SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment to
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission
March 31, 1997 File No. 33-9390
INFORMATION ANALYSIS INCORPORATED
(Exact name of Registrant as specified in its charter)
Virginia 54-1167364
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11240 Waples Mill Road, #300 22030
Fairfax, VA (Zip Code)
(Address of principal executive offices)
(Registrant's telephone number,
including area code) (703) 383-3000
2222 Gallows Road, #400
Dunn Loring, VA 22027
(Former Address of principal executive offices) (Zip Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
$.01 par value common stock 1,887,557 shares at March 31, 1997
Transitional Small Business Disclosure Format:
Yes No X
--- ---
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PART I
Item 6. Exhibits and Reports on Form 8-K
See the Index to Exhibits attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Information Analysis Incorporated
(Registrant)
By:
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Sandor Rosenberg, Chairman of the
Board and President
Date: July 16, 1997
By:
---------------------------------
Richard S. DeRose, Executive Vice
President and Treasurer
Date: July 16, 1997
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INDEX TO EXHIBITS
Exhibit No. Description
4.2 Software License Agreement dated
March 24, 1997 between the
Registrant and Computer Associates
International, Inc. (Confidential Treat-
ment Requested)
SOFTWARE LICENSE AGREEMENT
This Agreement is entered into as of March 24, 1997 (the "Effective Date") by
and between Computer Associates International, Inc., having a place of business
at One Computer Associates Plaza, Islandia, NY 11778-7000 and Information
Analysis, Inc. ("Supplier") having a place of business at 11240 Waples Mill
Road, Suite 400, Fairfax, Virginia 22030.
Whereas, Computer Associates wishes to acquire rights to use, market and
distribute certain Year 2000 source code remediation tool software programs and
documentation owned or to be developed by Supplier (the "Products" as defined
below) for marketing to CA customers that are licensed for certain CA software
programs (the "CA Software" as defined below); and
Whereas, Supplier is willing to grant such rights and licenses and to perform
duties with respect to the development, marketing and support of the Products
and Computer Associates is willing to accept such license and market the
Products on the terms and conditions of this Agreement.
Now Therefore, the parties agree as follows:
1. DEFINITIONS
The following capitalized terms shall have the meanings set forth below for
purposes of this Agreement.
"CA" means Computer Associates International, Inc. and any corporation which is
now or hereafter owned or controlled, directly or indirectly, by Computer
Associates International, Inc.
"CA Software" means the CA software products described in Section 4 of Exhibit A
together with their associated user documentation and all enhancements, updates,
new releases and modifications thereof developed during the Term of this
Agreement, excluding, however, any Products.
"Confidential Information" means the CA Software, the Products and CA Customer
information, the terms and conditions of this Agreement and all other
information which by its nature is understood to be confidential or is
identified in writing by either party as its confidential or trade secret
information at the time of disclosure. Confidential Information does not include
information which is: (i) generally available to the public on an unrestricted
basis; (ii) previously known without obligation of confidentiality; (iii)
independently developed without use of or reference to any Confidential
Information; (iv) rightfully received from a third party without restriction or
obligation of confidentiality; (v) not identified in writing as confidential and
which is not otherwise reasonably understood to be confidential by its nature;
or (vi) approved by the disclosing party for disclosure.
"Customer" means an end-user licensee of a Product.
"Distributor" means a company that is authorized by CA or another CA Distributor
to market, supply, license or distribute the Products pursuant to a written
distribution agreement.
"Employee" means, with respect to a given person, the employees, consultants,
contractors and
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agents of such person, all of whom have signed non-disclosure agreements.
"Functional Specification" means a detailed functional specification for the
Products, to be mutually agreed upon by Supplier and CA within ******* days
after the Effective Date, which will be based on the description set forth in
Section 3 of Exhibit A.
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"Line of Code" means a line of software source code, regardless of content
(including, without limitation, headers, statements, function and procedure
calls, definitions, comments and empty lines), as measured by the Products'
line-of-code metering algorithms.
"Order" means a CA order for Products and/or Services referencing this Agreement
that is submitted by CA to Supplier.
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"Packaged" means, with respect to each Product, a version of the Product which
is designed to be installed and configured by a Customer.
"Phase 1", "Phase 2", "Phase 3" and "Phase 4" are phases of the development of
the Products hereunder and are defined in Section 5 of Exhibit A attached
hereto.
"Products" means the software products of Supplier which are described in
Sections 1, 2 and 3 of Exhibit A, together with their associated user
documentation and all enhancements, updates, new releases and modifications
thereof developed during the Term of this Agreement, excluding, however, any CA
Software.
"Public Release" means the date on which Supplier makes a version of a Product
generally available to all Customers for installation and use for production
rather than testing.
"Support" means the Product support services described in Section 2 of Exhibit B
and in Exhibit C.
"Term" means the period set forth in Section 9 of this Agreement.
***********************
***********************
2. APPOINTMENT AND GRANT OF LICENSES; JOINT RESPONSIBILITIES
2.1 Supplier appoints CA as a non-exclusive distributor with rights to
use, market and distribute the Products, in object code form only, in the
Territory during the Term and in accordance with the terms and conditions of
this Agreement.
*Confidential information deleted
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2.2 Supplier hereby grants CA the following rights and licenses in the
Territory:
a) the non-exclusive right to use the Products solely for purposes
of marketing and demonstrating the Products pursuant to this Agreement, free of
all license fees. At the termination of this Agreement, CA shall promptly return
all Products to Supplier unless otherwise agreed by Supplier in writing. Any
Products provided to CA under this Agreement may be used by CA solely in
connection with CA's performance of this Agreement and subject to the following
terms and conditions:
1) CA shall restrict access to the Products to those of its
Employees having a genuine need to have such access for the purposes of
performing this Agreement. CA shall not use the Products for the benefit of any
third party or permit any third party to install or use the Products except
pursuant to license agreements with Customers. CA shall only use the Products
for purposes relating to the performance of this Agreement and shall not use the
Products for the analysis or remediation of its own software or that of any
other person, or for any other internal production use, without the prior
written consent of Supplier and the payment of appropriate license fees;
2) No portion of the Products may be incorporated into the CA
Software or any other software product of CA unless otherwise agreed by Supplier
in writing. Except as otherwise set forth in this Agreement, CA may not
transfer, distribute, assign or sublicense the Products to any third parties;
and
b) the exclusive right and license to market, sublicense and
distribute the Products directly and indirectly through Distributors to
Customers who are licensed for the CA Software products described in Section 4
of Exhibit A hereto; provided that (i) the foregoing exclusive license is
limited to the Products supplied hereunder which are designed to be used with
the CA Software described in Section 4 of Exhibit A, and shall not restrict
Supplier from licensing other products similar to the Products that are not used
in conjunction with the CA Software; and (ii) Supplier shall retain the right to
market, license and distribute the Products directly (but not through
third-party distributors) to Customers. Supplier agrees to provide Supplier's
standard license terms and conditions regarding the Products to CA, and CA will
sublicense the Products to Customers on similar terms and conditions as approved
by Supplier. Except as otherwise set forth in this Agreement or as mutually
agreed by the parties, all copies of the Products distributed by CA to its
Customers will be supplied in the same packaging and with the same license terms
as provided by Supplier to CA.
2.3 CA and Supplier will work together following execution of this
Agreement to agree, within ************ after the start of Phase I for each
Product, upon (a) a detailed Functional Specification for each Product based on
the description thereof in Section 3 of Exhibit A, and (b) acceptance test
protocols and standards. Supplier agrees to undertake the development and
modification of the Products so that the Products will substantially comply with
the Functional Specification. Supplier will provide CA with the deliverables
described in Exhibit A. Upon completion of the development effort, Supplier will
provide CA with at least one copy of the object code version of the Product
(including a comprehensive set of user documentation) for CA's evaluation and
acceptance testing purposes to determine that the Product substantially complies
with the Functional Specification. The methodology and standards of the
acceptance test to be used shall be the ones agreed upon by the parties pursuant
*Confidential information deleted
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to the first sentence of this paragraph. In the event that CA determines that
the initial release of the Products does not substantially comply with the
Functional Specifications, then Supplier shall promptly provide CA with any
modifications, new releases or updates necessary to remedy such non-conformity.
In the event that Supplier fails to provide such modifications, new releases or
updates within ninety (90) days after a request therefor, CA may terminate this
Agreement upon written notice without any further obligation to Supplier, and
may receive a refund of any royalties on Net Revenues previously paid to
Supplier with respect thereto. These acceptance testing terms shall only apply
to the initial release of each of the Products provided by Supplier to CA under
this Agreement.
2.4 Ownership of the Products shall remain vested in Supplier (or
Supplier's licensors, if parts of the Products are licensed by Supplier from
third parties). Nothing in this Agreement shall be construed as transferring
ownership of copyright in the Products to CA. CA may make copies of any computer
tapes, disks, or other material provided by Supplier only to the extent required
for the performance of CA's obligations hereunder and for back-up purposes. CA
agrees not to make any copies or partial copies of any computer tapes, disks, or
other materials provided by Supplier for the purpose of supplying them to third
parties. All copies of the Products made by CA are and remain the property of
Supplier and shall be marked with Supplier's copyright and other proprietary
rights notices. CA shall not de-compile, disassemble or otherwise reverse
engineer the Products, and shall not modify, translate, enhance or create
derivative works of the Products.
2.5 Supplier grants CA a royalty-free license to use, in conjunction
with the marketing of the Products under this Agreement, all trademarks, service
marks or trade names (the "Supplier Marks") used by the Supplier to identify the
Products (as such Supplier Marks may be revised or replace from time to time by
Supplier). All goodwill arising from CA's use and promotion of the Supplier
Marks shall inure to the benefit of Supplier. CA will, by its use of the
Supplier Marks or otherwise, obtain no proprietary or other rights in any of the
Supplier Marks, and agrees to refrain from asserting any such rights against
Supplier. The license granted under this Section 2.6 will expire upon the
termination of this Agreement.
2.6 Each party agrees to take the necessary precautions to maintain the
confidentiality of the Confidential Information of the other party by using the
same degree of care as it uses with respect to its own Confidential Information
of like nature. Each party shall only use such Confidential Information in
connection with its performance of this Agreement and shall only disclose such
Confidential Information to its Employees having a need to know it in order to
accomplish the purposes of this Agreement who are bound by appropriate
nondisclosure obligations at least as protective as the provisions of this
Section.
3. SUPPLIER'S RESPONSIBILITIES
3.1 During Phase 1, Supplier will develop or modify the Products to meet
the Functional Specification as set forth in Section 3 of Exhibit A. Supplier
will use its best efforts to provide CA with the deliverables as set forth in
Sections 1 and 2 of Exhibit A on or before the due dates set forth in Section 6
of Exhibit A.
3.2 Supplier will provide CA, at no charge, with a single camera-ready
copy of each marketing piece which Supplier develops regarding the Products, and
hereby grants to CA the right to make copies of and distribute such marketing
pieces in connection with CA's.
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performance of this Agreement. Supplier will perform such marketing support
activities relating to the Products as described in Section 2 of Exhibit B
hereto or as otherwise mutually agreed in writing.
3.3 Supplier will provide to CA the support described in Section 2 of
Exhibit B.
3.4 Supplier will notify CA in advance in writing of any plans to
produce new, enhanced or modified versions of the Products or any replacements
to the Products. Supplier agrees to offer to make all such new, enhanced,
modified or replacement Products available to CA subject to the provisions of
this Agreement when the same are first made available to other licensees of the
Products. Supplier also agrees, at no additional charge, to replace any older
versions of the Products held in stock or used internally by CA or its
Distributors promptly upon availability of the new release. Supplier will
continue to provide Support for old or superseded versions of the Products for
at least one year after release of the new or replacement Products.
4. CA'S RESPONSIBILITIES
4.1 Within five (5) business days after the date of this Agreement, CA
will provide Supplier with the then-current versions of each CA Software product
described in Section 4 of Exhibit A. During the term of this Agreement, CA will
provide new versions of the CA Software products to Supplier upon their public
release. The CA Software is to be used by Supplier solely in connection with the
development and support of the Products pursuant to this Agreement. The CA
Software is licensed to Supplier *********************. At the termination of
this Agreement, Supplier shall promptly return all CA Software to CA unless
otherwise agreed by CA in writing. Any CA Software provided to Supplier under
this Agreement may be used by Supplier solely in connection with Supplier's
performance of this Agreement and subject to the following terms and conditions:
a) Supplier shall restrict access to the CA Software to those of its
Employees having a genuine need to have such access for the purposes of
performing this Agreement. Supplier shall not use the CA Software for the
benefit of any third party or permit any third party to install or use the CA
Software. Supplier shall not export the CA Software from the United States.
Supplier shall only use the CA Software for purposes relating to the performance
of this Agreement and shall not use the CA Software for other internal
production use;
b) Supplier acknowledges CA's representation that the CA Software
constitutes proprietary information and trade secrets which are the property of
CA. Supplier shall exercise the same precautions as it uses for the protection
of its own trade secrets and proprietary information to insure that CA's trade
secrets and proprietary information are not disclosed or used in a manner
inconsistent with CA's interests;
c) Supplier may make copies of any computer tapes, disks, or other
material provided by CA only to the extent required for the performance of
Supplier's obligations hereunder and for back-up purposes. Supplier agrees not
to make any copies or partial copies of any computer tapes, disks, or other
materials provided by CA for the purpose of supplying them to third parties. All
copies of the CA Software made by Supplier are and remain the property of CA and
shall be marked with CA copyright and other proprietary rights notices. Supplier
shall not de-compile, disassemble or otherwise reverse engineer the CA Software,
and shall not modify, translate, enhance or create derivative works of the CA
Software;
*Confidential information deleted
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d) No portion of the CA Software may be incorporated into the
Products unless otherwise agreed by CA in writing. Supplier may not transfer,
distribute, assign or sublicense the CA Software to any third parties; and
e) Title to the CA Software, including any modifications and
enhancements thereto developed under this Agreement, is retained by CA as set
forth herein. Supplier is only granted a non-exclusive license to use the CA
Software subject to the terms and conditions of this Agreement.
4.2 CA will perform such marketing activities relating to the Products
as described in Section 3 of Exhibit B hereto or as otherwise mutually agreed in
writing. Each party will bear its own costs and expenses on all sales support
activities unless otherwise agreed in writing.
4.3 a) During Phase 3, Supplier will provide potential Customers with
the opportunity to evaluate the Products by the use of online evaluations, test
runs using Large Volume Production Environments, small pilot projects run on
IAI's systems or otherwise; provided, however, that such potential Customers
shall in all cases pay for the conversion services actually rendered in the
course of such evaluations.
b) During Phase 4, with Supplier's written consent in each case, CA
shall be entitled to license Packaged Products to potential Customers for
evaluation purposes for periods not exceeding 30 days (unless a longer period is
agreed by the Supplier); provided, however, that such potential Customers shall
in all cases pay for the conversion services actually rendered in the course of
such evaluations. Such copies of the Packaged Products shall be licensed
pursuant to CA's then standard trial or evaluation license agreements and shall
contain software-enforced limits on the number of Lines of Code which they will
process during such evaluation period.
4.4 Supplier shall during the Term be enrolled in CA's maintenance and
support plan for each of the CA Software and shall be entitled to receive all
assistance, support, product updates and upgrades, mailings and other benefits
which are made generally available to CA's customers. ************************
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5. INVOICING AND PAYMENTS
5.1 CA shall pay Supplier the fees set forth in Section 1 of Exhibit B
for copies of the Products licensed by CA or its Distributors to Customers under
the terms of this Agreement. Supplier shall pay CA the license fees set forth in
Section 1 of Exhibit B for copies of the Products licensed by Supplier to
Customers under the terms of this Agreement. Notwithstanding the foregoing, no
moneys shall be payable for evaluation copies, support or marketing copies or
for replacement of defective copies.
5.2 Each party shall report revenues received from the licensing and
distribution of the Products on a quarterly basis within 45 days of the end of
each calendar quarter. Each party shall include payment with respect to Product
license fees received during such quarter together with its quarterly revenue
report, which payment shall take into account any credits due such party in
respect of returned or defective copies of the Products.
*Confidential information deleted
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5.3 All prices are inclusive of all taxes and duties, except that sales
tax or VAT shall be payable by the selling party at the prevailing rate on the
date of invoice where no exemption from such taxes is available. Except as
otherwise set forth in this Agreement, all invoices will be payable in US
Dollars within 30 days of receipt of invoice (unless different payment terms are
agreed).
5.4 With respect to Phase 3 Products, Supplier shall arrange the
delivery of copies of such Products to Customers and shall assist Customers in
installing such Products. Supplier shall consult with CA regarding the
sequencing, scheduling and implementation of all such installations, but
Supplier shall control and make the final determination of the sequencing,
scheduling and implementation of all such installations. With respect to
Packaged Products, Supplier shall arrange, at its expense and risk, shipment of
all such Products ordered by CA on the appropriate storage medium and in
appropriate packaging to one CA facility for redistribution by CA to its
Distributors and Customers. Risk of loss remains with Supplier until receipt by
CA.
5.5 Each Party shall maintain complete and accurate records of Product
licensing activities and license fees obtained therefrom and shall submit
marketing and revenue reports to the other party at monthly intervals as set
forth above. Not more frequently than once per year during the Term of this
Agreement, each party shall have the right to have an independent accounting
firm, upon prior notice and during normal business hours, audit the other's
records solely to determine whether the auditing party has been paid all amounts
payable to it under this Agreement. In the event the auditors determine that
such party is due any amount, then the audited party shall, within fifteen (15)
days of notice thereof, pay the auditing party such amount together with
interest thereon at the rate of one percent (1.0%) per month. The auditing party
shall bear the expenses of the audit; provided, however, that in the event any
such audit reveals that the other has understated the amount that it is
obligated to pay under this Agreement by more than five percent (5%) of the
amount reported during the period audited, then the audited party shall pay, in
addition to any other fees contractually due, all reasonable costs and expenses
associated with the audit, and the auditing party shall thereafter have the
right to audit the other's records not more than twice per year.
6. POST SALES SUPPORT AND MAINTENANCE
6.1 Supplier shall be responsible for providing Support of the Products
to CA and its Customers in accordance with Section 2 of Exhibit B and in Exhibit
C. Supplier shall provide installation, calibration and training services at
rates determined by Supplier.
6.2 Supplier shall, at Supplier's cost and expense, place the source
code for the Products into escrow with a mutually agreed escrow agent pursuant
to the escrow agreement approved by CA and attached hereto as Exhibit D. Such
materials shall include the source code of the Products, necessary documentation
and listings, known error information, amendments and modifications to the
source code and documentation and copies of all of Supplier's tools and
materials necessary to provide support for the Products (including electronic
and hard copy versions of the Products, documentation and support materials)
(all of the foregoing hereinafter referred to as the "Source Code"). The above
materials shall be provided to the escrow agent within 30 days of the start of
Phase 2 and shall be periodically updated during the Term to ensure the currency
of materials. In the event that Supplier commits a material breach of its
obligations
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hereunder and does not cure the breach within ninety (90) days after receiving
written notice thereof, ceases doing business and does not designate a successor
or is the subject of any bankruptcy proceeding which is not dismissed within
thirty (30) days, CA shall have the right to obtain the Source Code for the
Products from the Escrow Agent or directly from Supplier. Supplier agrees that
each of the above conditions shall obligate the Escrow Agent to immediately
release the Source Code of the Products and related materials to CA. CA shall
use the Source Code acquired hereunder only for purposes of providing Support
services to Customers. The Source Code shall be treated as Confidential
Information of Supplier and CA shall not disclose or distribute the Source Code
to any third party unless otherwise agreed by Supplier in writing.
7. REPRESENTATIONS AND WARRANTIES
7.1 Supplier warrants that it has the right to grant the licenses and
rights granted in this Agreement and that it is under no obligation or
restriction, nor will it assume any obligation or restriction, which would in
any way interfere with, be inconsistent with or present a conflict of interest
concerning Supplier's obligations under this Agreement.
7.2 Supplier represents and warrants that the Products do not infringe
any patent, copyright or trademark or other intellectual property right of any
third party and that the exercise by CA of the rights granted under this
Agreement shall not infringe any patent, copyright, trademark or other
intellectual property right of any third party.
7.3 Upon Public Release of each Product, Supplier warrants that such
Product (including all new releases and updates thereto) will operate
substantially in accordance with its Functional Specification and published
documentation. Should such Product not operate in the prescribed manner, then
Supplier shall use its best efforts to ensure that it does so in as short a time
as is possible.
7.4 CA acknowledges that (i) the Products contain metering code that
monitors and reports on the number of Lines of Code which are analyzed by the
Products, and (ii) all versions of the Products will contain code which will
require authorization codes to operate and which will, upon the expiration of
such codes (due to the passage of a certain time or the analysis of a certain
number of Lines of Code, or both), cause them to become inoperative. Except as
set forth above, Supplier shall not include any authorizations strings, "time
bombs", license managers or other devices in the Products unless such devices
are specifically disclosed to and acknowledged by CA in writing.
7.5 Supplier represents and warrants that it has or will obtain
appropriate insurance coverage in accordance with generally accepted commercial
practices, covering risks such as loss due to errors or omissions in the
software code, as well as general liability, in the amount of at least
$1,000,000. Supplier agrees, upon CA's request, to provide CA with copies of the
relevant certificates of insurance pertaining to such insurance.
7.6 CA warrants that it has the right to grant the licenses and rights
granted in this Agreement and that it is under no obligation or restriction, nor
will it assume any obligation or restriction, which would in any way interfere
with, be inconsistent with or present a conflict of interest concerning CA's
obligations under this Agreement.
7.7 CA represents and warrants that, to the best of CA's knowledge, the
CA Software
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does not infringe any patent, copyright or trademark or other intellectual
property right of any third party and that the exercise by Supplier of the
rights granted under this Agreement shall not infringe any patent, copyright,
trademark or other intellectual property right of any third party.
8. INDEMNITY
8.1 Supplier shall fully indemnify CA against any and all loss, costs,
expenses and liability in connection with, and defend CA against any claims (i)
which result from a breach of the warranties of Supplier set forth above in
Section 7; or (ii) which are based on a failure of Supplier to perform its
Support obligations set forth herein; provided that:
a) Supplier is given prompt written notice of such claim and its
details by CA;
b) Supplier shall have the sole right to conduct and control the
claim's prosecution, defense, settlement or compromise;
c) CA shall give Supplier all reasonable assistance in connection
therewith at Supplier's expense; and
d) such claim is not caused by any acts of CA other than use and
distribution of the Products in accordance with this Agreement.
8.2 CA shall fully indemnify Supplier against any and all loss, costs,
expenses and liability in connection with, and defend Supplier against any
claims (i) which result from a breach of the warranties of CA set forth above in
Section 7; or (ii) which are based on a failure of CA to perform its obligations
set forth herein; provided that:
a) CA is given prompt written notice of such claim and its details
by Supplier;
b) CA shall have the sole right to conduct and control the claim's
prosecution, defense, settlement or compromise;
c) Supplier shall give CA all reasonable assistance in connection
therewith at CA's expense; and
d) such claim is not caused by any acts of Supplier other than use
of the CA Software in accordance with this Agreement.
9. TERM AND TERMINATION
9.1 This Agreement shall commence upon its execution and shall continue
for a period of ************ and shall thereafter automatically renew for
additional ***************** unless either party notifies the other of its
intention to terminate this Agreement at least sixty (60) days prior to any
renewal date. This Agreement may be terminated prior to the end of the above
terms as follows:
a) By CA in the event the Products fail initial acceptance testing
as set forth
*Confidential information deleted
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above;
b) At any time by mutual written agreement of the parties;
c) By either party if the other party commits any material breach of
its obligations hereunder and fails within ninety (90) days of written notice to
cure the same. Any such termination shall be without prejudice to any other
rights which may have accrued to the parties hereunder; or
d) By either party immediately by written notice if the other party
files a petition in bankruptcy, goes into liquidation, admits that it is
insolvent, makes an assignment for the benefit of creditors, or has a petition
in bankruptcy or receivership filed against it and such petition is not
dismissed within thirty (30) days following filing.
9.2 In the event of any uncured breach by Supplier as set forth in
Sections 9.1(c) or (d), CA shall be entitled (if it so elects) to make or obtain
copies of the Products to fulfill then-outstanding Customer orders, and CA
shall, in such event, pay Supplier its share of Net Revenues (as set forth in
Section 1 of Exhibit B) attributable to such orders.
9.3 All licenses to use the Products properly granted by CA hereunder
shall survive any expiration or termination of this Agreement. In the event of
termination howsoever caused (other than termination by Supplier as a result of
an uncured breach by CA), Supplier shall continue to provide CA and its
Customers with support and updates for the Products for a period of at least one
(1) year, subject to CA or its Customers continuing to make payments in
accordance with this Agreement (or the Customer's agreement with Supplier). At
the termination of the Agreement, Supplier shall, on request of CA, offer to
provide support to all CA Customers in accordance with its then standard terms,
conditions and prices for a period of at least one (1) year following
termination of this Agreement.
9.4 In addition to this Section 9, the obligations set forth in Section
2.6 and Articles 7, 8, 10 and 11 shall survive termination of this Agreement and
shall bind the parties and their legal representatives, successors, and
permitted assigns;
10. LIMIT OF LIABILITY
10.1 Except as set forth above in the Section of this Agreement titled
"Indemnity", NEITHER PARTY SHALL IN ANY CIRCUMSTANCES BE LIABLE TO THE OTHER
PARTY FOR ANY SPECIAL, CONSEQUENTIAL OR INDIRECT LOSS, DAMAGE OR INJURY, COST OR
EXPENSE HOWSOEVER ARISING AND OF WHATSOEVER NATURE INCLUDING (WITHOUT
LIMITATION) LOSS OF PROFIT, LOSS OF CONTRACTS, LOSS OF OPERATION TIME OR LOSS OF
USE OF ANY EQUIPMENT OR PROCESS.
10.2 Nothing in this Section is intended to exclude or restrict or shall
be construed as excluding or restricting the liability of CA or Supplier for the
death or personal injury caused by the negligence of CA or Supplier or their
Employees.
10.3 Notwithstanding any other provision of this Agreement, the
aggregate liability of either party to the other for any reason whatsoever
hereunder (other than liabilities arising from
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the obligations set forth in Article 5 hereof) arising during the twelve (12)
months following the Effective Date shall not exceed *********************);
with respect to claims arising thereafter, each party shall be liable to the
other to the extent set forth elsewhere in this Agreement.
11. GENERAL
11.1 All notices, consents and other communications required or
permitted under this Agreement shall be in writing and sent by registered or
certified mail, postage pre-paid, transmitted by facsimile transmission
confirmed by mail as set forth above or sent by overnight courier (if delivery
is confirmed by the courier) to the addresses indicated on the first page of
this Agreement, or such other address as either party may indicate upon 10 days'
prior notice to the other party.
11.2 Both parties agree that the personnel of one party shall not for
any purposes be considered Employees of the other party and that the parties
shall be deemed independent contractors. Nothing in this Agreement shall be
construed to constitute either party as an agent, partner or legal
representative of the other party. Each party assumes full responsibility for
the actions of its personnel while performing activities pursuant to this
Agreement. Both parties shall comply with all applicable legal requirements in
their performance of this Agreement. Each party agrees, during the term of this
Agreement and for one (1) years after the termination of this Agreement, not to
solicit for employment or retainer any person who shall have been an Employee of
the other party during the then preceding one (1) years.
11.3 The parties agree to keep the specific terms and conditions of this
agreement in confidence. All announcements and press releases relating to this
Agreement shall be in a form to be mutually agreed to by the parties. Each party
shall bear its own expenses in its performance under this Agreement. Neither
party may assign this Agreement without the prior written consent of the other
party, such consent not to be unreasonably withheld.
11.4 This Agreement shall be governed by the laws of the State of New
York (excluding its conflicts of laws principles). If any provision of this
Agreement is held by a court of competent jurisdiction to be illegal, invalid,
or unenforceable, the validity or enforceability of the remainder of this
Agreement shall not be affected.
*Confidential information deleted
-11-
<PAGE>
11.5 This Agreement represents the entire agreement between the parties
with respect to the subject matter contained herein and supersedes any and all
written communications, representations and arrangements whether written or oral
(whether given or made before or after the date hereof). No alternation,
modification, waiver or addition to this Agreement shall be valid unless made in
writing and signed by both parties' duly authorized representatives.
Computer Associates International, Inc. Information Analysis, Inc.
By: /s/ Tommy Bennett By: /s/ Sandor Rosenberg
----------------- --------------------
Name: Tommy Bennett Name: Sandor Rosenberg
--------------- ------------------
Title: Vice President Title: President
-------------- -----------------
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<PAGE>
EXHIBIT A
PRODUCTS
This Exhibit A supplements the Software License Agreement between the parties.
All capitalized terms used but not defined herein have the meanings set forth in
the Agreement.
1. PRODUCTS TO BE DEVELOPED AND SUPPLIED TO CA. Supplier will develop one
Product for each of several language-database-platform environments. Each
Product will remediate Customer source code which runs on one specific
language-database-platform environment.
A. Date 2000 Remediation Products for *******. Each Product will be
configured for a single database environment in the ****** system, and will rely
on the information from the ****** date impact assessment tool to remediate the
Date 2000 impacts on applications designed for such environment.
B. Date 2000 Remediation Products for *********. Each Product will be
configured for a single database environment in the ********* system, and will
rely on the information from the ********* date impact assessment tool to
remediate the Date 2000 impacts on applications designed for such environment.
C. Date 2000 Remediation Products for ************. Each Product will be
configured for a single database environment in the ************ system, and
will rely on the information from CA's ************ date impact assessment tool
to remediate the Date 2000 impacts on applications designed for such
environment.
2. OPERATING ENVIRONMENTS SUPPORTED. Supplier will develop Products which
are compatible with the following environments:
A. ****** (mainframe only) - IDMS databases only; compatible with:
(1) IBM VSE/SP
(2) IBM VSE/ESA
(3) IBM MVS/XA
(4) IBM MVS/ESA
(5) IBM VM/XA
B. ********* (mainframe only) - databases only; compatible with:
(1) IBM MVS
(2) IBM VSE
(3) IBM VM
C. ************ (mainframe only) - *********** and ********* databases
only; compatible with:
(1) IBM MVS
(2) IBM VSE
(3) IBM CICS
*Confidential information deleted
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<PAGE>
3. FUNCTIONAL SPECIFICATION FOR PRODUCTS.
Supplier will work with CA technical teams to refine each Product to allow a
high degree of automation for each supported environment in addition to
developing the Application Program Interfaces (API) to the appropriate CA
Software. Ultimately, the degree of automation and accuracy of the remediation
process will largely depend on the accuracy of the input from the CA date impact
assessment process (tool and analyst) and the quality of the technical teams who
run the remediation process using the Product.
**************************************************************************
********************************************************************************
**************************************************************************
********************************************************************************
******************************************************************************
*******************************************************************************
******************************************************************************
**********************************************
******************************************************************************
********************************************************************************
******************************************************************************
*******************************************************************************
******************************************************************************
*************************************************************************
******************************************************************************
*************
Each Product will require adjustments to reflect the specifics of a Customer's
particular software environment so as to enable the Product to be more
compatible with the performance of the specific environment. As a result, the
efficacy of each Product will be directly proportional to the quality of the
work of the technical teams who run the remediation process using the Products.
4. CA SOFTWARE
*************************
**************
**************
********************************************
**************
*******************
***************************** ******
************************ ******
************************ ******
************************** ******
************************ ******
************************** ******
*Confidential information deleted
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<PAGE>
**************
********************** ******
************************* ******
**********************************
**********
************
**********
******************
******************
********
******
All docomentation for the above plus:
*****************************
**********************************
The source for the IDD Programming Interface Modules(s) used to navigate the
IDD.
***************************
*******
**************
**********
*************
********************
***********************
*************
*****************************
*********
****************************
***************
****************************
***********
****************
********************
********************
*******
***************
***************
*****************
*****************
**********************
*Confidential information deleted
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<PAGE>
*********************
***********
***********
***************
***********
***************
*********************
*********
Plus any products later deemed necessary to support the CA/IAI Relationship as
mutually agreed to by both parties.
5. PHASES
Each Product will evolve through four product development and marketing phases,
as follows:
A. Phase 1 - Product Design And Development.
(1) "Phase 1" means, with respect to each Product, the time period
preceding the beta test phase of such Product. During Phase 1, each product will
be developed, tested and linked to the corresponding CA-Impact 2000 tools for
the given target environment. Phase 1 includes, without limitation, all design,
development, implementation, debugging, testing, pre-release enhancement and
pre-release marketing relating to such Product. Phase 1 is the "Product Design
And Development" Phase of the Agreement, and will vary in length depending on
the Product's development schedule. Upon completion of Phase 1, Supplier shall
have delivered a Product which substantially complies with the Functional
Specification and which is ready for installation at Beta testing sites.
B. Phase 2 - Beta Test
During Phase 2, Supplier will install one copy of the object code version at up
to four (4) Beta test sites as designated and agreed upon by both parties. Prior
to the end of Phase 1, Supplier and CA will develop mutually agreeable Beta test
criteria which will define the conditions under which a given Product has
successfully completed the Beta test Phase. Beta test site testers will sign
standard evaluation licensing agreements with the appropriate disclaimers, at
reduced licensing rates to be agreed to by Supplier and CA.
C. Phase 3 - Licensing To Large Volume Environments.
"Phase 3" means, with respect to each Product, the time period commencing with
the Public Release of the Product, when the Product is ready for delivery and
installation into Large Volume Production Environments. Phase 3 encompasses
post-release marketing, installation, customization, tuning, Support,
enhancement and revision of such Product in Large Volume Production
Environments. It can continue after the commencement of Phase 4.
This product offering will require Supplier technical services to install and
modify the tool to
*Confidential information deleted
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<PAGE>
reflect the particular characteristics of the target operating environment.
Given the nature of the deliverable during Phase 3, ongoing modifications to the
product are anticipated as part of the remediation process to account for
environment-specific anomalies. The Product will require a high level of
technical expertise and support to achieve desirable levels of throughput,
automation and remediation.
During Phase 3, Marketing efforts will be focused on licensing the CA and
Supplier products (and corresponding support services) to (i) systems
integrators who establish Large Volume Production Environments to service their
clients and (ii) large enterprises which establish Large Volume Production
Environments to service their own internal remediation needs. During Phase 3,
smaller CA clients (under 1 million lines of code) who inquire as to the
availability of the Products will be referred to established Factories to ensure
quality control of the remediation process, to maximize the efficiency of the
Supplier's delivery and support process and to maximize Supplier's and CA's
return on investment. Supplier shall control the sequence, scheduling and
implementation of all such installations.
D. Phase 4 - Marketing A Packaged Product Offering.
"Phase 4" means, with respect to each Product, the time period commencing with
the Public Release of the Packaged version of such Product to Customers.
Following the Public Release of each Product, CA and Supplier will develop
mutually agreeable criteria which will define the conditions under which a given
Product can be marketed as a Packaged Product. CA and Supplier will work
together to develop a Packaged version of such Product on experience gained in
licensing, installing and supporting such Product in large volume environments.
Supplier and CA technical teams will refine the Product packaging, documentation
and operating environment to enable user installation and implementation. The
end result will be Packaged Products which can be aggressively marketed through
the CA marketing channel directly to end-users.
6. DEVELOPMENT TIMETABLES.
A. Date 2000 Remediation Products for ****** Phase 1 is expected to be
completed approximately ****** after the Effective Date. Phase 2 is expected to
be completed within ****** thereafter.
B. Date 2000 Remediation Products for ********* - Phase 1 is expected to
be completed approximately ****** after the Effective Date. Phase 2 is expected
to be completed within *** thereafter.
C. Date 2000 Remediation product for ************ - Phase 1 is expected
to be completed approximately ******* after the Effective Date. Phase 2 is
expected to be completed within ****** thereafter.
The foregoing timetables are based on Supplier's best professional judgment and
Supplier's knowledge of the CA Software and related factors. If such factors
change or the interface with the CA Software contains unanticipated
complexities, the foregoing timetables may change. In all cases, Supplier will
work closely with CA to alert CA to any potential problems that might affect any
timetable and will work diligently to adhere to the original timetable.
*Confidential information deleted
-17-
<PAGE>
EXHIBIT B
COMMERCIAL TERMS
This Exhibit B supplements the Software License Agreement between the parties.
All capitalized terms used but not defined herein have the meanings set forth in
the Agreement.
1. PRODUCT ROYALTIES
A. Royalties. **********************************************************
*****************************************************************************
***************. For each copy of the Products distributed by CA, CA shall pay
Supplier a royalty equal to ******************************* by CA for the
licensing of the Products by CA to Customers. For each copy of the Products
licensed by Supplier, Supplier shall pay CA a marketing fee equal to
********************************* by Supplier for the licensing of the Products
by Supplier to Customers. With respect to transactions denominated in currencies
other than United States Dollars, the foreign currency amount will be converted
into US Dollars in accordance with CA's generally accepted accounting principles
before determining the resulting Net Revenues. If the Product is licensed or
leased with other hardware or software products priced together or sold as a
single unit or as a part of a combined lease or license of the Product with such
other products (a "Bundled Product Sale"), then the Net Revenues arising from
such Bundled Product Sales will be the pro-rata amount attributable to the
Product, with such allocation being based on CA's and Supplier's standard list
prices for all of the products included in the Bundled Product Sale in question.
B. Prices. Supplier shall set suggested retail prices (including license
fees, metering charges and Support fees) for the Products. CA shall be free to
establish its own prices (including license fees and metering charges) for the
Products. The parties agree, however, that the target minimum amounts payable by
CA to Supplier with respect to each Product license to a Customer shall be
**************************************** (the "Target Minimum Fees"). For each
Product license which results in Supplier's receipt of license fees which are at
least equal to the Target Minimum Fees, Supplier will provide to the licensee,
without additional charge, a reasonable number of hours of installation,
calibration and training services.
C. Special Pricing. CA and Supplier may mutually agree to vary the
Target Minimum Fees in special circumstances. If, in a special circumstance, a
pricing model is proposed which would result in Supplier receiving less than the
Target Minimum Fees, both parties will negotiate, in good faith, modifications
to the Target Minimum Fees for such deal, or a change in the pricing model to
meet such market requirements.
2. SUPPORT TO BE PROVIDED BY SUPPLIER
A. Pre-Sales Support.
(1) During the acceptance testing period described in Section 2.3 of
the Agreement, Supplier shall make one qualified engineer available to provide
telephone support to CA during normal business hours until completion of such
acceptance testing.
*Confidential information deleted
-18-
<PAGE>
(2) Supplier and CA together will train CA's sales training staff on
how to market the Product; such CA sales training staff shall then be required
to train others in CA's sales organization. The first ten (10) person-days of
such training and consulting per Product shall be provided without charge for
the time of Supplier's personnel, and shall be provided at CA's Islandia, New
York headquarters. CA will, however, reimburse Supplier for all costs and
expenses (including, without limitation, reasonable travel, food and lodging
expenses at the same rates as for CA's own employees) incurred by Supplier in
connection with the performance of its duties under this Section 2.A(2). Any
additional person-days of training will be charged at Supplier's then-current
training rates.
B. Delivery. Within sixty (60) days after the date hereof, a procedure
for administering and executing the delivery and installation of each order will
be agreed upon by Supplier and CA. Once Customer has ordered a Product, Supplier
will work with the CA account team to coordinate delivery and installation of
such Product.
C. Post-Sales Support. The fees payable to CA to Supplier for the
Products shall cover the following post sales activities by Supplier to support
CA Customers of the Products. Except as otherwise indicated below with respect
to Support, the following post sales support services shall be provided at no
additional cost to CA or its Customers.
(1) Installation of the Products. Supplier will provide these
services under a schedule determined by Supplier.
(2) Calibration. Supplier will provide these services under a
schedule determined by Supplier.
(3) Training. Supplier will provide these services under a schedule
determined by Supplier.
(4) Help Desk Support Services. The cost of each Customer's initial
year of Support service for copies of the Products distributed hereunder is
included in the fees payable by CA to Supplier as set out in Section 1 of this
Exhibit B. All CA revenues from the initial year of Product Support service sold
with each Product license will be considered to be part of "Net Revenue."
Additional years of Support service must be contracted by Customers directly
with Supplier. Supplier shall retain all Support revenues from services
contracted directly between Supplier and any Customer of the Products, including
all Support renewals, after the initial year. Help Desk inquiries received by
Supplier that relate to the CA Software or other CA Year 2000 product offerings
will be referred by Supplier to CA. To the extent required by Supplier's Support
agreement with each Customer, Supplier shall (a) correct any reported errors in
the Products which cause them not to comply with the then current version of its
user documentation, and, prior to such correction, Supplier shall provide
work-arounds to minimize the effects of any Errors until a fix can be provided;
and (b) periodically enhance and update each of the Products to ensure that the
Products supplied to CA will include all new releases and functionality made
available to Supplier's other customers of such Product, and all modifications
necessary to support new versions of the hardware and software operating
environments in which the Products are designed to operate.
D. Technical Services. All consulting, training, technical support and
other services
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<PAGE>
provided by Supplier to Customers ("Technical Services") not included in the
services to be provided by Supplier pursuant to Section 2.C of this Exhibit B
shall be the sole responsibility of Supplier and shall be provided on such
terms, conditions and fees as may be agreed between Supplier and such Customers.
Supplier shall be entitled to retain all revenues it receives from such
Customers for such services unless otherwise agreed in writing.
3. DUTIES OF CA
A. Each product development cycle will require software, technical
support and technical expertise from CA to develop the IAI Date 2000 remediation
operating modules for the specific language-database-platform environment. In
particular, CA will provide IAI with the following resources for each Product:
(1) Software Developer Licenses for the appropriate CA Software,
documentation and related technical assistance as necessary;
(2) A minimum of 160 hours of CA Software product installation and
technical support;
(3) Beta and early release sites, preferably in the Washington DC
area;
(4) API technical information for each CA Software product as
appropriate;
(5) 2 person-months of QA assistance from CA; and
(6) 2 person-months of assistance from CA in writing documentation.
The ability for Supplier to achieve the target delivery schedules for each
Product will depend upon the timely delivery of the necessary CA Software and
technical support.
B. The CA marketing effort throughout term of Agreement will include:
(1) Within one month following the Effective Date, CA and Supplier
will mutually agree on the format and substance of a world-wide announcement of
the CA-Supplier relationship and of the capabilities of the Products and the
entire Date 2000 tool suite, and CA will publish such announcement within one
month following the Effective Date.
(2) An ongoing CA marketing campaign for the Products to include
internet hot-links between the Supplier and CA home pages, articles in the
appropriate newspapers and technology periodicals, cable television interviews
and joint marketing efforts at technology conferences.
(3) CA will develop and provide high quality marketing materials for
the Products to the CA client base for ************************
(4) CA will work jointly with Supplier to negotiate and consummate
teaming and licensing relationships for the Products with Large Volume
Production Environment Customers.
*Confidential information deleted
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<PAGE>
4. PRIMARY CA AND SUPPLIER POINTS OF CONTACT
CA: SUPPLIER:
Kevin Coyne Sandor Rosenberg, President
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<PAGE>
EXHIBIT C
SUPPORT SERVICES TERMS AND CONDITIONS
This Exhibit C supplements the Software License Agreement between the parties.
All capitalized terms used but not defined herein have the meanings set forth in
the Agreement.
1. DEFINITIONS.
"Maintenance Releases" means product temporary fixes (PTFs), error
corrections, work-arounds or other maintenance tapes and corrections made
available by Supplier to its customers.
"Updates" means new releases of the Products providing additional
functionality as well as error corrections.
2. FIRST LEVEL SUPPORT. First Level Support will be provided, in English,
by Supplier to CA and its Customers.
A. Supplier shall have a reasonable number of appropriately trained
technical personnel available in its support centers to provide help desk
support regarding the Products and shall have at least one support installation
of the Products at a Supplier support center. CA may pass calls received by CA
relating to the Products directly to Supplier's First Level Support
organization.
B. Supplier shall provide First Level Support substantially as described
in CA's Client Support Handbook, a copy of which has been provided to Supplier.
Such First Level Support shall include call acceptance from the Customer with
diagnosis of problems to determine if they relate to software provided by
Supplier, CA, or other parties. Supplier shall be responsible for investigating
and collating all suspected errors in the Products reported by Customers and
attempting to apply known PTFs or Maintenance Releases. Any unresolved suspected
errors relating to the Products shall be referred for action under Second Level
Support. First Level Support shall also include response to general advice and
guidance questions from supported Customers.
3. SECOND LEVEL SUPPORT.
A. Supplier shall provide Second Level Support, in English, during the
hours and substantially in accordance with the procedures described below which
shall include problem diagnosis and error corrections or avoidance
(work-arounds) with respect to suspected errors in the Products reported by CA
or its Customers. Such service shall also include provision to CA of any
Maintenance Releases and Updates for the Product made available by Supplier
during the Term of the Agreement. CA shall have the right to distribute such
Updates to supported CA Customers.
B. Severity levels:
1) "Severity 1" means a suspected Product error that: (1) renders the
Product inoperative; or (2) causes the Product to fail catastrophically (system
down condition).
2) "Severity 2" means a suspected high impact Product error that
materially
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<PAGE>
restricts the use or performance of the Product.
3) "Severity 3" means a Product error that causes a minor impact on
the use of the Product, or a Documentation error.
4) "Severity 4" means a question about Product use or implementation.
C. Supplier shall respond, in English, to CA and Customer requests for
Second Level Support by telephone, facsimile, on-line service (if available) or
in writing to CA on a twenty-four hour/7 day per week basis. Such Second Level
Support service shall be comparable to the second level and third level services
offered by CA with respect to its own products as set forth in the then current
CA Client Support Handbook. In connection with such service, Supplier shall use
all reasonable efforts to respond to CA requests for service within the
following response times:
1) Severity 1 -- 1 business hour
2) Severity 2 -- 2 business hours
3) Severity 3 -- 1 business day
4) Severity 4 -- 2 business days
D. If any corrections to Product are required as part of Second Level
Support, Supplier will also provide, as applicable, Maintenance Releases or
Updates in appropriate format to CA or directly to CA's Customers. Supplier will
use reasonable efforts to provide corrections or work-arounds to all errors
reported by CA in the following time periods.
1) Severity 1 -- work-around or fix restoring functionality of system
(must be restored to Severity 2 or better level of functionality) within one (1)
business day and fix for error within five (5) business days.
2) Severity 2 -- work-around within five (5) business days and fix
within ten (10) business days.
3) Severity 3 -- fix in next major release of the Product.
4) Severity 4 -- reply to the advice and guidance call within a
reasonable period of time.
E. In the event that CA needs to escalate the severity level of a
problem or Supplier fails to respond or provide error correction or avoidance
within the above time periods, CA may escalate the problem to Supplier's
customer services (or engineering) manager or, if necessary, to Supplier's
senior management.
F. All Updates to the Products furnished by Supplier to CA shall be
upwardly compatible with the prior release of the Products. CA shall have the
right to distribute all Maintenance Releases and Updates to the Products
provided by Supplier as part of Second Level Support to all Distributors and all
supported CA Customers.
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EXHIBIT D
FORM OF ESCROW AGREEMENT
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<PAGE>
SOURCE CODE ESCROW AGREEMENT
----------------------------
THIS SOURCE CODE ESCROW AGREEMENT (this "Agreement") is made as of the
_____ day of ____________, 1997 by and among (i) INFORMATION ANALYSIS, INC.
("Supplier"), a Virginia corporation, (ii) COMPUTER ASSOCIATES INTERNATIONAL,
INC. ("CA"), a ___________ corporation, and (iii) _____________________________
(the "Custodian"), a _______________________ professional corporation.
WHEREAS, Supplier and CA are parties to that certain Software License
Agreement (the "License Agreement"), of even date herewith, pursuant to which
Supplier granted to CA the right to market and sublicense those computer
software products described on Exhibit A attached hereto (the "Products");
WHEREAS, Supplier desires to deliver to the Custodian, as a custodian, a
copy of the source code (the "Source Code") for each of the Products, which
Supplier desires the Custodian to keep in its possession for delivery to CA
under certain circumstances; and
WHEREAS, the Custodian desires to act as a custodian of the Source Code
for the benefit of Supplier and CA, under the terms and conditions specified
herein.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending legally to be bound, hereby agree as follows:
1. Delivery by Supplier. With respect to each Product, Supplier shall,
within thirty (30) days after the commencement of Phase 2 under the License
Agreement, deliver to the Custodian a copy of the current Source Code together
with necessary documentation and listings, known error information, amendments
and modifications to the source code and documentation and copies of all of
Supplier's tools and materials necessary to provide support for such Product
(including electronic and hard copy versions of the Product, documentation and
support materials) (all of the foregoing hereinafter referred to as the "Source
Code Copy").
2. Duplication; Updates; Changes. The Custodian shall be permitted to
duplicate the Source Code Copy only to the extent necessary for the Custodian to
comply with the terms and provisions of this Agreement, provided that CA shall
bear the expense of such duplication. Supplier shall from time to time (but no
less frequently than semi-annually) deposit with the Custodian any
modifications, updates or new releases to the Source Code, as soon as
practicable after such modifications, updates, new releases shall be
commercially released by Supplier. Upon the delivery by Supplier of an updated
Source Code Copy to the Custodian hereunder, the Custodian shall return to
Supplier the Source Code Copy theretofore held in custody by the Custodian. The
Custodian shall have no obligation to verify that the current Source Code Copy
or any subsequently delivered Source Code Copy is in fact a copy of the Source
Code or any modification, update or new release thereof.
3. Delivery by the Custodian to CA. The Source Code Copy shall be held
by the Custodian for delivery of a copy thereof to CA, subject to the terms and
conditions of Section 4 hereof, in the event that:
<PAGE>
A. Supplier shall request the Custodian in writing to effect such
delivery to CA, such request to specify the address to which a copy of the
Source Code Copy is to be delivered;
B. Supplier commits a material breach of its obligations under the
License Agreement and does not cure the breach within ninety (90) days after
receiving written notice thereof; or
C. Supplier ceases doing business and does not designate a successor;
or
D. Supplier is the subject of any bankruptcy proceeding which is not
dismissed within thirty (30) days.
4. Procedure.
A. In the event that CA shall elect to make a claim for a copy of the
Source Code Copy under ss3B, ss3C or ss3D hereof, CA shall deliver to the
Custodian:
(i) Written notification of the occurrence of an event described
in ss3B hereof;
(ii) If CA claims a material breach by Supplier under ss3B
hereof, evidence that CA has previously notified Supplier in writing of such
breach and that CA has given Supplier ninety (90) days in which to cure such
breach, in accordance with the terms and conditions of the License Agreement;
(iii) A demand that a copy of the Source Code Copy be delivered to
CA;
(iv) A written undertaking from CA (which shall be legally
binding) that the copy of the Source Code Copy to be supplied to CA shall be
used only for purposes of providing maintenance and support services to
Customers that such copy of the Source Code Copy shall be promptly returned to
the Custodian at the expiration of the period during which CA has the right to
use the Product under its license agreement with Supplier and that the copy of
the Source Code Copy so supplied and the information and material contained
therein shall be held confidentially by CA and CA's employees, and shall not,
under any circumstances, be disclosed or made available to any other person or
entity;
(v) Specific instructions from CA for the place of delivery of a
copy of the Source Code Copy; and
(vi) A check payable to the order of the Custodian in an amount
equal to __________________ Dollars ($_____________).
B. Upon receipt of a claim by CA under ss4A hereof, the Custodian
shall, as soon as practicable but not later than five (5) business days after
receipt of such claim, send to Supplier a photocopy of all documents contained
in such claim.
C. If CA's claim for the Source Code Copy is made under ss3B or ss3C
hereof, Supplier may, within five (5) days from receipt of such documents send
to the Custodian written
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<PAGE>
notice of its objection to such claim and to request that the merits of such
claim be decided by a court of competent jurisdiction in an interpleader action,
in accordance with the terms of Article 5 hereof; provided, however, that
Supplier may take such action only if Supplier has a reasonable basis for
disputing the grounds on which such claim was made by CA.
D. If CA's claim for the Source Code Copy is made under ss3B or ss3C
hereof, and the Custodian shall not have received any notice of objection by
Supplier under ss4C hereof, then, within five (5) business days after the
expiration of the five (5) day period described in ss4C hereof, the Custodian
shall deliver to CA a copy of the Source Code Copy. If CA's claim for the Source
Code Copy is made under ss3A or ss3D hereof, then, within five (5) business days
after providing notice to Supplier under ss3B hereof, the Custodian shall
deliver to CA a copy of the Source Code Copy.
5. Disputes and Interpleader. In the event of any dispute between
Supplier and CA claiming beneficiary status under this Agreement relating to the
delivery of a copy of the Source Code Copy by the Custodian or to any other
matter covered by this Agreement, the Custodian may submit this matter to any
court of competent jurisdiction in an interpleader or similar action. Any and
all costs incurred by the Custodian in connection therewith shall be borne
equally by Supplier and CA.
6. Liability. Except for actual fraud, criminal conduct or gross
negligence, the Custodian shall not be liable to Supplier or to CA by reason of
any act or failure to act by the Custodian in connection with this Agreement.
7. Indemnity. Supplier and CA hereby agree to indemnify and hold
harmless the Custodian and each of its directors, officers and stockholders,
absolutely and forever, from and against any and all claims, actions, damages,
suits, liabilities, obligations, costs, fees, charges and any other expenses
(including legal fees) whatsoever which may be asserted against, or incurred by,
the Custodian or any of its directors, officers or stockholders with respect to
any act or failure to act by the Custodian in connection with this Agreement or
otherwise, except as otherwise provided in Article 6 hereof.
8. Withdrawal of Custodian. Custodian may withdraw its services as
Custodian hereunder upon ninety (90) days' prior notice to CA and Supplier, and
upon such withdrawal, all obligations and liabilities of Custodian hereunder
shall cease and terminate. Promptly upon receipt of such notice, but in no event
later than ninety (90) days after receipt of such notice, CA and Supplier shall
agree upon a successor escrowee and shall mutually instruct Custodian to send
all copies of the Source Code then in Custodian's possession to such successor
escrowee. In the event that Supplier and CA shall fail mutually to so instruct
Custodian, Custodian shall, at the end of such ninety (90)-day notice period,
return to Supplier all copies of the Source Code then in its possession.
9. Fee. Supplier shall pay to the Custodian the fee of _____________
Dollars ($___________) per year as compensation for the Custodian's services
under this Agreement, such compensation to be paid annually in advance.
10. No Waiver. Neither any course of dealing by Supplier, CA or the
Custodian, nor any failure or delay on either party's part to exercise any
right, power or privilege hereunder shall operate as a waiver of any right or
remedy of such party hereunder unless such waiver is in writing and signed by
the party waiving its rights and remedies, and then only to the extent
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<PAGE>
specifically set forth in such writing. A waiver as to one event shall not be
construed as a continuing waiver by CA or the Custodian, as the case may be, or
as a bar to or waiver of any right or remedy by such party as to any subsequent
event.
11. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York, without regard to the choice
of law provisions thereof.
12. Notices. All notices, demands or consents required or permitted to
be given under this Agreement shall be in writing and shall be hand delivered,
sent by registered or certified mail, postage prepaid, return receipt requested,
or sent by overnight delivery or facsimile:
If to Supplier: Information Analysis, Inc.
11240 Waples Mill Road, Suite 400
Fairfax, Virginia 22030
If to CA: The President and copy to General Counsel
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11778-7000
If to the Custodian:
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or to such other address or addresses as shall be given by any party to the
others pursuant to the provisions of this Article 12.
13. Entire Agreement. Except for the License Agreement, including the
Schedules thereto, this Agreement shall constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and there are no
written or oral representations, understandings or agreements relative hereto
which are not fully expressed therein or herein. Except as otherwise provided
herein, no addition or modification of any provision of this Agreement shall be
binding unless made in writing and signed by all parties hereto.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers, have executed this Agreement as of the day and year first above
written.
SUPPLIER:
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Information Analysis, Inc., a
Virginia corporation
By:
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---------------, -----------
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CA:
--
Computer Associates International, Inc.,
a _____________ corporation
By:
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---------------, -----------
THE CUSTODIAN:
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By:
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SCHEDULE A
TO
SOURCE CODE ESCROW AGREEMENT PROGRAMS
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