EXHIBIT 10.16
DEVELOPMENT AND LICENSE AGREEMENT
This Development and License Agreement (this "AGREEMENT") is entered
into as of December 1, 1999 (the "EFFECTIVE DATE") by and between SMARTDISK
CORPORATION, a Delaware corporation, with its principal offices at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and SmartDisk International, Inc., a
Delaware corporation, having a Japan branch with its principal place of business
located at Kyoei Yaesu Bldg., ▇-▇-▇▇ ▇▇▇▇▇, ▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇-▇▇▇▇, ▇▇▇▇▇,
(collectively "SMARTDISK"), and SONY CORPORATION, a corporation formed under the
laws of Japan, with its principal offices at ▇-▇-▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇-▇▇,▇▇▇▇▇, ▇▇▇-▇▇▇▇ ▇▇▇▇▇ ("SONY").
R E C I T A L S
A. "FLOPPY DISK" means higher density 3.5 inch micro floppydisks which
conform to the technical specifications of the document entitled "Information
processing - Data interchange on 90mm (3.5in) flexible disk cartridges using
modified frequency modulation recording at 15916 ftprad on 80 tracks on each
side" issued by ISO as "ISO-9529-1."
B. SmartDisk designs, develops and manufactures, among other products,
products for the ability to read data to and write data from flash memory
storage products, in the form of Floppy Disks ("FLASHPATH").
C. Sony has developed and distributes a certain form of flash memory
card system known as the Memory Stick ("MEMORY STICK"); further, Sony is
developing a new version of its Mavica brand camera (the "New Mavica") that will
internally accept the MSFP II (as defined hereafter) as an adapter for the
Memory Stick.
D. The parties desire to have SmartDisk design, develop, manufacture
and sell to Sony a type of FlashPath product for use with the Memory Stick and
the New Mavica ("MSFP II") which is suitable for mass production and
distribution (such MSFP II is in addition to the FlashPath product currently
being developed by SmartDisk for Sony) and have Sony distribute the MSFP II.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. DEFINITIONS
1.1 "CONFIDENTIAL INFORMATION" means (i) all information
disclosed by either party to the other during the term of this Agreement
relating to either party's financial or business plans and affairs, financial
statements, internal management tools and systems, marketing plans, clients,
contracts, products and programs, product and program development plans,
hardware, firmware, software programs and other technology which information is
deemed by the disclosing party as confidential; (ii) which is disclosed in oral,
written, graphic, machine recognizable, and/or
sample form; and, (iii) is clearly designated, labeled or marked as
confidential. Confidential Information which is disclosed other than in material
form will be confirmed as Confidential Information in writing by the disclosing
party within thirty (30) days after such disclosure, identifying the place and
date of such disclosure and names of the receiving party's employees to whom
such disclosure was made and describing the resume of the information disclosed.
1.2 "DESIGN SPECIFICATIONS" means the written preliminary
specifications for MSFP II attached hereto as EXHIBIT A which shall be deemed to
be part of this Agreement.
1.3 "DEVELOPMENT SCHEDULE" means a description of the
development obligations of each party with respect to MSFP II to be set forth in
EXHIBIT B attached hereto. The Development Schedule shall include, without
limitation, a detailed description of each party's deliverables, delivery dates
and milestones for: (i) developing various beta-version components of MSFP II;
(ii) developing and testing a production prototype which shall be used as a
manufacturing sample; (iii) developing and testing manufacturing and engineering
improvements for commercial manufacturing cost reductions; and (iv) developing
commercialized, final products.
1.4 "FINAL SPECIFICATIONS" means the written final
specifications for MSFP II to be agreed to by the parties as set forth in
Section 2.1 below and when so agreed to shall become EXHIBIT C attached hereto
and shall be deemed to be part of this Agreement.
1.5 "INTELLECTUAL PROPERTY RIGHTS" means patents, copyrights
including rights in audiovisual works and moral rights, trademarks, service
marks, and trade names and registrations and applications therefor, trade
secrets, know-how, rights in trade dress and packaging and other intellectual
property rights recognized by the law of the United States and each applicable
jurisdiction.
1.6 "MEMORY STICK ASIC COMPONENTS" means the Intellectual
Property Rights in those portions of the digital chip used solely to provide a
serial to parallel interface allowing the Memory Stick to communicate with the
FlashPath, and which the parties hereto may develop to create MSFP II.
1.7 "MEMORY STICK UPDATES" means updates, additions,
enhancements, or modifications to the Memory Stick.
1.8 "PATENTABLE DEVELOPMENTS" means all ideas conceived
during, and which are directly related to, the development of MSFP II which are
patentable ideas or inventions, excluding the Memory Stick ASIC Components and
the Specified Driver Source Code.
1.9 "SPECIFIED DRIVER SOURCE CODE" means all Intellectual
Property Rights in those portions of the driver software source code which are
developed pursuant to this Agreement and which specifically support only MSFP
II.
2. DEVELOPMENT PHASE I - PROJECT PLANNING
SmartDisk has developed the Design Specifications for MSFP II
which previously have been delivered to Sony. The parties shall review and
revise, as is acceptable to both parties, the Design Specifications to create
the Final Specifications by December 1, 1999. By no later than December 1, 1999,
the parties shall negotiate in good faith to develop and agree upon the
Development Schedule, which shall be deemed to be part of this Agreement as
EXHIBIT B.
3. DEVELOPMENT PHASE II - PROJECT DEVELOPMENT
3.1 DESIGNATED CONTACTS. EXHIBIT D attached hereto sets forth
each party's designated "Principal Contact", which shall be each party's
respective point of contact for the resolution of problems. In addition, Exhibit
D sets forth each party's respective "Program Manager", who shall have overall
responsibility for the direction and coordination of the development of MSFP II.
The Sony and SmartDisk Program Managers shall establish and implement reasonable
project management procedures. In addition to the responsibilities set forth
herein, the Principal Contact and Program Manager shall be responsible for
matters designated in the Development Schedule, if any.
3.2 DEVELOPMENT OPERATIONS. The parties hereby agree to carry
out their respective obligations pursuant to and in accordance with the Final
Specifications and Development Schedule. In addition to the requirements set
forth in the Final Specifications and Development Schedule, Sony agrees to
provide technology resources which Sony deems necessary to assist in SmartDisk's
understanding of the Memory Stick so as to enable SmartDisk to develop MSFP II.
3.3 ACCEPTANCE OF MILESTONES. SmartDisk shall deliver to Sony
each milestone associated with a deliverable as set forth in the Development
Schedule for review and approval by Sony. Sony will test the delivered milestone
to determine whether such delivered milestone is in conformity with the Final
Specifications. Sony will inform SmartDisk whether such delivered milestones are
in conformity with the Final Specifications within the time periods set forth in
the Development Schedule. In the event that a delivered milestone does not
conform to the relevant portion of the Final Specification (such nonconformance
will be referred to as "DEFICIENCIES"), Sony shall reject the delivered
milestone and provide written notice to SmartDisk describing the Deficiencies in
sufficient detail to allow SmartDisk to correct the Deficiencies. Within a
period of time to be agreed between the parties after receiving each report
regarding Deficiencies, SmartDisk will use its best commercial efforts to
correct the Deficiencies so that the milestone conforms to the applicable part
of the Final Specifications. The procedure in this Section 3.3 will be repeated
with respect to a milestone to determine whether it is acceptable to Sony. In
the event a delivered milestone fails to conform to the Final Specifications
more than two times, the Program Managers shall meet to determine the
appropriate course of action.
3.4 CHANGES TO FINAL SPECIFICATIONS. Either party may request
changes to the Final Specifications during the development of MSFP II. All
requested changes by a party shall be submitted to the other party's Program
Manager in writing. Upon such other party's receipt of such changes, the parties
shall determine the amount of rework necessary, the additional development time
necessary, any additional costs associated with such changes and which party
shall be responsible for such costs. All such determinations shall be made by
the mutual consent of the parties. Upon written approval by both parties to
effect the requested change, SmartDisk will commence implementation of
such change. SmartDisk will revise the Final Specifications and Development
Schedule to reflect such change.
3.5 MEMORY STICK MODIFICATIONS. In the event that during the
term of this Agreement, Sony develops, or has developed on its behalf, any
modification, enhancement or update to the Memory Stick which causes MSFP II to
no longer interoperate with the Memory Stick or causes MSFP II to become
commercially obsolete, Sony shall send SmartDisk written notice thereof no later
than six (6) months prior to Sony's anticipated first commercial release of such
modification and the Principal Contacts shall meet to determine the appropriate
course of action for the parties. Notwithstanding the foregoing, in the event of
minor modifications, enhancements or updates to the Memory Stick, Sony shall
exercise its best efforts to advise SmartDisk of such minor modifications,
enhancements, or updates, as soon as possible. SmartDisk shall exercise best
efforts to incorporate such minor modifications, enhancements, or updates, as
soon as commercially reasonable, taking into consideration the cost of such
modifications and the impact on manufacturing lead times.
3.6 COMPLETION. The development of MSFP II shall be deemed
completed upon Sony's acceptance of the final milestone as set forth in the
Development Schedule, but shall in no event be later than March 31, 2000.
4. OWNERSHIP AND LICENSE
4.1 FLASHPATH. SmartDisk has and will retain all rights of
ownership in and to FlashPath, including without limitation the object code,
source code and documentation, all proprietary rights embodied therein and
related thereto, and Sony agrees and understands that it will not obtain, assert
or claim any right or license therein except as specifically set forth in this
Agreement. SmartDisk hereby grants and agrees to grant to Sony a non-exclusive,
worldwide, fully-paid right and license to market, sell and distribute those
portions of FlashPath (and Intellectual Property Rights incorporated therein)
which are incorporated in MSFP II for a period of five (5) years from the
Effective Date and to grant sublicenses of the foregoing to distributors of Sony
products.
4.2 MEMORY STICK. Sony has and will retain all rights of
ownership in and to the Memory Stick, including without limitation the object
code, source code and documentation, all proprietary rights embodied therein and
related thereto, and SmartDisk agrees and understands that it will not obtain,
assert or claim any right or license therein except as specifically set forth in
this Agreement. Sony hereby grants and agrees to grant to SmartDisk a
non-exclusive, worldwide, fully-paid right and license to use and reproduce, as
reasonably required by SmartDisk, the Memory Stick, including its design
documentation and object and source code, for the sole internal purpose of
designing, developing, manufacturing, testing, performing quality assurance,
performing quality control, improving and providing support and maintenance for
MSFP II. Notwithstanding the grant of non-exclusive rights by Sony as set forth
above, the parties understand and agree that SmartDisk shall be the exclusive
developer of MSFP II as developed in accordance with the Final Specifications
and Sony's technical assistance. In the event MSFP II contains any portion of
the Memory Stick which is proprietary to Sony, Sony hereby grants SmartDisk an
exclusive, fully-paid, worldwide right and license to reproduce, modify and
include such portions of the Memory Stick in
MSFP II as developed in accordance with the Final Specifications and Sony's
technical assistance and to make, have made, market, sell and distribute to Sony
MSFP II as developed in accordance with the Final Specifications and Sony's
technical assistance which includes such portions of the Memory Stick and to
sublicense any of the foregoing solely for the purposes of manufacturing MSFP II
for distribution to Sony.
4.3 MEMORY STICK ASIC COMPONENTS AND SPECIFIED DRIVER SOURCE
CODE. SmartDisk hereby assigns and agrees to assign to Sony all worldwide right,
title and interest SmartDisk may have or acquire in and to the Memory Stick ASIC
Components and the Specified Driver Source Code without royalty or any other
consideration except as may be expressly set forth herein. In addition, Sony
hereby grants and agrees to grant to SmartDisk a perpetual, exclusive,
worldwide, fully-paid right and license to make, have made, use and reproduce
the Memory Stick ASIC Components and the Specified Driver Source Code for the
sole purposes of designing, developing, manufacturing, testing, performing
quality assurance, performing quality control, improving and providing support
and maintenance for MSFP II and any other product which SmartDisk may develop
and supply to Sony in the future. In the event Sony requests that SmartDisk
perform additional development work with respect to the Memory Stick ASIC
Components and the Specified Driver Source Code for the New Mavica, the parties
will determine an appropriate additional development fee to paid by Sony to
SmartDisk for such work.
4.4 PATENTABLE DEVELOPMENTS. All Patentable Developments shall
be owned jointly by Sony and SmartDisk. Each party hereto hereby assigns and
agrees to assign to the other a one-half undivided interest in and to all
worldwide right, title and interest which each such party may have or acquire in
and to the Patentable Developments without royalty or any other consideration
except as may be expressly set forth herein. The parties further agree to use
their commercially reasonable efforts to cause any third party involved in the
development of the Patentable Developments to likewise contribute any rights
such third party may have in the Patentable Developments to an equal joint
ownership among all such parties. Notwithstanding the joint ownership described
herein, no party shall have the obligation to account to the others for any
further development, distribution, commercialization or other use of the
Patentable Developments and each party hereto waives its rights to claim the
other party committed waste of any Patentable Development. Any party to this
Agreement (the "CLAIMING PARTY") shall have the right to bring a claim of
infringement against any third party which infringes any of the Patentable
Developments and the other party hereto agrees to cooperate in any claim brought
by the Claiming Party at the expense of the Claiming Party.
4.5 ADDITIONAL LICENSES. To the extent that Sony owns or has
licenses to any additional Intellectual Property Rights which affect the design,
development, manufacture, license or sale of MSFP II, Sony hereby grants and
agrees to grant to SmartDisk a non-exclusive, worldwide, fully-paid right and
license to use such Intellectual Property Rights to design, make, have made, use
and sell MSFP II to Sony for distribution by Sony.
4.6 PROPRIETARY MARKINGS. The parties agree that each MSFP II
shall be labeled as set forth in Exhibit E attached hereto and shall carry on
all containers and storage media therefor and in all marketing material the
trademarks, copyright notices, patent notices, trade secret notices and other
notices regarding proprietary rights as set forth in Exhibit E.
5. DEVELOPMENT FEES
5.1 GENERAL. In consideration of the development of MSFP II,
Sony shall pay to SmartDisk the development fees set forth in EXHIBIT F attached
hereto and incorporated herein by reference (the "FEES").
5.2 MONTHLY INVOICES. For those Fees designated on Exhibit F
as "Invoice Fees", SmartDisk shall send to Sony on a monthly basis an invoice
and an accounting for Product development work performed by SmartDisk during the
month. Sony shall pay each such invoice within thirty (30) calendar days of
receipt.
5.3 PAYMENT FOR DELIVERABLES. SmartDisk shall submit
deliverables to Sony in accordance with Section 3.3 above. Upon acceptance any
delivered milestone, Sony shall remit to SmartDisk the applicable Fee associated
therewith in accordance with the Development Schedule.
5.4 TOOLING AND DIES. SmartDisk shall purchase on behalf of
Sony, and as Sony's purchasing agent, tooling and dies for the manufacture of
MSFP II. As of the Effective Date the parties estimate the cost of such tooling
and dies to be approximately (Y) 35,000,000 and Sony shall reimburse SmartDisk
for the costs thereof. The actual amount of reimbursement by Sony shall be
determined by both parties at the time SmartDisk orders such tooling and dies.
The timing and manner of payment of such costs shall be more fully set forth in
a separate Manufacturing Agreement to be entered into by the parties hereto.
5.5 TAXES. All taxes, duties, fees and other governmental
charges of any kind (including customs duties, import sales, services and use
taxes, but excluding taxes based on the gross revenues or net income of
SmartDisk) which are imposed by or under the authority of any government or any
political subdivision thereof on the Fees shall be borne by Sony and shall not
be considered a part of, a deduction from or an offset against such fees.
SmartDisk shall be responsible for all taxes assessed on the gross revenues or
net income of SmartDisk by any governmental authority with jurisdiction over
SmartDisk. In the event that Sony is required to withhold taxes based on such
gross revenues or net income of SmartDisk by any such governmental authority,
Sony is hereby authorized to make such payment of withholding taxes and Sony
will provide SmartDisk with official tax receipts or other evidence of payment
of such withheld taxes sufficient to substantiate a claim by SmartDisk for
credit against SmartDisk's United States federal income tax.
6. INDEMNIFICATION AND LIMITATIONS ON LIABILITY
6.1 SMARTDISK'S OBLIGATIONS. (a) SmartDisk will indemnify and
hold harmless Sony from and against all claims, actions, damages, costs and
expenses (including attorneys' fees) arising out of any actual or threatened
claim of infringement of any patent, or any copyright, trademark, or trade
secret arising out of FlashPath or any of SmartDisk's other contributions to
MSFP II only as used in MSFP II, to the extent that such contributions were not
a direct result of instructions or technical assistance received from Sony. This
obligation will be subject to the following terms and conditions:
(i) The obligation will arise only if Sony gives SmartDisk
prompt notice of the infringement claim and grants SmartDisk, in writing,
exclusive control over its defense and settlements;
(ii) This obligation will cover MSFP II only in the form as
delivered to Sony by SmartDisk or its agents, and will not cover any correction,
modification, improvement, enhancement or addition to any Product made by anyone
other than SmartDisk without SmartDisk's prior written authorization;
(iii) This obligation will not cover any claim that any
Product infringes any third party's rights as used in combination with any
hardware or software not supplied by SmartDisk if that claim could have been
avoided by the use of that Product in combination with other hardware or
software, notwithstanding the foregoing, the obligation will cover any claim
that any Product infringes any third party's rights as used in combination with
any Floppy Disk drives in common and/or in combination with any Memory Stick in
common;
(iv) This obligation will not cover any use of the Memory
Stick ASIC Components, the Specified Driver Source Code or the Patentable
Developments used with or in any product other than MSFP II;
(v) Without limiting SmartDisk's general obligation of
indemnification, and in addition thereto, if an infringement claim is asserted,
or if SmartDisk believes one likely, SmartDisk will have the right and the
obligation to do any of the following, if approved by Sony: (a) procure a
license from the person(s) claiming or likely to claim infringements; or (b)
modify MSFP II to avoid the claim of infringement; or (c) suspend the Agreement
with respect to such Product until the infringement claim has otherwise been
resolved. If SmartDisk choose the option (c) and as a result, the development of
MSFP II hereunder is delayed by more than ninety (90) days, Sony shall have the
right to terminate this Agreement, and SmartDisk shall reimburse Sony, in such
amounts as the parties shall agree but in no event more than the payments made
by Sony hereunder.
(b) SmartDisk warrants that the Memory Stick ASIC Components
and Specified Driver Source Code supplied to Sony will perform in accordance
with the Final Specifications. SmartDisk warrants that for twelve (12) months
from the date on which Sony accepted the final milestone as set forth in the
Development Schedule, the Memory Stick ASIC Components and Specified Driver
Source Code shall be free from any significant programming errors and from
defects in workmanship and materials. In the event that any defect is found
during the warranty period, SmartDisk shall remedy such defect at no additional
expense to Sony.
6.2 SONY'S OBLIGATIONS. Sony will indemnify and hold harmless
SmartDisk from and against all claims, actions, damages, costs and expenses
(including attorneys' fees) arising out of any actual or threatened claim of
infringement of any patent , or any copyright, trademark, or trade secret
arising out of the Memory Stick or any of Sony's other contributions to MSFP II,
only as used in MSFP II, including arising from Sony's instructions and
technical assistance. This obligation will be subject to the following terms and
conditions:
(i) The obligation will arise only if SmartDisk gives Sony
prompt notice of the infringement claim and grants Sony, in writing, exclusive
control over its defense and settlements;
(ii) This obligation will cover MSFP II only in the form
developed pursuant to the Final Specifications or as corrected, modified,
improved, or enhanced by SmartDisk to the extent that such action by SmartDisk
did not give rise to the claim;
(iii) This obligation will not cover any claim that any
Product infringes any third party's rights as used in combination with any
hardware or software not supplied by Sony if that claim could have been avoided
by the use of that Product in combination with other hardware or software;
(iv) This obligation will not cover any use of the Memory
Stick ASIC Components, Specified Driver Source Code or the Patentable
Developments used with or in any product other than MSFP II;
(v) Without limiting Sony's general obligation of
indemnification, and in addition thereto, if an infringement claim is asserted,
or if Sony believes one likely, Sony will have the right and the obligation to
do any of the following if approved by SmartDisk: (a) procure a license from the
person(s) claiming or likely to claim infringements; or (b) reimburse SmartDisk
to have SmartDisk modify MSFP II to avoid the claim of infringement; or (c)
suspend the Agreement with respect to such Product until the infringement claim
has otherwise been resolved; and
6.3 ENTIRE OBLIGATION. SECTIONS 6.1 AND 6.2 STATE THE PARTIES'
EXCLUSIVE AND ENTIRE OBLIGATIONS WITH RESPECT TO ANY CLAIMS OF INFRINGEMENT OF
PROPRIETARY RIGHTS OF ANY KIND.
6.4 GENERAL INDEMNIFICATION. Subject to the provisions of
Sections 6.1, 6.2 and 6.3 hereof, each party shall indemnify, defend and hold
the other and its successors harmless from any and all claims, demands, actions,
losses, liabilities, costs, expenses or damages of any kind or nature
(including, but not limited to reasonable attorneys fees) arising out of any
misrepresentation or breach or default in connection with any of the
representations, warranties, covenants or obligations made by such party.
6.5 DISCLAIMER OF WARRANTIES. EXCEPT FOR THE EXPRESS
WARRANTIES STATED IN THIS AGREEMENT, SMARTDISK MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO THE PRODUCT AND SMARTDISK SPECIFICALLY DISCLAIMS ANY
WARRANTIES, WHETHER EXPRESS OR IMPLIED, FOR MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE.
6.6 LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND OR
THE LOSS OF ANTICIPATED PROFITS ARISING FROM ANY BREACH OF THIS AGREEMENT EVEN
IF SUCH PARTY IS NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF
WHETHER ANY REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL PURPOSE. UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY'S
LIABILITY TO THE OTHER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
PRODUCT, EXCEED THE AMOUNTS PAID BY SONY TO SMARTDISK UNDER THIS AGREEMENT
REGARDLESS OF WHETHER ANY ACTION OR CLAIM IS BASED ON SUCH CONTRACT, WARRANTY,
INDEMNITY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT OR OTHERWISE.
7. ASSIGNMENT
This Agreement shall not be assigned by either party, in whole or in
part without the written consent of the other, which consent will not be
unreasonably withheld. However, either party may assign this Agreement to a
subsidiary or entity controlled by or under common control with such party, or
to any successor in-interest resulting from a reorganization, merger,
acquisition or sale of substantially all of the assets of such party, upon
written notice to the other party, (as long as the original party hereto, to the
extent such party continues to exist, remains primarily liable to the other
contracting party).
8. DURATION AND TERMINATION OF AGREEMENT
8.1 TERM. This Agreement is effective for a period commencing
on the Effective Date, and ending on the earlier of the completion of the
development of MSFP II or March 31, 2000.
8.2 TERMINATION FOR CAUSE. Subject to Section 8.3, in the
event that either materially breaches this Agreement and such breach remains
uncured twenty (20) calendar days following receipt of written notice by the
nonbreaching party, the nonbreaching party may terminate this Agreement by
written notice to the breaching party in which case the effective date of such
termination shall be the day following the twenty (20) day cure period described
herein.
8.3 SURVIVAL. Sections 4, 5.4, 6, 9, and 10 shall survive the
termination or expiration of this Agreement.
9. CONFIDENTIAL INFORMATION
9.1 CONFIDENTIAL INFORMATION. Each party agrees to use
reasonable efforts, and at least the same care that it uses to protect its own
confidential information of like importance, to prevent unauthorized
dissemination and disclosure of the other party's Confidential Information
during and for a period of three (3) years after the term of this Agreement;
provided, however, that with respect to Confidential Information regarding
specifications of Memory Stick, SmartDisk shall, in perpetuity, use reasonable
efforts, and at least the same care that it uses to protect its own confidential
information of like importance, to prevent unauthorized dissemination and
disclosure. All these obligations under this Section 9.1 will be subject to the
following terms and conditions:
(i) The foregoing obligations will not apply to
any Confidential Information that: (a) becomes known to the general public
without fault or breach on the part of the receiving party; (b) the disclosing
party customarily provides to others without restriction on disclosures; (c) the
receiving party receives from a third party without breach of a nondisclosure
obligation and without restriction on disclosure; (d) was in the possession of
the receiving party prior to disclosure by the other; or (e) is independently
developed by the receiving party's personnel having no access to any
Confidential Information obtained from the other.
(ii) Nothing in this Agreement will affect any
obligation of either party to maintain the confidentiality of a third party's
confidential information.
9.2 NO IMPAIRMENT. Nothing in this Agreement will impair the
right of either party to use, develop or market technologies, ideas or products
similar to those of the party so long as such use, development or marketing does
not infringe on any Intellectual Property Right of such other party or use such
other party's the Confidential Information.
9.3 PUBLIC ANNOUNCEMENT. Sony and SmartDisk agree that no
press release or other public announcement about this Agreement or the business
relationship between the parties shall be made without the prior written consent
of both parties, which shall not be unreasonably withheld.
10. GENERAL
10.1 RELATIONSHIP OF THE PARTIES. The parties' relationship
during the term of this Agreement shall be that of an independent contractors.
Neither party shall have, nor shall represent that it has, any power, right or
authority to bind the other, or to assume or create any obligation or
responsibility, express or implied, on behalf of the other or in such other
party's name, except as herein expressly provided.
10.2 INFORMAL DISPUTE RESOLUTION. Should any dispute or
disagreement between SmartDisk and Sony arise relating to any provision of this
Agreement (except with respect to Section 9.1), the Program Manager of one party
may give written notification of such dispute or disagreement to the Program
Manager of the other party. The Program Managers shall communicate with each
other promptly with a view to resolving such dispute or disagreement within
fourteen (14) calendar days of commencing their negotiations (or such extended
period as the Program Managers agree is appropriate in any case). In the event
that a dispute or disagreement is not resolved by the Program Managers within
such time period, the Program Managers shall refer the dispute for discussion
and resolution to the Principle Contact of SmartDisk and the Principle Contact
of Sony, who shall have an additional fourteen (14) calendar days to meet and
confer concerning a possible resolution. In the event that a dispute or
disagreement is not resolved by the Principle Contacts within such time period,
the Principle Contacts shall refer the dispute for discussion and resolution to
the President of SmartDisk and the President of Personal Video Company of Sony,
who shall have an additional fourteen (14) calendar days to meet and confer
concerning a possible resolution.
10.3 GOVERNING LAWS. The internal laws of the State of
Delaware, U.S.A., regardless of any choice of law principles, shall govern the
validity of this Agreement, the construction of its terms and the interpretation
and enforcement of the rights and duties of the parties.
10.4 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties.
10.5 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement
and application of such provision to other persons or circumstances shall be
interpreted so as best to reasonably effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision of
this Agreement with a valid and enforceable provision which will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provision.
10.6 ENTIRE AGREEMENT. This Agreement and the exhibits hereto,
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior and
contemporaneous agreements or understandings, express or implied, written or
oral, between the parties with respect hereto, except for the Memorandum of
Understanding between the parties dated executed in March, 1999 (the "MOU"),
which shall survive this Agreement. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof. In the event of any conflict between the terms of this
Agreement and the MOU, the terms of this Agreement shall control.
10.7 AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived, only by a writing signed by the parties. The waiver by a party of any
breach hereof for default in payment of any amount due hereunder or default in
the performance hereof shall not be deemed to constitute a waiver of any other
default or succeeding breach or default.
10.8 ATTORNEYS' FEES. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party shall be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including, without limitation, costs,
expenses and fees on any appeal). The prevailing party shall be the party
entitled to recover its costs of suit, regardless of whether such suit proceeds
to final judgment. A party not entitled to recover its costs shall not be
entitled to recover attorneys' fees. No sum for attorneys' fees shall be counted
in calculating the amount of a judgment for purposes of determining if a party
is entitled to recover costs or attorneys' fees.
10.9 NOTICES. Whenever any party hereto desires or is required
to give any notice, demand or request with respect to this Agreement, each such
communication shall be in writing and shall be given or made by facsimile, mail
or other delivery and faxed, mailed or delivered to the intended recipient at
the addresses specified below:
If to the Company: SmartDisk Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
If to Sony: Sony Corporation Shinagawa Technology Center
Shinagawa INTERCITY ▇ ▇▇▇▇▇
▇-▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇,▇▇▇▇▇,▇▇▇-▇▇▇▇ ▇▇▇▇▇
Facsimile:(▇▇)▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Sony Corporation
▇-▇-▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇,
▇▇▇-▇▇▇▇ ▇▇▇▇▇
Facsimile:(▇▇)▇▇▇▇-▇▇▇▇
Attn: Intellectual Property Department
General Manager
Except as may be otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by facsimile with
verified receipt by the receiving fax machine, when personally delivered, four
(4) days after being delivered to an overnight air courier (E.G. DHL, or Federal
Express) upon proof of delivery, or, in the case of a mailed notice, five (5)
days after being deposited in the United States mail certified or registered
mail, postage prepaid. Either party may change its address for such
communications by giving notice thereof to the other party in conformance with
this section.
10.10 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby, and to carry into effect the intents
and purposes of this Agreement.
10.11 FORCE MAJEURE. No failure or omission to carry out or
observe any of the terms, provisions or conditions of this Agreement shall give
rise to any claim by one party against the other or be deemed to be a breach of
this Agreement if the same is caused by or arises out of one or more of the
following conditions: acts of God; acts, regulations or laws of any government;
war; civil commotion; destruction of production facilities or materials by fire,
earthquake or storm; labor disturbances; epidemic; failure of public utilities
or of suppliers; or any other event, matter or thing wherever occurring and
whether or not of the same class or kind as those set forth above, which is not
reasonably within the control of the party affected thereby. Any party
temporarily excused from performance hereunder by such conditions shall resume
performance promptly when such conditions are removed or cured. Any party
claiming any such conditions as an excuse for delay in performance hereunder
shall give prompt notice in writing thereof to the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
SMARTDISK CORPORATION SONY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: CEO and President Title: General Manager
SMARTDISK INTERNATIONAL, INC.
By: /s/ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President