DEVELOPMENT AGREEMENT
between
THINKING TOOLS, INC.
and
SHL SYSTEMHOUSE INC.
Agreement No. EC00202
THIS DEVELOPMENT AGREEMENT (the "AGREEMENT"), is made this 30th day of
June between SHL SYSTEMHOUSE INC., with its principal offices at 000 X'Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxx, Xxxxxx XXX 6L2 ("SHL"), and Thinking Tools,
Inc., with its principal offices at One Lower Xxxxxxxx Drive, Suite 1-250,
Monterey, California USA 93940 ("Thinking Tools") who agree as follows:
1.0 TERM
The term of this Agreement shall commence on the last date entered
below by the parties signing this Agreement (the "Effective Date"), and unless
otherwise terminated pursuant to Section 14, shall terminate on August 31, 1996
(the "Expiration Date").
2.0 GOOD AND DELIVERABLES TO BE SUPPLIED
2.1 Thinking Tools agrees to provide to SHL, on the terms and
conditions hereinafter stated, those deliverables described in Schedule A (the
"Deliverables") attached hereto and incorporated herein.
2.2 The Schedule(s) attached to this Agreement shall specify the
following for the Deliverables included therein, as applicable:
(a) the Statement of Work;
(b) the assumptions;
(c) the payment schedule.
2.3 In addition to the Schedule(s), also incorporated into this
Agreement is Thinking Tools' Proposal. In the event of a conflict the order of
precedence for these documents shall be as follows:
(1) This Development Agreement;
(2) The Schedule(s);
(3) Thinking Tools' proposal.
3.0 FEES AND PAYMENT
3.1 SHL agrees to pay to Thinking Tools the amounts specified in the
Schedule(s) for the provision of the Deliverables specified therein. SHL and
Thinking Tools agree that the Project Schedule and associated charges specified
in the Schedule(s) are subject to adjustment at any time
that SHL and Thinking Tools mutually agree to change, add to or delete any
previously agreed upon work as described in the Statement of Work subject to and
in accordance with the Change Control Procedures specified in Section 4.0.
3.2 Thinking Tools will xxxx SHL on a monthly basis, or as otherwise
specified in the attached Schedules(s). Payment in full of each invoice shall be
due within forty-five (45) days of receipt of that invoice. Amounts invoiced but
not paid by SHL within forty-five (45) days of receipt of an invoice shall bear
interest at the lesser of one and one-half percent (1.5%) per month, calculated
monthly not in advance (19.56% per annum), or the highest rate permitted by law.
3.3 Unless otherwise provided, SHL shall reimburse Thinking Tools for
all reasonable, receipted out-of-pocket expenses identified in this Agreement,
as follows:
(a) Travel and Living expenses of Thinking Tools project
members including airfare, local transportation, hotels and meals. It is
understood that all such Travel and Living expenses shall be as required to
conduct business directly with SHL employees, or their designates. Travel and
Living expenses incurred by Thinking Tools to conduct business without the
direct involvement of SHL employees are not reimbursable. All such expenses
shall be in accordance with SHL's then current expense account guidelines.
(b) Courier expenses required to conduct business directly
with SHL Systemhouse employees, or their designates. Courier expenses incurred
by Thinking Tools to conduct business without the direct involvement of SHL
System house employees are not reimbursable.
SHL shall pay the expenses in full within forth-five (45) days
of receipt of an invoice therefor accompanied by supporting vouchers and
receipts.
Notwithstanding the above Thinking Tools shall not incur any
reimbursable expenses for this Agreement without the prior consent of SHL. In
addition, Thinking Tools shall maintain complete and accurate accounting records
in accordance with sound business practices to substantiate reimbursable
expenses. Such records will be available to SHL upon request.
4.0 CHANGE CONTROL PROCEDURES
4.1 A Change Control Document in the form attached to this Agreement as
Exhibit A shall be used to accommodate changes to the Deliverables specified in
the Schedule(s). Requests by SHL for changes to the Deliverables specified in a
Schedules are subject to the procedures specified in this Section 4.0.
4.2 SHL shall advise the Thinking Tools Project Manager, in writing, of
the desired change, with the same degree of specificity as in the relevant
Schedule.
4.3 The Thinking Tools Project Manager will assess the impact of the
desired change on:
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(a) The total cost of the Deliverables to be provided
under this Agreement;
(b) the milestones to be reached;
(c) the time frame for completion; and
(d) any further areas which, in the opinion of the
Thinking Tools Project Manager, are likely to be affected by the desired change.
Thereupon, Thinking Tools will prepare a Change Control Document
incorporating the description of the changes requested.
4.4 Thinking Tools shall provide SHL with the Change Control Document.
The Change Control Document from Thinking Tools shall constitute an offer by
Thinking Tools to provide the Deliverables request by SHL at the prices stated
in the Change Control Document. This offer shall be irrevocable for ten (10)
business days following receipt by SHL.
4.5 If SHL accepts Thinking Tools' offer by signing the Change Control
Document, the Schedules(s) affected by the change shall be deemed amended to
incorporate the change in question. The price stated in the Change Control
Document shall be recoverable from SHL by Thinking Tools outside any limit of
maximum expenditure in the relevant Schedule(s) and/or this Agreement.
5.0 WARRANTIES AND LIMITATION OF LIABILITY
5.1 Thinking Tools warrants that (i) the Beta Prototype and Final
Release deliverables which it is providing under this Agreement will be of
professional quality conforming to generally accepted data processing and
consulting practices; (ii) the Beta Prototype and Final Release deliverables
provided to SHL shall conform in all material respects to the specifications and
requirements for such items as specified in this Agreement; and (iii) Thinking
Tools is able to provide the Deliverables specified in this Agreement and
Thinking Tools does not have any agreement with any third party which would
restrict its ability to perform under this Agreement; and (iv) the use of the
Deliverables, or any information relating thereto or contained therein will not
infringe any copyright, patent or trademark of any third party, or breach any
trade secret or right of privacy of any third party.
In the event of a breach of this warranty, and after having followed
the Deliverables Acceptance Process outlined in Schedule A, Section A.1.2, SHL
shall provide written notification to the Thinking Tools Project Manager of said
breach. The written notification shall describe specific actions required of
Thinking Tools to remedy the breach. Thinking Tools shall then without charge
and without delay, repair, replace or modify the Beta Prototype or Final Release
deliverable so as to correct said warranty breach within 30 days of notification
for the Final Release deliverable. If Thinking Tools fails to remedy a defect or
nonconformity within the required time frames, SHL's sole remedy shall be the
recovery of its actual damages which shall be limited to the total amount paid
by SHL to Thinking Tools for those services upon which the liability is based.
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Thinking Tools warrants that, for the earlier of, a period of twelve
months following the date of the acceptance by SHL of the Final Release
deliverable, or, a period of six months from the date that the Project Challenge
product (hereinafter referred to as "the Product") is made generally available
by SHL to its internal or external customers, the Product shall perform in
accordance with the functional specifications set out in the Definitions
Document deliverable. Thinking Tools also warrants that it shall, at its
expense, correct any errors or omissions in the Product which cause the Product
to fail to function in accordance with its functional specifications.
5.2 Thinking Tools will negotiate in good faith to reach a reasonable
maintenance agreement to support the Product, if and when requested by SHL,
which would take effect at the end of the warranty period. If Thinking Tools and
SHL are unable to reach a reasonable maintenance agreement with Thinking Tools'
maintenance rates comparable to SHL's standard maintenance rates, SHL shall
acquire the rights and tools necessary to maintain the Product.
5.3 SHL shall indemnify Thinking Tools in the event that SHL's
unauthorized use of the Deliverables infringes any copyright, patent, or
trademark of any third party, or breach any trade secret or right of privacy of
any third party.
5.4 Each party (the "Indemnifying Party") hereto agrees to defend the
other party (the "Indemnified Party") against claims, suits or actions alleging
that the Indemnifying Party's use of the Software infringes a U.S. or Canadian
patent, copyright or trade secret of a third party and agrees to pay costs and
damages finally awarded against the Indemnified Party for infringement of such
patent, copyright or trade secret with respect to the use of the Deliverables,
providing that the Indemnifying Party is notified in writing within five (5)
business days as of any suit or claim whether in the form of a lawsuit or
otherwise against the Indemnified Party; and that the Indemnified Party permits
the Indemnifying Party to defend, compromise or settle said claim of
infringement and gives the Indemnifying Party all available information,
assistance, and authority to enable the Indemnifying Party to do so; and that
the Indemnified Party fully observes all the terms and conditions of this
Agreement. The Indemnifying Party shall not be responsible for any compromise or
settlement made without its consent.
Further, the Indemnifying Party shall have no liability for any claim
based on or arising out of:
(i) unauthorized modification of the Deliverables by the
Indemnified Party or any other party not authorized by the Indemnifying Party;
(ii) use of the Deliverables in a manner not authorized by the
Indemnifying Party; or
(iii) use of the Deliverables in association with hardware or software
not provided or authorized by the Indemnifying Party.
The foregoing constitutes the Indemnifying Party's entire liability for
copyright, patent, trade xxxx, industrial design, trade secret or other
intellectual property right infringement.
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6.0 PROPERTY RIGHTS
6.1 Thinking Tools acknowledges and agrees that SHL has the worldwide,
unlimited, perpetual, irrevocable exclusive right to use, copy, market, sell and
distribute ("Rights") the Product in accordance with this Agreement. SHL shall
retain title to and ownership in the executable version of the Product. Thinking
Tools shall retain intellectual property rights to all pre-existing Thinking
Tools materials and materials produced or authored by Thinking Tools in the
course of providing Deliverables to SHL. SHL shall retain intellectual property
rights for all SHL materials and ideas regarding project management know-how and
methodologies, whether pre-existing or developed specifically by SHL for
incorporation in the Product. In the event Thinking Tools utilizes any
independent contractors in performing work for SHL, Thinking Tools warrants that
it has taken all necessary actions with its own independent contractors to
ensure that SHL will enjoy the Rights as specified in the Agreement.
6.2 SHL's Rights shall extend to the executable version of the Product
and includes the right to use the Product internally without restriction.
Thinking Tools will maintain full rights and title to the Product source code.
As SHL may require access to the Product source code, Thinking
Tools shall place the Product source code in escrow subject to the execution of
an escrow agreement. SHL shall reimburse Thinking Tools for the escrow fees
identified in the escrow agreement to be executed.
6.3 SHL's Rights include the exclusive rights to market, distribute,
license, and sell the Product worldwide. Thinking Tools will receive a royalty
fee for external sales as negotiated, and mutually agreed to, by the parties. It
is the intent of the parties to negotiate and execute the formal Royalty
Agreement prior to the completion of the Final Release deliverable, anticipated
to be completed by March 15, 1996.
6.4 Thinking Tools shall not include components containing SHL
proprietary information in other products. Thinking Tools may reuse all
components that do not contain SHL proprietary information in a product Thinking
Tools develops for itself or for others.
Thinking Tools will develop a product under this agreement
whose primary purpose is to be used as an SI/IT project management training
tool. Thinking Tools may not develop a product for itself or for others whose
primary purpose is to be used as an SI/IT project management training tool
(hereinafter referred to as a "Competing Product").
It is the intent of the parties to negotiate in good faith a Royalty
Agreement to address:
(a) selling the Product as is;
(b) selling the Product with enhancements, where SHL
retains its Rights and Thinking Tools has the rights to develop the custom
enhancements;
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(c) selling a derivative work of the Product, where SHL
and Thinking Tools mutually agree to the derivative work, where SHL receives an
industry reasonable royalty for the derivative work, and where Thinking Tools
has rights to develop the Competing derivative work.
Thinking Tools hereby acknowledges that these restrictions are
reasonable. Any breach of this Section 6.4 shall be deemed a breach of a
material provision of this Agreement. The parties acknowledge and agree that the
Royalty Agreement shall contain a clause substantially similar to the provisions
of this Section 6.4.
6.5 Thinking Tools has the rights to generalize the non-proprietary
components of the Product, i.e., use base simulation components without SHL
methodology content or project management know-how to build a Non-Competing
product. A Non-Competing Product is a product whose primary purpose is other
than for SI/IT project management training. Examples of a Non-Competing Product
include a general purpose tool used for planning and a project management
training tool used for specific types of projects, such as construction
projects.
6.6 In the event that this Agreement terminates, Thinking Tools shall
not use or reproduce the Concept Paper, Final Design, or Prototype produced
under Agreement number EC00170, or any enhancements to these items completed
under this Agreement, to create a Competing Product for any party other than
SHL.
7.0 PROJECT MANAGEMENT
7.1 Each party shall appoint a Project Manager who shall be fully
responsible for coordinating the activities of the appointing party. Each party
shall direct all performance-related inquiries to the Project Manager of the
other party.
7.2 SHL's Project Manager shall be the sole representative of SHL with
authority to request or approve amendments to the Deliverables to be provided
under this Agreement.
8.0 CONFIDENTIALITY
8.1 Each party agrees to treat all information and materials received
from the other party that are labeled "Confidential" or "Proprietary" as
confidential information of the other party. Each party further agrees to use at
least the same degree of care to avoid disclosure or dissemination of the other
party's confidential information as it uses to protect its own confidential
materials, but in any event, at least a reasonable degree of care. Neither party
shall use the confidential information of the other party for its own benefit or
for the benefit of any third party, except as expressly permitted in this
agreement.
8.2 Each party agrees to advise all of its employees, agents,
subcontractors or consultants that may have access to or otherwise receive the
confidential information of the other party of all obligations pertaining to the
protection of the confidential information of the other party under this
Agreement.
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8.3 Neither party shall disclose confidential information of the other
party to any third party (other than independent contractors having a
"need-to-know"), without the other party's prior written consent; provided,
however, that a party shall not be liable for disclosure of information
designated as "Confidential" or "Proprietary" by the other party if the same:
(a) is in the public domain at the time of disclosure;
(b) becomes known to the other party from a third-party
source under no obligation to maintain confidentiality;
(c) becomes publicly available through no fault or
failure to act by the receiving party in breach of this Agreement; or
(d) is already known by the receiving party when
received, or is independently developed by the receiving party without
reference to the information provided by the other party, as established by
documentary evidence; or
(e) is required by a court or other governmental
authority to be disclosed (provided that the receiving party has used
reasonable efforts to make such disclosure subject to a protective order or
confidentiality agreement).
8.4 If, in order to fulfill the purposes of this Agreement, it is
necessary for the party receiving confidential information of the other party to
copy the same, in whole or in part, the receiving party may do so, but solely
for the purpose of enabling such party to perform under this Agreement.
8.5 Upon achieving the purpose(s) intended, or in the event of the
earlier termination of this Agreement, each party shall immediately return
and/or destroy all materials containing confidential information of the other
party. Each party shall further certify in writing to the other party that all
copies or partial copies of material containing confidential information of the
other party have been returned and/or destroyed.
9.0 ACCESS
SHL agrees to allow Thinking Tools and its independent contractors
sufficient working space as well as such access to SHL's personnel, files, and
equipment at SHL's facility as is necessary for the performance by Thinking
Tools' employees and/or independent contractors of the Deliverables required
hereunder, subject to the prior agreement of SHL concerning the details of such
access.
10.0 OFFERS OF EMPLOYMENT
10.1 Each party to this Agreement hereby undertakes that, without the
prior written approval of the other party, it shall not solicit for employment
any employee(s) of the other party who shall have been assigned to or worked
under this Agreement, nor shall it, either directly or indirectly, induce any
such employee to terminate his or her employment with the other party.
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10.2 This Section shall be effective and enforceable until a period of
six (6) months after the date of acceptance by SHL of all of the Deliverables to
be provided by Thinking Tools under this Agreement.
11.0 INDEPENDENT CONTRACTORS
11.1 The relationship of Thinking Tools to SHL is that of an
independent contractor. Under no circumstances shall any employees of one party
be deemed to be the employees of the other for any purpose. Each party shall pay
all wages, salaries, and other amounts due its respective employees relative to
this Agreement and shall be responsible for all obligations respecting them
relating to income tax withholdings, unemployment insurance premiums, pension
plan contributions, and other similar responsibilities.
11.2 Neither party has the right or authority to assume or to create
any obligation or responsibility on behalf of the other party, except as may
from time to time be provided by written instrument signed by both parties.
11.3 Nothing contained herein shall be construed as implying a joint
venture or partnership relationship between the parties.
12.0 FORCE MAJEURE
Thinking Tools shall not be responsible for any failure to comply with
or for any delay in performance of the terms of this Agreement where the failure
or delay is due to acts of God or the public enemy, war, riot, embargo, fire,
explosion, sabotage, flood, accident; or, without limiting the foregoing, any
circumstances of like character beyond its control.
13.0 TERMINATION
13.1 If either party shall at any time neglect, fail, refuse to perform
under, or otherwise breach any of the material provisions of this Agreement,
then the other party may serve upon the defaulting party notice of intention to
terminate this Agreement (including its Schedule(s)). If, within 30 days of the
date of service of such notice, the defaulting party has not fully cured all the
defaults indicated therein, or presented a plan acceptable to the other party to
cure such defaults, then upon expiration of the 30 days, this Agreement shall
terminate.
14.0 ENTIRE AGREEMENT
14.1 This Agreement (including the Schedule(s) attached hereto),
constitutes the entire understanding between the parties pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations, and discussions, whether oral or written, of the
parties. There are no warranties, representations, promises, covenants, or other
agreements between the parties other than those expressly set forth herein.
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14.2 No supplement, modification, or amendment of this Agreement or any
Schedule shall be binding unless executed in writing by an authorized
representative of each party.
15.0 APPLICABLE LAW
15.1 This Agreement (including the Schedules(s) attached hereto) shall
be governed by and construed according to the laws of the Province of Ontario
without regard to its choice of law rules.
16.0 WAIVER
16.1 No term or condition of this Agreement shall be deemed waived, and
no breach or omission excused, unless in writing and signed by the party against
whom enforcement of such waiver or consent is sought. A waiver of any condition
or term of this Agreement in any regard shall not constitute a waiver or consent
to any different or subsequent breach or omission, and either party may invoke
any remedy available at law or in equity despite any such prior waiver or
consent.
17.0 SEVERANCE
If any provision of this Agreement or the accompanying Schedule(s) is
held to be void, illegal, unenforceable, or otherwise in conflict with the law
governing this Agreement, such provision shall be deemed to be restated to
reflect as nearly as possible the original intentions of the parties in
accordance with applicable law, and the other provisions shall remain in full
force and effect.
18.0 TAXES
The amounts payable to Thinking Tools under this Agreement are
exclusive of any taxes, however designated, levied or based on this Agreement or
the Deliverables furnished by Thinking Tools hereunder, including, without
limitation, any personal property, sales and use taxes. SHL agrees to pay and be
responsible for all such taxes (excluding taxes based on Thinking Tools' net
income). SHL shall promptly reimburse Thinking Tools for any such taxes which
Thinking Tools pays directly.
19.0 SURVIVAL
Notwithstanding the termination of this Agreement, it is acknowledged
and agreed that the following provisions shall survive:
(a) Section 3.0 Fees and Payment
(b) Section 5.0 Warranties and Limitation of Liability
(c) Section 6.0 Property Rights
(d) Section 8.0 Confidentiality
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(e) Section 10.0 Offers of Employment
(f) Section 11.0 Independent Contractors
(g) Section 13.0 Termination
(h) Section 14.0 Entire Agreement
(i) Section 15.0 Applicable Law
(j) Section 18.0 Taxes
(k) Section 20.0 Notices
(l) Exhibit B Contingent Development Package License
20.0 NOTICES
20.1 Any notices required or permitted to be sent under this Agreement
shall be sent by registered mail, return receipt requested or by express mail,
telecopy, or hand delivery to the address of the party in this Section. Notices
sent by registered mail shall be deemed effective on the third business day
following mailing and if sent by express mail, telecopied, or hand delivered,
shall be deemed effective on receipt.
20.2 Any notice required to be delivered to SHL shall be sent to:
SHL Systemhouse Inc.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attn: Xxxxx Xxxxxxxx
c/o Xxxx Xxxxxxx
Telecopy: (000) 000-0000
20.3 Any notice required to be delivered to Thinking Tools shall
be sent to:
Thinking Tools, Inc.
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0-000
Xxxxxxxx, XX, XXX 00000
Attn: Xxxx Xxxxx
Telecopy: (000) 000-0000
20.4 Either party may change its address and/or recipient for
notices by notifying the other party in accordance with this Section 20.
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21.0 ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of
Thinking Tools, its successors and permitted assigns, and SHL, its successors
and assigns. Thinking Tools may not assign this Agreement or any of its rights
or obligations under this Agreement (including its rights under the
Schedule(s)), without the prior written consent of SHL.
22. LOSS OF VIABILITY
If Thinking Tools is dissolved and liquidated, becomes bankrupt,
insolvent, acknowledges in writing its inability to meet its debts as they fall
due or ceases to do business or files a petition for or is petitioned into
bankruptcy or if the assets of Thinking Tools are placed into the hands of a
receiver or liquidator, SHL shall have the right to:
(a) immediately terminate this Agreement;
(b) offer employment to Thinking Tools' employees or
former employees;
(c) activate the Contingent Development Package License
("Contingent License") attached to this Agreement as Exhibit B;
(d) forever enjoy Rights to the object code for the Product
for all interim deliverables produced up to the date of termination as well as
to all deliverable completed by or on behalf of SHL.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
last date entered below:
THINKING TOOLS, INC.
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xx. Xxxx Xxxxx
Title: President
Date: August 11, 1995
SHL SYSTEMHOUSE INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxx. Xxxxx Xxxxxxx
Title: Director, Integration Methods
Date: August 10, 1995
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xx. Xxxx Xxxxxx
Title: President, Transformational
Services
Date: August 14/95
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