Exhibit 10.4
Research and Development Cost Sharing Agreement between the Company
and Sideware International SRL, effective August 27, 1999
ECRM PRODUCTS
RESEARCH AND DEVELOPMENT
COST SHARING AGREEMENT
This Research and Development Cost Sharing Agreement (the "Agreement") is
dated for reference the 27th day of August 1999.
BETWEEN:
SIDEWARE INTERNATIONAL SRL, a society subsisting under the laws of
Barbados and having an office at 0xx Xxxxxx, Xxxxxxxx, Xx. Xxxxx,
Xxxxxxxx
(hereinafter "International")
OF THE FIRST PART;
AND:
SIDEWARE SYSTEMS INC., a company subsisting under the laws of
British Columbia, Canada, and having its head office at #000-000
Xxxx 0xx Xxxxxx, Xxxxx Xxxxxxxxx, X.X., X0X 0X0
(hereinafter "Canco")
OF THE SECOND PART;
WHEREAS:
A. International was formed on August 27, 1999, for the purpose of
developing, distributing and selling computer software products in world-wide
markets;
B. Canco has been engaged in the business of developing, distributing and
selling software products predominantly in the Canadian market;
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C. International and Canco will each engage in the business of designing,
developing, distributing and selling software products that facilitate
electronic commerce over the internet through electronic customer relations
management (the "ECRM Products");
D. Effective from September 1, 1999, International and Canco have agreed
to pool their respective resources for the purpose of conducting research and
development with respect to the design and development of ECRM Products and
to share the risks and costs of such research and development activity and
the intangible property as may be developed therefrom on the terms of this
Agreement;
E. International and Canco have agreed to share ownership and rights to,
as well as to exploit the proprietary technology developed on the terms
contained in this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, International and Canco record their agreement as follows:
SECTION 1
INTERPRETATION
1.01 DEFINITIONS - In this Agreement:
"Confidential Information" shall mean any information disclosed by one party
to the other pursuant to this Agreement which is in written, graphic, machine
readable or other tangible form and is marked "Confidential", "Proprietary",
or in some other manner to indicate its confidential nature, or is otherwise
known to be confidential information of the disclosing party. Confidential
Information may also include oral information disclosed by one party to the
other pursuant to this Agreement, provided that such formation is designated
as confidential at the time of disclosure and is reduced to writing by the
disclosing party within a reasonable time (not to exceed thirty (30) days)
after its oral disclosure, and such writing is marked in a manner to indicate
its confidential nature and delivered
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to the receiving party. All Developed Technology shall be considered
Confidential Information of each party.
"Developed Technology" shall mean any Technology arising out of or
constituting the results of the Research Program conducted by the parties.
"Developed Technology Documentation" shall have the meaning provided in
Section 7.01 of this Agreement and shall include all written materials or
other media pertaining to a Developed Technology and all information,
concepts, data, and techniques included therein.
"R&D Costs" of a party shall mean and include all costs incurred by a party
in connection with and properly allocable to the Research Program, including
all direct and indirect costs and expenses incurred by a party for the
conduct by it of the Research Program as well the cost of any Technology or
other intangible property purchased, licensed or otherwise acquired from
third parties as part of the Research Program.
"Research Program" shall mean that term described in Section 3 of this
Agreement.
"Share of R&D Costs" of a party shall mean the portion of the R&D Costs
allocated to the party under this Agreement.
"Technology" shall mean any and all technologies, procedures, processes,
designs, inventions, discoveries, know-how and works of authorship, including
without limitation documentation, and all (i) issued patents, utility models
and the like, and applications therefore pending before any relevant
authority world-wide, including any additions, continuations,
continuations-in-part, divisions, reissues or extensions based thereon, (ii)
copyrights and other rights in works of authorship; (iii) mass work rights,
(iv) trade secrets, and (v) Confidential Information and any other
intellectual property rights constituting, embodied in or pertaining thereto.
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SECTION 2
JOINT RESEARCH AND DEVELOPMENT
2.01 The parties hereto agree to combine their research and development
efforts and to share the costs, risks and rights relating to the development
of the ECRM Products, related and successor technology (whether or not
foreseen at the time hereof), and such other items as the parties may agree
to from time to time, including both basic or experimental research and
product-specific research (whether relating to new product development or the
improvement, adaptation or modification of existing products, as well as the
development of prototypes) which the parties may agree to make part of the
joint ECRM Products research and development program. The parties hereto
intend that the arrangements contemplated by this Agreement constitute a
"qualified cost contribution arrangement" pursuant to subsection 247(1) of
the INCOME TAX ACT, Canada.
SECTION 3
DEVELOPMENT ACTIVITIES AND SCHEDULES
3.01 At the beginning of each year, or at such other times agreed to by the
parties, unless this Agreement shall have terminated in accordance with the
provisions of this Agreement, the parties shall:
(a) agree upon the ECRM Products research and development activities
to be undertaken during the year; and
(b) prepare a development schedule for the activities to be undertaken
including an allocation of the development responsibilities of
each party, including, without limitation, the location where the
development activities will occur.
The research and development activities and schedule described in this
Section 3.01 (the "Research Program") shall be considered a part of this
Agreement. The parties hereto may amend or modify the Research Program at any
time during the year as they shall agree.
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SECTION 4
COST ALLOCATION
4.01 ALLOCATION OF OWNERSHIP - The parties have agreed that they shall
jointly own and hold the Developed Technology. The party's respective
ownership rights in the Developed Technology are set out in Sections 6.01 and
6.02 herein.
4.02 ALLOCATION OF R&D COSTS - The parties intend that the proportion of
R&D Costs borne by each party shall be based upon the reasonably anticipated
benefits to be derived by each party as a result of commercial exploitation
of the Developed Technology. The parties believe that reasonably anticipated
benefits to be derived from commercial exploitation of the Developed
Technology may be best measured by the sales revenue reasonably expected to
be derived from the licensing and sale of copies of the Developed Technology
by the parties in accordance with their respective ownership rights set out
in Sections 6.01 and 6.02 of this Agreement.
4.03 ANTICIPATED BENEFITS - As of the date of this Agreement, the parties
believe that Canco's reasonably anticipated benefits from the Developed
Technology shall be one tenth (1/10th) of the total of both parties'
reasonably anticipated benefits relating to the Developed Technology, and the
parties believe that International's reasonably anticipated benefits from the
Developed Technology shall be nine tenths (9/10ths) of the total of both
parties' reasonably anticipated benefits relating to the Developed
Technology. The parties will annually review their projections of the
anticipated benefits from the Developed Technology and their respective
shares of such anticipated benefits, and if warranted, adjust the agreement
with respect to each party's share of such anticipated benefits for the
purposes of this Agreement. Such adjustments shall only apply to allocation
of R&D Costs incurred after the date of such adjustments.
4.04 SHARE OF R&D COSTS - To implement the foregoing Sections 4.01 to 4.03,
Canco's Share of R&D Costs incurred each year in conduct of the Research
Program shall be equal to ten percent (10%) of such R&D Costs until adjusted
pursuant to the terms of this Agreement. International's
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Share of R&D Costs incurred each year in conduct of the Research Program
shall be equal to ninety percent (90%) of such R&D Costs, until adjusted
pursuant to the terms of this Agreement.
4.05 DOCUMENTATION - Each party hereto shall maintain documentation regarding:
(a) the methodology and data used to establish projections of the
anticipated benefits from commercial exploitation of Developed
Technology;
(b) the total amount of R&D costs incurred pursuant to this Agreement;
(c) the R&D costs borne by each party hereto:
(d) the accounting method used to determine the costs and projections
of anticipated benefits of the Developed Technology (including the
method used to translate foreign currencies), and, to the extent
such accounting method materially differs from United States
generally accepted accounting principles, an explanation of such
material differences; and
(e) any prior research relating to the Developed Technology.
The parties shall exchange their respective documentation as it
becomes available.
4.06 ACCOUNTING METHODS - The parties hereto agree to use a consistent
method of accounting to measure R & D Costs, and agree to translate foreign
currencies on a consistent basis.
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SECTION 5
STATEMENT OF R&D ACTIVITIES
PAYMENT OF SHARE OF R&D COSTS
5.01 STATEMENTS OF R&D ACTIVITIES - Each party shall on a monthly basis
report to the other party with respect to the progress made on the
development responsibilities allocated to that party pursuant to the Research
Program described in Section 3.01. Such report shall also include any
suggested amendments to the Research Program.
5.02 INTERNATIONAL SHARE OF R&D COSTS - While this Agreement remains in
effect, Canco shall provide to International a statement of R&D Costs
incurred by Canco each month by the end of the following month. Such
statement shall also invoice International's share of the R&D Costs to be
reimbursed to Canco, and generally be in the form attached hereto as Schedule
"A".
5.03 CANCO SHARE OF R&D COSTS - While this Agreement remains in effect,
International shall provide to Canco a statement of R&D Costs incurred by
International each month by the end of the following month. Such statement
shall also invoice Canco's share of the R&D Costs to be reimbursed to
International, and generally be in the form attached hereto as Schedule "A".
5.04 PAYMENTS OF REIMBURSEMENTS - Within one month of exchanging the
statements of R&D Costs for a particular month pursuant to Sections 5.02 and
5.03, the party owing the greater of the two amounts invoiced in the
statements (the "Payor") shall pay to the other party the amount invoiced to
the Payor less the amount that the Payor invoiced to the other party.
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SECTION 6
DEVELOPED TECHNOLOGY
6.01 OWNERSHIP AND FILINGS
(a) Canco and International agree that legal title to the Developed
Technology should be held by one party in order to most
effectively protect the Developed Technology by making it easier
to prosecute claims against infringers and to make filings for
patent applications, and copyright and mass work registrations,
and agree that Canco should hold legal title to the Developed
Technology, subject to the rights held by International as
described in Section 6.02 below. Legal title to Developed
Technology which is conceived or developed by employees of either
party or of both parties shall be held and remain in Canco,
subject to the rights to be held and retained by International
pursuant to Section 6.02 below.
(b) Canco shall have the right of first election to file patent
applications and copyright and mass work registrations (the
"Filings"). Canco will make its election at the earliest
practicable time and will notify International in writing of its
decision to file any such Filings. In addition, Canco will
consult with International regarding the content of such Filings
and will send International a copy of any such Filings and all
correspondence with the applicable governmental offices. The
party that prepares and files any Filings will bear the expenses
of preparing, filing and prosecuting that application and of
paying any taxes, annuities or maintenance fees on the pending
application and on any patent, copyright or mass work right issued
thereon. The non-filing party agrees at no charge to furnish all
documents and other assistance reasonably requested for the
purpose of the filing and prosecution of such Filings. All
Filings will be filed in the name of Canco, and all patents on
inventions and mass work rights issued in relation to the
Developed Technology will be held in the name of Canco.
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6.02 INTERNATIONAL'S RIGHTS IN DEVELOPED TECHNOLOGY - Subject to the terms
and conditions of this Agreement, Canco and International agree that
International shall have and hold a non-exclusive, transferable, perpetual,
irrevocable, royalty-free right and license, with right to grant and
authorize sublicenses, on and in respect of any Developed Technology, to
practice, use and modify the Developed Technology in order to develop, use,
make, have made, sell and otherwise distribute, directly or indirectly, the
Developed Technology world-wide outside of Canada.
6.03 INFRINGEMENT - If either party becomes aware of any actual or
potential infringement or misappropriation of any Developed Technology, then
such party shall promptly notify the other party in writing of such
infringement ("Infringement Notice").
(a) International shall have the sole right to prosecute infringements
of any Developed Technology or infringement or misappropriation of
any trade secret contained in Developed Technology throughout the
world other than in Canada, and Canco shall have the sole right to
prosecute infringements of any Developed Technology or
infringement or misappropriation of any trade secret contained in
Developed Technology in Canada.
(b) If the party having the sole right to prosecute an infringement
does not take reasonable actions to such end before the end of
ninety (90) days from the issuance of an Infringement Notice or
notifies the other party that it does not intend to prosecute such
infringement, then (i) the other party shall have the sole right
for sixty (60) days at its expense to prosecute such infringement
and (ii) the party which did not prosecute such infringement
during such ninety (90) day period shall take all actions
reasonably requested by the other party in such prosecution,
subject to indemnification by the prosecuting party of the other
party. If the other party does not take reasonable actions to
prosecute such infringement to such end before the end of such
sixty (60) day period or notifies the party having the initial
right to prosecute that it does not intend to prosecute such
infringement, then Section 6.03(b) shall become applicable again.
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The parties shall consult with each other concerning prosecution
of infringement or misappropriation of know-how not protected by
Developed Technology and the allocation of costs or awards
relating to such prosecution.
6.04 THIRD PARTY LICENSES - Any Technology used to create Developed
Technology licensable or sublicensable by Canco or International because of
an agreement with a third party and as to which Canco or International is
required to make payment to a third party, and under which Canco or
International is free to grant full licenses or sublicenses to the other
party under the terms of this Agreement, shall be licensed to the other party
to the extent and subject to the terms of the agreement with such third party.
SECTION 7
DELIVERY OF DEVELOPED TECHNOLOGY
7.01 DEVELOPED TECHNOLOGY DOCUMENTATION - All documentation whether in
paper form or other media, relating to Developed Technology (the "Developed
Technology Documentation") shall be in the English language and shall be in
accordance with United States standards, measurements and practices. The
costs of any translation of the Developed Technology and adaptation of it for
a particular country shall be borne by the party desiring such translation.
7.02 DISCLOSURE OF DEVELOPED TECHNOLOGY - Subject to the provisions of this
Section 7, each party shall exercise reasonably diligent efforts to disclose
and deliver to the other party the Developed Technology and the Developed
Technology Documentation, to the extent not otherwise in such receiving
party's possession, as promptly as is practicable during the term of this
Agreement. A delivering party shall exercise reasonably diligent efforts to
ensure the accuracy of all Developed Technology provided but does not warrant
that all such Developed Technology will be accurate in all respects.
7.03 DELIVERY RESTRICTION - No Developed Technology Documentation shall be
delivered within the State of California unless such delivery is by means of
remote telecommunications or unless the
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parties hereto are satisfied that such transfer will not incur a sales or use
tax liability. Any attempted delivery contrary to the terms hereof shall be
void and of no effect. If the delivery is made by remote telecommunications,
the parties shall keep a detailed contemporaneous log documenting each
transmission by date, time, place, and the individuals responsible for such
transmission.
7.04 CONFIDENTIALITY - Notwithstanding any failure to so xxxx it, all
information included or embodied in the Developed Technology Documentation
shall be deemed Confidential Information.
SECTION 8
BEARING OF RISKS,
NO ASSURANCE OF SUCCESS
8.01 Each party conducting research and development shall be solely
responsible to use commercially reasonable efforts to design and develop the
products, devices and processes contemplated by the Research Program. No
party makes a warranty or guarantee that such product or process design or
development efforts will be successful or accomplished in a timely manner or
that the Developed Technology will be commercially viable. No party hereto
shall be liable to the other party hereto for failure to create Developed
Technology in accordance with this Agreement. Notwithstanding anything to
the contrary herein, each party shall bear its Share of R&D Costs regardless
of whether any Developed Technology is in fact produced and regardless of
whether the parties realize any income from any Developed Technology.
SECTION 9
CONFIDENTIAL INFORMATION
9.01 NONDISCLOSURE OF CONFIDENTIAL INFORMATION - Each party shall treat as
confidential all Confidential Information of the other party, shall not use
such Confidential Information except as set forth herein, and shall not
disclose such Confidential Information to any third party except as may be
reasonably required pursuant to this Agreement, and subject to
confidentiality obligations at
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least as protective as those set forth herein. Without limiting the
foregoing, each of the parties shall use at least the same degree of care
which it uses to prevent the disclosure of its own confidential information
of like importance to prevent the disclosure of Confidential Information
disclosed to it by the other party under this Agreement.
9.02 LIMITATION OF LIABILITY - Notwithstanding the above, neither party shall
have liability to the other with regard to any Confidential Information of the
other which:
(a) was in the public domain at the time it was disclosed or becomes
in the public domain through no fault of the receiver;
(b) was known to the receiver, without restriction, at the time of
disclosure as shown by the files of the receiver in existence at
the time of disclosure;
(c) is disclosed with the prior written approval of the discloser;
(d) was independently developed by the receiver without any use of the
Confidential Information and by employees or other agents of (or
independent contractors hired by) the receiver who have not been
exposed to the Confidential Information;
(e) becomes known to the receiver, without restriction, from a source
other than the discloser without breach of this Agreement by the
receiver and otherwise not in violation of the discloser's rights;
(f) is released by the other party from confidential treatment by
written consent; or
(g) is disclosed pursuant to the order or requirement of a court,
administrative agency, or other governmental body, provided,
however, that the receiver shall provide
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prompt notice thereof to enable the discloser to seek a protective
order or otherwise prevent such disclosure.
9.03 NONDISCLOSURE AGREEMENTS - Each party shall exert its best efforts,
including, but not limited to, the execution of proprietary non-disclosure
agreements with employees and consultants, and legal action, to enforce
compliance with the provisions of this Section 9 by its directors, officers,
employees, and any third party having access to the other party's
Confidential Information.
9.04 REMEDIES - Unauthorized use by either party of Confidential
Information provided to it by the other party hereunder will diminish the
value to the other party of such information. Therefore, if either party
breaches any of its obligations with respect to confidentiality and
unauthorized use of Confidential Information hereunder, the other party shall
be entitled to equitable relief to protect its interest therein, including
but not limited to injunctive relief, as well as monetary damages.
SECTION 10
TERM
10.01 TERM - The term of this Agreement shall be one (1) year commencing
August 27, 1999, and shall automatically be renewed for additional one-year
terms thereafter unless either party gives thirty (30) days written notice to
the other prior to the end of the term of its intent to terminate this
Agreement or unless terminated earlier under the provisions of this Section
10.
10.02 TERMINATION FOR CONVENIENCE - This Agreement may be cancelled by
either party for any reason or no reason by giving the other party written
notice sixty (60) days in advance.
10.03 TERMINATION ON DEFAULT - Subject to the terms set forth in this
Section 10.03 if either party defaults in the performance of its material
obligations hereunder, the other party shall have the option, upon written
notice to the defaulting party, to terminate this Agreement. If within
thirty (30) days after the notice of termination, the defaulting party shall
not have remedied the default, the parties shall consult in good faith for an
additional thirty (30) days to develop a plan to remedy
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such default and if such default is not corrected after such thirty (30) days
period, then this Agreement shall terminate.
10.04 TERMINATION IN THE EVENT OF BANKRUPTCY - This Agreement may be
terminated by either party on notice, (i) upon the institution by the other
party of insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of the debts, (ii) upon the institution of
such proceedings against the other party, which are not dismissed or
otherwise resolved in such party's favour within sixty (60) days thereafter,
(iii) upon the other party's making a general assignment for the benefit of
creditors, or (iv) upon the other party's dissolution or ceasing to do
business in the normal course.
10.05 SURVIVAL - Notwithstanding the expiration or termination of this
Agreement, it is acknowledged and agreed that those rights and obligations
which by their nature are intended to survive such expiration or earlier
termination shall survive, including without limiting the foregoing, the
provisions of Sections 6, 7 and 9. Upon any termination of this Agreement,
no party shall relinquish any of its rights to Developed Technology acquired
hereunder as it exists on such termination date but shall have no ownership,
rights, or license to Technology subsequently created or developed by the
other party.
SECTION 11
GENERAL
11.01 EXISTING CANCO TECHNOLOGY - The parties hereto acknowledge that Canco
and International have entered into a License Agreement of even date herewith
granting certain rights from Canco to International relating to existing
Canco Technology.
11.02 ASSIGNMENT - No party may assign its rights or obligations under this
Agreement without the prior written consent of the other party, and any
purported assignment without such consent shall have no force or effect.
Subject to the foregoing, this Agreement shall bind and inure to the benefit
of the respective parties hereto and their successors and assigns.
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11.03 WAIVER - Any waiver by any party of any default by the other hereunder
shall not be deemed to be a continuing waiver of such default or a waiver of
any other default or of any of the terms and conditions of this Agreement.
11.04 AMENDMENTS - The terms and conditions of this Agreement may not be
superseded, modified, or amended except in writing stating that it is such a
modification and signed by an authorized representative of each party hereto.
11.05 GOVERNING LAW; FORUM SELECTION - This Agreement shall be governed by
the laws of British Columbia, without reference to conflict of laws
principles. All disputes arising out of this Agreement shall be subject to
the exclusive jurisdiction and venue of British Columbia courts and the
parties consent to the personal and exclusive jurisdiction and venue of these
courts.
11.06 ATTORNEYS' FEES - The prevailing party in any legal action brought by
one party against the other shall be entitled, in addition to any other
rights and remedies it may have, to reimbursement for its expenses incurred
thereby, including court costs and reasonable attorneys' fees.
11.07 NOTICES - Any notice which any party desires or is obligated to give
to the other shall be given in writing or by facsimile or telex and sent to
the appropriate address set forth above, attention: President, or to such
other address as the party to receive the notice may have last designated in
writing. Except as otherwise expressly provided herein, notice shall be
deemed to have been received on the earlier of the date when actually
received or ten (10) days after being deposited in the mail, postage prepaid,
registered or certified mail, or within one (1) day if by facsimile or telex.
11.08 INDEPENDENT CONTRACTORS - This Agreement does not create a principal
or agent, employer or employee, partnership, joint venture, or any other
relationship except that of independent contractors between the parties.
Nothing contained herein shall be construed to create or imply a joint
venture, principal and agent, employer or employee, partnership, or any other
relationship
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except that of independent contractors between the parties, and neither party
shall have any right, power or authority to create any obligation, express or
implied, on behalf of the other in connection with the performance hereunder.
11.09 HEADINGS; COUNTERPARTS - Headings to Sections of this Agreement are to
facilitate reference only, do not form a part of this Agreement, and shall
not in any way affect the interpretation hereof. This Agreement may be
executed in two (2) counterparts or duplicate originals, all of which shall
be regarded as one and the same instrument, and which shall be the official
and governing version in the interpretation of this Agreement.
11.10 PARTIAL INVALIDITY - If any provision in this Agreement shall be found
or be held to be invalid or unenforceable in any jurisdiction in which this
Agreement is being performed, then the meaning of said provision shall be
construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it shall be
severed from the remainder of this Agreement which shall remain in full force
and effect. In such event, the parties shall negotiate, in good faith, a
substitute, valid and enforceable provision which most nearly effects the
parties' intent in entering into this Agreement.
11.11 FORCE MAJEURE - Nonperformance of either party shall be excused to the
extent that performance is rendered impossible by strike, fire, flood,
governmental acts or orders or restrictions, failure of suppliers, or any
other reason where failure to perform is beyond the reasonable control of and
is not caused by the negligence of the nonperformance party.
IN WITNESS WHEREOF, the parties have recorded their agreement on the _____
day of November, 1999, intending it to be effective from August 27, 1999.
SIDEWARE INTERNATIONAL SRL SIDEWARE SYSTEMS INC.
By: "signed" By: "signed"
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