EXHIBIT 10.13
EXCLUSIVE DISTRIBUTION RIGHT LICENSE AGREEMENT
This EXCLUSIVE DISTRIBUTION RIGHT LICENSE AGREEMENT (this "AGREEMENT")
is made and entered into by and between Kabushiki Kaisha Gatefor (hereinafter
referred to as "DISTRIBUTOR") and PPOL Inc., a California business corporation
(hereinafter referred to as "PPOL"), based on the mutual agreement between
Distributor and PPOL that PPOL shall grant, on and after October __, 2004,
being the effective date of this Agreement, to Distributor the exclusive
distribution right which was granted to Object Innovation Inc., a Florida
business corporation (hereinafter referred to as "FORMER DISTRIBUTOR") under
Article 2 "Grant of Right" of the certain Exclusive Distribution Right Agreement
relating to the domestic marketing of the certain software product "BridgeGate"
(hereinafter referred to as the "PRODUCT") in Japan, executed as of May 26, 2004
by and between PPOL and Former Distributor (hereinafter referred to as the
"ORIGINAL AGREEMENT").
SECTION 1. SUCCESSION OF ORIGINAL AGREEMENT
Distributor shall succeed the rights, duties and obligations under the Original
Agreement executed between PPOL and Former Distributor as a whole, including any
and all terms and conditions, accompanying miscellaneous provisions and
supplementary provisions as well as exhibits.
PROVIDED, HOWEVER, that, in light of the fact that Distributor is a business
corporation incorporated under the laws of Japan, should any inconsistency arise
with respect to the interpretation of the laws and regulations, Distributor and
PPOL shall respond to the problems in good faith through mutual consultation.
SECTION 2. ASSIGNMENT OF DISTRIBUTION RIGHT
2.1 Although PPOL covenanted in the Original Agreement that it would assign
the exclusive distribution right referenced in the preamble hereof to a
domestic corporation or subsidiary in Japan majority of whose shares
would be held and effectively controlled by PPOL within 180 days from
the date of the Original Agreement, PPOL shall, as a condition
precedent hereto, obtain the consent and the approval of Former
Distributor that PPOL will continue to hold the said exclusive
distribution right for a considerable period and the above-mentioned
covenant shall cease to exist through separate consultation with Former
Distributor.
2.2 PPOL shall hereby consent to grant to Distributor the authority to
discuss and negotiate with Former Distributor with respect to the
future development of marketing activities in Japan in the course of
practical discussion and negotiation with Former Distributor.
SECTION 3. TERM
The initial terns of this Exclusive Distribution Right License Agreement shall
be three (3) years running from October __, 2004 to October __, 2007. PROVIDED,
HOWEVER, that Distributor and PPOL may terminate and extend this Agreement
through mutual consultation regardless of the effectiveness and binding force of
the specific provisions such as the effective date, termination date and
automatic another one year renewal provisions or early termination by written
mutual consent provision of the Original Agreement.
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SECTION 4. GRANT OF ASSOCIATED LICENSE UNDER DISTRIBUTION RIGHT
PPOL shall not, during the Term of the Agreement, derogate the significance of
the licenses to develop, modify and duplicate the Software and the Japanese
version of the Documentation, create the products, etc, derived therefrom, and
the right to solicit the sublicensees for the marketing purpose, provided for in
the Original Agreement in association with the backbone provision of Article 2
"Grant of Distribution Right" thereof, and the trademark license (exclusive
license of trademark) and the right of appointment of a sub-dealer shall be
included herein.
For the avoidance of doubt, restrictions on the exclusive right provided for in
Article 2, Section 2.5 of the Original Agreement shall govern without any
reference thereto.
SECTION 5. IMPLEMENTATION OF CAPITAL INCREASE
In order to facilitate the marketing activities of the Product under the
exclusive distribution right, which is the intrinsic objective hereof, in
addition to those, solicitation of sublicense and the appointment of sub-dealers
in Japan provided for in Section 3 hereof, PPOL shall discharge the obligation
to pay in the money in the aggregate amount of 2.7 million yen as capital
increase contribution and advance the money temporarily applied to operating
funds, to Distributor by the following due date:
1. For capital increase contribution
in the amount of Y 120 million yen: by October 15, 2004
2. For advance
in the amount Y 150 million yen: by October 25, 2004
SECTION 6. LICENSE FEE FOR EXCLUSIVE DISTRIBUTION RIGHT
6.1 Distributor shall pay to PPOL the license fee for the exclusive
distribution right (hereinafter referred to as "LICENSE FEE")
calculated by the following standards:
(1) Upon the execution of this Exclusive Distribution Right
License Agreement, 100 million yen as the advance payment of
the License Fee. This amount is calculated based on the
assumption that the Gross Sale of the Product will reach the
minimum threshold of Y2 billion yen for three (3) years
(2) In addition, for the Gross Sale up to Y2 billion yen minimum
threshold, the amount calculated to the equivalent of 5% of
the Gross Sale shall be paid throughout the Term of the
Agreement as License Fee.
(3) For the portion of the Gross Sale exceeding the 2 billion
threshold, the amount calculated to the equivalent to 10% of
such exceeding portion shall be paid throughout the Term of
the Agreement as License Fee.
6.2 Each due date of the payments prescribed in the immediately preceding
Paragraph shall be as follows:
(1) The payment as prescribed in Item (1) above shall be made
within 30 days from the date of the Exclusive Distribution
Right License Agreement in Japanese yen.
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(2) The payment in the amount corresponding to the actual sales
performance as prescribed in Items (2) and (3) above shall be
made quarterly within 45 days of the end of each quarter in
Japanese yen.
SECTION 7 MINIMUM GUARANTEE OF LICENSE FEE
Even if the aggregate Gross Sale for the initial three (3) year period does not
reach Y2 billion yen, the Gross Sale shall be deemed to be Y2 billion yen and
the License Fee shall be deemed to be Y100 million yen accordingly, the
otherwise refundable balance of the amount which Distributor pays to PPOL
pursuant to Item (1) of the immediately preceding Section 6 shall be deemed to
be applied to the initial franchise fees (KE'NRI-KIN) for the License Fee and no
amount shall be refunded or recouped due to the deficit to the said Gross Sale.
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SECTION 8. TRANSFER OF EXCLUSIVE DISTRIBUTION RIGHT
The exclusive distribution right under this Agreement shall be assigned and
transferred free of charge by PPOL to Distributor after three (3) years lapse
from the date of this Agreement or, if and when the initial public offering of
the shares of Distributor is completed, PPOL shall assign and transfer the
rights to Distributor free of charge at the adequate timing and in the adequate
way which Distributor and PPOL determine through mutual consultation.
PROVIDED; HOWEVER, that, in each case, prior approval of Former Distributor
shall be required.
SECTION 9. INCORPORATION BY REFERENCE OF ORIGINAL AGREEMENT
The provisions from Article 4 "Maintenance and Support" to Article 16
"Miscellaneous" of the Original Agreement, which lack the corresponding
provisions in this Agreement, shall be hereby incorporated by reference.
PROVIDED, HOWEVER, that, Article 9, Section 6 of the initial agreement shall be
excluded from such incorporation and with respect to the provisions of Article
16, Section 3 of the initial agreement thereof; since they may not be
interpreted adequately as to the relationship between a U.S. corporation and a
JAPANESE Japanese corporation, the treatment thereof shall be discussed
separately.
SECTION 10. DAMAGES
10.1 Should any party hereto suffer loss or damage due to the breach of duty
under this Agreement by Distributor or PPOL, the party who suffers the
damages may demand the compensation for damages to the other party
(hereinafter referred to as "INDEMNITOR").
10.2 The scope of the damages to be compensated pursuant to the immediately
preceding Paragraph shall confined within the general damages which
obviously result from a breach, and even the damages which arise under
the special circumstances which are foreseeable by Indemnitor shall be
included in such scope.
In addition, Indemnitor shall pay such other costs including, but not
limited to reasonable attorney's fees which the other party may bear.
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SECTION 11. JURISDICTION
Should any action is required to be brought relating to this Agreement, the
parties hereto shall subject to the consent jurisdiction of the Tokyo District
and this Agreement shall be governed by the laws of Japan.
SECTION 12. SETTLEMENT OF DIFFERENCE
Should any difference arise with respect to the matters not specifically
provided for herein or the interpretation of any provision hereof, Distributor
and PPOL shall settle such difference through good faith consultation between
them.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement executed in
duplicate by affixing their names and seals below and each party shall retain
one (1) original in its possession.
October 1, 2004
Distributor: Kabushiki Kaisha Gatefor
52-2, Jungumae 5-chome, Shibuya-ku, Tokyo
By: /s/ Fumitaka Kurimoto (Seal)
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Fumitaka Kurimoto
Representative Director
PPOL: PPOL, Inc.
1 City Blvd. West, Suite 870
Orange, CA 92868
U.S.A.
By: /s/ Hideo Ohkubo (Seal)
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Hideo Ohkubo
CEO
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