1
EXHIBIT 10.9
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT, is made as of the 16th day of January, 1996, by and
between Template Software, Inc., a Maryland corporation with a place of
business at 00000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000 (hereinafter
"Consultant") and Xxxxx Preferred Choice, LLC, with a place of business at 0000
X Xxxxxx X.X., Xxxxx 000, Xxxxxxxxxx, XX 00000 (hereinafter "Buyer").
1. Services to be provided. While this Agreement is in effect and as
requested by Buyer, Consultant shall provide computer programming, system
analysis, design, training, data processing, consulting or related services
(the "Services") as further described in Schedule A (the "Work Order") and in
such additional Work Orders that the parties may sign from time to time. The
Work Order shall set forth, at a minimum, (a) the statement of work, (b) the
payment schedule for the applicable services, (c) the schedule of milestones,
(d) deliverables and delivery dates, (e) acceptance criteria (fixed price Work
Orders only), and (f) reporting requirements.
2. Changes to Services. Either party may request a change to the
Services set forth in a Work Order pursuant to a written change order ("Change
Order"). Each Change Order shall identify specifically and modifications to
the Services as described in a Work Order, including, without limitation,
modifications to tasks, timetables, deliverables, fees and charges, and
staffing. Within ten (10) days after the receipt of a Change Order, the
parties shall discuss the availability of personnel and resources to fulfill
such Change Order and the resulting adjustments to the Services as described in
the Work Order. Consultant, or Buyer, as applicable, shall have no obligation
to commence work in connection with any Change Order until such Change Order is
executed by both parties. Each Change Order executed by Buyer and Consultants
shall be incorporated into and constitute an amendment to this Agreement. The
terms of any Change Order shall control over any inconsistent provisions set
forth in the Agreement or any Work Order.
3. Progress Reports. Upon Buyer request from time to time, Consultant
shall provide Buyer with a status report of Consultant's activities relating to
a Work Order, including an explanation of actual or anticipated problem areas.
4. Work Rules and Regulations. Unless otherwise set forth in the Work
Order, Consultant shall perform Services at the location of Consultant set
forth in the first paragraph of this Agreement, or such other places as may be
required from time to time and mutually agreed to by the parties. Unless
otherwise stated in the Work Order, the employees and contractors of each party
shall observe the work rules and security regulations while performing work on
the others parties premises.
Development Agreement Page 1
2
5. Fees and Expenses.
(a) The fee paid to the Consultant and the method and timing of
the payment shall be stated in the Work Order.
(b) The fees for the services do not include local, state, or
federal sales, use, excise or similar taxes or duties, and such taxes shall be
the sole responsibility of the Buyer. In no event shall the Buyer be
responsible for taxes based on the income of the Consultant.
6. Term and Termination.
(a) This Agreement shall become effective as of the date first
written above and shall continue until December 31, 1997, provided that this
Agreement shall not terminate until the completion of all Work Orders executed
by the parties. The parties may mutually agree to extend the term of this
Agreement.
(b) Either party may terminate this Agreement immediately if the
other party breaches or is in default of any material obligation hereunder
which default is incapable of cure within thirty (30) days after receipt of
notice of such default (or such additional cure period as the non-defaulting
party may authorize in its sole discretion).
(c) Either party may terminate this Agreement if the other (i)
becomes insolvent; (ii) makes a general assignment for the benefit of
creditors; (iii) files or has filed against it a petition of bankruptcy
pursuant to Chapter 7 of the Bankruptcy Code or Chapter II or 13 of the
Bankruptcy Code and such party does not within sixty (60) days of such filing,
assume the obligations under this Agreement as a debtor-in-possession; (iv)
suffers or permits the appointment of a receiver for its business; or (v) has
wound up or liquidated, voluntary or otherwise. If the above events occurs,
that party shall immediately notify the other party of its occurrence.
7. Consequences of Termination.
(a) Upon termination of the Agreement for any reason, Buyer's sole
obligation, subject to specific termination provisions set forth in the
applicable Work Orders, shall be to pay Consultant for services actually
rendered under this Agreement. For fixed price Work Orders, such payment shall
be the Service Fees prorated based upon days elapsed in the period of
performance.
(b) Upon termination of any Work Order due to Consultant's breach
of this Agreement or such Work Order, Consultant shall within fifteen (15) days
thereafter, provide Buyer with all work-in progress, memoranda, notes, records,
drawings, manuals, computer software, and other documents or materials that
relate to the Services provided pursuant to such Work Order.
(c) The following sections shall survive the expiration or
termination of this Agreement for any reason: 7 through 15 and 17 through 21.
8. Work Product and Inventions. ALL materials developed, generated or
produced by Consultant or Consultant Personnel under a Work Order, including
computer software, documentation, flow charts, diagrams, specifications,
reports and data ("Work Product") shall be
Development Agreement Page 2
3
Buyer's sole and exclusive property. Consultant and Consultant Personnel shall
have no proprietary interest in the Work Product. An invention, product,
computer program, or specification, which is produced as a result of this
Agreement or any Work Order, whether patentable or unpatentable, which is made,
or first actually or constructively reduced to practice by Consultant or
Consultant Personnel ("Inventions") shall be Buyer's property. Consultant
shall promptly disclose all Inventions to Buyer. Notwithstanding the
foregoing, Work Product and Inventions shall not include Consultant Property or
extensions thereto which are identified in the Work Order.
9. License. Prior to providing Services under this Agreement pursuant to
any Work Order, Consultant shall either license or identify to Buyer in
writing, any technology, information, computer programs or other documentation
owned by or licensed to Consultant which will be useful or necessary to use the
Work Product ("Consultant Property"). Consultant and Buyer shall execute a
license agreement relating to the use of such Consultant Property in the form
attached hereto as Schedule B (the "License Agreement").
10. Proprietary Information. While performing the Services, Consultant
has been or may be given access to information which Buyer considers to be
proprietary and confidential (collectively, "Proprietary Information") which
includes without limitation;
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including information relating
to product plans, marketing strategies, finance, operations, customer
relationships, customer profiles, sales estimates, business plans, and internal
performance results relating to the past, present or future business activities
of Buyer, its Affiliates and the customers, clients and suppliers of any of the
foregoing;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and secret in
the sense that its confidentiality affords Buyer a competitive advantage over
its competitors.
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object code,
flow charts, data, databases, inventions, know-how, show-how and trade secrets,
whether or not patentable, or copyrightable;
(d) Work Product and Inventions; and
(e) all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills or material,
equipment, prototypes and models, and any other tangible manifestation of the
foregoing which now exist or come into the control or possession of Consultant.
Consultant shall use reasonable care to safeguard the Proprietary
Information and to prevent the unauthorized use of disclosure thereof. Unless
one of Buyer's officers has given written permission, Consultant shall not
disclose to anyone outside of Buyer, or use in other than Buyer's business any
Proprietary Information received from Buyer or for Buyer from any other Person.
These restrictions shall apply during and after Consultant's engagement with
Buyer. Any
Development Agreement Page 3
4
copies or reproductions of the Proprietary Information shall bear the patent,
copyright, trademark or proprietary notices contained in the original. Upon
Buyer's request, but in any event upon termination of this Agreement,
Consultant shall surrender to Buyer all memoranda, note, records, drawings,
manuals, computer software, and other documents or materials (and all copies of
them) relating to or containing Proprietary Information. Consultant shall
disclose or give access to Proprietary Information only to Consultant Personnel
having a need-to-know in connection with Consultant's engagement with Buyer and
only for use in connection therewith. Consultant shall advise Consultant
Personnel having access to or developing Proprietary Information of the
confidential and proprietary nature thereof. If Consultant learns of any
unauthorized use, or disclosure of Proprietary Information by any Consultant
Personnel or former Consultant Personnel it shall promptly advise Buyer in
writing.
11. Irreparable Harm. Consultant acknowledges that use or disclosure of
any Proprietary Information in a manner inconsistent with this Agreement will
give rise to irreparable injury to Buyer inadequately compensable in damages.
Accordingly, in addition to any other legal remedies which may be available, at
law or in equity, Buyer shall be entitled to equitable or injunctive relief
against the unauthorized use or disclosure of Proprietary Information.
12. Warranties. Consultant represents and warrants that: (a) Consultant
is a corporation, duly organized, validly existing and in good standing under
the laws of the State of Maryland; (b) Consultant has full power and authority
to execute, deliver and perform this Agreement, each Work Order and any
agreement supplementary hereto; (c) this Agreement, each Work Order and any
agreement supplementary hereto has been duly authorized, executed and delivered
by Consultant and is the legal, valid and binding obligation of Consultant in
accordance with their respective terms; (d) Consultant has the proper skill,
training and background to perform in a competent and professional manner the
work set forth in each Work Order; (e) the Services shall not be performed in
violation of any applicable law, rule or regulation, and Consultant shall have
obtained all permits necessary (if any) to comply with such laws, rules and
regulations; (f) Consultant has not had notice of, or knowledge of any basis
for, a claim against Consultant that the Work Product, Inventions or Services
infringe any Intellectual Property of any Person; (g) Consultant has full
right, title and authority to perform the obligations and grant the rights and
licenses granted in this Agreement; and (h) Buyer shall receive free, good and
clear title to all Work Product and Inventions. As used herein, the term
"Intellectual Property" means any patent, trademark, service xxxx, trade dress,
logo, trade name, copyright, mask work, trade secret, confidential information
or other proprietary right.
13. Personal Injury and Property Damage. Consultant shall be liable for
and shall indemnify, defend and hold Buyer, its officers and directors,
harmless against any claim, loss or damage, including reasonable attorneys'
fees, arising from the gross negligence or willful misconduct of Consultant or
Consultant Personnel for personal injury or death, or damage to personal or
real property.
Development Agreement Page 4
5
14. Intellectual Property Indemnification. Consultant shall indemnify,
defend and hold harmless Buyer, its Affiliates, any end user and their
respective successors, and assigns, including any customers, from all losses,
liabilities, damages, and claims (including taxes), and all related costs and
expenses, including reasonable attorneys' fees and costs of investigation,
litigation, settlement, judgment, interest and penalties ("Claim") relating to
the Work Product, Inventions or Services supplied hereunder, based on any
actual or alleged infringement of a third Person's Intellectual Property. If
any such claim arises, or if in Consultant's judgment is likely to arise, Buyer
agrees to allow Consultant, at Consultant's option, to procure the right for
Buyer, its Affiliates and their respective end users to continue to exercise
its rights and licenses granted herein, or to replace or modify the Work
Product, Inventions or Services in a functionally equivalent manner so they
become non-infringing. The foregoing remedial actions, however, shall not
relieve Consultant of its indemnity obligations with respect to any Claim that
may be incurred with respect to Work Product, Inventions or Services supplied
hereunder. Notwithstanding the foregoing, Consultant's obligations shall not
apply to any Claim that may be incurred with respect to the Work Product,
Inventions or Services supplied hereunder if (a) the applicable Work Product,
Inventions or Services were performed or prepared (as applicable) at Buyer's
specific instruction.
15. Conditions of Indemnity. The foregoing indemnity obligations shall be
contingent upon: (a) Buyer giving written notice to Consultant of any claim,
demand, or action for which indemnity is sought promptly after Buyer becomes
aware of such claim, demand or action and (b) Buyer cooperating fully in the
defense or settlement of any such claim, demand, or action.
16. Insurance. While Consultant is performing the Services, Consultant
shall, at its own cost and expense, obtain and maintain in full force and
effect, the following insurance coverage: (a) workers' compensation and
disability insurance with minimum limits of $100,000; (c) automobile liability
insurance with minimum limits of $500,000/$100,000 for bodily injury and
$100,000 for property damage; and (d) general comprehensive liability insurance
for suitable umbrella insurance with minimum single limit coverage of
$1,000,000.
17. Exclusion of Certain Damages. In no event shall either party or their
respective affiliates be liable to the other or any of their affiliates for any
consequential, indirect, special, or incidental damages or lost profits of any
kind whatsoever, regardless of the basis of the claim, whether in contract,
tort, strict liability, or other legal or equitable theory, whether or not such
party has been advised of the possibility of such potential loss or damage.
The foregoing limitations shall not apply to consultant's obligations of
indemnity set forth in Section 14.
18. Limitation of Liability. Except for claims pursuant to Section 14, in
no event shall either party or any affiliate of either party be liable for
amounts in excess of the direct damages for its breach of this Agreement up to
the amount set forth in the Work Order relating thereto.
19. Solicitation of Personnel. Subject to the limitations imposed by
applicable law, during the term of this Agreement and for one (1) year
afterward, neither party shall solicit the employment,
Development Agreement Page 5
6
directly or indirectly, of any employee of the other party with whom such party
had contact pursuant to this Agreement.
20. Independent Contractors. Buyer and Consultant are acting hereunder as
independent contractors. Consultant shall not be considered or deemed to be an
agent, employee, joint venturer, or partner of Buyer. Consultant Personnel
shall not be considered employees of Buyer and shall not be entitled to any
benefits that Buyer grants its employees. If any federal, state or local
government agency, any court or any other applicable entity determines that any
Consultant Personnel is an employee of Buyer for any purpose, Consultant shall
indemnify, defend and hold harmless Buyer, its officers and directors from all
liabilities, costs and expenses (including but not limited to reasonable
attorneys' fees) associated with such determination. Consultant shall be
responsible for the conduct of Consultant Personnel.
21. General. This Agreement and its Schedules constitute the complete and
exclusive statement of agreement between the parties, which supersedes and
merges all prior proposals and all other agreements, oral and written, between
the parties relating to the subject matter of this Agreement. This Agreement
may be modified only in writing signed by both parties. As used herein, "Person"
shall mean any general limited partnership, limited partners, corporation,
limited liability company, joint venture, trust, business trust, governmental
agency, cooperative, association, individual or other entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of
such Person as the context may require. The waiver or failure of either party
to exercise any right provided for herein shall not be deemed a waiver of any
further right hereunder. This Agreement is personal to Consultant and
Consultant may not assign its rights or delegate its duties or obligations
under this Agreement to any Person, except as provided for in a Work Order.
Buyer may assign this Agreement to any Affiliate, or as part of the sale of
that part of its business which includes the Work Product and Inventions or
pursuant to a merger, consolidation or other reorganization, without
Consultant's consent, upon notice to Consultant. This Agreement shall bind and
benefit Buyer, its successors and assigns. This Agreement and performance
hereunder and actions related hereto shall be governed by the internal laws of
the Commonwealth of Virginia without giving effect to those principles
governing conflicts of laws. Any notice given under this Agreement shall be in
writing and addressed as shown on page 1. A notice shall be effective (a) upon
receipt if delivered by hand or (b) three (3) days after deposit in the U.S.
mails, postage prepaid, certified mail return receipt requested. Either party
may change its address at any time by giving written notice of the change. In
the event of a conflict between this Agreement, any Work Order or a Change
Order, the terms of a Change Order which conflict with the terms of a Work
Order or the Agreement shall prevail over the terms of the relevant Work Order
or Agreement; and the terms of a Work Order which conflict with the terms of
the Agreement shall prevail over the terms of the Agreement.
Development Agreement Page 6
7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Template Software, Inc. Xxxxx Preferred Choice, LLC
By: Xxxxxx X. Xxxxxxxxxx By: Xxx Xxxxxx
----------------------------- -----------------------
Name: Xxxxxx X. Xxxxxxxxxx Name: Xxx Xxxxxx
----------------------------- -----------------------
Title: President Title: Chief Operating Officer
----------------------------- -----------------------
Development Agreement Page 7
