license and distribution agreement which is attached hereto as Exhibit
1 ("Corel Reciprocal License Agreement") under which COREL has granted to DRAGON
a license to distribute certain versions of its productivity software together
with certain of DRAGON's speech recognition software products.
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6.3 Taxes. COREL shall pay, in addition to all amounts specified in this
Agreement, all duties and foreign, federal, state, county, local income taxes,
value added taxes and other taxes, or amounts in lieu thereof, and interest
thereon, paid or payable or collectible by DRAGON (exclusive of taxes based on
DRAGON's net income) levied or based on amounts chargeable to or payable by
COREL pursuant to this Agreement. In the event any payments required to be made
by COREL under this Agreement are subject to applicable withholding tax that
COREL is required to deduct from such payments, COREL shall promptly deliver to
DRAGON receipts issued by appropriate government authorities for all such taxes
withheld or paid by COREL and COREL shall fully and promptly cooperate with
DRAGON to provide such information and records as DRAGON may require in
connection with any application by DRAGON to obtain available tax credits.
6.4 Reports. COREL will provide to DRAGON quarterly reports within forty
(45) days of the end of each quarter specifying the number of reproductions of
the Integrated COREL Products released for distribution by COREL and its
Distributors. Such reports shall include a breakdown of the number of Integrated
COREL Products by version, language and sales channel (ie. retail or OEM).
6.5 Audits. COREL agrees to maintain complete and accurate records relating
to its promotion, marketing, use and distribution of Integrated COREL Product.
DRAGON shall have the right no more often than once per twelve month period to
appoint an independent third party to examine COREL's relevant books and records
in order to verify COREL's compliance with the terms of this Agreement. Any such
audit shall be at the expense of DRAGON unless the audit reveals a
non-compliance by COREL with the terms of this Agreement of greater than five
percent (5%) in which case the audit shall be at the expense of COREL.
7. WARRANTIES, REPRESENTATIONS AND COVENANTS
DRAGON warrants, represents and covenants to COREL as follows and
acknowledges that COREL is relying on such warranties, representations and
covenants in entering into this Agreement and the transactions contemplated in
this Agreement:
7.1 Storage Medium. The DRAGON Software storage medium for the golden
masters is warranted against defects in workmanship and materials for a period
of ninety (90) days from the date it is delivered to Distributor. In the event
that the storage medium is defective DRAGON will replace it free of charge with
another copy of the DRAGON Software. Replacement of the storage medium shall be
DRAGON's sole obligation and COREL's sole remedy for a breach of the warranty in
this section.
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7.2 Limitation. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, THE DRAGON
SOFTWARE AND STORAGE MEDIA ARE PROVIDED AND LICENSED "AS IS" AND THERE ARE NO
WARRANTIES, REPRESENTATIONS OR CONDITIONS, EXPRESS OR IMPLIED, WRITTEN OR ORAL,
ARISING BY STATUTE, OPERATION OF LAW OR OTHERWISE, REGARDING THEM, OR ANY OTHER
PRODUCT OR SERVICE PROVIDED HEREUNDER OR IN CONNECTION HEREWITH. DRAGON
DISCLAIMS ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABLE QUALITY,
MERCHANTABILITY, DURABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NO
REPRESENTATION OR OTHER AFFIRMATION OF FACT, INCLUDING BUT NOT LIMITED TO
STATEMENTS REGARDING PERFORMANCE OF THE DRAGON SOFTWARE OR STORAGE MEDIA, WHICH
IS NOT CONTAINED IN THIS AGREEMENT, SHALL BE DEEMED TO BE A WARRANTY BY DRAGON.
THERE IS NO IMPLIED WARRANTY OF NONINFRINGEMENT; THE SOLE REMEDY FOR
INFRINGEMENT IS PROVIDED IN SECTION 8.
IT IS UNDERSTOOD BY BOTH PARTIES TO THIS AGREEMENT THAT SPEECH RECOGNITION IS A
STATISTICAL PROCESS, THAT RECOGNITION ERRORS ARE INHERENT IN THE PROCESS OF
SPEECH RECOGNITION, AND THAT SPEECH RECOGNITION APPLICATIONS MUST BE DESIGNED TO
ALLOW FOR SUCH ERRORS IN THE RECOGNITION PROCESS. BOTH PARTIES UNDERSTAND THAT
SUCH ERRORS ARE INEVITABLE AND THAT IS THE USER OF THE DRAGON SOFTWARE'S
RESPONSIBILITY TO CORRECT RECOGNITION ERRORS BEFORE USING THE RESULTS OF THE
RECOGNITION.
7.3 No Variation. NO AGREEMENTS VARYING OR EXTENDING THE FOREGOING
WARRANTIES OR LIMITATIONS WILL BE BINDING ON EITHER PARTY UNLESS IN WRITING AND
SIGNED BY AN AUTHORIZED REPRESENTATIVE OF BOTH PARTIES.
7.4 COREL not to Bind. COREL will give and make no warranties or
representations on behalf of DRAGON as to quality, merchantable quality, fitness
for a particular use or purpose or any other features of the DRAGON Software;
and COREL shall not incur any liabilities, obligations or commitments on behalf
of DRAGON, including, without limitation, a variation of the End User License.
8. INFRINGEMENT
8.1 Defense and Settlement. If notified promptly in writing of any action
(and all prior related claims) brought against COREL alleging that COREL's
distribution or other disposition of the DRAGON Software under this Agreement
infringes any valid Canadian or United States copyright, DRAGON will defend that
action at its expense
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
and will pay the costs and damages awarded against COREL in the action,
provided: that DRAGON shall have sole control of the defense of any such action
and all negotiations for its settlement or compromise; that COREL, and where
applicable, those for whom COREL is in law responsible, cooperate fully with
DRAGON in its defense of the action; and that DRAGON shall have no liability if
the action results from the use of the DRAGON Software for purposes or in an
environment for which it was not designed or modification of the DRAGON Software
by anyone other than COREL.
8.2 Options Where Claim. If a final injunction is obtained in such action
against COREL's resale of the DRAGON Software or if in DRAGON's opinion the
DRAGON Software is likely to become the subject of a claim of infringement,
DRAGON shall at its sole option and expense either procure for COREL the right
to resell the DRAGON Software or replace or modify the DRAGON Software so that
it becomes non-infringing or terminate this Agreement. In the event DRAGON
terminates this Agreement pursuant to this Section 8.2, COREL shall be entitled
to terminate the Corel Reciprocal License Agreement.
9. LIMITATION OF LIABILITY
9.1 Limitation. EXCEPT IN CASE OF A CLAIM FOR WHICH DRAGON IS OBLIGATED TO
DEFEND AND SETTLE PURSUANT TO SECTION 8.1 AND THE INDEMNITY PROVIDED BY COREL
PURSUANT TO SECTION 10.1, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES WHATSOEVER
RESULTING FROM LOSS OF USE, DATA OR PROFITS, ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR THE USE OR PERFORMANCE OF THE DRAGON SOFTWARE OR STORAGE
MEDIA, OR OTHER DRAGON PROVIDED MATERIAL WHETHER IN AN ACTION IN CONTRACT OR
TORT INCLUDING BUT NOT LIMITED TO NEGLIGENCE AND WHETHER OR NOT SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR SUCH DAMAGES ARE FORESEEABLE.
9.2 Aggregate Liability. Other than as provided in Section 8, DRAGON's
aggregate liability to COREL whether for negligence, breach of contract,
misrepresentation or otherwise shall in respect of a single occurrence or a
series of occurrences in no circumstances exceed the amount of [**]
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10. COREL INDEMNIFICATION
10.1 Indemnification. Except as set forth in Section 8, COREL agrees to
indemnify and save DRAGON harmless from and against any and all claims, demands,
costs and liabilities (including all reasonable legal and attorney fees and
expenses) of any kind whatsoever, arising directly or indirectly: (i) out of
claims by COREL's Customers relating to COREL Products; (ii) out of COREL's, or
its authorized Distributor's reproductions of the DRAGON Software; or (iii) out
of COREL's performance or non-performance of its obligations hereunder.
11. CONFIDENTIALITY
11.1 Proprietary Information. All information (regardless of its form,
manifestation or how it is known to the other party) concerning either party to
this Agreement, including without limitation the source code for the DRAGON
Software, technology, data, business, financial affairs, and operations of each
respective party hereto, is hereby deemed to be for the purposes of this Section
11 as confidential and proprietary to each such respective party ("Confidential
Information"). Confidential Information shall not include information defined as
Confidential Information above which the receiving party can establish before a
court of competent jurisdiction: (i) was in the possession of the receiving
party at the time of disclosure; (ii) prior to or after the time of disclosure
becomes part of the public domain without the act or omission of the party to
whom it was disclosed; (iii) is disclosed to the receiving party by a third
party under no legal obligation to maintain the confidentiality of such
information; or (iv) was independently developed by the receiving party. All
such confidential Information shall be treated as strictly confidential by the
receiving party and its employees, contractors and agents and shall not be
disclosed by the receiving party without the disclosing party's prior written
consent. However, the receiving party may disclose Confidential Information of
the disclosing party in accordance with judicial or other governmental order,
provided the receiving party shall give the disclosing party reasonable notice
prior to such disclosure and shall comply with any applicable protective order
or equivalent.
11.2 Treatment of Confidential Information. Neither party shall in any way
duplicate all or any part of the other party's Confidential Information, except
in accordance with the terms and conditions of this Agreement. Each party shall
have an appropriate agreement with each of its employees, contractors and agents
having access to the other party's confidential Information sufficient to enable
that party to comply with all the terms of this Agreement. Each party agrees to
protect the other's Confidential Information with a fiduciary duty and shall
adopt or maintain procedures to protect such Confidential Information
commensurate with such duty.
11.3 Further Treatment of Proprietary Information. Each party agrees not to
disclose any such Confidential Information without the prior written consent of
the
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other, to anyone other than that party's employees, contractors and agents who
have a need to know same to carry out the rights granted hereunder. Each party
shall use its reasonable efforts to protect all such Confidential Information
from material harm, damage, theft, tampering, sabotage, interference or
unauthorized use, during the term of this Agreement and during such time as such
Confidential Information remains in the possession of the other party.
11.4 Action to Protect. Each party shall promptly report to the other any
actual or suspected violation of the terms of this Section 11, and shall take
all reasonable steps to prevent, control or remedy such violation.
11.5 Equitable Relief. In recognition of the unique and proprietary nature
of the information disclosed by the parties, it is agreed that each party's
remedies for a breach by the other of its obligations under this Section 11
shall be inadequate and the disclosing party shall, in the event of such breach
be entitled to seek equitable relief, including without limitation, injunctive
relief and specific performance, in addition to any other remedies provided
hereunder or available at law.
12. TERMINATION
12.1 Term. Subject to Section 6.1, this Agreement shall commence on the
Effective Date and, subject to Section 8.2, shall continue for a period of two
(2) years unless it is terminated in accordance with the provisions of this
Section. Unless either party notifies the other a minimum of sixty (60) days
prior to the end of the Term of this Agreement or any renewal Term thereof, it
shall automatically renew for successive one (1) year terms thereafter. This
Agreement may be terminated by either party in the event of any material breach
by the other party hereto which continues after thirty (30) days written notice
of said breach (which notice shall, in reasonable detail, specify the nature of
the breach) by the non-defaulting party to the defaulting party.
12.1.1 Upon termination of this Agreement the licenses granted to
COREL pursuant to Section 2 shall terminate immediately and
COREL shall immediately discontinue distribution of and return
or destroy Gold Masters of the DRAGON Software within its
possession or control within thirty (30) days of termination.
Notwithstanding the foregoing, COREL shall be entitled to
distribute for a period of up to six (6) months after the date
of termination all inventory of Integrated COREL Products
existing at the date of termination and COREL may retain such
copies of the DRAGON Software as are required to maintain and
support its End Users.
No termination of this Agreement by either COREL or DRAGON shall affect
sublicenses of the DRAGON Software granted to End Users under the terms of the
End User License.
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13. NOTICES
13.1 Notices. Any notice or other communication to the parties shall be sent
to the attention of the persons and at the addresses set out below, or such
other persons and/or places as they may from time to time specify by notice in
writing to the other party. Any such notice or other communication shall be in
writing, and shall be given by registered mail, facsimile or telex and shall be
deemed to have been given when such notice should have reached the addressee in
the ordinary course, provided there is no strike by postal employees in effect
or other circumstances delaying mail delivery, in which case notice shall be
delivered or given by facsimile or telex.
In the case of COREL: In the case of DRAGON:
Corel Corporation Dragon Systems, Inc.
1600 Carling Ave. 320 Nevada St.
Ottawa, ON Newton, MA
Canada K1Z 8R7 U.S.A. 02160
Fax: 613-725-2691 Fax: 617-332-9575
Attention: Carey Stanton Attention: Janet Baker
Vice-President of President
Business Development
CC: Hale & Dorr
CC: Corporate Counsel 60 State Street
Legal Department Boston, MA 02109
Attention: Michael Bevilacqua
14. GENERAL
14.1 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, excluding that
body of law applicable to choice of law and excluding the United Nations
convention on contracts for the International Sale of Goods and any legislation
implementing such convention, if otherwise applicable.
14.2 Survival. The provisions of sections 2.4.5, 3, 4.4, 5.2, 7, 8, 9, 10
and 11 shall survive any termination of this Agreement until expressly waived in
writing by the party for whom they are of benefit or terminated by a further
written agreement of the parties.
14.3 Enforceability. If any provision of this Agreement is declared by a
court of competent jurisdiction to be invalid, illegal or unenforceable, such
provision or part thereof which is necessary to render the provision valid,
legal and enforceable, shall
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be severed from the agreement and the other provisions and the remaining part
thereof of that provision shall remain in full force and effect.
14.4 Further Assurances. The parties agree to do all such things and to
execute such further documents as may reasonably be required to give full effect
to this Agreement.
14.5 Entire Agreement. This Agreement, together with the Reciprocal License
Agreement, constitutes the entire agreement between the parties concerning the
subject matter hereof and cancels and supersedes any prior understandings and
agreements between the parties hereto with respect thereto. There are no
representations, warranties, terms, conditions, undertakings or collateral
agreements, expressed, implied or statutory, between the parties other than as
expressly set forth in this Agreement or the Reciprocal License Agreement.
14.6 Remedies. The remedies expressly stated in this Agreement shall be in
addition to and not in substitution for those generally available at law or in
equity.
14.7 Waiver. No waiver or any provision of this agreement by a party shall
be enforceable against that party unless it is in writing and signed by an
authorized officer of that party.
14.8 Assignment. Neither party may assign this Agreement or the rights
granted hereunder without the prior written consent of the other which shall not
be unreasonably withheld; provided that either may assign this Agreement to a
purchaser of all or substantially all of the assets related to the product line
which utilizes the DRAGON Software or to a successor corporation in the event of
a merger or other reorganization in which it is not the surviving entity and
provided further that either party may assign all or any part of its rights
under this Agreement to a wholly-owned subsidiary of such party.
14.9 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute but one and the same instrument.
14.10 Publicity. Upon the Effective Date or shortly thereafter, the parties
shall co-operate to make a public announcement about the execution of this
Agreement. Each party must approve the final form and content of that
announcement. After the initial announcement is made under this Section 14.10,
DRAGON and COREL shall communicate and cooperate with respect to advertising and
publicity regarding this Agreement and their relationship, and, subject to
section 2.3, shall obtain the consent of the other party before publishing or
releasing any public statements or announcements relating to this Agreement,
other than advertising and marketing materials.
-14-
15
14.11 Independent Contractors. The parties to this Agreement are independent
contractors. No relationship of principal to agent, master to servant, employer
to employee or franchisor to franchisee is established hereby between the
parties. Neither party has the authority to bind the other or incur any
obligation on its behalf.
14.12 Purpose of Agreement. This Agreement, together with the Dragon
Reciprocal Agreement, enables COREL, royalty-free, to license and distribute
DRAGON's current and next major version of DNS Personal Edition incorporated
into or bundled with its current and next major version of Corel WordPerfect
Suite, including its Legal Edition of the Suite. DRAGON may, also on a
royalty-free basis, license and distribute COREL's previous version and current
version of Corel WordPerfect Suite incorporated into or bundled with DRAGON's
speech recognition products. Both parties will engage in a variety of joint
marketing activities. Since it is understood that integrated products
incorporating or bundled with the current version of DRAGON's DNS software are
more salable than those incorporating or bundled with the previous version of
Corel WordPerfect Suite, COREL agrees further to actively promote DRAGON's
visibility with its products, and to engage in additional activities
facilitating DRAGON's activities to realize timely revenues through the
licensing and distribution of DRAGON products and product upgrades to COREL's
target market and customer base. These additional activities, actively under
discussion and therefor not detailed in the agreements here, are essential to
the success of DRAGON, as well as to COREL.
Also included in these agreements are terms and conditions under which each of
the parties may, for royalty, sublicense specific integrated products to
hardware OEMs for purchasers of new equipment. Additionally, certain other
designated COREL products incorporating Corel WordPerfect Suite may be licensed
and distributed by DRAGON for fees to be determined by the parties. These
include, but are not limited to COREL's 32-bit Legal Edition and 32-bit Medical
Edition Suites.
[signature page follows]
-15-
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/s/ EJS
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
COREL CORPORATION
PER: /s/ Michael O'Reilly
-----------------------------------
Name: Michael P. O'Reilly
Title: Vice-President Finance
C.F.O. and Treasurer
PER: /s/ Mitch Desrochers
-----------------------------------
Name: Mitch Desrochers
Title: Controller
COREL CORPORATION LIMITED
PER: /s/ Anthony O Dowd
-----------------------------------
Name: Anthony O Dowd
Title: General Mgr.
DRAGON SYSTEMS, INC.
PER: /s/ Janet M. Baker
-----------------------------------
Name: Janet M. Baker
Title: President
-16-
17
SCHEDULE "A"
DRAGON SOFTWARE
1. The DRAGON designated versions of DRAGON Naturally Speaking version 2.0
to 2.4x Personal Edition (object code) ("DNS2.0") DLL to enable
integration of DNS2.0 with COREL Product (object code) ("DLL")
Platforms: Windows 95 & Windows NT 4.0
Languages: English (US)
English (UK)
German
Estimated Delivery Date: English (U.S.) and English (U.K.) -
February/98
German - March/98
The parties acknowledge that the delivery of
DNS 2.0 is contingent upon both the operation
of the DLL and the d1l provided to DRAGON by
COREL and the successful completion of the
quality assurance process.
Bundled with: COREL may bundle DNS2.0 together with any version of
Corel WordPerfect Suite version 8.x.
2. The DRAGON designated versions of DRAGON Naturally Speaking version 2.5
to 2.9x Personal Edition (object code) ("DNS2.5") DLL to enable
integration of DNS2.5 with COREL Product (object code) ("DLL")
Platforms: Windows 95 & Windows NT 4.0
Languages: English (US)
English (UK)
French
Italian
German
Spanish
Estimated Delivery Date: May/98
-17-
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Bundled with: COREL may bundle DNS2.5 together with any version of
Corel WordPerfect Suite version 8.x and/or 9.x.
In the event DNS2.5 is not available in time to integrate
it with Corel WordPerfect Suite 9.x, COREL may bundle
DNS2.0 together with any version of Corel WordPerfect
Suite 9.x; provided that DNS2.0 and the associated DLL
are compatible with Corel WordPerfect Suite 9.x.
3. DRAGON Naturally Speaking version 3.0 Personal Edition (object code)
("DNS3.0")
DLL to enable integration of DNS3.0 with COREL Product (object code)
("DLL")
Platforms: Windows 95 & Windows NT 4.0
Languages: English (US)
English (UK)
French
Italian
German
Spanish
Delivery Date: November/98
Bundled with: COREL may bundle DNS3.0 together with any version of
Corel WordPerfect Suite version 9.x; provided the
associated DLL is compatible with Corel WordPerfect
Suite 9.x.
Distribution
Restriction: COREL shall not be entitled to distribute DNS3.0 with the
Legal Edition of Corel WordPerfect Suite 9.0 until thirty
(30) days after the first commercial shipment of the
relevant language version of DNS 3.0.
COREL shall not be entitled to distribute DNS3.0 with the
Professional Edition of Corel WordPerfect Suite 9.0 until
sixty (60) days after the first commercial shipment of
the relevant language version of DNS 3.0.
COREL shall not be entitled to distribute DNS3.0 with the
Standard Edition of Corel WordPerfect Suite 9.0 until
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19
ninety (90) days after the first commercial shipment of
the relevant language version of DNS 3.0.
4. Command and control speech recognition software ("Command and Control")
Platforms: Windows 95 & NT 4.0
Languages: English (US)
English (UK)
French
Italian
German
Spanish
Estimated Delivery Date: This software has not yet been developed and
will be delivered to COREL if and when
available.
Bundled with: COREL may bundle Command and Control with any OEM version
of Corel WordPefect Suite 8.x and/or 9.x.
-19-
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SCHEDULE "B"
TRADE-MARK USAGE GUIDELINES
[SEE ATTACHED]
-20-
21
DRAGON SYSTEMS, INC.
IDENTITY MARK
The following guidelines specify usage of the Dragon Systems, Inc. identity
mark. Any individuals (whether Dragon Systems employees, consultants, outside
vendors or third parties) involved in developing communications, documentation,
or packaging related to Dragon Systems products must understand and comply with
the following guidelines. Please contact Becky Squier at Dragon System,
1-617-965-5200, with any questions or issues.
DRAGON SYSTEMS, INC.
IDENTITY MARK USAGE
Size: The Dragon identity mark must be reproduced with a minimum vertical
dimension of 1 inch.
Color: Whenever possible, the mark should be reproduced in color as follows:
the dragon image, the horizontal rule, and the words "The Natural
Speech Company(TM)" print 100% PMS 185 Red (or process match-91
magenta, 76 yellow). The words "Dragon Systems, Inc." print in 100%
black.
ACKNOWLEDGMENT
Use of the Dragon Systems, Inc. identity mark should be accompanied by an
acknowledgment line (when required), as follows:
"An authorized reseller of Dragon Systems' speech products and services."
TRADEMARKS
Dragon Systems and the Dragon image are registered trademarks of Dragon Systems,
Inc.
DRAGON SYSTEMS, INC. LOGOS
-21-
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DRAGON SYSTEMS LOGOS
-22-
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SCHEDULE "C"
ROYALTY SCHEDULE
1. Retail Sales
There shall be [**] owed by COREL to DRAGON on sales of Integrated
COREL Product sold through the retail sales channel.
2. OEM Sales
COREL shall pay DRAGON the following per unit royalties on sales of
Integrated COREL Product sold through the OEM sales channel. Only the English
(U.S.) version of the Integrated COREL Product may be sold through the OEM sales
channel and is restricted to distribution in the United States and Canada.
UNITS/MONTH* INTEGRATED COREL INTEGRATED COREL PRODUCT
PRODUCT IN WHICH D.NS IS IN WHICH COMMAND AND
INCORPORATED** CONTROL IS INCORPORATED***
- ----------------------- ------------------------- ----------------------------
[**] [**] [**]
- ----------------------- ------------------------- ----------------------------
[**] [**] [**]
- ----------------------- ------------------------- ----------------------------
[**] [**] [**]
- ----------------------- ------------------------- ----------------------------
[**] [**] [**]
- ----------------------- ------------------------- ----------------------------
[**] [**] [**]
- ----------------------- ------------------------- ----------------------------
* The unit amounts refer to the average number of units distributed by each OEM
distributer in any particular month. They do not refer to total OEM sales by
COREL.
** May only be distributed on PCs with RAM equal to or greater than 48MB and
that use DRAGON certified audio channels.
All dollar amounts are in U.S. currency.
3. The foregoing amounts shall be paid by COREL to DRAGON on a quarterly
basis within [**] days of the end of each quarter.
-23-
24
ADDENDUM NO.1 TO
THE DRAGON RECIPROCAL LICENSE AGREEMENT
THIS ADDENDUM made as of the 17th day of September, 1998, by and
between Corel Corporation and Corel Corporation Limited (collectively "COREL")
and Dragon Systems, Inc. ("DRAGON").
BACKGROUND:
1. COREL and DRAGON have entered into the Dragon Reciprocal License
Agreement made as of the 25th day of January, 1998 ("License
Agreement"), under which DRAGON granted to COREL a license to its
Naturally Speaking speech recognition software product.
2. Corel and Dragon wish to amend the License Agreement by amending the
Royalty Schedule as it relates to the Dutch version of Corel
WordPerfect with Dragon Naturally Speaking and to OEM sales of the
Integrated COREL Product.
NOW THEREFORE, in consideration of the mutual promises, covenants and
obligations contained herein, the parties agree as follows:
1. AGREEMENT TERMS
Except as specifically amended in this Addendum, the terms and conditions of the
License Agreement shall continue in full force and effect and govern this
Addendum as if repeated herein in full.
2. SCHEDULE "A" - DRAGON SOFTWARE
2.1 Dutch Language Dragon Software. Schedule "A" to the License Agreement
shall be amended by adding "Dutch" to the listing of language version of DNS 3.0
contained in paragraph 3. The Dutch version of DNS 3.0 or higher shall be
delivered to COREL on or before June 1st , 1999.
2.2 Dragon Software Version 3. Schedule "A" to the License Agreement shall
be amended by deleting the bundling restrictions for Version 3 of the Dragon
Software contained in paragraph 3 and replacing them with the following:
"Bundled with: COREL may bundle DNS 3.0 together with any version of
Corel WordPerfect Suite version 8.x or 9.x; provided the
associated DLL is compatible with the respective version
of Corel WordPerfect Suite."
-24-
25
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
In addition, the delivery date listed under the heading "Delivery Date" shall be
deleted and replaced with "as soon as the quality assurance testing for Version
3 of Dragon Software used in conjunction with Corel WordPerfect Suite has been
completed ". Finally, the restrictions listed under the heading "Distribution
Restriction" in paragraph 3 shall be deleted in their entirety.
3. DRAGON RESPONSIBILITIES
3.1 The following new Section 5.4 shall be added to the Agreement:
"5.4 Delivery of Dutch Version. DRAGON shall deliver to COREL a
commercial version of the DRAGON Software in the Dutch language. In
consideration therefore, COREL shall pay to DRAGON a non-refundable,
non-recurring engineering costs (NRE) in the amount of [**]dollars, to
be paid as follows:
[**]
[**]
[**]
and [**]or on delivery of the final, commercial release version of
DRAGON Naturally Speaking 3.0 or higher - Dutch language version,
whichever is later."
4. SCHEDULE "C" - ROYALTY SCHEDULE
4.1 Dutch Retail Version. The following shall be added to Paragraph I of
Schedule "C" of the License Agreement:
"Notwithstanding the foregoing, in consideration of the licenses
granted by DRAGON to COREL regarding the Dutch version of the DRAGON
Software, COREL shall pay to DRAGON a royalty of [**]per unit of
Integrated COREL Product that includes the Dutch language version of
DRAGON Software for the initial [**]. After the initial [**], COREL
shall pay to DRAGON a royalty of [**]per unit.
The foregoing royalty rates shall apply to copies of the retail version
of the Integrated COREL Product sold to the retail sales channel only.
For clarity, the retail sales channel does not include corporate,
government or academic sales through COREL's corporate licensing
programs. In the event COREL wishes to sell the Integrated COREL
Product in which the Dutch language
-25-
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
version of the DRAGON Software is included through the OEM channel the
parties shall establish a royalty rate using the approval process
outlined in Section 2.5 of the Agreement. In the event COREL wishes to
sell the Integrated COREL Product
in which the Dutch language, version of the DRAGON Software is included
through COREL's corporate licensing programs, or if COREL wishes to
sell an academic version of Integrated COREL Product in which the Dutch
language version of the DRAGON Software is included in the retail sales
channel, the parties shall establish a royalty rate for such sales and
shall evidence any agreed upon rate in writing.
4.2 OEM Sales. The pricing matrix for Integrated COREL Product in which DNS
is incorporated as set out in paragraph 2 of Schedule "C" shall be deleted and
replaced with the following:
UNITS/MONTH INTEGRATED COREL PRODUCT IN WHICH
DNS IS INCORPORATED
- ------------------------------------ ------------------------------------------
[**] [**]
- ------------------------------------ ------------------------------------------
[**] [**]
- ------------------------------------ ------------------------------------------
[**] [**]
- ------------------------------------ ------------------------------------------
[**] [**]
- ------------------------------------ ------------------------------------------
[**] [**]
- ------------------------------------ ------------------------------------------
[**] [**]
- ------------------------------------ ------------------------------------------
Note: Prices are for U.S. and Canada only.
In addition, the following shall be added to Paragraph 2 of Schedule
"C" to the License Agreement:
"COREL may distribute copies of the Integrated COREL Product through
the OEM sales channel on terms other than those set out above, provided
that COREL obtains the prior written approval of an authorized
representative of DRAGON, approving such alternate terms. In seeking
and granting such approval, the parties agree to follow the procedure
set out in Section 2.5 of the Agreement."
-26-
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5. OEM ARRANGEMENTS
5.1 OEM Distribution. The last sentence of Section 2.3 shall be deleted and
replaced with the following:
"No version of the Integrated COREL Product other than the English
(U.S.) version may be distributed by an OEM, and no version of the
Integrated COREL Product may be distributed by an OEM outside of Canada
and the U.S., without the written approval of an authorized
representative of DRAGON. In seeking and granting such approval, the
parties agree to follow the procedure set out in Section 2.5 of the
License Agreement. It is understood and agree that COREL shall not
publicly divulge the portion of the royalty it receives from its OEM
customer which is being paid to DRAGON by COREL. COREL further agrees
to require its OEM customers to implement similar promotion and
marketing requirements as set forth in Sections 4.5 and 4.6 of the
Agreement. Specifically, unless otherwise agreed to by DRAGON, COREL
shall require OEM to include a Dragon promotional flyer or "splash
screen" offer to purchase upgrades from Dragon. DRAGON will provide
camera-ready artwork for the promotional flier that will be printed at
COREL's or OEM's expense. COREL will also require OEM to include
DRAGON's name and logo wherever COREL's name and logo is included in
any packaging and marketing materials."
5.2 Approval Process. The following new Section 2.5 shall be added to the
License Agreement:
"2.5 Approval Process. In the event that COREL wishes to distribute
copies of the Integrated COREL Product through the OEM sales channel on
terms other than those set out in this Agreement, COREL shall submit to
DRAGON a term sheet substantially in the form set out in Schedule "D"
hereto ("Approval Form"). Such Approval Form shall specify, among other
things, the identity of the OEM through which COREL proposes to
distribute the Integrated COREL Product, the estimated monthly volume
of units of the Integrated COREL Product to be distributed by the OEM,
the proposed royalty to be paid by COREL to DRAGON in connection with
the proposed distribution and any other terms which are not otherwise
contained in the License Agreement. Upon receipt of a completed
Approval Form from COREL, DRAGON shall have five (5) business days in
which to either accept or reject proposed terms contained therein. Such
acceptance or rejection must be communicated to COREL in writing by
having an authorized representative of DRAGON check the appropriate
"Accepted" or "Rejected" box on the Approval Form, sign where indicated
and return by means of fax to the COREL contact person indicated on the
Approval Form. If DRAGON falls to communicate its acceptance or
rejection of the terms contained on a
-27-
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particular Approval Form within the five (5) business day period,
DRAGON shall be deemed to have rejected such terms. Any terms that have
been accepted by DRAGON in accordance with the process from part of the
Agreement but shall apply only with respect to the specific OEM set out
in the Approval Form. In the event of a conflict between the terms of
this Agreement and the terms contained in an Approval Form accepted by
DRAGON, the terms contained in the Approval Form shall prevail."
6. SCHEDULE "D"
6.1 The schedule attached hereto as Schedule "D" shall be added to the
License Agreement and shall therein also be referred to as Schedule
"D".
7. PRESS RELEASES
7.1 Publicity. The following shall be added to Section 14.10 of the
Agreement:
"In addition, where COREL issues a press release regarding the bundling
of Integrated COREL Product, COREL shall mention the DRAGON Software. COREL
shall also request permission from each OEM for DRAGON to be entitled to use
OEM's name in DRAGON press releases and other marketing materials; provided
DRAGON complies with any reasonable guidelines provided to DRAGON by OEM. COREL
shall be required to obtain DRAGON's written approval of any proposed OEM
distribution agreement for which such permission is not granted."
8. REGISTERED USER BASE
8.1 Dual Registration. The following shall be added to Section 4.8 of the
Agreement:
"Notwithstanding the foregoing, COREL agrees that it shall institute a
process whereby End Users of the Integrated COREL Product may elect to
register as users of the DRAGON Software at the same time that they
register as users of the COREL Product. Initially, this process will be
the inclusion of a DRAGON registration card in copies of the Integrated
COREL Product. To facilitate this process, DRAGON shall provide COREL
with camera-ready artwork for the DRAGON registration card. COREL may,
at any time, institute an alternate process to the inclusion of the
DRAGON registration card, that will permit dual registration. Where an
End User elects to register as a user of the DRAGON Software, such user
information shall be provided to DRAGON by COREL. DRAGON agrees that it
shall comply with all laws regarding the use of the registered user
names and shall defend or settle, and indemnify COREL from any claim,
action or demand arising
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29
from DRAGON's use of the registered names. DRAGON also agrees that it
shall not use the register user information that it receives from COREL
hereunder for the purposes of marketing any Competitive Products."
9. EFFECTIVE DATE
9.1 This Addendum shall be effective as of the date first set out above.
10. MISCELLANEOUS
10.1 The last instance of the word "COREL" in Section 8.1 of the Agreement
shall be deleted and replaced with the word "DRAGON".
[signature page follows]
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IN WITNESS WHEREOF the parties hereto have executed this Addendum as of
the date first above written.
COREL CORPORATION
Per: /s/ Michael O'Reilly
-----------------------------------
Name: Michael P. O'Reilly
Title: Vice-President Finance
C.F.O.. and Treasurer
Per: /s/ Mitch Desrochers
-----------------------------------
Name: Mitch Desrochers
Title: Controller
COREL CORPORATION LIMITED
Per: /s/ Anthony O Dowd
-----------------------------------
Name: Anthony O Dowd
Title: General Mgr
DRAGON SYSTEMS, INC.
Per: /s/ John Shagoury
-----------------------------------
Name: John Shagoury
Title: C.O.O.
-30-
31
SCHEDULE "D"
[see attached]
-31-
32
OEM DISTRIBUTION APPROVAL FORM
COREL SALES CONTACT:
Name: Tel:
Title: Fax:
DATE OF SUBMISSION:
PROPOSAL:
OEM Customer: Address:
Software: Hardware:
(Inc. language and version no.)
Monthly Volume:______________________ Royalty to be paid by Corel to Dragon:
(per unit)
Royalty to be paid by OEM to Corel:
Term of Contract: (per unit)
Cost of Microphone:
Territory: (Who is responsible for cost)
OTHER TERMS:
Promotional Flyer Included: yes ____ no ____
Hardware Testing: To be tested by OEM ____ To be tested by Dragon ____
Approved Use of OEM Name by Dragon: yes ___ no ____ Other: Attach separate
sheet
APPROVAL:
TERMS ACCEPTED [ ] [check one] TERMS REJECTED [ ]
Signature of Authorized Dragon Representative
Print Name:
Title:
Date:
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EXHIBIT 1
COREL RECIPROCAL LICENSE AGREEMENT
-33-
34
ADDENDUM NO.2
This Addendum made as of the 24th day of November, 1998 by and between Corel
Corporation and Corel Corporation Limited (collectively "COREL") and Dragon
Systems, Inc. ("DRAGON").
WHEREAS COREL and DRAGON have entered into the Dragon Reciprocal License
Agreement made as of the 25th day of January, 1998 as amended by Addendum No. 1
dated September 17th , 1998 (the "License Agreement") whereby DRAGON granted
COREL a license to its Naturally Speaking speech recognition software product;
and COREL and DRAGON wish to amend the License Agreement on the terms and
conditions set out below.
NOW THEREFORE in consideration of the mutual promises, covenants and obligations
contained herein, the parties agree as follows:
1. Except as specifically amended in the Addendum, the terms and
conditions of the Agreement shall continue in full force and effect and
govern this Addendum as if repeated herein in full.
2. For the purpose of the Compaq Coupon offer more fully described below
the following terms and conditions shall apply:
Compaq Computer Corporation (with its principal place of business at
20555 SH 249, Houston, TX 77070-2698)("Compaq"), shall, between the
period of December 1st, 1998 through to March 31st, 1999, bundle a
coupon created by COREL ("Coupon") with Compaq's Presario line of
personal computers which have been pre-loaded with Corel WordPerfect
Suite 8 software and which will be distributed in the United State
only. The Coupon shall offer each end-user customers one of two (2)
options which shall entitle such end-user customers to receive via U.S.
mail and upon availability: (i) Corel WordPerfect Suite 9 including
Dragon NaturallySpeaking Personal Edition U.S. English version only and
a noise canceling headset microphone; or (ii) Dragon NaturallySpeaking
for Teens U.S. English version only and a noise canceling headset
microphone. Shipping and handling fee of nine dollars and ninety-nine
cents ($9.99 US) ("Fee") shall be charged to the end-user customer's
credit card. End user customers shall be required to redeem the Coupon
on or before December 31st, 1999.
DRAGON shall be solely responsible for fulfillment of the Coupon
through its designated fulfillment house.
-34-
35
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
In the event an end-user customer chooses option (i), COREL's
responsibilities shall be as follows:
a. COREL shall be responsible for the first level paid for
technical support for the Corel WordPerfect Suite 9 with
Dragon NaturallySpeaking Personal Edition U.S. English version
only; and
b. The amounts pay by COREL to DRAGON shall be calculated based
upon the following:
[**] US royalty otherwise payable by COREL for the Dragon
NaturallySpeaking feature less the Fee received by DRAGON from
the end-user customers after deduction of all costs related to
the Coupon ([**] US) and the prorated printing cost of the
Coupon as reported on DRAGON's quarterly reports and set out
on DRAGON's invoice to COREL. For purposes of clarity the
calculation of the amount payable by COREL to DRAGON is as
follows: [**] US - ([**] US - [**] US - pro-rated printing
cost of the Coupon) = final amount to be paid by COREL.
COREL shall pay such final amount to DRAGON for each Coupon
fulfilled by DRAGON sixty (60) days after COREL's receipt of
DRAGON's quarterly reports.
In the event that an end-user customer chooses option (ii), no royalty
shall be due from COREL to DRAGON.
IN WITNESS WHEREOF the parties have executed this Addendum by their
duly authorized representatives as of the date set forth above.
DRAGON SYSTEMS, INC. COREL CORPORATION
PER: /s/ Janet M. Baker PER: /s/ Mitch Desrochers
------------------------ ------------------------
Name: Janet M. Baker Name: Mitch Desrochers
Title: President Title: Controller
COREL CORPORATION LIMITED
PER: /s/ Anthony O Dowd
------------------------
Name: Anthony O Dowd
Title: General Mgr.
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