AGREEMENT
This Agreement, dated as of July 1, 1998, is between Fourth Shift
Corporation, a Minnesota corporation with its principal place of business in
Minneapolis, Minnesota, and Micro Data Base Systems, Inc., an Indiana
corporation with its principal place of business in West Lafayette, Indiana.
RECITALS
In recognition of Fourth Shift Corporation's stature in
manufacturing and financial applications and of the superior capabilities of
Micro Data Base Systems, Inc.'s patented database management system, Fourth
Shift and MDBS wish to join forces to strengthen their respective marketplace
positions. Fourth Shift will, accordingly, use MDBS software technologies in
support of those Fourth Shift activities which Fourth Shift believes can
benefit from the inclusion of these advanced capabilities. It is the
intention of the parties that their relationship, as evidenced by this
Agreement, will grow and develop over time, if and as appropriate.
In recognition of the existence of subsidiaries of Fourth Shift
Corporation, the ongoing change and growth in the number and configuration of
those subsidiaries, and the desire of Fourth Shift and MDBS to facilitate the
licensing of MDBS technologies throughout the Fourth Shift corporate family,
MDBS and Fourth Shift wish to enter into a single licensing agreement that
benefits and is binding upon Fourth Shift Corporation and all of its
subsidiaries.
For due consideration, the receipt and sufficiency of which are hereby
acknowledged, Micro Data Base Systems, Inc. and Fourth Shift Corporation, on its
own behalf and on behalf of all of its operating subsidiaries, agree as follows:
1 DEFINITIONS
1.1 "Fourth Shift" refers collectively to Fourth Shift Corporation
and its operating subsidiaries whether directly or indirectly held, now
existing or hereafter acquired during the term of this Agreement. An
individual operating subsidiary of Fourth Shift Corporation is sometimes
referred to generically herein as a "Fourth Shift Entity." A list of the
currently existing direct and indirect subsidiaries of Fourth Shift
Corporation is attached as Exhibit A hereto.
1.2 "MDBS" refers to Micro Data Base Systems, Inc.
1.3 "MDBS Development Code" refers to computer object code that has
been or is hereafter created by MDBS as part of its MDBS III, MDBS IV or
TITANIUM product lines (including enhancements, improvements and support for
new operating systems made to those products using the architecture and code
base of MDBS IV or TITANIUM) and is (or previous to this Agreement has been)
delivered by MDBS to Fourth Shift or sold or licensed by MDBS as one or more
identified development system modules.
1.4 "MDBS Runtime Code" is a subset of MDBS Development Code that is
listed as distributable on an MDBS standard runtime distribution license, price
list or product catalog, or their equivalent.
1.5 "MDBS-content Fourth Shift Application" refers to a software
program into which MDBS Runtime Code is (or previous to this Agreement has
been) integrated by or for a Fourth Shift Entity as an embedded database
management system pursuant to this Agreement or a prior agreement between
MDBS and Fourth Shift Corporation, which: a) is (or previous to this
Agreement has been) distributed by a Fourth Shift Entity for the purpose of
using Fourth Shift
Products, and b) contains a significant amount of computer code created by a
Fourth Shift Entity. This definition is not and shall not be deemed to be
dependent on the form or configuration of media used to embody or deliver an
"MDBS-content Fourth Shift Application."
1.6 "Acquisition Transaction" refers to any merger of Fourth Shift
Corporation with or into, combination of Fourth Shift Corporation with, or sale
of all or substantially all of the assets of Fourth Shift Corporation to any
other person or entity, or sale of a majority of the outstanding voting stock of
Fourth Shift Corporation to any single person or entity. An Acquisition
Transaction shall not include any good-faith merger, transfer of assets or other
combination of a Fourth Shift Entity with any other Fourth Shift Entity that
does not cause a material change in the ownership, control or capitalization of
Fourth Shift and its operating subsidiaries considered as a corporate family.
2 PRIOR AGREEMENTS SUPERSEDED
2.1 This Agreement supersedes all distribution agreements previously
entered into by Fourth Shift Corporation and Micro Data Base Systems, Inc. To
the extent that this Agreement conflicts with any previous agreement between
Micro Data Base Systems, Inc. and Fourth Shift Corporation or any of its
subsidiaries, this Agreement controls.
2.2 Any and all agreement documents entitled "Business Partner
Agreement," "Tailored Technical Services Agreement," or "Cooperative Sales
Support Agreement" entered into by Fourth Shift Corporation and Micro Data Base
Systems, Inc. (including those dated July 1, 1997) are deemed terminated as of
June 30, 1998. Notwithstanding the execution of this Agreement, Fourth Shift
Corporation shall remain obligated to MDBS pursuant to the terms of the Business
Partner Agreement dated as of July 1, 1997 to pay MDBS royalties specified
therein *
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* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
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3 BASE TERM
3.1 The Base Term of this Agreement shall be from July 1, 1998 to
June 30, 2002, except that the Base Term may be terminated by MDBS prior to
June 30, 2002, as follows:
3.1.1 The Base Term may be terminated for cause pursuant to
section 17.1 of this Agreement.
3.1.2 In the event of an Acquisition Transaction that is
reasonably expected to cause a material change in the unit-volume of Fourth
Shift's distribution of MDBS-content Fourth Shift Applications during the
Base Term, then MDBS may, at its sole option, elect to terminate the Base
Term prior to June 30, 2002, as follows:
3.1.2.1 Not later than January 1, 2001, MDBS shall give
Fourth Shift written notice of its election to terminate the Base Term;
3.1.2.2 Upon issuance by MDBS of written notice of its
election to terminate the Base Term, the Base Term shall terminate as of the
first June 30 that occurs more than 150 days after issuance by MDBS of its
notice of election to terminate the Base Term.
4 RENEWAL TERM
4.1 Provided that this Agreement has not previously terminated
pursuant to section 17.1 Fourth Shift Corporation may extend the term of this
Agreement beyond the Base Term as follows:
4.1.1 Fourth Shift may extend the term of this Agreement for up to
three successive three-year periods, each of which is referred to herein as a
"Renewal Term," subject to the following exceptions:
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4.1.1.1 If MDBS elects to terminate the Base Term
pursuant to paragraph 3.1.2 of this Agreement, then Fourth Shift may extend
the term of this Agreement for one three-year Renewal Term only.
4.1.1.2 In the event of an Acquisition Transaction during
a Renewal Term that is reasonably expected to cause a material change in the
unit-volume of Fourth Shift's distribution of MDBS-content Fourth Shift
Applications during that Renewal Term, MDBS may, at its sole option, elect to
terminate that Renewal Term prior to its normal expiry, as follows:
4.1.1.3 Not later than January 1 of the second contract
year of the Renewal Term, MDBS shall give Fourth Shift written notice of its
election to terminate that Renewal Term;
4.1.1.4 Upon issuance by MDBS of written notice of its
election to terminate that Renewal Term, the Renewal Term shall terminate as
of the first June 30 that occurs more than 150 days after issuance by MDBS of
its notice of election to terminate the Renewal Term.
4.1.1.5 Upon termination of the Renewal Term by MDBS
pursuant to this paragraph 4.1.1, Fourth Shift may elect to enter into a
single, final Renewal Term by notifying MDBS in writing of Fourth Shift's
intent to exercise its option to do so.
4.2 To exercise its option to enter into a Renewal Term, Fourth Shift
shall, not less than one hundred twenty (120) days prior to the expiration of
the Base Term, or the then-current Renewal Term, as may be applicable, give MDBS
written notice of Fourth Shift's intent to do so. The date upon which Fourth
Shift exercises its option to enter into a Renewal Term shall be known as the
"Renewal Term Exercise Date."
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5 END TERM
5.1 At the expiry of the Base Term or the final Renewal Term,
whichever comes later, the term of this Agreement shall be extended for a
two-year period designated as the "End Term." The sole purpose and intent of
MDBS and Fourth Shift Corporation with respect to the End Term is to permit
Fourth Shift Corporation, in the event that the parties choose to end their
business relationship pursuant to the terms of this Agreement, to have a
wind-down period to distribute maintenance updates to MDBS-content Fourth
Shift Applications to its then-existing base of customers who have installed
MDBS-content Fourth Shift Applications, subject to the terms and conditions
set forth in this Agreement, while fairly compensating MDBS in proportion to
the extent of Fourth Shift Corporation's duplication and distribution of
those maintenance updates.
5.2 If Fourth Shift Corporation does not exercise its option to
enter into a first Renewal Term, then the term of this Agreement shall extend
to June 30, 2004, inclusive of the End Term. If Fourth Shift Corporation
exercises its option to enter into the first Renewal Term, then the term of
this Agreement shall extend to June 30, 2007, inclusive of the End Term. If
Fourth Shift Corporation exercises its option to enter into a second Renewal
Term, then the term of this Agreement shall extend to June 30, 2010,
inclusive of the End Term. If Fourth Shift Corporation exercises its option
to enter into a third Renewal Term, then the term of this Agreement shall
extend to June 30, 2013, inclusive of the End Term.
5.3 The provision of this Agreement for the End Term is not
intended to and shall in no manner be construed to prejudice the right of
either party to seek to enter into future agreements with each other for the
use, duplication and distribution of MDBS computer code,
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or the engagement of MDBS's consulting and support services.
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6 BASE TERM FEE AND RELATED INITIAL OBLIGATIONS
6.1 For the Base Term, Fourth Shift Corporation shall pay MDBS *,
which amount is referred to hereinafter as the "Base Term Fee" for the Base
Term; provided that, in the event of termination of the Base Term prior to
June 30, 2002, the Base Term Fee shall be reduced *. Fourth Shift
Corporation shall pay the Base Term Fee * as follows:
6.1.1 * due and owing on July 1, 1998;
6.1.2 * due and owing on the fifteenth day of each calendar month
commencing August 15, 1998 through June 15, 2002.
6.2 In addition to the Base Term Fee, Fourth Shift shall pay MDBS the
following upon the inception of this Agreement:
6.2.1 If this Agreement is executed on or before July 1, 1998,
Fourth Shift shall concurrently with execution of this Agreement pay MDBS *
in satisfaction of outstanding obligations associated with its purchase of a
TITANIUM version 7 Single User Development System with MDBS IV database
compatibility; in such case, and only such case, certain other related
obligations in the amount of * are deemed discharged upon payment of the July
1, 1998 installment of the Base Term Fee.
6.2.2 If this Agreement is executed after July 1, 1998, Fourth
Shift shall pay MDBS * concurrently with execution of this Agreement in
satisfaction of certain outstanding invoices from MDBS to Fourth Shift.
______________
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* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
10
7 RENEWAL TERM FEE
7.1 Upon exercise of its right to extend the term of this Agreement
into a Renewal Term, Fourth Shift shall become obligated to pay MDBS a
"Renewal Term Fee" for each Renewal Term option exercised. At the inception
of each Renewal Term, the Renewal Term Fee for that Renewal Term shall be
determined as follows:
7.1.1 If neither MDBS nor Fourth Shift invokes the fee
determination procedures set forth in paragraph 7.1.2 below on or before the
Renewal Term Exercise Date, then the Renewal Term Fee shall automatically be
determined by reference to 1) * times the annual increment of the Base Term
Fee, and 2) the * of Fourth Shift between that reported for * and that
reported for *, as follows:
First Renewal Term Fee:
* Second Renewal Term Fee:
* Third Renewal Term Fee:
* By way of illustration only, if Fourth Shift's * (as reported by
Fourth Shift *) increases or decreases from that reported at * to that
reported at *, then the Renewal Term Fee for the first Renewal Term would
increase or decrease *.
7.1.2 On any Renewal Term Exercise Date Fourth Shift may
request, and not later than the fifth day after any Renewal Term Exercise
Date that occurs after early termination of the Base Term or any Renewal Term
pursuant to Sections 3.1.2 or 4.1.1.2, respectively, MDBS may request by
written notice pursuant to paragraph 21.9 below that the parties commence the
"Renewal Term Fee Determination Procedure" (as it shall be known) as set
forth below. Once
______________
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* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
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either Fourth Shift or MDBS demands commencement of the Renewal Term Fee
Determination Procedure, the parties shall be bound to complete that
Procedure and to abide by the resulting determination of the Renewal Term
Fee. Upon commencement of the Renewal Term Fee Determination Procedure, the
parties shall negotiate in good-faith for a Renewal Term Fee to be determined
by reference to any or all of the following criteria, as appropriate: *. If
the parties reach agreement according to these criteria on a Renewal Term Fee
for the Renewal Term at issue, then that agreement shall be memorialized as
an addendum to this document, and shall be binding upon the parties. If, by
the 30th day after the Renewal Term Exercise Date, the parties' good-faith
negotiation fails to result in an agreed-upon Renewal Term Fee, then the
parties shall submit the determination of the Renewal Term Fee to binding
arbitration, as follows:
7.1.2.1 Not later than the 45th day after the Renewal
Term Exercise Date, the party commencing the Renewal Term Fee Determination
Procedure (the "Commencing Party") shall set forth in detail a statement of
contentions and supporting facts and evidence with respect to determination
of the Renewal Term Fee, and shall serve that document on the other party
(the "Responding Party");
7.1.2.2 Not later than the 60th day after the Renewal
Term Exercise Date, the Responding Party shall set forth in detail a
statement of contentions and supporting facts and evidence with respect to
determination of the Renewal Term Fee, and shall serve that document on the
Commencing Party;
7.1.2.3 A single arbitrator shall be chosen by the
parties from a panel supplied by the CPR Institute for Dispute Resolution
("CPR"), New York City, or based upon the
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______________
* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
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CPR's suggestion of a person outside its panel, according to a procedure set
down by CPR;
7.1.2.4 The arbitration and all documents and proceedings
associated therewith, shall be kept confidential;
7.1.2.5 CPR's rules for commercial arbitrations shall be
applied to all matters of procedure, including discovery, subject to the
final decision and authority of the arbitrator;
7.1.2.6 The arbitrator shall be charged to determine the
Renewal Term Fee by taking into account each of the criteria enumerated in
paragraph 7.1.2; provided, however, that in the event of a Renewal Term Fee
Determination that occurs after early termination of the Base Term or a
Renewal Term pursuant to sections 3.1.2 or 4.1.1.2, the arbitrator shall be
further instructed that the Renewal Term Fee shall not be less than * per
annum;
7.1.2.7 The arbitrator's decision shall be final, and
shall become an addendum to this Agreement;
7.1.2.8 Each party shall pay one-half of the fees and
costs assessed by CPR with respect to the arbitration, and each side shall
bear its own attorney's fees and costs associated with the arbitration,
regardless of outcome.
7.2 Fourth Shift Corporation must pay one thirty-sixth of the
Renewal Term 'Fee on the fifteenth day of each month of the Renewal Term.
8 END TERM FEE
8.1 Prior to the inception of the End Term, Fourth Shift
Corporation and MDBS shall negotiate in good-faith for the determination of:
______________
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* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b.
16
8.1.1 a mutually agreeable fee as fair market compensation to
MDBS for Fourth Shift's receipt of version upgrades and maintenance releases
of MDBS computer code during the End Term;
8.1.2 appropriate obligations of Fourth Shift for
record-keeping and disclosure to MDBS with respect to Fourth Shift's
duplication and distribution of MDBS computer code during the End Term
pursuant to this Agreement.
8.2 The parties' agreement with respect to the matters set forth in
paragraph 8.1 shall be memorialized as a written addendum to this Agreement,
and shall become part of this Agreement.
8.3 If Fourth Shift Corporation and MDBS fail to agree upon and
execute the addendum described in the preceding paragraph within the last
thirty days of the Base Term or, if applicable, the last Renewal Term, then
the parties shall submit their dispute to binding arbitration as follows:
8.3.1 A single arbitrator shall be chosen by the parties from a
panel supplied by the CPR Institute for Dispute Resolution ("CPR"), New York
City, or based upon the CPR's suggestion of a person outside its panel,
according to a procedure set down by CPR;
8.3.2 The CPR's rules for commercial arbitration shall be
applied to all matters of procedure, including discovery, subject to the
final decision and authority of the arbitrator;
8.3.3 The arbitrator shall be charged to take into account MDBS
standard commercial rates for the rights described in paragraphs 8.1 and 9.3
and determine a fair market fee therefor;
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8.3.4 The arbitrator's decision shall be final, and shall
become an addendum to this Agreement.
8.3.5 The arbitration and all documents and proceedings associated
therewith, shall be kept confidential;
8.3.6 Each party shall pay one-half of the fees and costs
assessed by CPR with respect to the arbitration, and each side shall bear its
own attorney's fees and costs associated with the arbitration, regardless of
outcome.
8.4 Fourth Shift Corporation shall pay the End Term Fee in monthly
installments in the same manner as the Base Term Fee.
9 GRANT OF LICENSE
9.1 During the Base Term, and during the Renewal Term(s) (if any),
Fourth Shift may, subject to payment of its above-referenced fee obligations:
*
9.3 The license rights created by this Agreement are intended to be *.
9.4 At the conclusion of the End Term, all of MDBS's obligations to
Fourth Shift Corporation pursuant to this Agreement (other than those
obligations set forth in section 19 hereinbelow) shall cease completely.
9.5 Under no circumstance may any Fourth Shift Entity permit any
third-party to use or have access to MDBS Runtime Code other than in the form
of an MDBS-content Fourth Shift Application without (i) specific prior
notification to and written permission from MDBS (which permission shall be
given, conditioned or withheld according to MDBS's reasonable business
judgment) and (ii) compliance with the licensing requirements herein.
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______________
* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
9.6 Fourth Shift Entity may not permit any third-party (other than an
individual Fourth Shift agent working on the development of an MDBS-content
Fourth Shift Application at or by remote access to a Fourth Shift facility on a
licensed installation of MDBS Development Code) to use or have access to any
MDBS Development Code without (i) prior notification to and written permission
from MDBS (which permission shall be given, conditioned or withheld according to
MDBS's reasonable business judgment) and (ii) compliance with the licensing
requirements set forth in section 15.4 below.
10 REPORTING; DISCLOSURE
10.1 Commencing on June 30, 1999, on each successive June 30 of the
Base Term, the Renewal Term(s), (if any), and the End Term, Fourth Shift
Corporation shall disclose to MDBS the following:
10.1.1 A summary of the aggregate number of end-users
(delineated by MDBS-content Fourth Shift Application) who have subscribed to
Fourth Shift's customer support program with respect to an MDBS-content
Fourth Shift Application during the preceding twelve months;
10.1.2 The corporate identity of each Fourth Shift Entity that has
used * any MDBS Runtime Code or MDBS Development Code during the previous twelve
months;
10.1.3 The corporate identity of each Fourth Shift Entity that
is in possession of any MDBS Runtime Code or MDBS Development Code;
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_____________
* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
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10.1.4 The names and version numbers of all MDBS-content Fourth
Shift Applications for which Fourth Shift has rendered any customer support,
service or maintenance during the previous twelve months;
10.1.5 A copy of the text and an exemplar of the format of the
standard license agreement (shrinkwrap or clickwrap) used by Fourth Shift as a
license agreement for each MDBS-content Fourth Shift Application distributed by
any Fourth Shift Entity during the previous year;
10.1.6 Complete directory file listings for all MDBS-content
Fourth Shift Applications that are available for distribution to any
customers of any Fourth Shift Entity;
10.1.7 A listing, by MDBS Development Code system serial
number, of the physical office address for each computer, workstation or
database server on which any MDBS Development Code is installed;
10.1.8 The name and version number of any database management
system product, other than an MDBS database management system product, which
Fourth Shift has distributed (other than an alpha or beta version thereof)
during the preceding twelve months.
10.2 *
11 MAINTENANCE RELEASES
11.1 MDBS Development Code delivered to Fourth Shift pursuant to this
Agreement shall generally conform to MDBS's user documentation.
11.2 During the Base Term and any Renewal Terms, *
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* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
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12. SERVICE
12.1 During the Base Term, Fourth Shift Corporation shall pay MDBS
a Term Service Fee of *, which shall be payable in four equal installments of
* each on the date this Agreement is executed, July 1, 1999, July 1, 2000,
and July 1, 2001.
12.2 During the Renewal Term, if any, Fourth Shift Corporation
shall pay MDBS a Term Service Fee equivalent to prepayment for * hours of
telephone support at MDBS's published rate for standard telephone support in
effect as of the inception of that Renewal Term. The Term Service Fee for
the Renewal Term shall be payable in three equal installments on July I of
each year of the Renewal Term.
12.3 Payment of the Term Service Fee during the Base Term and any
Renewal Term shall entitle Fourth Shift to * hours per contract year (July
I-June 30) of standard telephone support, consulting, and custom development
services from MDBS support personnel, as follows:
12.3.1 MDBS will annually provide training to Fourth Shift
personnel for the purpose of introduction to new advanced functionalities of
MDBS's products, which hours shall be charged against Fourth Shift's annual
*-hour allocation.
12.3.2 Standard telephone support shall be available Monday
through Friday, excluding national holidays, 9:00 a.m. to 5:00 p.m. E.S.T.
12.3.3 MDBS shall not be obligated to make its consulting
personnel available to Fourth Shift anywhere other than West Lafayette,
Indiana and Minneapolis, Minnesota. Fourth Shift shall reimburse MDBS for
all reasonable travel costs and expenses for MDBS personnel who travel to
Minneapolis, Minnesota.
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* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
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12.3.4 During the Base Term and any Renewal Term, Fourth Shift
may, at its option, purchase additional standard telephone support hours from
MDBS in blocks of * hours at * of MDBS's standard commercial rate in effect
for standard telephone support at the time of each such purchase.
12.3.5 Any hours of telephone support, consulting and custom
development services that are not used during a given contract year will
expire, and will not carry over into any subsequent contract year.
12.4 MDBS shall have no obligation to provide any telephone support
or other technical service to Fourth Shift during the End Term or thereafter;
provided, however, that during the End Term Fourth Shift may purchase
telephone support from MDBS by paying MDBS the then-standard commercial rate
for such support, and MDBS may, in its sole discretion, make other services
available to Fourth Shift.
12.5 During the Base Term and any Renewal Term, Fourth Shift may
request to purchase, and MDBS shall (as it has in the past) endeavor to make
available, priority support services from time to time according to mutually
agreeable terms and conditions then-agreed between the parties, taking into
account any then-relevant considerations, specifically including but not
limited to any mission-critical needs identified by Fourth Shift and any
opportunity costs to MDBS.
13 SOURCE CODE ESCROW
13.1 Not later than August 1, 1998, MDBS shall enter into a source
code escrow agreement with Data Securities International, Inc. (hereafter,
the "Source Code Escrow Agent") with Fourth Shift as a beneficiary with
respect to the MDBS IV and TITANIUM products,
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substantially in accordance with the escrow agreement attached hereto as
Exhibit B, as subsequently conformed to this Agreement.
13.2 Notwithstanding any provision of this Agreement, title to the
Source Code shall remain with MDBS at all times.
13.3 *
13.4 Once the circumstances or conditions that cause an Escrow
Release Event end, Fourth Shift shall promptly return the Source Code Package
to the Source Code Escrow Agent.
13.5 In the event of release of the Source Code Package to Fourth
Shift, Fourth Shift may use the Source Code Package solely pursuant to the
terms of this Agreement for the maintenance of MDBS-content Fourth Shift
Applications, and for no other purpose. Under no circumstances may Fourth
Shift distribute, deliver, copy or convey the Source Code Package or any part
thereof to any third-party.
13.6 Fourth Shift shall respond promptly, fully and completely, to
any and all reasonable requests for information from MDBS concerning Fourth
Shift's use of the Source Code Package and the names of the individual(s)
having access to the Source Code Package.
13.7 Under no circumstances shall Fourth Shift have any right to
receive the Source Code Package or any part thereof from the Source Code
Escrow Agent following the expiry of the Base Term or the final Renewal Term
(if any).
_____________
* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
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14 DEVELOPMENT AND MARKETING
14.1 Fourth Shift will employ all MDBS Runtime Code which Fourth
Shift believes in its reasonable business judgment to be beneficial to the
development and performance of its MDBS-content Fourth Shift Applications.
14.2 Upon MDBS's request, Fourth Shift will provide testimonials by
Fourth Shift respecting the benefits derived by Fourth Shift and its
customers from use of MDBS database technology.
14.3 Upon request from MDBS, Fourth Shift will timely make available
to MDBS for interview Fourth Shift technical and marketing staff who are
knowledgeable regarding the advantages of any TITANIUM feature newly utilized
in an MDBS-content Fourth Shift Application; provided further, that MDBS will
draft TITANIUM Case Studies based upon those interviews and supporting
information to be supplied by Fourth Shift, and Fourth Shift will cooperate
with MDBS in the editing of those Case Studies to the satisfaction of MDBS
and Fourth Shift.
14.4 For Fourth Shift customers requiring consulting assistance that
Fourth Shift does not itself provide with respect to MDBS Runtime Code in its
MDBS-content Fourth Shift Applications, Fourth Shift:
14.4.1 Will identify MDBS as the preferred supplier of such
services;
14.4.2 Hereby consents to the performance by MDBS of any
services requested of MDBS by a Fourth Shift customer; provided, however,
that such services shall be performed by MDBS as an independent contractor
solely responsible therefor, and Fourth Shift's consent is not and shall
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not be deemed a guarantee, warranty or endorsement by Fourth Shift of the
services to be performed by MDBS.
14.5 Fourth Shift will continually make its marketing, sales,
development, and customer support staff knowledgeable of the overall
functionality and all significant features of the TITANIUM database
technology. Fourth Shift will also make best efforts to ensure that all
statements made by its representatives regarding MDBS technologies are
accurate. If requested by Fourth Shift, MDBS will provide support in these
undertakings.
14.6 Fourth Shift and MDBS will maintain and update, as appropriate,
the established Web links and related activities.
14.7 Fourth Shift will include the standard MDBS "BUILT WITH
TITANIUM" logo, as supplied by MDBS in object code, in the screens referenced
in paragraph 15.6 for its MDBS content Fourth Shift Applications which
utilize TITANIUM code.
15 COPYRIGHT AND PATENT PROTECTION
15.1 Fourth Shift acknowledges that MDBS holds a copyright to all MDBS
Runtime Code and MDBS Development Code.
15.2 This Agreement does not, and shall not be construed to,
transfer or authorize the transfer to anyone of (i) MDBS's title in or
copyright in any MDBS computer code, or (ii) Fourth Shift's title in or
copyright in any Fourth Shift computer code.
15.3 Under no circumstance may any Fourth Shift Entity distribute or
permit the distribution after the date of the execution of this Agreement of
any MDBS-content Fourth Shift Application to any person or entity who does
not enter into a license agreement with a Fourth Shift Entity for the use of
the subject MDBS-content Fourth Shift Application. Such license
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agreement may be in writing, or may take the form of a shrinkwrap or
click-wrap license and shall contain a notice that the MDBS-content Fourth
Shift Application includes certain software owned and copyrighted by MDBS;
that the recipient is not receiving title to the MDBS software, but rather a
license to use it; and that only working and backup copies for
non-production, archive purposes may be made. At least one such license
agreement entered into on or after December 31, 1998 for each Fourth Shift
customer or client shall contain the following statement:
This product includes certain software owned and copyrighted by Micro Data
Base Systems, Inc., XX Xxx 0000, Xxxx Xxxxxxxxx, Xxxxxxx 00000, XXX. Micro
Data Base Systems, Inc. holds United States Patents with respect to any and
all TITANIUM database management system technology used in this software.
You are not receiving title to the software owned by MDBS, but rather a
license to use it. Only working and backup copies for non-production,
archive purposes may be made. No identifying marks or copyrights in or on
the software may be deleted. The portions of the product owned by MDBS may
not be used independently of a product or service of Fourth Shift
Corporation or its subsidiaries. Micro Data Base Systems, Inc. makes no
express or implied warranties of quality, performance, merchantability or
fitness for any particular purpose. The MDBS portions of the product are
licensed "as is", with all faults and defects. MDBS will not be liable for
incidental, consequential, or exemplary damages.
15.4 No third-party (other than an individual Fourth Shift agent
working on the development of an MDBS-content Fourth Shift Application at or
by remote access to a Fourth Shift facility on a licensed installation of
MDBS Development Code) may assist in the development of an MDBS-content
Fourth Shift Application without first entering into a license agreement with
MDBS.
15.5 No third-party may provide duplication or distribution services
to Fourth Shift for an MDBS-content Fourth Shift Application *.
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15.6 All MDBS-content Fourth Shift Application copies manufactured
on or after November 1, 1998 or the date of the first manufacture of the next
release of an MDBS-content
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* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
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Fourth Shift Application (whichever date is earlier) shall (with programming
assistance from MDBS upon Fourth Shift's request) employ a sign-on screen,
boot-up screen or comparable splash screen that presents to the
Application-user, each time the Application-user begins using the
Application, a display that includes:
15.6.1 The standard MDBS logo, and
15.6.2 The following statement: "This product includes certain
software owned and copyrighted by Micro Data Base Systems, Inc., West Lafayette,
Indiana USA. Use of this software is governed by the license agreement that
accompanied its delivery and/or installation."
16 ASSIGNMENT
16.1 Neither party may assign this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld but may contain reasonable conditions imposed by the non-assigning
party. With respect to the rights and obligations set forth in this clause,
Fourth Shift and MDBS will both act in good-faith.
17 TERMINATION
17.1 Subject to the procedures set forth below, either party shall
have the right to terminate this Agreement prior to its expiry upon the
occurrence of a material violation by the other party of its material
obligations under this Agreement (hereafter, an "Event of Default").
17.2 A termination on account of an uncured Event of Default will
become effective only upon occurrence of the following:
17.2.1 Delivery by the terminating party to the party alleged
to be in default, by certified mail to the Notice address set forth below, of
a written notice of the Event of Default; and,
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17.2.2 Failure by the non-terminating party to cure the duly
noticed Event of Default within thirty-three calendar days of the mailing of
the written notice of the Event of Default.
17.3 Upon termination of this Agreement by either party for cause
prior to the expiry of the term of this Agreement, Fourth Shift's rights to
duplicate or distribute MDBS Runtime Code pursuant to this Agreement shall
thenceforth cease completely.
17.4 Upon termination of this Agreement, whether by expiry or for
cause, Fourth Shift shall promptly:
17.4.1 With respect to Fourth Shift's obligations pursuant to
this Agreement, submit to a reasonable review by MDBS of documents that
directly reflect Fourth Shift's use of MDBS Development Code and use;
duplication and distribution of MDBS Runtime Code;
17.4.2 Either destroy or deliver to MDBS all runtime version
copies of all MDBS-content Fourth Shift Applications that remain in Fourth
Shift's inventory.
17.5 Notwithstanding termination of this Agreement (whether by
expiry or for cause), Fourth Shift customers or clients who received a copy
of an MDBS-content Fourth Shift Application from a Fourth Shift Entity
pursuant to this Agreement or a prior Agreement between MDBS and Fourth Shift
Corporation shall retain their rights with respect to their copy (or copies)
of that MDBS-content Fourth Shift Application.
17.6 Neither party's remedies with respect to termination of this
Agreement shall be deemed to be exclusive of any of its available legal
rights and remedies. Upon termination of this Agreement for cause, the
non-defaulting party will be entitled to all available damages and remedies
as otherwise provided by law, including but not limited to contract, tort,
patent,
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and copyright remedies and reimbursement for reasonable attorney's fees and
enforcement costs, subject to the limitation set forth in paragraph 19.3
below.
18 WARRANTIES
18.1 Fourth Shift Corporation warrants and agrees that:
18.1.1 It is authorized to enter into this Agreement;
18.1.2 It intends and is authorized to bind all of its
subsidiaries, both direct and indirect, to comply with the requirements of
this Agreement, as agents of Fourth Shift Corporation with respect to those
requirements.
18.2 MDBS warrants and agrees that:
18.2.1 MDBS Development Code (including MDBS Runtime Code) does
not infringe any patent, copyright, trade secret or any other proprietary
right of any third party;
18.2.2 MDBS owns all right, title and interest in and to MDBS
Development Code (including MDBS Runtime Code);
18.2.3 MDBS Development Code (including MDBS Runtime Code) is
free and clear of all liens, security interests, charges or encumbrances by
third parties;
18.2.4 MDBS has full right, power and authority to enter into
this Agreement and to carry out its obligations hereunder;
18.2.5 MDBS's TITANIUM version 7 product, when properly
programmed by Fourth Shift and used in conformity with its user documentation
and intended functionality, will properly record, store, retrieve, process
and present calendar dates, data and information before or after January 1,
2000 and will accurately calculate, store, and display date dependent fields
representing the year 2000 and subsequent years up to the documented design
limit of those
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products without compromising the integrity of any data. This
warranty is strictly limited to version 7 (and subsequent versions) of MDBS's
TITANIUM product and does not apply to any other MDBS products or to any
software developed by Fourth Shift.
18.2.6 MDBS's MDBS IV product, when properly programmed by
Fourth Shift and used in conformity with its user documentation and intended
functionality, will properly record, store, retrieve, process and present
calendar dates, data and information up to the year 2027, and will accurately
calculate, store, and display date-dependent fields representing the year
2000 and subsequent years up to up to the year 2027 without compromising the
integrity of any data. This warranty is strictly limited to MDBS's MDBS IV
product and does not apply to any other MDBS products or to any software
developed by Fourth Shift.
18.3 Subject to the foregoing express warranties, MDBS disclaims any
and all warranties with respect to MDBS Development Code, MDBS Runtime Code
or any part thereof, including any and all implied warranties of
merchantability, or fitness or suitability for any purpose (whether or not
MDBS knows, has reason to know, has been advised, or is otherwise in fact
aware of any such purpose), whether alleged to arise by law, by reason of
custom or usable in the trade, or by course of dealing.
19 LIMITATION OF LIABILITY; INDEMNIFICATION
19.1 Fourth Shift Corporation will indemnify MDBS from and against
any judgment won by a third-party against MDBS, which judgment relates to the
interruption or loss of use of, or the furnishing, functioning or use of any
MDBS-content Fourth Shift Application, or part thereof, except that Fourth
Shift shall not be obligated to indemnify MDBS to the extent that Fourth
Shift establishes that the judgment resulted from (i) the gross negligence or
willful
34
misconduct of MDBS, its employees or agents or (ii) solely from harm directly
caused by an defect in MDBS Runtime Code, which defect was not known to
Fourth Shift, and not from any error or omission of Fourth Shift or (iii)
breach by MDBS of a representation or warranty given or other obligation
undertaken by MDBS to Fourth Shift in this Agreement. To qualify for
indemnity under this paragraph, MDBS must (i) give Fourth Shift prompt notice
of any such claim, and (ii) cooperate with Fourth Shift and allow Fourth
Shift, if it elects to do so, to control the defense of any such claim and
all related settlement negotiations. In the event that Fourth Shift has
elected to control the defense of any such claim and MDBS wishes to
participate in the defense thereof, Fourth Shift shall allow MDBS, if it
elects to do so, to participate at its own expense. Fourth Shift Corporation
will also reimburse MDBS for attorney's fees reasonably incurred by MDBS in
the defense of any proceeding that results in a judgment that is
indemnifiable under this paragraph.
19.2 Notwithstanding the foregoing, MDBS agrees to indemnify a
Fourth Shift Entity against any judgment won by a third-party against that
Fourth Shift Entity to the extent that the judgment is based upon a claim
that the Fourth Shift Entity's use, duplication or distribution of MDBS
Development Code or MDBS Runtime Code (as part of an MDBS-content Fourth
Shift Application distributed pursuant to this Agreement) infringed any
copyright, patent, trade secret or other proprietary right of a third-party.
To qualify for indemnity under this paragraph, Fourth Shift must (i) give
MDBS prompt notice of any such claim, and (ii) cooperate with MDBS and allow
MDBS, if it elects to do so, to control the defense of any such claim and all
related settlement negotiations. In the event that MDBS has elected to
control the defense of any such claim and any Fourth Shift Entity wishes to
participate in the defense thereof, MDBS shall allow
35
that Fourth Shift Entity, if it elects to do so, to participate at its own
expense. This paragraph has no application to the extent that MDBS
establishes that any claim or suit for infringement of any copyright, patent,
trade secret or other proprietary right of a third-party results from a
Fourth Shift Entity's modification of any MDBS Development Code or MDBS
Runtime Code, or a Fourth Shift Entity's use, duplication or distribution of
MDBS Development Code or MDBS Runtime Code in a form or manner that is not
expressly intended and authorized by MDBS. MDBS will also reimburse a Fourth
Shift Entity for attorney's fees reasonably incurred by that Fourth Shift
Entity in the defense of any proceeding that results in a judgment that is
indemnifiable under this paragraph.
19.3 Notwithstanding any language to the contrary contained herein,
neither MDBS nor any Fourth Shift Entity shall be liable to the other for any
exemplary or punitive damages under any circumstances.
20 ASSUMED LIABILITIES
20.1 Fourth Shift Corporation hereby assumes and will satisfy all
liabilities to MDBS for the actions of each and any Fourth Shift Entity from
the date of execution of this Agreement forward with respect to any use,
duplication or distribution of any MDBS Runtime Code or MDBS Development
Code. Fourth Shift's obligations under this paragraph survive the
termination of this Agreement.
21 MISCELLANEOUS
21.1 This Agreement shall not be changed, modified or amended except
by a writing signed by MDBS and Fourth Shift Corporation
21.2 Both MDBS and Fourth Shift have participated in the drafting of
this Agreement.
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21.3 MDBS shall be entitled to reimbursement from Fourth Shift for
MDBS's costs of shipping and physical duplication for all physical media,
documentation and other materials shipped by MDBS to Fourth Shift pursuant to
this Agreement.
21.4 All past due payment obligations of Fourth Shift to MDBS pursuant
to this Agreement shall accrue interest at the rate of * per month.
21.5 Fourth Shift agrees to comply with all government export
regulations in distributing any MDBS-content Fourth Shift Application.
21.6 The parties shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiation between
executives who have authority to settle the controversy.
21.6.1 Any party may give the other party written notice of any
dispute not resolved in the normal course of business. Within 15 days after
delivery of the notice, the receiving party shall submit to the other a written
response. The notice and the response shall include (a) a statement of each
party's position and a summary of arguments supporting that position, and (b)
the name and title of the executive who will represent that party and of any
other person who will accompany the executive. Within 15 days after delivery of
the disputing party's notice, the executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to attempt to resolve the dispute.
21.6.2 If the matter has not been resolved within 30 days of the
disputing party's notice, or if the parties fail to meet within 15 days, either
party may initiate mediation of the controversy or claim as provided
hereinafter.
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21.6.3 If the dispute has not been resolved by negotiation as
provided herein, the parties shall endeavor to settle the dispute by
mediation under the then current CPR Model
______________
* Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
38
Procedure for Mediation of Business Disputes. The neutral third party will
be selected from the CPR Panel of Neutrals as an individual with industry
knowledge in the software industry, unless the parties otherwise agree. If
the dispute has not been resolved within 60 days after the commencement of
mediation, either party may take such other actions as are available under
applicable law. Notwithstanding any other provision of this paragraph 21.6,
each party shall be entitled at any time to seek any and all legal and
equitable remedies necessary to preserve the status quo pending the mediation.
21.6.4 This paragraph 21.6 shall have no application to disputes
relating to the Renewal Term and End Term fees and fee determination procedures
set forth in this Agreement.
21.7 If litigation or other action is commenced between MDBS and any
Fourth Shift Entity concerning any dispute arising out of or relating to this
Agreement, the prevailing party will be entitled, in addition to any other award
that may be made, to recover all court costs or other official costs and all
reasonable expenses, including without limitation reasonable attorney's fees and
expenses.
21.8 Each party acknowledges that in the course of dealings between
the parties, each may acquire information about the other's business activities
and operations, technical information and trade secrets, including but not
limited to computer programs and the terms of this Agreement (the "Confidential
Information"). Confidential Information shall not include information generally
available to or known by the public, information independently developed outside
the scope of this Agreement, information not subject to any obligation of
confidentiality which is already known by the receiving party, or, in general,
the existence of this Agreement. Each party shall hold all such Confidential
Information in strict confidence and shall not reveal
39
the same except pursuant to a court order. The Confidential Information
shall be safeguarded with at least as great a degree of care as each party
holds its own most confidential materials or data relating to its own
business, but in no event less than a reasonable degree of care.
21.9 Notices required by this Agreement are effective only if
written and delivered by certified mail to the contact person and address
shown below, or to such other persons and addresses as the parties may
subsequently agree upon in writing:
21.9.1 For MDBS: Micro Data Base Systems, Inc.
Attn: General Counsel
X.X. Xxx 0000
Xxxx Xxxxxxxxx, XX 00000
21.9.2 For Fourth Shift: Fourth Shift Corporation
Attn: General Counsel
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by a duly authorized officer of each party hereto.
Date: June 30, 1998 Fourth Shift Corporation
-------------------
/s/ Xxxxx X. Xxxxxx
-------------------
By: Xxxxx X. Xxxxxx
Its: VP & CFO
Date: June 30, 1998 Micro Data Base Systems, Inc.
-------------------
/s/ J. Xxxxx Xxxxxxx
--------------------
By: J. Xxxxx Xxxxxxx
Its: Executive Vice President
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