EXHIBIT 10.16
AGREEMENT
THIS AGREEMENT is hereby entered into and effective this 4th day of
December , 19 96 , by and between Sperry Marine Inc., a subsidiary of Xxxxxx
Industries, Inc., organized and existing under the laws of the State of
Delaware, with an office and place of business at 0000 Xxxxxxxx Xxxxx,
Xxxxxxxxxxxxxxx, Xxxxxxxx, 00000 (hereinafter referred to as "Sperry") and
Marine Management Systems, Inc., a corporation organized and existing under the
laws of the State of Delaware, with an office and place of business at 000 Xxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (hereinafter referred to as "MMS"), acting
hereinafter solely as a "Party" and collectively as "the Parties".
R E C I T A L S:
WHEREAS, MMS is engaged in the business of providing computer software
and related systems and services to the marine industry; and
WHEREAS, Sperry is engaged in the business of providing various
products, services, and systems to the marine industry; and
WHEREAS, the Parties are engaged currently in unique, complementary and
non-competitive businesses, and
WHEREAS, the Parties desire to enter into a strategic alliance in
connection with the development and distribution of their existing and future
products, services, and systems.
NOW, THEREFORE, in consideration of the above premises, the mutual
covenants set forth hereinbelow, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged by Sperry and MMS, the Parties
hereby agree as follows:
I. DEFINITIONS
A. Software Application Products -- All MMS non-ISIT related
Products, not including third-party products, whether
developed and/or marketed presently or in the future by MMS
including, but not limited to, the FLEET MANAGER SERIES of
products (FleetWORKS, FleetLINK, FleetWATCH), and all
modifications, improvements and enhancements thereto, whether
or not under present development, and all associated software.
B. ISIT Products -- MMS' Integrated Shipboard Information
Technology Product(s) including all modifications,
improvements and enhancements thereto, whether or not under
present development, and all associated software.
C. Turn-Key Products -- All MMS hardware, Product support and
engineering services in connection with the MMS Software
Application and ISIT Products.
D. IBS -- Sperry's Integrated Bridge System including all
modifications, improvements and enhancements thereto, whether
or not under present development, and all associated software,
hardware, product support, and engineering and marketing
services.
E. U.S. Government Market -- All Agencies of the United States
Government.
F. Foreign Government Market -- All Agencies of foreign
(non-U.S.) governments.
G. Commercial Market -- All Domestic (U.S.) and Foreign
Non-Government markets.
H. Distribute -- Means the sale of MMS Software Application,
ISIT, or Turn-Key Products to and by Sperry using transfer
pricing and resale pricing. The transfer price is MMS' price
to Sperry; the resale price is Sperry's price to the end user
or customer.
X. Xxxxxx'x Sole Right and License to Distribute means MMS
retains the right to Distribute directly its (MMS's) Products,
but relinquishes the right to appoint other distributors and
licensees.
X. Xxxxxx'x Non-Exclusive Right and License to Distribute
means that MMS retains the right to appoint other distributors
and licensees for its (MMS's) Products.
K. Bundled -- MMS Software Application and ISIT Products that
are sold and/or packaged as part of and/or within a related
Sperry product or system.
L. Non-Bundled -- MMS Software Application and ISIT Products
that are sold on a stand alone basis (that is, not sold and/or
packaged as part of and/or within a related Sperry product or
system).
M. Private Label -- A Party's trademark or trade name.
N. Products -- Means all Products as defined under Part I. A.,
B., and C. above.
O. Marine and Military Applications -- Products that are sold
for use on any marine vessel or in any shore side marine
operation.
P. Bridge Financing -- The proposed financial transaction as
described in the Letter of Intent dated November 14, 1996 by
and between Sperry and MMS.
II. LICENSE TO AND DISTRIBUTION BY SPERRY OF MMS PRODUCTS
A. MMS hereby grants to Sperry the Sole Right and License to
Distribute to the U.S. Government Market all MMS Software
Application Products for Marine and Military Applications,
whether Bundled or Non-Bundled, and Distributed under either
the Sperry or MMS Private Label. The decision on how to label
is at Sperry's discretion.
B. MMS hereby grants to Sperry the Sole Right and License to
Distribute within Commercial and Foreign Government Markets
for Marine and Military Applications all Software Application
Products that are Bundled only, and Distributed only under
Sperry's Private Label. The territory of Greece shall be
excluded from this provision until June 1997.
C. MMS hereby grants to Sperry a Non-Exclusive Right and
License to Distribute within Commercial and Foreign Government
Markets for Marine and Military Applications all Software
Application Products that are Bundled only, and Distributed
only under MMS' Private Label. The territories of Greece,
Singapore-Malaysia-Indonesia, and Hong Kong shall be excluded
from this provision until June 1997, August 1997 and January
1998, respectively.
D. MMS hereby grants to Sperry the Sole Right and License to
Distribute to the U.S. Government Market for Marine and
Military Applications all ISIT Products that are Bundled only,
and Distributed under either the Sperry or MMS Private Label.
The decision to label is at Sperry's discretion, although in
either case the ISIT name shall be retained by Sperry.
E. MMS hereby grants to Sperry the Sole Right and License to
Distribute within Commercial and Foreign Government Markets
for Marine and Military Applications all ISIT Products that
are Bundled only, and Distributed only under Sperry's Private
Label, although the ISIT name shall be retained by Sperry.
F. MMS hereby grants to Sperry a Non-Exclusive Right and
License to Distribute within Commercial and Foreign Government
Markets for Marine and Military Applications all ISIT Products
that are Bundled only, and Distributed only under MMS' Private
Label.
G. Subject to the limitations described elsewhere in this Part
II, MMS hereby grants to Sperry a Sole License, where it has
been granted a Sole Right to distribute hereinabove, or a
Non-Exclusive License where it has been granted a
Non-Exclusive Right to distribute hereinabove, to use and
reproduce the MMS Software Application and ISIT Products and
related documentation. MMS' licenses hereunder are granted
with the right to sublicense to the end user, and the Parties
shall agree on the terms and conditions of an end user license
agreement to be executed by Sperry and the end user prior to
delivery of any Product to an end user.
MMS shall indemnify and hold Sperry and its customers
harmless with respect to allegations or claims of
infringement of intellectual property rights held by
third- parties arising from the use or reproduction
of the software licensed hereinabove.
H. For sales situations not otherwise described in this Part
II, at MMS' discretion, which will be exercised reasonably,
and on a case by case basis, MMS may xxxxx Xxxxxx a
Non-Exclusive Right and License to Distribute Software
Application and ISIT Products, Non-Bundled only, under either
the MMS or Sperry Private Label. The decision on how to label
is at MMS' discretion.
I. If required by Sperry, MMS hereby agrees to make available
to Sperry the Turn- Key Products in connection with any of the
distribution arrangements described in this Part II.
J. MMS hereby represents that none of the distribution
arrangements described in this Part II cause MMS to be in
breach of, or Sperry to be liable for interfering with, any of
MMS' existing agreements with its current network of dealers
and/or marketing representatives. MMS shall indemnify and hold
harmless Sperry against and/or from any and all claims,
judgements, damages, fees, and costs that Sperry may incur
arising out of or in connection with MMS' misrepresentation of
this provision.
III. RELATIONSHIP OF THE PARTIES
This Agreement is not intended by the Parties to constitute or create a
joint venture, pooling arrangement, partnership, or formal business organization
of any kind and the rights and obligations of the Parties shall be only those
expressly set forth herein. Neither Party shall have the authority to bind the
other.
Sperry is not authorized to make any representation or warranty
concerning the Products other than that provided in writing by MMS. Sperry
agrees to indemnify, defend and hold MMS harmless from any damages, claims or
costs that may be incurred by MMS for Sperry's breach of this provision.
IV. TERMS AND CONDITIONS OF TRANSFER OF MMS PRODUCTS TO SPERRY
In addition to any terms and conditions to which the Parties may
subsequently agree, the following terms and conditions shall apply to the sale,
license or other transfer of MMS Products to Sperry in connection with the
distribution arrangements described in Part II above:
A. Transfer Pricing:
1. For the Software Application Products Distributed by Sperry
under the MMS Label the following fees/discounts shall apply:
Sperry Finder's Fee - 10% For sales in which MMS is
substantially involved in the
sales process.
Sperry Discount off MMS' list For sales in which MMS is
prices then in effect - 30% not involved in the sales
process.
Where MMS and Sperry agree to share in a sale under
this section, the Parties shall agree upon an
equitable splitting of the 30% discount described
above.
MMS shall provide to Sperry post-sale Product support
under this section on a contract basis pursuant to
mutually agreed upon terms and conditions. Post-sale
Product support includes installation, customer
training, and technical support.
MMS shall sell to Sperry any Turn-Key hardware
required under this section at cost plus 15%.
2. For the Software Application Products Distributed under the
Sperry label the following discounts shall apply:
Discount off MMS' list For sales in which MMS is prices then in
effect - 50% not involved in the sales
process.
Where MMS and Sperry agree to share in a sale under
this section, the Parties shall agree upon an
equitable splitting of the 50% discount described
above.
MMS shall provide any post-sale Product support
required by Sperry under this section on a contract
basis pursuant to mutually agreed upon terms and
conditions. Post-sale Product support includes
installation, customer training, and technical
support.
If Sperry furnishes the post-sale Product support
described above to the customer, MMS will assist
Sperry as required on a time and material basis.
MMS shall sell any Turn-Key hardware required under
this section at cost plus 15%.
3. For the ISIT Products, Sperry's discounts/fees will
be based upon MMS's most favorable pricing then in
effect.
4. The Parties agree to periodically review the elements
of Transfer Pricing described hereinabove and make
adjustments as mutually agreed upon in writing in
connection with any changes in market conditions
and/or quantity fleet buys.
5. Sperry retains sole pricing discretion in the resale
to its [Sperry's] customers and end users of all MMS
Products described hereunder, regardless of whether
the Products are sold under the MMS or the Sperry
Private Label, whether the Products are Bundled or
Non-Bundled, or whether the Products are sold within
the U.S. Government Market, the Foreign Government
Market, or the Commercial Market.
B. Training:
For Software Application Products, MMS shall provide Sperry with ten
(10) free days of Product sales training and ten (10) free days of
technical/support training at MMS's offices, after which these training
services shall be made available to Sperry at MMS' list prices less
15%.
C. Promotional Materials and Manuals:
MMS shall provide Sperry with all materials reasonably necessary for
Sperry to replicate, at Sperry's expense, any sales, marketing,
operating or service manuals, and training materials for Sperry's
Private Label use at no cost. MMS shall provide Sperry with MMS' sales,
marketing, operating or service manuals, and training materials
required in connection with MMS labeled products at cost.
D. Demonstration Software:
MMS shall provide Sperry with ten (10) copies of demonstration software
for the Software Application Products within thirty (30) days after the
effective date of this Agreement.
E. Warranty:
MMS represents and warrants that each copy of the Software Application
and ISIT Products will, for a period of one (1) year after delivery to
Sperry, function and perform substantially in accordance with the
applicable user documentation. In the event that the Software
Application or ISIT Product does not operate as warranted due to a
material programming error, MMS shall, at its option, either replace
the defective copy or use commercially reasonable efforts to correct
the error or provide a detour around the error, subject, however to
receiving timely notice of the error from and the assistance and
cooperation of Sperry (and, to the extent requested by MMS, the
end-user) in identifying and isolating the error. Such repair or
replacement shall be Sperry's sole and exclusive remedy for a breach of
warranty under this provision.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, MMS MAKES NO WARRANTIES
OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND THE EXPRESS WARRANTY PROVIDED IN SECTION E IS IN LIEU OF
ALL OTHER OBLIGATIONS OF MMS OF ANY KIND WITH RESPECT TO THE DELIVERY,
USE, OR PERFORMANCE OF MMS' PRODUCTS.
MMS' liability for damages or otherwise in connection with this
Agreement, if any, shall be limited to the amount paid to it by Sperry
under this Agreement during the twelve (12) month period immediately
preceding the occurrence of the event giving rise to such damages. IN
NO EVENT WILL MMS BE LIABLE TO SPERRY FOR LOST PROFITS, LOST SAVINGS,
OR OTHER SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES.
The provisions of this Section E shall survive termination of this
Agreement.
Upon the expiration of the one (1) year warranty period, MMS shall
provide extended post-sale Product (warranty) support as described in
Part IIA above under separate contract at a 15% discount from MMS'
standard support rates.
F. Point of Contact:
All Product support provided by MMS for Sperry's Private Label versions
of MMS' Software Application and ISIT Products will be provided through
a central point of contact at Sperry. This point of contact may change
upon adequate notice by Sperry to MMS.
G. Best Efforts:
Sperry shall use its best efforts to promote and market the Products.
H. Trademarks and Logos:
MMS hereby grants to Sperry a non-exclusive license to make limited use
of the names, trademarks, and logos of MMS solely in connection with
the marketing, promotion, distribution and licensing of the Products
described in this Agreement.
Sperry agrees that the names, trademarks, and logos of MMS used by
Sperry pursuant to the license granted hereunder shall conform as to
art work, lettering, color, and size to those used by MMS and shall
identify MMS as the owner of such names, trademarks, and logos. No such
use shall be in a manner which would cause a reasonable person to infer
that SPERRY has any affiliation with MMS or the right in or to the
Software other than as provided in this Agreement. MMS reserves the
right to terminate the license granted hereunder with respect to any or
all of the Marks at any time if, in MMS' reasonable judgement, Sperry's
continued use of any Xxxx would jeopardize or be detrimental to the
valuable goodwill which MMS enjoys in its Marks. The license granted
hereunder shall expire upon termination of this Agreement.
V. FUTURE PRODUCT PLANNING, DEVELOPMENT, AND MARKETING
A. The Parties hereby agree to cooperate in the joint development
and marketing of new products related to the subject matter of
this Agreement. In furtherance of this provision, each Party
hereby agrees to permit a representative of the other Party to
participate in their respective product planning processes
and, furthermore, the Parties shall consider the establishment
of a joint New Product Planning Group that would be
responsible for developing and marketing products in the
navigation, ship control, communications management systems
areas.
B. The Parties hereby agree to jointly develop and coordinate a
worldwide account management system and strategic sales plan
for all Products described in this Agreement and, in
furtherance of this provision, shall appoint account
coordinators to manage this responsibility.
X. Xxxxxx shall make its IBS ISIT compliant and MMS shall promote
Sperry's IBS as the first Integrated Bridge System to be fully
compliant with MMS' Software Application and ISIT Products.
Sperry shall promote ISIT as the standard maritime Information
Technology platform.
D. The Parties shall enter into separate agreements regarding
their respective ownership, manufacturing, and marketing
rights in connection with any future products that are jointly
developed and/or marketed under this Part V.
VI. SOFTWARE ESCROW
Promptly after the effective date of this Agreement, the Parties shall
enter into an Escrow Agreement mutually agreeable to the Parties and the Parties
shall appoint a Software Escrow Depository (the "Depository"), the cost of which
shall be borne by Sperry, to hold MMS's Software Application and ISIT Products
source codes and related documentation including all updated versions of these
Product source codes and documentation [containing corrections, enhancements,
and so forth], which Sperry has the right to Distribute under this Agreement.
MMS shall promptly deposit copies of the source codes and documentation for the
Products with the Depository and shall promptly update the deposited source
codes and documentation as updates of the Products are released by MMS. MMS
hereby represents that it shall execute all documents and/or contracts ("the
Escrow Agreement") required by the Depository under which the Depository will
take possession of the source codes and documentation described herein. MMS
hereby agrees that the source codes and documentation to be held by the Escrow
Agent shall be kept current during the term of this Agreement, and furthermore,
hereby agrees that the Depository shall have the right to deliver the source
codes and other documentation to Sperry in accordance with the terms,
conditions, and events (including, but not limited to, the situation wherein MMS
is unable to meet its on-going financial obligations) as set forth in the Escrow
Agreement. In the event that the MMS Product source codes and documentation
described herein are delivered to Sperry by the Depository in accordance with
the Escrow Agreement, Sperry shall have a royalty-free, non-exclusive license in
these source codes and documentation to support Sperry's then existing
customers. Sperry shall be granted a royalty-bearing license to the released
Product source codes and documentation for uses other than in connection with
supporting its then existing customers under terms and conditions to be agreed
upon by Sperry and MMS or its successor in interest, but in no event shall the
amount of the royalty be greater than the Transfer Pricing then in effect.
Except as provided hereinabove, Sperry shall have no right to use,
reproduce, duplicate, or possess the source code for the Software Application
and ISIT Products software.
VII. EXCLUSIVE STRATEGIC ALLIANCE
Sperry and MMS hereby agree not to enter into a Strategic Alliance
agreement containing similar or more favorable terms, conditions, and provisions
as those set forth herein with any other non-affiliated party during the term of
this Agreement regarding products similiar to any of the Products described
herein without the prior written consent of the other, such consent not to be
unreasonably withheld.
VIII. PROPRIETARY INFORMATION
A. During the term and in furtherance of this Agreement, either
Party may disclose to the other information or data that the
disclosing party considers to be proprietary, competition
sensitive, company confidential, or secret ("Information").
B. The receiving Party agrees, from the date of disclosure, to
protect the Information received from the disclosing Party. In
order to be subject to this provision, such Information, if in
written form, shall be identified at the time of the
disclosure by an appropriate legend, marking stamp or positive
written identification on the face thereof to be
"proprietary", or if an oral disclosure is made, such
Information shall be identified at the time of disclosure by
giving appropriate notice to the receiving Party, provided,
however, that the following Information shall always be deemed
"proprietary" whether or not it is marked as such: software,
inventions, customer lists, future product plans and financial
information. The receiving Party shall maintain and protect
the disclosing Party's Information with the same degree of
care it normally uses in the protection of its own such
Information.
C. The receiving Party agrees not to use directly or indirectly,
any such Information for its own benefit or for the benefit of
any other person, firm or corporation in a manner inconsistent
with the purpose of this Agreement. The receiving Party may
disclose such Information to its officers, those of its
employees and others under its control having a need-to-know,
all of whom will be required to maintain the disclosed
Information or data in their confidence. The receiving Party
shall be defined as the Party to this Agreement who is
receiving the Information, and any parent organization,
subsidiaries or affiliates thereof, including any companies
that are affiliates of the receiving Party.
D. The restriction on disclosure set forth herein shall not
apply:
1. to information that receiving Party can document was
generally available to the public at the time of
disclosure;
2. to information that receiving Party can document was
already known to receiving Party as evidenced by its
tangible records before it received Information from
disclosing Party;
3. to information developed independently from receipt
by personnel having no knowledge of disclosing Party
Information;
4. to information that is in the public domain or falls
into public domain through no breach of this
Agreement by receiving Party;
5. to information that is rightfully obtained by
receiving Party from a third Party and not under any
obligation of confidentiality;
6. to information that is provided by disclosing Party
to a third Party and not under any obligation of
confidentiality; or
7. to information that receiving Party develops
independently of Information received from
disclosing Party.
E. Part VIII of this Agreement shall be effective from the day
and year first above written, and shall remain effective for
ten (10) years thereafter. Upon the termination of this
Agreement, the receiving Party shall return to disclosing
Party all Information received under this Agreement and purge
all Information from receiving Party's computers and software,
in whatever form, and shall certify to disclosing Party as to
such returning or purging.
F. The provisions set forth in this Part VIII shall survive the
termination of this Agreement.
IX. TERM
The term of this Agreement shall be for five (5) years from the effective date
as first set forth hereinabove.
X. MISCELLANEOUS PROVISIONS
A. GOVERNING LAW
This Agreement shall be construed in accordance with and governed
exclusively by the laws of the State of Delaware, excluding its
conflict of laws rules.
B. SEVERABILITY
If any provision hereof, or the application thereof to any person,
entity or circumstance shall to any extent be invalid or unenforceable
in any pertinent jurisdiction or not in compliance with the laws
thereof, the remainder hereof shall not be affected thereby but shall
remain valid and enforceable as though the invalid term or provision
were not a part hereof to the extent performance of this Agreement is
not thereby rendered impractical.
C. WAIVER
The failure or delay of either Party to enforce at any time or for any
period of time any of the provisions of this Agreement shall not
constitute a waiver of such provisions or the right of either Party to
enforce each and every provision on any future occasion.
D. ASSIGNMENT
Neither Party shall assign nor in any manner transfer its interest or
responsibilities under this Agreement to any third party without the
prior written consent of the other Party. This restriction shall not
apply to assignments to any successor corporation in the event of a
merger or consolidation, or to assignments by MMS or Sperry to any of
their respective subsidiary or affiliated corporations.
E. HEADINGS
The headings used herein are for descriptive purposes only and are not
to be construed as part of this Agreement.
F. SOLICITATION OF EMPLOYEES
During the term of this Agreement, each Party agrees not to solicit for
employment or hire any technical or professional employee of the other
without prior approval of the other Party.
G. PRESS RELEASES
MMS and Sperry shall mutually agree on any press releases and other
publicity issued in connection with their Strategic Alliance.
H. MERGER AND MODIFICATIONS
This written Agreement, including the Escrow Agreement referred to
herein and hereby incorporated by reference, contains the entire
Agreement between the Parties and supersedes any previous
understandings, oral or written (including all prior drafts and
versions hereof), with respect to the subject matter hereof. Any
modification of this Agreement shall be effective only if in writing
and executed by an authorized representative of each Party.
I. EFFECT OF FAILURE OF BRIDGE FINANCING
Notwithstanding the agreed to effective date first above written and
Section X.H. above, this Agreement is contingent upon Sperry and MMS
concluding their Bridge Financing. In the event the Bridge Financing is
not concluded within a reasonable time after the date first above
written, this Agreement shall be void and have no force or effect.
J. POINTS OF CONTACT
The respective points of contact hereunder for each Party are as
follows:
MARKETING ADMINISTRATIVE
For Sperry: For Sperry:
Xxxxxx X. Xxxx, Xx. Xxxxxx X. Xxxxxxx
Senior Manager, Business Development Vice President, Finance
Sperry Marine Inc. Sperry Marine Inc.
0000 Xxxxxxxx Xxxxx 0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx, XX 00000 Xxxxxxxxxxxxxxx, XX 00000
Phone 000 000-0000; Fax 000 000-0000 Phone 000 000-0000; Fax 000 000-0000
For MMS: For MMS:
Xxxxxxx X. Xxxxxx Xxxxxx X. Xxxxx
VP, Sales, Marketing & Corporate Development Executive Vice President
Marine Management Systems, Inc. Marine Management Systems, Inc.
000 Xxxx Xxx. 00 Xxxx Xxx.
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Phone 000 000-0000; Fax 000 000-0000 Phone 000 000-0000; Fax 000 000-0000
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives, effective as of the date
first above written.
For Marine Management Systems, Inc.: For Sperry Marine Inc.:
/s/ Xxxxxx X. Story /s/ Xxxx X. Xxxxxx
--------------------------- ----------------------------
Xxxxxx X. Story Xxxx X. Xxxxxx
President President
