Licensor Oriented Software License Agreement

§ 8.17 Form: User Oriented Software Development and License Agreement

AGREEMENT made this day of by and between Licensor with its principal place of business at and Licensee with its principal place of business at .

WHEREAS, Licensee desires to acquire a data processing software system to perform a substantial part of its operations; and

WHEREAS, Licensee desires to license certain application software owned by Licensor and to engage Licensor to modify said application software to meet Licensee's data processing system requirements; and

WHEREAS, Licensor desires to license certain application software to Licensee and to perform certain modifications to the application software to meet Licensee's data processing software system requirements.

NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties agree as follows:

1. The Software System

1.1 Definition of the System

Licensor agrees to supply to Licensee a data processing software system (the "System") which meets Licensee's requirements contained in Licensee's "Request for Proposal" as all such requirements may be modified or superseded by the Detailed Design Specifications as defined herein. A copy of the Request for Proposal is annexed hereto as Exhibit "1", and its contents are expressly incorporated herein. Licensee agrees to pay for the Software System in accordance with the terms and conditions hereinafter set forth. The Software System shall consist of the Licensed Software and the Modifications, as those terms are hereinafter defined.

2. The Licensed Software

2.1 License

Licensor hereby grants to Licensee a license in perpetuity to use the Licensor's proprietary software, consisting of the Programs, Documentation and Training Materials, set forth on Schedule "A" attached hereto (hereinafter the "Licensed Software").

2.2 License Fee

Licensee shall pay to Licensor for the license of each application of Licensed Software the respective "License Fee" set forth in Schedule "A", in accordance with the payment terms set forth herein. Licensee shall pay the initial payment as set forth in Schedule "A" to Licensor upon execution of this Agreement.

2.3 Licensor Property

All aspects of the Licensed Software, including without limitation programs and methods of processing, shall remain the sole and exclusive property of Licensor and shall not be sold, revealed, disclosed or otherwise communicated, directly or indirectly, by Licensee to any person, company or institution whatsoever other than as set forth herein. It is expressly understood that no title to or ownership of the Licensed Software, or any part thereof, is hereby transferred to Licensee. Notwithstanding the above, Licensee shall have the right to make available to other parties any such information about the Licensed Software which is necessary to conduct its daily business.

2.4 Scope of License

A. Licensee may use the Licensed Software on any or all central processing units owned or controlled by Licensee or any of Licensee's subsidiaries, including but not limited to those listed in Schedule "B". Irrespective of the number of central processing units owned or controlled by Licensee upon which the Licensed Software is used, Licensee shall pay only one "License Fee" for each application of Licensed Software licensed.

B. Licensor hereby consents to the use by Licensee of the Licensed Software in a time-sharing or service bureau environment when the central processing unit upon which the Licensed Software is usually run is not operational. Licensee shall give written notice to Licensor if the source code is moved pursuant to this subparagraph.

2.5 Ownership

Licensor warrants that it owns and possesses all rights and interests in the Licensed Software necessary to enter into this Agreement, and shall indemnify and hold Licensee, its agents and employees, harmless from any loss, damage or liability for infringement of any United States patent right or copyright or other property right with respect to the use of the Licensed Software delivered hereunder; provided that Licensee permits Licensor to defend, compromise or settle said claim or infringement and gives Licensor all available information, assistance and authority to enable Licensor to do so.

2.6 Programming Language

Licensee understands that Licensor represents that Licensed Software is written in COBOL for use with the operating system software set forth on Schedule "C". Licensee further agrees that its use of the Licensed Software and the performance thereof in any other programming language and operating system combination is solely Licensee's responsibility.

3. Modification of Software

3.1 Modifications

To enable the System to meet Licensee's requirements, Licensor agrees to design, program, test and implement modifications to the Licensed Software as set forth on Schedule "D" attached hereto, and as modified or superseded by the Detailed Design Specifications as hereinafter defined. Such modifications are referred to as "Modifications"; the Licensed Software as modified by the Modifications is referred to as the "Software System".

3.2 Nature of Modifications

Licensor represents that the Licensed Software is fully capable of supporting approximately eighty percent (80%) of the requirements of Licensee set forth in the RFP, and further that the Modifications described in Schedule "D" do not represent major revisions, but rather can be developed within the framework of the Implementation, Software Modification Completion and Payment Schedule attached as Schedule "G". With respect to the Modifications, Licensor shall utilize methods of structured design and coding and standards of coding consistent with those used by it in the Licensed Software.

3.3 License of Modifications

Upon Final Acceptance of an Application, as those terms are defined herein, Licensor grants to Licensee a license in perpetuity to use the Modifications related to such Application. The terms and conditions of such license shall be identical to those set forth in Section 2 above. In the event Licensor licenses to any other person or entity the Modifications or any software incorporating the design, structure or code of the Modifications, Licensor shall compensate Licensee with a royalty in accordance with Schedule "E", attached hereto.

4. Development, Implementation, and Acceptance

4.1 Licensee Participation

During the entire course of the project, licensee shall provide a project director (the "Project Director") whose duties shall be to act as liaison between Licensor and Licensee. It is understood that for the Systems to succeed the Licensee data processing staff should acquire a knowledge of the Systems. As a consequence, Licensee shall have the right to have one programmer-analyst at Licensor's premises. Licensor shall provide desk space for such Licensee employee.

4.2 Staffing and Staff Qualifications

The consulting and professional personnel provided by Licensor hereunder shall have appropriate technical and application skills to enable them to perform their duties hereunder. Licensor shall disclose in the progress reports provided for hereunder the names and experience of Licensor consulting and professional personnel assigned to the project. It is agreed that (named manager) shall be primarily responsible as the project manager. The project manager shall devote his full time efforts to installation of the System. The project manager shall make himself available, as reasonably required and agreed to, to be on-site at the appropriate Licensee site during testing, implementation and at other necessary times. Licensor shall provide sufficient staffing to enable the System to be installed in accordance with the implementation schedule. Licensee shall have the right to require Licensor to replace any personnel, other than the project manager, working on the project at Licensee premises whom Licensee deems, in its reasonable sole discretion, to be unfit or otherwise unsatisfactory. In the event that (named manager) is no longer associated with Licensor, the responsibilities shall be assumed by an individual with equivalent qualifications, experience, and knowledge of the appropriate System.

4.3 Training

Licensor shall provide all necessary instruction and training to enable Licensee to supply input and to utilize output of the Software System, including training on Licensee's site. Such training is described on Schedule "F" attached hereto. Licensor shall provide computer operations training on the Test System. Licensee, at its option, shall be entitled to have one employee on-site at Licensor's computer facility to accomplish the training objectives set forth in Schedule "F". Licensee shall reimburse Licensor in accordance with the payments set forth on Schedule "F" for training performed by Licensor after Final Acceptance.

4.4 Progress Meetings

Twice each month there shall be a meeting to discuss the progress of the projects. At such meetings the Licensor Project Manager shall present a written report to Licensee with respect to project status and progress. Such report shall include a summary of the accomplishments and difficulties during the prior reporting period, and the anticipated results during the next reporting period.

4.5 Implementation Schedule

An Implementation, Software Modification and Payment Schedule for completion of the Modifications and installation of the System, for the convenient reference of the parties, is attached as Schedule "G", which represents the expectations of the parties as to the timing of the various stages of this Agreement. A more detailed Implementation Schedule shall be attached and included as part of the Detailed Design Specifications.

Licensor recognizes that each System shall be a major factor utilized by the respective Licensee organization in its operation. Failure to implement the Systems according to schedule shall result in expense and damage to Licensee.

Accordingly, Licensor agrees to control any slippage in the Implementation Schedule by assigning the necessary additional resources to the project activities. In no case shall Licensor allow the Preliminary Acceptance milestone for any Application to slip more than sixty (60) calendar days. The Implementation Schedule shall be adjusted for mutually agreed upon delays or for delays solely attributable to Licensee.

4.6 Applications

The application software systems to be developed and licensed hereunder (each individually referred to as an "Application") are as follows:

1. Accounts Receivable

2. Accounts Payable

3. Order Processing

4. Invoicing

5. Inventory Control

The Applications shall be developed and implemented in accordance with the Implementation Schedule to be developed as part of the Detailed Design Specifications as hereinafter provided.

4.7 Detailed Design Specifications

A. For each Application Licensor shall, with Licensee's full cooperation, gather the necessary data and develop Detailed Design Specifications. Licensee shall make available personnel knowledgeable in Licensee operations with respect to each Application for the number of days set forth on Schedule "H" attached hereto. The Detailed Design Specifications shall include for each System: system flow charts, program descriptions, file layouts, report layouts and screen layouts.

B. The Detailed Design Specifications for all Applications shall be delivered to Licensee, in document form, no later than (date specified). Licensee shall accept or reject the completed Detailed Design Specifications by (date specified). The parties may mutually agree in writing to modify the aforesaid dates with respect to delivery and acceptance or rejection of the Detailed Design Specifications. Once Licensee has accepted the Detailed Design Specifications, this Agreement shall continue in full force and effect, and may not be terminated by either party.

C. Upon acceptance of the Detailed Design Specifications by Licensee, Licensee shall pay to Licensor the appropriate progress payment set forth on Schedule "G".

4.8 Coding, System Testing and Preliminary Acceptance

A. After approval of the Detailed Design Specifications, Licensor shall commence coding and provide the necessary programming modifications specified in the Detailed Design Specifications. Upon completion of the program coding for each applicable Application, Licensor shall perform system testing. Licensor shall notify Licensee when program coding is complete and system testing has commenced. The system tests to be performed by Licensor for each Application shall test every path of logic for such Application, including daily, weekly, monthly and annual processing.

B. Program coding and system testing shall occur at Licensor's facility. Licensor represents that it has and anticipates having sufficient capacity on the computers at its facility to test each and every Application.

C. Upon completion of program coding and system testing, Licensor shall cause to be performed at Licensor's computer facility, in the presence of representatives of both parties, the acceptance test included in the Detailed Design Specifications. Licensee shall have fourteen (14) days to accept or reject the results of the acceptance test in writing. If the acceptance test as defined herein is not successful, Licensee, at its sole option, may declare a default pursuant to this Agreement.

D. The successful completion of the acceptance test at Licensor's facility shall be known as Preliminary Acceptance. Upon completion of Preliminary Acceptance of an Application, Licensee shall pay to Licensor the appropriate progress payment set forth on Schedule "G".

4.9 Initial Live Testing and Initial Acceptance

After Preliminary Acceptance, the applicable Application shall be installed on the Licensee system. The acceptance test defined in the Detailed Design Specifications shall be performed on the Licensee equipment. The Application shall be used for the live transmission and processing of Licensee's operational data in a production environment for 30 days, including a complete monthend cycle of processing. At the end of such 30-day period, there shall be no known unresolved or uncorrected program errors, which errors have been communicated in writing from Licensee to Licensor, to impair the functions the System is designed to perform. The successful completion of the 30-day period shall be known as Initial Acceptance. Upon completion of Initial Acceptance of an Application, Licensee shall pay to Licensor the appropriate progress payment set forth on Schedule "G".

4.10 Documentation

The documentation to be provided on or before Preliminary Acceptance of each Application of the Software System shall include the Detailed Design Specifications, system flow charts, program flow charts, file layouts, report layouts, screen layouts, program source code, user instruction manuals, and all other documentation as specified in the RFP and the Licensor Proposal. The documentation to be delivered hereunder shall be developed in conformance with Licensee's documentation standards. Upon the later of (a) delivery to Licensee of the documentation for an Application, and (b) completion of the training associated with such Application, Licensee shall pay Licensor the appropriate progress payment set forth on Schedule "G".

4.11 Final Acceptance

After Initial Acceptance of all Applications has been completed, each Application of each System shall be used for the live transmission and processing of Licensee's operational data. The System shall meet or exceed the performance standards set forth in this Agreement. At the later of (a) 90 days after the final Application has been Initially Accepted, or (b) 30 days after the resolution of program errors which impaired the functions the System is designed to perform, Final Acceptance for a System shall be deemed to have occured. Upon Final Acceptance of a System, Licensee shall pay to Licensor the aggregate of the final payments for that System set forth on Schedule "G".

4.12 Data and File Conversion

At Licensee's request, Licensor shall provide conversion programs and such technical support as may be necessary for data and file conversion of Licensee's currently existing in-house and service bureau systems to the new Systems being delivered hereunder. The cost for conversion shall be provided as part of the Detailed Design Specifications.

4.13 Changes After Detailed Design

A. Licensor in developing the Software System may make minor modifications to the Software System and Detailed Design Specifications if such minor modifications do not limit, diminish or affect the functional operation or use of the System or its output, or result in the System failing to comply with the volume and response time criteria contained in this Agreement. All such changes shall be documented in writing, a copy of which shall be submitted to Licensee for prior approval. There shall be no change in the prices set forth in this Agreement as a result of such minor modifications.

B. After acceptance of the Detailed Design Specifications, and before Preliminary Acceptance of any Application, Licensee shall have the right to request from Licensor in writing a change to the Software System or Detailed Design Specifications.

If a change is requested, Licensor shall, within a reasonable time not to exceed twenty days, inform Licensee in writing if such change would result in an extension of the Implementation Schedule, or additional cost to Licensee, giving the details thereof. Licensor shall use best efforts to respond as expeditiously as possible. A change requested by Licensee requiring no extension or additional cost shall be considered effective if within twenty days Licensee consents in writing thereto. A change for which an extension or increase has been specified by Licensor shall be considered effective if within twenty days thereafter Licensee consents in writing to such extension or increase.

4.14 Licensee Provision of Information

It is understood that for this Agreement to be completed in a timely fashion, Licensee must cooperate in the furnishing of appropriate information to Licensor. If Licensee arbitrarily fails to cooperate in the furnishing of information, Licensor shall deliver to Licensee a written notice, giving specific itemization of information required to be delivered by Licensee. If seven (7) days after receipt of such notice Licensee has not provided such information or in writing given reasonable grounds why such information is not available or necessary, Licensee shall reimburse Licensor for the costs associated for time lost by Licensor personnel caused by the lack of such information, and the Implementation Schedule shall be adjusted to reflect the slippage caused by such Licensee failure to provide information.

5. Rights and Obligations

5.1 Confidentiality

Licensee and Licensor each agree to hold in strictest confidence any information and material which is related to either party's business or is designated as proprietary and confidential, herein or otherwise, by either party in connection with the transactions contemplated by this Agreement. Each party agrees not to make use of such designated information and material other than for the performance of this Agreement. Proprietary and confidential information includes information related to research, development, pricing, trade secrets, customer lists, salaries or business affairs of the parties to this Agreement. The parties' obligations of confidentiality under this Agreement shall survive termination of this Agreement.

5.2 Expenses

Reasonable out-of-pocket expenses incurred by Licensor shall be reimbursed by Licensee. Schedule "E", attached hereto, is Licensor's out-of-pocket expense estimate for the forecasted expenses during the performance of this Agreement.

5.3 Source Code

Licensor shall provide to Licensee all source code for the entire Software System provided hereunder.

5.4 Software Maintenance

Until Final Acceptance of each System, Licensor shall perform maintenance on the Software System for that System, free of charge, to assure that the System is in conformance with the Detailed Design Specifications and other obligations of this Agreement. Thereafter, at Licensee's option, Licensor shall continue to perform maintenance on the Software System for an additional period of one year upon payment by Licensee of ten percent (10%) of the aggregate license fees plus modification costs for those Applications which have been accepted and are operational on the System.

Maintenance shall include corrections of errors or malfunctions of the Software System, modifications to the Applications to ensure their compatibility with the Operating System Software used by Licensee under a Licensor maintenance agreement, any programming required by changes in the laws of any state in which Licensee is located, and the provision and installation of all other revisions or enhancements to the Applications.

Licensor hereby grants Licensee up to five (5) options to renew this annual agreement for software maintenance at a price to be negotiated annually between Licensee and Licensor, but not to exceed the prior year's price by more than ten percent (10%).

5.5 System Requirements

Licensor is familiar with the System requirements of Licensee. The Systems defined herein are adequate for Licensee's requirements. Licensor warrants that for 90 days after Initial Acceptance of each Application, such Application shall comply with Licensee's requirements as disclosed in the Detailed Design Specifications. In addition, Licensor warrants that each Application shall be free of defects in programming and operation until Final Acceptance. If the application software fails to perform in accordance with the above warranty, Licensee shall inform Licensor of the problem and Licensor shall assign the necessary resources within one week to correct the problem without additional cost to Licensee.

5.6 Terminal Response Time

Licensor warrants that assuming (a) an equipment configuration set forth in Schedule "J", (b) volumes disclosed in the RFP, and (c) the processing environment described in Schedule "K", then with respect to each transaction initiated on a terminal the System shall receive, process the on-line function and respond to such transaction in no greater than 3 seconds 90% of the time, and in no instance greater than 5 seconds, from the time the transaction is completely keyed to the time the appropriate System response appears on the terminal.

5.7 Default

Licensor shall be deemed to be in default under this Agreement upon Licensee giving written notice with respect to the occurrence of any of the following:

A. In the event that Licensor is or becomes insolvent or a party to any bankruptcy or receivership proceeding, or any similar action affecting the affairs or property of Licensor;

B. In the event that the scheduled dates specified in the Implementation Schedule slip by more than sixty (60) calendar days;

C. In the event that Licensor fails to comply with the paragraph 4.2 hereof with respect to key personnel;

D. In the event that the System fails to comply with the paragraph 5.6 hereof with respect to terminal response time; or

E. In the event that Licensor materially fails to perform or comply with the terms and conditions of this Agreement. If the parties are in disagreement with respect to whether or not Licensor has materially performed, they agree to negotiate directly to resolve the dispute. Licensor shall be afforded an opportunity to resolve such a dispute with Licensee, and, within thirty (30) days after commencement of negotiations, may cure said default upon written notice to that effect delivered by Licensee.

5.8 Disclaimer

Except for those warranties set forth in this Agreement, Licensor makes no other warranties, express or implied including warranties of merchantability or fitness for a particular purpose. In no event shall Licensor be liable for loss of profits, special, incidental or consequential damages arising out of the breach of any provision of this Agreement.

5.9 Taxes

Licensee shall, in addition to the payments required hereunder, pay all sales, use, transfer or other taxes, whether federal, state or local, however designated, which are levied or imposed by reasons of the transaction contemplated hereby; excluding, however, income taxes on profits which may be levied against Licensor. Licensee shall reimburse Licensor for the amount of any such taxes paid or accrued by Licensor as a result of this transaction.

6. General

6.1 Force Majeure

The parties hereto shall not be responsible for any failure or delay in the performance of any obligations hereunder caused by acts of God, flood, fire, war or public enemy.

6.2 Most Favored Customer

For the complete period covered by this Agreement, Licensor agrees to treat Licensee as its most favored customer. In according such treatment, Licensor agrees not to reassign any staff assigned to Licensee projects to other projects until such time as the Licensee projects are satisfactorily completed. Licensor represents that all of the prices, terms, warranties and benefits granted by Licensor hereunder are comparable to or better than the equivalent terms being offered by it to any present customer of Licensor. If during the term of this Agreement Licensor shall enter into arrangements with any other customer providing such customer more favorable terms, this Agreement shall thereupon be deemed amended to provide the same terms to Licensee.

6.3 Notices and Requests

All notices and requests in connection with this Agreement shall be given or made upon the respective parties in writing and by depositing in the U.S. mail, postage pre-paid, certified or registered, return receipt requested, and addressed to the party at the address set forth herein or to such other address as the party to receive the notice or request so designates by written notice to the other. All notices and requests shall be deemed as given as of the day of receipt by the respective party.

6.4 Entire Agreement

Each party acknowledges that it has read this Agreement, understands it, and agrees to be bound by its terms and further agrees that it is the complete and exclusive statement of the agreement between the parties, which supercedes and merges all prior proposals, understandings and all other agreements, oral and written between the parties relating to the subject matter of this Agreement. The Agreement may not be modified or altered except by a written instrument duly executed by both parties.

6.5 New York Law

This Agreement and performance hereunder shall be governed by and construed in accordance with the laws of the State of New York. Licensor agrees that substantial portions of this Agreement were negotiated in New York and are to be performed in New York. Any and all proceedings relating to the subject matter hereof shall be maintained in the courts of the state of New York or the Federal district courts sitting in New York, which courts shall have exclusive jurisdiction for such purpose.

6.6 Enforceability

If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

6.7 No Waiver

The failure of either party to exercise in any respect any right provided for herein shall not be deemed a waiver of any right hereunder.

6.8 Assignment

This Agreement and the rights and duties hereunder shall not be assignable by the parties hereto except upon written consent of the other.

IN WITNESS WHEREOF, the parties hereto have signed this Agreement the date and year first written above by their duly authorized representatives.