SECOND AMENDMENT TO
SOFTWARE DEVELOPMENT AND PUBLISHING AGREEMENT
This SECOND AMENDMENT TO SOFTWARE DEVELOPMENT AND PUBLISHING AGREEMENT
("Amendment") is entered into as of June 29, 1998, by and between Broderbund
Software, Inc., a Delaware corporation ("Publisher"), and ModaCAD, Inc., a
California corporation("Author").
R E C I T A L S :
A. WHEREAS, the parties have previously executed and delivered that certain
Software Development and Publishing Agreement, dated March 15, 1996, as amended
on October 11, 1996 (the "Agreement").
B. WHEREAS, the parties desire to further amend the Agreement in the manner set
forth in this Amendment.
C. WHEREAS, except as expressly defined herein, capitalized terms used herein
shall have the meanings ascribed to them in the Agreement.
NOW, THEREFORE, the parties agree to amend the Agreement as follows:
1. Definitions:
(a) The following definitions shall be added to the Agreement as if originally
set forth therein:
"Additional Catalog Components means Catalog Components that are developed by or
on behalf of Author after the date hereof, containing digital product catalogs
of home furnishings and fixtures and interior design elements and materials
offered by vendors other than the vendors of the furnishings and fixtures and
interior design elements and materials contained in the Catalog Components
existing as of the date hereof."
"Author Enhanced Core Technology means future enhancements to the Core
Technology, or replacements thereof, developed by or on behalf of Author solely
for use in or in connection with the Works, Derivative Works, Conversions,
Derivative On-line Programs and Foreign Language Adaptations and all
intellectual properties (including, without limitation, patents and copyrights,
but excluding all trademarks and service marks) associated therewith."
"Publisher Enhanced Core Technology means future enhancements to the Core
Technology, or replacements thereof, developed by or on behalf of Publisher and
all intellectual properties (including, without limitation, patents and
copyrights, but excluding all trademarks and service marks) associated
therewith."
(b) Section 1.01 of the Agreement shall be deleted and restated as follows as if
originally set forth therein:
"1.01 Catalog Components means components containing digital product catalogs of
home furnishings and fixtures and interior design elements and materials, in
existence on the date hereof and used in or in connection with the Works,
Derivative Works, Conversions, Derivative On-line Programs and Foreign Language
Adaptations, and including any future enhancements thereto acquired by Publisher
pursuant to Sections 3(c) and (d) hereof."
(c) Section 1.03 of the Agreement shall be deleted and restated as follows as if
originally set forth therein:
"1.03 Core Technology means Author's existing proprietary modeling and rendering
technology currently used in or in connection with the Works, Derivative Works,
Conversions, Derivative On-line Programs and Foreign Language Adaptations
including, without limitation, its rendering features such as lighting, texture
mapping, UV mapping and modeling and its database cataloging features such as
pricing, rule-based validation and search and retrieval, and all intellectual
properties (including, without limitation, patents and copyrights, but excluding
all trademarks and service marks) associated therewith, excluding any Author
Enhanced Core Technology (as defined above)."
2. (a) Section 2 of the Agreement shall be deleted in its entirety, provided,
however, that, notwithstanding the foregoing, Author shall still be obligated to
perform the obligations described in Section 2(b) and Section 2(c) hereof as if
originally set forth therein.
(b) Section 2.02 of the Agreement shall be deleted and restated as follows as if
originally set forth therein:
"2.02 Author Enhanced Core Technology. In the event that Publisher desires to
obtain any rights in and to any Author Enhanced Core Technology that may exist
from time to time after the date hereof, Publisher shall contact Author, and
Author and Publisher shall commence good faith negotiations with respect to
whether, and if so the terms upon which, the rights to any Author Enhanced Core
Technology may be granted to Publisher, provided, however, that in no event
shall Author have any obligation whatsoever to develop any Author Enhanced Core
technology. "
(c) Author shall use commercial best efforts to deliver the Product Upgrade
described on Schedule 2(b) attached hereto to Publisher as soon as practicable
after the date hereof; provided, that following such delivery Author shall use
its commercial best efforts to repair any errors in content or technical defects
in regards to the program code, graphics or sound which impair the proper
functioning of the Product Upgrade, by no later than July 31, 1998. Such
commercial best efforts shall include, without limitation, making the personnel
who developed the Product Upgrade available to perform such repair services
until such time as Author's obligations under this Section 2(c) have terminated.
3. Section 3 of the Agreement shall be amended to provide:
(a) That the "term of the Agreement" referenced in Section 3.01 of the Agreement
shall mean a perpetual term.
(b) That the fourth sentence of Section 3.01 of the Agreement shall be deleted.
(c) That, in addition to the rights granted to Publisher pursuant to Section
3.01 of the Agreement, Author hereby grants Publisher the right to create
Publisher Enhanced Core Technology, and that Publisher shall have the perpetual,
exclusive (even as against Author), worldwide, royalty-free license to publish,
manufacture, reproduce, market, and distribute the Publisher Enhanced Core
Technology solely in connection with the exploitation of the Works, Derivative
Works, Conversions, Derivative On-line Programs and Foreign Language
Adaptations; provided, however, that in the event that Author desires to obtain
any rights in and to any Publisher Enhanced Core Technology that may exist from
time to time after the date hereof, Author shall contact Publisher, and Author
and Publisher shall commence good faith negotiations with respect to whether,
and if so the terms upon which the rights to any Publisher Enhanced Core
Technology may be granted to Author; provided, however, that in no event shall
Publisher have any obligation whatsoever to develop any Publisher Enhanced Core
Technology.
(d) That, in addition to the rights granted to Publisher pursuant to Section
3.01 of the Agreement, Author hereby grants to Publisher the perpetual,
exclusive (even as against Author), worldwide, royalty-free, non-transferable
license to publish, manufacture, reproduce, market, and distribute the Catalog
Components solely in connection with the exploitation of the Works, Derivative
Works, Conversions, Derivative On-line Programs and Foreign Language
Adaptations, but (i) only for so long as Author shall have the rights so to
sublicense Publisher, and (ii) only in accordance with Author's rights so to
sublicense Publisher; provided, however, that the exclusive license granted
herein shall not limit or restrict in any way Author's rights to use and make
use of the Catalog Components and Additional Catalog Components other than in
connection with the exploitation of the Works, Derivative Works, Conversions,
Derivative On-line Programs and Foreign Language Adaptations. In the event that
Author enhances the digital product catalogs of home furnishings and fixtures
and interior design elements and materials contained in such Catalog Components
,then Author shall promptly make such enhancements available to Publisher,
without charge, to enable Publisher to exploit such enhancements in the manner
described above in this Section 3(d), provided, however, that in no event shall
Author have any obligation whatever to enhance any digital product catalogs.
Without limiting the provisions of this Section 3(c), in no event shall
Publisher be obligated to publish, manufacture, reproduce, market, modify,
enhance or distribute any Catalog Components in connection with the exploitation
of the Works, Derivative Works, Conversions, Derivative On-line Programs or
Foreign Language Adaptations.
(e) That, in the event that Author develops, or has developed, any Additional
Catalog Components, then upon Publisher's written request, Author and Publisher
shall commence good faith negotiations with respect to whether, and if so the
terms upon which, the rights to any Additional Catalog Components may be granted
to Publisher , provided, however, that in no event shall Author have any
obligation whatever to develop or have developed any Additional Catalog
Components. Without limiting the provisions of this Section 3(e), in no event
shall Publisher be obligated to publish, manufacture, reproduce, market,modify,
enhance or distribute any Additional Catalog Components in connection with the
exploitation of the Works, Derivative Works, Conversions, Derivative On-line
Programs or Foreign Language Adaptations. In addition, nothing set forth in this
Amendment shall be construed to limit Publisher's ability to incorporate in the
Works, Derivative Works, Conversions, Derivative On-line Programs or Foreign
Language Adaptations any components containing digital product catalogs of home
furnishings and fixtures and interior design elements and materials which may be
developed by or on behalf of Publisher without using, directly or indirectly,
the Core Technology or Author's Enhanced Core Technology, provided, that such
components may be developed by or on behalf of Publisher to be compatible with
the Core Technology and/or Author's Enhanced Core Technology (f) That, without
limiting the rights granted to Publisher under this Section 3, or under Section
3.01 of the Agreement (as amended hereby), Publisher hereby (i) acknowledges
that Author currently engages, and in the future will engage, in the provision
of product cataloging and electronic commerce and related services on the
Internet (and on and through other interactive products and media, including
future successor media, now known or hereafter developed), including, without
limitation on world wide web and successor sites maintained by one or more
product vendors, (ii) covenants and agrees that the continued provision of such
services shall not constitute a conflict with the exclusive rights granted to
Publisher under this Section 3, or under Section 3.01 of the Agreement (as
amended hereby); and (iii) Publisher shall not use or permit any use of any
rights or properties whatever licensed from Author in any way or on any medium
that competes with Author's services described in (ii), provided, that Author
hereby acknowledges and agrees that the development, maintenance and support by
or on behalf of Publisher of a site on the Internet (and on and through other
interactive products and media, including future successor media, now known or
hereafter developed), including, without limitation, on the world wide web, for
purposes of enabling end-users of the Works, Derivative Works, Conversions,
Derivative On-line Programs and/or Foreign Language Adaptations to access
Catalog Components and Additional Catalog Components to be used in connection
with the Works, Derivative Works, Conversions, Derivative On-line Programs and
Foreign Language Adaptations, shall not be deemed to be a conflict or breach of
the provisions of Section 3(f)(iii).
(g) Publisher acknowledges and agrees that nothing in the Agreement, as amended
hereby, shall limit or restrict in any way whatever Author's right and ability
to use the Core Technology and Author Enhanced Core Technology, and Catalog
Components and Additional Catalog Components in and in the development of
products other than the Works, Derivative Works, Conversions, Derivative On-line
Programs or Foreign Language Adaptations.
4. Section 4 of the Agreement shall be deleted and restated as follows as if
originally set forth therein:
"4. Payments. In consideration for the execution of this Amendment, Publisher
shall pay to Author One Million Nine Hundred Eighty Thousand Dollars
($1,980,000) (the "Consideration"), which shall be paid concurrently with the
execution hereof. Without limiting any other provision of this Amendment, the
parties hereto acknowledge and agree that, except as provided herein, each
party's respective obligations to make payments, or to return any payments made
prior to the date hereof, under the Agreement shall terminate, including,
without limitation, Publisher's obligation to pay to Author any amounts withheld
from payment to Author as reserves for product returns pursuant to Section
4.02(d) of the Agreement, and Author's obligation to return any amounts paid to
Author by Publisher as an advance against future royalties. In addition,
Publisher shall be responsible for all Units returned by customers following the
date hereof.
5. Section 5 of the Agreement shall be deleted.
6. Section 6 of the Agreement shall be deleted.
7. Section 7 of the Agreement shall be deleted.
8. Section 8 of the Agreement shall be deleted.
9. Section 9 of the Agreement shall be deleted and restated as follows as if
originally set forth therein:
"9. Term. The term of this Agreement, as amended hereby shall be perpetual."
10. Section 10 of the Agreement shall be amended to provide that the obligations
of the Author thereunder to repair defects without charge shall (i) only apply
to the Works, Conversions and Foreign Language Adaptations, including, without
limitation, Core Technology, Author Enhanced Core Technology, Catalog Components
and Additional Catalog Components, except to the extent, and solely to the
extent, any of the foregoing have been modified in any material respect by the
Publisher and (ii) shall terminate one (1) year from the date of this Amendment.
In the event that Publisher requests Author to repair any defects in the Works,
Conversions and Foreign Language Adaptations, including, without limitation,
Core Technology, Author Enhanced Core Technology, Catalog Components and
Additional Catalog Components either (a) following the date which is one (1)
year after the date of this Amendment, or (b) to the extent any such defects
result from any modification of any of the foregoing in any material respect by
the Publisher, then Publisher shall be obligated to compensate Author for such
repair services upon terms to be mutually agreed to between the parties after
good faith negotiations.
11. Section 11 of the Agreement shall remain in full force and effect, and the
representations made by each party therein shall be deemed to have been made by
each party on the date hereof.
12. Section 12 of the Agreement shall be deleted.
13. Section 13 of the Agreement shall be amended to provide:
(a) Section 13.01 of the Agreement shall be deleted and restated as follows as
if originally set forth therein:"In addition to any copyright notices placed
thereon, Publisher shall place a copyright notice on the packaging, CD-ROM (or
other memory storage device used to distribute the Works), user documentation
and user interface of the software for all Works and any Derivative Works,
Conversions and Foreign Language Adaptations, and in other appropriate places
for Derivative On-line Programs and Derivative Products, which shall read
(solely with respect to the Core Technology and Author Enhanced Core
Technology):"(C)199_ ModaCAD, Inc.'" (b) Section 13.03 of the Agreement shall be
deleted.
14. Section 14 of the Agreement shall be deleted.
15. Section 15, of the Agreement shall be amended to provide that the last
sentence of Section 15 shall be deleted and replaced with the sentence set forth
below, as if originally set forth therein: "Notwithstanding any other provisions
of this Agreement, the rights and obligations of this Section 15 shall survive
for a period of ten (10) years from the date hereof." (b) Section 15 of the
Agreement shall be supplemented by adding the following paragraph as if
originally set forth therein:
"Publisher covenants and agrees that the disclosure and license as herein
provided of Core Technology and Author Enhanced Core Technology (together,
"Proprietary Code") is made in strict confidence and Publisher acknowledges that
the Proprietary Code contains valuable trade secrets and legally protected
intellectual property of Author and Author's licensors, and that, accordingly,
Publisher shall maintain all Proprietary Code obtained as a result of this
Agreement in strict confidence. Without limitation of any other provision of
this Agreement, Publisher shall not disclose any of the Proprietary Code to any
person or entity without the prior written consent of Author; and, further,
Publisher shall take such actions as may be reasonably necessary to prevent any
unauthorized disclosure of the Proprietary Code to others. Such actions shall
include, but not necessarily be limited to (i) refraining from making any copies
of any of the Proprietary Code, or any portion thereof, except for the purposes
contemplated by this Agreement; and (ii) storing the Proprietary Code, as well
as Publisher's notes, writings and/or data files containing any of Author's
Proprietary Code in a secure site when not in use. As a condition to the
disclosure of the Proprietary Code to one or more of Publisher's directors,
officers, employees, representatives, agents and advisors for purposes
contemplated by this Agreement, Publisher shall (i) limit such disclosure to the
fewest number of such persons who have a reasonable need to know the same; (ii)
inform such persons of the confidential and proprietary nature of the
Proprietary Code and of the terms of this Agreement; and (iii) inform him, her
or them, as the case may be, that upon such disclosure, they will become bound
by these terms.
16. Section 16 of the Agreement shall be deleted in its entirety and restated as
follows as if originally set forth therein:
"Except as expressly provided in, the Agreement, as amended hereby, Publisher
acknowledges that Author has not made any representation or warranty to the
Publisher as to the specifications, capabilities, implementations, uses or
functions of the Proprietary Code, nor has Author made any representation or
warranty as to the possible or expected success of the Proprietary Code in any
specific use, and Author shall have no liability with respect to any of the
foregoing. Except as expressly provided in the Agreement, as amended hereby,
Author does not make by virtue of the Agreement, as amended hereby, or by virtue
of the transactions contemplated herein, and Author expressly disclaims, any
representation or warranty, whether express or implied, with respect to the
Proprietary Code or its applications or uses, including but not limited to
implied warranties of merchantability and fitness for a particular purpose.
Except for the indemnity obligations of Author and Publisher expressly provided
in the Agreement, as amended hereby, neither Author nor Publisher shall be
liable to the other for any consequential, incidental, indirect or special
damages in connection with the Proprietary Code, or performance of obligations
under the Agreement, as amended hereby, even if the other party has been
apprised of the likelihood of such damages occurring."
17. The Amendment to the Agreement dated October 11, 1996 shall be terminated
and shall be of no further force and effect.
18. Except for the obligations and rights conferred by, or arising under or in
connection with, the Agreement, as amended hereby (including, any claims,
demands, costs, contracts, liabilities, objections, rights, damages, expenses,
compensation and actions and causes of action arising hereunder): (i) the
Author, on behalf of itself, hereby waives and releases and discharges
Publisher, as well as its respective officers, directors, shareholders and
agents, from any and all claims, demands, costs, contracts, liabilities,
objections, rights, damages, expenses, compensation and actions and causes of
action of every nature, whether in law or in equity, known or unknown, or
suspected or unsuspected, which such parties ever had or now have against each
other of any type, nature and description; and (ii) the Publisher, on behalf of
itself, hereby waives and releases and discharges Author, as well as its
officers, directors, shareholders and agents, from any and all claims, demands,
costs, contracts, liabilities, objections, rights, damages, expenses,
compensation, and actions and causes of action of every nature, whether in law
or in equity, known or unknown, or suspected or unsuspected, which such parties
ever had or now have against each other of any type, nature and description.
Subject always to the provisions of the immediately preceding paragraph, the
parties expressly waive and relinquish any and all rights which they may have
under the provisions of 1542 of the California Civil Code which reads as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
19. Each party hereto shall execute and deliver after the date hereof such
instruments and take such other actions as the other party may reasonably
request in order to carry out the intent of the Agreement, as amended hereby, or
to better evidence or effectuate the transactions contemplated in the Agreement,
as amended hereby.
20. Except as expressly amended hereby, the provisions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and
year first above written.
"Author" "Publisher"
MODACAD, INC BRODERBUND SOFTWARE, INC.
/S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------- --------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
President and COO Group VP and CFO
SCHEDULE 2(b)
Product Upgrade: Version 2 of "3D Home Interiors"
Delivery Schedule: Gold Master Version.
