1
Exhibit 10.2
CONFIDENTIAL TREATMENT REQUESTED - REDACTED
JOINT DEVELOPMENT AGREEMENT
THIS JOINT DEVELOPMENT AGREEMENT ("Agreement") made effective this 24th
day of July, 1997, by and between ICARUS DEVELOPMENT AND MARKETING CORPORATION,
00000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("ICARUS") and HYPROTECH, LTD.,
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0 ("HYPROTECH").
RECITALS
A. The "engineering work processes" in the engineering field,
construction field, and research and development field and within owner operator
companies, consist of conceptual design, basic engineering, detailed
engineering, operations and maintenance; which processes utilize and/or have a
need to utilize software for process simulation, equipment selection, sizing and
cost estimating.
B. HYPROTECH and ICARUS presently believe that there is a relatively
low level of software integration across the foregoing disciplines, and desire
to develop and offer an integrated set of software applications that will
provide engineers and others with an environment in which to address process
simulation, equipment selection, equipment sizing and cost estimating.
C. HYPROTECH has developed a proprietary flow sheet process simulation
program called HYSYS. Using object-oriented programming, HYSYS represents a
framework in which engineering applications can be implemented from conceptual
design through plant operation within a single environment. ICARUS owns the
rights to industry proven software and technology in the areas of design, cost
estimating, scheduling, computer aided engineering (CAE), computer aided design
(CAD), and expert system technologies.
D. HYPROTECH and ICARUS are entering into this Agreement, in order to
integrate appropriate portions of their respective technologies and produce
Jointly Developed Products (as hereinafter defined), which address engineering
work processes in the Chemical Processing Industry, where HYSYS and/or HYSIM are
used as the source of process information.
2
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, which are
hereby incorporated by reference and made a part hereof, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto covenant and agree as follows:
1. Definitions.
HYPROTECH Technology means the proprietary computer software
owned and/or marketed by HYPROTECH relating to process simulation, modeling,
equipment selection, equipment sizing, cost estimating, heuristics, HYPROTECH
Framework, and all associated data, technology, information, and know-how.
HYPROTECH Products means the software programs and related
services owned and/or marketed by HYPROTECH which are based upon HYPROTECH
Technology, including but not limited to HYSYS and HYSIM simulation software
products.
ICARUS Technology means the proprietary computer software
owned and/or marketed by ICARUS relating to equipment selection, equipment
sizing, cost estimating, cost modeling, volumetric modeling, heuristics,
scheduling, project management, Computer Aided Engineering (CAE), Computer Aided
Design (CAD), expert systems development, knowledge bases, object database,
knowledge based and object database driven graphics, and all associated data,
technology, information, and know-how.
ICARUS Products means the software programs and related
services owned and/or marketed by ICARUS which are based upon ICARUS Technology,
including but not limited to ICARUS Process Evaluator (IPE), ICARUS Mentor,
ICARUS Project Manager, Questimate, ICARUS 2000, and their related products.
Proprietary Information means software, firmware,
documentation, data, source code, methods, procedures, and related know-how
including all copyright, patent, trade secret and other intellectual property
rights. For purposes of this agreement, Proprietary Information shall not
include information available in the public domain, or information learned from
another source.
CPI means the chemical processing industries, including
chemical processing, oil refining, natural gas processing, energy producing,
petrochemical, pharmaceutical, food, pulp and paper, ore beneficiation and
related industries.
Authorized Simultaneous User ("ASU") means the number of end
users as shown in the appropriate end-user license agreement that may
simultaneously utilize the software product licensed.
2
3
Affiliate means, with respect to any party, any other Person
which is affiliated with such party, and for the purposes hereof:
a. two Persons will be considered to be affiliated with
one another if one of them controls the other, or if
both of them are controlled by a common third party,
and
b. one Person will be considered to control another
Person if it has the Power to direct or cause the
direction of the management and policies of the other
Person, whether directly or indirectly, through one
or more intermediaries or otherwise, and whether by
virtue of the ownership of shares or other equity
interests, the holding of voting rights or
contractual rights, or otherwise.
Person means any individual, corporation, partnership,
government body, association or unincorporated organization.
Customer means end user and excludes distributors and
resellers.
Existing Customer means any Person authorized under a license
agreement to use the products of a party at the time of the first commercial
release of any Jointly Developed Product.
HYPROTECH Framework means the component-based application
programming interface ("API"), algorithmic organization, control, and storage
architecture developed by HYPROTECH for use in HYPROTECH software applications.
Jointly Developed Software Modules means software jointly
developed by HYPROTECH and ICARUS and associated know-how, data, methods,
procedures, and technology and that does not contain any HYPROTECH Technology or
ICARUS Technology or either party's Proprietary Information.
Jointly Developed Product(s) means a software end-product,
which is jointly developed by HYPROTECH and ICARUS and which may contain
portions of HYPROTECH Technology, portions of ICARUS Technology, portions of
Jointly Developed Software Modules, and/or technology jointly developed by both
parties.
PICASSO means the software product that was in development by
HYPROTECH and that HYPROTECH planned to use with the HYPROTECH Framework, and
that was planned to address engineering work processes in the CPI such as but
not limited to conceptual design, equipment selection, equipment sizing, and
cost estimation.
3
4
PLANT-PRODUCT means the software product intended to be
primarily marketed to process engineers with little or no prior cost engineering
experience or responsibility, where nothing more than data provided by a
converged steady state simulation case is required to produce a cost estimate.
This product includes PICASSO, other appropriate HYPROTECH Technology and
appropriate ICARUS Technology. PLANT-PRODUCT shall be completed jointly by the
parties pursuant to this Agreement, and shall be deemed a Jointly Developed
Product.
PROCESS-PRODUCT means the software product intended to be
primarily marketed to process engineers where process simulation data is
necessary, but not sufficient input by itself to produce a cost estimate that is
satisfactory to the user. This product includes PICASSO, other appropriate
HYPROTECH Technology and appropriate ICARUS Technology.
PROCESS-PRODUCT shall be completed jointly by the parties
pursuant to this Agreement, and shall be deemed a Jointly Developed Product.
HYSYS-IPE means the Jointly Developed Products (PLANT-PRODUCT
and PROCESS-PRODUCT) that are intended to address engineering work processes in
the CPI and that use HYSYS and/or HYSIM as the source of process information.
For the purposes of this Agreement, the two versions of HYSYS-IPE referred to
are PLANT-PRODUCT and PROCESS-PRODUCT.
2. HYSYS-IPE. The parties agree to direct their initial joint
development efforts towards completion of PLANT-PRODUCT and PROCESS-PRODUCT as
Jointly Developed Products, permitting an integrated link into the HYSYS
Framework resulting in an integrated engineering package, capable of offering
conceptual design, process design, dynamic operability and control analysis,
process and capital and operating cost optimization, equipment selection,
sizing, cost estimating, scheduling, CAD and CAE technology. The parties agree
to complete the development of PLANT-PRODUCT and PROCESS-PRODUCT such that each
may be licensed according to its own pricing structure.
It is planned that PLANT-PRODUCT shall contain the appropriate
software modules in ICARUS' IPE software for translation of HYSIM and/or HYSYS
output, equipment selection, equipment sizing, and the appropriate software
modules for design and cost estimation of equipment, bulks, and indirect costs
that are currently in ICARUS' Questimate software.
It is planned that PROCESS-PRODUCT shall contain the
appropriate software modules for translation of HYSIM and/or HYSYS output,
equipment selection, equipment sizing, and the appropriate software modules for
design and cost estimation of equipment, bulks, and indirects that are currently
in ICARUS' IPE software.
4
5
2.1 Phase I Development of HYSYS-IPE: The parties shall
develop HYSYS- IPE in two phases. The objective of Phase I shall be to produce
the two different versions of HYSYS-IPE referred to above. Both parties shall
endeavor to deliver products to the market no later than the end of September,
1997.
PLANT-PRODUCT shall be developed by ICARUS providing
appropriate modules of its Questimate plant cost estimating engine, which the
parties shall combine with the appropriate ICARUS process simulation interface
modules for transferring process simulation output results from HYSIM and HYSYS
into input suitable data for equipment selection and sizing, and by building a
one-way communication interface to HYSYS-Steady State. PLANT-PRODUCT shall use
the existing ICARUS modules for transfer of process information from HYSIM and
HYSYS.
For PROCESS-PRODUCT, the parties shall create a
one-way interface between the appropriate ICARUS IPE cost estimation modules and
HYSIM and HYSYS-Steady State.
Phase II: During the second phase of development of
HYSYS-IPE, the parties shall endeavor to enhance the products, such that they
may be delivered to the marketplace with the following, general capabilities:
(i) operate in an interactive manner, (ii) support partial recalculations, (iii)
are user-extensible, and (iv) allow for two-way communication with HYSYS as
necessary for automated capital optimization.
Both PLANT-PRODUCT and PROCESS-PRODUCT shall strive
to create two-way, interactive, and fully-integrated links to HYSYS such that
the parties will be able to immediately upon successful development enter the
market for end user license of these products.
3. Accomplishment of Primary Business Objectives. The parties
agree to direct their efforts towards accomplishing the following primary
business objectives in three phases.
3.1 Phase One Objectives:
(i) Jointly announce the HYPROTECH-ICARUS relationship to the
marketplace as soon as practicable in order to attract attention, establish
dominance, and pre-empt potential competitive actions.
(ii) Release Jointly Developed Products as soon as possible
(as mutually determined by the parties), to exploit 1st-mover advantages, and
reinforce announcement of the venture.
5
6
3.2 Phase Two Objectives:
(i) Establish a unique competitive advantage by integrating
the appropriate existing HYPROTECH Technology and appropriate existing ICARUS
Technology to produce the HYSYS-IPE products.
(ii) Establish a unique competitive advantage by developing
the Jointly Developed Products to behave in an interactive manner, support
partial recalculation, are user-extensible, and allow for two-way communication
necessary for automated capital optimization.
3.3 Long Range Objectives:
(i) Develop Jointly Developed Products (as mutually
determined) so that modern technology in this field provides a strategic
advantage over existing technology.
(ii) Capture greater market share for process evaluation
software by the year 2000, in order to position the joint products as "defacto
standards" in the marketplace.
(iii) Grow primary demand (new market) for process
evaluation-based solutions by 100% by the year 2000.
4. Coordination of Product Development.
(i) ICARUS shall control and maintain the engineering side
(ICARUS Technology portion) of all Jointly Developed Products incorporating or
intended to incorporate ICARUS Technology.
(ii) HYPROTECH shall control and maintain the framework and
related user interfaces for the Jointly Developed Products (HYPROTECH Framework)
and add functionality to the process engineering side (HYPROTECH Technology).
(iii) ICARUS and HYPROTECH will agree on an object interface
format that will integrate ICARUS Technology with HYPROTECH Technology and
produce a product suite according to Section 2 of this Agreement within the
first 3 years of this Agreement.
(iv) As to all Jointly Developed Products, both parties must
jointly agree that the product is functional and ready to be marketed before
either party shall release the product to the marketplace.
5. Licensing Necessary to Marketing.
(i) HYPROTECH grants to ICARUS the right to sub-license the
HYPROTECH Technology contained in HYSYS-IPE and any agreed-to optional modules,
but only in object code form, and only as a part of HYSYS-IPE or other Jointly
Developed Products.
6
7
(ii) ICARUS grants to HYPROTECH the right to sub-license
the ICARUS Technology contained in the HYSYS-IPE product and any agreed-to
optional modules, but only in object code form and only as a part of HYSYS-IPE
or other Jointly Developed Products.
(iii) Each party will grant the other a royalty free,
non-transferable, world-wide license to incorporate any Jointly Developed
Software Modules into each party's respective software products and/or services
for licensing in object code form only and provided that such party's respective
software products and/or services do not directly or indirectly compete with any
product and/or service of the other party being offered or marketed as of the
date of this Agreement, or compete with any Jointly Developed Product.
(iv) Neither party grants to the other party, a license to any
Proprietary Information except to the extent as set forth in Section 5 (i) and 5
(ii).
6. Pricing and Commissions.
6.1 Pricing of PROCESS-PRODUCT: The price schedule for
PROCESS-PRODUCT is shown on Schedule A attached hereto. Both parties shall
jointly develop future pricing schedules, however, in the event of a pricing
dispute over PROCESS-PRODUCT, HYPROTECH shall defer to ICARUS.
6.2 Pricing of PLANT-PRODUCT: The price schedule for
PLANT-PRODUCT is shown on Schedule A attached hereto. Both parties shall jointly
develop future pricing schedules, however, in the event of a pricing dispute
over PLANT-PRODUCT, HYPROTECH shall defer to ICARUS.
[*]License fees due under a multi-year license which are not
equal in amounts during each year of the license (other than due to differences
resulting from consumer price index or other inflationary escalators or a change
in the software licensed), shall be reamortized equally over the entire license
term to which such fees relate, for the purposes of determining the first year's
license fees upon which the commission hereunder shall be based. The "selling
party" as that term is used in this paragraph shall be deemed to be the party
that licenses the Jointly Developed Product to a Customer; however, the parties
agree to assist each other in the sales and marketing of Jointly Developed
Products, and if both parties have been directly involved with a Customer
(whether via telephone, writing, facsimile or other electronic communication or
transmission, and/or by personal visit, which involvement is confirmed in
writing or by other tangible means), or where one party has requested the other
party to assist it by contacting the Customer directly and such assistance is in
fact provided, then such sale shall be considered a "joint sale" and the
commissions due
-----------------
[*] This information has been omitted pursuant to a request for
confidential treatment.
7
8
hereunder shall be divided equally between both parties. General assistance by
one party to the other party's sales and marketing personnel in furtherance of a
sale, but without direct Customer contact, shall not constitute a "joint sale."
6.4 Form of License; Calculation of Revenue: The preferred
form of end-user software license will be a five-year license for a specified
number of Authorized Simultaneous Users to be agreed upon by both parties
regardless of who sells the product. The term "sale," "sell," "selling party" or
any derivation thereof or similar term used in this Agreement is solely for the
convenience of the parties, and both parties agree that all end-user
transactions regarding the use of HYSYS-IPE and/or any other Jointly Developed
Product shall be pursuant to a license agreement only, and that no ownership
rights or title shall transfer. In addition, under no circumstances shall any
Proprietary Information, including specifically source code, transfer or be
placed in escrow with any end-user or anyone else.
6.5 Other Party's Products; [*]: In addition to the HYSYS-IPE
offerings, both parties may elect to market the other party's products (i.e.,
excluding Jointly Developed Products) through their direct sales force, dealers,
distributors, sales agents, or network of business partners, after sales
certification training in the appropriate product by the party that has
marketing rights to such product. [*]Where there exists documented evidence of
prior sales activity with the account in question by the party that has
marketing rights to the product, there shall be no finder's fee due.
7. Resource Commitment and Revenue Share.
7.1 Staffing. Each party will determine the necessary amounts
of staff and other resources to be devoted to the development of Jointly
Developed Products. Each party shall appoint one or more Technical Project
Managers (Section 12 below), each of whom will consult with the other in
determining appropriate amounts of staffing and resources.
7.2 Planning. Each party will develop and submit to the other
party a proposed marketing plan with respect to HYSYS-IPE and any other Jointly
Developed Products. Each party agrees to use reasonable efforts to market
Jointly Developed Products, and both parties shall agree on a joint marketing
and promotional activity plan ("M&P"), and the budget for same. The M&P budget
and the various allocations within the budget shall be determined by the
Business Managers to be appointed by the parties (Section 12 below), who shall
consult with each other in finalizing the M&P budget. The items contained within
the M&P budget are intended to be expended by the parties, with each party
contributing such amounts as may be mutually agreed upon. Nothing contained
therein
-----------------
[*] This information has been omitted pursuant to a request for
confidential treatment.
8
9
shall preclude either party from incurring additional costs for marketing and
sales, and each party shall be solely responsible for all costs incurred with
respect to its own marketing and sales. As to all such expenses incurred by
either party in conjunction with development, marketing and/or sales, the party
incurring same shall indemnify, defend and hold the other party harmless against
all claims for same.
7.3 Technical Support. HYPROTECH and ICARUS agree to fund
Support, Documentation and Training activities and resources in amounts
determined by each such party to be adequate, and each party's Business Managers
shall consult in making such determinations. Each party shall be responsible for
the performance, maintenance, user documentation, technical documentation, and
technical support to Customers, for its own software modules that are part of
any Jointly Developed Product. The primary technical support for HYPROTECH
Technology in Jointly Developed Products shall be directly from HYPROTECH to the
end-user, and the primary technical support for ICARUS Technology in Jointly
Developed Products shall be from ICARUS to the end-user. Both parties shall
conduct all technical support to end-users in such a manner as to provide the
highest level of comfort to all Customers of all Jointly Developed Products,
regardless of which party made the sale.
7.4 Reporting. Each party will provide a report of licensing
activity, and accounting for money received for each calendar quarter and shall
pay monies due the other party as a result of activities in that calendar
quarter within 30 days of the end of that calendar quarter with respect to (i)
Jointly Developed Products, and (ii) one party's products pursuant to Section
6.5.
7.5 Technology Development. Each party shall be responsible
for all costs associated with its technology (except for new technology jointly
developed by both parties, which costs shall be determined prior to each such
venture), user documentation, technical support, marketing, and sales as such
relates to any Jointly Developed Product.
7.6 Revenue Share for Existing Customers of ICARUS.
Revenues shall be divided after deduction of the sales commission to be paid
pursuant to Section 6 above.[*]
7.7 Revenue Share for all other sales. Revenues from
all sources other than licenses to Existing Customers shall be divided after
deduction of the sales commission to be paid pursuant to Section 6 above.[*]
-----------------
[*] This information has been omitted pursuant to a request for
confidential treatment.
9
10
7.8 Future Revenue Shares. HYPROTECH and ICARUS shall
jointly develop license fees and revenue splits for any other Jointly Developed
Products.
8. Marketing.
8.1 Jointly Developed Products: Both parties agree to
collaborate in joint worldwide marketing efforts by utilizing existing direct
sales and marketing personnel, affiliates, dealers, distributors, sales agents,
and business partners of both parties. Both parties shall endeavor to develop a
collaborative marketing plan no later than September 30, 1997, detailing sales
strategy and joint marketing activities such as press releases, trade shows,
technology conferences, user conferences, technical articles, etc. Both parties
will have the right to market Jointly Developed Products.
8.2 PROCESS-PRODUCT: Marketing of the PROCESS-PRODUCT shall
endeavor to take advantage of the positive brand and corporate images that exist
in the marketplace for both companies and their products. All Jointly Developed
Products shall be marketed under the joint names of both parties; however, it
shall not be required that each party's name receive equal prominence on all
packaging, documentation, and other marketing and sales materials, provided, the
company name and logo of both parties must nevertheless be displayed in a manner
that is readily identifiable and readable by the Customer, although not equal in
prominence. In the event of any dispute between the parties regarding the
marketing of PROCESS-PRODUCT, including the identification of name and logo as
herein set forth, the ultimate decision regarding such marketing shall be made
by ICARUS, which agrees to act reasonably with respect to same. No marketing
activity shall diminish or tarnish the reputation, or corporate or brand image
of either party, its products or any Jointly Developed Products.
8.3 PLANT PRODUCT: Marketing of the PLANT-PRODUCT shall
endeavor to take advantage of the positive brand and corporate images that exist
in the marketplace for both companies and their products. All Jointly Developed
Products shall be marketed under the joint names of both parties; however, it
shall not be required that each party's name receive equal prominence on all
packaging, documentation, and other marketing and sales materials, provided, the
company name and logo of both parties must nevertheless be displayed in a manner
that is readily identifiable and readable by the Customer, although not equal in
prominence. In the event of any dispute between the parties regarding the
marketing of PLANT-PRODUCT, including the identification of name and logo as
herein set forth, the ultimate decision regarding such marketing shall be made
by HYPROTECH, which agrees to act reasonably with respect to same. No marketing
activity shall diminish or tarnish the reputation, or corporate or brand image
of either party, its products or any jointly developed products.
10
11
8.4 ICARUS IPE: ICARUS [*] ICARUS Process Evaluator ("IPE")
[*] ICARUS [*] PROCESS-PRODUCT [*] PROCESS-PRODUCT [*] such Customers [*]
PROCESS-PRODUCT [*] to same. In conjunction therewith, ICARUS shall be entitled
to offer PROCESS-PRODUCT as a [*] IPE Product(s) [*] by each Customer, for the
[*] Customer's [*] IPE [*] without [*] charge to the Customer and/or [*] other
[*] as will [*] for the Existing Customer [*] PROCESS-PRODUCT. With respect to
such [*] the pricing, commissions and revenue sharing referred to in Sections 6
and 7 above [*] Existing Customer of ICARUS [*] and [*] an [*] PROCESS-PRODUCT
and if the [*] or [*] under an [*] is [*] to said Customer, then no such [*]
shall be due. In addition, with respect to any subsequent renewals of a license
agreement by said Customer, ICARUS [*] the [*] shown on Schedule A attached
hereto, [*] to or more consistent with the [*] for the Customer [*]
PROCESS-PRODUCT, in which event [*] and [*] rather than those [*].
9. Technology and Proprietary Information Ownership.
9.1 Owned Technologies: ICARUS shall retain sole ownership of
ICARUS Technology and its Proprietary Information, and HYPROTECH shall retain
sole ownership of HYPROTECH Technology and its Proprietary Information. Each
party shall retain sole ownership of any existing or new technology, software
modules, models, capabilities, know-how, routines, and/or Proprietary
Information, developed by it for or used by it in HYSYS-IPE or any other Jointly
Developed Product. Neither party shall have any rights to the other party's
Technology or Proprietary Information.
9.2 Other Use: Either party will be able to use Jointly
Developed Software Modules for applications that lie outside the scope of any
Jointly Developed Product, including HYSYS-IPE, without compensation to the
other party, provided that such applications do not directly or indirectly
compete with the other party's products (HYPROTECH Products or ICARUS Products)
or any Jointly Developed Products.
9.3 Access to Other Technologies: In the course of their
business, either party may obtain access to other technologies from external
third parties. There is no restriction on either party entering into external
agreements as appropriate, provided that the terms of any external agreement do
not violate this Agreement.
-----------------
[*] This information has been omitted pursuant to a request for
confidential treatment.
11
12
9.4 Associated Software Modules: Both parties may have today,
or will develop in the future, external to the development program of HYSYS-IPE,
associated modules that may provide additional marketing benefits to the other
party. It is agreed that these modules will be provided to the other party at
the prices in commercial (non-government) published price schedule(s), the terms
of compensation to be negotiated as necessary, provided no prior exclusivity
exists that takes precedence.
9.5 No Transfers: Neither party shall transfer, assign,
pledge, xxxxx x xxxx on or otherwise encumber any Jointly Developed Products, or
Proprietary Information or Technology used in any Jointly Developed Products or
its rights granted under this Agreement, whether outright or as collateral.
9.6 Confidentiality: Neither HYPROTECH nor ICARUS shall
disclose any Proprietary Information of the other to a third party.
10. End User Licensing.
The parties agree that all "sales" shall be via mutually agreed upon
license agreements only. Both parties will agree on the form of end-user license
agreement(s), but agree that all end-user license agreements for Jointly
Developed Products shall contain adequate protections and fixed monetary
limitations of damages for HYPROTECH and ICARUS, and limitations and disclaimers
in the areas of warranty, liability, condition of merchantability or fitness for
the purpose, infringement, and appropriate indemnifications. HYPROTECH agrees to
utilize the basic form of the standard license form utilized by ICARUS for IPE,
reserving the right for HYPROTECH to amend as necessary to offer additional
protections deemed important to HYPROTECH.
11. Competition.
11.1 Each party agrees not to disassemble, reverse engineer, or create
derivative works of the other party's software, software modules, or other
Proprietary Information.
11.2 During the term of this Agreement and for a period of [*]
following the expiration or earlier termination thereof, neither party [*] that
[*] with the other [*], i.e., ICARUS Products or HYPROTECH Products [*] of
execution of this Agreement.
11.3 The parties further agree that Jointly Developed Products [*]
with HYPROTECH Products [*] ICARUS Products, unless the parties mutually agree
to same. HYPROTECH acknowledges that HYSIS-IPE [*] and agrees that [*] shall
not be [*] HYPROTECH, and HYPROTECH further warrants to ICARUS that [*] by
HYPROTECH
-----------------
[*] This information has been omitted pursuant to a request for
confidential treatment.
12
13
that [*] with equipment selection, equipment sizing, cost estimating,
scheduling, CAE and/or CAD. HYPROTECH agrees that [*] will be incorporated [*]
Jointly Developed Products. The parties acknowledge that PROCESS-PRODUCT [*]
with IPE, but except to [*], the parties have not agreed, as of the date hereof,
to develop any Jointly Developed Products which will be [*] with HYPROTECH
Products or ICARUS Products. The foregoing shall not preclude either party from
the development or marketing of software and/or the providing of services,
individually or with others, which products or services [*] either HYPROTECH
Products, ICARUS Products, and/or Jointly Developed Products [*], provided
however, any products [*] Jointly Developed Products, or the [*] Products.
Furthermore, [*] preclude ICARUS from developing custom or customized software
systems for individual Customers (as distinguished from commercially available
products) that integrate ICARUS Technology with the Customer's software or other
software from third parties [*] process simulation software available from third
parties [*] HYPROTECH [*] from developing custom or customized software systems
for [*] other than ICARUS, notwithstanding that in both such instances, the
custom or customized software systems may be [*] to Jointly Developed Products
or ICARUS Products or HYPROTECH Products. In the event either party shall desire
to provide custom or customized services to its respective Customer(s), to the
extent any such services primarily involve utilization of the other party's
technology, Section 11.4 below shall apply.
11.4 [*] Each party hereby agrees that it is in their mutual
respective interests to [*] to the other party that is within said other
party's [*] with respect to [*] offered by either party to its respective
Customers. Therefore, during the term of this Agreement, if one party [*] from
a Customer(s) [*] which involve the [*], the party receiving [*] from its
Customer [*] shall notify the other party [*] in writing of same, including
all material details necessary to the application of this subsection. Such
notification shall be transmitted by the [*] within [*] following receipt of
the Customer's [*], whether such [*] is made in writing, orally and/or by other
means. The [*] shall [*] to the [*]. To the extent the services to be provided
under said [*] involve, to any material degree, services within the [*]
Technology, then the [*] shall be deemed to have the [*] to [*] such services
to the [*] Customer under the [*]. In consideration thereof, the [*] shall
-----------------
[*] This information has been omitted pursuant to a request for
confidential treatment.
13
14
receive from the [*] of the total Customer [*] for such [*], or if the [*] to
be provided by the [*] comprise only part of the [*] to be provided to the
Customer, then [*] of the value or price allocated to such [*], all as
determined by the [*]. Payment shall be due to the [*] only after [*] are
provided by the [*], and payments are received by the [*] from the [*]. The [*]
shall be entitled to retain the [*] of the [*] allocation, as the case may be.
The [*] shall have [*] from receipt of its copy of the [*] within which to
exercise such [*] herein set forth, and to validly exercise same it must notify
the [*] in writing which must be received within the [*] period. Failure to
exercise same within the time period herein set forth shall be deemed an
election not to [*]. Additionally, if at any time a Customer refuses to accept
the [*] as [*] in performance of the [*], then the [*] shall have [*] under
this subsection, and the [*] shall be free to perform the [*] and/or with
others. With respect to any such [*] the provision of which the [*]
participates as herein set forth, all [*] by the [*] during the performance of
the [*] shall be deemed a [*] and both parties to this Agreement shall retain
the rights applicable to same to the extent set forth in this Agreement,
subject, however, to the ownership and other rights of the [*] or [*] by the
[*].
11.5 Both parties will agree not to directly or indirectly recruit or
employ each other's employees during the term of this Agreement and for a period
of five (5) years after termination or expiration of this Agreement.
12. Additional Responsibilities of Each Party.
12.1 The parties shall jointly select from their own full time
personnel a Technical Project Manager and a Business Manager for each joint
development effort, who will define relative responsibilities and expected
revenues. Those personnel shall then select a Product Manager who is a full time
staff member of HYPROTECH or ICARUS, for each Jointly Developed Product.
12.2 It shall be the responsibility of the foregoing
individuals to provide to management at both companies, the development
schedule, budget and marketing strategy with expected revenues for each year
ending 30 April. The development schedule will indicate three-month milestones,
identify the party responsible for the development, and any additional personnel
required. It is the responsibility of management at both companies to review the
schedule, budget, development, assignments, marketing and revenue goals, and to
provide necessary input and final approvals in order to produce a set of
schedules acceptable to both parties.
12.3 Each party will make the appropriately qualified
personnel available to the development team and marketing team. Each party will
endeavor to have the necessary development team for HYSYS-IPE in place no later
than July 31, 1997. Each party will be solely responsible to make all
enhancements to its software modules, as such
-----------------
[*] This information has been omitted pursuant to a request for
confidential treatment.
14
15
enhancements relate to the development of HYSYS-IPE or any other Jointly
Developed Product. Each party will make the necessary modifications to existing
program functionality and/or routines within the time frame agreed to in the
development schedules. If agreed to by the Technical Project Managers and
approved by each company's management, development personnel may be relocated on
a temporary basis from one company's offices to the other company's offices for
efficiency purposes, and subject to such terms and conditions as the parties may
agree upon.
12.4 Both parties will exchange versions of their software
which are included in Jointly Developed Products and documentation with each new
version, and provide copies of such software as needed for the other party to
perform its obligations under this Agreement. Both parties agree to provide
necessary information needed by the development team in order to complete the
integration of the two products.
13. Intellectual Property Rights.
Each party hereby warrants to the other that the technology
provided by said party to any Jointly Developed Product and/or used in the
development thereof, does not and shall not infringe upon any third party United
States and Canadian intellectual property rights including but not limited to
copyright, patent, trade xxxx and trade secrets. Each party agrees to indemnify,
defend and hold the other party harmless with respect to any proceeding brought
by a third party against the other party, alleging infringement of intellectual
property rights. As a condition thereof, each party indemnified hereunder agrees
to give the indemnifying party prompt, written notice of any such claim, suit or
proceeding, and permit the indemnifying party to defend such claim, suit or
proceeding. Under this provision, the indemnifying party shall have control over
the defense of any such claim, suit or proceeding, including appeals,
negotiations, and rights to settle or effect a settlement or compromise thereof,
and agrees to use best efforts to secure the right to continue using the
allegedly infringing technology or agrees to modify or replace same in order to
make it non-infringing. In addition, all expenses incurred with respect to any
such efforts in relation to correcting Jointly Developed Products in the
possession of Customers in order to make them non-infringing, shall be borne by
the indemnifying party.
14. Copy and Unauthorized Use Protection.
Any Jointly Developed Product containing ICARUS software must
have adequate protection against unauthorized use and license management. The
parties agree to use the ICARUS developed ICARUS System Device (ISD) as the
license manager for any product containing ICARUS software, provided ICARUS
agrees to adopt another device if the alternate device can be shown to be as
effective as ICARUS' own and has the same protection against unauthorized use
and license management.
15
16
15. Third Party Licenses.
Each party may utilize third party technology in its
respective software components, provided (i) the technology is properly licensed
by that party for the application and subsequent re-license in the marketplace
to Customers, (ii) each licensing party informs the other party to this
Agreement that licensed technology is being used with an adequate description of
same and the source thereof, and (iii) any costs of such licensing are (a) borne
solely by the party licensing such technology with respect to technology
licenses existing as of the signing of this agreement, the cost of which is
deemed to be already included in the determination of the price schedule and
revenue sharing provisions of this Agreement, and (b) must include any price
adjustments and/or revenue sharing adjustments necessary to be reflective of the
costs of licensing any such technology as may be negotiated by the parties.
16. Subcontractors.
Either party may subcontract a portion of the development work
of any Jointly Developed Product to another person or entity, subject to the
other party's consent, which consent will not be unreasonably withheld. It is
agreed that no subcontracting to a direct or indirect competitor of either party
will occur. In order to subcontract, the other person or entity providing the
services must sign a written agreement, in advance, to be bound by all
intellectual property protections and other indemnifications and protections
afforded to the parties hereunder, and said agreement must include terms
approved by both parties which ensure that both HYPROTECH and ICARUS will retain
exclusive rights to the developed intellectual property and technology. Any
technology developed by a subcontractor will be covered under the terms of this
Agreement.
17. Term.
17.1 Term: The term of this Agreement will be ten (10)
years.
17.2 Default: In the event of material default hereunder, the
non-defaulting party shall give the defaulting party written notice thereof,
adequately describing the default, whereupon the defaulting party shall have
ninety (90) days within which to cure same. If not cured, the non-defaulting
party shall be permitted to exercise all available remedies, and/or terminate
this Agreement pursuant to paragraph 20 hereof.
17.3 Equitable Relief: Notwithstanding the foregoing, nothing
herein shall be deemed to preclude either party from seeking equitable relief of
an appropriate nature, including injunctive relief, against the other party,
with respect to any violation of this Agreement which relates to the
unauthorized release of technology or Proprietary Information or infringement
upon intellectual property rights, without waiting the ninety (90) day period
set forth in Section 17.2 above.
16
17
18. Change in Ownership. A substantial change in ownership is
defined as the change in controlling interest (51% or more) of either party.
With the exception of the specific conditions described in this Section 18, this
contract will remain in force notwithstanding a change in ownership. However, if
a controlling interest (51%) in one party is acquired by a direct competitor of
the other party or if the parent of one party acquires a controlling interest in
a competitor of the other party, this Agreement can be terminated at the option
of the other party, and the other party will have the right to continue the
development and marketing of Jointly Developed Products and any new products
which may or may not be deemed competitive with Jointly Developed Products,
notwithstanding Section 11.2, Competition, and payments due each party shall
continue as defined elsewhere in this Agreement.
19. Disputes/Informal Resolution: Disputes regarding material breaches
of this Agreement shall be governed pursuant to the terms and conditions of this
Agreement pertaining to a party's default. Non-material disputes shall be
resolved in the following manner: The parties shall engage in dialogue between
their Business and Project Managers, and shall progressively involve higher
levels of management as necessary. Either party may notify the other party in
writing, of the existence of a non-material dispute requiring resolution,
whereupon the parties shall have thirty (30) days within which to resolve the
dispute in the manner hereinabove set forth. In the event the parties are unable
to resolve the dispute within said thirty (30) day period or such additional
period of time as to which the parties have agreed in writing, then either party
may invoke and demand binding arbitration pursuant to the rules of the American
Arbitration Association then in effect. If the parties are unable to agree to
the materiality of the breech or dispute, it shall be deemed material for the
purpose of this Section 19. Notwithstanding the foregoing, the parties may agree
in writing to have any material dispute also resolved by arbitration in
accordance with the rules of the American Arbitration Association or pursuant to
any other means. Arbitration under this paragraph shall be held in the State of
Maryland. Nothing herein shall be deemed to limit either party's remedies at law
or in equity with respect to any material breach of this Agreement.
20. Termination.
20.1 Insolvency: The term of this Agreement terminates
automatically in the event that either party is or becomes insolvent.
20.2 Change of Ownership. The term of this Agreement can
also be terminated as provided in Section 18 above.
20.3 Default: The term of this Agreement can also be
terminated if either party is in material default and has not cured the
condition within the agreed to period of time. In such event, the non-defaulting
party shall have, in addition to its other remedies, the option of:
17
18
(a) Allowing the term of this Agreement to
continue for a period of its choosing, but not longer than the current term; or
(b) Terminating the term of this Agreement
immediately.
In the event of termination due to Default, the
non-defaulting party has the right to continue the development and marketing of
Jointly Developed Products and any new products which may or may not be deemed
competitive with Jointly Developed Products, notwithstanding Section 11.2
Competition.
20.4 Responsibilities Upon Termination:
(i) With the exception of termination due to insolvency, both
sides agree to continue to support any then existing Jointly Developed Products
until the end of the term of any license thereof to any Customer.
(ii) Both parties shall retain equal rights to all Jointly
Developed Software Modules which have been made part of the Jointly Developed
Products. However, neither party shall thereafter market, sell, use, distribute,
transfer ownership or possession, lease, license or loan any Jointly Developed
Product, or any trademark or servicemark associated therewith, whether under the
name existing immediately prior to termination or any other name, except to the
extent necessary for the fulfillment of license agreements existing as of the
date of termination, nor shall either party reproduce any Jointly Developed
Product or prepare derivative works therefrom. Notwithstanding the foregoing, in
the event of a termination of this Agreement pursuant to Section 18 above based
upon a change in ownership or pursuant to Section 20.3 above based on a material
default, then the other party shall continue to have the right to market Jointly
Developed Products; provided, however, the provisions of Sections 6.3, 7.4, 7.6
and 7.7 shall be deemed applicable to such post-termination sales of Jointly
Developed Products.
(iii) Notwithstanding termination of the term of this
Agreement, all provisions of this Agreement pertaining to the ownership of
technology, Proprietary Information, intellectual property rights,
indemnifications, and other protections shall remain in full force and effect.
Notwithstanding termination of the term of this Agreement, all provisions of
this Agreement pertaining to non-competition shall remain in full, except as
provided for in Sections 18, Change of Ownership, and 20.3, Default.
21. No Warranties.
21.1 All software and technology contributed by either party
to development of any Jointly Developed Products shall be deemed to be for each
party to evaluate, test and incorporate as determined by the parties jointly.
Therefore, all such software and technology shall be deemed to have been
contributed in "AS IS" condition, and without any warranty or representation of
any kind or nature. The parties shall jointly assume all risk
18
19
associated with the performance or non-performance thereof and neither party
shall be liable to the other as a result of any improper performance or
non-performance thereof.
21.2 Neither party shall be liable to the other as a result of
any failure of any Jointly Developed Product or any component or technology
owned or developed by either party or jointly and contributed thereto. Each
party hereby acknowledges that software is generally of such complexity that
there may be inherent defects, which neither party guarantees can be corrected
or are capable of being corrected. Each party agrees to use reasonable, good
faith efforts to correct or work around any defects.
21.3 NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR IMPLIED,
IN FAVOR OF THE OTHER PARTY, AND EACH PARTY HEREBY DISCLAIMS ALL SUCH
WARRANTIES, INCLUDING ANY EXPRESS WARRANTIES, IMPLIED WARRANTY OF
MERCHANTABILITY, IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, AND ALL
OTHER EXPRESS OR IMPLIED WARRANTIES.
22. Limitation of Liability.
Each party hereby agrees that neither party, nor its
affiliates, dealers, business partners, agents or employees, will be liable to
the other party, with respect to any loss or, damage howsoever arising out of
the use of any Jointly Developed Product and/or any technology incorporated
therein, the results of the use or marketing thereof, or the inability to market
same. In no event shall either party be responsible to the other party for any
special indirect incidental or consequential or exemplary damages. Each party
hereby acknowledges that this limitation of liability is reasonable under the
circumstances, and having regard to the state of the art of computer software
and other component programs thereof, and the nature of this relationship. Each
party agrees to equally bear all risks associated with their joint development
efforts. The limitations herein set forth shall apply even if the other party
has been advised of the possibility of damages, and shall apply to damages of
any nature whatsoever, including without limitation, loss of profits, loss of
revenue, loss of business opportunities, loss of software, loss of data, cost of
recreating software technology or data, cost of any substitute software
technology, data or equipment, and regardless of the theory on which any such
claim or liability may exist, whether based in contract, warranty, negligence,
other tort or any other theory whatsoever.
23. Affiliates.
23.1 Compliance: Both parties agree that each party will take
such action as is appropriate or necessary with respect to its Affiliates, as
well as each of their subcontractors and/or licensors, to assure compliance with
all obligations under this agreement including restrictions on copying and other
protections afforded to each party hereunder, to the extent such Affiliates
become involved in any manner whatsoever with respect to this Agreement.
19
20
23.2 Affiliates Ownership of Technology, Etc.: Each party
recognizes that with respect to each party's respective technology, Proprietary
Information and/or other contributions to the joint development efforts
described in this Agreement, that such party's Affiliates may own and/or share
rights therein. To the extent that either party's Affiliate(s), owns or shares
such rights, such party to this Agreement will take all action necessary and/or
appropriate to require that such rights be transferred to it for the purposes of
this Agreement or that such Affiliate contribute same to the joint development
effort described under this Agreement. To the extent any such Affiliate owns or
shares rights to technology, Proprietary Information and/or otherwise, such
Affiliate has been identified on Schedule B attached hereto.
24. Miscellaneous.
24.1 Complete Agreement; Interpretation: This Agreement,
together with any attachments referred to herein which are hereby made a part
hereof, constitutes the entire agreement of the parties, all prior negotiations,
proposals and writing pertaining to same being superceded hereby. No changes,
alterations or modifications to this Agreement shall be effective unless in
writing and signed by the parties. All headings and numbering in this Agreement
are for the convenience of the parties and for reference only, and shall in no
way be used in the interpretation of any of the provisions hereof.
24.2 Non-Waiver: No benefit or right accruing to either party
under this Agreement shall be deemed waived unless the waiver is agreed to in
writing and signed by the other party. A waiver in one instance of any act,
condition or requirements stipulated herein shall not be deemed a continuing
waiver, nor a waiver of the applicable term or condition of this Agreement, nor
a waiver of any other act, condition or requirement.
24.3 Jury Waiver: Each party hereto knowingly,
voluntarily and intentionally waives the right it may otherwise have to trial by
jury of any dispute arising under or relating in any way to this Agreement.
24.4 No Assignment: Either party may assign this Agreement
upon the prior written consent of the other party, but only to an affiliate or
successor of either party, provided that the assignee confirms its acceptance
and assumption of all terms and conditions herein set forth. This Agreement and
the rights herein granted shall otherwise be non-assignable.
24.5 Laws and Regulations: The validity, construction and
interpretation of this Agreement and the rights and obligations of the parties
hereto shall be governed by the laws of the State of Maryland, U.S.A. (including
where applicable, the Uniform Commercial Code as adopted in the State of
Maryland). Except for actions based on infringement by one party of the other
party's intellectual property rights or breach by one party of its duty of
secrecy and restricted use of confidential information owed to the other party,
each party consents to the jurisdiction and venue of any State or Federal Court
of competent
20
21
jurisdiction in the State of Maryland with respect to any dispute arising out of
this Agreement, and further agrees that the mailing to the other's last known
address by registered mail of any process shall constitute lawful and valid
service of process. This Agreement shall be deemed to have been entered in the
State of Maryland.
24.6 Employee Compliance: Both parties agree that each will
take such action as is appropriate or necessary with respect to its employees,
to assure compliance with all obligations under this Agreement, including
restrictions on copying and other protections afforded to each party hereunder.
24.7 Severability: If any provision or clause of this
Agreement or the application thereof to any person or circumstances is held
invalid or unenforceable, such invalidity or unenforceability shall not affect
the other provisions or applications hereof, which can be given effect, without
the invalid or unenforceable provision or application, and to that end the
provisions of this Agreement are declared to be severable.
24.8 Notices: Notices to either party hereunder shall be sent
by certified mail or registered mail, return receipt requested, by courier or by
recognized, overnight delivery, to the following addresses or to such other
address which either party may hereafter designate by like notice:
ICARUS Development and Marketing Corporation
00000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: President
HYPROTECH, Ltd.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxx, Xxxxxx X0X 0X0
Attn: President
21
22
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
effective the date first above written, intending this document to constitute an
agreement under seal, and intending to be legally bound hereby.
ICARUS DEVELOPING AND HYPROTECT LTD.
MARKETING CORPORATION
By:/s/Xxxxxxx X. Xxxxxxx (seal) By:/s/Xxxxx Sim (seal)
------------------------------- -------------------------------------
Xxxxxxx X. Xxxxxxx Xxxxx X. Sim
------------------------------- -------------------------------------
Name Name
Senior Vice President - Research &
President Development
------------------------------- -------------------------------------
Title Title
28 Jul 97
------------------------------- -------------------------------------
Date Date
22
