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EXHIBIT 10.2
LICENSE AGREEMENT
This LICENSE AGREEMENT ("Agreement") is made and entered into to be
effective as of March 22, 1999 (the "Effective Date") between Evolve Software,
Inc., a Delaware corporation with its principal place of business at 615 Battery
Street, Suite 400, San Francisco, California 94111 ("Evolve"), and Paradigm
Software Technologies, a Delaware corporation with its principal place of
business at 641 Avenue of the Americas, New York, NY 10011 ("Paradigm")
(hereinafter referred to collectively as the "Parties" and individually as a
"Party").
WHEREAS, Evolve markets and distributes a software product, known as
"ServiceSphere," that provides enterprise service automation functionality.
WHEREAS, Paradigm markets and distributes software products, known as
ParaTrac, ParaLinc, and WebLinc (together, "Delivery Management").
WHEREAS, Evolve and Paradigm believe that it would be useful to users
of Evolve Products to have access to the functions offered by Paradigm's
Delivery Management software products.
ACCORDINGLY, for good and valuable consideration, the receipt of which
is hereby acknowledged, the Parties hereby agree as follows:
1. DEFINITIONS
When used herein, the following terms shall have the following
meanings:
1.1. "Acceptance Date" shall mean the date on which "Acceptance" of the
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Licensed Software or applicable Deliverable has occurred pursuant to
Section 3.2.
1.2. "Evolve Product" shall mean any Evolve software product, including,
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without limitation, the Resource Management and Opportunity Management
modules of ServiceSphere.
1.3. "Integrated Offering" shall mean any Evolve Product into which the
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Licensed Software has been incorporated.
1.4. "Licensed Software" shall mean the object and source code versions of
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Paradigm's Delivery Management software product, including Ancillary
Program(s), Enhancements, Documentation, Source Code and Source Code
Documentation, which shall have the following meanings:
1.4.1 "Ancillary Program(s)" shall mean the third-party software
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delivered with or embedded in the Licensed Software and are
necessary for the Licensed Software to operate in all
material respects in accordance with the Documentation.
1.4.2 "Documentation" shall mean Paradigm's published guides,
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manuals and on-line help for use of the Licensed Software.
1.4.3 "Enhancements" shall mean both source and object code
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versions of the releases, enhancements, versions, upgrades
(including releases or versions that operate on a different
or new platform or version of the operating system or any
other hardware), updates, fixes, modifications, improvements
and additions to the Licensed Software to
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correct deficiencies in, and/or to improve or extend the
capabilities of the Licensed Software, or any part thereof,
and their operation.
1.4.4 "Source Code" means computer software in the form of source
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statements for the Licensed Software including, without
limitation, all software in the form of electronic and
printed human-readable, mnemonic or English-like program
listings, printed and on-line descriptions of the design of
the Licensed Software including, without limitation, system
flow charts, program flow charts, definitions, file layouts,
program narratives, global documentation (including global
variables), program listings and Source Code Documentation.
1.4.5 "Source Code Documentation" means: (a) available sub-
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programs, routines, program files, data files, file and data
relationships, data definition specifications, data models,
program and system logic, interfaces, algorithms, program
architecture, design concepts, system designs, program
structure, sequence and organization, screen displays and
report layouts related to interacting with or a part of the
Licensed Software, whether in human-readable or machine-
readable form; and (b) available reference manuals, user and
operating guides and manuals, design specifications,
functional specifications, flow charts, internal use
listings or manuals relating to error corrections, fixes and
workarounds, file and program cross-reference information
(whether in manual, guide or other format), whether in
human-readable or machine-readable form.
1.3 "Support and Maintenance" shall mean the support and maintenance
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services provided under the Support and Maintenance Plan attached as
Exhibit B.
2. LICENSE GRANT
2.1. Grant of License. Paradigm hereby grants and agrees to grant to Evolve
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a non-exclusive, perpetual, worldwide, right and license (and, subject
to the limitations set forth in Section 2.2, below, with the right to
sublicense, and authorize sublicensees to sublicense further and with
the right to transfer this license as set forth in Section 11.8) to
prepare derivative works based on, reproduce, distribute, perform and
display (publicly or otherwise), disclose, use, and otherwise exploit
all or any portion of the Licensed Software, Enhancements thereto, and
any other information or materials delivered or required to be
delivered to Evolve hereunder. Paradigm shall also provide copies of
the Licensed Software for unlimited internal use by Evolve.
2.2. Limitations. Evolve agrees that it shall not distribute, nor shall it
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sublicense or otherwise grant third parties the right to distribute,
the Licensed Software except as incorporated into an Integrated
Offering.
3. DELIVERY, ACCEPTANCE AND OWNERSHIP
3.1. Delivery. As soon as practicable after the Effective Date, Paradigm
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shall deliver to Evolve golden master disks and other materials
containing the then-current version of the Licensed Software for the
Supported Systems. Until the Royalty Cap (as defined in Exhibit A) is
reached, Paradigm shall deliver to Evolve a golden master disk and
other materials containing the most recent Enhancements to the
Licensed Software for the Supported Systems as soon as
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practicable, but not later than thirty (30) days after Paradigm has
made such Enhancements generally commercially available. The other
Deliverables (as defined in Section 3.2, below) required by this
Agreement shall be delivered by Paradigm as required hereunder, as
agreed by the parties or, if not specified or agreed to, on a
commercially reasonable timeframe. Any such Deliverables shall be
subject to Acceptance as set forth in Section 3.2 and the provisions
regarding ownership in Sections 3.3 and 3.4.
3.2. Acceptance. Except for Acceptance of the Licensed Software by
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Whittman-Hart as set forth in Exhibit A, Evolve shall have an
"Acceptance Period" of thirty (30) days after delivery to test and
otherwise evaluate the Licensed Software, or any other deliverable
required by this Agreement (each, a "Deliverable") to determine
whether the Deliverable conforms to the Documentation or to the
specifications for the Deliverable otherwise provided to Paradigm by
Evolve and as agreed to by Paradigm in its reasonable, good faith
technical and/or business judgment taking into account the intent of
the parties hereunder to work together to meet functional requirements
of licensees and sublicenses of the Licensed Software
("Specifications"). In the event the Deliverable does not conform to
the Specifications, Evolve shall notify Paradigm of such non-
conformance during the Acceptance Period, and Paradigm shall redeliver
the corrected Deliverable as soon as commercially practicable, but in
any event no later than thirty (30) days after the date Evolve
provided Paradigm with notice of non-conformance of the Deliverable.
Unless such non-conformance notice is given, the Deliverable will be
deemed Accepted by Evolve at the end of the Acceptance Period and any
amounts that may be due for such Deliverable shall be immediately due
and payable. In the event that such non-conformance notice is given,
and Paradigm does not redeliver the Deliverable within the time frame
set forth in the preceding sentence or the Deliverable continues not
to conform to the Specifications, Evolve may request Paradigm to
correct and redeliver the Deliverable in accordance with the procedure
set forth above until the Deliverable conforms to the Specifications,
or Evolve may, in its sole discretion, terminate this Agreement and/or
withhold payment of any and all monies that may be owed to Paradigm
for such Deliverable under this Agreement until such time as Evolve
accepts such Deliverable; provided, however, that Evolve's election of
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its right to withhold the payment of monies owed Evolve for such
Deliverable as provided herein shall not constitute a waiver of
Evolve's right to later terminate this Agreement until such time as
Evolve accepts such Deliverable. In the event Evolve elects to
withhold payment of such monies for such Deliverable, Paradigm's
obligations hereunder shall continue unabated during such period;
provided, however, that Evolve shall be obligated to make any withheld
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payments promptly upon Acceptance of such Deliverable.
3.3. Ownership of Evolve Developments. Any products, including derivative
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versions of the Licensed Software, developed by Evolve during the term
of this Agreement ("Evolve Developments") shall be wholly owned by
Evolve. All right, title and interest in and to the Evolve
Developments (including software and intermediate versions thereof),
routines and subroutines, in both source code and object code
versions, formulae, development notes, flow charts, outlines, work
papers and manuals and other materials created as part of, or in
connection with, the Deliverables which do not constitute Paradigm
Developments pursuant to 3.4 below, and all patents, copyright rights
(including without limitation, the right to create derivative works),
trade secrets and all other intellectual property rights in or
pertaining to the Evolve Developments, shall belong exclusively to and
vest in Evolve; provided, however, that interface components to major
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accounting systems developed by Evolve with the assistance of
Paradigm, will be licensed to Paradigm on a perpetual royalty free
basis. Interface components to major accounting systems developed by
Evolve without the assistance of Paradigm will be
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licensed to Paradigm on a "reverse royalty" basis, pursuant to a
separate binding agreement to be executed by the parties.
3.4 Ownership of Paradigm Developments. The Licensed Software and all
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Deliverables hereunder, including derivative versions of Licensed
Software, developed by Paradigm prior to or during the term of this
Agreement ("Paradigm Developments"), except for Integration
Deliverables (defined in Section 4.2, below) shall be wholly owned by
Paradigm, subject only to the license rights to such Paradigm
Developments granted to Evolve pursuant to this Agreement. All right,
title and interest in and to the Paradigm Developments (including
software and intermediate versions thereof), routines and subroutines,
in both source code and object code versions, formulae, development
notes, flow charts, outlines, work papers and manuals, and all
patents, copyright rights (including without limitation, the right to
create derivative works), trade secrets and all other intellectual
property rights in or pertaining to the Paradigm Developments, shall
belong exclusively to and vest in Paradigm, subject only to the
license rights granted to Evolve pursuant to this Agreement.
4. OTHER OBLIGATIONS OF PARADIGM
4.1. Staffing; Knowledge Transfer. As specified in Exhibit A, Paradigm
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shall provide the qualified personnel, who have knowledge of and
experience with implementation and support of the Licensed Software;
provided, however, that the allocation of personnel set forth therein
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is not intended and shall not be construed to limit Paradigm's
obligation to provide the personnel and resources necessary and
appropriate to fulfill its obligations and provide the services and
Deliverables required of it under the terms of this Agreement; and
further provided, that in the event that any of the personnel listed
in Exhibit A cease to be employed by Paradigm, Paradigm shall have the
right to substitute suitable replacement personnel of Paradigm's
choosing, but subject to Evolve's consent which shall not be
unreasonably withheld or delayed.
4.2. Integration. Paradigm shall assist Evolve in the integration of the
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Licensed Software into the Integrated Offering. All right, title and
interest in and to the software (including intermediate versions
thereof), routines and subroutines, in both source code and object
code versions, formulae, development notes, flow charts, outlines,
work papers, manuals and other materials created in connection with
the integration work, and all patents, copyright rights (including
without limitation, the right to create derivative works), trade
secrets and all other intellectual property rights in or pertaining to
the foregoing, except for the Licensed Software (collectively, the
"Integration Deliverables"), shall belong exclusively to and vest in
Evolve.
4.3. Obligation to Provide Support. Paradigm shall supply to Evolve the
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Support and Maintenance services set forth in Exhibit B. Paradigm
shall continue to support the Licensed Software on the following
hardware and software systems (the "Supported Systems"): Intel
Pentium- and Pentium II-based PCs and servers; Microsoft Windows NT
(server and client); Microsoft SQL Server Database; Microsoft IIS WEB
Server; Crystal Report Server; Symantec Visual Cafe (Java compiler);
Netscape Navigator and Microsoft Internet Explorer (browsers), but
only for so long as Evolve continues to pay any Royalties to Paradigm
pursuant to this Agreement. If necessary to assure compatibility with
any new version or release of the Supported Systems, Paradigm shall
deliver to Evolve a new version or release of the Licensed Software
that is compatible with such new version or release of Supported
Systems as soon as it is reasonably
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commercially practicable for Paradigm to do so after a new version or
release of the Supported Systems becomes generally commercially
available.
5. ROYALTIES AND PAYMENT
5.1. Royalties; Referral Fees. Evolve shall pay to Paradigm a royalty in
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United States dollars on each sublicense or license of Licensed
Software from Evolve, as set forth in Exhibit A ("Royalties"). Upon
Evolve's payment in full of its total Royalties obligations pursuant
to this Agreement, the license granted to Evolve by Paradigm in
Section 2.1 shall be fully paid and non-assessable without Evolve
having any further obligation to pay Royalties to Paradigm. In such
event, Paradigm's obligations under this Agreement shall cease, except
for any Support and Maintenance services purchased by Evolve. Subject
to Paradigm's right to cure as set forth in Section 10.2(i) below, the
failure of Paradigm to provide the Enhancements to, and/or any Support
and Maintenance services purchased by, Evolve as required by this
Agreement will release Evolve from any obligation to pay Royalties
commencing on the due date for any such Enhancement and/or such
Support and Maintenance until such time as such Enhancements and/or
Support and Maintenance are provided by Paradigm (a "Breach Period");
provided, however, that in the event that Paradigm fails to cure any
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breach of its obligations to provide Enhancements and/or Support and
Maintenance within thirty (30) days of written notice from Evolve as
provided by Section 10.2(i) below, then the Royalty Cap (as defined in
Exhibit A) shall be reduced by an amount equal to the amount of any
Royalties accrued during any such Breach Period. In addition, Evolve
will pay Paradigm a fee of ten percent (10%) (the "Referral Fee") of
the license fees from the license of an Evolve Product by a qualified
and approved customer referred to Evolve by Paradigm, who had not been
previously contacted by Evolve (as demonstrated by Evolve's written
records).
5.2. Royalty Statements. Evolve shall render to Paradigm quarterly
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statements of account for net sales and Royalties and Referral Fees
due to Paradigm within thirty (30) days of the end of each calendar
quarter and Evolve agrees to accompany such statements with checks in
payment of the amount of Royalties and Referral Fees due therein.
5.3. Audit Rights. Upon fifteen (15) days written notice, Paradigm may
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cause to be examined through an independent certified public
accountant, lawyer or other representative the books of account of
Evolve insofar as they relate to the sale or the licensing of
Integrated Offerings at Paradigm's own expense unless errors amounting
to five percent (5%) or more of the total sums earned by Paradigm
pursuant to this Agreement shall be found to Paradigm's disadvantage,
in which case the cost shall be borne by Evolve. In the event that the
audit discloses any underpayment of amounts which should have been
paid to Paradigm, such amounts due (including, if applicable,
reimbursement for the cost of the audit) shall be made within fifteen
(15) days thereafter. Audits shall occur no more than once a year
during the normal business hours of Evolve. Evolve shall not be
required to retain supporting records for a period of more than five
(5) years after the rendering of any statement.
6. CONFIDENTIALITY
6.1. Confidential Information. Evolve and Paradigm hereby establish these
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terms and conditions governing the use, nondisclosure, and protection
of confidential information ("Confidential Information") that one
party (the "Disclosing Party") provides or discloses to the other
party (the "Receiving Party") pursuant to this Agreement.
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6.2. Designation. Receiving Party shall have a duty to protect only that
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Confidential Information which: (i) is first disclosed by Disclosing
Party in tangible form and is marked as "Confidential" (or with a
similar designation) at the time of disclosure, including, without
limitation, the existence, terms, and conditions of this Agreement; or
(ii) if disclosed by Disclosing Party in non-tangible form, is orally
identified as confidential at the time of disclosure or would be
reasonably expected to be confidential under the circumstances and due
top the nature of the information provided.
6.3. Limitations on Use and Disclosure. Receiving Party shall use
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Confidential Information received from Disclosing Party hereunder only
for the purpose of exercising its rights and fulfilling its
obligations under this Agreement, shall not disclose such Confidential
Information to third parties and shall protect and safeguard such
Confidential Information against disclosure with the same degree of
care as Receiving Party's own Confidential Information. Receiving
Party shall disclose Confidential Information received from Disclosing
Party to employees or consultants only if such personnel have a
legitimate need to know such information and are bound in writing by
confidentiality obligations not materially less restrictive than those
set forth herein. Receiving Party shall use the same degree of care
and discretion (but in any event no less than a reasonable degree of
care and discretion) to avoid unauthorized disclosure or use of
Confidential Information received from Disclosing Party hereunder as
Receiving Party uses to protect its own information of a similar
nature from unauthorized disclosure or use.
6.4. Exclusions. Without granting any right or license, the parties agree
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that no obligation of nondisclosure or nonuse hereunder shall apply to
any information (i) that Receiving Party already possesses at the time
of the disclosure by Disclosing Party or rightfully receives from a
third party, (ii) that Receiving Party develops independently, (iii)
that is or becomes generally available to the public other than by
breach of this Agreement, or (iv) that Disclosing Party provides or
has provided to any third party without similar restrictions.
Receiving Party may disclose Confidential Information received from
Disclosing Party to the extent that Receiving Party is required by any
government authority to disclose such information, provided that
Receiving Party gives Disclosing Party prompt notice of such
requirement and reasonably cooperates with Disclosing Party in
attempting to limit such required disclosure.
6.5. Equitable Relief. Receiving Party acknowledges and agrees that, due to
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the unique nature of Disclosing Party's Confidential Information,
there can be no adequate remedy at law for any breach of Receiving
Party's confidentiality obligations hereunder, that any such breach
may result in irreparable harm to Disclosing Party, and that
therefore, upon any such breach or threat thereof, Disclosing Party
shall be entitled to appropriate equitable relief, including without
limitation injunctive relief, in addition to whatever remedies it
might have at law.
6.6. Duration and Return of Documents and Code. Receiving Party's
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obligations hereunder with respect to any particular item of
Confidential Information received hereunder shall survive any
termination or expiration of this Agreement. Upon request of
Disclosing Party following termination or expiration of this
Agreement, Receiving Party will return all documents and code
containing Confidential Information that were given to it by
Disclosing Party.
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7. REPRESENTATIONS AND WARRANTIES. The following representations and warranties
shall remain in effect during the term of this Agreement:
7.1 Program Warranty. Paradigm represents and warrants that, for a period
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of one (1) year after initial delivery, the Licensed Software,
including any Enhancements thereto, shall materially perform the
functions described in the Documentation, and will be free from
material defects in design, materials, and workmanship.
7.2 Ancillary Program Warranties and Indemnities. To the extent that
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Paradigm is permitted to do so under agreements with its third party
software suppliers, Paradigm shall pass through to Evolve all third
party software end-user warranties and indemnities. To the extent that
Paradigm is not permitted to pass any third-party software end-user
warranties and indemnities through to Evolve, Paradigm agrees to
enforce such warranties and indemnities on behalf of Evolve to the
extent Paradigm is permitted to do so under the terms of applicable
agreements with such third parties.
7.3 Limited Services Warranty. Paradigm represents and warrants, for a
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period of ninety (90) days following the provision of Services
hereunder, that it shall perform the Services required by, or
contracted to be performed by Paradigm pursuant to, this Agreement in
accordance with generally accepted industry practices and standards
applicable to such services; provided, however, that where this
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Agreement specifies a particular standard or criteria for performance,
this warranty is not intended to and does not diminish that standard
or criteria for performance.
7.4 Supported Systems Warranty. Paradigm represents and warrants that the
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Licensed Software, including any Enhancements thereto, will operate on
the then-current version of the Supported Systems as of the effective
date of this Agreement, and that Paradigm will not incorporate
proprietary solutions or architecture in the Licensed Software or
future Enhancements that would prevent the Licensed Software from
operating on the Supported Systems. Upon Evolve's written consent
which shall not be unreasonably withheld or delayed, Paradigm shall
not be required to continue to support the Licensed Software or
Enhancements thereto on Supported Systems (i) which are deemed to be
"out of date" or not generally supported in the industry if there is a
commercially viable alternative or no alternative is reasonably
necessary, or (ii) for more than six (6) months after the introduction
of a new version of a Supported System, provided that Paradigm
supports the then-current version of the Supported System by the time
which support is withdrawn for the immediately preceding version of
the Supported System.
7.5 Disabling Code Warranty. Paradigm represents and warrants that the
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Licensed Software does not contain and will not receive from any
Paradigm data transmission via modem or other Paradigm medium, any
virus, worm, trap door, back door, timer, clock, counter or other
limiting routine, instruction or design that would erase data or
programming or otherwise cause the Licensed Software, and any Evolve
Product working with the Licensed Software as part of an Integrated
Offering, to become inoperable or incapable of being used in the full
manner for which it was designed and created (a "Disabling Code")
including, without limitation, any limitations that are triggered by:
(a) the Licensed Software being used or copied a certain number of
times, or after the lapse of a certain period of time; (b) the
Licensed Software being installed on or moved to a central processing
unit or system that has a serial number, model number or other
identification different from the central processing unit or system on
which the Licensed Software were originally installed; or (c) the
occurrence or lapse of any similar triggering factor or event. In the
event Paradigm introduces any Disabling Codes in the Licensed
Software, Paradigm shall: (w) take all steps necessary at Paradigm's
sole cost to test a new copy of the Licensed Software for
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the presence of Disabling Codes; (x) furnish to Evolve a new copy of
the Licensed Software without the presence of Disabling Codes, (y)
install and implement such new copy of the Licensed Software at no
additional cost to Evolve; and (z) take all steps necessary, at
Paradigm's sole cost, to restore any and all data or programming lost
by Evolve as a result of such Disabling Code.
7.6 Special Millennium Warranty. Paradigm represents and warrants that, as
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of the Effective Date and thereafter, the Licensed Software can and
will be able accurately to: (a) process consistently any date-data,
date-rollover event or date-data calculations that can be expected of
the Licensed Software if used for its authorized purposes, with no
adverse impact on the functionality of the Licensed Software
including, without limitation, the producing of errors, invalid
results, abnormal interruption or termination; (b) accept, process,
return and display date-data and perform date-data calculations
including, without limitation, computations, comparisons, sequencing,
sorts and extracts, in a consistent manner regardless of the dates
used in such date-data whether before, on, during or after January 1,
2000; (c) exchange date-data and related information with other
hardware, firmware or software with which it interacts, provided that
the interacting hardware, firmware or software is itself capable of
exchanging accurate date-data with ambiguous two-digit year-date input
and otherwise properly exchange date data with it; (d) accept and
respond to two-digit year-date input in a defined, predetermined and
appropriate manner; and (e) store and display date-data in ways that
are unambiguous as to the determination of the century. For purposes
of the foregoing: (f) "date-data" is defined as any data, formula,
algorithm, process, input or output, that includes, calculates or
represents a date, day or time, a reference to a date, day or time, or
a representation of a date, day or time; and (g) a "date-rollover
event" is defined as any transition between one date and the following
date including, without limitation, any time, date, day-of-the-week,
month and year progressions and any regularly scheduled leap events.
The foregoing warranty shall expire on March 31, 2001 with respect to
the version of the Licensed Software delivered upon execution of this
Agreement and any Enhancement or other Deliverable delivered prior to
October 1, 2000, and shall expire one hundred and eighty (180) days
following the delivery of any Enhancement or other Deliverable
thereafter.
7.7 Intellectual Property Warranty. Paradigm represents and warrants that
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it has the right and power to grant the Program Licenses, including
license to Ancillary Programs and other third-party software, granted
to Evolve hereunder, that it is not aware of any infringement of any
patent, trademark, copyright, trade secret or other proprietary right
of any third party by the Licensed Software or Documentation, that the
Licensed Software are free and clear of all liens, claims,
encumbrances or demands of third parties, and that there is currently
no actual or threatened suit against Paradigm by any such third party
based on an alleged violation of such right.
7.8 Warranty of Authority. Paradigm and Evolve each represent and warrant
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that they have the right to enter into this Agreement and that there
are no outstanding assignments, grants, licenses, encumbrances,
obligations, or agreements which relate to the Licensed Software or
either party's obligations hereunder (whether written, oral or
implied) that are inconsistent with this Agreement and the rights
granted herein.
7.9 Pending Litigation. Paradigm represents and warrants that there is no
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action, suit, proceeding claim or investigation pending, or to the
best of Paradigm's knowledge, threatened against, by or affecting
Paradigm or the Licensed Software in any court, or by or before any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or
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instrumentality, domestic or foreign, or before any arbitrator of any
kind which, if adversely determined, would adversely affect the
Licensed Software or restrict Paradigm's ability to consummate the
transactions contemplated hereby or continue its obligations
hereunder. Paradigm knows of no basis for any such action, suit,
claim, investigation or proceeding. Evolve represents and warrants
that there is no action, suit, proceeding claim or investigation
pending, or to the best of Evolve's knowledge, threatened against, by
or affecting Evolve in any court, or by or before any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind which, if adversely determined, would adversely
restrict Evolve's ability to consummate the transactions contemplated
hereby or continue its obligations hereunder. Evolve knows of no basis
for any such action, suit, claim, investigation or proceeding.
7.10 Warranty of Cooperation. Paradigm acknowledges that Evolve is working
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with a number of third parties in developing, maintaining and
supporting the Integrated Offering. Having acknowledged the foregoing,
Paradigm agrees that it will cooperate with all such third party
and/or ancillary system providers as necessary and as requested by
Evolve.
7.11 No Material Misstatements or Omissions. No representation or warranty
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by Paradigm or Evolve that is contained in this Agreement or in any
Exhibit attached hereto contains any untrue statement of a material
fact or omits to state a material fact necessary to make the
statements and facts contained herein or therein not materially
misleading.
8. INDEMNITY
8.1. Indemnity Obligation of Paradigm. Paradigm will indemnify, defend, and
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hold harmless Evolve against any action or claim brought against
Evolve (or any Evolve reseller, distributor, or end user) to the
extent that it is based upon a claim that the Licensed Software, as
provided by Paradigm to Evolve under this Agreement and used within
the scope of this Agreement, infringes any patent rights, copyright
rights, or other intellectual property rights, or incorporates any
misappropriated trade secrets (an "Infringement Claim"). Paradigm will
pay any liabilities, costs, damages, or expenses, including attorneys'
fees, attributable to such Infringement Claim that are awarded against
Evolve (or any Evolve reseller, distributor, or end user) in a
judgment or settlement approved in advance by Paradigm, provided that
Evolve: (i) promptly notifies Paradigm in writing of the Infringement
Claim; (ii) grants Paradigm sole control of the defense and settlement
of the Infringement Claim; and (iii) provides Paradigm with all
assistance, information, and authority required for the defense and
settlement of the Infringement Claim. Evolve may retain its own
counsel, at Evolve's own expense, to monitor the defense and
settlement of the Infringement Claim.
8.2. Additional Remedies. Without limiting Paradigm obligations under the
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foregoing Section 8.1, if Evolve's use of any of the Licensed Software
hereunder becomes subject to an Infringement Claim, or in Paradigm's
opinion is likely to become subject to an Infringement Claim, Paradigm
shall, at its sole option and expense, make commercially reasonable
efforts to either: (i) procure for Evolve the right to continue using
such Licensed Software under the terms of this Agreement; or (ii)
replace or modify such Licensed Software so that it is non-infringing;
provided, however, that any such efforts shall not substantially
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diminish the functionality of the Licensed Software. If neither of the
two options described above is commercially reasonable, then Paradigm
shall accept the return of the portion of the Licensed Software
subject to the Infringement Claim and (i) refund to Evolve a pro rata
portion of the Royalties received for
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such returned portion of the Licensed Software based on a seven (7)
year straight line depreciation method from the date of payment of
such Royalties to be refunded, and (ii) reduce the Royalty Cap by such
pro rata rate, based on a percentage of any diminished functionality
resulting therefrom. The foregoing states Paradigm's sole obligation
and Evolve's sole remedy in the event of any Infringement Claim.
8.3 Indemnification Obligation of Evolve. Evolve will indemnify, defend,
------------------------------------
and hold harmless Paradigm against any action or claim brought against
Paradigm with respect to the Evolve Product or the Integrated Offering
(a "Product Claim"), except to the extent that it is based upon an
Infringement Claim covered by Section 8.1, above. Evolve will pay any
liabilities, costs, damages, or expenses, including attorneys' fees,
attributable to such Product Claim that are awarded against Paradigm
in a judgment or settlement approved in advance by Evolve, provided
that Paradigm: (i) promptly notifies Evolve in writing of the Product
Claim; (ii) grants Evolve sole control of the defense and settlement
of the Product Claim; and (iii) provides Evolve with all assistance,
information, and authority required for the defense and settlement of
the Product Claim. Paradigm may retain its own counsel, at Paradigm's
own expense, to monitor the defense and settlement of the Product
Claim.
9. LIMITATION OF LIABILITY
9.1. Limitation of Liability. EXCEPT FOR EACH PARTY'S OBLIGATIONS UNDER
-----------------------
SECTION 8, NEITHER PARTY SHALL HAVE ANY LIABILITY WHATSOEVER ARISING
OUT OF OR IN CONNECTION WITH OR RELATED TO THIS AGREEMENT OR THE
RIGHTS PROVIDED HEREUNDER FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL,
PUNITIVE, OR SPECIAL DAMAGES OF ANY KIND (INCLUDING WITHOUT LIMITATION
LOST REVENUES, PROFITS, OR SAVINGS, LOSS OF BUSINESS, USE, OR DATA),
EVEN IF INFORMED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES,
WHETHER IN AN ACTION IN CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION,
NEGLIGENCE), STRICT LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY.
EXCEPT FOR EACH PARTY'S OBLIGATIONS UNDER SECTION 8, IN NO EVENT SHALL
EITHER PARTY'S AGGREGATE LIABILITY FOR ANY CLAIMS ARISING UNDER THIS
AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE, EXCEED THE TOTAL
ROYALTIES RECEIVED FROM EVOLVE PURSUANT TO THIS AGREEMENT.
10.TERM OF AGREEMENT
10.1. Term. This Agreement shall be binding upon the Parties as of the
----
Effective Date and shall continue in full force and effect until
terminated by either Party pursuant to Section 10.2
10.2. Termination. Either Party may terminate this Agreement by giving
-----------
a notice to the other Party if (i) the other Party commits a material
breach of this Agreement and fails to remedy same within thirty (30)
days after delivery of notice by the non-breaching Party of the
occurrence or existence of such breach or such longer period as may be
agreed to in writing by the non-breaching Party; or (ii) the other
Party fails to continue to do business in the ordinary course as a
result of any voluntary or involuntary liquidation, dissolution or
winding up of such Party's business.
10
<PAGE>
10.3. Effect of Termination. Except as provided in this Section 10.3,
---------------------
termination of this Agreement shall not limit either party from
pursuing other remedies available to it, including injunctive relief,
nor shall such termination relieve Evolve of its obligation to pay all
fees that have accrued or are otherwise owed by Evolve. The rights and
obligations of the Parties under Sections 3, 5, 6, 7, 8, 9, 10, and 11
of this Agreement shall survive any termination of this Agreement. If
this Agreement is terminated, Evolve shall cease licensing the
Licensed Software, and within thirty (30) days after termination,
certify that Evolve has destroyed the Licensed Software; provided,
---------
however, that all licenses and sublicenses granted by Evolve prior to
-------
any termination by Paradigm shall survive according to their terms and
Evolve shall be entitled to retain and use one copy of the Licensed
Software as necessary to support its licensees and sublicensees.
11. MISCELLANEOUS
11.1. Nature of Relationship Between Parties. Nothing contained in this
--------------------------------------
Agreement shall be deemed to constitute either Party or any of its
representatives the partner, joint venturer, agent, or legal
representative of the other Party or to create any fiduciary
relationship between the Parties for any purpose whatsoever. Except as
otherwise specifically provided in this Agreement, neither Party nor
any of its representatives shall have any authority to act for, bind,
create, or assume any obligation or responsibility on behalf of the
other Party. Nothing in the Agreement shall be deemed to establish a
minimum amount of Royalties to be paid to Paradigm; provided, however,
-----------------
that for so long as Royalties shall be payable pursuant to this
Agreement, Evolve will use commercially reasonable efforts to license
and sublicense the Licensed Software. Paradigm may not refer to
Evolve's customers in its marketing materials, including, without
limitation, press releases and customer lists. Each party may refer in
its marketing materials to the other party and the nature of the
relationship between the parties, provided that any such reference by
a party has been approved in writing by an authorized representative
of the other party prior to its release or publication. Nothing in
this Agreement shall be deemed to require either party to refer to the
other Party or the nature of the relationship between the parties,
except that Evolve is required to identify Paradigm as the owner of
the Licensed Software in the Integrated Offering until the Royalty Cap
has been reached.
11.2. No Hiring. For the term of this Agreement and for one year
---------
thereafter each Party is restricted from hiring current employees of
the other Party, unless otherwise agreed to in writing by the Parties.
11.3. Notices. In any case where any notice or other communication is
-------
required or permitted to be given hereunder, such notice or
communication shall be given in writing by personal delivery,
registered mail, or overnight or other courier or delivery service,
addressed to the respective Party at the addresses indicated below:
If to Evolve:
Evolve Software, Inc.
615 Battery Street, Suite 400
San Francisco, California 94111
Attn: John Bantleman or President
11
<PAGE>
If to Paradigm:
Paradigm Software Technologies, Inc.
641 Avenue of the Americas
New York, NY 10011
Attn: Atlee Brown or President
with a copy to:
David A. Gurwin, Esquire
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
All such notices or other communications shall be deemed to have been given
and received (i) upon receipt if personally delivered or sent by
registered mail and (ii) when delivery is confirmed if sent by overnight
or other courier or delivery service.
11.4. Choice of Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal law, but not the conflict-of-laws
rules, of the state of California
11.5. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law. If the application of any provision of this Agreement
to any particular facts or circumstances shall be held to be invalid
or unenforceable by a court of competent jurisdiction, then (i) the
validity and enforceability of such provision as applied to any other
particular facts or circumstances and the validity of other provisions
of this Agreement shall not in any way be affected or impaired thereby
and (ii) such provision shall be enforced to the maximum extent
possible so as to effect the intent of the Parties and shall be
reformed without further action by the Parties to the extent necessary
to make such provision valid and enforceable.
11.6. Headings. The section, article and other headings herein are
--------
inserted only for convenience and ease of reference and are not to be
considered in the construction or interpretation of any provision of
this Agreement.
11.7. Modifications; Waivers. No modification, amendment, extension,
----------------------
renewal, rescission, termination, or waiver of any of the provisions
contained herein, or of any future representation, promise, or
condition in connection with the subject matter hereof, shall be
binding upon either Party unless in writing and signed by a duly
authorized representative on its behalf. No waiver shall operate as a
waiver of, or estoppel with respect to, any other action. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or at equity. The waiver of
the time for performance of any act or condition hereunder does not
constitute a waiver of the act or condition itself.
12
<PAGE>
11.8. Assignment; Successors. Neither Party shall transfer or assign
----------------------
this Agreement, in whole or in part, including by operation of law,
without the other Party's prior written consent, which consent will
not be unreasonably withheld or delayed. Any attempt to transfer or
assign this Agreement without such consent shall be null and void.
Notwithstanding the foregoing, this Agreement is transferable or
assignable without such prior written consent by either Party as part
of a sale, transfer or other disposition by the Party of all or
substantially all its assets. Subject to the foregoing limits on
transfer and assignment, this Agreement shall be binding upon and
shall inure to the benefit of the Parties and their respective
successors and assigns.
11.9. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same Agreement.
11.10. Entire Agreement. This Agreement contains the entire agreement
----------------
between the Parties with respect to the matters expressly addressed
herein. It is expressly understood and agreed that this Agreement may
not be altered, amended, modified, or otherwise changed in any respect
or particular whatsoever, except by a writing duly executed by an
authorized representative of each affected Party. This Agreement
supersedes all prior agreements, understandings, and representations
concerning the subject matter hereof, including that certain Letter of
Agreement between the Parties dated January 5, 1999. Each Party
warrants that it is not relying upon any representation, condition, or
term except as set forth explicitly in this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first written
above.
EVOLVE SOFTWARE, INC. PARADIGM SOFTWARE TECHNOLOGIES, INC.
By: /s/ John P. Bantleman By: /s/ Atlee Brown
----------------------------------- -------------------------
John P. Bantleman, its President Atlee Brown, its President
13
<PAGE>
EXHIBIT A
---------
ROYALTY PAYMENTS: For each Evolve customer licensing the Licensed Software
(except Whittman-Hart), Evolve shall owe Paradigm a Royalty as a percentage of
the Total License Fees Paid to Evolve for the Licensed Software by such Evolve
customer according to the following schedule:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Term of Payment Royalty Obligation
--------------------------------------------------------------------------------------------------------
<S> <C>
Until December 31, 1999 Ten Percent (10%) without a cap or credit
to the Royalty Cap.
--------------------------------------------------------------------------------------------------------
January 1, 2000 until the earlier of (a) December 31, Twenty Percent (20%) up to a maximum of One
2000 or (b) reaching the Royalty Cap. Million Dollars ($1,000,000)
--------------------------------------------------------------------------------------------------------
January 1, 2001 until the earlier of (a) December 31, Fifteen Percent (15%) up to a maximum of
2001 or (b) reaching the Royalty Cap. One Million Dollars ($1,000,000)
--------------------------------------------------------------------------------------------------------
January 1, 2002 until reaching the Royalty Cap. Ten Percent (10%)
--------------------------------------------------------------------------------------------------------
</TABLE>
Evolve's total Royalty obligation commencing on January 1, 2000 and thereafter
shall not exceed Three Million US Dollars ($3,000,000) in the aggregate (the
"Royalty Cap"). All royalties will be paid to Paradigm within thirty (30) days
of the end of each calendar quarter. As used above, "Total License Fees Paid"
-----------------------
means the gross license revenues collected by Evolve during any given term from
licenses of the Licensed Software, less (i) normal and customary rebates, and
cash and trade discounts, actually taken, (ii) sales, use and/or other excise
taxes or duties actually paid, (iii) the cost of any packages and packing; (iv)
shipping insurance costs and outbound transportation charges prepaid or allowed,
(v) import and/or export duties actually paid, (vi) amounts allowed or credited
due to returns, and (vii) any published or provided volume discounts; provided,
---------
however, the Licensed Software shall not be less than one-third (1/3) of the
--------
total software license fees collected for the Opportunity Manager and/or
Resource Manager and Delivery Manager modules only.
TECHNICAL RESOURCES: In order to facilitate the agreement, Paradigm will commit
five full-time equivalent resources consisting of consultants and engineers for
a period of 12 months to directly support Evolve's customer implementation
activities, to transfer application knowledge and skills to Evolve, to aid in
the integration of the Licensed Software into Evolve ServiceSphere, to perform
the other services, and to travel, as reasonably requested by Evolve. The time
commitment indicated for each resource represents an overall estimate over the
period (more or less time will be spent on a monthly basis depending on the
specific project phase). The resources to be assigned to Evolve will be
allocated from the following Paradigm employees:
Time
Commitment
----------
. Julian Ehrlich (Sr. design consultant and project leader) 60%
. Barbara Ure (Sr. consultant and engagement manager) 50%
. Benjamin McGlothlin (Sr. consultant) 100%
. Roberta Knutson (Sr. consultant) 50%
. Jim Blake (Consultant) 50%
. Imran Rahman (Sr. design engineer and technical manager) 50%
. Yan Yashayev (Sr. engineer) 50%
. Gennady Mozolevskiy (Sr. engineer) 50%
. Tony Alcamo (Sr. consultant) 40%
14
<PAGE>
All resources and their precise time and project assignments are subject to
approval by Evolve and Paradigm. Furthermore, if Evolve in its reasonable
judgment determines a resource is unsatisfactory and upon written notice of
such, Paradigm shall use its reasonable efforts to expeditiously replace such
resource with another suitably qualified resource.
OTHER CONSULTING SERVICES: Evolve may contract for additional Paradigm resources
or time from these resources during the initial 12-month period at the rate of
$1000 per day per person, after which consulting services will be provided at
Paradigm's standard published consulting rates, or as otherwise agreed by the
parties. Evolve will pay Paradigm's invoices for services, and reimburse
Paradigm's reasonable and actual out-of-pocket expenses, within thirty (30) days
of submission of any invoice and pre-approved expense reimbursement request with
related receipts.
MILESTONE PAYMENTS: Evolve shall make the following payments to Paradigm based
upon completion of the following milestones expected to occur on or about the
dates specified (each, a "Deliverable Payment"):
. Initial Installations:
---------------------
. Upon delivery of the current version of the Licensed Software at
Evolve, expected to occur in January 1999, Evolve shall pay Paradigm
One Hundred and Fifty Thousand US Dollars ($150,000).
. Upon delivery and installation of the Licensed Software at Whittman-
Hart, Inc. ("WH") for commencement of the pilot, expected to occur in
March 1999, Evolve shall pay Paradigm One Hundred and Fifty Thousand
US Dollars ($150,000).
. Whittman-Hart Acceptance: Upon Acceptance by WH of the Licensed Software,
------------------------
including interfaces to SAP Financials, HR, expected to occur in September
1999 (the "SAP Interfaces"), Evolve shall pay Paradigm Seven Hundred
Thousand US Dollars ($700,000); provided, however, that Evolve will make
-----------------
the following progress payments to Paradigm to be credited to the payment
to be made upon WH Acceptance of the Licensed Software (each, a "Progress
Payment"):
. Two Hundred Thousand US Dollars ($200,000) upon acceptance by WH of
the initial pilot of the Licensed Software installed at WH, expected
to occur in May 1999.
. Two Hundred and Fifty Thousand US Dollars ($250,000) upon Acceptance
of the SAP Interfaces to the Licensed Software installed at WH,
expected to occur in June 1999.
Whittman-Hart shall have ninety (90) days after the implementation of the
Licensed Software and the SAP Interfaces (the "Acceptance Period") to
accept the Licensed Software and the SAP Interfaces. In the event that WH
does not accept the Licensed Software and/or the SAP Interfaces (regardless
of Whittman-Hart's acceptance of other ServiceSphere programs delivered by
Evolve), the Agreement shall terminate without further obligation;
provided, however, that Paradigm shall be entitled to retain all Progress
-----------------
Payments theretofore made. Evolve may, at its sole discretion, elect to
continue the Agreement by paying the outstanding amounts that would be paid
if WH had accepted the Licensed Software, which amounts shall then be
credited in full to the total Royalties due hereunder.
. Integration Deliverables: Upon Acceptance by Evolve of the Integration
------------------------
Deliverables, expected to occur in December 1999, Evolve shall pay Paradigm
Two Hundred and Fifty Thousand US Dollars ($250,000).
15
<PAGE>
EXHIBIT B
SUPPORT AND MAINTENANCE PLAN
----------------------------
ARTICLE 1
GENERAL
-------
1.1 Term. Support and Maintenance services described in this Exhibit B to
-----
be provided to Evolve shall commence on the Effective Date and continue until
June 30, 2000. Thereafter, Support and Maintenance services will be available to
Evolve until June 30, 2001 at a cost of $50,000 per annum, for up to forty (40)
hours per month of technical support services, and $100 per hour for Support and
Maintenance services in excess of forty (40) hours per month. The fees for
Support and Maintenance Services provided by Paradigm following June 30, 2001
will not be increased in any year by more than the average annual increase
applied by Paradigm to all of its customer maintenance contracts.
1.2 Definitions. Capitalized terms used herein shall have the meanings
-----------
ascribed to them in the Agreement and/or in this Support and Maintenance Plan.
ARTICLE II
SUPPORT AND MAINTENANCE SERVICES
--------------------------------
2.1 General
-------
2.1.1 Evolve shall establish and maintain the organization and
processes to provide "First Line Support" for the Licensed Software
directly to Evolve customers. First Line Support shall include but not be
limited to (a) a direct response to users with respect to inquiries
concerning the functionality or operation of the Licensed Software, (b) a
direct response to users with respect to problems with the Licensed
Software, (c) a diagnosis of problems or deficiencies of the Licensed
Software and (d) a resolution of problems or deficiencies of the Licensed
Software.
2.1.2 If after reasonable commercial efforts Evolve is unable to
diagnose or resolve problems or deficiencies of the Licensed Software,
Evolve shall contact Paradigm for "Second Line Support" and Paradigm shall
provide support for the Licensed Software in accordance with this Support
and Maintenance Plan.
2.1.3. For so long as Evolve elects, in its sole discretion, to
obtain Support and Maintenance service pursuant to Section 1.1 of this
Exhibit B, Paradigm shall establish and maintain a dedicated, named
resource to provide Second Line Support for the Licensed Software to
Evolve. Second Line Support shall be provided to Evolve only if, after
reasonable commercial efforts, Evolve is unable to diagnose and/or resolve
problems or deficiencies of the Licensed Software. Second Line Support
shall be provided to up to two designated representatives of Evolve (the
"Key Operators"). Paradigm shall not provide Second Line Support directly
to Evolve customers.
2.2 Hours of Support. Paradigm shall provide Support and Maintenance to
-----------------
Evolve for the Licensed Software during hours of 6:00 a.m. to 5:00 p.m., pacific
standard time, on weekdays, except up to ten (10) holidays per annum observed by
Paradigm and provided to Evolve upon execution of this Agreement and at the
commencement of each year thereafter in which Evolve has purchase Support and
Maintenance services.
16
<PAGE>
2.3 Support and Maintenance Services. Paradigm shall provide the
--------------------------------
following Support and Maintenance services to Evolve:
2.3.1 Technical Support. Paradigm shall provide Evolve with
------------------
solutions and/or corrections to reported and verifiable problems or defects
which cause the Licensed Software to fail to operate in accordance with the
Documentation ("Defects"). Enhancements will be sent to Key Operators.
Paradigm shall ensure that qualified personnel are available to provide
telephone support to the Key Operators concerning Defects.
2.3.2 Corrections, Modifications, and Enhancements.
---------------------------------------------
(A) Corrections. For any period during which Evolve obtains
------------
Support and Maintenance from Paradigm, any corrections to Licensed
Software shall be provided by Paradigm, taking into account the level
of severity of the problem and Evolve's Support and Maintenance
obligations to licensees and sublicensees of the Licensed Software, in
accordance with the response procedures established from time to time
by Paradigm for its Support and Maintenance customer generally upon
transmission of a report of a Defect (an "Incident Report") by Evolve.
Each Incident Report shall be made through Paradigm's Customer Support
Center via telephone, fax, e-mail or pager. Subject to Sections 2.3.3
and 2.3.4, below, such fixes or corrections shall be provided at no
additional cost to Evolve.
(B) Enhancements. Paradigm will makes Enhancements available
-------------
to Evolve at no additional charge, except media and handling charges
Paradigm shall provide such Enhancements to Evolve upon their general
release and no later than the time when the first of Paradigm's
customers receive such Enhancements.
(C) Documentation. Paradigm shall provide updated
-------------
Documentation for any Licensed Software or Enhancements provided to
Evolve in accordance with the Agreement as such Documentation is
generally released.
2.3.3 Excluded Services. Excluded from the coverage of this Plan are
------------------
services that become necessary as a direct result of Evolve's unauthorized
modification, alteration or misuse of the Licensed Software; the
integration of the Licensed Software by Evolve with any third party
software; failure or interruption of any electrical power; failure of
computer hardware or equipment or programs not covered by this Plan; or
catastrophe, negligence of Evolve or any third party, operator error,
improper use of hardware or software or attempted maintenance by
unauthorized persons; or any accident or other cause external to the
Licensed Software and not caused by Paradigm. Such excluded services shall
be provided by Paradigm, at Evolve's request, at the rates set forth in
Exhibit A to the Agreement.
2.3.4 On-Site Services. Paradigm shall perform the Support and
-----------------
Maintenance services from its own location or on site at Evolve's offices;
provided, however, that in the event it is necessary for Paradigm to
-----------------
perform certain services on-site at Evolve's offices in order to fulfill
its Support and Maintenance obligations as set forth hereunder, it shall
provide such on-site services at no additional cost to Evolve, except
reimbursement for Paradigm's travel and out-of-pocket expenses incurred in
providing such on site Support and Maintenance Services.
17
