CONFIDENTIAL
EXHIBIT 10.12
VALUE ADDED RESELLER AGREEMENT
This Agreement is made as of the 14th day of April, 1998 (the "Effective Date")
by and between QAD INC., 0000 Xxx Xxxx, Xxxxxxxxxxx, XX 00000 ("QAD") and
PARAGON MANAGEMENT SYSTEMS, INC., 0000 Xxxx Xxxxxxx Xxxx., 00xx Xxxxx, Xxx
Xxxxxxx, XX 00000 ("Paragon").
Paragon Management Systems and QAD Inc. agree as follows:
ARTICLE 1 RIGHTS AND OBLIGATIONS
1.1 Paragon hereby grants to QAD, and QAD hereby accepts from Paragon, a
non-exclusive, world-wide, transferable right to copy (when sublicensed to
distributors), modify, market, use, license, sublicense and distribute
Paragon Applications software in executable form as a QAD product to
Licensee's of QAD MFG/PRO Software and On/Q Software.
1.2 Paragon shall provide QAD copies of the latest Paragon Applications
software [*] throughout the term of this Agreement [*]. New releases of
Paragon Applications shall be provided to QAD [*] including, but not
limited to [*].
1.3 Paragon shall create/maintain an Application Program Interface ("API")
between Paragon Applications and QAD MFG/PRO Software and On/Q Software
required for integration of Paragon Applications to MFG/PRO Software and
On/Q Software. New versions of Paragon's API shall be concurrent with new
releases of MFG/PRO Software and On/Q Software.
1.4 The API between Paragon Applications and MFG/PRO Software and On/Q Software
consists of Paragon owned ERP API and QAD owned MFG/PRO Software and On/Q
Software specific interface program ("Specific Interface Program"). QAD
shall own the Specific Interface Program.
1.5 During the term of this Agreement, Paragon shall provide QAD [*] advance
written notice before entering into a business arrangement to license
Paragon Applications to a QAD competitor, including, but not limited to
[*]. QAD shall provide [*] advance written notice before entering into
an agreement to provide a competitive application of Paragon
Applications including, but not limited to, [*], etc.
1.6 QAD and Paragon agree to enter into a mutually acceptable contract
modification or a separate agreement to cover development of the API
between Paragon Applications and MFG/PRO Software and On/Q Software. QAD
and Paragon shall endeavor to complete negotiation of this
modification/separate agreement within forty-five (45) days of the date of
execution of this Agreement. The terms of such agreement shall, include,
but not be limited to technical details of the interface, development
milestones, ownership, warranties, indemnities, support, quality, etc. In
the event the parties are unable to reach agreement on this
modification/separate agreement either party may terminate this
Agreement without further liability.
PAGE 1
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL
ARTICLE 2 PRICES, [*] AND PAYMENT TERMS
2.1 QAD shall pay Paragon a royalty calculated as a percentage of the [*]
price received by QAD for Paragon Applications licensed by QAD and/or
its distributors and partners. The royalty percentages are listed in the
Royalty Schedule attached hereto as Schedule 1. During the [*] of this
Agreement, QAD shall pay a royalty of [*] of the [*] price received by
QAD for Paragon Applications subject to a minimum of [*] of the [*]
price. During the [*] of this Agreement, QAD shall pay a royalty of [*]
of the [*]price received by QAD for Paragon Applications subject to a
minimum of [*]of the [*] price. Changes to the royalty schedule may be
proposed by either party on a case by case basis or on presentation of a
business case to justify such a change. Any changes to the royalty
schedule shall be subject to the agreement of both parties.
2.2. QAD shall pay Paragon, a [*] consisting of the following: (1) [*]; and
(2) [*]. The effective schedule of the payments are listed below:
a. [*]. These changes will include but are not limited to all references
found in menus, help, documentation, training materials, marketing
materials, etc. and shall be made within [*] of execution of this
Agreement. All future releases to QAD shall follow this format.
b. [*]
c. [*]
d. [*]
QAD and Paragon shall jointly define the specific vertical market
requirements within [*] following execution of this Agreement.
*This plan shall be submitted to QAD not later than [*] following
execution of this Agreement.
2.3 [*] shall not affect outstanding offers by QAD or QAD distributors and
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 2
CONFIDENTIAL
partners which result in an order within [*] of the date of the original
offer.
2.4 Payments to Paragon shall be made [*] and shall be [*] from the date
following the [*] and such payments shall be for licenses granted in
the previous [*].
ARTICLE 3 SALES, MARKETING AND ORDER ADMINISTRATION
3.1 Demonstration and evaluation licenses shall be available to QAD on an as
required basis [*]; QAD distributors or partners and to prospective
licensees of MFG/PRO Software or On/Q Software ("End Users"). For the
purpose of this section a demonstration license shall be a standard license
which may be limited in application or use; and an evaluation license shall
be a standard license which has the same functionality as a regular copy of
the software.
3.2 QAD may offer Paragon Applications to any End User or site to which QAD,
a QAD distributor or partner has licensed MFG/PRO Software or On/Q
Software. Paragon may license Paragon Applications [*]. On an annual
basis, QAD and Paragon shall review the activity in QAD MFG/PRO and On/Q
sites surrounding Paragon Applications. [*].
3.3 QAD may offer Paragon Applications to sites not currently using MFG/PRO
Software or On/Q Software if such site has expressed a desire to
purchase either MFG/PRO Software or On/Q Software. Such sites must
intend to purchase MFG/PRO Software or On/Q Software within one (1) year
of receipt of QAD's offer to purchase such software in conjunction with
Paragon Applications.
3.4 Paragon reserves the right to license Paragon Applications [*].
3.5 Generally, QAD shall not utilize Paragon personnel in its selling cycle
except in conjunction with the licensing of Paragon. In the event
Paragon personnel are needed in the selling cycle, QAD shall pay
reasonable time and expenses subject to approval by QAD's Director of
Sales or his or her designee.
3.6 On a quarterly basis, QAD shall report the number of Paragon
Applications licenses issued and detail the funnel for global sales
activity related to Paragon Applications, including the company name,
location and projected revenue. The funnel information shall be used by
Paragon for planning purposes only.
3.7 Annually, QAD shall update the revenue plan for Paragon Applications
based on QAD's current revenue projections through the end of the then
current contract term. The revenue plan shall be determined by good
faith negotiation of both parties at the beginning of each calendar year.
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 3
CONFIDENTIAL
3.8 All license agreements with End Users shall be based upon QAD standard
software license terms and conditions. Paragon shall have an opportunity
to review QAD's form of license agreement and any changes made thereto
by QAD during the term of this Agreement.
3.9 Any public announcements, media releases, or public disclosure for
general distribution (including, but not limited to, promotional or
marketing material) by either party, or by their employees or agents,
relating to this Agreement or its subject matter shall be coordinated
with and approved in writing by the other party prior to its release.
3.10 Paragon shall in electronic format make available to QAD, and QAD
distributors and partners, advertising literature relating to Paragon
Applications which Paragon has prepared or may in the future prepare,
and marketing materials to be used by QAD in performing it rights under
this Agreement. QAD shall have the right to determine the use of such
literature as it deems appropriate. QAD may employ any marketing
collateral provided by Paragon, and any portion thereof, in its
marketing activity or material QAD chooses to develop, including any
translation or modification of the Paragon marketing material.
ARTICLE 4 TRAINING AND SUPPORT
4.1 During the [*] of this Agreement, Paragon [*] to QAD to provide sales
training to QAD personnel.
4.2 During the term of this Agreement, Paragon [*] the following personnel
resources to support of QAD's licensing Paragon Applications: [*].
QAD shall designate an Alliance Product Manager and shall provide
sufficient resource to facilitate its obligations under this Agreement.
4.3 Paragon shall offer training for the Paragon Applications in the
form of [*] "Train the Trainer" [*] for QAD personnel at a
QAD location, at a reasonable time as QAD may elect. QAD shall bear
its own out of pocket expenses for travel, meals and lodging in
attending such training session. Within [*] of each major release of
Paragon Applications, Paragon shall offer to provide one (1) free
training session to "Train the Trainer" for QAD personnel or its
designated partner. Pricing for additional training sessions
shall be [*].
4.4 QAD shall provide worldwide support to all QAD customers utilizing
MFG/PRO Software or On/Q Software in conjunction with Paragon
Applications. QAD shall provide level 1 and level 2 support; however,
during the [*] of this Agreement, Paragon and QAD shall create a support
plan utilizing QAD and Paragon support personnel. Following sufficient
training from Paragon and the [*] of this Agreement, QAD shall support
Paragon Applications for level 1 and level 2 and Paragon shall be
responsible for level 3 support.
a. Level 1 support: receive and log support calls from partners and End
Users.
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 4
CONFIDENTIAL
b. Level 2 support: research the reported problem and provide an
appropriate remedy for such problem if QAD is able to determine one.
c. Level 3 support: research problems with Paragon Applications which
QAD is unable to remedy and provide an appropriate remedy to all
reported errors in the Paragon Applications. Paragon shall have the
following goals:
Severity 1: [*] notify QAD of receipt of the error report,
identify the nature of the problem and provide a commitment date
by which the issue shall be remedied.
Severity 2: [*] notify QAD of receipt of the error report,
identify the nature of the problem and provide a commitment date
by which the issue shall be remedied.
Severity 3: [*] notify QAD of receipt of the error report,
identify the nature of the problem and provide a commitment date
by which the issue shall be remedied.
ARTICLE 5 TERM AND TERMINATION
5.1 This Agreement shall remain in force for [*] from the effective date unless
terminated by either party in accordance with this Section 5. The parties
shall have the option to extend the term of this Agreement at the end of
[*] period for an additional [*] upon mutual agreement of both parties by
providing written notice of such intention at least [*] prior to the
expiration of the initial [*] term.
5.2 Either party may terminate this Agreement upon [*] notice in writing to the
other party if the other party has breached a material provision of this
Agreement. The party breaching a material provision of this Agreement shall
have [*] to cure the breach, in which case the notifying party shall
withdraw its notice of termination. In the event that the breach is not
capable of being remedied within the [*] period to cure, the party in
breach shall receive a reasonable extension of the cure period, not to
exceed [*].
5.3 A party may terminate this Agreement immediately by written notice to
the other party if the other party enters into liquidation, whether
voluntary or compulsory, or enters into a settlement with its creditors
or applies for suspension of payment or admits its inability to pay its
debts when due or is declared bankrupt or takes or suffers any similar
action in consequence of debt.
5.4 Either party may terminate the Agreement immediately by notice in
writing in the event the other party sells or disposes of substantially
all its assets or in the event that the control, management or ownership
of the other party's business passes into other hands other than those
now exercising or entitled to the same, either voluntarily or by law.
5.5 In the event of a pending acquisition of Paragon or investment into
Paragon of more than [*] of Paragon's market value, Paragon shall
immediately notify QAD. Paragon agrees to notify QAD of Paragon's
intention to be acquired by a competitor of
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 5
CONFIDENTIAL
QAD [*] prior to such acquisition. QAD agrees to notify Paragon of QAD's
intention to be acquired by a competitor of Paragon [*] prior to such
acquisition. QAD agrees to notify Paragon of QAD's intention to acquire a
competitor of Paragon [*] prior to such acquisition. If such acquisition
occurs, Paragon may terminate this Agreement upon written notice to QAD.
5.6 Should controlling interest in Paragon be acquired by a third party
during the term of this Agreement, QAD shall have the right to continue
to license Paragon Applications and receive all new release of Paragon
Applications for a period of [*] following termination of this Agreement.
ARTICLE 6 WARRANTIES, INDEMNITIES AND LIMITATION OF LIABILITY
6.1 Paragon shall defend, indemnify and hold harmless QAD against all costs
(including reasonable attorneys fees arising from a claim that Paragon
Applications furnished and used within the scope of this Agreement
infringe a copyright or patent, trade secret, or other intellectual
property right, provided that: (i) QAD notifies Paragon in writing
within [*] of the claim; (ii) Paragon has control of the defense and all
related settlement negotiations; and (iii) QAD provides Paragon with the
assistance, information, and authority necessary to perform the above.
Reasonable out-of-pocket expenses incurred by QAD in providing such
assistance shall be reimbursed by Paragon.
a. Paragon shall have no liability for any claim of infringement based
on: (i) use of a superseded or altered release of Paragon
Applications if such infringement would have been avoided by the
use of current unaltered release of Paragon Applications that
Paragon provides to QAD; or (ii) the combination, operation, or use
of Paragon Applications furnished under this Agreement with
programs or data not furnished by Paragon if such infringement
would have been avoided by the use of Paragon Applications without
such programs or data.
b. In the event Paragon Applications is held or are believed by
Paragon to infringe, Paragon shall have the option, at its expense,
to: (i) modify Paragon Applications to be noninfringing; (ii) obtain
for QAD a license to continue using Paragon Applications; or (iii)
substitute Paragon Applications with other software reasonably
suitable to QAD.
6.2 QAD warrants that, to the knowledge of QAD, it has the right to grant
all the rights to Paragon as specified in the Agreement. [*].
6.3 THE ABOVE WARRANTY IS THE ONLY WARRANTY MADE BY QAD CONCERNING THE
OBLIGATIONS OF QAD UNDER THIS AGREEMENT. TO THE MAXIMUM EXTENT PERMITTED
BY APPLICABLE LAW, NO OTHER WARRANTY IS MADE HEREUNDER BY QAD AND ALL
OTHER CONDITIONS, WARRANTIES, AND REPRESENTATIONS, EITHER EXPRESS OR
IMPLIED, ARE EXCLUDED, INCLUDING, BUT NOT LIMITED TO, CONDITIONS OR
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 6
CONFIDENTIAL
WARRANTIES RELATING TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE
6.4 Paragon warrants that Paragon Applications will be [*] for a period of [*]
from the date of shipment of Paragon Applications to an End User.
6.5 Paragon warrants all media delivered to QAD to be [*]. Paragon warrants
that its technical support, consulting, training and other services will
be [*]. This warranty shall be valid for [*]. For any breach of the above
warranty, Paragon shall: [*].
6.6 THE WARRANTIES ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
6.7 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR LOSS OF PROFITS, REVENUE OR
PRODUCT USE, OR LOSS OR INACCURACY OF DATA, AND IN NO EVENT, SHALL EITHER
PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL
DAMAGES INCURRED BY EITHER PARTY OR ANY THIRD PARTY, EVEN IF THE OTHER
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
ARTICLE 7 CONFIDENTIALITY
7.1 It is recognized that each party under this Agreement, as well as the End
Users, may make available to the other party confidential information.
Confidential information may include in any form, but is not limited to,
processes, formulae, specifications, programs, instructions, source code
for operating system-dependent routines, technical know-how, methods and
procedures of operation, benchmark test results, business or technical
plans and proposals.
It is agreed that confidential information received by a party under this
Agreement shall:
a. be kept confidential by the receiving party;
b. be treated by the receiving party in the same way as it treats
confidential information generated by itself;
c. not be used by the receiving party otherwise than in connection with
the implementation of this Agreement; and
d. be divulged to the receiving party's personnel, or End User's
personnel, only if they have to know and have undertaken to keep
confidential information secret.
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 7
CONFIDENTIAL
Each party agrees to use all reasonable steps to ensure that confidential
information received under this Agreement is not disclosed by its employees
or agents in violation of this Article.
7.2 The commitments pursuant to provision 7.1 shall continue during the term of
this Agreement and survive the termination of this Agreement for [*]. These
commitments shall cease if, but only to the extent that, confidential
information:
a. Is or becomes generally known or available to the public at large
through no act or omission of the receiving party; or
b. Can be demonstrated to be available lawfully to the receiving party
prior to the disclosure or has thereafter been furnished to the
receiving party without restrictions as to disclosure or use; or
c. Can be demonstrated to be independently developed by the receiving
party without use of any confidential information received under this
Agreement.
Each party may disclose confidential information to any of its associated
companies on condition that such associated companies shall be bound by the
same commitments undertaken under this Article 7.
7.3 QAD considers MFG/PRO Software and On/Q Software and the API to such
software to be a trade secret. QAD does not disclose such information to
QAD competitors or potential competitors. Paragon shall not use design,
code or documentation gained by access to the MFG/PRO Software or On/Q
Software for purposes other than those contemplated under this Agreement
and without the prior written consent of QAD.
7.4 Paragon considers Paragon Applications and the API to such software to be a
trade secret. Paragon does not disclose such information to Paragon
competitors or potential competitors. QAD shall not use design, code or
documentation gained by access to the Paragon Applications for purposes
other than those contemplated under this Agreement and without the prior
written consent of Paragon.
ARTICLE 8 GENERAL PROVISIONS
8.1 LAW. This Agreement shall be construed, interpreted, and applied in
accordance with the laws of the State of California, USA, without regard to
that body of law known as conflict of laws and without reference to the
1980 United Nations Convention on Contracts for the Sale of Goods and any
amendments thereto. Any dispute arising between the parties shall be
settled by arbitration under the rules of the American Arbitration
Association in the city of Los Angeles, CA before a single arbitrator
selected under those rules.
8.2 FORCE MAJEURE. A party shall be excused for failures and delays in
performance of its obligations under this Agreement caused by war, riots,
or insurrections, laws and regulations, strikes, floods, fires, explosions
or other catastrophes beyond the control of such party but excluding the
financial well being of that party. Such party shall use commercial
reasonable efforts to avoid or remove such cause and such party shall
continue performance hereunder promptly whenever such causes are removed.
The party
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 8
CONFIDENTIAL
claiming force majeure shall give prompt written notice thereof to the
other party. This Paragraph shall not apply to any obligation to pay money.
8.3 TAXES. All payments under this Agreement (the "Payments") are [*] of
all federal, state, provincial and local sales, use excise, import or
export, value added and similar taxes or duties (the "Taxes"). Each party
required to make any Payment [*]. Each party is responsible for payment of
any net income taxes due on its own income resulting from Payments.
8.4 ASSIGNMENT. The Agreement may not be assigned by Paragon without the prior
written consent of QAD.
8.5 ENFORCEMENT. The failure of either party to enforce any provision of the
Agreement shall not be construed to be a waiver of such provision or such
party's right to thereafter enforce the same, and no waiver of any breach
shall be construed as an agreement by such party to waive any subsequent
breach of the same or other provisions.
8.6 [*]
8.7 SURVIVAL. The provisions of Article 6 entitles "Warranties, Indemnities and
Limitation of Liability", Article 7 entitled "Confidentiality" and Article
8 entitled "General Provisions" shall survive the expiration or termination
of this Agreement, as well as the termination or expiration of any license
granted under this Agreement.
8.8 ENTIRE AGREEMENT. This Agreement, including any schedules attached hereto,
contain the entire agreement between the parties hereto with respect to the
subject matter hereof and shall supersede any and all prior communications,
representations, agreements, and/or undertakings, whether verbal or
written, between the parties hereto in respect to the said subject matter.
Any amendment or other modification of any of the terms and provisions
hereof must be in writing and signed by duly authorized representatives of
the parties hereto.
The undersigned hereby agree that by causing their duly authorized
representatives to sign this document, they become parties to said Agreement and
agree to be bound by all terms, conditions and obligations contained therein
effective as of the 14th day of April, 1998.
QAD INC. PARAGON MANAGEMENT SYSTEMS, INC.
/s/ XXXXX XXXXXXXXXXX /s/ XXXXXXXXX XXXXXXXX
--------------------------------------- ---------------------------------
Signature Signature
Xxxxx Xxxxxxxxxxx Xxxxxxxxx Xxxxxxxx
--------------------------------------- ---------------------------------
Name Name
Executive V.P. of Production Chief Financial Officer
--------------------------------------- ---------------------------------
Title Title
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 9
CONFIDENTIAL
April 17, 1998 4/14/98
--------------------------------------- ---------------------------------
Date Date
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 10
CONFIDENTIAL
SCHEDULE 1
ROYALTY SCHEDULE
-----------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C
-----------------------------------------------------------------------------------------
ROYALTY PAYABLE TO PARAGON AS A MINIMUM ROYALTY PAYABLE TO
PERCENTAGE OF [*] PRICE PARAGON AS A PERCENTAGE PERCENT OF MAINTENANCE
RECEIVED BY QAD; [*] LIST PRICE
SUBJECT TO COLUMN B CONDITIONS
-----------------------------------------------------------------------------------------
[*] [*] [*]
-----------------------------------------------------------------------------------------
[*] [*] [*]
-----------------------------------------------------------------------------------------
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 11
