Services Contract - Midcontinent Business Systems Inc. and Kofax Image Products Inc.
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MIDCONTINENT BUSINESS SYSTEMS, INC.
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SERVICES CONTRACT
THIS AGREEMENT made this TWENTY-FIFTH DAY OF SEPTEMBER, 1995, by and between
MIDCONTINENT BUSINESS SYSTEMS, INC., hereinafter referred to as "MBS," and
KOFAX IMAGE PRODUCTS, hereinafter referred to as "Client,"
WITNESSETH:
WHEREAS, Client has purchased ImagePlus software and desires to have MBS
prepare customized changes to such software;
NOW, THEREFORE, in consideration of the mutual covenants and premises contained
herein, the parties hereto agree as follows:
1. Compensation. MBS has previously delivered to Client a "Statement of
Work" for the proposed Project. A copy of such Statement of Work is
attached and details the tasks to be performed by MBS and also
represents a cost for such services. MBS hereby agrees to perform all
work related to the Statement of Work for the sum of [ * ]
[ * ] AS A GUARANTEED PRE-PAYMENT OF ROYALTY FEES AT [*] PER ASCENT
SCAN STATION LICENSE FOR THE FIRST 60 LICENSES, AND [*] PER ASCENT
SCAN STATION LICENSE FOR ALL LICENSES THEREAFTER.
2. Test and Acceptance of Project.
a. At such time as MBS has completed the Project, it shall so inform
Client. Client shall thereafter, within twenty (20) business days,
complete such acceptance testing as Client desires to determine
the functionality, performance and conformance of the Project to
the specification of the High Level Design Document, hereinafter
referred to as "Requirements." Client bears the full
responsibility of assuring that the Project has been completed in
accordance with the Requirements and to the levels of
functionality, performance, and other specifications as are
established in the Requirements. FAILURE OF THE CLIENT TO PERFORM
SUCH TESTS SHALL PRECLUDE THE CLIENT FROM RAISING ISSUES OF
FUNCTIONALITY, PERFORMANCE AND NON CONFORMANCE TO THE
SPECIFICATIONS ESTABLISHED IN THE REQUIREMENTS IN THE EVENT OF ANY
DISPUTE BETWEEN CLIENT AND MBS.
b. Upon completion of Client's pre-acceptance testing, Client shall
either give MBS a written letter of acceptance or a written letter
specifying deficiencies in the Project. Such deficiencies shall
refer with specificity to particular sections of the Requirements.
In the event of any deficiencies, MBS shall proceed as rapidly as
feasible to correct such deficiencies. After such deficiencies
have been corrected by MBS, Client shall again run such
pre-acceptance tests as it desires and thereupon deliver to MBS
either a letter of acceptance or list of additional deficiencies.
This procedure shall be repeated until Client has accepted the
Project.
3. Source Code and Customized Code. MBS will provide Client with a copy
of the source code in order to facilitate Client's use of the Project.
However, MBS shall retain all ownership rights of both the source code
and all customized codes prepared by MBS in connection with the
Project. This customized code shall be licensed to Client as set forth
below. MBS does not permit
* Confidential portions omitted and
filed separately with the
Securities and Exchange Commission.
CONFIDENTIAL TREATMENT
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modification of the customized code except that if the Client
determines to modify the code, the following provisions apply.
a. All warranties made by MBS pursuant to this Agreement shall
immediately terminate.
b. Client agrees that it will provide MBS with a copy of the
modified source code.
4. Changes in the Requirements. To the extent that the Client, during
the course of the Project, determines that it wishes to change the
Requirements for the project, Client shall provide MBS with a proposed
change order specifying the changes in the Requirements. Upon receipt
of the proposed change order, MBS shall then provide Client with a
letter amendment to this Agreement indicating the adjustment of
acceptance of the change order on the compensation to be paid to MBS
pursuant to this Agreement. If MBS accepts the change order and the
Client accepts the adjustment in the compensation to MBS, the parties
shall enter into a written amendment of this Agreement accepting the
change order and adjusting the compensation.
5. Software to be Licensed. In addition to completion of the Project,
the parties desire to enter into a License Agreement whereby Client
will receive a limited license to utilize the custom programming
prepared by MBS for Client pursuant to this Agreement. As used
hereafter, the term Project Software Package includes all custom
programming including custom codes and source codes utilized by MBS in
modifying Client's environment to meet the specifications set forth in
the Requirements.
6. Grant of License and Restrictions of License.
a. MBS hereby grants to Client, subject to the limitations of
this Agreement, a non-exclusive license to use and market
the Project Software Package.
b. This license is limited by the following conditions:
(1) Unless terminated by MBS due to a breach of this
Agreement by Client, Client's license under this
Agreement shall be perpetual.
7. Protection of MBS's Proprietary Rights. To protect MBS's proprietary
rights to the Project Software Package, Client agrees to adhere to the
conditions listed in Section 6 above. Further, Client agrees to
instruct all of its employees who may use or have access to the
Project Software package of the conditions listed in Section 6. Client
also agrees that it will take all such steps as are necessary to
prevent any third party from having access to or using or duplicating
the Project Software Package.
8. Maintenance. MBS shall provide defect only support, directly to the
client, for the Project Software Package as part of the royalty
payment to MBS. This support shall remain in effect as long as the
client's customers maintain a valid support contract with the client.
Any support which is necessitated by any alterations, tampering or
repairs performed on the Project Software Package by Client or any
third party shall be at additional charge to a Client.
9. Payments and Special Charges. Client shall promptly pay all invoices
sent to Client by MBS in accordance with this Agreement. All charges
shall be due and payable by Client within thirty (30) days after
billing by MBS. After that time, a finance charge of 1.5% per month
will be charged to the outstanding balance.
10. Additional Duties of Client. Client shall promptly report to MBS any
suspected malfunctions or defects in the Project Software Package.
11. Enhancements; Modifications. If Client desires any modifications in
the Project Software Package, MBS shall make such modifications, if
feasible, at a price to be determined by MBS.
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12. Default. Either party shall be in default under this Agreement if it
fails to timely perform or observe any of the terms or conditions of
this Agreement.
13. Remedies. In the event of a default under this Agreement by a party,
the other party shall have the right to terminate this Agreement upon
written notice thereof to the defaulting party. In the event of a
default by MBS, Client's remedies shall be limited to the right to
recover from MBS the amount of any sums actually paid to MBS under
this Agreement. If either party terminates this Agreement due to
default by the other before delivery, acceptance and payment of the
license fee, Client shall immediately return the Project Software
package and any other property of MBS which it may have to MBS. In the
event of a default by Client, MBS shall have any and all rights
available under law and at equity, including the right to sue for all
damages incurred and to sue for specific performance. Client agrees
that upon the occurrence of any actual or threatened breach by Client
of the restrictions upon the use, sale, transfer, or disclosure of the
Software Package contained in Section 8 herein, monetary damages alone
shall not be sufficient remedy or protection for MBS, and MBS shall be
entitled to such injunctive or other equitable relief as may be deemed
proper or necessary by a court of competent jurisdiction. Except as
provided herein, all available rights and remedies shall be cumulative
and the exercise of any right or remedy shall not be deemed exclusive.
MBS SHALL IN NO EVENT BE LIABLE FOR ANY INCIDENTAL, SPECIAL, INDIRECT
OR CONSEQUENTIAL DAMAGES, AND CLIENT'S RIGHT TO DAMAGES SUFFERED BY
REASON OF A DEFAULT HEREUNDER SHALL BE LIMITED TO THE REFUND OF NO
MORE THAN ANY CHARGES PAID HEREUNDER.
14. Limitations of MBS's Warranties. MBS warrants only that the Project
Software package shall function as specified by the Requirements and
that MBS has the right to grant the license contained in this
Agreement. MBS MAKES NO OTHER WARRANTIES OR REPRESENTATIONS, WHETHER
EXPRESS OR IMPLIED, REGARDING THE PROJECT SOFTWARE PACKAGE OR ITS
FUNCTIONS OR CAPABILITIES, INCLUDING NO WARRANTY REGARDING THE FITNESS
OF THE PROJECT SOFTWARE PACKAGE FOR CLIENT'S INTENDED USE(S) OR
CLIENT'S EQUIPMENT. Notwithstanding anything herein to the contrary,
however, MBS shall have no duty to correct, repair, redesign or
otherwise perform services for the Project Software package (i) once
Client has accepted the Project Software package, or (ii) if Client
has in any way modified or tampered with the Project Software Package.
In addition, MBS shall have no liability for claims concerning
installation, performance specifications, or capability of the Project
Software Package unless such claims are made in writing within one
year after delivery of the Project Software Package by MBS.
15. General Provisions. Any waiver by either party of any term or
condition of this Agreement or a default hereunder shall not be
constructed as a waiver of any subsequent performance due under that
term or condition or any other term or condition of any subsequent
default. The provisions of this Agreement are severable and in the
event that any provision hereof is held by any court to be voidable or
unenforceable, such provisions shall be deemed stricken from this
Agreement and all other terms and conditions shall remain in full
force and effect, and the parties agree to remain bound by and perform
in accordance with the terms hereof, as so amended. This Agreement
constitutes the entire agreement between the parties and supersedes
any previous written, between the parties. This Agreement may not be
amended or altered except by a writing signed by both parties.
16. Governing Law, Jurisdiction, and Venue. This Agreement shall be
deemed to be an agreement entered into in the State of South Dakota.
The laws of the State of south Dakota shall govern this agreement.
Upon request of MBS, any dispute arising under or in connection with
this agreement may be submitted to binding arbitration in Sioux Falls,
SD, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association.
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17. Exclusivity. MBS agrees that under the terms of this agreement, it
will develop proprietary and confidential information for and on
behalf of Kofax. In consideration of the foregoing, MBS agrees that
for a period of 2 years following the date of this agreement, it will
not contract to develop a Windows, Unix or OS/2-based document capture
system releasing to, or integrated with, IBM's ImagePlus/400 system on
behalf of any of the following direct competitors of Kofax:
Conerstone Imaging, Intrafed, Micro Systems, File Net (includes
Watermark), Dakota Imaging, Wang Laboratories, Avitar, and Xionics.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date set
forth above.
Midcontinent Business Systems, Inc. KOFAX Image Products
1803 Research Blvd. 3 Jenner Street
Suite 501 Irvine, CA 92718-3807
Rockville, MD 20850
Name: Mark Addink Name: Kevin Drum
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Signature: /s/ MARK ADDINK Signature: /s/ KEVIN DRUM
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Title: Branch Manager Title: VP Marketing
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Date: 10/30/92 Date: 10/16/95
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