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EXHIBIT 10(i)
ITM SOFTWARE DEVELOPMENT AGREEMENT
THIS ITM SOFTWARE DEVELOPMENT AGREEMENT (the "Agreement") is made and
entered into this 9th day of September, 1994 by and between BEARHILL LIMITED, A
British Virgin Islands corporation ("Bearhill") with its principal place of
business at Xxxxxxxxxx Plaza, P.O. Box 873, Wickhams Cay I, Road Town, Tortola,
British Virgin Islands and GUARDIAN TIMING SERVICES, INC., an Ontario
corporation ("GTS") with its principal place of business at 000 Xxxxxxxx Xxxxxx
Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx, Xxxxxx.
RECITALS
A. Bearhill wishes to market investment advisory services internationally,
using market timing techniques to produce better return for its investors.
B. Bearhill requires computer software in order to generate market timing
signals.
C. Bearhill has selected GTS to perform the development of Release I of the
ITM Software and the related documentation upon the terms and subject to the
conditions of the Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "ACCEPTANCE CRITERIA" shall mean the technical and operational
performance criteria as described in Schedule A.
1.2 "ACCEPTANCE DATE" shall mean the date when a Deliverable has been duly
accepted by Bearhill as per Section 3.4.
1.3 "ACCEPTANCE TEST PLAN" shall mean the detailed test plan created by
GTS for development of the ITM software as described in Schedule A.
1.4 "CHANGE ORDER" shall mean an amendment to the ITM Specifications or
Project Plan meeting the requirements set forth in Section 2.1.
1.5 "CONFIDENTIAL INFORMATION" shall mean proprietary information as
described in Section 7.
1.6 "DELIVERABLE" shall mean a specific, tangible, numbered component of
the ITM Software, as described in the Project Plan, including, but not limited
to, source or object code, or Documentation. All Deliverables will be in
English.
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1.7 "DELIVERY DATE" shall mean the actual date on which GTS delivers a
Deliverable to Bearhill pursuant to Section 3.3 to enable acceptance testing
for the Deliverable in accordance with Section 3.4.
1.8 "DERIVATIVE WORK" shall mean a work which is based upon one or more
pre-existing works, such as a revision, modification, translation, abridgement,
condensation, expansion, collection, compilation or any other form in which
such pre-existing works may be recast, transformed or adapted, and which, in
the absence of this Agreement or other authorization by the owner of the
pre-existing work, would constitute a copyright infringement or other
infringement of proprietary rights of the owner therein.
1.9 "DOCUMENTATION" shall mean the documents indicated in the Project
Plan.
1.10 "FINAL ACCEPTANCE DATE" shall mean the date when all Deliverables have
been completed by GTS.
1.11 "ITM SOFTWARE" shall mean the proprietary computer software program as
described in Exhibit B, "Description of Software".
1.12 "PROJECT PLAN" shall mean that part of Schedule A described as the
"Project Plan", which describes the phases into which the ITM Project is
divided.
2. SPECIFICATIONS
2.1 Specifications and Acceptance Test Plan
(a) The ITM Specifications are described in Schedule A.
(b) Bearhill shall, with the assistance of GTS conduct the
acceptance tests in accordance with the Acceptance Test Plan
and the Acceptance Criteria.
2.2 Change Orders
Any amendment to the ITM Specifications or Project Plan shall be valid
and binding only if effected by a Change Order approved as hereinafter set
forth.
(a) Bearhill may initiate a Proposed Change Order by delivering to
GTS a written request signed by an officer of Bearhill
requesting GTS to prepare information to substantiate the
Proposed Change Order. Such writing shall specify the
requested change and cross-reference the portion of the ITM
Specifications or Project Plan which is proposed to be
amended.
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(b) Upon receipt of a written request pursuant to this Section,
GTS shall, within fifteen (15) days, prepare a good faith
estimate of the effort required to complete the Proposed
Change Order for Bearhill's review. Such estimate shall be
limited to those adjustments that GTS reasonably requires to
implement the requested change and shall contain:
(i) a detailed description of the proposed amendment to
the ITM Specifications or Project Plan (including, as
necessary, the Deliverables and technical
information); and
(ii) the change, if any, to the terms of this Agreement;
(c) GTS may initiate a Proposed Change Order by delivering a
Proposed Change Order meeting the requirements of Section
2.2(b) to Bearhill. Bearhill shall evaluate and respond to
GTS with respect to any Proposed Change Order on or before the
fifteenth (15th) day after receipt.
(d) Proposed Change Orders shall become effective as Change Orders
and shall act as amendments to this Agreement and to portions
of the ITM Specifications and Project Plan specified in such
Proposed Change Order upon their execution by an officer of
Bearhill and by an officer of GTS.
3. DEVELOPMENT OF SOFTWARE
3.1 Creation of Software
GTS agrees to design, develop and complete the ITM Software and
Documentation in accordance with the Project Plan, so that the ITM Software
confirms to, and operates in accordance with, the ITM Specifications set out in
Schedule A.
3.2 GTS's Obligations
During development of the ITM Software, GTS shall:
(a) Provide Bearhill with reasonably detailed written progress
reports monthly and as otherwise requested;
(b) Provide Bearhill with access to the ITM Software and
Documentation on GTS's premises;
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(c) Develop the ITM Software with diligence in a competent, timely
and professional manner.
(d) Commit and utilize sufficient resources and qualified
personnel to complete development of the ITM Software and
Documentation within the development timetable set forth in
the Project Plan and ITM Specifications:
(e) Not engage in any activity to:
(i) sell, assign, encumber, restrict or otherwise
transfer the ITM Software, in whole or in part, or
any rights therein, or
(ii) impede the marketing of licenses to use the ITM
Software;
(f) Notify Bearhill promptly of any factor, occurrence or event
coming to its attention that may affect GTS's ability to meet
any of its obligations hereunder or that is likely to occasion
any material delay in delivery of any of the Deliverables.
3.3 Delivery
In accordance with the Project Plan, GTS shall create the Deliverables
and deliver them to Bearhill for approval and acceptance in accordance with
Section 3.4.
With respect to each Deliverable, GTS hereby grants to Bearhill a
limited, fully paid and exclusive license to use the Deliverables as follows:
(1) To use and reproduce the Deliverables for the purposes of
performing acceptance testing in accordance with Section 3.4
of this Agreement;
(2) To use and reproduce the Deliverables for the purposes of
marketing and demonstration of the ITM Software including, but
not limited to, developing preliminary market contacts and
further developing end user prospects and excluding
installations or sales of the ITM Software.
This license shall terminate on the date Bearhill accepts delivery of
the ITM Software as set forth in Section 3.4(d) or upon termination of this
Agreement, whichever is earlier.
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3.4 Acceptance Testing
(a) Each Deliverable will be created by GTS and delivered to
Bearhill for approval. For those Deliverables requiring
machine execution, acceptance tests shall be run by Bearhill
as set forth in the Acceptance Test Plan with the assistance
of GTS. Deliverables not requiring machine execution will be
compared by Bearhill to criteria as set forth in the
Acceptance Test Plan.
(b) Bearhill shall promptly notify GTS in writing of any failure
or failures of a Deliverable discovered in testing or of any
discrepancy of a Deliverable against the checklist. Upon such
notification, GTS shall immediately undertake to correct such
failure or discrepancies. Upon such correction, acceptance
testing shall again be performed to determine that the
Deliverable complies with the requirements set forth in
subsection 3.4(a) above. Failure of a Deliverable that is
material to the development of the ITM Software to satisfy any
such criteria after the second round of acceptance testing
shall constitute a material breach of this Agreement by GTS
entitling Bearhill to pursue its remedies on default set forth
under Article 9 unless GTS has provided Bearhill with a
reasonably acceptable plan to satisfy the Acceptance Criteria.
(c) Bearhill shall make every reasonable effort to promptly
deliver written acceptance of a Deliverable in a time frame
that is consistent with the approved detailed Project Plan,
but shall in any event deliver such notification within twenty
(20) days (or such other number of days set forth in the
Project Plan) after the Delivery Date.
(d) The Final Acceptance Date for the ITM Software shall be
determined by the successful completion, by Bearhill, of the
final acceptance tests. The precise time, date, and place of
these tests shall be mutually agreed by the parties. Bearhill
shall deliver written notification to GTS in not less than
fifteen (15) days following the tests of any failure or
failures of the ITM Software discovered in testing or any
deficiencies or errors found. GTS shall have thirty (30) days
to remedy any deficiencies or errors to Bearhill's reasonable
satisfaction or if such deficiencies or errors cannot be
remedied within such thirty (30) day period, GTS shall present
Bearhill within such period a remedial plan of action which
shall have a reasonable opportunity for success. Failure of
the ITM Software to satisfy the final acceptance tests
according to the above procedures shall constitute a material
breach of this Agreement by GTS.
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3.5 GTS's Representations, Warranties and Covenants
(a) GTS represents and warrants to Bearhill that:
(i) the ITM Software and Documentation are and shall be
original with GTS in every and all respect;
(ii) Neither the ITM Software and Documentation nor any
rights therein have been or shall be, in any way,
encumbered, restricted, conveyed, granted or
otherwise diminished; and
(iii) The ITM Software and its use, marketing and
distribution does not and will not infringe any
patent, copyright, trade secret or other proprietary
rights of any third party.
(b) GTS covenants for the benefit of Bearhill that:
(i) GTS shall itself perform all of its duties under this
Agreement and will not subcontract for any work to be
performed by other parties; and
(ii) For a period of five (5) years following the date of
this Agreement, GTS will not develop or acquire any
software product or service similar to the ITM
Software for companies that compete with Bearhill.
4. DEVELOPMENT CONSIDERATION
4.1 Fixed Price for Development
For the performance of all of GTS's obligations hereunder (other than
Section 6.4) Bearhill shall pay to GTS 12.5% of all revenues earned by
Bearhill, including, without limitation, revenue from all licenses of the ITM
Software and revenue from investment management services performed by Bearhill
(whether or not such investment management services are dependent on the use of
the ITM Software).
4.2 Taxes
GTS will be responsible for all taxes arising from payments and
advances from Bearhill pursuant to this Agreement.
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4.3 GTS Right to Use
In addition, notwithstanding any other provisions of this Agreement,
GTS shall have the non-exclusive right to use the ITM Software in GTS's
investment management business, but in such case GTS shall pay to Bearhill 15%
of all revenues directly attributable to the exploitation of the ITM Software.
5. OWNERSHIP OF INTELLECTUAL PROPERTY
5.1 Title
Bearhill has, and at all times shall retain, all right, title and
interest in and to the Project Plan and the ITM Specifications, any
modification and Derivative Works thereof, and all intellectual property rights
relating thereto, All rights, title and interest in and to the ITM Software,
any modification and Derivative Works thereof, the Documentation and all
intellectual property rights relating thereto shall be owned exclusively by
Bearhill upon the Final Acceptance Date.
5.2 Filings or Registrations - Notices
GTS shall assist Bearhill in making any filings or registrations which
Xxxxxxxx xxxxx appropriate to protect Bearhill's interest in the ITM Software
and/or Documentation. In addition, GTS agrees to affix appropriate copyright
or other proprietary notices on the ITM Software and/or Documentation as
directed by Bearhill.
6. GTS'S SUPPORT
When Bearhill becomes the owner of the ITM Software pursuant to
Section 5.1, the following provisions shall apply:
6.1 Error Correction
GTS shall maintain the ITM Software free of all "bugs" and errors as
long as Section 6.4 remains in effect.
6.2 New Techniques
GTS shall, on a best effort basis, promptly inform Bearhill of any new
techniques, procedures, or other developments which may necessitate updating
the ITM Software.
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6.3 Marketing
Bearhill shall have sole responsibility and rights to price and market
the ITM Software and Documentation and any requested signals derived therefor.
GTS shall provide assistance in the preparation of such marketing materials,
including providing Bearhill with such information regarding the ITM Software
as Bearhill shall reasonably request.
6.4 GTS Management Agreement
Bearhill hereby appoints GTS as the manager of the ITM Software, for a
term of one year on the date of acceptance of the ITM Software. As manager GTS
shall input all necessary data, run the ITM Software and indicate forthwith to
Bearhill when the ITM Software indicates a buy, sell, hold or short signal in
respect of any stock market being monitored. Bearhill shall, from time to
time, instruct GTS which stock markets are to be monitored using the ITM
Software. In consideration of its services under this Section 6.4, GTS shall
receive a fee of 2.5% of the gross revenues earned by Bearhill from its
investment management and advisory business (such fee to be in addition to the
fee set out in section 4.1). The provisions of this Section 6.4 may be renewed
annually, at the option of Bearhill. If Bearhill does not terminate the
provisions of this Section 6.4 by written notice given at least thirty days
before the end of the term, the provisions of this Section 6.4 shall continue
for a further year.
7. CONFIDENTIALITY
7.1 Definition
Bearhill and GTS have and will develop, own and disclose to each other
certain proprietary techniques and confidential information ("Confidential
Information") which have great value in their respective businesses. Except as
provided in this Agreement, each party shall retain sole and exclusive
ownership, right, title and interest in and to all of its Confidential
Information.
7.2 Protection of Confidential Information
Should either party disclose to the other party any of its
Confidential Information, the party receiving the Confidential Information
shall maintain the Confidential Information in confidence, shall use at least
the same degree of care to maintain the secrecy of the Confidential Information
as it uses in maintaining the secrecy of its own proprietary, confidential and
trade secret information, shall always use at least a reasonable degree of care
in maintaining the secrecy of the Confidential Information, shall use the
information only for the purpose of performing its obligations under this
Agreement unless otherwise agreed in writing
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by the other party, and shall deliver to the other party, in accordance with
any request from the other party, all copies notes, packages, diagrams,
computer memory media and all other materials containing any portion of the
other party's Confidential Information. Neither party shall disclose any such
Confidential Information to any person except those of its employees having a
need to know in order to accomplish the purposes and intent of this Agreement,
and shall require each employee, before he or she receives direct or indirect
access to the Confidential Information, to acknowledge the confidential,
proprietary and trade secret nature of the Confidential Information and to
agree to be bound by this Section 7.2.
7.3 Limitation of Obligations
Neither party shall have any obligation with respect to any portion of
such Confidential Information which:
(i) was known to it prior to receipt from the other party,
(ii) is lawfully obtained by either party from a third party under
no obligation of confidentiality or
(iii) is or becomes publicly available other than as a result of any
act or failure to act of the receiving party.
7.4 Injunctive Relief
GTS and Bearhill acknowledge that:
(i) the restrictions contained in Section 7.2 are reasonable and
necessary to protect the other party's legitimate interests,
(ii) in the event of a violation of these restrictions, remedies at
law will be inadequate and such violation will cause
irreparable damages to the other party within a short period
of time, and
(iii) the disclosing party will be entitled to injunctive relief
against each and every violation.
7.5 Protection of Proprietary Rights
GTS shall at its own cost and expense, protect and defend Bearhill's
ownership of the ITM Software and Documentation and all copyrights, trademarks
and trade secrets associated therewith, against all claims, liens and legal
processes
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of creditors of GTS and misappropriations by third parties from GTS, its
agents, subdistributors or employees and keep the same free and clear from all
such claims, liens, processes, and misappropriations.
8. INFRINGEMENT INDEMNITY
8.1 Indemnity
GTS agrees to provide Bearhill with the following protection against
claim of proprietary right infringement of the ITM Software or Documentation.
Subject to Bearhill's compliance with its obligations set forth in
this Section, GTS shall:
(1) indemnify Bearhill from and against any liability, cost, loss
or expense of any kind;
(2) hold harmless Bearhill and save it from any liability, cost,
loss or expense of any kind; and
(3) defend any suit or proceeding against Bearhill arising out of
or based on any claim, demand or action alleging that the ITM
Software or Documentation or any portion thereof as furnished
under this Agreement and used as herein contemplated infringes
any third-party rights in copyright or patent or the trade
secret rights of any third party.
In addition, GTS shall pay any costs, damages or awards of settlement,
including court costs, arising out of any such claim, demand or action,
provided that Bearhill promptly gives written notice of the claim, demand or
action to GTS and that GTS may direct and fully participate in the defense or
any settlement of such claim, demand or action.
8.2 Undertakings If Infringement Found
In the event that the ITM Software or Documentation or any portion
thereof developed by GTS, as furnished under this Agreement and used within the
scope hereof, is held in such a suit or proceeding to infringe a third party
proprietary right as set forth in Section 8.,1, and that the use of the ITM
Software and/or Documentation or any portion thereof is enjoined, GTS shall, at
its sole option and expense:
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(1) procure for Bearhill the right to continue using the ITM
Software and/or Documentation or portion thereof, or
(2) replace the same with non-infringing software or documentation
of equivalent functions and efficiency.
8.3 Bearhill's Obligations
Bearhill shall promptly notify GTS in writing of any claim hereunder
and shall cooperate with and provide all reasonable assistance to GTS, at GTS's
expense, in the defense or settlement of such claim.
9. TERM AND TERMINATION
9.1 Term
This Agreement shall commence as of the date of this Agreement set
forth on its first page and will include all work done on ITM Software prior to
such date and shall remain in effect, unless terminated as provided in this
Article.
9.2 Termination
This Agreement will terminate upon the occurrence of any one of the
following events before the Final Acceptance Date as follows:
(a) In the event that either party is adjudged insolvent or
bankrupt, or if any proceedings are instituted by or against
it seeking relief, reorganization or arrangement under any
laws relating to insolvency, or upon any assignment for the
benefit of its creditors, or upon the appointment of a
receiver, liquidator or trustee of any of its property or
assets, or upon the liquidation, dissolution or winding up of
its business, then and in any such event this Agreement may be
terminated or cancelled immediately by the other party upon
the giving of written notice.
(b) Upon the other party's default as set forth in Sections 9.1
and 9.2, the non-defaulting party may terminate this Agreement
following fifteen (15) days' written notice to the other
party.
9.3 Survival
The provisions of Section 3.5, 4, 5, 7, 8, 9, 10 and 11 shall survive
termination of this Agreement for any reason.
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00. MISCELLANEOUS
10.1 Governing Laws
It is the intention of the parties hereto that the laws of the
Province of Ontario (irrespective of its choice of law principles) shall govern
the validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties hereto.
The parties agree to exclude the United Nations Convention on Contracts for the
International Sale of Goods from this Agreement and from any agreement that may
be executed to implement this Agreement.
10.2 Binding Upon Successors and Assigns
Subject to, and unless otherwise provided in this Agreement, each and
all of the covenants, terms, provisions and agreements contained in this
Agreement shall be binding upon, and inure to the benefit of, the permitted
successors, executors, heirs, representatives, administrators and assigns of
the parties hereto; provided, however, that this Agreement shall not be
assignable by either party without the prior written consent of the other
party.
10.3 Severability
If any provisions of this Agreement, or the application thereof, shall
for any reason and to any extent be invalid or unenforceable, the remainder of
this Agreement and application of such provision to other persons or
circumstances shall be interpreted so as best to reasonably effect the intent
of the parties hereto.
10.4 Entire Agreement
This Agreement, and the documents referred to in this Agreement, along
with their exhibits, constitute the entire understanding and agreement of the
parties with respect to their subject matter and supersede all prior and
contemporaneous agreements or understandings.
10.5 Amendment and Changes
No amendment, modification, supplement or other purported alteration
of this Agreement shall be binding upon the parties unless it is in writing and
is signed on behalf of the parties by their own authorized representatives.
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10.6 Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be an original as against any party whose signature appears thereon
and all of which together shall constitute one and the same instrument.
10.7 Other Remedies
Any and all remedies expressly conferred upon a party by this
Agreement shall be deemed cumulative with and not exclusive of any other remedy
conferred by this Agreement or by law on such party, and the exercise of any
one remedy shall not preclude the exercise of any other.
10.8 No Waiver
The failure of any party to enforce any of the provisions of this
Agreement shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
10.9 Notices
Whenever any party desires or is required to give any notice, demand,
or request with respect to this Agreement, each such communication shall be in
writing and shall be effective only if it is delivered by overnight messenger
services, express or electronic means (with confirmed receipt), addressed as
follows:
GTS: Xxxx-Xxxxxx Fruchet
Guardian Timing Services
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax Number: (000) 000-0000
Bearhill:
Bearhill Limited
Xxxxxxxxxx Plaza
P.O. Box 873
Wickhams Cay I
Road Town, Tortola
British Virgin Island
Fax Number: (000) 000-0000
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Such communications shall be effective when they are received by the
addressee. Any party may change its address for such communications by giving
an appropriate notice to the other party in conformity with this Section.
10.10 No Joint Venture
Nothing contained in this Agreement shall be deemed or construed as
creating a joint venture or partnership between the parties. Except as
expressly set forth, no party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party, and the
relationship of the parties is, and at all times will continue to be, that of
independent contractors.
10.11 Further Assurances
Each party agrees to cooperate fully with the other party and to
execute such further instruments, documents and agreements and to give such
further written assurance, as may be reasonably requested by the other party,
to better evidence and reflect the transactions described in and contemplated
by this Agreement, and to carry into effect the intents and purposes of this
Agreement.
10.12 Force Majeure
Neither party will be liable for any failure or delay in performing an
obligation under this Agreement that is due to cause beyond its reasonable
control, such as natural catastrophes, governmental acts or omissions, laws or
regulations, labour strikes or difficulties, transportation stoppages or
slowdowns or the inability to procure parts or materials.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove written.
BEARHILL LIMITED GUARDIAN TIMING SERVICES,
INC.
By: /s/ Xxxxxxxx Xxxxxxx By /s/ J.P. Fruchet
----------------------------- -----------------------------
Title: Director Title: President
-------------------------- -------------------------
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SCHEDULE A
PROJECT PLAN
The Project Plan for the ITM Software describes the phases into which
the ITM Project is divided.
Overview of Project
The objective of the Project is to create a disciplined timing model
using a proprietary computer software program - the ITM Software - to generate,
buy, sell, hold or short signals in respect of any stock market being
monitored. The stock markets that will be monitored are the U.S. stock market
(U.S. Standard and Poor's Index), the Japanese Stock Market (Nikkei 225
Average), the United Kingdom Stock Market (FTSE 100 Share Index) and the German
Stock Market (Frankfurt Dax Index).
Release I of the ITM Software will relate only to the U.S. stock
market. Release II, III and IV will relate to the Japanese, United Kingdom and
German stock markets respectively. Release II, III and IV will be undertaken
only the Final Acceptance Date and upon specific request by Bearhill to proceed
with a further Release. There are no specific acceptance criteria or
acceptance test plans with respect to Release II, III or IV.
Project Plan
Phase I
The creation and testing of the Main Computer Program taking into
consideration the ITM specifications, the Acceptance Criteria and the
Acceptance Test Plan. Phase I will be completed within sixty days.
Phase II
The Documentation of the ITM Software will be completed within a
further thirty days.
Phase III
Final Acceptance by Bearhill's testing of the ITM Software.
Deliverables
There will be four Deliverables.
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SCHEDULE B
DESCRIPTION OF SOFTWARE
The ITM Software is a proprietary computer software program which is
used to generate buy and sell signals with respect to any stock market being
monitored.
The stock markets that will be monitored are the U.S. stock market
(U.S. Standard and Poor's Index), the Japanese Stock Market (Nikkei 225
Average), the United Kingdom Stock Market (FTSE 100 Share Index) and the German
Stock Market (Frankfurt Dax Index).
The ITM Software is based on a disciplined decision process on inputs
that are based on fundamental and technical elements. Once the data has been
entered, the ITM Software generates objective buy, hold, sell or short signals
for any monitored stock market as a whole.
The date that will be used in the ITM Software will be obtained from
sources in the public domain, mostly from Xxx Xxxxx Research, a company which
specializes in providing economic and market information. What is unique about
the ITM Software is the proprietary manner in which the data is treated by the
software to generate timing signals.
Release I will provide timing signals for the U.S. stock market (S & P
500 Index). Market timing signals for the Japanese, United Kingdom, and German
markets will be developed by combining the U.S. timing signals with timing
signals for these three markets as obtained from Xxx Xxxxx Research, but
treated by GTS in a proprietary manner. Bearhill shall indicate to GTS the
order in which the software for each of the Japanese, United Kingdom and German
markets is to be developed. Development for each will be completed within
thirty days.
DELIVERABLE #1: This will be the Main Computer Program which
generates all buy, hold, sell or short signals on the basis of the individual
inputs and the decision rules included in the Computer Program. The Main
Computer Program will be available on a diskette.
DELIVERABLE #2: The Documentation will describe each individual input
and the source, frequency of the input as well as the decision rules to reach
buy and sell signals.
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DELIVERABLE #3: The Main Printout will show all the individual inputs
entered on a daily or weekly basis as well as all buy and sell signals during
the Test Periods.
DELIVERABLE #4: The Summary of Results will show the individual buy
and sell dates and the corresponding level of the S &P 500.
ITM Specifications
The ITM Software, as applied to the Standard and Poor's 500 Index
("S&P 500") must meet the following specifications, using backtesting methods
to apply the buy and sell signals over the period from January 5, 1979 to
December 31, 1993 (the "Test Period"):
(a) a maximum number of 100 buy and sell signals during the Test
Period;
(b) a ratio of profitable trades to unprofitable trades of at
least 2 to 1;
(c) a ratio of points gain in profitable trades to points lost in
unprofitable trades of at least 3 to 1;
(d) a compound annual return for the simulation which outperforms
a buy-and-hold strategy for the Standard and Poor's 500 Index
by at least 6% per annum on average over the period.
Acceptance Criteria
(a) Technical Criteria
1. The software must be able to run on an IBM compatible personal
computer using 386 processor and a hard disk with 3M free disk space.
2. The buy and sell signals must be generated by the computer
software program using a constant set of programming rules.
(b) Operational Performance Criteria
1. Source of inputs to the software. All elements entering the
software must be in the public domain and readily available to institutional
investors.
2. At least eighty percent of all individual inputs must be available
on a weekly or daily basis.
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0. The maximum number of individual inputs per daily input into the
software program must not exceed fifty.
Acceptance Test Plan
The Acceptance Test Plan for the development of the ITM Software will
be conducted by Bearhill with the assistance of GTS as follows:
(a) the Acceptance Test Plan will cover the Test Period;
(b) GTS will enter the data for each of the individual elements,
as described in the Documentation, entering into the ITM
Software which will generate the Main Printout;
(c) The buy and sell signals, including the dates and the
corresponding S & P 500 level generated by the ITM Software,
as shown on the Main Printout, will be entered by GTS into the
Summary of Results.
The Summary of Results, the Documentation and the Main Printout will
be compared by Bearhill to the ITM Specifications and the Acceptance Criteria.
Bearhill will have the right to verify that data entered is accurate.
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