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EXHIBIT 10(v)
DEVELOPMENT AGREEMENT
This DEVELOPMENT AGREEMENT ("Agreement") dated as of September 30, 1997 is
entered into by and between AlliedSignal Inc., a Delaware corporation, by and
through its Communications Systems business unit having a principal place of
business at 0000 Xxxx Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000-0000
("AlliedSignal") and Mykotronx, Inc., a California corporation, having a
principal place of business at 000 Xxx Xxxx Xxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx
00000 ("Mykotronx") and a wholly-owned subsidiary of Rainbow Technologies Inc.
("Rainbow"), AlliedSignal and Mykotronx may be individually referred to as a
"Party" or collectively referred to as the "Parties".
WHEREAS, the Parties have entered into in addition to this Agreement:
(a) an Asset Purchase Agreement ("Purchase Agreement"), dated September 30, 1997
(the "Closing Date"), for sale by AlliedSignal to Mykotronx of certain assets
including assets used in the design, manufacture and sale of the Product line
(the "Product"); and (b) a Manufacturing Agreement ("Manufacturing Agreement")
in which AlliedSignal will manufacture the Products for Mykotronx for a period
of time (all three agreements hereinafter referred to collectively as the
"Collective Agreements"); and
WHEREAS, terms of the Purchase Agreement and the Manufacturing
Agreement are incorporated herein by reference.
WHEREAS, the Parties have further determined that it is mutually
desirable for AlliedSignal to develop an enhanced Product for sale by Mykotronx;
and
WHEREAS, the Parties wish to enter into this Development Agreement
which shall set forth the terms and conditions upon which AlliedSignal shall
develop the Product for Mykotronx;
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Parties agree as follows:
1.0 GENERAL DEFINITIONS
A. "The Product" as used in this Agreement shall mean the equipment
developed under this Agreement in accordance with the Product Specification,
attached hereto as EXHIBIT A, and fully-endorsed by the NSA.
B. "Technical Information" means any and all tangible information
including, but not limited to, designs, drawings, manufacturing processes,
software code, and software documentation relating exclusively to the Product.
2.0 LICENSES GRANTED
A. For the term of this Agreement, Mykotronx grants and agrees to grant
to AlliedSignal a nonexclusive, royalty-free license to use all intellectual
property transferred to Mykotronx by AlliedSignal pursuant to the Purchase
Agreement ("Intellectual Property") solely for the purpose of developing the
Product. Mykotronx shall make available to AlliedSignal all necessary
Intellectual Property required to develop the Product.
3.0 PRODUCT DEVELOPMENT
A. AlliedSignal shall develop the Product, and complete the upgrade to
the High Speed Wireline Adapter adding an unbalanced interface, both in
accordance with the Statement of Work and Development Schedule attached hereto
as EXHIBIT B.
B. Mykotronx shall have the right, at its sole option and without
obligation to provide the Product development assistance to AlliedSignal, to
monitor the development of the Product for the purpose of understanding, the
technical aspects of the Product and to facilitate the transmission of
AlliedSignal Product know-how to Mykotronx.
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(i) The employees listed below shall act as each Parties
technical correspondent in transmitting and receiving THE PRODUCT
know-how.
AlliedSignal: Xxxxxxx Xxxxx
Mykotronx: Xxxxx Xxxxxxxxxx
(ii) Subject to any government regulations, AlliedSignal shall
permit personnel of Mykotronx access to AlliedSignal's Facility and
shall further provide, at no cost to Mykotronx, office space, telephone
service and access to office equipment and supplies reasonably
necessary to support Mykotronx personnel.
C. The development of the Product shall be completed by no later than
September 30, 1998 at which time AlliedSignal shall have shipped or have ready
for shipment fifty (50), NSA-endorsed Products ("Delivery Date").
4.0 KEY PERSONNEL
A. AlliedSignal shall dedicate the "Development Key Personnel" (as
defined in the letter agreement, dated the date hereof, between AlliedSignal and
Mykotronx) to the development of the Product provided such development requires
full-time performance. In the event any Development Key Personnel inform
AlliedSignal of plans to leave the employ of AlliedSignal, AlliedSignal shall
use reasonable efforts to retain such person; provided, however, that the
foregoing shall not require AlliedSignal to offer any bonuses, or increase
salaries or benefits other than at AlliedSignal's discretion. Further, the
foregoing shall not prevent AlliedSignal, in its sole discretion, from offering
any Development Key Personnel a promotion, or prevent any Development Key
Personnel from accepting any promotion or transfer (within AlliedSignal or
otherwise); provided, however, that the General Manager of the Communication
Systems division of AlliedSignal shall, in any event, use reasonable efforts to
balance the needs of the Development Key Personnel and the needs of the
development of the Product in a manner that is intended to be equitable to all
of the Parties concerned. In the event any Key Development Personnel gives
AlliedSignal notice that he or she has elected to leave AlliedSignal's employ,
AlliedSignal shall give notice to Mykotronx and AlliedSignal agrees that
Mykotronx will not be bound to the non-solicitation clause of the Purchase
Agreement with respect to such individual.
5.0 DEVELOPMENT PRICE
A. Mykotronx shall reimburse AlliedSignal for costs incurred by
AlliedSignal for development and transition to production of the Product after
the Closing Date up to an amount not to exceed _______________ ($____________)
(the "Development Price").
B. The Development Price shall be paid by Mykotronx to AlliedSignal in
accordance with the following fee schedule:
(i) The Product development costs (as determined by
AlliedSignal in accordance with its past practice), which are
anticipated to be approximately $__________, are payable within 30 days
of the Closing Date;
(ii) an amount equal to $_________ less the amount paid in
subsection (i) upon completion of milestone 2.3(2) as set forth in
EXHIBIT B;
(iii) $______ upon completion of milestone 2.3 (3 ) as set
forth in EXHIBIT B;
(iv) $______ upon completion of milestone 2.3 (4 and 5) as set
forth in EXHIBIT B; and
(v) up to $________ upon complete of milestone 2.3 (6) as set
forth in EXHIBIT B and full endorsement of the Product by the NSA.
C. Except for the scheduled payment identified in subsection (i) all
payments shall be net 30 days upon submission of an invoice by AlliedSignal for
each milestone identified in subsections ii-v, and each such invoice shall be
accompanied by a statement of the incurred costs described in the invoice
relating to direct material, labor, applicable labor overhead and material
burden consistent with AlliedSignal's disclosed practices and 1% for
administration requirements.
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D. As soon as practicable after the payment of the Development Price
set forth above, AlliedSignal shall determine any variances incurred in the
amount of burden included in such payments. If the burden variances in the
aggregate is positive, AlliedSignal shall pay the amount of such positive
variance to Mykotronx. If the burden variance in the aggregate is negative,
Mykotronx shall pay the amount of such negative variance to AlliedSignal;
provided, however, the amount of the total Development Price including burden
variance shall not exceed ______________.
6.0 CHANGES
A. Any changes to either of Exhibits A or B requested by Mykotronx
shall be communicated in writing to AlliedSignal ("Changes"). AlliedSignal shall
provide Mykotronx the additional costs associated with each Change and the time
necessary for AlliedSignal to implement the requested Change. Upon receipt of
Mykotronx's written approval of the additional development costs and development
time for the changes, AlliedSignal will implement the Change and Mykotronx shall
reimburse AlliedSignal for the agreed-to development costs. The Statement of
Work will be amended to reflect the Change and the Delivery Date will be
modified as mutually agreed to by the Parties. Notwithstanding Mykotronx's cap
to the Development Price, any Change that causes an increase in the Development
Price by $_____ in the aggregate shall be paid by Mykotronx. If any Change will
cause a delay in the Delivery Date as determined by AlliedSignal, the Delivery
Date shall be adjusted to reflect the time delay caused by the Change. Nothing
in this section is intended to relieve AlliedSignal of its obligation to
complete the development of an NSA fully-endorsed Product.
B. All Changes to this Agreement shall be coordinated through the
Contracts Department of the Parties.
C. No order or statement by the Government or conduct of Government
personnel shall constitute any Change to this Agreement.
7.0 RESERVED
8.0 PRODUCT DELIVERY DATE-LIQUIDATED DAMAGES
A. In the event AlliedSignal fails to complete the development of the
Product as set forth in section 3.0 (C), above, by the Delivery Date,
AlliedSignal shall pay to Mykotronx as liquidated damages $______ for each month
through December 1998 that the Product development is not complete, and $_______
for each month thereafter that the Product development is not complete. The
total amount of liquidated damages payable under this Section shall not exceed
$_______.
B. Anything to the contrary notwithstanding, the Delivery Date shall be
(1) delayed for a period of three months if in the calendar year 1998 Mykotronx
receives gross sales revenues of at least $___ million from sales of Products
and/or Ancillaries; provided, however, at least $__ million of such sales occurs
in the second half of 1998; or (2) delayed for the period of time caused by the
U.S. Govermnent or any of its agencies or departments (which cause is not
attributable to the performance of AlliedSignal or its complicance with the
requirements of the NSA endorsement process) or by force majeure events.
C. In the event AlliedSignal is obligated by the terms of this
Agreement to pay liquidated damages to Mykotronx, AlliedSignal shall pay such
sum on a net thirty (30) basis from receipt of the invoice from Mykotronx,
provided, however, AlliedSignal does not dispute the invoice.
9.0 LIMITATION ON DAMAGES
A. Notwithstanding anything to the contrary in the Collective
Agreements, AlliedSignal's liability under the clauses entitled: (a) PRODUCT
DELIVERY DATE-LIQUIDATED DAMAGES of this Agreement; and (b) PRICING and (c)
DELIVERY DATE-LIQUIDATED DAMAGES of the Manufacturing Agreement shall not exceed
______________ dollars ($_____________) in the aggregate.
B. IN NO EVENT SHALL EITHER PARTY HERETO BE LIABLE TO THE OTHER PARTY
HERETO FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES THAT ARE
CLAIMED TO BE INCURRED BY THE OTHER PARTY WHETHER SUCH CLAIM ARISES UNDER
CONTRACT, TORT (INCLUDING STRICT LIABILITY) OR OTHER THEORY OF LAW RELATED TO
PERFORMANCE HEREUNDER OR AN ALLEGED BREACH OF A CONTRACT HEREUNDER.
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C. The terms "indirect, incidental, consequential or exemplary damages"
as used herein shall include, but is not limited to, punitive damages, loss of
use, loss of business reputation, increased expense of operation, loss of
profit, cost of money and loss of use of capital or revenue arising at any time.
D. A claim under this Agreement, the Purchase Agreement or the
Manufacturing Agreement shall preclude a claim on the same subject matter under
any of the other three agreements.
10.0 RIGHTS IN TECHNICAL INFORMATION
A. Any and all Technical Information developed by AlliedSignal in the
development of the Product, shall be the sole and exclusive property of
Mykotronx, and AlliedSignal hereby assigns to Mykotronx all such Technical
Information. AlliedSignal will, at the expense of Mykotronx, and at its
reasonable request, perform all acts and execute all papers necessary or
desirable to perfect Mykotronx's intellectual property rights in, and title to,
any such Technical Information. AlliedSignal agrees that, for any works of
authorship created by AlliedSignal in the course of this Agreement, those works
that come under one of the categories of "Works Made for Hire" in 17 U.S.C.
Section 101 shall be considered Works Made for Hire. For any works of authorship
that do not come under such categories, AlliedSignal hereby assigns and agrees
to assign all right, title, and interest it has to any copyright in such works
and will execute or cause to be executed at Mykotronx's expense any documents
required to establish Mykotronx's ownership of such copyright.
11.0 TERM
A. This Agreement is effective as of the date first set forth above
and, unless sooner terminated under the provisions below, will continue until
completion of AlliedSignal's obligations hereunder. Any clause that by its
nature should survive termination of this Agreement shall survive termination,
including, but not limited to, the clauses entitled LIMITATION ON DAMAGES,
RIGHTS IN TECHNICAL INFORMATION, RESOLUTION OF DISPUTES, NOTICES, ASSIGNMENT and
GOVERNING LAW.
12.0 INSOLVENCY
Either Party may cancel this Agreement in the event of the suspension
of the other Party's business, insolvency of the other Party, the institution of
bankruptcy, reorganization, arrangement or liquidation proceedings involving or
affecting the other Party, or any assignment for the benefit of creditors of
the other Party, or receivership that the other Party places itself in or may be
placed in.
13.0 RELATIONSHIP
A. AlliedSignal is an independent contractor engaged by Mykotronx in
the development of the Product. Nothing in this Agreement shall constitute
AlliedSignal as an employee, agent or general representative of Mykotronx. This
Agreement shall not constitute appointment of either Party as the legal
representative or agent of the other, nor shall either Party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against, or in the name of, or on behalf of the other
Party.
14.0 RESOLUTION OF DISPUTES
A. In the event of a dispute relating to this Agreement, the Parties
shall make a good faith effort to settle any differences without resorting to
arbitration. If settlement of the dispute is not possible either Party may
invoke arbitration. However, the Party wishing to initiate arbitration shall
give thirty (30) days prior notice to the other Party. During this thirty (30)
day period selected upper management personnel shall further attempt to resolve
the dispute. Any unresolved dispute arising out of or relating to this
Agreement, including interpretation, validity, scope and enforceability, shall
be resolved by arbitration to be held exclusively in the city of New York, New
York. Such arbitration shall be the Parties' exclusive remedy. The arbitration
shall apply the law of the State of New York to the dispute, exclusive of its
conflict of laws and shall be conducted in accordance with the then-existing
Commercial Arbitration Rules of the American Arbitration Association. The
arbitrator shall be empowered to assess compensatory damages except in the areas
where this Agreement exempts any Party from liability or limits such damages.
The judgment of the arbitrator shall be final and binding on the Parties and any
Party may enter the arbitration award as a final judgment in a court of
competent jurisdiction with power to enforce the arbitration award. The Parties
shall pay their own arbitration expenses and shall equally share the
arbitrator's costs and fees and the arbitrator shall allocate such costs and
fees equally between the Parties as part of the award.
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15.0 FORCE MAJEURE
A. In the event a delay in development occurs which delay is occasioned
by: (a) acts of God, including, but not limited to, fire, floods, unusually
severe weather; (b) civil or military authority, war, hostility, riots,
government action in its contractual or sovereign capacity; (c) strikes or other
labor actions; or (d) where such delay is occasioned by other causes beyond the
control of AlliedSignal and without its fault or negligence, then the Delivery
Date shall be extended for a period equal to the time lost by reason of any such
delay. Anything to the contrary notwithstanding, AlliedSignal shall be
responsible for delays caused by subcontractors failing to make timely
deliveries unless such delays are caused by force majeure events, and such
delays further subject to the limitations set forth in the section entitled
PRODUCT DELIVERY DATE-LIQUIDATED DAMAGES.
16.0 NOTICES
A. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given when mailed postpaid registered or certified mail
and addressed to the party for whom it is intended at its record address, and
such notice shall be effective as of the date it is deposited in the mail. The
record address of the Parties for this purpose is:
AlliedSignal Communications Systems
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Director of Contracts
Mykotronx Inc.
000 Xxx Xxxx Xxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Manager of Contracts
Attn: Program Manager
17.0 ASSIGNMENT
A. This Agreement may not be assigned without the prior written consent
of the other Party which consent shall not be unreasonably withheld by any
Party, provided however, that without such consent (i) AlliedSignal may assign
any of its rights hereunder to any wholly-owned subsidiary of AlliedSignal or to
any purchaser of substantially all of the assets of the business unit to which
this Agreement relates, and ii) Mykotronx may assign any of its rights hereunder
to any wholly-owned subsidiary of Rainbow or to any purchaser of substantially
all of the assets of Mykotronx.
18.0. WAIVER
A. The failure of either party at any time to require performance by
the other party of any section of this agreement shall not affect the full right
to require such performance at any time thereafter, nor shall the waiver by
either party of a breach of any section hereof be taken or held to be a waiver
of any succeeding breach of such article, or as a waiver of the section itself.
19.0 SEVERABILITY
A. In the event any article or portion thereof in this agreement is
finally determined by a court of competent jurisdiction to be unenforceable or
void, then such article or portion thereof shall be deemed deleted and the
balance of the articles of this agreement shall remain in full force aria
effect.
20.0 GOVERNING LAW
A. This Agreement shall be interpreted and construed in accordance with
the laws of the State of New York, disregarding its conflict of laws principles
which may require the application of the laws of another jurisdiction.
21.0 HEADINGS
A. Article, sub-article and Attachment headings of this Agreement are
for convenience only and are not to be construed as part of this Agreement or as
defining or limiting in any way the purpose and intent of the provisions
thereof.
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22.0 ENTIRE AGREEMENT
A. The Collective Agreements constitute the entire agreement between
the Parties relating to the development and NSA endorsement of the Product and
supersedes any and all prior written or oral understandings, commitments or
agreements relating thereto. This agreement may not be amended or modified
except by a writing duly signed by the authorized representatives of the parties
hereto.
IN WITNESS WHEREOF, AlliedSignal and Mykotronx have caused this
Agreement to be executed by their respective duly authorized representatives on
the dates indicated below.
AlliedSignal Inc. Mykotronx Inc.
By: By:
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Print Name: Xxxx X. Xxxxxx Print Name: Avi Margalith
Title: Vice President Title: President
Date: 9-30-97
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