Exhibit 10.5
INTELLECTUAL PROPERTY AGREEMENT
THIS INTELLECTUAL PROPERTY AGREEMENT (this "Agreement") is dated as of
December 31, 1996 ("Effective Date") by and between True North
Communications Inc., ("TNC"), and TN Technologies Holding Inc. ("TNT"), and
describes the terms and conditions pursuant to which TNT shall license to TNC
certain Software (as defined below).
WHEREAS, TNC desires to receive a license to certain assigned intellectual
property assets of TNT and TNT desires to grant such license in accordance with
the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valid consideration, the receipt and adequacy of which are hereby acknowledged,
the parties, intending to be legally bound, agree as follows:
1. Definitions
For the purpose of this Agreement, the following terms shall have the
following meanings:
1.1 "Confidential Information" means all Software listings, Documentation
(as defined below), information, data, drawings, benchmark tests,
specifications, trade secrets, object code and machine-readable copies of the
Software (as defined below), source code relating to the Software, and any other
proprietary information supplied to TNC by TNT, including all items defined as
"confidential information of TNT" in any other agreement between TNC and TNT
whether executed prior to or after the date of this Agreement.
1.2 "Documentation" means any instruction manuals or other materials
regarding the Use (as defined below) of the Software.
1.3 "Maintenance and Support" means the services described in Section 5.
1.4 "Software" means the computer software programs specified in Attachment
A and otherwise provided to TNC pursuant to this Agreement.
1.5 "Update" means a release or version of the Software containing
functional enhancements, extensions, error corrections or fixes that are
generally made available (other than media and handling charges) by TNT, and
shall include the source code embodied in such functional enhancements,
extensions, error corrections or fixes.
1.6 "Use" means utilization of the Software by TNC and its affiliates and
subsidiaries (as permitted herein) for their own internal information processing
services and computing needs.
2. Grant of License
2.1 License Grant. Subject to the terms and conditions of this Agreement,
TNT hereby grants to TNC a nonexclusive and nontransferable license to (a) Use
the Software, and to make sufficient copies as necessary for such Use; (b) use
and copy the Documentation in connection with Use of the Software; and (c)
modify and enhance the Software and hire third parties to do so in accordance
with Section 2.4 below. This license transfers to TNC neither title nor any
proprietary or intellectual property rights to the Software, Documentation, or
any copyrights, patents, or trademarks, embodied or used in connection
therewith, except for the rights expressly granted herein. The license for the
Knowledge Network (as described on Attachment A) shall become perpetual and paid
up upon the payment of all Development Costs set forth in Attachment B. The
Software may not be sublicensed by TNC; provided, however, that (a) the SCJNet
Software (as described on Attachment A) may be sublicensed by TNC to S.C.
Xxxxxxx & Son, Inc. ("SC Xxxxxxx"), for SC Johnson's use (and the use of SC
Johnson's affiliates and subsidiaries) consistent with the terms of this
Agreement; (b) the KCNet Software (as described in Attachment A) may be
sublicensed by TNC to Xxxxxxxx Xxxxx Corporation ("KC"), for KC's use (and the
use of KC's affiliates and subsidiaries) consistent with the terms of this
Agreement; and (c) the Software may be used by the affiliates and subsidiaries
of TNC consistent with the terms of this Agreement.
2.2 Deliverables. Unless otherwise indicated in Attachment B, TNT shall
issue to TNC, as soon as practicable, but in no later than ninety (90) days
after the Effective Date one (1) machine-readable copy of the Software,
including source code thereto, along with one (1) copy of the appropriate
Documentation.
2.3 Copies. TNC may not copy the Software, except as permitted by this
Agreement; provided, however, that TNC will be entitled to make a reasonable
number of machine-readable copies of the Software for backup, disaster recovery
or archival purposes. TNC shall maintain accurate and up-to-date records of the
number and location of all copies and users of the Software and Documentation
and inform TNT in writing of such location(s) on a quarterly basis. All copies
of the Software and Documentation will be subject to all terms and conditions of
this Agreement. Whenever TNC is permitted to copy or reproduce all or any part
of the Software and Documentation, all titles, trademark symbols, copyright
symbols and legends, and other proprietary markings must be reproduced. In the
event that TNC requires additional copies of the Software from TNT, TNT shall
provide such copies at the cost of the media upon which the Software is stored.
Any re-installation services for such replacement copies will be provided by TNT
to TNC in accordance with the provisions of the Software Maintenance and
Enhancement Agreement between TNC and TNT of even date herewith.
2.4 TNC Modification and Enhancement of the Software. TNC shall have the
right to modify and enhance the Software and hire third parties to do so,
provided that TNC shall first discuss such modifications and enhancements with
TNT, and TNT shall have the opportunity to propose that TNT will modify and
enhance the Software. If the parties do not agree upon terms under which TNT
shall modify and enhance the Software, TNC shall have the right to modify and
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enhance the Software and hire third parties to do so, provided that such third
parties agree to abide by the confidentiality provisions of this Agreement.
3. License Restrictions
TNC agrees that it will not itself, or through any parent, other
subsidiary, affiliate, agent or other third party:
(a) sell, lease, license or sublicense the Software or the Documentation;
(b) decompile, disassemble, or reverse engineer the Software, in whole or
in part;
(c) allow access to the Software by any user other than TNC's employees and
the employees of TNC's affiliates and subsidiaries; (provided, however
the SCJNet Software may be used by SC Xxxxxxx (and its affiliates and
subsidiaries) and the KCNet Software may be used by KC (and its
affiliates and subsidiaries));
(d) use the Software to provide processing services to third parties, or
otherwise use the Software on a "service bureau" basis; or
(e) provide, disclose, divulge or make available to, or permit use of the
Software by any third party without TNT's prior written consent.
4. License Fee
4.1 Payment. In consideration of the license granted pursuant to Section
2.1, TNC agrees to pay TNT the License Fees as defined and specified in
Attachment B on the dates specified therein.
4.2 Taxes. All charges and fees provided for in this Agreement (including
the Maintenance Fees as defined and specified in Attachment B) are exclusive of
and do not include any taxes, duties, or similar charges imposed by any
government. TNC agrees to pay or reimburse TNT for all federal, state, dominion,
provincial, or local sales, use, personal property, excise or other taxes, fees,
or duties arising out of this Agreement or the transactions contemplated by this
Agreement (other than taxes on the net income of TNT).
5. Maintenance and Support
Maintenance and support of the Software shall be provided in accordance
with the terms of the Maintenance and Support Agreement between the parties of
even date herewith.
6. Limited Warranty and Limitation of Liability
TNT warrants that the Software will perform with substantially the same
features and
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functionality of the Software currently installed at TNC's premises for a period
of one (1) year from the Effective Date. If during this time period the Software
does not perform as warranted, TNT shall, at its option, undertake to correct
the Software, replace such Software free of charge or, if neither of the
foregoing is commercially practicable, terminate this Agreement and refund to
TNC the License Fee. In addition, TNT warrants that the media on which the
Software is distributed will be free from defects in materials and workmanship
under normal use for a period of ninety (90) days from the Effective Date. TNT
will replace any defective media returned to TNT within the ninety (90) day
period. The foregoing are TNC's sole and exclusive remedies for breach of
warranty. The warranty set forth above is made to and for the benefit of TNC
only. The warranty will apply only if:
(a) the Software has been properly used at all times and in accordance with
the instructions as communicated in writing by TNT;
(b) no modification, alteration or addition has been made to the Software
by persons other than TNT or TNT's authorized representative; and
(c) TNC has not requested modifications, alterations or additions to the
Software that cause it to deviate substantially from the same features
and functionality of the Software currently installed at TNC's
premises.
EXCEPT AS SET FORTH ABOVE, TNT MAKES NO WARRANTIES, WHETHER EXPRESS,
IMPLIED, OR STATUTORY REGARDING OR RELATING TO THE SOFTWARE OR THE
DOCUMENTATION, OR ANY MATERIALS OR SERVICES FURNISHED OR PROVIDED TO TNC UNDER
THIS AGREEMENT, INCLUDING MAINTENANCE AND SUPPORT. TNT SPECIFICALLY DISCLAIMS
ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO THE SOFTWARE, DOCUMENTATION AND SAID OTHER MATERIALS AND
SERVICES, AND WITH RESPECT TO THE USE OF ANY OF THE FOREGOING.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT WILL TNT BE
LIABLE FOR ANY LOSS OF PROFITS, BUSINESS INTERRUPTION, LOSS OF DATA, COST OF
COVER OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN
CONNECTION WITH OR ARISING OUT OF THE FURNISHING, PERFORMANCE OR USE OF THE
SOFTWARE OR SERVICES PERFORMED HEREUNDER, WHETHER ALLEGED AS A BREACH OF
CONTRACT OR TORTIOUS CONDUCT, INCLUDING NEGLIGENCE, EVEN IF TNT HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. IN ADDITION, TNT WILL NOT BE LIABLE FOR ANY
DAMAGES CAUSED BY DELAY IN DELIVERY OR FURNISHING THE SOFTWARE OR SAID SERVICES.
TNT'S LIABILITY FOR DAMAGES WILL NOT, IN ANY EVENT, EXCEED THE LICENSE FEE PAID
BY TNC TO TNT UNDER THIS AGREEMENT.
The provisions of this Section 6 allocate risks under this Agreement
between TNC and TNT.
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TNT's pricing reflects this allocation of risks and limitation of liability.
No action arising out of any breach or claimed breach of this Agreement or
transactions contemplated by this Agreement may be brought by either party more
than one (1) year after the cause of action has accrued. For purposes of this
Agreement, a cause of action will be deemed to have accrued when a party knew or
reasonably should have known of the breach or claimed breach.
No employee, agent, representative or affiliate of TNT has authority to
bind TNT to any oral representations or warranty concerning the Software. Any
representation and warranty of TNT concerning the Software not in this Agreement
will be valid only if (a) it is in writing dated after the Effective Date, and
(b) the writing is executed by an officer of TNT.
7. Indemnification for Infringement
TNT shall, at its expense, indemnify and hold TNC harmless from any claim,
action or allegation brought against TNC that the Software infringes any patent,
copyright, trade secret or other proprietary right of any third party and shall
pay any final judgments awarded or settlements entered into; provided that TNC
gives prompt written notice to TNT of any such claim, action or allegation of
infringement and gives TNT the authority to proceed as contemplated herein. TNT
will have the exclusive right to defend any such claim, action or allegation and
make settlements thereof at its own discretion, and TNC may not settle or
compromise such claim, action or allegation, except with prior written consent
of TNT. TNC shall give such assistance and information as TNT may reasonably
require to settle or oppose such claims. If any such infringement, claim, action
or allegation is brought or threatened, TNT may, at its sole option and expense:
(a) procure for TNC the right to continue Use of the Software or
infringing part thereof;
(b) modify or amend the Software or infringing part thereof, or replace
the Software or infringing part thereof with other software having
substantially the same or better capabilities without substantially
increasing TNC's costs (for example, RAM upgrades shall not be
considered to substantially increase TNC's costs whereas replacement
of several CPUs will be considered to substantially increase TNC's
costs); or,
(c) if neither of the foregoing is commercially practicable terminate this
Agreement and repay to TNC a portion, if any, of the License Fee equal
to the amount paid by TNC less one-forty-eighth (1/48) thereof for
each month or portion thereof that this Agreement has been in effect,
whereupon TNT and TNC will be released from any further obligation to
the other under this Agreement, except for the obligations of
indemnification provided for above and such other obligations that
survive termination.
The foregoing obligations shall not apply to the extent the infringement
arises as a result of modifications to the Software made by any party other than
TNT or TNT's authorized representative.
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The foregoing states the entire liability of TNT with respect to infringement of
any patent, copyright, trade secret or other proprietary right.
8. Confidential Information
8.1 TNC's Obligations. TNC acknowledges TNT's claim that the Confidential
Information constitutes valuable trade secrets, and TNC agrees that it shall use
Confidential Information solely in accordance with the provisions of this
Agreement and will not disclose, or permit to be disclosed, the same, directly
or indirectly, to any third party without TNT's prior written consent. TNC
agrees to exercise due care in protecting the Confidential Information from
unauthorized use and disclosure. However, TNC bears no responsibility for
safeguarding information that is publicly available, already in TNC's possession
and not subject to a confidentiality obligation, obtained by TNC from third
parties without restrictions on disclosure, independently developed by TNC
without reference to Confidential Information, or required to be disclosed by
order of a court or other governmental entity.
8.2 TNT's Obligations. TNT acknowledges that, in the course of its
performance of this Agreement, it may become privy to certain information that
TNC deems proprietary and confidential. TNT agrees to treat all such information
that is identified as proprietary and confidential in a confidential manner and
will not disclose or permit to be disclosed the same, directly or indirectly, to
any third party without TNC's prior written consent. However, TNT bears no
responsibility for safeguarding information that is publicly available, already
in TNT's possession and not subject to a confidentiality obligation, obtained by
TNT from third parties without restrictions on disclosure, independently
developed by TNT without reference to such information, or required to be
disclosed by order of a court or other governmental entity.
8.3 Injunctive Relief. In the event of actual or threatened breach of the
provisions of Section 8.1 or 8.2, the nonbreaching party may have no adequate
remedy at law and will be entitled to seek immediate and injunctive and other
equitable relief, without the necessity of showing actual money damages.
9. Term and Termination
9.1 Term. This Agreement will take effect on the Effective Date and will
remain in force until terminated in accordance with this Agreement.
9.2 Termination by TNC. This Agreement may be terminated by TNC upon
ninety (90) days' prior written notice to TNT, with or without cause, provided
that no such termination will entitle TNC to a refund of any portion of the fees
under Attachment B. Such termination shall not occur within five (5) years after
the Effective Date with respect to the Knowledge Network Software.
9.3 Termination by TNT. TNT may, by written notice to TNC, terminate this
Agreement if any of the following events ("Termination Events") occur:
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(a) TNC fails to pay any undisputed amount due TNT within thirty (30)
days after TNT gives TNC written notice of such nonpayment;
(b) TNC is in material breach of any nonmonetary term, condition or
provision of this Agreement, which breach, if capable of being
cured, is not cured within thirty (30) days after TNT gives TNC
written notice of such breach;
(c) TNC (i) terminates or suspends its business, (ii) becomes
insolvent, admits in writing its inability to pay its debts as
they mature, makes an assignment for the benefit of creditors, or
becomes subject to direct control of a trustee, receiver or
similar authority, or (iii) becomes subject to any bankruptcy or
insolvency proceeding under federal or state statutes; or
(d) TNT elects to refund TNC's fees in accordance with Section 7.
Termination of this Agreement will not affect the provisions regarding
TNC's or TNT's treatment of Confidential Information, provisions relating to the
payment of amounts due, or provisions limiting or disclaiming TNT's liability,
which provisions will survive termination of this Agreement.
9.4 Effect of Termination. If the Development Costs set forth on
Attachment B for any of the Software licensed herein have not been fully paid,
within thirty (30) days after the date of termination or discontinuance of this
Agreement for any reason whatsoever, TNC shall (a) cease all Use of the Software
and the Documentation for which Development Costs have not been fully paid; and
(b) return such Software and all copies, in whole or in part, all such
Documentation relating thereto, and any other Confidential Information relating
to such Software in its possession that is in tangible form. TNC shall furnish
TNT with a certificate signed by an executive officer of TNC verifying that the
same has been done.
10. Nonassignment/Binding Agreement
Neither this Agreement nor any rights under this Agreement may be assigned
or otherwise transferred by TNC, in whole or in part, whether voluntarily or by
operation of law, including by way of sale of assets, merger or consolidation,
without the prior written consent of TNT, which consent will not be unreasonably
withheld. Subject to the foregoing, this Agreement will be binding upon and will
inure to the benefit of the parties and their respective successors and assigns.
11. Notices
Any notice required or permitted under the terms of this Agreement or
required by law must be in writing and must be (a) delivered in person, (b) sent
by first class certified mail, or air mail, as appropriate, or (c) sent by
overnight air courier, in each case properly posted and fully prepaid to the
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appropriate address set forth below. Either party may change its address for
notice by notice to the other party given in accordance with this Section.
Notices will be considered to have been given at the time of actual delivery in
person, three (3) business days after deposit in the mail as set forth above, or
one (1) day after delivery to an overnight air courier service.
12. Miscellaneous
12.1 Force Majeure. Neither party will incur any liability to the other
party on account of any loss or damage resulting from any delay or failure to
perform all or any part of this Agreement if such delay or failure is caused, in
whole or in part, by events, occurrences, or causes beyond the control and
without negligence of the parties. Such events, occurrences, or causes will
include, without limitation, acts of God, strikes, lockouts, riots, acts of war,
earthquake, fire and explosions, but the inability to meet financial obligations
is expressly excluded.
12.2 Waiver. Any waiver of the provisions of this Agreement or of a
party's rights or remedies under this Agreement must be in writing to be
effective. Failure, neglect, or delay by a party to enforce the provisions of
this Agreement or its rights or remedies at any time, will not be construed and
will not be deemed to be a waiver of such party's rights under this Agreement
and will not in any way affect the validity of the whole or any part of this
Agreement or prejudice such party's right to take subsequent action.
12.3 Severability. If any term, condition, or provision in this Agreement
is found to be invalid, unlawful or unenforceable to any extent, the parties
shall endeavor in good faith to agree to such amendments that will preserve, as
far as possible, the intentions expressed in this Agreement. If the parties fail
to agree on such an amendment, such invalid term, condition or provision will be
severed from the remaining terms, conditions and provisions, which will continue
to be valid and enforceable to the fullest extent permitted by law.
12.4 Integration. This Agreement (including the Attachments and any
addenda hereto signed by both parties) contains the entire agreement of the
parties with respect to the subject matter of this Agreement and supersedes all
previous communications, representations, understandings and agreements, either
oral or written, between the parties with respect to said subject matter. This
Agreement may not be amended, except by a writing signed by both parties, with
an officer of TNT executing such writing.
12.5 Conflicting Terms. No terms, provisions or conditions of any
purchase order, acknowledgment or other business form that TNC may use in
connection with this Agreement or the performance of the terms hereof will have
any effect on the rights, duties or obligations of the parties under, or
otherwise modify, this Agreement, regardless of any failure of TNT to object to
such terms, provisions or conditions.
12.6 Export Controls. TNC may not export or re-export the Software
without the prior written consent of TNT and without the appropriate United
States and foreign government licenses.
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12.7 Non-Waiver. No exercise or enforcement by either party of any right
or remedy under this Agreement will preclude the enforcement by such party of
any other right or remedy under this Agreement or that such party is entitled by
law to enforce.
12.8 Governing Law. This Agreement will be interpreted and construed in
accordance with the laws of the State of Illinois and the United States of
America, without regard to conflict of law principles.
12.9 Dispute Resolution.
(a) Except as set forth in Sections 8.1 and 8.2 any dispute,
controversy or claim arising in connection with this Agreement, shall be settled
by binding arbitration if so requested by any party hereto pursuant to paragraph
(b) below. The arbitration shall be conducted by three arbitrators, who shall be
appointed pursuant to the rules of the American Arbitration Association (the
"AAA"). The arbitration shall be held in Chicago, Illinois and shall be
conducted in accordance with the commercial arbitration rules of the AAA, except
that the rules set forth in this Section 2.11 shall govern such arbitration to
the extent they conflict with the rules of the AAA.
(b) Upon written notice by a party to the other parties of a request
for arbitration hereunder, the parties shall use their commercially reasonable
efforts to cause the arbitration to be conducted in an expeditious manner. All
other procedural matters shall be within the discretion of the arbitrators. In
the event a party fails to comply with the procedures in any arbitration in a
manner deemed material by the arbitrators, the arbitrators shall fix a
reasonable period of time for compliance and, if the party does not comply
within said period, a remedy deemed just by the arbitrators, including an award
of default, may be imposed.
(c) The determination of the arbitrators shall be final and binding on
the parties. Judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction. The parties shall each be responsible for
their own expenses in connection with such arbitration, including without
limitation, counsel fees and fees of experts; provided, however, that the
parties shall share equally in the expense of the arbitrators and of the AAA.
IN WITNESS WHEREOF, the parties have executed this Agreement.
TRUE NORTH COMMUNICATIONS INC. TN TECHNOLOGIES HOLDING INC.
"TNC" "TNT"
By: By:
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(print name and title) (print name and title)
Date: Date:
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Address: Address:
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ATTACHMENT A
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SOFTWARE
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Knowledge Network
SCJNet
KCNet
ATTACHMENT B
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FEES
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KNOWLEDGE NETWORK
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TNC has paid to TNT three hundred seventy thousand dollars ($370,000) and TNT
acknowledges receipt of such payment. On the Effective Date, TNC shall pay to
TNT three hundred seventy thousand dollars ($370,000). On July 1, 1997, July 1,
1998, July 1, 1999 and July 1, 2000, regardless of the term of this Agreement,
TNC shall pay TNT one-fifth of TNT's development costs in equal portions (the
"Development Costs"), with such Development Costs calculated on TNT's prorated
estimate of Development Costs to be determined on December 31, 1996. In no event
will any of such July payments be less than seven hundred forty thousand dollars
($740,000) or exceed eight hundred thousand dollars ($800,000). Such payments
will be adjusted upward in the event the two payments of three hundred seventy
thousand dollars ($370,000) do not equal one-fifth of the Development Costs, to
account for any shortfall.
SCJNET
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TNC shall pay TNT a license fee of $150,000, due by the Effective Date and TNT
acknowledges receipt of such payment.
On each anniversary of the Effective Date for each year of the term of this
Agreement, TNC shall pay TNT a license fee of $50,000 per year, at the
commencement of each such year.
KCNET
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TNC has paid to TNT fifty thousand dollars ($50,000) and TNT acknowledges
receipt of such payment for Phase I of the KCNet Software. TNC and TNT shall
agree on the fees for further phases of the KCNet Software, and TNC shall have
rights to such further phases in accordance with the terms of this Agreement as
such fees for further phases are agreed upon by the parties.
