Exhibit #10.16
LICENSE AGREEMENT
This Agreement, dated as of March 3, 1996 (the "Effective Date") is made by and
between Fourth Shift Corporation, a Minnesota corporation, with its principal
offices at 0000 Xxxxxxxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
(hereinafter "FSC") and Teknekron Software Systems, Inc. a Delaware corporation,
with offices at 000 Xxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx, 00000 (hereinafter
"TSS").
WHEREAS, TSS is a software developer and supplier of computer
networking software technology, and related software development services,
including the Teknekron Information BUS-TM-, the Rendezvous-Registered
Trademark- Information Bus, Transaction Express, Enterprise Toolkit and other
extensions or derivatives of these products, or of other TSS technologies; and
WHEREAS, FSC desires to embed portions of certain TSS products or
technologies into one or more, current or future FSC product(s), for licensing
through FSC's distribution system;
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement and for other good and valuable consideration, the parties agree
as follows:
1. DEFINITIONS
1.1. "AGREEMENT" shall mean this License Agreement.
1.2. "TSS SOFTWARE" shall mean those TSS software programs or program
modules included on Exhibit A, or amendments to Exhibit A, along with
any UPDATES or ENHANCEMENTS to those programs; whether the programs
are marketed by TSS under the indicated tradename, or under any other
tradename. TSS SOFTWARE consists of DEVELOPMENT SOFTWARE and RUN TIME
SOFTWARE.
1.3. "DEVELOPMENT SOFTWARE" shall mean software applications and library
files that enable FSC to create FSC PRODUCTS as set forth in Exhibit
A.
1.4. "RUN TIME SOFTWARE" shall mean application services which will be
embedded in the FSC PRODUCT as set forth in Exhibit A.
1.5. "FSC PRODUCTS" shall mean the computer software program(s) to be
distributed by FSC which includes all or portions of the RUN TIME
SOFTWARE, including any FSC derivatives of those programs; whether
using the tradename "FSC" or any other tradename, provided, however,
that an FSC PRODUCT may not be a software environment designed for
substantially the same purpose(s) as the TSS SOFTWARE.
1.6. "OBJECT CODE" shall mean computer software programs in
machine-readable format.
1.7. "SOURCE CODE" shall mean computer software programs in human-readable
format which can be converted by a compiler into OBJECT CODE.
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1.8. "DEFECT(S)" shall mean any condition wherein the TSS SOFTWARE supplied
to FSC under this Agreement fails to perform in accordance with the
DOCUMENTATION which was provided to FSC by TSS.
1.9. "DOCUMENTATION" shall mean any performance specifications or user
manuals supplied to FSC by TSS in accordance with this AGREEMENT,
which may include, but is not limited to sequence diagrams, flow
charts, schematics, processes, functional specifications, design
documents, test plans, release notes, installation information, user
documentation, Application Programming Interfaces (APIs), any software
development kit documentation, or other information relating to the
TSS SOFIWARE programs.
1.10. "END-USER" shall mean the person who or entity which licenses an FSC
PRODUCT from FSC pursuant to a valid license agreement which includes
terms protecting against unauthorized duplication or use.
1.11. "NOTICE" shall mean a written notice provided to either party from the
other party in conformance with section 11.1 of this Agreement.
1.12. "AUTHORIZED PLATFORM" shall mean the hardware/operating system
platforms specified in Exhibit A.
1.13. "AUTHORIZED DEVELOPER" shall mean those specific FSC employees and
consultants under contract to FSC (subject to section 2.7 below)
designated by FSC as authorized users of the TSS SOFTWARE as specified
in Exhibit B.
1.14. "DEVELOPER LICENSE" shall mean use of the DEVELOPMENT SOFTWARE by an
AUTHORIZED DEVELOPER on an AUTHORIZED PLATFORM under the terms of this
AGREEMENT.
1.15. "ENHANCEMENTS" shall mean a change or addition to the TSS SOFTWARE,
other than an UPDATE, that improves its function, adds new function,
or substantially enhances its performance. ENHANCEMENTS shall not
include programs that have a value and utility separate from the use
of the TSS SOFTWARE and are priced and offered separately from the TSS
SOFTWARE.
1.16. "UPDATES" shall mean a change to the TSS SOFTWARE that is in a form
that reestablishes material conformity of the TSS SOFTWARE to its
applicable DOCUMENTATION, including bug fixes, error corrections,
minor enhancements of performance, or enhancements to keep the TSS
SOFTWARE current with changes in the AUTHORIZED PLATFORMS. All
UPDATES shall be considered part of the TSS SOFTWARE for all purposes
under this AGREEMENT.
2. LICENSE OF SOFTWARE
2.1. DEVELOPMENT LICENSES
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2.1.1. TSS hereby grants Licensee a non-exclusive, non-transferable
license to use the DEVELOPMENT SOFIWARE and the
DOCUMENTATION on an internal basis for the sole purpose of
creating FSC PRODUCTS, subject to the terms and conditions
of this AGREEMENT. FSC PRODUCTS may be created pursuant to
this license (i) only on the AUTHORIZED PLATFORMS specified
in Exhibit A and (ii) only by AUTHORIZED DEVELOPERS. Each
AUTHORIZED DEVELOPER shall be granted a DEVELOPER LICENSE.
AUTHORIZED DEVELOPERS may create FSC PRODUCTS on either
stand alone computers or on computer networks provided the
number of AUTHORIZED DEVELOPERS may never exceed the number
of DEVELOPER LICENSES for which FSC has paid a license fee
as specified on Exhibit C. FSC may replace or substitute
for a designated AUTHORIZED DEVELOPER but only if the
individual is no longer an employee or consultant of FSC or
is reassigned, on a non-temporary basis, to other duties
within FSC where use of the TSS DEVELOPMENT SOFTWARE will
not be required. FSC may also use the FSC PRODUCTS created
by FSC on an internal basis in accordance with this
AGREEMENT.
2.1.2. FSC may make one copy of the DEVELOPMENT SOFTWARE for each
AUTHORIZED PLATFORM solely for backup purposes.
2.2. LICENSE OF RUN TIME SOFTWARE
2.2.1. Subject to the terms and conditions of this AGREEMENT, TSS
hereby grants FSC a worldwide, non-exclusive,
non-transferable license to (i) link and embed exactly in
the form provided to FSC, the RUN TIME SOFTWARE solely in
conjunction with and as a part of an FSC PRODUCT and (ii)
reproduce, market, sublicense and distribute the RUN TIME
SOFTWARE solely in conjunction with and for execution of FSC
PRODUCTS by END USERS. FSC is prohibited from distributing
the RUN TIME SOFTWARE in any format other than as an
embedded component of an FSC PRODUCT.
2.2.2. FSC may distribute the RUN TIME SOFTWARE as contained in the
FSC PRODUCTS on a worldwide basis on any media, and in any
manner, including but not limited to floppy disks, compact
disks, or using any other computer software storage device
or data communication device.
2.2.3. FSC is authorized to duplicate the RUN TIME SOFTWARE, in
whole or in part, for purposes of product development,
product testing, manufacturing, technical support, sales
support, or archival storage. Where applicable, TSS
copyright notices should be incorporated into the
appropriate software programs. Manufacturing of the FSC
PRODUCTS containing the RUN TIME SOFTWARE or its associated
documentation may be performed by FSC employees, or, subject
to Confidentiality and Proprietary Information restrictions,
by FSC-authorized contractors, agents, software duplication
suppliers, documentation suppliers, or packaging suppliers.
2.3. ENHANCEMENTS. TSS may from time to time offer ENHANCEMENTS as and
when developed or acquired by TSS, to FSC for inclusion in the FSC
PRODUCTS. If the parties agree on including any ENHANCEMENTS,
appropriate changes in the DOCUMENTATION and payment provisions shall
be set forth in a written amendment to this AGREEMENT and
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thereupon the ENHANCEMENTS shall become part of the TSS SOFTWARE and
DOCUMENTATION for purposes of this AGREEMENT.
2.4. This AGREEMENT is not a sale of the TSS SOFTWARE and DOCUMENTATION or
any copy of the TSS SOFTWARE and DOCUMENTATION, and FSC shall have no
title or ownership in the TSS SOFTWARE and DOCUMENTATION, or any
copies of part thereof, regardless of the form on which the original
and any copies may exist. FSC is prohibited from removing or
obliterating any copyright, trademark, or other proprietary rights
notice on the TSS SOFTWARE and DOCUMENTATION.
2.5. FSC may not use (or cause to be used) the TSS SOFTWARE (excluding the
RUN TIME SOFTWARE incorporated into an FSC PRODUCT) for rental, as a
part of a service bureau, or for any similar purpose. Except as
otherwise provided in Section 2.2.1, all sublicensing of the TSS
SOFTWARE and DOCUMENTATION or any part thereof is prohibited. FSC may
not decompile, disassemble, reverse-assemble, analyze or otherwise
examine the TSS SOFTWARE for reverse engineering of the TSS SOFTWARE.
2.6. DOCUMENTATION. Pursuant to the terms of this Agreement, TSS hereby
grants FSC a worldwide, perpetual, non-exclusive, paid up, irrevocable
license right to include, subject to any Confidential and Proprietary
Information restrictions, any or all of the DOCUMENTATION for the RUN
TIME SOFTWARE into FSC's own user documentation or technical support
documentation, as well as the right to develop and own derivatives of
any such FSC PRODUCT documentation. FSC acknowledges and agrees that
this AGREEMENT grants FSC no title or right of ownership in the
original DOCUMENTATION or TSS SOFTWARE. Notwithstanding the above,
FSC or its agents are authorized to include the DOCUMENTATION with any
local language versions of FSC PRODUCT documentation, whether prepared
in a written or an electronic form.
2.7. ALLOWABLE USE. FSC is strictly prohibited from developing any FSC
PRODUCTS where the purpose of such FSC PRODUCT is to create another
stand alone software program that is designed for substantially the
same purpose as the TSS SOFTWARE. If the FSC PRODUCT includes a
programming interface, FSC is prohibited from including functionality
which reproduces, replicates, or substantially duplicates any portion
of the structure, form or functions of the programming interface
provided with the TSS SOFTWARE.
2.8. FSC PRODUCTS shall be distributed with a license agreement which
authorizes an END USER to use the FSC PRODUCT subject to the following
provisions: (a) the limitation on the END USER'S use of the FSC
PRODUCT, including prohibitions on distribution to other parties,
including but not limited to distribution of the RUN TIME SOFTWARE, or
any part thereof; decompiling, disassembling, sublicensing or leasing
the FSC PRODUCT; copying the FSC PRODUCT (other than for making backup
copies); removing or obliterating any copyright, trademark, or
proprietary rights notices; and use on platform other than the
authorized platform; (b) a bar on the export or re-export of the FSC
PRODUCT absent necessary US governmental approvals or export licenses;
(c) an acknowledgment of the inclusion of the RUN TIME SOFTWARE in the
FSC PRODUCT and TSS' proprietary interest in them; (d) an exclusion
of liability on the part of TSS under the license agreement and an
agreement to look solely to FSC for damages relating to the FSC
PRODUCT; (e) a prohibition on the reproduction, distribution,
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use, linking, or embedding of the RUN TIME SOFTWARE or any part
thereof in any other software program; (f) a prohibition on use for
rental, as a part of a service bureau, or for any similar purpose; and
(g) a prohibition on the creation of any software program which makes
direct function calls to the TSS libraries.
2.9. FSC agrees to exercise a reasonable standard of care to (i) limit
access to the TSS SOFTWARE and DOCUMENTATION to its employees which
are AUTHORIZED DEVELOPERS and (ii) prohibit access to the TSS SOFTWARE
and DOCUMENTATION (other than the RUN TIME SOFTWARE incorporated into
an FSC PRODUCT, as authorized in this AGREEMENT) to any third party,
without the prior written consent of TSS. Notwithstanding the
foregoing, FSC shall have the right to allow consultants under
contract to FSC to access the TSS SOFTWARE and DOCUMENTATION provided
that (a) such access is governed by the terms and conditions of this
AGREEMENT including, without limitation, the provisions relating to
designated AUTHORIZED DEVELOPERS and AUTHORIZED PLATFORMS, and (b) FSC
shall be responsible for any failure of any consultant to comply with
the terms and conditions of this AGREEMENT. FSC will establish a
reliable procedure to monitor the use of the TSS SOFTWARE to ensure
that the TSS SOFTWARE and DOCUMENTATION are only being used by
AUTHORIZED DEVELOPERS on the AUTHORIZED PLATFORMS. FSC is prohibited
from disclosing the results of benchmark tests on the TSS SOFTWARE
unless TSS consents to such disclosure in writing. FSC agrees to use
the TSS SOFTWARE and DOCUMENTATION only as specifically authorized in
this AGREEMENT and for no other purpose. These obligations will
survive any termination of this AGREEMENT.
2.10. USE OF TRADENAMES, TRADEMARKS, OR COPYRIGHTS. Pursuant to the terms
of this Agreement, TSS hereby grants FSC a non-exclusive license to
use the TSS trademarks, as supplied by TSS, in connection with the
marketing, sales, and support of the FSC PRODUCTS. TSS represents and
warrants to FSC that the trademarks do not infringe any third party
intellectual property rights. TSS shall indemnify and hold FSC
harmless from any third-party claims that use of the TSS trademarks by
FSC or an END-USER infringes any third party intellectual property
rights. FSC acknowledges and agrees that the trademarks used by TSS
to identify the TSS SOFTWARE may change from time to time. FSC agrees
to change the TSS trademarks it uses in connection with the FSC
PRODUCTS accordingly, provided TSS provides reasonable notice.
2.11. MARKETING AND SALES MATERIALS. FSC may, at its sole discretion and
expense, develop and distribute advertising and product literature
containing system requirements, specifications, functional
information, or any other information related to the TSS SOFTWARE, the
FSC PRODUCTS or associated services. Wherever TSS, its products, or
its tradenames, or trademarks are mentioned or identified, TSS shall
have the right to review and approve any such usage which approval
shall not be unreasonably withheld.
3. PAYMENT SCHEDULE
3.1. LICENSING REPORTS
3.1.1. QUARTERLY REPORTS. FSC shall provide TSS with summarized
quarterly reports of license sales and maintenance/support
sales of the FSC PRODUCTS. Reports covering
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the prior calendar quarter will be provided to TSS within
thirty (30) days following the end of that quarter. All
such reports will be considered Confidential Information as
defined in Section 8.1.
3.1.2. SHIPMENT RECORDS. FSC shall maintain a shipment record of
all authorized licenses of FSC PRODUCTS containing the RUN
TIME SOFTWARE including copies in use by FSC, its
distributors, its resellers, and its licensees. These
records shall be maintained for a minimum of three (3) years
following the shipment of a product to a FSC customer.
3.2. PAYMENTS
3.2.1. LICENSE FEES. For the duration of this Agreement, FSC
agrees to pay TSS license fees for the TSS SOFTWARE
consistent with the terms of the License Fee Schedule
contained in Exhibit C, which fees may be amended from time
to time at the sole discretion of TSS. All fees may be
increased no more than once per year, in accordance with the
ECI, and any government-caused increases which are not
generally reflected in such index, which may include
mandated health insurance. The "ECI" means the US Labor
Department Bureau of Statistics Employment Cost Index for
white collar occupations. All license fees are to be
computed and paid in U.S. dollars.
3.2.2. SUPPORT FEES. FSC shall pay TSS fees annually for the
support of TSS SOFTWARE. The first year's support fee is
set forth in Exhibit C. Support fees may be amended by TSS
at each annual renewal thereof, subject to the provisions of
3.2.1.
3.2.3. PAYMENT PROCEDURES. License fees for the TSS SOFTWARE will
be paid in accordance with the prices and terms contained in
Exhibit C. Payments shall be made by company check or by
electronic funds transfer and shall be due and payable at
the time FSC provides the summarized quarterly report as
defined in section 3.1.1.
3.2.4. THIRD-PARTY SOFTWARE. TSS is responsible to pay all
required royalties or other payments for any third-party
software which may be contained in the TSS SOFTWARE, and
shall continue to maintain licensing and sublicensing terms
and conditions for such software which conform to the
licensing terms and conditions for the TSS SOFTWARE made
between the parties to this Agreement.
3.3. AUDIT RIGHTS. TSS or its authorized agent shall have the right to
periodically audit FSC's licensing revenue records related to the FSC
PRODUCTS to verify compliance with the payment terms of this
Agreement, provided that: 1) FSC is provided at least five (5)
business days advance Notice of the TSS' intention to audit; and 2)
provided that the audit is conducted during normal business hours or
at another time deemed by the parties to be reasonable, and 3)
provided that this audit right may be exercised no more frequently
than once during any twelve month period. If during an audit, FSC is
found to have inaccurately reported the applicable licensing revenue,
FSC shall be required to pay for any unreported licenses as well as an
additional penalty equal to 1 1/2 % per month for the delayed payment
of any applicable royalty fees otherwise due and payable to TSS. If
the royalty fees which were otherwise due and payable for
under-reported
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licenses exceed 5% of the royalties due and payable under this
AGREEMENT, FSC shall reimburse TSS for any reasonable costs associated
with conducting the audit.
4. DELIVERY AND ACCEPTANCE
4.1. DELIVERY. Upon the signing of this AGREEMENT and payment of the
initial licensing fee specified on Exhibit C, TSS shall deliver two
(2) complete copies of the OBJECT CODE versions of all of the RUN TIME
SOFTWARE programs, OBJECT CODE versions of the DEVELOPMENT SOFTWARE,
and all available DOCUMENTATION for the TSS SOFTWARE. Follow-on
deliveries of any new or modified OBJECT CODE or DOCUMENTATION
including the general release versions of all alpha or beta versions
of the LICENSED SOFTWARE, shall be delivered to FSC at the time of
initial beta testing. All deliveries will be F.O.B. TSS' facility in
Palo Alto, California. Reasonable transportation and insurance will
be arranged by TSS and billed to FSC.
4.2. ACCEPTANCE. FSC shall have ten (10) business days following delivery
of the media to verify that: 1) the media is in good working order;
and 2) that the applicable software have been delivered.
5. TERM OF AGREEMENT
5.1. INITIAL TERM. The initial term of this AGREEMENT shall be five (5)
years from the effective date of this AGREEMENT unless terminated
earlier.
5.2. RENEWAL. The initial term (or any extended term resulting from a
renewal) will be automatically extended on a year-to-year basis unless
terminated by written notice from either party at least sixty (60)
days before the end of the term of any renewal thereof. The initial
term (or any extended term resulting from a renewal) will be extended
automatically by one year upon each of the following circumstances:
(a) volume of business in the third year of at least $250,000, (b)
volume of business in the fourth year of at least $300,000, and (c)
volume of business in any subsequent year of at least $350,000. For
avoidance of doubt, if FSC does not meet the preceeding minimum
renewal requirement in any year, the remaining term of the AGREEMENT
after that year will not be less than two years.
5.3. TERM OF LICENSES. Notwithstanding anything contained herein to the
contrary, once FSC has made full payment of the license fee for an
item of TSS SOFTWARE, TSS cannot terminate the license granted
hereunder with respect to such item, except for an uncured breach by
FSC of the terms of Section 2 (Grant of License), Section 8
(Proprietary Information) or Section 11.2 (Assignment).
6. TECHNICAL SUPPORT AND UPDATES
6.1. TSS' SUPPORT OBLIGATIONS.
6.1.1. TECHNICAL SUPPORT SERVICES. FSC shall designate no more
than two (2) AUTHORIZED DEVELOPERS, the right to substitute
not to be unreasonably withheld, to act as technical support
liaison personnel between FSC and TSS. Each such
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designated AUTHORIZED DEVELOPER shall be entitled to access
the TSS Support Center. The Support Center operates during
business hours, 9:00 a.m. to 5:00 p.m. Pacific Time, Monday
through Friday, excluding TSS holidays. The Support Center
may be contacted to notify TSS of problems associated with
the TSS SOFTWARE and related DOCUMENTATION. TSS will log
all problems, including DEFECTS, and exercise best efforts
to provide explanations, assistance in problem resolution,
work-arounds if available and general technical assistance.
6.1.2. SERVICES PROVIDED FOR AN ADDITIONAL CHARGE. The Support
Center will provide the following services for an additional
charge: (i) assistance with questions and problems that
occur when the TSS SOFTWARE is used in a manner that is
inconsistent with its specification, and (ii) support
outside of hours specified in 6.1.1. In cases where FSC
desires these services, or when FSC requires an UPDATE or
bug fix prior to general UPGRADE availability, these
services will be made available to FSC on a time and
materials basis at TSS' standard T&M rates.
6.1.3. DURATION OF SUPPORT. TSS shall only provide technical
support for the current version of the TSS SOFTWARE and for
the version immediately preceding the last UPDATE. TSS
shall support the prior version for a period which shall not
exceed twelve (12) months from the date the UPDATE becomes
generally available. Upon expiration of this twelve months,
and upon request by FSC, TSS will provide support for prior
versions on mutually agreeable terms.
6.1.4. UPDATES. TSS shall provide, for the period during which and
the licenses for which FSC pays annual fees, UPDATES of the
TSS SOFTWARE prepared by TSS when and as such UPDATES become
available for delivery to FSC. TSS shall use reasonable
efforts to include in such UPDATES corrections of DEFECTS in
the TSS SOFTWARE provided TSS is given adequate notice of
the nature of such DEFECTS and provided further that TSS is
under no obligation to correct any DEFECT in any particular
UPDATE.
6.2. FSC'S SUPPORT OBLIGATIONS. Except as otherwise provided in this
AGREEMENT, FSC shall assume all responsibility and liability to END
USERS with respect to the FSC PRODUCTS and, in accordance with this
section, shall assume all responsibility and liability to such END
USERS for support and assistance.
6.2.1. FSC will be responsible for all technical support relating
to the FSC PRODUCT, including any RUN TIME SOFTWARE embedded
therein.
6.2.2. The purchase of technical support is not required, however,
if FSC elects to obtain such support for the DEVELOPMENT
SOFTWARE, FSC must purchase such support for the total
number of AUTHORIZED DEVELOPERS of the DEVELOPMENT SOFTWARE
for which a license is granted under this AGREEMENT, and if
an END USER elects to receive technical support, FSC shall
pay to TSS the applicable fee for support of the RUN TIME
SOFTWARE no later than the date of installation of the FSC
PRODUCT. If FSC elects to purchase support, FSC must
purchase support for both the DEVELOPMENT SOFTWARE and the
RUN TIME SOFTWARE. After the initial
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annual term, and upon receipt by FSC of an invoice
specifying the technical support fee due for the next term,
technical support will be renewable for a successive 12
month period. Payment of the invoice is due by the first
day of the subsequent term. Reinstatement after a lapse of
technical support will require payment by FSC of TSS'
then-current technical support fee for the lapsed period.
All payments are nonrefundable, except in the event this
AGREEMENT is terminated due to a breach by TSS, in which
case FSC shall receive a pro rata refund of the unused
portion.
6.2.3. Licensee is prohibited from providing UPDATES of the RUN
TIME SOFTWARE to END USERS not covered by a support
agreement for such software and for which the applicable
support fee has not been paid.
6.3. TSS will not be obligated to remedy any TSS SOFTWARE defect caused by
FSC's modification or misuse of the TSS SOFTWARE. TSS makes no
warranties with respect to the technical support service being
provided, either express or implied, including without limitation,
any warranty of merchantability or fitness for a particular purpose.
6.4. TRAINING. Training services provided by TSS to FSC personnel may be
purchased by FSC, in accordance with TSS' standard terms and
conditions.
6.5. LICENSING CONTROLS. Unless specifically approved in writing by FSC,
TSS shall make best efforts to ensure that the TSS SOFTWARE shall not
contain any lock, clock, timer, counter, copy protection feature,
defect (virus or worm), or any other disabling device which: (a) might
lock, disable, or erase the programs; (b) prevent FSC or an END USER
from fully using or sublicensing the RUN TIME SOFTWARE in accordance
with this AGREEMENT; or (c) require action or intervention by TSS or
any other person or entity to install or use the TSS SOFTWARE.
7. SOURCE CODE ESCROW
7.1. ESCROW DEPOSIT. TSS agrees to deposit with either Data Securities
International, Inc. (DSI) or another Escrow Agent mutually acceptable
to both parties, a copy of the SOURCE CODE and each subsequent UPDATE
or ENHANCEMENT of any component of the TSS SOFTWARE provided to FSC
under the terms of this AGREEMENT and all such related materials and
design documentation. Prior SOURCE CODE versions of the TSS SOFTWARE
will be maintained in escrow for six months. FSC shall have the right
to inspect and verify at the Escrow Agent's site, that the appropriate
deposits of the applicable SOURCE CODE and documentation are being
made. An additional deposit shall be made upon each new UPDATE or
ENHANCEMENT of the TSS SOFTWARE which is provided to FSC under the
terms of this AGREEMENT. Both parties agree to complete and execute
any and all additional agreements as may be necessary to facilitate
the commitments herein. FSC shall pay TSS a fee of $4,000 for these
escrow services during the first year of this AGREEMENT, and a fee of
$2,000 for each subsequent year. TSS is required to pay any and all
associated fees which are due and payable to the Escrow Agent.
7.2. ESCROW RELEASE CONDITIONS. FSC shall have the right to receive the
SOURCE CODE from escrow only upon the occurrence of one of the
following conditions: (a) TSS ceases to carry on its business; or (b)
TSS fails to provide the support services set forth in section 6.1
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above for a period of 180 days. In the event such release condition
occurs, FSC shall notify the Escrow Agent of such occurrence and the
Escrow Agent shall notify TSS of such claim, all as set forth in the
escrow agreement with terms customary for transactions of this type.
7.3. SOURCE CODE USE RESTRICTIONS. Any SOURCE CODE which may be provided
to FSC by TSS in accordance with section 7 this AGREEMENT shall be
used only for the development, testing, maintenance support, or
manufacturing of FSC PRODUCTS or derivatives of the FSC PRODUCTS. The
SOURCE CODE is only to be provided to employees of FSC and to approved
contractors (whose approval is at the sole discretion of TSS), and
only those employees who have a need-to-know.
8. PROPRIETARY INFORMATION
8.1. CONFIDENTIAL INFORMATION. Each party acknowledges that the other
party may disclose certain technical, financial, or business
information that such other party considers to be confidential and
proprietary ("Confidential Information"), and that the unauthorized
use or disclosure of any such Confidential Information by the party
receiving such Confidential Information (the "Receiving Party") would
cause irreparable financial and other damages to the disclosing party
(the "Disclosing Party"). Without limiting the generality of the
preceding sentence, the parties agree that the TSS SOFTWARE is
included in the Confidential Information of the parties. The
Receiving Party agrees not to disclose to any third party, use or
duplicate any Confidential Information of the Disclosing Party, except
as expressly permitted in this Agreement. The Receiving Party will
limit the disclosure of all such Confidential Information to those of
its employees who have a need to access such Confidential Information
for the performance of this Agreement. The Receiving Party further
agrees to take all reasonable measures to maintain the confidence of
all such Confidential Information in its possession or control, which
measures will in no event be less than the measures that the Receiving
Party takes to protect its own confidential and proprietary
information of similar importance. Each party agrees, on an annual
basis, to inform the other party of product and platform plans.
8.2. EXCEPTIONS. Confidential Information will not include information
that: (a) is in or enters the public domain without breach of this
Agreement; or (b) the Receiving Party lawfully receives from a third
party without restriction on disclosure and without breach of a
nondisclosure obligation; or (c) the Receiving Party develops
independently, which it can prove with written evidence; or (d)
information that the Receiving Party is required by U.S. law or
regulation to disclose.
9. WARRANTIES, INDEMNITIES, AND LIABILITIES
9.1. WARRANTEES
9.1.1. RIGHTS TO LICENSE THE INTELLECTUAL PROPERTY. TSS represents
and warrants that TSS now has and, during the term of this
AGREEMENT, will continue to have the complete, worldwide
right to license the TSS SOFTWARE and to sublicense any and
all third-party software which may be contained in the TSS
SOFTWARE under the licensing terms and conditions contained
in this AGREEMENT. Upon breach of this warranty, FSC may
terminate this AGREEMENT effective immediately and, if FSC
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makes such election, the parties shall be relieved of all
further liability or obligation between them. Such election
must be made within thirty (30) days of notice to FSC of
such breach. If FSC does not make such election, FSC's
sole remedies shall be those set forth in sections 9.2 and
9.3.2 of this AGREEMENT.
9.1.2. DOCUMENTATION. TSS represents and warrants to FSC, for a
period of ninety(90) days from execution of this AGREEMENT,
that the TSS SOFTWARE will function in accordance with the
DOCUMENTATION. TSS represents and warrants to FSC, for a
period of ninety (90) days from receipt by FSC, that any
UPDATES to the TSS SOFTWARE will function in accordance with
the DOCUMENTATION.
9.1.3. MEDIA. TSS warrants for a period of ninety (90) days after
delivery to FSC that the TSS SOFTWARE or any implementation,
modification, UPDATE, ENHANCEMENT, patch, source code, or
documentation has been delivered on media which is free from
any defects in material or workmanship. The sole remedy for
a media defect, at the sole option of FSC, shall be either
(a) the immediate replacement of the media containing the
software or DOCUMENTATION, or ( b) the delivery of the
software or DOCUMENTATION on a different media specified by
FSC.
9.1.4. DISCLAIMER Subject to the foregoing representations and
warranties, TSS does not warrant, guarantee, or make any
representations regarding the use, or results of the use of
the TSS SOFTWARE. THE ABOVE WARRANTIES ARE THE ONLY
WARRANTIES OF USE OF ANY KIND, EITHER EXPRESS OR INLPLIED.
TSS DISCLAIMS ALL OTHER WARRANTIES INCLUDING ANY INLPLIED
WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A
PARTICULAR PURPOSE. Such disclaimer is a fundamental part
of TSS' bargain hereunder. TSS would not have entered into
this AGREEMENT absent such disclaimer.
9.2. INDEMNITIES
9.2.1. SCOPE OF THE INDEMNIFICATION. TSS shall indemnify and agree
to hold FSC harmless from any claim that the TSS SOFTWARE as
contained in any FSC PRODUCT violates the rights of any
third parties with respect to any U.S. copyright, patent, or
trade secret or other U.S. intellectual property right.
9.2.2. CONDITIONS OF INDEMNIFICATION. TSS will have no obligation
under Section 9.2 unless: (1) FSC provides prompt
notification to TSS of any claim which comes to its
attention; and (2) TSS has full discretion and sole control
of the defense or settlement of any such claim; and (3) that
FSC provides full and complete cooperation, at no cost to
FSC, in the defense and settlement of any such claim.
9.3. LIMITATION OF LIABILITIES
9.3.1. CONSEQUENTIAL DAMAGES. FSC acknowledges and agrees that the
license fees and other charges which TSS is charging under
this AGREEMENT do not include any consideration for
assumption by TSS of the risk of FSC's consequential,
incidental, or exemplary damages which may arise in
connection with FSC's use of the TSS
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SOFTWARE. Therefore, neither party shall be liable for any
indirect, special, incidental, consequential, or exemplary
damages, including loss of profits, loss of data, or
interruption of business arising out of or relating to
performance or non-performance by the other party under this
AGREEMENT, whether based on contract, tort, product
liability or any other legal theory, regardless of whether
the party sought to be held accountable has knowledge of the
possibility of such damages.
9.3.2. TITLE DEFECTS. In the event that TSS is unable, using
reasonable commercial efforts, to obtain for FSC rights to
use TSS SOFTWARE in accordance with this AGREEMENT, TSS
shall either (i) obtain a license to use the software,
(ii) provide a functionally similar and compatible program,
(iii) modify the infringing program so that it is non
infringing while maintaining comparable functionality, or
(iv) if none of the above are reasonably feasible, as
determined in TSS' sole judgment, then TSS shall return a
proportionate share of the license fees paid to TSS for the
infringing software, such proportion to be based upon a five
(5) year straight line depreciation schedule; with such
depreciation commencing when the software is delivered.
Following the repayment, TSS shall be discharged of all
further liability for such infringement except for
continuing obligation of indemnification against third party
claims.
9.3.3. PROGRAM DEFECTS. Upon expiration of 9.1.2 above, remedies
for any failure of the TSS SOFTWARE to adequately perform
the functions described in the DOCUMENTATION shall be
limited to TSS' obligations under section 6.1 above.
9.3.4. LIMITED LIABILITY. With the exception of liability for
claims related to Section 9.2. 1, "Scope of the
Indemnification" or to Section 8.1 "Confidential
Information, TSS shall be not be liable hereunder for any
amount greater than the sum of license fees paid to TSS
pursuant to this AGREEMENT for the specified term during
which the liability occurred.
10. TERMINATION
10.1. TERMINATION FOR DEFAULT. This AGREEMENT may be terminated by the
non-defaulting party if any of the following events of default occur:
10.1.1. If either party materially fails to perform or comply with
this AGREEMENT or any provision thereof, and does not cure
such default within forty-five (45) days of the written
notification from the other party; or, if the default is not
one which by its nature cannot be fully remedied within
forty-five (45) days, the defaulting party has not
undertaken all reasonable measures toward remedying the
default within said forty-five (45) day period including a
date agreed to by both parties for final remedy of the
breach, or does not cure the breach by the agreed-upon
date;
10.1.2. If either party is declared insolvent by court or
governmental agency;
10.1.3. If either party makes a general assignment for the benefit
of creditors;
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10.2. MUTUAL AGREEMENT. This Agreement may be terminated at any time by the
mutual agreement of the parties. Continuing rights and obligations of
the parties specified in section 10.3 shall survive the termination of
this AGREEMENT.
10.3. CONTINUING RIGHTS AND OBLIGATIONS. The following rights and
obligations would survive termination of this AGREEMENT:
10.3.1. SUBLICENSES. Right-to-use sublicenses to END USERs shall
survive termination of this AGREEMENT. The termination or
expiration of one license shall not affect any other
license.
10.3.2. RETURN OF PROPRIETARY BUSINESS DATA. Upon termination of
this AGREEMENT both parties shall collect the proprietary
business or technical information and the TSS SOFIWARE which
belongs to the other party, except as may be necessary to
continue to support FSC's existing customers, and to return
it to the appropriate party or provide an officer's written
certification that all such materials have been collected
and completely destroyed.
10.3.3. PROPRIETARY INFORMATION. Obligations of the parties to
safeguard and protect the proprietary information of the
other party, in accordance with section 8 of this AGREEMENT,
shall survive termination of this AGREEMENT.
10.3.4. PAYMENTS. Obligations for license fees and any other
specified charges incurred prior to the termination date of
this AGREEMENT shall survive termination of this AGREEMENT.
10.3.5. All FSC rights to the FSC PRODUCTS and any associated
documentation, copyrights, trademarks, tradenames, and
other assets related to the FSC PRODUCTS shall survive
termination of this AGREEMENT. All TSS rights to the TSS
SOFTWARE, and the associated documentation, copyrights,
trademarks, and tradenames shall survive termination of
this AGREEMENT.
11. MISCELLANEOUS AGREEMENTS
11.1. NOTICES. All notices under this Agreement shall be in writing, and
either hand delivered, delivered by prepaid courier, or sent by
electronic means, with a copy sent concurrently by certified mail,
return receipt requested. Notices shall be sent to the parties at the
following addresses or such other addresses as the parties
subsequently may provide:
IF to LICENSEE: Fourth Shift Corporation
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
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With a COPY to: Xxxxxx & Xxxxxxx
Attorneys at Law
0000 Xxxxx Xxxx Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
IF to LICENSER: Teknekron Software Systems, Inc.
000 Xxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Chief Financial Officer
Telephone: (415) 325 -1025
Fax: (000) 000-0000
With a COPY to: Xxxxx & Xxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
11.2. ASSIGNMENT. Neither party may assign or transfer any of the rights or
responsibilities set forth herein without the express written consent
of the other party and any attempt to do so shall be deemed void,
except that either party may assign this Agreement and/or any of its
rights and/or obligations hereunder, upon written notice to the other
party to another entity in the event of that party's merger or
consolidation with another entity, without the consent of the other
party, provided that the assignee is capable of fulfilling and intends
to fulfill the obligations of the assigning party under this
Agreement. Notwithstanding the above, this AGREEMENT shall inure to
the benefit of the party's respective successors, permitted assigns,
or any Acquirer of the intellectual property assets related to the TSS
SOFTWARE.
11.3. CONFIDENTIALITY. The relationship between the parties to this
AGREEMENT and the specific terms and conditions of this AGREEMENT are
considered to be proprietary business information of the parties.
Without the prior, written approval of the other party, neither FSC or
TSS may disclose this information or issue a public relations
announcement concerning any relationship between the parties, and then
only to the extent authorized in the written approval.
Notwithstanding the above, TSS and FSC may each refer to the other in
their marketing, promotion and sales efforts.
11.4. TAXES. FSC is responsible for the payment of all applicable taxes,
assessments, fees, or duties related to the licensing, export, or
import of the RUN TIME SOFTWARE as embodied in the FSC PRODUCTS by FSC
with the exception of taxes based upon TSS' income.
11.5. FORCE MAJEURE. No delay, failure, or default in performance of any
obligation of either party hereunder shall constitute a breach of this
Agreement to the extent caused by Force Majeure. The term "Force
Majeure" shall be defined to include fires, earthquakes, or other
casualties or accidents, acts of God, severe weather conditions,
strikes or labor disputes, war or
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other violence, failures of suppliers to deliver components or
services, or any law, order, proclamation, regulation, ordinance,
demand, or requirement of any governmental agency.
11.6. DISCLAIMER OF AGENCY. Nothing in this AGREEMENT shall be construed as
creating a partnership, joint venture, or agency relationship between
the parties, or as authorizing either party to act as agent for the
other.
11.7. GOVERNING LAW. This AGREEMENT is governed by, and construed in
accordance with the laws of the State of California without regard to
conflict of law principles.
11.8. DISPUTE RESOLUTION PROCESS. In the event of any disagreement
regarding performance under or interpretation of this AGREEMENT and
prior to the commencement of any formal proceedings, the parties shall
continue performance as set forth in this AGREEMENT and shall attempt
in good faith to reach a negotiated solution by designating
representatives of appropriate authority to resolve the dispute(s) in
a timely and expeditious manner. If the matter is not resolved within
forty-five (45) days following a formal Notice of perceived breach of
contract or dispute to the other party, then the parties agree to
resolve such dispute in accordance with the terms of section 11.14.
Nothing in this AGREE MENT shall be construed to restrain the parties
from pursuit of equitable relief through any court of competent
jurisdiction for any breach of Confidentiality or Confidential
Information.
11.9. COMPLIANCE WITH LAWS. In the performance of this contract, the
parties shall comply with the requirements of all applicable laws and
regulations of any state, country, or governmental entity. Neither
party shall export any licensed programs without, if it is required,
first obtaining a license or clearance from the Department of Commerce
or other appropriate agency of the United States Government.
11.10. ENTIRE AGREEMENT. This AGREEMENT, including the Exhibits,
Attachments, or mutually signed amendments shall constitute the entire
agreement between the parties concerning the subject matter hereof,
and will supersede all previous communications, representations,
understandings, and agreements, either oral or written, between the
parties. The parties acknowledge that they have read the AGREEMENT,
understand it, and agree to be bound by its terms and conditions,
which have been negotiated by the parties, without respect to the
author of any clause, section, or exhibit. All headings in this
AGREEMENT are included solely for convenient reference and shall not
affect the meaning or interpretation of this AGREEMENT.
11.11. NO WAIVER. Neither party's failure to exercise any of its rights
hereunder shall constitute or be deemed a waiver or forfeiture of any
such rights.
11.12. SEVERABILITY. If any provision of this AGREEMENT is held by any court
of competent jurisdiction to be invalid or unenforceable, that
provision will be severed from the AGREEMENT and any remaining
provisions will continue in full force, so long as the AGREEMENT still
expresses the intent of the parties.
11.13. COUNTERPARTS. This AGREEMENT may be executed in one or more
counterparts, each of which shall be deemed an Original, and all of
which taken together shall constitute one and the same AGREEMENT.
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11.14. ARBITRATION. Subject to Section 11.8, any controversy or claim
arising out of or related to this AGREEMENT, or the breach shall be
settled by binding arbitration. The party first filing its demand for
arbitration shall simultaneously specify the name, address and phone
number of its arbitrator. The party receiving such demand shall
respond within five (5) days of receipt of such demand by giving the
name, address and phone number of its arbitrator. The parties'
respective arbitrators need not be neutral. A third arbitrator shall
be selected by the parties' respective arbitrators or, if they are
unable to do so within five (5) days of appointment, at the election
of either party, by the American Arbitration Association under the
Rules. The arbitrators as so empaneled shall promptly meet and fix a
time and place for the hearing of the dispute which time shall not be
more than sixty (60) days after the empanelment. The majority of the
panel shall render a decision within ten (10) days of the completion
of the hearing and shall promptly transmit an executed copy of the
award to the respective parties. The decision of the arbitrators
shall be final and binding upon the parties and enforceable in any
court of competent jurisdiction. The parties agree that this section
11.14 does not apply to breaches of confidentiality or proprietary
rights provisions and that either party may petition a court of law
for injunctive relief and such other rights and remedies as it may
have at law or equity against such breaches. The parties further
agree that the arbitrator(s) shall have no authority or jurisdiction
to determine disputes involving any limitation of liability or to
modify such limitations in any manner. Arbitration shall take place
in either San Francisco, California, or Minneapolis, Minnesota, or, if
the parties cannot agree, in Chicago, Illinois.
11.15. ATTACHMENTS. Any attachments or Exhibits to this AGREEMENT shall be
initialed and dated by both parties to the AGREEMENT. All amendments
must be signed and dated by authorized representatives of each party.
Any Exhibits are hereby incorporated by reference into this AGREEMENT.
EXHIBIT A: LICENSED SOFTWARE PROGRAMS
EXHIBIT B: AUTHORIZED DEVELOPERS
EXHIBIT C: LICENSE FEE SCHEDULE
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized representatives.
AGREED:
FOURTH SHIFT CORPORATION TEKNEKRON SOFTWARE SYSTEMS, INC.
Signed: /s/ XX Xxxxxxxx Signed: /s/ Xxxxx X. Xxxx
----------------------------- -------------------------------
Print Name: XX Xxxxxxxx Print Name: Xxxxx X. Xxxx
------------------------- ---------------------------
Title: President Title: Exec. Vice President/CFO
------------------------------ --------------------------------
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