Assignment, Software Development and License Agreement - NYSERNet.org Inc. and AppliedTheory Communications Inc.
ASSIGNMENT, SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT
NYSERNET.ORG, INC.
APPLIEDTHEORY COMMUNICATIONS, INC.
OCTOBER 1, 1996
TABLE OF CONTENTS
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---- I. DEFINITIONS
A. Assignment
B. Consideration
C. Representations, Warranties and Indemnification
D. Delivery of AJB Software
II. SOFTWARE DEVELOPMENT
A. Development
B. Progress Reports and Acceptance
C. Deficiency Letter
D. User Documentation
E. Payment
F. Transfer of the New AJB Software
G. Term
H. Termination
I. Noninfringement Warranty
J. Software Warranty
K. Year 2000 Standards
L. No Undocumented Features
III. LICENSE
A. Grant
B. Ownership of Derivatives Works
C. Indemnification
IV. MISCELLANEOUS PROVISIONS
A. Indemnification
B. Notices
C. Disputes, Choice of Law
D. Independent Contractor Status
E. Security, No Conflicts
F. Insurance, Indemnity
G. Miscellaneous
LIST OF SCHEDULES
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Schedule A List of AJB Software by Module or File Schedule B America's Job
Bank Contract Amendment with NYSDOL Schedule C Software Development Specifications
Schedule D Software Development Fees
This Agreement is made as of October 1, 1996 by and between NYSERNet.org, Inc., a
not-for-profit corporation organized and existing under the laws of the State of
New York, with its principal offices at 125 Elwood Davis Road, Syracuse, New York
13212, hereinafter referred to as "NYSERNet," and AppliedTheory Communications, Inc.,
with its principal office at 40 Cuttermill Road, Great Neck, New York 11201, hereinafter
referred to as "AppliedTheory."
W I T N E S S E T H:
WHEREAS, NYSERNet has developed and authored the original and later versions
of the proprietary software known as RDBMS.a; and
WHEREAS, NYSERNet has developed and authored the original and later versions
of the proprietary software known as AJB WWW SERVER SOFTWARE and AJB WWW SERVER/AGENT
SOFTWARE including the additional modules listed on Schedule A for the non-profit
purpose of working with the New York State Department of Labor ("NYSDOL") to establish
a world wide web version of the America's Job Bank system; and
WHEREAS, NYSERNet has entered into a further agreement with NYSDOL to modify
and update the AJB Software (as defined below), pursuant to America's Job Bank Contract
Amendment #3 dated October 25, 1996 that is attached as Schedule B ("NYSDOL AMENDMENT"),
under which NYSDOL agreed to pay NYSERNet $446,600 for software development services;
and
WHEREAS, NYSERNet must seek experienced personnel to aid in fulfilling its
obligations under the NYSDOL AMENDMENT; and
WHEREAS, NYSERNet is further interested in generating for its non-profit
purposes a stream of income from the AJB Software and later versions, but does not
want to spend its own funds to commercialize the AJB Software; and
WHEREAS, AppliedTheory wishes to acquire the AJB Software for the purpose
of modifying the AJB Software for commercialization in other markets; and
WHEREAS, AppliedTheory has developed expertise relating to the AJB Software
and has experienced personnel capable of aiding NYSERNet to fulfill NYSERNet's obligations
under the NYSDOL AMENDMENT; and
WHEREAS, AppliedTheory will have to expend a considerable amount of its
own financial and time resources to commercialize the AJB Software to suit the needs
of other markets;
-Page 1- NOW THEREFORE in consideration
of the promises and the mutual covenants herein contained, and for good and valuable
consideration, receipt of which is hereby acknowledged, the parties agree as follows:
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A. AJB SOFTWARE means the software application originally written by NYSERNet that
consists, as of October 1, 1996, of the files and modules identified on Schedule
A.
B. EFFECTIVE DATE - The effective date of this Assignment, Software Development
and License Agreement (this "Agreement") shall be October 1, 1996.
C. MATERIAL DEVIATION means a failure of the New AJB Software to perform a function
on Schedule B or C, such as to cause one or more of its functional components not
to perform or cause an important system not to work, or to fail to adequately perform
repetitively on a variety of data, or to reflect inaccurate data.
D. NEW AJB SOFTWARE means the AJB Software plus any adaptations, derivatives, or
original works authored by AppliedTheory based upon the AJB Software and any adaptations,
derivatives, modifications and enhancements made by NYSERNet pursuant to the license
contained in Article III.
I. ASSIGNMENT
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A. Assignment. Subject to the further provisions of this Agreement, NYSERNet hereby
sells, assigns and transfers to AppliedTheory and its successors and assigns the
entire right, title and interest of NYSERNet in and to all versions of the AJB Software,
including but not limited to all rights in any and all original authorship, copyrights,
trade secrets, inventions, ideas, concepts, algorithms, routines, screens, patentable
ideas and information which relate to the AJB Software. This assignment includes
the right to sue and collect for any and all past infringements of the AJB Software.
NYSERNet hereby further agrees that: (i) it will not execute any writing or do any
act whatsoever conflicting with these presents; (ii) NYSERNet and its assigns, successors
and legal representatives will at any time upon request without additional consideration,
but at the expense of AppliedTheory, execute any documents or applications that AppliedTheory
may determine as necessary or desirable in the enjoyment of this grant; and (iii)
NYSERNet will cooperate, at the expense of AppliedTheory, in any proceedings or transactions
involving the assigned AJB Software.
-Page 2- B. Consideration.
1. In consideration of the above assignment, AppliedTheory agrees to pay NYSERNet
two percent (2%) of all revenues derived from sales of licenses or sublicenses of
the AJB Software, in whole or in part, as well as such licenses of the New AJB Software.
AppliedTheory shall pay NYSERNet the required percentage thirty (30) days after AppliedTheory
receives payment from a commercial corner. Payments shall cease when two (2) years
have elapsed after AppliedTheory first licenses the AJB Software to a commercial
customer. The revenues derived from sales, licenses or sublicenses of the AJB Software
and the New AJB Software shall be the gross revenues to AppliedTheory from the sale
or license of any product or service which includes the AJB Software or the New AJB
Software, in whole or in part, determined in accordance with generally accepted accounting
principles consistently applied; provided that the revenues from bundled transactions,
including the sales or licenses of such products or services and other products or
services, shall be prorated based upon the list price (or, if there is no list price,
the fair value) of the products and services so bundled.
2. AppliedTheory is under no obligation to make any minimum payments. The parties
agree that if AppliedTheory's efforts to commercialize the AJB Software fail to yield
any license fees, then NYSERNet is not entitled to any additional payments under
this Agreement. Further, NYSERNet is not entitled to any proceeds from the licensing
of any AppliedTheory product that does not incorporate or use any AJB Software code.
3. The parties agree that nothing in this payment arrangement indicates a failure
fully to assign all rights in the AJB Software or that NYSERNet has retained any
interest in the assigned AJB Software, except those license rights set forth in Article
III.
C. Representations, Warranties and Indemnification. NYSERNet represents and warrants
that, to the best of its knowledge, it has all right, title and interest in the AJB
Software, subject to the rights granted to the NYSDOL, and that it has authority
to assign these rights. NYSERNet further represents and warrants that, to the best
of its knowledge, the AJB Software does not infringe upon any third party's intellectual
property rights including copyrights, trademarks, trade secrets or patents. NYSERNet
shall have no liability under this Agreement, including but not limited to this Section
I.C., in excess of the aggregate amounts paid to it by AppliedTheory under this Agreement.
-Page 3- D. Delivery of AJB Software. Upon
execution of this Agreement, NYSERNet shall deliver to AppliedTheory copies of the
source code and executable object code of the AJB Software on an appropriate medium,
and a hard copy of each. NYSERNet shall also deliver copies of any documentation,
notes, charts or other materials in its possession or under its control relating
to or useful in connection with the programming, functionality or instructions for
use of the AJB Software.
II. SOFTWARE DEVELOPMENT
A. Development. AppliedTheory agrees to develop and provide software to NYSERNet
that meets the requirements and specifications of the NYSDOL AMENDMENT, and which
will meet the further specifications for phased work set forth in the Software Development
Specifications that are attached as Schedule C. AppliedTheory will be solely responsible
for, and will indemnify NYSERNet and hold NYSERNet harmless with respect to, the
performance of and any claims made by the NYSDOL or any third party under or with
respect to such agreement and specifications.
B. Progress Reports and Acceptance. Immediately upon the completion of each phase
of development enumerated and described in Schedule C, AppliedTheory shall deliver
and install the software developed in that phase, and shall also provide a progress
report. In the progress report AppliedTheory shall inform NYSERNet of the readiness
for testing of the particular phase of software. The progress report shall also contain
a breakdown of costs expended to complete the task in sufficient detail to satisfy
the needs of the NYSDOL. The date of the progress report shall be the installation
date for that particular phase of software. In addition, AppliedTheory shall provide
all other reports which are necessary to comply with NYSDOL requirements and any
other such interim or final reports which may be reasonably requested by NYSERNet.
1. Promptly after the installation date of each phase of development, NYSERNet
shall test the particular phase of software to determine if it meets the specifications
and requirements set forth in Schedule C. If and when the acceptance tests establish
that the developed software delivered upon completion of any phase of development
is performing in accordance with the provisions of Schedules B and C, and the software
is duly accepted by NYSDOL, NYSERNet shall promptly notify AppliedTheory that it
accepts the software developed in that phase, and the date of such notification shall
be the date on which NYSERNet shall be obligated to make the applicable payment specified
below.
-Page 4- 2. Unless NYSERNet provides a deficiency
letter detailing Material Deviations of the developed software from Schedule B or
C within thirty (30) business days after delivery and installation of that particular
phase of the software, the phase of New AJB Software so delivered shall be deemed
accepted.
C. Deficiency Letter. Should NYSERNet provide a deficiency, letter to AppliedTheory
within the thirty (30) day period, AppliedTheory shall act promptly to exert its
best efforts to correct the perceived deficiency at no extra cost to NYSERNet. At
such time as AppliedTheory believes it has corrected the reported deficiency, it
shall so state in writing to NYSERNet and NYSERNet shall again have a thirty (30)
business day period to provide a deficiency letter or else such phase of the New
AJB Software shall be deemed accepted. This process shall continue until NYSERNet
does not provide a deficiency letter within such period, at which point that particular
phase of the New AJB Software shall be deemed to have been accepted. NYSERNet shall
not unreasonably withhold or delay acceptance.
D. User Documentation. AppliedTheory shall, no later than sixty (60) calendar
days after final delivery and NYSERNet's acceptance of the New AJB Software, provide
NYSERNet five (5) copies of "Documentation" describing in reasonable detail understandable
by an operator of general proficiency the use and operation of the New AJB Software.
The Documentation shall be supplied in magnetic and printed form and may be reproduced
by NYSERNet for purposes authorized herein.
E. Payment. NYSERNet agrees to pay AppliedTheory for delivery of the NEW AJB Software
in accordance with this section. Upon the acceptance of each phase of the New AJB
Software and receipt of the progress report provided for in Section II.B, NYSERNet
shall pay to AppliedTheory the price of such phase as specified in Schedule D, Software
Development Fees. In the event development of the software is terminated by NYSERNet
on account of AppliedTheory's default under Section II.H, NYSERNet shall be under
no obligation to make any further payments for any undelivered phases of software.
NYSERNet's rights under this Section are in addition to such other remedies as it
may have with respect to AppliedTheory's default.
F. Transfer of the New AJB Software. AppliedTheory shall provide NYSERNet with
each phase of the New AJB Software in both source code and object code formats on
an appropriate medium, as well as a had copy of the source code.
-Pate 5- 1. NYSERNet hereby acknowledges that
the New AJB Software (including any Documentation, source code, translations, compilations,
partial copies and derivative works) contains and will contain confidential and proprietary
information belonging exclusively to AppliedTheory or such third party as may be
identified on the New AJB Software or applicable Documentation ("AppliedTheory Confidential
& Proprietary Information"). AppliedTheory Confidential & Proprietary Information
does not include: (i) information in the public domain through no wrongful act of
NYSERNet of (ii) information received by NYSERNet from a third party who was free
to disclose it. NYSERNet agrees to protect the AppliedTheory Confidential Information
from disclosure to third parties by taking all reasonable precautions not less than
NYSERNet employs to protect its own Confidential Information. NYSERNet acknowledges
that violation of this provision would cause irreparable harm not adequately compensable
by monetary damages. In addition to other relief, it is agreed that injunctive relief
shall be available without necessity of posting bond to prevent any actual or threatened
violation of such provision.
2. AppliedTheory owns and shall own all right, title, and interest to the New AJB
Software, subject to the provisions of this Agreement and the agreements between
NYSERNet and the NYSDOL, and NYSERNet expressly acknowledges and agrees that none
of the New AJB Software shall be deemed to be "work for hire" under the Federal Copyright
Laws (17 U.S.C. #101).
3. NYSERNet agrees to take all necessary measures, including use of a proper copyright
notice whenever appropriate, to protect and preserve AppliedTheory's copyright in
the AJB Software.
G. Term. The software development agreement described in this Section II and the
license described in Section III shall commence on the Effective Date and shall continue
in full force and effect in perpetuity, unless terminated earlier in accordance with
Section II.H.
H. Termination. Either party may, in addition to other relief, terminate this Agreement
if the other party breaches any material provision hereof and fails within ten (10)
days after receipt of notice of default to correct such default or to commence corrective
action reasonably acceptable to the aggrieved party and proceed with due diligence
to completion. Either party shall be in default hereof if it becomes insolvent, makes
an assignment for the benefit of its creditors, and/or a receiver is appointed or
a petition in bankruptcy is filed with respect to the party and is not dismissed
within thirty (30) days. Termination shall have no effect on the parties' rights
or obligations to safeguard and respect Confidential & Proprietary Information under
Section II.F. In the event NYSERNet shall terminate this Agreement, title to the
AJB Software and the New AJB Software shall revert to NYSERNet, and AppliedTheory
shall (a) immediately upon such termination cease to use, sublicense or otherwise
deal in or with the AJB Software and the New AJB Software and (b) deliver to NYSERNet
all copies of AJB Software and the New AJB Software and all related
-Page 6- documentation in its possession or under
its control. Notwithstanding the provisions of the preceding sentence, any licenses
granted by AppliedTheory prior to the date upon which notice of termination is given
by NYSERNet shall remain in full force and effect.
I. Noninfringement Warranty. AppliedTheory represents and warrants that those aspects
of the New AJB Software which AppliedTheory authors (hereinafter "AppliedTheory Authorship"),
when properly used as contemplated herein, will not infringe or misappropriate any
United States copyright, trademark, patent, or the trade secrets of any third persons.
Upon being notified of such a claim, AppliedTheory shall (i) defend through litigation
or obtain through negotiation the right of NYSERNet to continue using the AppliedTheory
Authorship; (ii) rework the AppliedTheory Authorship so as to make it noninfringing
while preserving the original functionality; or (iii) replace the AppliedTheory Authorship
with functionally equivalent software. If none of the foregoing alternatives provides
an adequate remedy, NYSERNet may terminate all or any part of this agreement and
recover amounts paid for the infringing AppliedTheory Authorship. The above remedies
do not apply to any of the code assigned by NYSERNet pursuant to Section I.
J. Software Warranty. AppliedTheory warrants that, for twelve (12) months following
the acceptance, as described in Section II.B, of the New AJB Software: (i) the New
AJB Software shall be free from material programming errors and from defects in workmanship
and materials; (ii) the New AJB Software shall conform to the performance capabilities,
characteristics, specifications, functions and other descriptions set forth in Schedules
B and C; and (iii) the development services to be performed by AppliedTheory shall
be generally performed in a timely and professional manner by qualified persons familiar
with New AJB Software. In the event that material defects are discovered during the
warranty period, AppliedTheory shall promptly remedy such defects at no additional
expense to NYSERNet.
K. Year 2000 Standards. AppliedTheory represents and warrants it will ensure the
New AJB Software records, stores, recognizes, interprets, processes and presents
both 20th and 21st century dates using four digit years substantially according to
formats and assumptions specified in the Documentation. This warranty is subject
to the conditions described in the preceding subsection, and does not apply insofar
as the New AJB Software derives date functions from other programs (e.g., operating
system run-time libraries, databases or firmware (nor does it require AppliedTheory
to work around or accommodate other programs that are not compliant with year 2000
standards.
-Page 7- L) No Undocumented Features. AppliedTheory
represents and warrants that (i) the New AJB Software will not contain any timer,
counter, lock or similar device (other than security features specifically approved
by NYSERNet in the specifications) that inhibits or in any way limits its ability
to operate, and (ii) it will scan the New AJB Software with commercially available
anti-virus software and shall use due diligence to remove viruses capable of being
detected with such software. All corrections shall be as fully warranted as the original
work through expiration of the original warranty period.
III. LICENSE
A. GRANT. AppliedTheory hereby grants NYSERNet a non-exclusive, royalty-free, perpetual
license to: (1) install, store, load, execute and display (collectively, "Use") as
many copies of the New AJB Software, in whole or in part, as NYSERNet deems necessary
in support of its operations as a not-for-profit corporation; (2) provide to any
U.S. federal, state or local government agency, including but not limited to, NYSDOL,
a sublicense to the New AJB Software, in whole or in part, and user documentation
in machine-readable or printed form as is necessary to support the government agency's
or NYSDOL's use of the New AJB Software pursuant to the terms of Schedule B; and
(3) adapt, modify or create derivative works, or sublicense others to do the same
on its behalf, with respect to the New AJB Software, and sublicense the New AJB Software,
related documentation and such adaptations, modifications and derivative works, in
whole or in part, in order to build upon and fulfill government contracts and in
order to engage in such other not-for-profit business as NYSERNet, in its sole discretion,
may deem appropriate.
B. Ownership of Derivatives Works. NYSERNet hereby acknowledges that it does not
have and shall not have an ownership interest or title in any adaptations, modifications
or derivative works. To that end, NYSERNet shall provide AppliedTheory with all source
and object code relating to NYSERNet derivative authorship within ten (10) days of
providing an executable version to the end user.
C. Indemnification. AppliedTheory hereby agrees to indemnify and hold harmless
NYSERNet from all claims that the AppliedTheory Authorship when used within the scope
of this license infringes upon a patent, trademark, copyright, trade secret or other
proprietary right of any third party. AppliedTheory shall defend at its own expense
against any such infringement or misappropriation claim. AppliedTheory shall pay
all costs, damages, and any attorneys' fees awarded to any such third party in an
infringement action against NYSERNet; provided NYSERNet promptly notifies AppliedTheory
in writing of the lawsuit and gives AppliedTheory sole conduct of the defense and
all related settlement negotiations.
-Page 8- IV. MISCELLANEOUS PROVISIONS
A. Indemnification.
a) AppliedTheory shall indemnify, defend and hold NYSERNet and its officers, directors,
agents, employees and sublicensees harmless from and against any and all liabilities,
damages, losses, expenses, claims, demands, suits, fines or judgments, including
reasonable attorney's fees and costs and expenses incidental thereto, which may be
suffered by, accrued against, charged to or recoverable from any of them by reason
the breach of any of its obligations or the falsity of any of its [their] representations
and warranties contained herein.
b) AppliedTheory shall indemnify, defend and hold NYSERNet and its officers, directors,
agents and employees harmless from and against any and all liabilities, damages,
losses, expenses, claims, demands, suits, fines or judgments, including reasonable
attorneys' fees, costs and expenses incidental thereto, which may be suffered by,
accrued against, charged to or recoverable from any of them arising out of a claim
that any product sold, licensed or sublicensed or any service provided by AppliedTheory
infringes or misappropriates any patent, copyright, trade secret or other proprietary
right of a third party. The foregoing obligation of AppliedTheory does not apply
to the extent that the alleged infringement would have occurred solely through the
use of unmodified version of the AJB Software as licensed to AppliedTheory, without
its combination with other hardware or software.
B. Notices. Notices set to either party shall be effective: (i) when delivered
in person or transmitted by telecopier ("fax") machine; (ii) one (1) day after being
sent by overnight courier; or (iii) two (2) days after being sent by first class
mail postage prepaid. A facsimile of this Agreement and notices generated in good
form by a fax machine (as well as a photocopy thereof) shall be treated as "original"
documents admissible into evidence unless a document's authenticity is genuinely
place in question.
C. Disputes, Choice of Law. Except for certain emergency judicial relief authorized
under Section III.F which may be brought at any time, the parties agree that all
disputes between them shall first be subject to the procedures in Section III.H.
Any remaining disputes shall be submitted to a panel of three (3) arbitrators, with
each party choosing one (1) panel member and the third member chosen by the first
two (2) panel members. The proceedings shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The award of
the arbitrators shall be binding and shall include a written explanation of their
decision and be limited to remedies otherwise available in court. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAW OF THE
UNITED STATES AND THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS.
-Page 9- D. INDEPENDENT CONTRACTOR STATUS.
Each party and its agents are independent contractors in relation to the other party
with respect to all matters arising under this Agreement. Nothing herein shall be
deemed to establish a partnership, joint venture, association or employment relationship
between the parties. Each party shall remain responsible, and shall indemnify and
hold harmless the other party, for the withholding and payment of all federal, state
and local personal income, wage, earnings, occupation, social security, workers'
compensation, unemployment, sickness and disability insurance taxes, payroll levies
or employment benefit requirements (under ERISA, state law or otherwise) now existing
or hereafter enacted and attributable to the responsible party.
E. SECURITY, NO CONFLICTS. Each party agrees to inform the other party of any information
made available to the other party that is classified or restricted data, agrees to
comply with the security requirements imposed by any state or local government, or
by the U.S. Government, and shall return all such material upon request. Each party
represents and warrants that is participation in this Agreement does not conflict
with any contractual or other obligation of the party or create any conflict of interest
prohibited by the U.S. Government or any other government and shall promptly notify
the other party if any such conflict arises during the term of this Agreement.
F. INSURANCE, INDEMNITY. Each party shall maintain adequate insurance protection
covering its respective activities hereunder, including coverage for statutory workers'
compensation, comprehensive general liability for bodily injury and tangible property
damage, as well as adequate coverage for vehicles. Each party shall indemnify and
hold the other harmless from liability for bodily injury, death and tangible property
damage resulting from the negligent or willfully injurious acts or omissions of its
officers, agents, employees or representatives acting within the scope of their work.
G. MISCELLANEOUS. This document and the accompanying attachments specifically referenced
herein constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other communications, whether written or oral. This
Agreement may be modified or amended only by a writing signed by the party against
whom enforcement is sought. Except as specifically permitted herein, neither this
Agreement nor any rights or obligations hereunder may be transferred or assigned
by NYSERNet without AppliedTheory's prior written consent and any attempt to the
contrary shall be void. AppliedTheory reserves all rights not specifically granted
herein. Neither party shall be liable for delays caused by events beyond its reasonable
control. Any provision hereof found by a tribunal of competent jurisdiction to be
illegal or unenforceable shall be automatically conformed to the minimum requirements
of law and all other provisions shall remain in full force and effect. Waiver of
any provision hereof in one instance shall not preclude enforcement thereof on future
occasions. Headings are for reference purposes only and have no substantive effect.
-Page 10- IN WITNESS WHEREOF, for adequate
consideration and intending to be legally bound, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives.
NYSERNet.ORG, INC.
By: /s/ James D. Luckett
--------------------------------
JAMES D. LUCKETT
APPLIEDTHEORY COMMUNICATIONS, INC.
By: /s/ Richard Mandelbaum
--------------------------------
RICHARD MANDELBAUM
-Page 11-