EXHIBIT 10.9
CONFIDENTIAL TREATMENT REQUESTED FOR
PORTIONS OF THIS DOCUMENT
DIRECT SALES AND LICENSE AGREEMENT
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V. & XXXXXX ELECTRONICS CORPORATION
THIS DIRECT SALE AND LICENSE AGREEMENT (this "Agreement") is made as of the
13/th/ day of October 1997 by and between Lernout & Hauspie Speech Products
and its subsidiaries, a Belgian corporation (hereinafter referred to as
"L&H") and Xxxxxx Electronics Corporation, a New York corporation
(hereinafter, together with its wholly-owned subsidiaries, collectively
referred to as "AEC").
1 CONSIDERATION. The parties are entering into this Agreement for and in
consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged.
2 BACKGROUND. L&H develops, markets, licenses and supports automated
speech recognition software programs, among them, the software programs
identified in Schedule 2.1(a) attached hereto, the most recent versions
of which software programs as of the date hereof are referred to as the
"Software". AEC develops, markets and sells, among other products,
personal computer based headsets, including, among others, the headsets
identified in Schedule 2.1(b), each of which such identified headsets is
referred to singly as a "Headset" and collectively as the "Headsets".
L&H desires to sell headsets bundled with various Kurzweil, a division
of Lernout & Hauspie, dictation and voice command software products and
on a stand-alone basis to L&H end-users. AEC desires to sell headsets
to L&H for bundling with Kurzweil, a division of Lernout & Hauspie,
dictation and voice command software products and for resale to L&H end-
users in accordance with the terms and conditions of this agreement.
3 DIRECT SALES.
3.1 Headsets. AEC hereby agrees on the terms set forth herein to sell
Headsets to L&H for resale by L&H only to L&H Customers.
3.2 Trade Names, Trade Marks and Copyrighted Materials. AEC hereby
grants to L&H a non-transferable, non-exclusive, right and license
during the term of this Agreement to use the trade names, trade
marks and copyrighted materials of AEC identified in Schedule 3.2
attached hereto (the "AEC Names, Marks and Materials") in
connection with the resale, distribution, marketing and promotion
of the Headsets to L&H customers as provided herein. Such
activities as are licensed under this Section 3.2 are referred to
as the "Licensed Activities".
3.3 Product Warranty. Subject to the provisions of this Agreement
relating to customer service to be provided by L&H for Headsets
purchased by L&H, AEC hereby agrees that L&H shall have the right
to pass on to L&H customers the product warranty that AEC
ordinarily and customarily provides to purchasers of such Headsets
and set forth in Schedule 3.3 attached hereto (such product
warranty in such form being referred to as the "Product Warranty").
3.4 Export. The parties anticipate that Kurzweil, a division of
Lernout & Hauspie, may, from time to time, request AEC to ship
Headsets purchased by L&H under this Agreement to locations
specified by Kurzweil, a division of Lernout & Hauspie. L&H agrees
that it shall not itself or request AEC or any other party to ship,
directly or indirectly, Headsets or other materials provided by AEC
hereunder to any country for which the United States requires an
export license or other governmental approval at the time of such
export.
3.5 Resale Restrictions. For the term of this agreement, Kurzweil, a
division of Lernout & Hauspie will not market, promote, distribute
or sell any headsets other than the Headsets purchased hereunder.
Kurzweil, a division of Lernout & Hauspie, further agrees that
resales by it of Headsets shall not vary substantially from the
manufacturer's suggested retail prices set forth in Schedule
2.1(b).
3.5.1 Price/Performance Protection: AEC understands that Kurzweil,
a division of Lernout & Hauspie will continue its evaluation
of microphones in all form factors, including headsets. If
Kurzweil, a division of Lernout & Hauspie, finds a microphone
exceeding the price/performance of the NC80 or NC8, L&H will
notify AEC of said finding, and grant AEC a grace period of
(CONFIDENTIAL TREATMENT REQUESTED) days to provide a
microphone of equivalent price/performance. If AEC is unable
to provide a microphone of equivalent price/performance within
the grace period, Kurzweil, a division of Lernout & Hauspie,
will be entitled to purchase, market, promote and sell
microphones from other vendors on a non-exclusive basis.
4 PURCHASE ORDERS, PURCHASE PRICE AND PAYMENT.
4.1 Minimum Amount. Each order for Headsets under this Agreement shall
be for a minimum of (CONFIDENTIAL TREATMENT REQUESTED) Headsets and
shall be set forth in writing and delivered to AEC.
4.2 Purchase Price. L&H shall pay to AEC for each Headset purchased by
L&H under this Agreement the purchase price set forth in Schedule
2.1(b) for such Headset,which such purchase price is quoted FOB
Hong Kong. AEC agrees that the price provided by AEC to L&H under
this Agreement for each Headset model set forth in Schedule 2.1(b)
will not exceed (CONFIDENTIAL TREATMENT REQUESTED).
4.3 Delivery. In accordance with schedule 4.3 attached hereto, all
deliveries of Headsets covered by any purchase order received by
AEC from L&H under this Agreement shall be made in bulk, FOB
Shipping Point by the (CONFIDENTIAL TREATMENT REQUESTED) day after
receipt by AEC of such purchase order. All deliveries hereunder
shall be in bulk form and shall be made as L&H shall specify to
AEC.
4.4 Payment. Payment of the purchase price for Headsets purchased by
L&H under this Agreement shall be made NET (CONFIDENTIAL TREATMENT
REQUESTED) days by L&H following the date of delivery. Payment
shall be made in U.S. dollars. Any payments made after the due
date shall bear interest at a rate of (CONFIDENTIAL TREATMENT
REQUESTED) per month.
5 DISTRIBUTION AND PROMOTIONAL LITERATURE.
5.1 Distribution to L&H Customers. (CONFIDENTIAL TREATMENT REQUESTED)
5.2 Promotional Literature. (CONFIDENTIAL TREATMENT REQUESTED)
6 PACKAGING.
6.1 Responsibility. L&H shall be responsible for the packaging of the
Headsets purchased by L&H hereunder for resale to L&H Customers.
6.2 Approval by AEC. Prior to their use in connection with resales by
L&H to L&H Customers, all packaging of Headsets sold by AEC for
resale hereunder shall be submitted to AEC for review by AEC. AEC
shall have the right to prohibit the use of any portion of such
packaging that AEC reasonably believes could damage AEC's or the
Headset's image or customer appeal or that is misleading about the
capabilities, use or function of the Headsets, or the rights in the
technology comprising the Headsets or the AEC Marks, Names and
Materials.
6.3 Product Warranty. All packaging of Headsets distributed by L&H
shall include a written copy of the Product Warranty.
6.4 Not A Sale. None of the information or promotional materials
concerning the Headsets shall state or imply that the intellectual
property of AEC comprising the Headsets is being sold outright to
L&H or any manufacturer, distributor, reseller or end-user, but
shall in all cases refer to the grant of "a license to use" such
intellectual property.
6.5 Intellectual Property Markings. L&H shall not alter or remove any
copyright, trademark, patent, patent pending, proprietary and/or
other legal notice contained on or in the Headset. The existence
of any copyright notice shall not be construed as an admission, or
be deemed to create a presumption, that any publication of AEC
copyrighted material has occurred.
6.6 Expenses. (CONFIDENTIAL TREATMENT REQUESTED)
7 COOPERATION. The parties shall cooperate with each other to their
mutual benefit as follows:
7.1 Web Site Links. Each of L&H and AEC will incorporate in its own
web site a so-called "hot-link" to the other's web site.
7.2 Joint Promotion. L&H and AEC will promote their joint relationship
and the symbiosis of the Headsets and Software through press
releases, all relevant trade shows that pertain to the markets in
which the Headsets and Software are being marketed, and in relevant
collateral material.
7.3 Customer Service. (CONFIDENTIAL TREATMENT REQUESTED)
7.4 Returns and Product Warranty Service. Xxxxxx shall be responsible
for and shall bear any and all expenses incurred in connection with
the handling of returns of Headsets for service or replacement
under the Product Warranty.
8 TERM AND TERMINATION.
8.1 This Agreement shall have an initial term of one (1) year
commencing on the date first set forth above and shall
automatically renew for successive terms of one (1) year each
unless one party provides written notice of non-renewal to the
other party at least (CONFIDENTIAL TREATMENT REQUESTED) prior
to the expiration of the then current term or unless earlier
terminated as the result of a breach by a party.
8.2 If either party shall breach any term, condition or provision of
this Agreement and if the breaching party shall (a) fail to cure
such breach within (CONFIDENTIAL TREATMENT REQUESTED) days after
receipt from the other party of a notice of such breach or (b) in
the case of breaches which require more than (CONFIDENTIAL
TREATMENT REQUESTED) days to effect a cure, fail to commence and
continue in good faith efforts to cure such breach, provided that
such cure shall be effected no later than (CONFIDENTIAL TREATMENT
REQUESTED)days after receipt of such notice of such breach, the
non-breaching party may terminate this Agreement by written notice
to the other party.
9 CONFIDENTIAL INFORMATION.
9.1 Definition. In the course of the parties working together under
this Agreement, each party will have occasion to acquire and/or
receive from the other party and each party will have occasion to
disclose to the other party information that is not public, that is
of critical competitive and financial importance to the disclosing
party and that the disclosing party wishes to maintain in
confidence. All of such information however acquired by the
receiving party, including, without limitation, trade secrets,
customer lists, business plans, marketing plans, non-public
financial data, product specifications and designs, the existence,
nature, substance, progress and results of research and development
projects, concepts, inventions, discoveries, formulations,
processes, drawings, documents, records, software, or any other
information, whether similar to the specified information or not,
that is identified as confidential to the disclosing party, to any
parent, subsidiary or affiliate company thereof or to any third
party, is hereinafter referred to as such party's "Confidential
Information".
9.2 General Rule regarding Non-disclosure. Accordingly, each party in
its capacity as a party receiving Confidential Information agrees
on behalf of itself and its principals, partners, directors,
officers, employees and advisors (collectively "Employees") and
that without the prior written approval of the disclosing party, it
will not:
9.2.1 use the disclosing party's Confidential Information for its
own benefit, except in connection with the carrying out of its
responsibilities and obligations under this Agreement;
9.2.2 use the disclosing party's Confidential Information for anyone
else's benefit for any reason;
9.2.3 disclose the disclosing party's Confidential Information to
anyone other than to those Employees with a need to know the
information in order to carry out its responsibilities and
obligations under this Agreement.
9.3 Exceptions. The obligation of confidentiality shall not relate to
any information (a) that was already known to the receiving party
prior to its disclosure by the disclosing party; (b) that is or
becomes publicly known through no act or fault of the receiving
party; (c) that is received by a party (without a breach of this
Agreement) from a third party with no restrictions as to its
disclosure; or (d) that is required to be disclosed pursuant to
applicable law, a court order, a judicial proceeding, or the
enforcement hereof, provided that the party whose information is to
be disclosed is provided with reasonable prior written notice so
that such party may contest such disclosure.
9.4 Return of Confidential Information. Upon the request of a party,
the other party will return any of the requesting party's
Confidential Information that is in tangible form and any physical
manifestations of such Confidential Information.
9.5 Employees. The receiving party shall take all reasonable steps
necessary to ensure that its employees are bound by restrictions
regarding the use and disclosure of the disclosing party's
Confidential Information similar to those contained herein.
9.6 Injunctive Relief. Each party understands, acknowledges and agrees
that Confidential Information is of great competitive as well as
monetary value and that, therefore, each party shall have the right
to bring an action to enjoin any unauthorized disclosure or use of
its own Confidential Information by the other party, it being
agreed that a suit for monetary damages alone would be an
inadequate remedy.
9.7 Degree of care. Each party as a receiving party shall use the same
degree of care in protecting the confidentiality of confidential
information received from the other party as such receiving party
uses to protect its own confidential information.
10 AEC WARRANTY AND INDEMNITY FOR INFRINGEMENT.
10.1 Warranty.
10.1.1 AEC warrants (i) that it has the right to grant the licenses
contained herein to L&H for the Licensed Activities, and (ii)
that the Licensed Activities and the use of the Headsets by
end-users will not infringe any patent rights, copyrights or
other intellectual property rights of a third party.
10.1.2 AEC MAKES NO WARRANTY WITH RESPECT TO INTELLECTUAL PROPERTY
RIGHTS IN ANY COUNTRIES, OR OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR ANY OTHER OR FURTHER WARRANTY, EITHER
EXPRESS OR IMPLIED OR BY TRADE USAGE, IN CONNECTION WITH THE
HEADSETS OR THE CONDUCT OF THE LICENSED ACTIVITIES.
10.2 Indemnity.
10.2.1 AEC agrees to indemnify and hold L&H and L&H customers that
purchase Headsets from L&H hereunder harmless from, and defend
L&H against, any loss, cost, damage, or expense and any claims
therefor (including reasonable attorney's fees and expenses)
suffered by L&H that arise from the infringement or the
alleged infringement by the Headsets or the conduct of the
Licensed Activities of any patent rights, copyrights or other
intellectual property rights of a third party, including any
claim of misappropriation of trade secrets (each a "Claim").
10.2.2 In the event a Claim is made, in order to be entitled to the
indemnity hereunder, L&H and any L&H customer indemnified
hereunder must promptly notify AEC thereof in writing and must
tender the defense of the Claim to AEC in writing. AEC shall
undertake the defense of the Claim at its own expense and in a
prompt and competent manner.
10.3 Limitations and Exclusions.
10.3.1 AEC SHALL HAVE NO LIABILITY OR OBLIGATION HEREUNDER TO L&H
WITH RESPECT TO ANY CLAIM THAT RESULTS FROM OR IS BASED ON (i)
ANY IMPROVEMENTS, UPDATES, MODIFICATIONS OR OTHER CHANGES TO
THE HEADSETS THAT ARE NOT MADE BY AEC; (ii) IMPROPER USE OF
THE HEADSET; (iii) THE MALFUNCTIONING OF ANY HEADSET NOT
OTHERWISE COVERED BY THE WARRANTY SET FORTH IN SCHEDULE 3.3;
OR (iv) END-USER ERROR.
10.3.2 AEC SHALL HAVE NO LIABILITY OR OBLIGATION TO L&H HEREUNDER
WITH RESPECT TO ANY CLAIM OF INFRINGEMENT OF A PATENT,
COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT IN
WHICH AEC OR ANY AFFILIATE OF AEC HAS AN INTEREST OR LICENSE
OTHER THAN THE INTEREST GRANTED HEREUNDER.
10.3.3 IF ANY HEADSETS BECOME, OR IN AEC'S OPINION IS LIKELY TO
BECOME, THE SUBJECT OF A CLAIM, AEC AT ITS OWN OPTION AND
EXPENSE SHALL EITHER (i) PROCURE FOR L&H AND/OR L&H CUSTOMERS
THAT HAVE PURCHASED HEADSETS FROM L&H THE RIGHT TO CONTINUE
USING SUCH HEADSETS; (ii) REPLACE OR MODIFY THE HEADSETS SO
THAT THEY BECOME NON-INFRINGING.
11 RESERVED.
12 L&H'S INDEMNITY FOR INFRINGEMENT.
12.1 Indemnity. L&H agrees to indemnify and hold AEC harmless from, and
defend AEC against, any loss, cost, damage, or expense and any
claims therefor (including reasonable attorney's fees and expenses)
suffered by AEC that arise from the publication and/or sale by L&H
of the Software or that are based on (i) alleged infringement by
the Software of any patent rights, copyrights or other intellectual
property rights of a third party; (ii) on theories of product
liability, warranty, personal injury; or (iii) arising out of the
illegal exportation of any Software or Headset by L&H.
12.2 Claims. In the event any claim of the type described in Section
12.1 is made against AEC, in order to be entitled to the indemnity
provided hereunder, AEC must promptly notify L&H thereof and must
tender the defense thereof to L&H in writing. L&H shall undertake
the defense thereof at its own expense in a prompt and competent
manner.
13 OTHER INDEMNITY MATTERS.
13.1 NEITHER PARTY SHALL BE LIABLE OR OBLIGATED IN ANY MANNER UNDER THIS
AGREEMENT TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES EVEN IF INFORMED OF THE POSSIBILITY THEREOF IN
ADVANCE.
13.2 Each party shall give the other party prompt written notice of any
threat, warning or notice of any claim of which such party has
knowledge or has reason to have such knowledge and for which
indemnity is provided hereunder by a party.
14 NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed given either (a) when hand delivered
to a party; (b) when deposited with any delivery service listed in
Schedule 14 attached hereto with instructions to provide next-business-
day delivery and proof of delivery to a party; or (c) when sent by
facsimile transmission to a party followed immediately by delivery in
conformity with clauses (a) or (b) of this Section 14, as follows:
IF TO L&H AT: IF TO AEC AT:
Xxxx-Xxxxxxxxxxxxx 0 00-00 00/xx/ Xxxx
0000 xxxxx, Xxxxxxx Xxxx Xxxxxx Xxxx, XX 00000
Attn: Legal Department Attn: Legal Department
Fax#: (000) 000-0000 Fax#: (000) 000-0000
or to such other address of a party as such party may by notice hereunder
designate to the other party.
15 MISCELLANEOUS.
15.1 Entire Agreement; Amendments; Counterparts. This Agreement
together with the schedules attached hereto contains the entire
understanding of the parties on the subject matter hereof except as
otherwise expressly contemplated herein and no representation,
affirmation of fact, course of prior dealings, promise or condition
in connection herewith or usage of the trade not expressly
incorporated herein shall be binding on the parties; shall not be
amended hereof except as otherwise expressly contemplated herein;
shall not be amended except by written agreement of the parties
signed by each of them; shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns;
may be executed in one or more counterparts each of which shall be
deemed an original hereof, but all of which shall constitute but
one and the same agreement; and shall not be assignable by a party
without the prior written consent of the other party.
15.2 Assignment. L&H shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of AEC.
AEC shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of L&H.
15.3 Construction.
15.3.1 The words "herein," "hereof," "hereunder," "hereby,"
herewith" and words of similar import when used in this
Agreement shall be construed to refer to this Agreement as a
whole. The word "including" shall mean "including, but not
limited to," any enumerated items.
15.3.2 Each party and its counsel has reviewed this Agreement.
Accordingly, the normal rule of construction that any
ambiguities and uncertainties are to be resolved against the
party preparing an agreement will not be employed in the
interpretation of this Agreement; rather the Agreement shall
be construed as if all parties had jointly prepared it.
15.4 Waivers. The failure to insist upon strict compliance with any
term, covenant or condition contained herein shall not be deemed a
waiver of such term, nor shall any waiver or relinquishment of any
right at any one or more times be deemed a waiver or relinquishment
of such right at any other time or times.
15.5 Severability. In the event that any section or subsection of this
Agreement or part thereof is found by competent judicial authority
to be invalid, illegal or unenforceable in any respect, then such
section or subsection or part thereof shall, if possible, be
modified to the minimum extent necessary to render such section or
subsection valid, legal and enforceable and still be consistent
with the intent of the parties, and the validity, legality and
enforceability of any such section or subsection or part thereof in
every other respect and the remainder of this Agreement shall
continue in effect.
15.6 Force Majeure. Neither AEC nor L&H shall be in default or liable
for any delay or failure of compliance with this Agreement due to
an act of nature, public enemy, government action, freight embargo,
or strike beyond the control of the defaulting party and the
defaulting party shall provide the non-defaulting party immediate
notice of any such anticipated delay or failure of compliance;
provided, however, that any such act shall not relieve the
defaulting party's obligations hereunder and such party hereby
agrees to perform its obligations as soon as practicable after the
conditions causing such delay or failure have subsided.
15.7 Headings and Captions. The headings and captions of the sections
and paragraphs herein are for convenience only and shall not be
used to construe or interpret this Agreement.
15.8 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York
without giving effect to any choice of law or conflict of law
provision or rule whether of the State of New York or any other
jurisdiction that would cause the application hereto of the laws of
any jurisdiction other than the State of New York. Each party
agrees that any action arising under this Agreement may be brought
in the federal or state courts in the County of New York, State of
New York, and each party agrees to submit to the personal
jurisdiction of such courts.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first above
written.
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V. XXXXXX ELECTRONICS CORPORATION
By: By:
------------------------------- -----------------------------
President Co-President
SCHEDULE 2.1(A) - L&H SOFTWARE
(CONFIDENTIAL TREATMENT REQUESTED)
SCHEDULE 2.1(B) - AEC HEADSETS
Product Description Purchase Price MSRP
(Confidential Treatment Request)
SCHEDULE 3.2 - AEC COPYRIGHTED MATERIALS
Xxxxxx Electronics Corporation hereby grants to L&H, its subsidiaries and
affiliates the nonexclusive, royalty-free right and license to use, in
connection with the marketing of the Headsets, the Headset name(s) and
trademarks used by the supplier to identify the Headsets including any
portions thereof. If Xxxxxx Electronics Corporation informs L&H in writing,
that Xxxxxx Electronics Corporation objects to L&H's use of the Headset(s)
names and trademarks, L&H will take reasonable steps to modify it.
(Confidential Treatment Requested)
SCHEDULE 3.3 - FORM OF AEC PRODUCT WARRANTY
Xxxxxx warrants that all Headsets provided to L&H under the terms of this
Agreement are free from defects in design, material and workmanship, and
conform to all of AEC's Headset representations in this agreement and agreed
upon Headset specifications.
(see attached Consumer Guarantee)
SCHEDULE 4.3 -
FOB Shipping point is defined as freight on board at AEC's shipping points in
(CONFIDENTIAL TREATMENT REQUESTED). (CONFIDENTIAL TREATMENT REQUESTED)
SCHEDULE 14 - LIST OF APPROVED COURIERS FOR DELIVERY OF NOTICES
(CONFIDENTIAL TREATMENT REQUESTED)
ORDER SCHEDULE
(CONFIDENTIAL TREATMENT REQUESTED)
DELIVERY SCHEDULE
(CONFIDENTIAL TREATMENT REQUESTED)
