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OEM & Distribution Agreement

Between

CompanyXYZ Technology and ABCorporation

This OEM Distribution Agreement ("Agreement") is made by and between CompanyXYZ Technology Inc  ("XYZ"), located at 100 Main St, San Francisco, CA 94111, and ABCorporation, Inc. (“ABC”) located at 101 Main St., San Francisco, CA 94112 as of ____________________________, 2003.

Definitions

1.        Effective Date:  The date on which this Agreement is signed by both parties hereto.

2.        Level 1 Support:  Support assistance on the Products provided by XYZ directly to its end-users or distributors, including but not limited to verification of proper setup, usability issues, user operational procedures; and assistance arising out of issues related to other software or hardware, or the interaction thereof.  To provide such assistance, the Level 1 Support personnel shall determine if the reported problem is obvious or known, operational or one requiring further analysis by a Level 2 Support person.  In the event that the reported problem is deemed an obvious or known problem, Level 1 Support requirements are satisfied by instructing the user to resolve the problem.

3.        Level 2 Support:  ABC technical support, provided only to XYZ and only after XYZ has attempted to solve a problem through the Level 1 Support procedures. 

4.        Retail Customer:  Any customer who is an end-user who purchases a XYZ product as packaged, out-of-the-box software from a retail establishment with a physical store or from a retail distributor of such packaged software products for delivery via mail, courier, or package shipper such as UPS.

5.        Web Customer:  Any customer who is an end-user who purchases a Product or Products via the web and for delivery via download. 

6.        “Product”or “Products”:  ABC’s Product1, Product2, Product3, Product4, and Product5 products, whether under those names or under names created and rebranded by XYZ, and including all versions, general releases, enhancements, bug fixes, customizations, and other modifications or additions to said products.

7.        Rebranded Product or Rebranded Products:  Any single or combination of ABC Products that are marketed and sold in accordance with the terms of this Agreement under a name or names:  (i) materially distinguishable from ABC’s Products’ names, (ii) which are names to which XYZ has lawful intellectual property rights, and (iii) which contain, as part of said name, some form of the word “WND” (e.g., WND1, WND2, WND3).  XYZ’s marketing of a Rebranded Product in no way shall be deemed to confer any intellectual property rights to the Rebranded Product or the Product from which it was rebranded, and all such rights (except XYZ trademarks on the name of a Rebranded Product) shall continue to vest in and remain with ABC.  Rebranded Products must be approved by ABC in writing in accordance with the terms of this Agreement.

8.        Territory:  The United States of America only.

Recitals:

WHEREAS, XYZ desires to market, distribute and sell ABC’s Products as Rebranded Products to Retail Customers;  and

WHEREAS, ABC is the developer and the owner of these Products and desires to gain a distribution channel to sell to Retail Customers;

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1)       License Grants by ABC  and Obligations of XYZ

a)     ABC hereby grants to XYZ for the Term hereof the exclusive right, within the Territory,  to duplicate, distribute, appoint distributors for, sell, resell, license to Retail Customers, rebrand with the “WND-” label as a prefix, and market the Rebranded Products to Retail Customers only.  XYZ has no right hereunder to, without limitation, market, sell or distribute the Products hereunder.  Exhibit B, attached hereto and made a part hereof, contains a facsimile of the End-User License Agreement which XYZ shall use in licensing the Rebranded Products to Retail Customers. 

b)    XYZ represents and warrants that it shall use its best efforts to promote the Rebranded Products in all its sales channels, including but not limited to retail stores. ABC understands that XYZ expects to undertake several cross-promotional activities  with  certain complementary 3^rd party software and hardware products and manufacturers and distributors thereof.  Prior to approving such promotions and acting upon them, XYZ agrees to obtain the prior written approval of ABC for the content and scope of said promotions.

c)     XYZ agrees to purchase, from ABC, a minimum of  ######dollars ($#####) of Product (as valued at the Manufacturers’ Suggested Retail Price [MSRP]) during the first year of this Agreement. The MSRPs of the Products and Rebranded Products are set forth in Exhibit A, which is attached hereto and made a part hereof. All Products shall be resold as Rebranded Products.  XYZ further agrees that, in each succeeding year of this Agreement, it will purchase from ABC Product valued at the MSRP then-in-effect that is a minimum of ## percent (##%) greater than that purchased during the prior year.  XYZ will purchase the Product from ABC at the royalty percentages set forth below as applied to the MSRP.

ABC shall measure XYZ’s actual sales (revenue) performance on a calendar quarter basis.  XYZ agrees that actual annual volume sales hereunder shall meet or exceed the performance level schedule stated below:

At the end of any calendar quarter, if XYZ’s cumulative annual revenue falls below the performance level schedule set forth hereinabove, XYZ shall have the next calendar quarter to bring the cumulative annual revenue up to the required minimum performance level.  In the event that XYZ fails to achieve this minimum performance level,then ABC at its sole discretion, may immediately terminate this Agreement or, in place thereof,  propose  to XYZ an alternative business relationship.  In no event shall any of these provisions be deemed to relieve XYZ of its Minimum Annual Purchase Obligation.

2)       Royalty Fee

a)       In each given month hereunder, XYZ agrees to pay ABC a royalty fee of ##percent (##%) of MSRP on the first ### hundred (###) Rebranded Products sold directly or indirectly (through distributors) to Retail Customers. Subsequent thereto, XYZ agrees to pay ABC a royalty fee of ## percent (##%) of MSRP on all additional copies of Rebranded Product sold. All royalty fees due to ABC will be calculated and paid in accordance with the terms of Section 3 hereinbelow based on XYZ’s net sales (sales net of returns), provided, however, that if in a given month, such net sales are negative because of returns, that neither party shall make any payment to the other.   No more than fifteen (15) calendar days after the last day of each month, XYZ shall electronically transmit or fax a sales report to ABC. Said report shall include the following:

i)         the quantities of each Rebranded Product in inventory and sold and the prices at which each said Rebranded Product was sold;

ii)       the cumulative revenues received by XYZ thereon;

iii)      the calculation of royalty fees due to ABC thereon; and

3)       Payment terms - XYZ will pay ABC at 30 days following the last day of each month hereunder all royalty fees  due to ABC that have not already been paid to ABC pursuant to XYZ’s minimum purchase requirements as set forth in Section 1c) hereinabove. 

4)       Taxes

a)       XYZ shall be responsible for paying all taxes related to, or arising out of, the sale of the Rebranded Product, except for taxes based or levied upon the net income of ABC. 

b)       XYZ shall provide and make available to ABC any resale certificates, information regarding out-of-state sales, and other exemption certificates or information reasonably requested by the other party (or as otherwise required for tax, regulatory, or legal reasons).

5)       Software Delivery - ABC agrees to deliver the Products by electronic means to XYZ promptly upon execution of this agreement and XYZ agrees to promptly create a Master Disk for the Rebranded Products from which it can create CD releases for any Rebranded Product or Product. Before shipping any Rebranded Product, XYZ must first provide ABC with a copy of each Rebranded Product as created from the Master Disk, upon the receipt of which ABC shall promptly verify that the Master Disk’s electronic representations are accurate representations of the electronic copies originally delivered by ABC to XYZ.  Upon receipt of such verification from ABC, XYZ shall have the right to begin shipping Rebranded Products to Retail Customers, provided that such copies shall be limited to the medium of CDs.  Notwithstanding the foregoing, if ABC determines that the Master Disk is in error, it shall promptly inform XYZ of same, and the process set forth in this Section 5 shall be repeated until the Master Disk is verified by ABC.  

6)       Revisions and Upgrades of the Products

During the Term hereof, ABC shall provide XYZ with:

a)       generally offered releases of the Products (including documentation, if any) that XYZ will make available as Rebranded Products to its Retail Customers;

b)       enhancements and major bug fixes to the Products that ABC periodically makes available to its customers, in addition to its general releases; and

c)       Any custom enhancements requested by XYZ and agreed to by ABC, and which are enhancements that ABC, at its sole discretion, chooses not to include in a general release, shall be developed and/or provided to XYZ only for a separate fee to be negotiated between the parties hereto.

d)       XYZ acknowledges and agrees that the Products and Rebranded Products (both as defined herein), including but not limited to revisions, upgrades or custom enhancements incorporated therein or added thereto, shall be owned solely by ABC and all right, title and interest to and in such Products shall vest in and remain solely with ABC, with no intellectual property  rights whatsoever inuring to the benefit of XYZ or of any third party, except that trademarks to the names of the Rebranded Products shall vest in and remain with XYZ. 

e)       ABC shall exercise its best efforts to provide XYZ with copies of Product releases thirty (30) days in advance of said release to Retail Customers.  XYZ shall exercise its best efforts to test the Product and to provide feedback and detailed reports to ABC of any discovered bugs, errors, or inconsistencies in the Product. 

f)        Each time that a revision or upgrade provided by ABC to XYZ requires the creation of a new Master Disk, the verification process set forth in Section 5 above shall be followed by both parties hereto.

7)       Security of Rebranded Products –  XYZ agrees to work with ABC to secure the Rebranded Product, such that a special and unique “key” will be required for each individual Retail Customer to unlock and use the Rebranded Products.  To the extent that any Product that ABC electronically transmits to XYZ is locked with some type of software security device, ABC agrees to provide XYZ with the information or keys necessary for XYZ to unlock said Product solely for the purpose of producing a Master Disk.

8)       Product discontinuance – ABC reserves the right, at any time during the Term hereof or thereafter, to discontinue manufacturing any Product or Products, provided that ABC gives XYZ thirty (30) days’ advance written notice of same.  Notwithstanding the foregoing, ABC agrees, during the Term hereof and for ninety (90) days subsequent thereto, to allow XYZ to continue to sell the Rebranded Product version of the discontinued Product.

9)       Buyout Provision.  At any time during the Term hereof, and notwithstanding any other provisions to the contrary, ABC may, at its sole option, terminate this Agreement on thirty (30) days written notice without cause by paying to XYZ the greater of #### thousand dollars ($###,000) or ## percent (##%) of XYZ’s gross revenues on the Branded Products for the twelve months prior to the date of notice (collectively, the “Buyout Provision”).  Under no circumstances shall this provision be deemed superior to any and all provisions herein governming ABC’s right to terminate this Agreement for cause, as said termination for cause rights shall remain superior to this Buyout Provision and shall supersede the terms of the Buyout Provision.  In the event that ABC exercises said Buyout Provision, XYZ’s rights subsequent to termination shall be the same as those rights it would have if this Agreement were terminated without cause as provided for elsewhere herein.

10)   Customer Support

a)       XYZ’s Responsibility:

i)         XYZ will provide Level 1 Support to their Retail Customers and to their distributors and resellers to said Retail Customers. 

ii)       If a given problem requires Second Level Support, Level 1 Support personnel will document all associated problem information and schedule a call back to the Retail Customer.   XYZ must then be able to reproduce the problem or bug on a consistent basis and must document the process used to reproduce the problem or bug.  XYZ must then promptly forward all relevant information concerning the problem, including the process used to reproduce the problem or bug, to ABC. At ABC’s request, XYZ shall also participate in a telephone conference call or calls to discuss the problem and background in detail with ABC personnel.   Notwithstanding the foregoing, XYZ reserves the right to submit a non-reproducible problem to ABC, but ABC reserves the right not to act upon said purported problem.

b)       ABC’s Responsibilitiy

i)         ABC will provide the same timeliness, quality of resolution and associated documentation in response to XYZ’s problems as they would to problems of their direct clients.[BC2] 

11)   Warranty

a)       Both parties represent and warrant that they have the authority to enter into this Agreement and to make and abide by the covenants herein.

b)       Product Warranty - ABC represents and warrants that every copy of Product provided to XYZ for the purposes of sale to Retail Customers as a Rebranded Product which may contain authorization string, or/and time limiting codes, or/and other instructions or codes, will have same disabled and will not limit obtaining of access of a particular, lawfully abiding,  Retail Customer to the  Rebranded Product.   Notwithstanding the foregoing, in no way shall the provisions of this Section 11b) be deemed to exclude ABC’s use of any of the security measures set forth in Section 7 hereof.

c)       Client’s Warranties - XYZ shall extend to each Retail Customer who purchases a Rebranded Product:

i)         the warranties, indemnification and services that it generally extends to its other Customers; and

ii)       through XYZ, and at XYZ’s sole expense, the software maintenance and technical support services on the Rebranded Products that ABC customarily provides and extends to its other customers on the Products. 

iii)      It is understood and agreed upon between the parties, that XYZ shall remain solely responsible to its Retail Customers for the performance and good working order of the Rebranded Products 

iv)     XYZ is not authorized to offer any other warranty regarding Rebranded Products on ABC’s behalf, whether written or oral, without ABC’s prior written consent.

d)       THE WARRANTIES REFERRED TO ABOVE, AND THE OBLIGATIONS THEREUNDER, ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, COURSE OF DEALING, USAGE OF TRADE AND FITNESS FOR A PARTICULAR PURPOSE.

12)   Restrictions

a)       XYZ acknowledges that the Rebranded Products and Products contain copyrighted material, trade secrets, patentable inventions and other valuable proprietary material owned by ABC or its vendors. 

b)       In order to protect such rights, XYZ shall not decompile, reverse engineer, disassemble or otherwise reduce the Rebranded Products or Products to a form, which will infringe in any way on ownership, copyrights, or other intellectual property rights of ABC.

c)       XYZ shall contact ABC if, in XYZ’s opinion, any need to alter, modify or change the Rebranded Product arises in the future.  Provided that XYZ furnishes ABC a written specification for changes, within thirty (30) days of its receipt of said specification, ABC agrees (i) to notify XYZ of ABC’s willingness or refusal to accommodate these changes; and (ii) to provide XYZ with a proposal detailing the costs of these modifications or changes and an estimate of when such changes can be completed.  Upon receipt of a revised Product resulting from XYZ’s acceptance of and ABC’s performance of said proposal, XYZ will incorporate the modifications in accordance with the proposal terms set forth by ABC and in accordance with the terms hereof.  XYZ agrees to test these changes and to formally acknowledge acceptance of the changes within thirty (30) days of ABC’s delivery of such changes.

d)       XYZ may not modify, rent, lease, loan, distribute or create derivative works based upon the Rebranded Products or the Products, in whole or in part, unless otherwise expressly provided for in this Agreement and unless it has obtained ABC’s prior written consent to same.

e)       XYZ shall use its best efforts and take all reasonable steps and precautions to safeguard the Rebranded Product and Product to ensure that no unauthorized person shall have access thereto and that no unauthorized copy, publication, disclosure or distribution, in whole in or in part, in any form will take place.   In the event that XYZ becomes aware that there has been or that there has been alleged to be, any unauthorized access whatsoever, XYZ shall, time being of the essence, inform ABC by phone, by email, and in writing.

13)   Confidentiality

a)       Each party agrees to use the other's Confidential Information (as defined below) only as authorized in this Agreement and to use diligent efforts, and at least the same degree of care used to protect its own Confidential Information, to prevent unauthorized use, dissemination and disclosure of the other's Confidential Information during the Term of this Agreement and for seven (7) years following the expiration or termination of this Agreement.

b)       Confidential Information is defined as:  (a) this Agreement, including all Exhibits or amendments, but not the existence of this Agreement or the promulgation of information to the public that has been approved in writing, in advance, by ABC, such as MSRPs; (b) all information related to either company's past, present or future business activities, including pricing, product and marketing plans, unless and until lawfully publicly disclosed; (c) all information of a technical nature regarding the Products and Rebranded Products, including designs, drawings, manufacturing processes and procedures, trade secrets, specifications, schematics, mechanical and engineering drawings, and engineering documentation, except for any such information that is intended by ABC to be distributed or disclosed to XYZ’s customers; (d) any and all methods, algorithms, techniques and processes contained in or related to the software contained in the Products or Rebranded Products; (e) all non-public financial and administrative information concerning either company; and (f) any other information designated by either company to the other in writing as confidential or proprietary.

c)       Confidential Information does not include any information that is:  (a) publicly known at the time of disclosure or becomes so at a future date (otherwise than as a breach of this Agreement); (b) already known to the other company at the time of disclosure and so identified by the other company in writing at the time of disclosure; or (c) independently developed by the other company without use of Confidential Information and for which the other company can furnish good and sufficient proof in writing to substantiate such independent development.

d)       Except as specified herein, neither company will disclose any Confidential Information without the prior written consent of the other, except as required by law or pursuant to the lawful request of a governmental agency. Each company agrees to notify the other promptly prior to any disclosure required by law or pursuant to request of a governmental agency.

e)       Upon termination or expiration of this Agreement for any reason, each will deliver to the other all Confidential Information of the other’s, including all copies contained on any storage or recording medium whatsoever.

14)   Trademarks

a)       Subject to the terms and conditions of Section 1 hereof, ABC grants XYZ a limited right to re-brand the Product and to fully own the respective trademarks of the Rebranded Product, provided

b)       XYZ grants the right to ABC to use the trademarks of the Branded Product for as long as this Agreement is valid. Trademark usage after the termination of this Agreement is subject to written approval by XYZ.

c)       All right, title and interest in or to the any trademarks associated with the Rebranded Product  shall remain with XYZ.

d)       Subject to ABC’s prior written approval, XYZ may modify the trademarks or substitute alternative marks for any or all of the Trademarks provided, however, that ABC shall not be required to incur any expense whatsoever to re-mark or otherwise modify packaging to adopt such modified, substituted or alternative marks.

e)       ABC shall implement and abide by the conditions of this Agreement related to the trademarks in a commercially reasonable manner to provide products consistent with the necessity to refill a depletion of then existing sales inventory.

f)        XYZ shall provide ABC with a sample of all product packaging and advertising that makes use of the XYZ’s trademarks for ABC approval.  Such approval shall not be unreasonably withheld or delayed.

15)   Limitation of Liability

a)       EXCEPT FOR INFRINGEMENT OF THE OTHER PARTY’S INTELLECTUAL PROPERTY RIGHTS OR BREACH OF CONFIDENTIALITY OBLIGATIONS AND Except AS OTHERWISE PROVIDED WITH RESPECT TO third party claims, THE AGGREGATE LIABILITY OF EITHER PARTY FOR DIRECT DAMAGES ARISING OUT OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE LIMITED TO THE AGGREGATE AMOUNT OF MONIES PAID AND/OR OR DUE TO ABC BY XYZ HEREUNDER AS OF THE DATE SUCH CLAIM IS FINALLY RESOLVED.

b)       IN NO EVENT SHALL EITHER PARTY BE LIABLE, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING LOST SAVINGS, LOST GOODWILL, LOST PROFIT OR BUSINESS INTERRUPTION EVEN IF NOTIFIED IN ADVANCE OF SUCH POSSIBILITY) ARISING OUT OF OR PERTAINING TO THE SUBJECT MATTER OF THIS AGREEMENT.

c)       IN NO EVENT WILL ABC BE LIABLE FOR ANY CLAIM AGAINST XYZ BY ANY OTHER PARTY, EXCEPT AS PROVIDED FOR IN SECTION 18 OF THIS AGREEMENT.

d)       XYZ ACKNOWLEDGES THAT IN THE EVENT OF TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH THE TERMS HEREOF, XYZ SHALL HAVE NO RIGHT TO DAMAGES OR INDEMNIFICATION OF ANY NATURE AS A RESULT OF SUCH TERMINATION, WHETHER ARISING OUT OF OR DUE TO ITS LOSS OF GOODWILL, FUTURE PROFITS, OR REVENUE, OR ON ACCOUNT OF EXPENDITURES, INVEST­MENTS, OR OTHER COMMITMENTS MADE BY XYZ.

16)   Infringement Indemnification 

a)       ABC shall defend, indemnify and hold harmless XYZ, its subsidiaries, parent corporations, Affiliates, officers, directors, independent contractors, XYZ’s, shareholders, employees, agents, successors and assigns from and against any claim, suit, demand, loss, damage, expense (including reasonable attorneys’ fees) or liability (collectively, “Claims”) due to a non-frivolous allegation that the Products provided by ABC to XYZ or to a Retail Customer pursuant to this Agreement infringe or misappropriate any patent right of any third party.  Notwithstanding the foregoing, ABC shall have no obligation of any kind to XYZ unless XYZ (a) gives ABC prompt written notice of any such Claim and a detailed description of the nature and content of said Claim; (b) authorizes ABC to have sole control the defense of the Claim and all settlement negotiations related thereto; and (c) cooperates fully with ABC in the defense of the Claim and all settlement negotiations related thereto.

b)       Notwithstanding the foregoing, ABC shall have no indemnity obligation with respect to any Claim or claim of infringement based on or arising out of  (a) any product of any third party or of XYZ that is not a Product or Rebranded Product; (b) any Product or Rebranded Product that has been altered or modified in any way by an entity other than ABC; (c) use of the Products or Rebranded Products in an application or environment or on a platform or with devices for which the Products or Rebranded Products were not designed or contemplated; (d)  modifications, alterations, combinations or  enhancements of the Products not performed by ABC; (e) any patent, copyright or trade secret in which ABC or any Affiliate has an interest; or (f) the combination, operation or use of any Product or Rebranded Product supplied hereunder with any device, apparatus, data, or program not supplied by ABC.

c)       THE FOREGOING PROVISIONS STATE ABC's ENTIRE OBLIGATION TO XYZ REGARDING ALLEGED OR OTHER INFRINGEMENT OF ANY THIRD PARTY INTELLECTUAL PROPERTY RIGHTS AND IS IN LIEU OF ANY IMPLIED WARRANTY OF NONINFRINGEMENT, WHICH IS HEREBY DISCLAIMED.

d)       Notwithstanding the foregoing, ABC  may, at its sole election and expense, elect to settle any Claim by: 

i)         procuring the right for XYZ (and any affected Retail Customers) to continue using the Rebranded Product; or

ii)       replacing all copies of the Product with a non-infringing and non-misappropriating equivalent product conforming substantially to the Product specifications; or

iii)      modifying the Product so as to make it non-infringing and non-misappropriating while conforming substantially to the Product specifications; or

iv)     terminate XYZ's license to the allegedly infringing Product and pay to XYZ an amount not to exceed the depreciated net value (as valued at the date of termination) of the Products which XYZ has sold hereunder in the prior six (6) months, depreciated on a straight-line basis over a three (3) year period.

17)   Records

a)       During the term of this Agreement and for a period of at least seven (7) years following the termination, cancellation or expiration hereof, both parties shall maintain records sufficient to determine, verify, and account for all transactions, including but not limited to XYZ’s payments of royalty fees to ABC, made hereunder.

18)   Term and Termination  [*** Note:  the terms of this section 18 were given to me by one of the parties.  Although I recommended redrafting this section to eliminate redundancies and inefficiencies in language, the party chose, subject to minor editing by me, to retain it.  Therefore, the repetition and lack of clarify herein does not reflect my drafting style; in fact, they are antithetical to it. ***]

a)       The Term of this Agreement shall commence on the Effective Date and continue in effect for two (2) years thereafter (the “Initial Term”). Thereafter, this Agreement shall automatically be renewed for a period of one (1) year at each successive expiration.

b)       Either party may terminate this Agreement by notifying the other party in writing with a minimum of ninety (90) days’ notice after the expiration of the Initial Term.

c)       Either party may terminate this Agreement for cause by giving the other party written notice of the other party’s breach of any obligation under this Agreement.  Such termination will become effective thirty (30) days after receipt of such notice, unless the breach is cured to the sole but reasonable satisfaction of the terminating party within such thirty (30) day period.

d)       Each calendar quarter hereunder, XYZ will provide to ABC a detailed summary of marketing, sales, and other costs and expenses incurred in the prior calendar quarter by XYZ in preparing , launching, selling and marketing the Branded Products to Retail Customers.

e)       Further, ABC may terminate this Agreement immediately on written notice to XYZ in the event that:

i.         A trustee or receiver is appointed for XYZ for any or all of XYZ’s property;

ii.        XYZ becomes insolvent or unable to pay debts as they mature, or cease to be paid; or makes an assignment for the benefit of creditors;

iii.      XYZ is dissolved, liquidated, or wound-up, or undertakes to do so;

iv.      XYZ breaches its responsibilities as described in Section 13 of this Agreement entitled “Confidentiality”;

v.       There is any material change in the management or control of XYZ, including but not limited to any transfer or any substantial part of XYZ’s business (whether by sale of stock, asset, merger, consolidation, or otherwise), any bulk transfer by XYZ pursuant to the Uniform Commercial Code, or death or incapacity of any principal of  XYZ.

vi.      XYZ has willfully and/or materially breached XYZ’s obligations and responsibilities under this Agreement and such breach is not cured pursuant to the cure provisions set forth hereinabove.

f)        Upon termination of this Agreement, XYZ must pay all outstanding amounts and obligations to ABC.  Any accrued rights to payment and any remedies for breach of this Agreement shall survive termination.

g)       Unless ABC terminates this Agreement for cause, XYZ may continue to exercise certain of its respective rights and licenses granted hereunder, but only to the extent necessary to allow XYZ to fulfill its then-existing obligations under license agreements to Retail Customers that are effective at the time of termination.

19)   Special provisions

XYZ agrees to build an Install shield and write a Start-up guide for the Rebranded Products that will be sold to Retail Customers, provided, however, that XYZ must first obtain the written approval of ABC (such approval not to be unreasonably withheld or delayed) on said shield and guide prior to releasing same.

20)   Audit Rights - ABC shall have the biannual right, at its own expense, to audit the records of XYZ to confirm and enforce the terms of this Agreement, including but not limited to verifying the number of licenses of Rebranded Products sold, as well as confirming payment transactions between XYZ and any third parties.  In the event such an audit reveals any discrepancies which, when resolved, would be to the favor and benefit of ABC, and such discrepancies account for amounts in excess of three percent (3%) of the amounts legitimately due to ABC during the time period under review, then XYZ shall bear the full cost and expense of any such audit and, notwithstanding same, any discrepancies revealed by such audit shall be resolve promptly in favor of the aggrieved party, whether or not such aggrievement was intentional.  Any such audit would require 2 business days’ advance written notification.

21)   Notices

a)       Any notices or communication under this Agreement shall be in writing and shall be hand-delivered or sent by registered mail return receipt or by express courier to the party receiving such communication at the address specified herein or such other address as either party may in the future specify in writing to the other party.

b)       All notices hereunder by XYZ to ABC, shall be directed to:  ABCorporation, Inc., [DELETED]

c)       All notices hereunder by ABC to XYZ shall be directed to: CompanyXYZ Technology, Inc., [DELETED]

22)   General

a)       Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of California (excluding its choice of law rules).  Any controversy arising out of or relating to this Agreement shall be settled by binding arbitration in Santa Clara County, California under the auspices of the American Arbitration Association (“AAA”), in accordance with the AAA’s Commercial Arbitration Rules then in effect.  The prevailing party in any arbitration or other legal proceeding shall be entitled, in addition to any other rights or remedies it may have, to reimbursement of all reasonable expenses incurred thereby, including reasonable attorneys' fees, arbitrator's fees, and witness fees, including those of expert witnesses.

b)       Force Majeure.  Neither party may claim damages or terminate this Agreement because the other failed in or delayed performance (other than for payment of monies due) due to circumstances beyond its reasonable control, including but not limited to labor disputes, strikes, lockouts, shortages or inability to obtain labor, energy, components, raw materials or supplies, war, riot, epidemic, fire, flood, earthquake, acts of God, governmental action, or any other circumstance beyond the control of the non-performing party.

c)       Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions will in no way be affected or impaired thereby, and the provision found to be illegal, invalid or unenforceable shall be modified to the smallest extent necessary to enable such provision to conform to the relevant law or governmental regulation or to make it enforceable.

d)       Succession.  This Agreement will inure to the benefit of the successors, assigns and heirs of ABC and to those of XYZ, but subject to the prior written approval of ABC.

e)       Surviving Obligations.  The rights and obligations of the parties that by their nature are intended to survive expiration or termination of this Agreement will survive expiration or termination of this Agreement

f)        No Waiver.  A failure of either party to exercise any of its rights hereunder shall not be deemed to be a waiver of that or any other right inuring to said party hereunder.

g)       Entire Agreement.  The terms and provisions contained in this Agreement (including the Attachments) constitute the entire understanding of the parties with respect to the transactions and matters contemplated hereby and supersede all previous communications, representations, agreements and understandings relating to the subject matter hereof.  No agreement or understanding extending this Agreement or varying its terms (including any inconsistent terms in any purchase order, acknowledgment or similar form) shall be binding upon either party unless it is in a writing specifically referring to this Agreement and signed by the duly authorized representative of the applicable party and accepted by another party.

23)   Counterparts - This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  In making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.

 

Both parties represent that they have read this Agreement, understand it, and agree to be bound by the terms and conditions stated herein.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers, and have duly delivered and executed this Agreement under seal as of the date first set forth above.