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EXHIBIT 10.3
SOFTWARE MARKETING AGREEMENT - QDMC/PCTP
This Software Marketing Agreement ("the Agreement") is entered into on
this 15th day of September, 1997 (the "Effective Date") by and between Shell Oil
Products Company, a Delaware corporation, acting for itself and as agent for
Shell Oil Company, a Delaware corporation (collectively, "Shell"), and
Simulation Sciences, Inc., a Delaware corporation ("SIMSCI").
RECITALS
WHEREAS, SIMSCI and Shell are complementary in their specific areas of
competence; and
WHEREAS, SIMSCI is a software technology company delivering process
simulation and rigorous real time optimization solutions, serving in segments of
process industries; and
WHEREAS, Shell is in the business of, among other things, the
exploration and production, refining and marketing, and processing of
petrochemical products; and
WHEREAS, Shell has developed and is the owner of certain computer
software programs; and
WHEREAS, Shell desires to grant to SIMSCI, and SIMSCI desires to
receive from Shell, certain rights to market, sell and evaluate such computer
software programs, all on the terms and conditions set forth herein
WHEREAS, The parties have entered into that certain term sheet dated
May 29, 1997 concerning the subject matter hereof (the "Term Sheet"); and
WHEREAS, The parties now desire to supersede the Term Sheet by entering
into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto agree as follows:
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AGREEMENT
1. DEFINITIONS Capitalized terms in this Agreement have the following meanings:
1.1 "Affiliated Entities" shall mean (i) Affiliates as of May 29, 1997
and (ii) Subsidiaries.
1.2 "Affiliates" shall mean [*], a company of [*], [*], an [*] company,
and any company (other than Shell) in whatever country organized, in which
either or both of said companies shall, at the time in question and directly or
indirectly through one or more intermediaries, [*] or more of the stock having
the [*] or, any company (other than Shell), in whatever country organized, in
which Shell, at the time in question and directly or indirectly through one or
more intermediaries, owns or has the power to exercise control of [*] or more of
the stock with the [*].
1.3 "Derivative Work" is a work that is based on an underlying work and
that would be a copyright infringement if prepared without the authorization of
the copyright owner(s) of the underlying work as described under United States
copyright laws. A Derivative Work is subject to the ownership rights and
licenses of a party or of others in the underlying work.
1.4 "Documentation" shall mean all technical documentation and
procedural and instructional manuals regarding the use of the Programs including
on-line help capabilities.
1.5 "Error" shall mean a substantial nonconformity of the Programs with
the corresponding user documentation.
1.6 "Intellectual Property Rights" shall mean all current and future
worldwide patents and other patent rights, utility models, copyrights, trade
secrets, trademarks and other intellectual property rights, including without
limitation all applications and registrations with respect thereto.
1.7 "Marketing and Demonstration Materials" shall mean Product
brochures, manuals, technical specification sheets, demonstration presentations,
Product education and training materials, Product descriptions including those
used in electronic online services, and other marketing sales literature used by
Shell in connection with its marketing activities or provided by Shell to SIMSCI
for SIMSCI's use in connection with marketing activities.
1.8 "Products" shall mean the Programs in object code form and the
Documentation.
1.9 "Programs" shall mean solely the Shell computer software programs
listed in Exhibit A and all New Versions thereof.
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1.10 "Scoping Study" shall mean the research, development and planning
efforts undertaken by SIMSCI in connection with integrating the Products with
SIMSCI's products, including ROMEO, PRO/II and PROVISION, which may include the
preparation of a business plan for the commercialization of such new integrated
products.
1.11 "Source Code" shall mean software in human-readable form,
including all related programmers' comments, data files and structures, header
files, include files, make files, macros, object libraries, programming tools
not commercially available, technical specifications, flowcharts
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and logic diagrams, schematics, annotations and documentation reasonably
necessary or useful in enabling an independent third party programmer with
reasonable programming skills to create, operate, maintain, modify and improve
the software without the help of any other person. Data files containing Source
Code must be in standard ASCII format and be readable by a text editor.
1.12 A "Subsidiary" shall mean a corporation, company, or other entity,
in whatever country organized, in which, (i) as of the Purchase Date, (x) Shell
or an Affiliate directly or indirectly through one or more intermediaries has
the [*] or (y) Shell or an Affiliate [*] or (ii) after the Purchase Date, Shell
or an Affiliate directly or indirectly through one or more intermediaries owns
at least [*] of the outstanding shares or securities (representing the right to
vote for the election of directors or other managing authority). With respect to
a corporation, company or other entity whose outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority) become at least [*] owned or controlled by Shell after the Purchase
Date during the term of this Agreement, only such a corporation, company or
other entity that is not a competitor of SIMSCI shall be deemed to be a
Subsidiary. For purposes of this Section 1.12 a competitor of SIMSCI shall mean
an entity that is in the business of developing and marketing for commercial
purposes computer software in direct competition with the Programs. Further,
with respect to interests acquired after the Purchase Date, any such
corporation, company, or other entity shall be deemed to be a Subsidiary for
only so long as such ownership or [*] exists.
1.13 "New Versions" means Error corrections and enhancements in
features and functionality of the Programs whether designated by a change in the
number to the right or left of the decimal point.
2. LICENSE GRANTS
2.1 Marketing License. Shell hereby grants to SIMSCI during the term of
this Agreement an exclusive, worldwide, fully paid-up, royalty-free license
under all its Intellectual Property Rights in the Programs to perform, display,
adapt, reproduce, and distribute to end users, in any medium or distribution
technology whatsoever, whether known or unknown, and either alone or in
connection with other products, the Products and associated Marketing and
Demonstration Materials.
2.2 Source Code License. Shell hereby grants to SIMSCI during the term
of this Agreement an exclusive, fully paid-up, royalty-free license to use, have
used, make, have made, import, have imported, reproduce, have reproduced,
display, have displayed, perform, have performed, prepare and have prepared
Derivative Works of and distribute and have distributed the Programs in Source
Code form for the exclusive and sole purpose of [*]. SIMSCI shall own all right,
title and interest in and to any Derivative Works created in connection with the
Scoping Study, including without limitation all Intellectual Property rights
therein and related thereto.
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2.3 Limitation. The rights granted in Section 2.1 and 2.2 are subject
to the rights in existence as of the Effective Date of Affiliated Entities and
those companies listed on Exhibit B to which licenses were granted prior to June
30, 1997 ("Existing Licensees") to use, reproduce and display the Products
internally which shall continue in full force and effect until such rights
expire or are terminated. Further, Shell and any Affiliated Entities reserve the
right to use, copy, reproduce, display and prepare Derivative Works of the
Products solely for internal purposes. In no event during the term of this
Agreement shall Shell or any Affiliated Entity market, sell or distribute the
Products or the Programs to any third party, and Shell agrees that it will
direct to SIMSCI all inquiries from third parties interested in obtaining a
license to use the Products.
2.4 Certain License Provisions.
2.4.1 SIMSCI shall use commercially reasonable efforts to
include in agreements relating to use of the Programs, to the extent
customary in the industry and permitted by the law of the jurisdiction
in which the agreement is likely to be interpreted or enforced, terms
which:
(a) proscribe or limit decompilation, reverse
engineering, or other surreptitious accessing of the Programs
to reveal any trade secrets or other proprietary know-how
embodied therein to which the sublicensee is not granted
rights; and
(b) protect Shell's intellectual property rights in
the Programs to substantially the same degree as SIMSCI's
intellectual property rights are protected.
2.4.2 SIMSCI shall include agreements relating to use of the
Program, to the extent permitted by the law of the jurisdiction in
which the agreement is likely to be interpreted or enforced, terms
which:
(a) provide a disclaimer of the implied warranties of
merchantability and fitness for a particular purpose on behalf
of its licensors with respect to the Programs;
(b) provide an exclusion of SIMSCI's licensors'
liability for incidental, consequential and indirect damages;
and
(c) provide a limitation of SIMSCI's licensors'
maximum liability to the amount that a licensee has paid in
licensing fees or royalties.
Notwithstanding the foregoing, it is understood that such provisions may not be
enforceable in a particular jurisdiction or with respect to a particular
agreement, and that it may not be commercially feasible for SIMSCI to negotiate
successfully the inclusion of such provisions in a particular agreement.
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2.5 Notices. SIMSCI shall ensure that all copies of the Programs or any
Documentation which are distributed to any third party bear all of the legends,
marks, and notices as follows:
2.5.1 the words "CONTAINS LICENSED PROPRIETARY MATERIAL OF
SHELL OIL COMPANY" or a copyright notice,
2.5.2 a restricted-rights legend conforming to the Federal
Acquisition Regulations (FARs) then in effect that apply to software
developed entirely at private expense,
2.5.3 indicators of trademark claim or registration wherever
any Shell trademark appears.
3. DELIVERY AND PAYMENT
3.1 Delivery. Within thirty (30) days of the Effective Date, Shell
agrees to deliver, at Shell's expense, to SIMSCI the Products (on such media as
may be mutually agreed by the parties) and Source Code for the Programs. Shell
shall deliver at least two (2) electronic copies of the Documentation and at
least two (2) electronic copies of the Marketing and Demonstration Materials
should any such materials exist.
3.2 License Fee. In consideration of the rights and licenses granted in
Section 2 hereof, SIMSCI shall pay to Shell a one-time license fee of One
Million Dollars ($1,000,000) (the "License Fee"). SIMSCI shall not be obligated
to pay to Shell any other fee or royalty for the licenses and rights granted
herein. SIMSCI shall pay the License Fee in cash (by check or wire transfer)
upon the Effective Date. The amount of the License Fee allocable to the Program
and other intangibles and the amount allocable to the Documentation, Marketing
and Demonstration Materials and other tangible items is set forth on Attachment
2 to Exhibit C.
4. TECHNICAL ASSISTANCE AND SUPPORT
4.1 Technical Assistance During Scoping Study. Shell will assist SIMSCI
as reasonably requested with the Scoping Study. SIMSCI agrees to estimate the
amount of effort needed and Shell agrees to use its best efforts with respect to
each such request to cause appropriately skilled individuals employed by Shell
to be made available to SIMSCI to assist in its commercialization and
integration of the Programs. In particular, Shell agrees that [*] shall be
available for at least [*] of [*] working time until [*]. Any consulting
services shall be at SIMSCI's expense based on Shell's cost as charged by Shell
to any Affiliated Entity which is based upon the experience of the employee and
the employee's years of service and pay level; provided such cost shall not
exceed $[*] per hour for services of [*] and $[*] per hour for all other
employees. Shell shall provide SIMSCI with specific employee charge rates as
employees are requested by and assigned to assist SIMSCI. Shell further agrees
to use its best efforts to cause its Affiliates, including Shell Services
Company, to
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negotiate consulting agreements with SIMSCI to provide assistance in SIMSCI's
commercialization and integration of the Programs. Any invention, idea, design,
works of authorship or intellectual
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property created by any Shell employee that is (i) related to the Scoping Study,
SIMSCI products or the Programs, (ii) the result of work performed directly for
SIMSCI and (iii) created during the term of this Software Marketing Agreement
shall be the sole property of SIMSCI and Shell hereby assigns to SIMSCI all
Shell's right, title and interest thereto including all Intellectual Property
Rights therein. Shell warrants that each such individual shall be an employee of
Shell shall have signed an invention assignment agreement assigning to Shell all
rights in works created by such individual in the performance of his or her
services.
4.2 Maintenance and Support. Shell will deliver all New Versions of the
Programs to SIMSCI promptly upon completion of such items. SIMSCI shall be
responsible for first level support to all its customers of the Programs and
Shell shall provide back up technical support to SIMSCI by telephone and e-mail.
Shell will not respond to inquiries directly from SIMSCI customers other than as
may be called for pursuant to the Marketing Cooperation Letter entered into
between the parties. Shell shall use its best efforts to correct Errors reported
by SIMSCI and shall respond to requests for support from SIMSCI with a level of
effort commensurate with the severity of the Errors reported by SIMSCI.
4.3 Training. At SIMSCI's request, Shell shall provide training
sessions for technical training to SIMSCI sufficient to enable SIMSCI to
effectively market the Products. Such training shall be held at Shell's Process
Control training facility at its Westhollow Technology Center, provided that
SIMSCI shall bear the costs of travel and related expenses of SIMSCI trainees
and pay to Shell a fee not to exceed $[*] per day per student for such training
with a minimum of [*] and maximum of [*] students per training session.
4.4 No Claims. Neither party shall bring, directly or indirectly, any
action, claim or proceeding against the other party (the "Hiring Party") as a
result of the Hiring Party hiring the employees of the other party so long as
the Hiring Party did not actively solicit such employees.
5. OPTION TO ACQUIRE
5.1 Option. During the term of this Agreement, SIMSCI shall have an
exclusive option to acquire from Shell (the "Option") all of Shell's right,
title and interest in and to the Programs (including all object code and Source
Code and Intellectual Property Rights therein) and related assets on the terms
and conditions set forth in Exhibit C. To exercise the Option SIMSCI must
provide Shell with written notice of its election along with tender of payment
of the Purchase Price by no later than midnight on [*].
5.2 Due Diligence. Upon reasonable advance notice, SIMSCI and its
agents shall have full access, upon reasonable request and during normal
business hours to the officers, employees,
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records, financial statements, customer lists, supplier lists, contracts and
other business information of Shell related to the Assets (as defined in Exhibit
C) in order to conduct due diligence with respect to the Assets.
6. CONFIDENTIALITY
6.1 Definition. "Confidential Information" means information of a
proprietary or confidential nature disclosed by either party to the other party,
whether directly or indirectly, and whether in writing, orally or by inspection
of tangible objects, which is designated as "Confidential," "Proprietary" or
some similar designation. Information communicated orally shall be considered
Confidential Information if such information is designated as being confidential
or proprietary at the time of disclosure. Confidential Information shall not,
however, include any information which (i) was publicly known and made generally
available in the public domain prior to the time of disclosure by the disclosing
party; (ii) becomes publicly known and made generally available after disclosure
by the disclosing party to the receiving party through no action or inaction of
the receiving party; (iii) is already in the possession of the receiving party
at the time of disclosure by the disclosing party as shown by the receiving
party's files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such
third party's obligations of confidentiality; (v) is independently developed by
the receiving party without use of or reference to the disclosing party's
Confidential Information, as shown by documents and other competent evidence in
the receiving party's possession; or (vi) is required by law to be disclosed by
the receiving party, including filings with government agencies such as the
Securities and Exchange Commission, provided that the receiving party gives the
disclosing party prompt written notice of such requirement prior to such
disclosure and assistance in obtaining an order protecting the information from
public disclosure.
6.2 Non-use; Non-disclosure; Maintenance of Confidentiality. Each party
agrees not to use the Confidential Information disclosed to it by the other
party for any purpose except to carry out its rights and obligations under this
Agreement. Neither party will disclose the Confidential Information of the other
to third parties or to its employees, except employees who are required to have
the information in order to carry out such party's obligations under this
Agreement. Each party agrees that it shall take reasonable measures to protect
the secrecy of and to avoid the disclosure and unauthorized use of the
Confidential Information of the other party. Without limiting the foregoing,
each party shall take at least those measures that it takes to protect its own
confidential information, and shall ensure that its employees who have access to
Confidential Information of the other party have signed a non-use and
non-disclosure agreement in content at least as protective of Confidential
Information as the provisions hereof prior to any disclosure of Confidential
Information to such employees. Each party may disclose Confidential Information
to its subsidiaries and other affiliates, except with respect to Shell, no
disclosures may be made to affiliates which are competitors of SIMSCI, provided
that any subsidiary or other affiliate prior to disclosure agrees in writing to
be bound by the provisions of these sections.
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7. REPRESENTATIONS AND WARRANTIES
7.1 Warranties. Shell represents and warrants to SIMSCI that (i) Shell
owns all right, title and interest in and to the Programs and Documentation and
all Intellectual Property Rights therein and related thereto; (ii) it has the
full right, power, and privilege to grant the rights herein; (iii) there are no
outstanding agreements, assignments or encumbrances inconsistent with the
provisions of this Agreement; (iv) except as set forth in Exhibit B there is no,
and Shell shall not grant, any right, license or interest inconsistent with the
rights granted to SIMSCI herein and Shell has not granted any right or license
to the Programs to any third party other than Affiliated Entities; (v) to the
best of Shell's knowledge there are no threatened or pending actions, suits,
investigations, claims or proceedings in any way related to the Programs and
Documentation and/or Intellectual Property Rights relating thereto; (vi) to the
best of Shell's knowledge the exercise of SIMSCI's rights hereunder does not
infringe the Intellectual Property Rights of any third party; (vii) the Programs
conform to their specifications and any representations made in writing by Shell
to SIMSCI, and (viii) Exhibit B sets forth the identity of all third parties to
which Shell has provided copies of the Programs and the scope of rights granted
to each such third party. Shell also represents and warrants that if the
Programs, when used in accordance with their associated documentation, are not
capable of correctly processing, providing and/or receiving date data within and
between the twentieth and twenty-first centuries, provided that all products
(for example, hardware, software and firmware) used with the Programs properly
exchange accurate date data with the Programs, Shell will correct such problem
at no charge to SIMSCI.
7.2 Disclaimer. THE WARRANTIES SET FORTH IN SECTION 7 ARE IN LIEU OF
ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, AND SHELL SPECIFICALLY
DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
7.3 Separate Representations. Each of the warranties set forth in this
Section 7 shall be separate and independent and, except as expressly provided to
the contrary, shall not be limited by reference to or inference from any other
warranty in this Agreement or any term of this Agreement.
8. INDEMNITY
8.1 Indemnification for breach of Warranties. Shell agrees to indemnify
and hold harmless SIMSCI, its affiliates, customers and its and their end users,
from any third party claim, suit or proceeding ("Claim") against them based on
Shell's breach of the warranties contained in Section 7.1 and to pay any
damages, settlement amounts and costs (including reasonable attorneys' fees and
court costs) relating to such a Claim. Shell will only pay settlement amounts
authorized by Shell and all costs, damages and attorneys' fees that a court
finally awards. SIMSCI shall promptly provide to Shell notice of any Claim, and
cooperate with and allow Shell to control the defense of any Claim and any
settlement negotiations. SIMSCI may participate in the proceedings at its option
and expense.
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8.2 Intellectual Property Indemnification. Shell agrees to indemnify
and hold harmless SIMSCI, its affiliates, customers and its and their end users,
from any Claim against them based on an allegation that the Programs infringe
any patent, copyright, trade secret or other intellectual property right of any
third party, and to pay any damages, settlement amounts and costs (including
reasonable attorneys' fees and court costs) relating to such a Claim. In
addition to any remedies specified in this Agreement, SIMSCI may pursue any
other remedy it may have in law or in equity. Shell will pay any settlement
amounts authorized by Shell and all costs, damages and attorneys' fees that a
court finally awards. SIMSCI shall promptly provide to Shell notice of any
Claim, and cooperate with and allow Shell to control the defense of any Claim
and any settlement negotiations. SIMSCI may participate in the proceedings at
its option and expense.
8.3 Procedure. SIMSCI shall notify Shell in writing of any Claim for
which it seeks indemnification under Section 8.1 above; and give Shell the
exclusive authority to defend or settle such Claim (it being understood that
SIMSCI may participate with counsel of its choosing at SIMSCI's own expense);
and, at Shell's expense (except for the value of the time of SIMSCI's
employees), give Shell reasonable information and assistance to settle and/or
defend any such Claim. Shell shall not have the right to settle any Claim in a
manner that is prejudicial to the interests of SIMSCI without SIMSCI's prior
written consent.
9. LIMITATION OF LIABILITY
EXCEPT FOR LIABILITY ARISING UNDER SECTION 8, IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES, LOSSES, COSTS OR EXPENSES OF ANY KIND, HOWEVER CAUSED AND
WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), IN CONNECTION WITH THE
LICENSES GRANTED HEREUNDER OR IN THE ASSIGNMENT AGREEMENT AND EXERCISE OF RIGHTS
THEREUNDER. THE FOREGOING LIMITATIONS SET FORTH IN THIS SECTION 9 SHALL APPLY
REGARDLESS OF WHETHER A PARTY KNOWS OR HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, LOSSES, COSTS, OR EXPENSES. THE PARTIES AGREE THIS SECTION 9
REPRESENTS A REASONABLE ALLOCATION OF RISK.
10. TAXES
Each party is responsible for complying with the collection, payment,
and reporting of all taxes imposed by any governmental authority applicable to
its activities in connection with the sale, lease, delivery or license of the
Products under this Agreement. Neither party is responsible for taxes that may
be imposed on the other party. Situations may arise where governmental
authorities require SIMSCI to withhold from amounts payable to Shell. In such
cases, SIMSCI may withhold the amount of taxes due from payments to be made to
Shell under this Agreement and remit the taxes withheld to the governmental
authority.
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11. TERM AND TERMINATION
11.1 Term. This Agreement shall commence upon the Effective Date
and shall remain in effect until the earlier of [*] or the date of exercise
by SIMSCI of the Option.
11.2. Effect of Termination; Survival. In the event that SIMSCI has
not elected to exercise the Option, upon expiration of the Agreement, SIMSCI
may retain a reasonable number of copies of the Programs (in both object and
Source Code format) and the Documentation sufficient to provide support to its
customers and all rights and licenses granted by Shell to SIMSCI shall cease,
except SIMSCI shall continue to have all necessary rights and licenses to
perform the following activities: (a) SIMSCI may continue to exercise the
rights and licenses granted under this Agreement for up to six months after
termination to fill customer orders SIMSCI receives before the expiration date,
(b) for as long as necessary to provide maintenance and subsidiaries for
internal use, other than as provided in this Section 11.2, shall terminate and
SIMSCI shall immediately refrain from selling, releasing or developing and
products embodying the Programs or parts thereof. All rights and licenses to
use the underlying works of Derivative Works developed by SIMSCI during the
Scoping Study shall terminate. All rights and licenses granted to SIMSCI's
customers and to SIMSCI for internal use as provided in this Section 11.2 shall
survive and continue and shall in no way be affected by such termination of
this Agreement. Sections 1, 4.4, 6, 7, 8, 9, 11 and 12 shall survive any
expiration of this Agreement.
12. GENERAL
12.1 Governing Law. The rights and obligations of the parties under
this Agreement shall not be governed by the 1980 U.N. Convention on Contracts
for the International Sale of Goods; rather such rights and obligations shall
be governed by and construed under the laws of Texas.
12.2 Arbitration. Any controversy or claim ("claim") whether based
on contract, tort, statute or other legal or equitable theory (including but
not limited to any claim of fraud, misrepresentation or fraudulent inducement or
any question of validity or effect of this Agreement including this section)
arising out of or related to this Agreement (including any amendments or
extensions), or the breach or termination thereof shall be settled by
arbitration in accordance with then current rules and procedures of the
Commercial Rules of Arbitration of the American Arbitration Association by one
(1) arbitrator appointed in accordance with such rules. The arbitration and any
award shall be in the English language. The arbitration shall be governed by
the United States Arbitration Act, 9 U.S.C. Sections 1-16 to the exclusion of
any provision of state law inconsistent therewith or which would produce a
different result, and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction. The arbitration shall be held in
Houston, Texas. The arbitrator shall determine the claims of the parties and
render a final award in accordance with the substantive law of the State of
Texas, excluding the conflicts
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provisions of such law. The arbitrator shall set forth the reasons for the award
in writing. Any claim by either party shall be time-barred if the asserting
party commences arbitration with respect to such claim later than two (2) years
after the cause of action accrues. All statutes of limitations and defenses
based upon passage of time applicable to any claim of a defending party
(including any counterclaim or setoff) shall be tolled while the arbitration is
pending. The obligation to arbitrate any claim shall extend to the successors,
assigns and third party beneficiaries of the parties. Any discovery shall occur
by agreement of the parties, or by order of the arbitrator upon a finding of
good cause. Each party shall bear its own costs, expenses and attorney's fees;
provided that if court proceedings to stay litigation or compel arbitration are
necessary, the party who unsuccessfully opposes such proceedings shall pay all
reasonable associated costs, expenses, and attorney's fees in connection with
such court proceeding. In order to prevent irreparable harm, the arbitrator
shall have the power to grant temporary or permanent injunctive or other
equitable relief. Prior to the appointment of an arbitrator, a party may,
notwithstanding any other provision of this Agreement, seek temporary injunctive
relief from any court of competent jurisdiction; provided that the party seeking
such relief shall (if arbitrator has not already commenced) simultaneously
commence arbitration. Such court ordered relief shall not continue more than ten
(10) days after the appointment of the arbitrator (or in any event for longer
than sixty (60) days). If any part of this arbitration provision is held to be
unenforceable, it shall be severed and shall not affect either the duty to
arbitrate or any part of this provision.
12.3 Notice. All notices required or permitted under this Agreement
will be in writing and will be deemed given when: (i) delivered personally; (ii)
sent by confirmed telex or facsimile; (iii) five (5) days after having been sent
by registered or certified mail, return receipt requested, postage prepaid; or
(iv) one (1) day after deposit with a commercial overnight carrier specifying
next day delivery, with written verification of receipt. All communications will
be sent to the respective addresses set forth below or to such other address as
may be designated by a party by giving written notice to the other party
pursuant to this Section 12.3.
(a) if to SIMSCI, to:
Simulation Sciences Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
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Telephone No. (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to Shell, to:
Shell Oil Products Company
Westhollow Technology Center
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Telephone No: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Shell Oil Company
Intellectual Property-Legal
X.X. Xxx 0000, Xxxxxxx, XX 00000-0000
Attention: Xxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
12.4 Independent Contractors. Nothing contained or done pursuant to
this Agreement shall be deemed or construed to create any partnership, joint
venture, or agency relationship between the parties hereto. Furthermore, the
parties agree that this Agreement does not constitute a partnership for tax
purposes. In the event that it is so construed, however, the parties agree to be
excluded from the provisions of Subchapter K of the United States Internal
Revenue Code of 1986, as amended. In no event shall such relationship constitute
a partnership for U.S. federal income tax purposes.
12.5 Headings. The section headings are for convenience of reference
only and shall in no way affect the interpretation of this Agreement.
12.6 Force Majeure. Neither party will be liable for any failure or
delay in its performance under this Agreement due to causes which are beyond its
reasonable control.
12.7 No Waiver; Modifications. No amendment or modification of this
Agreement, nor any waiver of any rights, will be effective unless assented to in
writing by the party to be charged, and the waiver of any breach or default will
not constitute a waiver of any other right hereunder or any subsequent breach or
default.
12.8 Assignment. Neither party may assign this Agreement without the
prior written consent of the other party, except that either party may assign
this Agreement to an entity into which
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it has merged or which has otherwise succeeded to all or substantially all of
its business and assets to which this Agreement pertains by merger,
reorganization or otherwise, and which has assumed in writing or by operation of
law its obligations under this Agreement. Any attempted assignment in violation
of this Section 12.8 shall be null and void and shall entitle the non-defaulting
party to terminate this Agreement. Subject to the foregoing, the rights and
liabilities of the parties hereto will bind and inure to the benefit of the
parties and their respective permitted successors, executors and administrators,
as the case may be.
12.9 Severability. In the event that any provision of this Agreement is
determined to be invalid, illegal or unenforceable by a court of competent
jurisdiction, the remainder of the Agreement shall remain in full force and
effect without said provision, and the parties shall negotiate, in good faith,
an enforceable substitute provision that most nearly effects the parties' intent
in entering into this Agreement.
12.10 Entire Agreement. This Agreement [including the Confidentiality
Agreement of February 4, 1996] is the complete and entire agreement between the
parties regarding the subject matter hereof, and shall supersede and replace any
and all prior agreements, communications, and understandings (both written and
oral), including without limitation the Term Sheet dated May 29, 1997 between
the parties, regarding such subject matter. Neither party has relied on any
promises, inducements or representations by the other, except those expressly
stated in this Agreement.
12.11 No Restriction. This Agreement is not to be construed as a
commitment or obligation, express or implied, on the part of SIMSCI that SIMSCI
will market, sell, purchase, license or sublicense any Products under this
Agreement. SIMSCI agrees that it will not independently develop programs that
may be competitive with the Products, however SIMSCI shall not be restricted
from acquiring, and thereafter developing, programs that may be competitive with
the Products. In the event of such acquisition SIMSCI shall notify Shell. SIMSCI
shall have full freedom and flexibility and sole and exclusive control over all
aspects of its business, including, without limitations (i) sales policies, (ii)
credit practices, (iii) hiring and supervision of personnel, (iv) marketing,
advertising, and promotion, (v) contracting, (vi) billing and collection; (vii)
pricing; and (viii) establishing the terms and conditions under which the
Products and Services are offered to customers. Nothing in this Agreement shall
be construed to restrict SIMSCI from conducting any other business relating to
any third party's computer software products.
SHELL OIL PRODUCTS COMPANY SIMULATION SCIENCES, INC.
FOR ITSELF AND AS AGENT FOR
SHELL OIL COMPANY
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- ---------------------------------
Title: Director of Technology Title: President and
------------------------------- Chief Executive Officer
---------------------------------
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Date: 9/11/97 Date: 9/11/97
------------------------------- ---------------------------------
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EXHIBIT A
PROGRAMS AND DOCUMENTATION
1. Shell Owned Software:
[*]
[*] Confidential Treatment Requested
18
EXHIBIT B
EXISTING LICENSEES
1. [*]
2. [*]
19
EXHIBIT C
ASSIGNMENT AGREEMENT
The following terms and conditions shall become effective upon the date
on which SIMSCI elects to exercise the Option (the "Purchase Date") pursuant to
Section 5 of the Software Marketing Agreement dated September 15, 1997.
Capitalized terms used herein but not otherwise defined shall have the meaning
defined in the Software Marketing Agreement.
1. ASSIGNMENT OF ASSETS
1.1 Assignment. Shell agrees to and hereby does irrevocably sell,
assign and transfer to SIMSCI, without limitation or reservation, all worldwide
right, title and interest in and to the following (collectively, the "Assets"):
(a) all rights and ownership of the Programs, including but
not limited to all technical, design, development, installation, operation and
maintenance information concerning the Programs, including Source Code, source
documentation, source listings and annotations, engineering notebooks (if any
such materials exist), example data and example results, as well as all
reference manuals and support materials normally distributed to end-users and
potential end-users in connection with the distribution of the Programs;
(b) all other physical and intangible assets, including
without limitation, to the extent any such materials exist, customer lists,
potential customer lists, proposals, operating manuals, accounting records,
business strategy plans, projects under development, lead referral methods,
co-selling arrangements, distribution methods and contacts, management plans and
business opportunities relating to the Programs;
(c) all Intellectual Property Rights in the foregoing items in
Sections (a) and (b) including without limitation U.S. Patent No. 4,616,308
(Morshedi et al.), any other patent rights, all copyrights, trade secrets, and
any registrations, applications or filings relating thereto, processes,
know-how, and any and all similar rights (collectively, the "Intellectual
Property"). Notwithstanding the foregoing, any references to Shell, Shell Oil
Company, Shell Oil Products Company, or any other Shell company, or any
appearance of the Shell Pecten logo which are found in the foregoing items in
Sections (a) and (b) shall not transfer rights in those trademarks, service
marks and trade named; and
(d) all of Shell's claims against any parties relating to any
of the foregoing in (a) through (c) and all of Shell's rights under contracts
pertaining to the foregoing, including without limitation any license,
development, consulting and maintenance agreements.
[*] Confidential Treatment Requested
20
1.2 Assumption of Obligations. SIMSCI shall not assume any liabilities
with respect to the Assets unless otherwise agreed in writing in which case that
parties shall make an appropriate adjustment to the Purchase Price.
1.3 Further Assurances. Shell shall, and shall cause its Affiliated
Entities, employees, agents and consultants to, without charge and promptly upon
request by SIMSCI execute any and all document(s) reasonably requested by SIMSCI
in order to (i) effect and perfect the assignment in Section 1.1, (ii) obtain,
enforce or defend SIMSCI's Intellectual Property Rights in the Assets, and (iii)
otherwise enable SIMSCI to obtain the full benefit of such assignment.
1.4 Delivery. Within thirty (30) days of the Purchase Date Shell shall
deliver to SIMSCI all Assets not previously delivered to SIMSCI. In addition,
Shell shall deliver promptly upon release to any Affiliated Entity copies of all
New Versions of the Programs prepared by Shell or by the Affiliated Entities
which are within Shell's possession or control. Upon SIMSCI's request during the
term of this Agreement, Shell shall also reduce to written summary and deliver
to SIMSCI all such other information of which Shell is aware that SIMSCI may
reasonably require to modify, debug, upgrade, support or otherwise correct
Errors and/or operate the Programs.
2. PURCHASE PRICE AND PAYMENT
2.1 Purchase Price. In consideration for the foregoing assignment of
the Assets, SIMSCI shall pay to Shell [*], (the "Purchase Price"). Attachment 2
sets forth the amount of the Purchase Price allocable to the Programs and
intangible assets and the amount allocable to the Documentation, physical assets
and other tangible items. Buyer shall pay and promptly discharge when due all
sales and related taxes imposed or levied by reason of the sale of the Assets to
Buyer.
2.2 Payment. SIMSCI will pay the Purchase Price in a combination of
cash (by check or wire transfer) and stock. Cash in the amount of [*] will be
delivered by SIMSCI to Shell on the Purchase Date. Shares of SIMSCI Common Stock
valued at [*] (calculated based on the average closing price for the ten (10)
trading days seven days prior to the Purchase Date) will be issued to Shell,
placed in an escrow account with a mutually agreed upon third party escrow agent
(the "Escrow Agent") and, subject to the terms of the applicable escrow
agreement by and among Shell, SIMSCI and the Escrow Agent, distributed to Shell
by the escrow agent in accordance with the applicable escrow agreement and the
following schedule: (i) 23% of the total Shares will be delivered on the first
annual anniversary of the Purchase Date, (ii) 19% of the total Shares will be
delivered on the second annual anniversary of the Purchase Date (iii) 29% of the
total Shares will be delivered on the third annual anniversary of the Purchase
Date, and (iv) 29% of the total Shares distributed will be delivered on the
fourth annual anniversary of the Purchase Date. Shares remaining in the escrow
account are referred to as the "Escrowed Shares". The shares released from
escrow shall have the registration rights set forth in Exhibit D.
2.3 Early Release of Escrow. If there is a Market Price Decline of (i)
more than fifty percent (50%) and less than seventy percent (70%), then fifty
percent (50%) of the remaining
[*] Confidential Treatment Requested
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Escrowed Shares shall be released promptly to Shell upon Shell's written
request, and (ii) seventy percent (70%) or more, then eighty percent (80%) of
the remaining Escrowed Shares shall be released promptly to Shell upon Shell's
written request. "Market Price Decline" shall mean that the
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value per share of SIMSCI's common stock in the Nasdaq National Market, adjusted
for stock splits, dividends and the like, as measured by the average closing
price for any ten (10) consecutive trading days, is lower than the closing price
of the SIMSCI's stock on the Purchase Date.
3. REPRESENTATIONS AND WARRANTIES OF SHELL. Shell represents and warrants
to SIMSCI as follows:
3.1 Intellectual Property.
(a) Attachment 1 sets forth a complete and accurate schedule
of all Intellectual Property capable of being identified, identifying
specifically (i) all patents and patent applications owned by Seller, including
the country of filing, filing number, date of issue, expiration date and title;
(ii) all registered trademarks and service marks and all trademark and service
xxxx applications, including country of filing, filing number, date of issue and
expiration date; (iii) all common law trademarks, service marks and trade names;
(iv) all registered and unregistered copyrights; (v) all license, option and
other agreements pursuant to which Shell acquired rights to any Intellectual
Property and all license, option and other agreements, oral or written, pursuant
to which Shell is obligated to pay royalties or other consideration to third
parties with respect to any Intellectual Property; and (vi) all license, option
and other agreements, oral or written, pursuant to which Shell has granted any
third party any right to any Intellectual Property. Complete and accurate copies
of all written agreements referred to in the foregoing clauses (v) and (vi) have
been provided to SIMSCI.
(b) Except as set forth on Attachment 1, (i) Shell has all
right, title and interest in and to the Intellectual Property; (ii) Shell has
neither incorporated into nor relied on any software, technology or proprietary
information of any third party in the creation of the Programs; (iii) Shell is
not making use of any invention, software, technology or proprietary information
in connection with the Programs in which any present or past employee of Shell
or any other person has or has claimed an interest, and Shell has no knowledge
of facts that could reasonably be expected to give rise to such a claim; (iv)
Shell is in full compliance with all agreements pursuant to which it acquired
any Intellectual Property; (vii) Shell has no knowledge that any third party is
infringing upon any of the Intellectual Property.
3.2 Agreements, Contracts and Commitments. Set forth on Attachment 1 is
a list of all agreements, contracts and commitments (written or oral) relating
to the Assets to which Shell is a party or by which it is bound in addition to
those identified pursuant to Section 3.1 (a). Shell has not breached, violated
or defaulted under, or received notice that it has breached, violated or
defaulted under, any of the terms or conditions of any contract. Each contract
is in full force and effect and, to the knowledge of Shell, the other party to
such contract has not breached, violated or defaulted under any of the terms or
conditions of any contract. Shell has obtained all necessary consents, waivers
and approvals of parties to any contract as are required to assign all rights
and benefits thereunder to SIMSCI.
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3.3 Investment Representations.
(a) Investment Representation. Shell is acquiring the Shares
for its own account, for investment and not with a view to the sale of
distribution thereof, nor with any present intention of distributing or selling
the same.
(b) Restricted Securities. Shell understands that the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act, and that the Shares must be
held indefinitely unless a subsequent disposition thereof is registered under
the Securities Act or is exempt from registration. Shell further understand that
the exemption from registration afforded by Rule 144 (the provisions of which
are known to Shell) issued under the Securities Act depends upon the
satisfaction of various conditions and that, if applicable, Rule 144 may only
afford the basis for sales in limited amounts.
(c) Accredited Investor. Shell represents and warrants to
SIMSCI that it is an "accredited investor" as defined in Regulation D
promulgated under the Securities Act.
(d) Access to Financial and Other Information. Shell has been
furnished with, or has had access to, all information concerning SIMSCI,
including the opportunity to raise questions of officers of SIMSCI, as Shell has
deemed necessary or appropriate in order to enable it to make an informed
investment decision with respect to the purchase of the Shares. Shell further
represents and warrants to SIMSCI that (a) it has such knowledge and experience
in financial matters that it is capable of evaluating the merits and risks of
its investment in the Shares, and (b) its financial condition is such that it is
able to bear all economic risks of the investment in the Shares, including a
complete loss of its investment therein and the risk of holding the Shares for
an indefinite period of time.
3.4 Representations Complete. There is no fact, circumstance or
condition of any kind or nature whatsoever known to Shell which reasonably could
be expected to have a material adverse effect on the Assets which has not been
set forth in this Agreement.
3.5 Notification of Certain Matters. Shell shall give prompt notice to
SIMSCI of the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which is likely to cause any representation or warranty of
Shell contained in this Agreement to be untrue or inaccurate.
4. REPRESENTATIONS AND WARRANTIES OF SIMSCI
4.1 Representations and Warranties of SIMSCI. SIMSCI represents and
warrants to Shell as follows:
(a) Organization, Standing and Corporate Power. SIMSCI is a
corporation, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and
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has the requisite power and authority to carry on its business as now being
conducted. SIMSCI and each Significant Subsidiary (as defined below) of SIMSCI
is duly qualified to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not have a material adverse effect on the business,
operating results or financial condition of SIMSCI and its consolidated
subsidiaries, taken as a whole (a "Material Adverse Effect on SIMSCI"). SIMSCI
has made available correct copies of its Amended and Restated Certificate of
Incorporation and Bylaws, in each case as amended to the date of this Agreement.
For purposes of this Agreement, a "Significant Subsidiary" means any subsidiary
that constitutes a significant subsidiary of SIMSCI within the meaning of Rule
1-02 of Regulation S-X of the Securities and Exchange Commission (the "SEC").
(b) Capital Structure. The authorized capital stock of SIMSCI
consists of 30,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock, of which 100,000 shares are designated as Series A Participating
Preferred Stock. On August 29, 1997, 10,929,170 shares of Common Stock were
outstanding, all of which were validly issued, fully paid and nonassessable. All
shares of Common Stock to be issued to Shell as provided in Section 2.2 (the
"Shell Shares"), upon issuance on the terms and conditions specified in this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(c) Authority; Noncontravention. SIMSCI has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The Board of Directors of SIMSCI
has duly approved this Agreement and the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by SIMSCI and the
consummation by SIMSCI of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of SIMSCI.
This Agreement, when executed and delivered, will constitute a valid and binding
obligation of SIMSCI, enforceable against SIMSCI in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained
herein may be limited by applicable laws. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without notice
of lapse of time, or both) under, or give rise to a right of consent,
termination, purchase, cancellation or acceleration of any obligation or to loss
of any property, rights or benefits under, or result in the imposition of any
additional obligation under, or result in the creation of any lien upon any of
the properties or assets of SIMSCI or any Significant Subsidiary under, (i) the
Certificate of Incorporation or Bylaws of SIMSCI or the comparable
organizational documents of any Significant Subsidiary, (ii) any contract,
license, loan or credit agreement, note, lease or other agreement filed or
incorporated by reference in any Company SEC Document (as defined below) as a
"Material Contract" under Item 601 of Regulation S-K or (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to SIMSCI
or any
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Significant Subsidiary or their respective properties or assets, other than any
such conflicts, violations, defaults, rights, losses, obligations or liens that
individually or in the aggregate would not have a Material Adverse Effect on
SIMSCI or prevent or materially delay the consummation of the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with, any United States Federal, state or
local government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign, is required by or with
respect to SIMSCI or any Significant Subsidiary in connection with the execution
and delivery of this Agreement by SIMSCI or the consummation by SIMSCI of the
transactions contemplated by this Agreement, except for (i) the filing of a Form
8-K with the SEC after the Closing, (ii) the listing of the SIMSCI Common Stock
to be issued upon Closing on the Nasdaq National Market and (iii) such other
consents, approvals, orders, authorizations, registrations, declarations or
filings (x) as may be required under "blue sky" laws of various states or (y)
the failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on SIMSCI or prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
(d) SEC Documents; Financial Statements.
(i) Since January 1, 1997, SIMSCI has filed all
reports, registration statements, proxy statements and other documents required
to be filed with the SEC under the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (the "Company SEC Documents"). As of their respective filing
dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Company SEC Documents, and, to the knowledge of SIMSCI, none of Company SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except to the extent that such statements have been
corrected, modified or superseded by a later filed Company SEC Document.
(ii) The consolidated financial statements of SIMSCI
included in Company SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with United States
generally accepted accounting principles consistently applied (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and presented fairly in all material respects
the consolidated financial position of SIMSCI as of the dates thereof and the
consolidated results of its operations and cash flows for the respective periods
indicated therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(e) Absence of Certain Changes or Events. Except as disclosed
in Company SEC Documents filed and publicly available prior to the date of this
Agreement, from January 1, 1997 to
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the date of this Agreement, SIMSCI has conducted its business only in the
ordinary course and there has not been any Material Adverse Effect on SIMSCI.
(f) Litigation. Except as disclosed in Company SEC Documents,
there is no suit, action or proceeding pending or, to the knowledge of SIMSCI,
threatened against SIMSCI or any of its Significant Subsidiaries that,
individually or in the aggregate, (i) would reasonably be expected to have a
Material Adverse Effect on SIMSCI, or (ii) would reasonably be expected to
prevent or materially delay the consummation of the transactions contemplated by
this Agreement.
5. LICENSE TO SHELL
5.1 License. Subject to the terms and conditions of this Assignment
Agreement, SIMSCI hereby grants to Shell and the Affiliated Entities (but only
for so long as they remain Affiliated Entities) a non-exclusive,
non-transferable, worldwide, perpetual, fully paid-up, royalty-free license,
without right of sublicense, to reproduce, have reproduced, modify, have
modified, perform and display the Programs and Documentation in object code and
Source code form, but only for Shell's and the Affiliated Entities internal use
and not for external distribution. Shell shall not use the Programs and
Documentation except as expressly permitted herein. Shell shall own all right,
title and interest in and to any Derivative Works created solely by Shell,
including without limitation, all Intellectual Property Rights therein subject
to SIMSCI's in the underlying works.
5.2 Restrictions. All rights not expressly granted herein are reserved
by SIMSCI, and except for the licenses granted pursuant to Section 5.1 above,
SIMSCI retains all right, title and interest in and to the Assets, including all
Intellectual Property Rights therein. Nothing contained in this Agreement shall
be construed as conferring upon Shell or the Affiliated Entities, by
implication, estoppel or otherwise, any license or other right except the
license and rights expressly granted herein. Except as otherwise expressly
provided herein, the licenses granted herein are granted solely to Shell for its
use and the use of the Affiliated Entities, and not, by implication or
otherwise, to any other party. In the event Shell or an Affiliated Entity either
acquires or divests itself of ownership interest in an entity or facility that
is using or has a potential need to use the Programs (in any case, a "Transition
Transaction"), then, (i) for a period of twelve (12) months from the effect date
of the Transition Transaction (the "Transitional Period"), use of the Programs
by such entity or facility shall be considered use for Shell's internal purposes
under Section 5.1; and (ii) in the event that a Transition Transaction is an
acquisition, during the Transition Period the parties hereto will discuss
whether a contractual relationship other than this Agreement shall govern the
continued use of the Programs by such newly acquired entity or facility. As used
in this Section 5.2, "acquisition" shall mean any business transaction wherein
Shell or an Affiliated Entity obtain rights of ownership in an entity or
facility through any business venture, including but not limited to, any
purchase, joint venture or partnership.
5.3 Product Warranty. SIMSCI warrants that any version of the Program
delivered to Shell by SIMSCI pursuant to the license granted in Section 5.1
shall substantially conform to its applicable specifications for a period of 90
days from the date of delivery.
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6. NON-COMPETE
For a period of three years from the Purchase Date of this assignment,
Shell agrees not to market, sell or distribute any products similar to or
competitive with the Programs. It is understood that this restriction prohibits
Shell from distributing any version of the Program or other Derivative Works
thereof completed as of expiration of the three-year period and permits
distribution only of those versions or other Derivative Works for which
development is completed after the expiration of such period.
7. MAINTENANCE AND DERIVATIVE WORKS
7.1 Maintenance. SIMSCI will make maintenance services available to
Shell and any Affiliated Entities on the same terms and conditions as it offers
to other customers of the Programs.
7.2 Derivative Works. The parties anticipate cooperating in the future
with respect to the creation of Derivative Works of the Programs. If one party
wishes to engage in a development project with the other party with respect to
creating Derivative Works of the Programs, it may submit a proposal to the other
party. Before beginning any work on such project the parties will complete and
execute a statement of work setting forth mutually agreed upon specifications,
development milestones, development costs, each party's obligations with respect
to completion of such development project and each party's respective rights to
the developed work. Except as specifically set forth otherwise in such statement
of work, SIMSCI shall own all such Derivative Works and Shell shall have license
rights to such works as set forth in Section 4 of this Assignment Agreement.
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ATTACHMENT 1
Third Party Software:
[*]
[*] Confidential Treatment Requested
29
EXHIBIT D
REGISTRATION RIGHTS
1. REGISTRATION RIGHTS WITH RESPECT TO SHARES
1.1 Definitions.
1.1.1 The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act of 1933, and the declaration or
ordering of the effectiveness of such registration statement.
1.1.2 The term "Registrable Shares" means and includes the
Shares issued to Shell under this Agreement; provided, however, that Registrable
Securities shall not include any (a) Escrowed Shares, (b) Shares which have
previously been registered, or (c) Shares which would otherwise be Registrable
Shares if Shell would then be permitted to sell all of the Shares (including the
Escrowed Shares) within any three (3) month period pursuant to Rule 144 under
the Securities Act.
1.1.3 The term "Ownership Percentage" means and includes the
number of Registrable Shares held by Shell divided by the total number of all
other securities entitled to registration pursuant to agreements with SIMSCI
approved by the Board of Directors and held by others participating in the
underwriting.
1.1.4 The term "Securities Act" means the Securities Act of
1933, as amended.
1.1.5 The term "Form S-3" means such form under the Securities
Act as is in effect on the date hereof or any successor registration form under
the Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by SIMSCI with the SEC.
1.1.6 The term "SEC" or "Commission" means the U.S. Securities
and Exchange Commission.
1.1.7 The term "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
1.2 "Piggyback" Registration. If at anytime SIMSCI shall determine to
register under the Securities Act (including pursuant to a demand of any
stockholder of SIMSCI exercising registration rights) any of its Common Stock
(except shares to be issued solely in connection with any acquisition of any
entity or business, shares issuable solely upon exercise of stock options, or
shares
30
issuable solely pursuant to employee benefit plans), it shall send to Shell
written notice of such determination and, if within ten (10) days after receipt
of such notice, Shell shall so request in writing, SIMSCI shall use its best
efforts to include in such registration statement all or any part of the
Registrable Shares that Shell requests to be registered, except that if, in
connection with any offering involving an underwriting of Common Stock to be
issued by SIMSCI, the managing underwriter shall impose a limitation on the
number of shares of Common Stock included in any such registration statement
because, in its judgment, such limitation is necessary to effect an orderly
public distribution, and such limitation is imposed as provided herein among the
holders of such Common Stock having an incidental ("piggy back") right to
include such Common Stock in the registration statement as provided below, then,
to the extent any shares requested to be included in the registration remain
available for registration after the underwriter's cut-back (the "Available
Shares"), SIMSCI shall be obligated to include in such registration statement,
with respect to Shell, only the product of (i) the number of Available Shares
and (ii) Shell's Ownership Percentage, as that term is defined in Section 1.1.3.
Notwithstanding the foregoing, no such reduction shall be made with respect to
securities being offered by SIMSCI for its own account or by holders of
securities who have requested SIMSCI to register such securities pursuant to a
mandatory registration obligation of SIMSCI. If Shell disapproves of the terms
of such underwriting, it may elect to withdraw therefrom by written notice to
SIMSCI and the underwriter.
1.3 Registration on Form S-3. After SIMSCI has qualified for the use of
Form S-3, Shell shall have the right to request an unlimited number of
registrations on Form S-3 (such requests shall be in writing and shall state the
number of shares of Registrable Securities to be disposed of and the intended
method of disposition of such shares), subject only to the following
limitations:
1.3.1 SIMSCI shall not be obligated to cause a registration on
Form S-3 to become effective prior to one hundred eighty (180) days following
the effective date of a Company-initiated registration (other than a
registration effected solely to qualify an employee benefit plan or to effect a
business combination pursuant to Rule 145 under the Securities Act);
1.3.2 SIMSCI shall not be obligated to cause a registration on
Form S-3 to become effective prior to expiration of one hundred eighty (180)
days following the effective date of the most recent registration pursuant to a
request by Shell under this Agreement or pursuant to a request by a holder of
registration rights under any other agreement of SIMSCI granting Form S-3 demand
registration rights;
1.3.3 SIMSCI shall not be required to effect a registration
pursuant to this Section 1.3.3 unless Shell proposes to dispose of shares of
Registrable Securities having an aggregate disposition price (before deduction
of underwriting discounts and expenses of sale) of at least $500,000; and
1.3.4 SIMSCI shall not be required to maintain and keep any
such registration on Form S-3 effective for a period exceeding ninety (90) days
from the effective date thereof. SIMSCI shall give notice to Shell and all
holders of registration rights under any other agreement of SIMSCI
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granting Form S-3 or similar demand registration rights of the receipt of a
request for registration pursuant to this Section 1.3.4 and shall provide a
reasonable opportunity for all such other holders to participate in the
registration.
1.4 Indemnification of Shell. In the event that SIMSCI registers any of
the Registrable Shares under the Securities Act, SIMSCI will indemnify and hold
harmless Shell and each underwriter of the Registrable Shares so registered
(including any broker or dealer through whom such shares may be sold) and each
person, if any, who controls Shell or any such underwriter within the meaning of
Section 15 of the Securities Act, from and against any and all losses, claims,
damages, expenses or liabilities, joint or several, to which they or any of them
become subject under the Securities Act or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse Shell,
each such underwriter and each such controlling person, if any, for any legal or
other expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the prospectus (or the
registration statement or prospectus as from time to time amended or
supplemented by SIMSCI) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading or any
violation by SIMSCI of any rule or regulation promulgated under the Securities
Act applicable to SIMSCI and relating to action or inaction required of SIMSCI
in connection with such registration, unless such untrue statement or omission
was made in such registration statement, preliminary or amended, preliminary
prospectus or prospectus in reliance upon and in conformity with information
furnished in writing to SIMSCI in connection therewith by Shell, or any such
controlling person expressly for use therein. Promptly after receipt by Shell,
any underwriter or any controlling person of notice of the commencement of any
action in respect of which indemnity may be sought against SIMSCI, Shell, or
such underwriter or such controlling person, as the case may be, will notify
SIMSCI in writing of the commencement thereof, and, subject to the provisions
hereinafter stated, SIMSCI shall assume the defense of such action (including
the employment of counsel, who shall be counsel reasonably satisfactory to
Shell, such underwriter or such controlling person, as the case may be), and the
payment of expenses insofar as such action shall relate to any alleged liability
in respect of which indemnity may be sought against SIMSCI. Shell, any such
underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and expenses of such counsel shall not be at the expense of SIMSCI
unless the employment of such counsel has been specifically authorized by
SIMSCI. SIMSCI shall not be liable to indemnify any person for any settlement of
any such action effected without SIMSCI's consent. SIMSCI shall not, except with
the approval of each party being indemnified under this Section 1.4, consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
parties being so indemnified of a release from all liability in respect to such
claim or litigation.
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1.5 Indemnification of SIMSCI. In the event that SIMSCI registers any
of the Registrable Shares under the Securities Act, Shell will indemnify and
hold harmless SIMSCI, each of its directors, each of its officers who have
signed the registration statement, each underwriter of the Registrable Shares so
registered (including any broker or dealer through whom such of the shares may
be sold) and each person, if any, who controls SIMSCI within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages, expenses or liabilities, joint or several, to which they or any of them
may become subject under the Securities Act or under any other statute or at
common law or otherwise, and, except as hereinafter provided, will reimburse
SIMSCI and each such director, officer, underwriter or controlling person for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the prospectus (or the
registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to SIMSCI in connection therewith by Shell,
expressly for use therein. Promptly after receipt of notice of the commencement
of any action in respect of which indemnity may be sought against Shell, SIMSCI
will notify Shell in writing of the commencement thereof, and Shell shall,
subject to the provisions hereinafter stated, assume the defense of such action
(including the employment of counsel, who shall be counsel satisfactory to
SIMSCI) and the payment of expenses insofar as such action shall relate to the
alleged liability in respect of which indemnity may be sought against Shell.
SIMSCI and each such director, officer, underwriter or controlling person shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof but the fees and expenses of such counsel shall not be at
the expense of Shell unless employment of such counsel has been specifically
authorized by Shell. Notwithstanding the two preceding sentences, if the action
is one in which SIMSCI may be obligated to indemnify Shell pursuant to Section
1.4, SIMSCI shall have the right to assume the defense of such action, subject
to the right of Shell to participate therein as permitted by Section 1.4. Shell
shall not be liable to indemnify any person for any settlement of any such
action effected without Shell's consent. Shell shall not, except with the
approval of SIMSCI, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the party being so indemnified of a release from
all liability in respect to such claim or litigation.
1.6 Exchange Act Registration. SIMSCI will use its best efforts to file
on a timely basis with the Commission all information that the Commission may
require under either of Section 13 or Section 15(d) of the Exchange Act and, so
long as it is required to file such information, shall use its best efforts to
take all action that may be required as a condition to the availability of Rule
144 under the Securities Act (or any successor exemptive rule hereinafter in
effect) with respect to SIMSCI's Common Stock. SIMSCI shall furnish to Shell
forthwith upon request (i) a written statement by SIMSCI as to its compliance
with the reporting requirements of Rule 144, (ii) a copy of the most
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recent annual or quarterly report of SIMSCI as filed with the Commission, and
(iii) any other reports and documents that Shell may reasonably request in
availing itself of any rule or regulation of the Commission allowing Shell to
sell any such Registrable Securities without registration.
1.7 Further Obligations of SIMSCI. Whenever SIMSCI is required
hereunder to register Registrable Shares, it agrees that it shall also do the
following:
1.7.1 Furnish to Shell such copies of each preliminary and
final prospectus and any other documents that Shell may reasonably request to
facilitate the public offering of its Registrable Shares;
1.7.2 Use its best efforts to register or qualify the
Registrable Shares to be registered pursuant to this Agreement under the
applicable securities or 'blue sky" laws of such jurisdictions as Shell may
reasonably request; provided, however, that SIMSCI shall not be obligated to
qualify to do business in any jurisdiction where it is not then so qualified or
to take any action that would subject it to the service of process in suits
other than those arising out of the offer or sale of the securities covered by
the registration statement in any jurisdiction where it is not then so subject;
1.7.3 Furnish to Shell a signed counterpart of,
(a) an opinion of counsel for SIMSCI, dated the
effective date of the registration statement;
(b) "comfort" letters signed by SIMSCI's independent
public accountants who have examined and reported on SIMSCI's financial
statements included in the registration statement, to the extent permitted by
the standards of the American Institute of Certified Public Accountants,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the
accountants "comfort" letters) with respect to events subsequent to the date of
the financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' "comfort" letters delivered to the underwriters in
underwritten public offerings of securities, but only if and to the extent that
SIMSCI is required to deliver or cause the delivery of such opinion or "comfort"
letters to the underwriters in an underwritten public offering of securities;
and
1.7.4 Furnish to Shell, upon request, a copy of all documents
filed and all correspondence from or to the Commission in connection with any
such offering unless confidential treatment of such information has been
requested of the Commission.
1.8 Expenses. In the case of a registration under Sections 1.2 or 1.3,
SIMSCI shall bear all costs and expenses of each such registration, including,
but not limited to, printing, legal and accounting expenses, Commission filing
fees and "blue sky" fees and expenses; provided, however, that SIMSCI shall have
no obligation to pay or otherwise bear (i) any portion of the fees or
disbursements in excess of an aggregate of $5,000 of more than one counsel for
Shell in connection
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with the registration of its Registrable Shares, (ii) any portion of the
underwriter's commissions or discounts attributable to the Registrable Shares
being offered and sold by Shell, or (iii) any of such expenses if the payment of
such expenses by SIMSCI is prohibited by the laws of a state in which such
offering is qualified and only to the extent so prohibited; and provided
further, that, in the event the registration under the Securities Act is
initiated by Shell pursuant to Section 1.3 of this Agreement and such
registration is thereafter withdrawn or terminated by Shell for reasons other
than the occurrence of one or more events regarding SIMSCI, which event or
events may have a material adverse affect upon the business or prospects of
SIMSCI, and Shell learns of such event or events after the date of the demand
for registration and prior to the date of withdrawal or termination by them and
such withdrawal or termination occurs with reasonable promptness thereafter,
then SIMSCI shall have no obligation to pay or otherwise bear any fees, expenses
or other costs arising out of or relating to such registration.
1.9 Transfer of Registration Rights. The rights to cause SIMSCI to
register shares granted to Shell under Sections 1.2 and 1.3 may be assigned to a
transferee or assignee in connection with the transfer or assignment of at least
50,000 Registrable Shares, provided that (i) such transfer or assignment may
otherwise be effected in accordance with applicable laws, (ii) such transferee
or assignee agrees to be bound by the terms of this Exhibit F, and (iii) SIMSCI
is given at least ten (10) days prior written notice of such transfer or
assignment.
1.10 Market Stand-off Agreement. To the extent requested by SIMSCI or
any underwriter of SIMSCI, Shell shall not sell or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any Registrable Shares
during a period (the "Stand-Off Period") equal to 90 days following the
effective date of a registration statement of SIMSCI filed under the Securities
Act except for securities sold as part of the offering covered by such
registration statement in accordance with the provisions of this Agreement. In
order to enforce the foregoing covenant, SIMSCI may impose stock transfer
restrictions with respect to the Registrable Shares of each holder until the end
of the Stand-Off Period.
1.11 Termination of Registration Rights. The registration rights
granted pursuant to this Exhibit F will terminate upon such time as Shell is
then permitted to sell all of the Shares within any three (3) month period
pursuant to Rule 144 under the Securities Act.
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ATTACHMENT 2
ALLOCATION
Tangibles: $[*]
[*] Confidential Treatment Requested
