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§ 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modified or superseded by the Detailed Design Specifications as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 Software2.1 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
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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.
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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 Software3.1 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
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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
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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.
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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.
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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
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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
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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 Obligations5.1 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.
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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;
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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 PUR-
POSE. 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
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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
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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.
LICENSOR
By: _______________________
LICENSEE
By: _______________________