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Exhibit 2
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CERTAIN CONFIDENTIAL INFORMATION IN THIS
EXHIBIT DENOTED BY ASTERISKS HAS BEEN
REDACTED PURSUANT TO 17 C.F.R. SECTIONS
200.80(b)(4), 200.83 AND 204.24b-2.
DEVELOPMENT AND LICENSE AGREEMENT
This Development & License Agreement (the "Agreement') is entered into
and effective as of September 24,1996 (the "Effective Date") by and between
Microsoft Corporation, a Washington corporation located at Xxx Xxxxxxxxx Xxx,
Xxxxxxx, XX 00000 ("Microsoft") and Company, Rational Software Corporation, a
Delaware corporation located at 0000 Xxx Xxxxx Xxxxxxxxxx, Xxxxx Xxxxx, XX
00000-0000 ("Company").
RECITALS
A. The Company has developed an object modeling technology for
development of component-based application programs.
B. Microsoft wishes to engage the Company to further development of such
technology to develop a product and associated documentation for end users of
its software tool products;
C. The Company is willing to grant Microsoft the rights described
herein, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. DEFINITIONS
1.1 "Confidential Information" shall mean: (i) any trade secrets
relating to either party's product plans, designs, costs, prices and names,
finances, marketing plans, business opportunities, personnel, research
development or know-how; and (ii) the terms, conditions and existence of this
Agreement. "Confidential Information" shall not include information that: (i) is
or becomes generally known or available by publication, commercial use or
otherwise through no fault of the receiving party; (ii) is known and has been
reduced to tangible form by the receiving party at the time of disclosure and is
not subject to restriction; (iii) is independently developed or learned by the
receiving party; (iv) is lawfully obtained from a third party that has the right
to make such disclosure; or (v) is made generally available by the disclosing
party without restriction on disclosure.
1.2 "Derivative Technology" shall mean: (i) for copyrightable or
copyrighted material, any translation (including translation into other computer
languages), portation, modification, correction, addition, extension, upgrade,
improvement, compilation, abridgment or other form in which an existing work may
be recast, transformed or adapted; (ii) for patentable or patented
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material, any improvement thereon; and (iii) for material which is protected by
trade secret, any new material derived from such existing trade secret material,
including new material which may be protected by copyright, patent and/or trade
secret.
1.3 "Documentation" means the Company-authored end user documentation
for the Product, which is described in the Specifications.
1.4 "IDE" means the Microsoft Integrated Development Environment for
certain of the MS Tool Products, which is further described on Exhibit B
attached hereto.
1.5 "MS Tool Products" shall mean Microsoft Visual Basic, Microsoft
Visual C++, Microsoft Visual J++, Microsoft Visual FoxPro, and all other future
Microsoft tool products, including all upgrades, versions and successors
thereof.
1.6 "Product" shall mean the computer software product that is described
in the Specifications, including all bug fixes, maintenance releases, upgrades,
versions, and successors thereof that the Company releases to Microsoft during
the term of this Agreement.
1.7 "Serious Error"' means a bug or programming error in the Product
that prevents or seriously impairs the performance of one or more major
functions.
1.8 "Specifications" shall mean the specifications for the Product,
which are attached to this Agreement as Exhibit A.
1.9 "Schedule" shall mean the schedule(s) for implementing the features
of the Product and Documentation described in the Specifications, which are set
forth in Exhibit A attached hereto.
1.10 "Win32 Platforms" means Microsoft Windows 95, Microsoft Windows NT,
and all upgrades, versions and successors to such products.
2. DEVELOPMENT OF PRODUCT AND DOCUMENTATION
2.1 SPECIFICATIONS AND SCHEDULE. Company shall develop and deliver the
Product and the Documentation to Microsoft in accordance with the Schedule and
the Specifications. A failure to deliver the Product or the Documentation in
accordance with the Schedule and/or the Specifications shall be deemed a
material breach for purposes of Section 9.2 of this Agreement.
2.2 DESIGN REVIEW & SPECIFICATIONS CHANGES. Company understands that
there may be additions, deletions or other changes which may affect the
Specifications at any time during the term of Agreement. Upon notice of any such
changes by Microsoft, Company and Microsoft shall work together to make any
necessary changes to the Specifications and Schedule.
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2.3 SOURCE CODE DROPS. The Company shall provide a complete and accurate
copy of the Product, including all updates and new versions, in source code form
on the dates that it is required to provide the same in object code form
pursuant to the terms of the Schedule and/or Sections 5.1.1 and 5.1.2. The
Company shall provide such source code copies of the Product on one or more
computer diskettes placed in sealed envelopes. Microsoft agrees that it shall
keep such envelopes in a secure facility and only break the seals to access the
source code to the Product upon the occurrence of one of the events described in
Section 3.4(a) or 3.4(b) of this Agreement or upon exercise of the Option
described in Section 5.2.
3. LICENSE TO PRODUCT AND DOCUMENTATION
3.1 OWNERSHIP. Except as expressly licensed to Microsoft in this
Agreement, Company retains all right, title and interest in and to the Product,
Documentation, and to any Derivative Technology of the Product created by or for
Microsoft.
3.2 OBJECT CODE LICENSE. Company hereby grants to Microsoft a perpetual,
nonexclusive, worldwide, irrevocable, [*] license: (i) to make, use, and copy
the Product in object code form only; (ii) to reproduce, license, sell, rent,
lease or otherwise distribute, and have reproduced, licensed, sold, rented,
leased or otherwise distributed, to and by third parties, copies of the Product
in object code form as part of any MS Tool Product; and (iii) to sublicense the
rights in the foregoing parts (i) and (ii) to third parties, including the right
to grant further sublicenses to third parties. Microsoft shall not license or
grant third parties the right to license the Product on a standalone basis.
The foregoing license grants include a license under any current and
future patents owned or licensable by Company to the extent necessary: (i) to
exercise any license right granted herein; and (ii) to combine the Product with
any hardware and software.
3.3 LICENSE TO DOCUMENTATION. Company hereby grants to Microsoft a
perpetual, nonexclusive, worldwide, irrevocable, [*] license: (i) to
make, use, and copy the Documentation; (ii) to reproduce, license, sell, rent,
lease or otherwise distribute, and have reproduced, licensed, sold, rented,
leased or otherwise distributed, to and by third parties, copies of the
Documentation; and (iii) to sublicense the rights in the foregoing parts (i) and
(ii) to third parties, including the right to grant further sublicenses to third
parties.
3.4 RESTRICTED SOURCE CODE LICENSE. Company hereby grants to Microsoft a
nonexclusive, perpetual, irrevocable, [*], worldwide right and license to (i)
make, use, copy, edit, format, modify, translate and create Derivative
Technology of the source code version of the Product; (ii) license, rent, lease
or otherwise distribute, and have reproduced, licensed, rented, leased or
otherwise distributed to and by third parties, object code versions of the
Product, and any Derivative Technology thereof, as part of an MS Tool; and (iii)
grant the rights set forth in this Section 3.4 to third parties, including the
right to license such rights to further third parties. The foregoing license
grant is subject to the following restrictions:
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(a) Microsoft may only obtain access to the source code version
of the Product, as delivered by the Company pursuant to Section 2.3, upon the
occurrence of one of the following events: (i) Company fails to correct a
Serious Error within fifteen (15) days after receiving written notice thereof
from Microsoft; or (ii) the Company fails to update the Product to incorporate
changes in Win32 Platforms, as required by Section 5.1.3, within thirty (30)
days after receiving written notice from Microsoft.
(b) Upon obtaining access to the source code version of the
Product for a reason described in sub-section (a) above, Microsoft shall only
use and/or modify the source code of the Product to the extent necessary either
to correct the Serious Error or update the Product for Win32 Platforms, as the
case may be.
(c) Microsoft shall not license the Product or any Derivative
Technology thereof on a standalone basis.
The foregoing license grants include a license under any current and
future patents owned or licensable by Company to the extent necessary: (i) to
exercise any license right granted herein; and (ii) to combine the Product or
Derivative Technology thereof with any hardware and software.
4. LICENSE TO [ * ]
The parties agree that within a reasonable period of time after the
Effective Date not to exceed ninety (90) days, they shall commence good faith
negotiations for Microsoft to grant the Company a non-exclusive, perpetual,
royalty free license to distribute copies of the Microsoft [ * ]
which is described in Exhibit C attached hereto, to end users of the Company's
development tool products.
5. OTHER OBLIGATIONS OF THE PARTIES
5.1 MAINTENANCE RELEASES AND UPDATES
5.1.1 MAINTENANCE RELEASES. During the term of the Agreement, the
Company shall provide Microsoft with all bug fixes and maintenance
releases for the Product no later than the date it provides the same to
any third party. In addition, the Company shall use reasonable efforts
to promptly correct any programming errors in the Product identified by
Microsoft and end users and to promptly provide Microsoft with such
corrections.
5.1.2 UPDATES. During the term of the Agreement, the Company
shall provide Microsoft with all updates and new versions of the Product
and the Documentation, including beta software releases, no later than
the date that it provides such updates and new versions to any other
third party.
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5.1.3 PLATFORM FEATURES. The Company agrees that the Product
shall execute exclusively on the Win32 Platforms and the Intel, MIPS,
Alpha and Power PC microprocessor platforms. The Company shall use
reasonable efforts to localize the Product and the Documentation for
such languages as Microsoft may request from time to time during the
term of this Agreement. The Company also shall use reasonable efforts to
implement enhancements to the Product as requested by Microsoft, such
enhancements to include, but not necessarily be limited to, changes
resulting from enhancements to the Win32 Platforms, new diagramming
features, usability improvements, code generation, repository
integration, and development environment enhancements.
5.2 OPTION TO OBTAIN FULL SOURCE CODE LICENSE.
5.2.1 SCOPE. The Company hereby grants Microsoft an option (the
"Option") to obtain a nonexclusive, perpetual, irrevocable, [*]
worldwide right and license to (i) make, use, copy, edit, format,
modify, translate and create Derivative Technology of the source code
version of the Product; (ii) license, rent, lease or otherwise
distribute, and have reproduced, licensed, rented, leased or otherwise
distributed, to and by third parties, object code versions of the
Product, and any Derivative Technology thereof, as part of an MS Tool
Product; and (iii) grant the rights set forth in Section 3.4 to third
parties, including the right to license such rights to other third
parties. Microsoft agrees to include a reference to the Company in the
"About Box" for the Product, as modified by Microsoft pursuant to this
Section . Microsoft further agrees not to license the Product or any
Derivative Technology thereof on a standalone basis.
5.2.2 OPTION PERIOD AND PRICE. The Option shall be exercisable
for a period of 180 days after the expiration or termination of this
Agreement pursuant to Section 9. Within 45 days after the exercise, if
ever, of the Option, Microsoft shall pay the Company a flat fee equal to
[*].
5.2.3 LICENSE BACK TO COMPANY. For a period of one (1) year after
the date that Microsoft exercises the Option, it shall provide the
Company with updates to all Microsoft- authored Derivative Technology of
the Product (the "MS Derivatives") on a quarterly basis in source code
form. The Company shall have a nonexclusive, perpetual, irrevocable,
[*] worldwide right and license to (i) make, use, copy, edit, format,
modify, translate and create Derivative Technology of the source code
version of the MS Derivatives; (ii) license, rent, lease or otherwise
distribute, and have reproduced, licensed, rented, leased or otherwise
distributed, to and by third parties, object code versions of the MS
Derivatives; and (iii) grant the rights set forth in Section 3.4 to
third parties, including the right to license such rights to further
third parties.
5.2.4 LICENSE TO IDE. For a period of [*] after the date that
Microsoft exercises the Option, the Company shall have the right to
obtain a license to integrate the IDE into the Product upon the then
standard terms and conditions and Microsoft shall
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waive any license fees due for the initial [*] of such license
agreement. The parties shall negotiate such an agreement in good faith.
5.3 PRESS RELEASES; MARKETING. Microsoft shall include information about
this Agreement (except financial terms and conditions), the Company and the
Product in xxxxxx xxxxx releases for any MS Tool Products that include the
Product. Financial terms and conditions of this Agreement shall not be disclosed
without the mutual written consent of both parties. The Company may issue its
own press release announcing the basic terms of this Agreement at the same time
that Microsoft issues its first press release concerning the Product. Microsoft
and the Company shall consult with one another concerning the form and contents
of any press release concerning the Product and the terms of this Agreement
prior to the issuance of any such press release. The parties shall undertake
reasonable efforts during the term of this Agreement to market and promote the
Product and the MS Tool Products.
5.4 TECHNICAL SUPPORT. The parties understand and agree that the Company
shall have sole responsibility for developing the Product in accordance with the
Specifications and the Schedule. Microsoft shall assist the Company in its
efforts to integrate the Product with future upgrades and versions of MS Tool
Products (if, and to the extent that such MS Tool Products include the Product)
by providing the Company with early access to object and, if necessary, source
code for such MS Tool Products if the parties determine that access to such code
is reasonably necessary to provide for integration of the Product into such MS
Tool Products. Prior to obtaining access to such software code, the Company
shall execute an agreement (e.g., a beta test agreement) in standard form to be
provided by Microsoft.
5.5 END USER SUPPORT. At least thirty (30) days prior to the date that
Microsoft makes the Product commercially available to the public as part of any
MS Tool Product, the Company shall provide complete and accurate technical
documentation and training to designated Microsoft product support engineers, at
no cost to Microsoft, to enable such product support engineers to provide
front-line support to end users about the features and functions of the Product.
The Company also shall update such technical documentation and provide
additional training, as reasonably necessary, at no cost to Microsoft.
Subject to the Company's satisfaction of the foregoing obligations,
Microsoft shall provide front-line support and shall accept and make reasonable
efforts to answer all product support calls from end user customers who have
licensed the Product as part of an MS Tool Product; provided, that Microsoft
product support engineers shall direct to the Company all calls for which they
have no answer or which have arisen from a programming error in the Product. The
Company shall provide Microsoft with the name, telephone number, fax number and
Internet e-mail address of a person at the Company who will accept all end user
customer support calls.
From time to time during the term of this Agreement, the Company shall
provide technical articles concerning the Product at no cost for distribution by
Microsoft through the Microsoft Developer Network, Microsoft Web Site, and other
distribution channels and media selected by
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Microsoft in its reasonable discretion. The Company may include a link to its
Web Site in any such documentation.
5.6 LIMITED EXCLUSIVITY. The Company agrees that to maintain the
uniqueness of the Product included within the MS Tool Products, it shall not
license the particular set of functions and features that are included in
Product to any third party without the consent of Microsoft, for a period of [*]
after the date the Company delivers Microsoft each new version of the Product
and for [*] after the date that the Company delivers Microsoft each new
upgrade to the Product.
5.7 MUTUAL COOPERATION. The parties agree to work together in good faith
on future marketing and distribution opportunities for the Product.
6. CONFIDENTIALITY; INDEPENDENT DEVELOPMENT
6.1 Each party shall protect the other's Confidential Information from
unauthorized dissemination and use with the same degree of care that such party
uses to protect its own like information. Neither party will use the other's
Confidential Information for purposes other than those necessary to directly
further the purposes of this Agreement. Neither party will disclose to third
parties the other's Confidential Information without the prior written consent
of the other party. Except as expressly provided in this Agreement, no ownership
or license rights is granted in any Confidential Information.
6.2 The parties' obligations of confidentiality under this Agreement
shall not be construed to limit Microsoft's ability to acquire, license,
develop, manufacture or distribute for itself, or have others acquire, license,
develop, manufacture or distribute for Microsoft, similar technology performing
the same or similar functions as the technology contemplated by this Agreement,
or to market and distribute such similar technology in addition to, or in lieu
of, the technology contemplated by this Agreement. Further, either party shall
be free to use for any purpose the residuals resulting from access to or work
with such Confidential Information, provided that such party shall maintain the
confidentiality of the Confidential Information as provided herein. The term
"residuals" means information in non-tangible form, which may be retained by
persons who have had access to the Confidential Information, including ideas,
concepts, know-how or techniques contained therein. Neither party shall have any
obligation to limit or restrict the assignment of such persons or to pay
royalties for any work resulting from the use of residuals. However, the
foregoing shall not be deemed to grant to either party a license under the other
party's copyrights or patents.
7. WARRANTIES
7.1 COMPANY. Company warrants and represents that:
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7.1.1 It has the full power to enter into this Agreement and to
grant the license rights set forth herein;
7.1.2 It has not previously and will not grant any rights to any
third party that are inconsistent with the rights granted to Microsoft
herein;
7.1.3 The Product is original to Company and does not infringe
any copyright, trade secret, or, to the knowledge of the Company, any
patent rights held by any third party;
7.2 Microsoft warrants and represents that it has taken the necessary
steps to enter into this Agreement.
8. INDEMNITY
8.1 INDEMNITY.
8.1.1 Company shall, at its expense and Microsoft's request,
defend any claim or action brought against Microsoft, and Microsoft's
subsidiaries, affiliates, directors, officers, employees, agents and
independent contractors, which, if true, would constitute a breach of a
warranty by Company in Section 7, and Company will indemnify and hold
Microsoft harmless from and against any costs, damages and fees
reasonably incurred by Microsoft, including but not limited to fees of
attorneys and other professionals, that are attributable to such claim.
Microsoft shall: (i) provide Company reasonably prompt notice in writing
of any such claim or action and permit Company, through counsel mutually
acceptable to Microsoft and Company, to answer and defend such claim or
action; and (ii) provide Company information, assistance and authority,
at Company's expense, to help Company to defend such claim or action.
Company will not be responsible for any settlement made by Microsoft
without Company's written permission, which permission will not be
unreasonably withheld.
8.1.2 Microsoft shall have the right to employ separate counsel,
at its expense, and participate in the defense of any claim or action.
Company shall reimburse Microsoft upon demand for any payments made or
loss suffered by it at any time after the date hereof, based upon the
judgment of any court of competent jurisdiction or pursuant to a bona
fide compromise or settlement of claims, demands, or actions, in respect
to any damages related to any claim or action under this Section 8.
8.1.3 Company may not settle any claim or action under this
Section 8 on Microsoft's behalf without first obtaining Microsoft's
written permission, which permission will not be unreasonably withheld.
In the event Microsoft and Company agree to settle a claim or action,
Company agrees not to publicize the settlement without first obtaining
Microsoft's written permission, which permission will not be
unreasonably withheld.
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8.2 DUTY TO CORRECT. Notwithstanding Section 8.1, should the Product or
portion thereof be held to constitute an infringement and use as contemplated by
this Agreement be enjoined or be threatened to be enjoined, Company shall notify
Microsoft and immediately, at Company's expense: (i) procure for Microsoft the
right to continue use the Product or portion thereof, as applicable, as licensed
in this Agreement; or (ii) replace or modify the Product or portion thereof with
a version that is non-infringing, provided that the replacement or modified
version meets the Specifications to Microsoft's satisfaction. If (i) or (ii) are
not available to Company, in addition to any damages or expenses reimbursed
under Section 8.1, Company shall refund to Microsoft all amounts paid to Company
by Microsoft under this Agreement.
9. TERMINATION
9.1 TERM. The term of this Agreement shall commence as of the Effective
Date and shall continue until two (2) years thereafter unless terminated earlier
as provided in this Section 9.
9.2 TERMINATION. Either party may suspend performance and/or terminate
this Agreement immediately upon written notice at any time if the other party is
in material breach of any material warranty, term, condition or covenant of this
Agreement and fails to cure such breach within thirty (30) days after written
notice thereof
9.3 EFFECT OF TERMINATION. Sections 3.2, 3.3, 3.4, 5.2, 5.5, 6, 7, 8, 10
and 11 shall survive any termination or expiration of this Agreement. Neither
party shall be liable to the other for damages of any sort resulting solely from
terminating this Agreement in accordance with its terms. Any licenses or
sublicenses already granted by Microsoft under this Agreement shall not be
affected by any termination of this Agreement and shall remain in full force and
effect.
10. LIMITATION OF LIABILITIES
10.1 NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10.2 THIS PROVISION HAS NO APPLICATION TO SECTIONS 6 AND 8.
11. GENERAL
11.1 NOTICES. All notices and requests in connection with this Agreement
shall be deemed given as of the day they are received either by messenger,
delivery service, or in the United States of America mails, postage prepaid,
certified or registered, return receipt requested, and addressed as follows:
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To Company: To Microsoft:
Rational Software Corporation Microsoft Corporation
2800 San Xxxxx Expressway Xxx Xxxxxxxxx Xxx
Xxxxx Xxxxx, XX 00000-0000 Xxxxxxx, XX 00000-0000
Attention:___________________ Attention: V.P., Developer Tools
Phone:_______________________ Phone: (000) 000-0000
Fax:_________________________ Fax: (000) 000-0000
Copy to: Law & Corporate Affairs
Fax: (000) 000-0000
or to such other address as a party may designate pursuant to this notice
provision.
11.2 NO JOINT VENTURE. Nothing in this Agreement shall be construed as
creating an employer-employee relationship, a partnership, or a joint venture
between the parties.
11.3 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Washington as though entered into between Washington residents and to
be performed entirely within the State of Washington, and Company consents to
jurisdiction and venue in the state and federal courts sitting in the State of
Washington. In any action or suit to enforce any right or remedy under this
Agreement or to interpret any provision of this Agreement, the prevailing party
shall be entitled to recover its costs, including reasonable attorneys' fees.
11.4 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of each party's respective successors and lawful assigns; provided,
however, that Company may not assign this Agreement, in whole or in part,
without the prior written approval of Microsoft.
11.5 CONSTRUCTION. If for any reason a court of competent jurisdiction
finds any provision of this Agreement, or portion thereof, to be unenforceable,
that provision of the Agreement will be enforced to the maximum extent
permissible so as to effect the intent of the parties, and the remainder of this
Agreement will continue in full force and effect. Failure by either party to
enforce any provision of this Agreement will not be deemed a waiver of future
enforcement of that or any other provision. This Agreement has been negotiated
by the parties and their respective counsel and will be interpreted fairly in
accordance with its terms and without any strict construction in favor of or
against either party.
11.6 ENTIRE AGREEMENT. This Agreement does not constitute an offer by
Microsoft and it shall not be effective until signed by both parties. This
Agreement constitutes the entire agreement between the parties with respect to
the Services and all other subject matter hereof and merges all prior and
contemporaneous communications. It shall not be modified except by a written
agreement dated subsequent to the date of this Agreement and signed on behalf of
Company and Microsoft by their respective duly authorized representatives.
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the Effective Date written above.
MICROSOFT CORPORATION RATIONAL SOFTWARE
CORPORATION
________________________________ _____________________________
By (Sign) By (Sign)
________________________________ _____________________________
Name (Print) Name (Print)
________________________________ _____________________________
Title Title
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EXHIBIT A
SPECIFICATIONS FOR PRODUCT AND DOCUMENTATION
AND SCHEDULE FOR DELIVERY
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[*]
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EXHIBIT B
[*]
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EXHIBIT C
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