EXHIBIT 10.19
[CONFIDENTIAL TREATMENT REQUESTED]
MASTER DEVELOPMENT AND LICENSE AGREEMENT
This MASTER DEVELOPMENT AND LICENSE AGREEMENT (the "AGREEMENT"), is made by and
between Security Dynamics Technologies, Inc., a Delaware corporation having its
principal place of business at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("SDTI"), and VeriSign, Inc., a Delaware corporation having its principal place
of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("VERISIGN"), and is effective as of September 30, 1997 (the "EFFECTIVE DATE").
RECITALS
WHEREAS, VeriSign has developed and owns certain computer software relating
to digital certificate authentication and local registration authority; and
WHEREAS, SDTI desires to engage VeriSign to customize such software to
SDTI's specifications and to obtain from VeriSign a license to distribute the
software in conjunction with other SDTI products, and VeriSign desires to accept
such engagement and grant such licenses on the terms set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
promises and undertakings set forth herein, and for other good and valuable
consideration, SDTI and VeriSign agree as follows:
1. DEFINITIONS
1.1 "ACCEPTANCE CRITERIA" means the criteria for the acceptance of the
Developed Technology set forth in the Specifications.
1.2 "DELIVERABLE" means any of the deliverable items set forth on the
Statement of Work.
1.3 "DEVELOPED TECHNOLOGY" means the work product, including the
Technology and Documentation, to be developed by either party
hereunder, as more fully set forth in the Specifications.
1.4 "DEVELOPMENT EQUIPMENT" means the development hardware, software and
other equipment and supplies provided to VeriSign by SDTI hereunder,
if any, as more particularly described in Exhibit A attached hereto
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and incorporated herein by this reference.
1.5 "DEVELOPMENT PERIOD" means the period commencing on the Effective
Date and ending on the date of acceptance by SDTI of the last
Deliverable under a Statement of Work.
1.6 "DOCUMENTATION" means the documentation necessary to use and support
the Developed Technology, together, in each case, with any
modifications or enhancements thereto.
1.7 "END-USER" The ultimate user of the Developed Technology who
purchases or licenses the Product for use in the regular course of
such customer's business and not for resale or further sublicensing
by such customer.
1.8 "ERROR CORRECTION" means a modification to VeriSign's Pre-Existing
Technology, the Developed Technology or a Deliverable that
establishes material conformity to the current Specifications and
Documentation or eliminates the adverse effect of a Non-Conformance
in the operation of the Developed Technology or Deliverable,
including but not limited to bug fixes and work-arounds.
1.9 "INTELLECTUAL PROPERTY RIGHTS" means all worldwide: (a) patents,
patent applications and other patent rights; (b) rights associated
with works of authorship, including copyrights, copyright
applications, copyright restrictions, Trademarks, registrations and
applications for registration of Trademarks, mask work rights, mask
work applications and mask work registrations; (c) rights relating to
the protection of trade secrets and confidential information; (d)
rights analogous to those set forth herein and any other proprietary
rights relating to intangible property; and (e) divisions,
continuations, renewals, reissues and extensions of the foregoing (as
applicable) now existing or hereafter filed, issued, or acquired.
1.10 "NON-CONFORMANCE" means a failure of the Developed Technology to
conform materially to the Specifications or to materially perform
correctly when measured against the Specifications.
1.11 "OBJECT CODE FORM" means a form of software code resulting from the
translation or processing of Source Code by a computer into machine
language or intermediate code, which thus is in a form which would
not be convenient for human understanding of the program logic, but
which is appropriate for execution or interpretation by a computer.
1.12 "PRE-EXISTING TECHNOLOGY" means Technology owned by either party
prior to the Development Period, as identified in the applicable
Statement of Work. Any and all Pre-Existing Technology may be
incorporated into the Developed Technology will still be "Pre-
Existing Technology."
1.13 "PRODUCT" means any product developed, manufactured, marketed, sold
or distributed by SDTI which consists of or incorporates any
Developed Technology.
1.14 "SOURCE CODE FORM" means a form in which a computer program's logic
is easily deduced by a human being with skill in the art, such as a
printed listing of the program or a form from which a printed listing
can be generated.
1.15 "SPECIFICATIONS" means the document or documents that characterize
and define the logical, functional, performance and operational
aspects of the Developed Technology, as initially set forth on
Exhibit B attached hereto and incorporated herein by this reference.
1.16 "STATEMENT OF WORK" or "SOW" means a written instrument that meets
the following requirements:
(a) Includes substantially the following statement: "This is a
Statement of Work under the Master Development and License
Agreement between SDTI Systems, Inc. and VeriSign, Inc., dated
effective ____ , 1997;"
(b) Is signed on behalf of both parties by their authorized
representatives;
(c) Contains the following five mandatory items:
(i) Description and/or Specifications of the services to
be performed and the Deliverables to be delivered to
SDTI;
(ii) The name and address of a Project Manager for each of
SDTI and VeriSign;
(iii) The amount, schedule, and method of payment to be
made to VeriSign, including NRE fees, license fees,
and royalties, if any;
(iv) The time schedule, framework or dates for performance
and for delivery of the Deliverables (the
"MILESTONES"); and
(v) Completion and Acceptance Criteria for the
Deliverables; and
(d) When applicable, includes:
(i) Provisions for written and/or oral progress reports
by VeriSign;
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(ii) Detailed functional and technical specifications and
standards for all services and Deliverables,
including quality standards, overall systems
architecture, project plan, identified dependencies
or contingencies and critical path issues;
(iii) Documentation standards;
(iv) Lists of any special equipment, including Development
Equipment, to be procured by VeriSign or provided by
SDTI for use in performance of the work;
(v) Identification of Pre-Existing Technology; and
(vi) Such other terms and conditions as may be mutually
agreeable between the parties.
1.17 "TECHNOLOGY" means technical information, knowledge, ideas, concepts,
processes, procedures, designs, schematics, works of authorship,
inventions and discoveries owned by or licensed to a party hereto and
subject to intellectual property protection and any and all
Intellectual Property Rights pertaining thereto.
1.18 "THIRD PARTY TECHNOLOGY" means software or other Technology owned by
a third party and used in connection with the Developed Technology as
set forth in Exhibit D attached hereto and incorporated herein by
this reference.
1.19 "DERIVATIVE" means, as applicable: (a) any computer software (whether
in source or object code form) port, work, product, service,
improvement, modification, alteration, enhancement, new version,
translation, adaptation, design, concept, materials and
documentation, in any medium, format or form whatsoever, that is
derived in any manner, directly or indirectly, from a pre-existing
work or any part or aspect thereof or that utilizes or incorporates
such a pre-existing work or any part or aspect thereof; (b) all
"derivative works," as defined in the copyright law of the United
States and (c) all materials and documentation related to each of the
foregoing.
1.20 "TRADEMARKS" means trademarks, service marks, trade names, trade
dress and logos.
1.21 "UPDATE" means a new revision of the Developed Technology that
includes bug fixes, corrections and minor modifications.
1.22 "ENHANCEMENT" means a new revision of the Developed Technology that
includes enhancements and new functionalities.
2. DEVELOPMENT WORK
2.1 ISSUANCE OF STATEMENTS OF WORK. The initial Statement(s) of Work
agreed to by both parties is attached to this Agreement. Additional
Statements of Work, regardless of whether they relate to the same
subject matter as the initial Statement of Work, shall become
effective upon execution by authorized representatives of both
parties and shall then also be attached to this Agreement.
2.2 CHANGES TO STATEMENTS OF WORK. Changes in any Statement of Work or in
any of the Specifications or Deliverables under any Statement of Work
shall become effective only when a written change request is executed
by authorized representatives of both parties. All change requests
with respect to this Agreement, any Statement of Work, or any
Specifications or Deliverables must be accepted by both parties.
2.3 DEVELOPMENT EFFORT. Each party agrees to use commercially reasonable
efforts to undertake and complete development of the Deliverables in
accordance with the Milestone Schedule and to timely deliver all the
Deliverables. Certain tasks to be undertaken by a party may require
information from the other party or completion of certain tasks by
the other party prior to a party undertaking its tasks. Each party
agrees that any delay in a party meeting the Milestones that is
caused by the failure of the other party to timely provide such
required information or complete performance shall not constitute a
default under this Agreement.
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3. OWNERSHIP
3.1 PRE-EXISTING TECHNOLOGY. Each party acknowledges and agrees that, as
between the parties, each party is and shall remain the sole and
exclusive owner of all right, title, and interest in and to its Pre-
Existing Technology, and all associated Intellectual Property Rights,
and that this Agreement does not affect such ownership. Each party
acknowledges that it acquires no rights under this Agreement to the
other party's Pre-Existing Technology other than the limited rights
specifically granted in this Agreement.
3.2 MODIFICATIONS/DERIVATIVE WORKS TO PRE-EXISTING TECHNOLOGY. Each party
acknowledges and agrees that, as between the parties, each party is
and shall remain the sole and exclusive owner of all right, title,
and interest in and to any Derivatives to its Pre-Existing Technology
regardless of who created such Derivatives, and all associated
Intellectual Property Rights therein and thereto. Each party
acknowledges that it acquires no rights under this Agreement to the
Derivatives of the other party's Pre-Existing Technology other than
the limited rights specifically granted in this Agreement.
3.3 DEVELOPED TECHNOLOGY. Subject to the ownership rights specified in
Sections 3.1 and 3.2 above, each party shall own that portion of the
Developed Technology that it solely created. Except in the event that
portions of the Developed Technology (a) constitute Derivatives of
SDTI Pre-Existing Technology, or (b) are solely created by SDTI, then
VeriSign shall be the sole and exclusive owner of the Developed
Technology. To the extent that the items in (a) and (b) above are
incorporated into the Developed Technology, SDTI shall grant, and
hereby does grant, to VeriSign a royalty-free, perpetual and
irrevocable, worldwide, non-exclusive license to use, reproduce and
distribute such code as part of the Developed Technology.
Notwithstanding anything else in this Section 3.3, SDTI acknowledges
and agrees that all Developed Technology created by the SDTI
personnel on site at VeriSign, as set forth in the initial Statement
of Work, and all Intellectual Property Rights therein, shall be owned
solely and exclusively by VeriSign.
3.4 PORTS. In the event that SDTI creates ports of the Developed
Technology to new platforms pursuant to SDTI's license rights under
Section 4.2(a) ("PORTS") and VeriSign agrees to support the Port,
then SDTI will promptly provide the Ports to VeriSign in Source Code
and Object Code form, and SDTI hereby assigns all Intellectual
Property Rights in the Ports to VeriSign.
3.5 ASSIGNMENT AND FURTHER ASSURANCES. Each party agrees to cooperate
with the other party and take all reasonable actions required to vest
and secure in such party all ownership rights, including all
Intellectual Property Rights, as specified in this Section 3.
4. LICENSE GRANTS; ACCESS TO TECHNOLOGY
4.1 SDTI PRE-EXISTING TECHNOLOGY. On the terms and subject to the
conditions set forth herein, for the period necessary for VeriSign to
have access to SDTI's Pre-Existing Technology in order to accomplish
its obligations under this Agreement, SDTI grants to VeriSign a
nonexclusive, nontransferable, royalty-free, limited license under
SDTI's Intellectual Property Rights in the SDTI Pre-Existing
Technology to:
(a) use, copy and modify SDTI Pre-Existing Technology for internal
purposes only and solely to the extent necessary to develop the
Developed Technology; and
(b) incorporate SDTI Pre-Existing Technology to the extent necessary
into the Developed Technology for use and distribution by SDTI.
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4.2 DEVELOPED TECHNOLOGY. On the terms and subject to the conditions set
forth herein, VeriSign grants to SDTI a non-exclusive, royalty-free,
perpetual, worldwide license, under VeriSign's Intellectual Property
Rights in its Pre-Existing Technology to the extent that it is
incorporated in the Developed Technology and the Developed Technology
to: (a) use, copy, modify, and prepare derivative works of the
Developed Technology in Source Code form and Object Code; and (b)
copy and distribute the Developed Technology solely in Object Code
Form to End-Users in combination with substantial added value in the
form of the Products. Except as expressly permitted herein, SDTI may
not (i) disassemble, decompile or reverse engineer the Developed
Technology, (ii) use the Developed Technology in any manner to
perform service bureau, time sharing, certification authority, or
other computer services to third parties or permit End Users to do
the same, or (iv) perform or permit any sublicensing or other
distribution of the Developed Technology in Source Code form. SDTI's
rights in the Developed Technology licensed hereunder shall be
limited to those expressly granted in this Agreement.
4.3 ACCESS TO TECHNOLOGY. VeriSign will provide SDTI first-to-market
access to new technologies which it develops that, in VeriSign's
reasonable discretion, have relevant impact to SDTI's business.
Similarly, SDTI will provide VeriSign with advanced notification of
security products and services it intends to launch and will make
reasonable efforts to utilize VeriSign technology, products and
services where appropriate. SDTI understands that VeriSign has a
similar arrangement with the following companies listed: Microsoft,
Netscape and Cisco Systems. VeriSign will notify and provide access
to these new technologies to SDTI and the above companies at the same
time. Any such disclosure by VeriSign to SDTI shall be subject to the
provisions of Section 10 of this Agreement.
4.4 TRADEMARKS.
(a) TRADEMARK LICENSE. During the term of this Agreement, VeriSign
hereby grants to SDTI a nonexclusive, nontransferable license to
advertise the Product and Developed Technology under the
VeriSign trademarks, trade names, logos and/or slogans listed on
Exhibit G ("TRADEMARKS") as updated by VeriSign and agreed to in
writing by SDTI from time to time. Such use must reference the
Trademarks as being owned by VeriSign. The rights granted to
SDTI in this license will terminate upon any termination or
expiration of this Agreement. Upon such termination or
expiration, SDTI will no longer make any use of any Trademarks.
(b) TRADEMARK OWNERSHIP. SDTI recognizes that VeriSign is the owner
of all right, title and interest in the Trademarks. SDTI's use
of the Trademarks shall inure to the benefit of VeriSign. SDTI
shall not at any time acquire any rights in the Trademarks by
virtue of any use it may make of the Trademarks. SDTI shall not
during the term of this Agreement, or thereafter, attack the
title or any rights of VeriSign in and to the Trademarks or
attack the validity of the Trademarks. SDTI shall not register
in any country any name or ▇▇▇▇ resembling or confusingly
similar to any of the Trademarks.
(c) QUALITY STANDARDS. SDTI shall use the Trademarks in accordance
with VeriSign's trademark usage guidelines specified in Exhibit
G, as amended by VeriSign from time to time and agreed to by
SDTI in writing. Upon VeriSign's request, SDTI shall furnish to
VeriSign free of cost a reasonable number of each printed item
of advertising, packaging, or other promotional material bearing
the Trademarks so that VeriSign may monitor SDTI's compliance
with the trademark usage guidelines set forth in Exhibit G, as
amended by VeriSign from time to time. If any of VeriSign's
Trademarks are to be used in conjunction with SDTI's or another
party's trademarks, on or in relation to the Product or
Developed Technology, then VeriSign's Trademarks shall be
presented legibly, but nevertheless separated from the other, so
that each appears to be a trademark in its own right, distinct
from the other ▇▇▇▇.
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4.5 OTHER AGREEMENTS BY SDTI.. SDTI may not distribute the Developed
Technology to any End User unless such End User is subject to an end
user license agreement with SDTI that: (i) protects VeriSign's
proprietary rights in the Developed Technology to at least the same
degree as the terms and conditions of this Agreement; (ii) requires
that such End User not reverse engineer, reverse compile or
disassemble the object code for the Developed Technology; (iii)
requires such End User to comply fully with all applicable laws and
regulations in any of its dealings with respect to the Developed
Technology; (iv) makes no representations or warranties on behalf of
VeriSign; and (v) does not grant any rights to such End User beyond
the scope of this Agreement. SDTI will promptly provide VeriSign with
reasonable access to such agreements following VeriSign's request.
4.6 U.S. GOVERNMENT AGENCIES. If SDTI distributes the Developed
Technology to any agency of the United States government, SDTI shall
require the government to agree that the Developed Technology is
"commercial computer software" or "commercial computer software
documentation" and that, absent written agreement to the contrary,
the government's rights with respect to the Developed Technology are
limited by the term of the End User license agreement, pursuant to
FAR Section 12.212(a) and/or DFARS Section 27.702-1(a) as applicable.
5. PROJECT MANAGEMENT AND DELIVERY
5.1 PROJECT MANAGERS. Each party will appoint a single project manager
("PROJECT MANAGER") and will promptly provide written notification to
the other party of the name and contact information for its Project
Manager. Each Project Manager will act as the principal liaison
between the parties with respect to his or her party's respective
performance under this Agreement and will identify to the other
party, and provide contact information for, the other individuals
responsible for specific tasks hereunder.
5.2 DELIVERY OF DELIVERABLES ON TARGET DATES. VeriSign shall use its
commercially reasonable efforts to deliver to SDTI the Deliverables
in accordance with the Milestones set forth on the Statement of Work.
5.3 DELIVERY OF ERROR CORRECTIONS. During the term of this Agreement and
for the period of VeriSign's warranty set forth in Section 13.1
below, VeriSign shall deliver to SDTI any Error Corrections for the
Developed Technology promptly upon their development.
5.4 DELIVERY OF DEVELOPED TECHNOLOGY. Upon completion of the Developed
Technology, VeriSign shall deliver it to SDTI for final evaluation
and testing pursuant to Section 8.
6. VERISIGN'S OBLIGATIONS AND DEVELOPMENT UNDERTAKINGS
6.1 USE OF DEVELOPMENT EQUIPMENT. VeriSign shall not use or permit use of
the Development Equipment for any purpose other than development of
the Developed Technology. The Development Equipment shall: (i) remain
the personal property of SDTI; (ii) be subject to inspection by SDTI
upon reasonable notice and during VeriSign's normal business hours;
and (iii) be kept free and clear of liens and encumbrances. VeriSign
shall use and maintain the Development Equipment in a careful and
proper manner and shall be responsible for all loss or damage which
occurs while the Development Equipment is in its possession. Upon the
termination of the Development Period, VeriSign shall return the
Development Equipment to SDTI in good condition, reasonable wear and
tear excepted, as may be directed by SDTI (and SDTI shall bear the
corresponding freight costs).
6.2 THIRD PARTY TECHNOLOGY. VeriSign shall obtain and secure the
worldwide rights to use and distribute any Third Party Technology
that is necessary for the Developed Technology to operate
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without Non-Conformance and to be used, manufactured and distributed
by SDTI pursuant to the terms of this Agreement.
6.3 TESTING. For so long as VeriSign provides maintenance services
pursuant to Section 12.2, VeriSign shall perform and be responsible
for the testing and debugging of all releases of the Developed
Technology and shall provide to SDTI at no charge all Error
Corrections to the Developed Technology. VeriSign shall provide all
assistance necessary for SDTI fully to test and evaluate the
Developed Technology and each Deliverable to determine whether it
substantially conforms to the Specifications, including the
Acceptance Criteria.
6.4 SCHEDULE CHANGES. In the event VeriSign determines that a particular
Milestone will likely be missed, it promptly shall give notice to
SDTI setting forth in reasonable detail the reason for the
anticipated delay, any corrective measures VeriSign intends to
undertake and the estimated revised Milestone.
7. SDTI'S OBLIGATIONS AND RIGHT TO MODIFY SPECIFICATIONS.
7.1 SUPPORT AND INFORMATION. SDTI will provide any engineering support,
technical training and other resources, including SDTI Pre-Existing
Technology, reasonably requested by VeriSign to assist VeriSign with
a Statement of Work ("RESOURCES"). SDTI shall not be obligated to
provide specific Resources or specific levels of any Resource unless
agreed in writing by SDTI.
7.2 DEVELOPMENT EQUIPMENT. SDTI shall provide to VeriSign the Development
Equipment listed in Exhibit A. The Development Equipment shall be
shipped to VeriSign freight prepaid.
7.3 SDTI UPDATES. SDTI may, in its sole discretion, update the SDTI Pre-
Existing Technology, if any, provided to VeriSign if a new release
becomes available during the Development Period, subject to
VeriSign's written agreement to any modification to the
Specifications necessitated by such new release.
7.4 CHANGES. If, at any time, SDTI desires to modify the Specifications
or the Statement of Work, SDTISDTI shall present a written request to
VeriSign describing such modifications using VeriSign's standard
Project Change Request Form (each such request is a "CHANGE ORDER"),
which VeriSign may approve in its sole discretion. VeriSign will
promptly review each such Change Order and determine, in VeriSign's
reasonable discretion, whether such Change Order can be accomplished
by VeriSign, and whether the performance of such Change Order will
increase the costs and/or delay the original schedule for creating
the Deliverables. If the parties agree to the Change Order (including
without limitation any such increased costs and/or delays estimated
by VeriSign), the Change Order will be deemed to amend and become
part of the Statement of Work and VeriSign will perform the
Consulting Services in accordance with such amended Statement of
Work.
7.5 SDTI'S INTERNAL USE OF CERTIFICATE AUTHORITY ("CA") SERVICES. If and
for so long as VeriSign's CA services and products are superior or
competitive (at a minimum, in terms of pricing, performance and
features) with similar products available in the market, as
determined by SDTI in its sole discretion, SDTI will purchase and use
VeriSign's CA products and services for its internal use only.
7.6 To the extent SDTI personnel are provided or take action at
VeriSign's site pursuant to this Agreement, such personnel shall be
provided solely at SDTI's cost, and upon VeriSign's reasonable
request, SDTI shall provide evidence of satisfaction of all state and
federal employment laws and worker compensation requirements in
connection with such personnel. Such personnel shall, at VeriSign's
reasonable request, execute confidentiality agreements containing
terms and conditions substantially similar to those in Section 10,
and shall agree to
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abide by all reasonable VeriSign visitor regulations. SDTI
understands that VeriSign operates a secure facility and that there
are portions of such facility that SDTI's personnel will not be
permitted to enter unless entry to such facility is necessary in
order to allow SDTI to exercise its rights hereunder. In the event
that VeriSign determines that any SDTI personnel has breached a
VeriSign visitor regulation, SDTI shall, upon receipt of notice from
VeriSign, immediately cause such person to be removed from VeriSign's
facility and provide a replacement.
8. EVALUATION AND ACCEPTANCE/REJECTION OF DEVELOPED TECHNOLOGY
Unless otherwise stated in the Statement of Work, SDTI shall advise
VeriSign in writing within forty five (45) days of receipt of the
completed Developed Technology for testing or evaluation whether SDTI
accepts or rejects such Developed Technology in accordance with the
Acceptance Criteria. In the event that SDTI does not respond in
writing within such forty five (45) day period, then the Developed
Technology shall be deemed accepted. If SDTI rejects the Developed
Technology, then SDTI shall provide to VeriSign a written statement
of the reasons for such rejection. Upon rejection, VeriSign shall
prepare an Error Correction within twenty (20) business days and
resubmit such Developed Technology to SDTI for evaluation pursuant to
this Section. In the event the Developed Technology still fails to
conform to the Acceptance Criteria after two (2) attempts to correct
and resubmit the Developed Technology, the matter shall be escalated
to the respective management of the parties for resolution. If the
parties cannot reach an agreement in good faith after such executive
escalation, either party may pursue whatever remedies it may have
under this Agreement, at law or in equity.
9. LICENSE FEES; ROYALTY PAYMENTS
9.1 LICENSE FEE. SDTI shall make the nonrefundable license payments to
VeriSign in accordance with Exhibit E attached hereto. Additional
license fees for subsequent projects shall be as set forth in the
applicable Statement of Work.
9.2 MAINTENANCE AND SUPPORT. In exchange for the receive maintenance and
support services and Updates and Enhancements for the Products from
VeriSign under Section 12, SDTI will pay VeriSign the nonrefundable
amounts specified in Exhibit E for such services.
9.3 PAYMENT TERMS. SDTI will make all initial payments to VeriSign when
specified in Exhibit E. SDTI will make all ongoing payments to
VeriSign due under Exhibit E within thirty (30) days after receipt of
VeriSign's invoice, unless otherwise set forth in a SOW. Payments
made under this Agreement after their due date will incur interest at
a rate equal to 1.5% per month or the highest rate permitted by
applicable law, whichever is lower.
9.4 TAXES. All amounts payable under this Agreement are exclusive of all
sales, use, value-added, withholding, and other taxes and duties.
SDTI will pay all taxes and duties assessed in connection with this
Agreement and its performance by any authority within or outside of
the U.S., except for taxes payable on VeriSign's net income. VeriSign
will be promptly reimbursed by SDTI for any and all taxes or duties
that VeriSign may be required to pay in connection with this
Agreement or its performance.
9.5 RECORDS AND AUDITS. SDTI shall keep all proper records and books of
account and all proper entries therein relating to its distribution
of Products under this Agreement. To the extent that SDTI is to pay
ongoing royalties under the terms of the initial or a subsequent SOW,
on no less than 30 days' prior written notice and no more than once
annually, VeriSign may request that an independent certified public
accountant audit the applicable records during regular business hours
at SDTI's offices to verify statements rendered hereunder. VeriSign
shall bear the expenses of any such audit; provided that if such
audit reveals that royalties paid by SDTI for any period are less
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than 95% of what should have been paid by SDTI, on VeriSign's
request, SDTI shall pay the costs of such audit in addition to
royalties then due and owing to VeriSign.
10. CONFIDENTIAL INFORMATION
10.1 CONFIDENTIAL INFORMATION. VeriSign and SDTI agree and acknowledge
that in order to further the performance of this Agreement, they will
be required to disclose to each other certain confidential
information which will be identified as such in writing or, if
disclosed orally, will be reduced to writing within thirty (30) days
thereafter ("Confidential Information"). The Developed Technology
will be regarded as Confidential Information whether or not it is
identified in writing as "Confidential."
10.2 PROTECTION OF CONFIDENTIAL INFORMATION. The receiving party agrees to
protect the confidentiality of the disclosing party's Confidential
Information with at least the same degree of care that it utilizes
with respect to its own similar proprietary information, including
without limitation agreeing:
(a) Not to disclose or otherwise permit any other person or entity
access to, in any manner, the Confidential Information or any part
thereof in any form whatsoever, except that such disclosure or access
shall be permitted to an employee, agent or contractor of the
receiving party requiring access to the Confidential Information in
the course of his or her engagement in connection with this Agreement
and who has signed and agreement obligating the employee, agent or
contractor to maintain the confidentiality of the confidential
information of third parties in the receiving party's possession;
(b) To notify the disclosing party promptly and in writing of the
circumstances surrounding any suspected possession, use or knowledge
of the Confidential Information or any part thereof at any location
or by any person or entity other than those authorized by this
Agreement; and
(c) Not to use the Confidential Information for any purpose other
than as explicitly set forth herein.
10.3 EXCEPTIONS. Nothing in this Section 10 shall restrict the receiving
party with respect to information or data, whether or not identical
or similar to that contained in the Confidential Information, if such
information or data: (a) was rightfully possessed by the receiving
party before its received from the disclosing party; (b) is
independently developed by the receiving part without reference to
the disclosing party's information or data; (c) is subsequently
furnished to the receiving party by a third party not under any
obligation of confidentiality with respect to such information or
data, and without restrictions on use or disclosure; (d) is or
becomes available to the general public otherwise than through any
act or default of the receiving party; or (e) is required to be
disclosed by the receiving party by law or government regulation.
10.4 INJUNCTIVE RELIEF. Because the unauthorized use, transfer or
dissemination of any Confidential Information provided hereunder may
diminish substantially the value of such materials and may
irreparably harm the disclosing party, if a receiving party breaches
the provisions of this Section 10, the disclosing party shall,
without limiting its other rights or remedies, be entitled to
equitable relief, including but not limited to injunctive relief.
11. USE OF CONTRACTORS
Each party may retain third parties ("Contractors") to furnish
services to it in connection with the performance of its obligations
hereunder and permit such Contractors to have access to the
Confidential Information of the other but only to the extent and
insofar as reasonably required in connection with the performance of
such party's obligations under this Agreement; provided that
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all such Contractors shall be required by the applicable party to
execute a written agreement: (a) sufficient to secure compliance by
the Contractors with such party's obligations of confidentiality
concerning Confidential Information set forth in Section 10; and (b)
acknowledging the Contractor's obligation to assign all work product
to such party in connection with performance hereunder.
12. SUPPORT
12.1 SUPPORT. Upon payment of the support fees set forth in Exhibit E,
VeriSign shall provide the documentation and support to SDTI as set
forth on Exhibit F for the Term of this Agreement. Additional or
different support and documentation and the corresponding support fee
may require for subsequent projects and shall be as set forth in the
applicable Statement of Work. Support services hereunder shall
commence on the Effective Date, shall extend for a period of three
(3) years, and shall continue for successive annual terms, which may
be terminated by either party upon (60) days notice prior to the end
of the then current term. Further, SDTI may terminate the support
services set forth herein at any time upon sixty (60) days written
notice to VeriSign.
12.2 MAINTENANCE. For a period of three (3) years from the Effective Date,
upon payment of the maintenance fees set forth in Exhibit E, VeriSign
shall provide to SDTI all Enhancements and Updates to the Developed
Technology that VeriSign may, in its sole discretion, choose to
develop. VeriSign shall deliver all Updates to SDTI promptly upon
their creation. SDTI shall receive such Enhancements simultaneous
with their release to VeriSign's similarly situated customers, and in
any event shall deliver such available Enhancements at least once per
year. VeriSign agrees to use its reasonable efforts to synchronize
its release of Enhancements and Updates to SDTI with SDTI's release
cycles of its Products. Upon delivery, Updates and Enhancements shall
be deemed part of and incorporated into the Developed Technology.
After the three (3) year maintenance period, the parties agree to
negotiate in good faith for the terms of extended maintenance
services as set forth in this Section. VeriSign agrees that it shall
offer maintenance rates to SDTI that are no less favorable than the
fees offered to any other third party purchasing similar products at
similar volumes under similar commercial terms and conditions.
13. REPRESENTATIONS AND WARRANTIES.
13.1 WARRANTY RE DEVELOPED TECHNOLOGY. VeriSign represents and warrants to
SDTI that (i) each Deliverable hereunder developed by VeriSign will
substantially conform to and perform in accordance with the
applicable Specifications and Documentation when delivered and (ii)
the Developed Technology, when delivered by VeriSign to SDTI, will
substantially conform to and perform in accordance with the
Specifications and Documentation, be free of material defects in
design, both for a period of ninety (90) days following acceptance by
SDTI of the applicable Deliverable (the "Warranty Period"). During
the Warranty Period, as SDTI's exclusive remedy for breach of the
above warranties, VeriSign shall promptly correct all Errors and
shall otherwise provide to SDTI, free of charge, the maintenance and
support services described in Section 12 above.
13.2 AUTHORIZATION AND ORIGINALITY. VeriSign represents and warrants that
it has the right to enter into this Agreement, and that there exist
no prior commitments or other obligations which prevent VeriSign from
making all of the grants and undertakings provided for in this
Agreement. VeriSign warrants that VeriSign has the right to make the
assignments and grant the licenses granted herein. SDTI represents
and warrants that it has the right to enter into this Agreement, and
that there exist no prior commitments or other obligations which
prevent SDTI from making all of the grants and undertakings provided
for in this Agreement. SDTI warrants that SDTI has the right to make
the assignments and grant the licenses granted herein.
10
13.3 DISCLAIMER. EXCEPT AS PROVIDED IN THIS AGREEMENT, VERISIGN MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE DEVELOPED
TECHNOLOGY OR OTHERWISE AND EXPRESSLY DISCLAIMS THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
AND NONINFRINGEMENT. No oral or written information or advice given
by VeriSign's employees or representatives which is not contained in
this Agreement shall create a warranty or in any way increase the
scope of VeriSign's obligations.
13.4 NO WARRANTY AS TO SDTI PRE-EXISTING TECHNOLOGY. SDTI makes no
representation or warranty concerning any SDTI Pre-Existing
Technology licensed to VeriSign hereunder. The SDTI Pre-Existing
Technology is licensed on an "AS IS" basis and solely for the
convenience of VeriSign in performing its obligations hereunder.
14. LIMITATION OF LIABILITY
EXCEPT AS SET FORTH IN SECTION 15, VIOLATION OF THE PARTIES'
RESPECTIVE INTELLECTUAL PROPERTY RIGHTS, BREACH BY PARTIES OF THEIR
RESPECTIVE CONFIDENTIALITY OBLIGATIONS, AND BREACH OF THE SCOPE OF
THE LICENSES GRANTED IN SECTION 4.2, (A) IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES IN CONNECTION WITH THE PERFORMANCE OF OR
ALLEGED FAILURE TO PERFORM THIS AGREEMENT (INCLUDING LOSS OF REVENUE,
PROFITS, USE, DATA, OR OTHER ECONOMIC ADVANTAGE), REGARDLESS OF THE
THEORY OF LIABILITY, EVEN IF SUCH PARTY HAS BEEN PREVIOUSLY ADVISED
OF THE POSSIBILITY OF SUCH DAMAGE OCCURRING, AND (B) IN NO EVENT
SHALL VERISIGN'S LIABILITY TO SDTI EXCEED THE TOTAL AMOUNTS PAID BY
SDTI TO VERISIGN UNDER THIS AGREEMENT.
15. INTELLECTUAL PROPERTY INDEMNIFICATION
15.1 SCOPE OF VERISIGN INDEMNIFICATION.
(a) VeriSign will indemnify, defend and hold SDTI harmless from and
against any and all losses, damages, liabilities and expenses
(including but not limited to reasonable legal fees, settlement
costs, judgments and awards) to the extent resulting from or
incurred in connection with any claim or legal proceeding
brought against SDTI and based on a claim that a Deliverable,
the Developed Technology, or any part thereof, or SDTI's use,
manufacture or distribution thereof, infringes any issued United
States patent or copyright or misappropriates any trade secret
of a third party except to the extent that such claim arises out
of (a) any SDTI Pre-Existing Technology or any modification to
the Deliverable or Developed Technology made by SDTI or not made
by VeriSign; or (b) any combination of the foregoing with
Technology not provided or recommended in writing by VeriSign.
The remedies set forth in this Section 15.1 shall be SDTI's sole
and exclusive remedy, and VeriSign's sole and exclusive
obligations with regard to third party claims of intellectual
property infringement.
(b) VERISIGN'S EFFORTS. Should SDTI's use and/or distribution of the
Developed Technology be enjoined or become the subject of a
claim of infringement, VeriSign shall use all reasonable
commercial efforts to either (a) procure for SDTI the right to
continue to use and distribute the Developed Technology , as the
case may be, or (b) replace or modify the Developed Technology,
as the case may be, to make it non-infringing without materially
changing the form, fit, operation and function of the Developed
Technology. If none of such alternatives is reasonably possible,
then the use and distribution of the particular Developed
Technology may be terminated at the option of VeriSign without
11
further obligation or liability except as otherwise provided
herein. In the event of such termination, VeriSign shall refund
to SDTI any and all monies paid by SDTI with respect to such
Developed Technology less depreciation for use on a straight
line basis amortized over _____ years.
(c) CONDITIONS TO INDEMNIFICATION. The foregoing indemnity is
conditioned on (i) prompt written notice by SDTI of any claim or
proceeding subject to indemnity; (ii) VeriSign's sole control of
the defense and settlement of any claim under this Section and
(iii) all reasonable cooperation and assistance by SDTI party in
the defense and settlement of such claim at VeriSign's expense.
15.2 SCOPE OF SDTI INDEMNIFICATION. Subject to Section 15.1, SDTI shall
defend, indemnify and hold VeriSign harmless from any and all
damages, liabilities, costs and expenses (including but not limited
to attorney's fees) incurred by VeriSign arising out of (i) claims
described in items (a) and (b) of Section15.1(a), or (ii) any acts or
omissions of SDTI in connection with their activities under this
Agreement. As a condition to such defense and indemnification,
VeriSign will provide SDTI with prompt written notice of the claim,
the opportunity to assume the defense of the claim at SDTI's expense,
and information and assistance, at SDTI's expense, in connection
therewith.
16. TERM AND TERMINATION
16.1 TERM OF AGREEMENT. This Agreement shall commence on the Effective
Date and continue in perpetuity unless terminated as set forth below
(the "Term").
16.2 TERMINATION FOR CAUSE. If either party commits a material breach of
the terms and conditions of this Agreement, the other party may
terminate this Agreement upon forty-five (45) days' prior written
notice to the defaulting party describing in reasonable detail such
breach unless, within such forty-five (45)day period after receipt of
such Notice, all breaches specified therein shall have been remedied.
16.3 TERMINATION FOR INSOLVENCY EVENT. To the fullest extent permitted by
law, this Agreement may be terminated at the option of the
terminating party upon written notice to the other party upon the
occurrence of any of the following events with respect to the other
party: (i) a receiver is appointed for such party or its property;
(ii) such party makes a general assignment for the benefit of its
creditors; (iii) such party commences, or has commenced against it,
proceedings under any bankruptcy, insolvency or debtor's relief law,
which proceedings are not dismissed within sixty (60) days; or (iv)
such party is liquidated or dissolved.
16.4 SURVIVAL OF RIGHTS AND OBLIGATIONS UPON TERMINATION. The provisions
of Sections 3, 4.2, 4.3, 10, 12, 13, 14, 15, 16, and 17 shall survive
any expiration or termination of this Agreement.
16.5 RETURN OF MATERIALS UPON TERMINATION. Upon termination or expiration
of this Agreement, all materials containing the SDTI Pre-Existing
Technology or Confidential Information of SDTI shall be returned
promptly to SDTI or destroyed and certified as same by an officer of
VeriSign. Unless otherwise provided in this Agreement, upon
termination of this Agreement, all materials containing the VeriSign
Pre-Existing Technology, Developed Technology, and VeriSign
Proprietary Information of VeriSign shall be returned promptly to
VeriSign or destroyed and certified as same by an authorized
representative of SDTI.
17. MISCELLANEOUS
17.1 FORCE MAJEURE. Neither party shall be liable to the other (except for
failure to pay) for delays or failures in performance resulting from
causes beyond the reasonable control of that party, including but not
limited to acts of God, labor disputes or disturbances, material
shortages or
12
rationing, riots, acts of war, governmental regulations,
communication or utility failures or casualties.
17.2 ASSIGNMENT. SDTI may not assign or otherwise transfer this Agreement,
or any of its rights or obligations under this Agreement to a third
party without the prior written consent of VeriSign. .
17.3 RELATIONSHIP OF PARTIES. The parties are independent contractors
under this Agreement and no other relationship is intended, including
a partnership, franchise, joint venture, agency, employer/employee,
fiduciary, master/servant relationship, or other special
relationship. Neither party shall act in a manner which expresses or
implies a relationship other than that of independent contractor or
binds the other party.
17.4 WAIVER OR DELAY. Waiver of any term, condition or provision of this
Agreement, or a delay in the enforcement of any right hereunder,
shall not be construed as a waiver of any other term, condition, or
provision, nor shall such waiver be deemed a waiver of any subsequent
breach thereof.
17.5 SEVERABILITY. If any term or provision of this Agreement is found to
be invalid under any applicable statute or rule of law then, that
provision notwithstanding, this Agreement shall remain in full force
and effect and such provision shall be deemed omitted.
17.6 BENEFICIARIES. This Agreement is made for the benefit of the parties
hereto and not for the benefit of any third parties.
17.7 GOVERNING LAW AND JURISDICTION. Any action related to this Agreement
will be governed by California law and controlling U.S. federal law.
No choice of law rules of any jurisdiction will apply. Any action
brought hereunder shall be brought exclusively in the United States
District Court for the Northern District of California, San ▇▇▇▇
▇▇▇▇▇▇, or the California Superior Court for the County of Santa
▇▇▇▇▇, as applicable.
17.8 ATTORNEYS' FEES. In addition to any other relief, the prevailing
party in any action arising out of this Agreement shall be entitled
to attorneys' fees and costs.
17.9 NOTICES. Any notices required or permitted to be given pursuant to
this Agreement shall be in writing, and may be personally delivered,
telecopied (with confirmation by recognized overnight courier), or
sent by recognized overnight courier to the addresses set forth on
the first page of this Agreement or to such other address as may be
specified from time to time by notice in writing. Any such notice
shall be deemed to have been given when received.
17.10 HEADINGS. Headings used in this Agreement are for ease of reference
only and shall not be used to interpret any aspect of this Agreement.
17.11 ENTIRE AGREEMENT. This Agreement, together with its Exhibits, is the
parties' entire understanding and agreement with respect to its
subject matter and supersedes (a) all prior or contemporaneous oral
or written communications, proposals, understandings, and
representations with respect to its subject matter; and (b) any
conflicting terms of any quote, order, acknowledgment, or similar
communication between the parties. This Agreement may not be modified
or amended, in whole or in part, except in a writing executed by duly
authorized representatives of each party.
17.12 COMPLIANCE WITH EXPORT LAWS SDTI shall not export, directly or
indirectly, the Developed Technology or other materials or
information provided by VeriSign hereunder, to any country for which
the United States or any other relevant jurisdiction requires any
export license or other governmental approval at the time of export
without first obtaining such license or approval.
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17.13 COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be an original and together which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
SECURITY DYNAMICS VERISIGN, INC.
TECHNOLOGIES, INC. ("SDTI") ("VeriSign")
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. Evan
---------------------------- ---------------------------
Name: ▇▇▇▇▇▇ ▇'▇▇▇▇▇ Name: ▇▇▇▇ ▇. Evan
-------------------------- -------------------------
Title: Chief Financial Officer Title: Chief Financial Officer
------------------------- ------------------------
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EXHIBIT A
DEVELOPMENT EQUIPMENT
[TO BE COMPLETED]
--------------------------------------------------------------------------------
EXHIBIT B
SPECIFICATIONS
[TO BE COMPLETED]
--------------------------------------------------------------------------------
EXHIBIT C
STATEMENT OF WORK
[TO BE COMPLETED]
--------------------------------------------------------------------------------
EXHIBIT D
THIRD PARTY TECHNOLOGY
[TO BE COMPLETED]
--------------------------------------------------------------------------------
EXHIBIT E
LICENSE AND ROYALTY PAYMENTS
1. LICENSE FEE. SDTI shall pay to VeriSign an initial license fee of U.S.
[*] for the Developed Technology as more particularly described in the
Statement of Work dated ______ , 1997. Such license fee shall be payable as
follows:
DELIVERABLE DATE PAYMENT
Execution of Agreement $ 900,000
Per Achievement of Milestones set forth in the Statement of Work $1,800,000
TOTAL $2,700,000
2. SUPPORT FEE: Support for the Developed Technology as set forth in Section
12.1 of the Agreement shall be provided by VeriSign without charge for a period
of six (6) months from the Effective Date. Thereafter, SDTI shall pay VeriSign
a support fee of [*] per month.
3. MAINTENANCE FEE: Maintenance services as set forth in Section 12.2 of the
Agreement shall be provided by VeriSign without charge for a period of twelve
(12) months from the Effective Date. Thereafter, SDTI shall pay VeriSign an
annual support fee of [*] payable upon the anniversary of the Effective
Date.
________________________
[*] Confidential treatment has been requested with respect to certain portions
of this exhibit. Confidential portions have been omitted form the public filing
and have been separately filed with the Securities and Exchange Commission.
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EXHIBIT F
SUPPORT
[TO BE COMPLETED]
16
EXHIBIT G
LOGO AND TRADEMARK USAGE GUIDE
VeriSign encourages its customers and partners to use VeriSign logos and
trademarks on customer and partner product data sheets, packaging, Web pages and
advertising - but it is important to use them properly.
When using VeriSign trademarks and service marks in ads, product packaging,
documentation or collateral materials, be sure to use the correct trademark
designator: (SM) for claimed or pending servicemarks, O for claimed or pending
trademarks, and (R) for registered trademarks. VeriSign trademarks and their
correct designators are depicted below. To ensure proper usage, please allow
VeriSign's Corporate Marketing department to review any materials using or
mentioning VeriSign trademarks prior to general release.
Using these VeriSign logos does not require prior written permission; in fact,
we encourage you to use them on your product packaging, Web pages and marketing
collateral. However, text of written materials which mention VeriSign services
and/or products should be reviewed by VeriSign's Corporate marketing department
at the draft stage.
VeriSign updates its Logo and Trademarks Usage Guide--available at
▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇/▇▇▇▇▇▇▇▇.▇▇▇▇ on a regular basis and will
distribute the information to its customers and partners. This information will
also be located on the VeriSign Web site and updated often.
Logos/Marks (see the website for actual logos):
VeriSign(TM)
Digital ID(SM)
Digital ID Partner(SM)
Digital ID Center(SM)
Authentic Site(TM)
17
