<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 1996
REGISTRATION NO. 333-05391
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CONNECT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
<TABLE>
<S> <C> <C>
DELAWARE 7375 77-0431045
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
CONNECT, INC.
515 ELLIS STREET
MOUNTAIN VIEW, CA 94043-2242
(415) 254-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
THOMAS P. KEHLER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CONNECT, INC.
515 ELLIS STREET
MOUNTAIN VIEW, CA 94043-2242
(415) 254-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
DONALD M. KELLER, JR. CARLA S. NEWELL
MARK L. SILVERMAN ANTHONY M. ALLEN
EDWARD Y. KIM CRAIG M. SCHMITZ
VENTURE LAW GROUP GUNDERSON DETTMER STOUGH VILLENEUVE
A PROFESSIONAL CORPORATION FRANKLIN & HACHIGIAN, LLP
2800 SAND HILL ROAD 600 HANSEN WAY
MENLO PARK, CA 94025 PALO ALTO, CA 94304
(415) 854-4488 (415) 843-0500
----------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
The purpose of this Amendment No. 5 is solely to file a certain exhibit to
the Registration Statement, as set forth below in Item 16(a) of Part II.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates
except the SEC registration fee, the NASD filing fee and the Nasdaq National
Market Listing Fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
SEC Registration Fee.......................................... $ 15,268
NASD Filing Fee............................................... 4,928
Nasdaq National Market Listing Fee............................ 50,000
Printing Fees and Expenses.................................... 200,000
Legal Fees and Expenses....................................... 350,000
Accounting Fees and Expenses.................................. 180,000
Director and Officer Insurance Expenses....................... 400,000
Blue Sky Fees and Expenses.................................... 15,000
Transfer Agent and Registrar Fees............................. 10,000
Miscellaneous................................................. 49,804
----------
Total......................................................... $1,275,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Act").
Article VIII of the Registrant's Certificate of Incorporation (Exhibit 3.1
hereto) provides for indemnification of its directors and officers to the
maximum extent permitted by the Delaware General Corporation Law and Section
6.1 of Article VI of the Registrant's Bylaws (Exhibit 3.2 hereto) provides for
indemnification of its directors, officers, employees and other agents to the
maximum extent permitted by the Delaware General Corporation Law. In addition,
the Registrant has entered into Indemnification Agreements (Exhibit 10.1
hereto) with its directors and officers containing provisions which are in
some respects broader than the specific indemnification provisions contained
in the Delaware General Corporation Law. The indemnification agreements may
require the Company, among other things, to indemnify its directors against
certain liabilities that may arise by reason of their status or service as
directors (other than liabilities arising from willful misconduct of culpable
nature) and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) Since May 31, 1993, the Registrant has issued and sold (without payment
of any selling commission to any person, except as set forth below) the
following unregistered securities (as adjusted to reflect the Registrant's
reincorporation in Delaware and the automatic conversion of its outstanding
Preferred Stock upon the completion of this offering):
(1) In connection with the reincorporation of the Registrant in Delaware to
be effected prior to the closing of this offering, the Registrant will
exchange shares of its capital stock for the outstanding shares of capital
stock of Connect, Inc., a California corporation.
(2) In June 1994, the Registrant issued and sold shares of Series E
Preferred Stock convertible into an aggregate of 703,999 shares of Common
Stock to a total of five investors for an aggregate purchase price of
$2,200,002.
II-1
<PAGE>
(3) In June 1994 the Registrant issued to an investment management company
a warrant to purchase shares of Series E Preferred Stock convertible into
an aggregate of 84,000 shares of Common Stock at an exercise price of $3.13
per share of Common Stock in consideration of services rendered in
connection with the Registrant's issuance and sale of Series E Preferred
Stock.
(4) In March 1995 the Registrant issued to two German individuals 196,000
shares of Series E Preferred Stock convertible into an aggregate of 196,000
shares of Common Stock in connection with the termination of a distribution
and license agreement with Connect GmbH Information Systeme, a German
limited liability company ("Connect GmbH"), and the assignment of certain
contracts from Connect GmbH to the Registrant.
(5) From March 1995 to December 1995 the Registrant issued Convertible
Subordinated Secured Notes to four investors in the aggregate principal
amount of $12,000,099 at an interest rate of 10% per annum. All of such
notes were converted into shares of Series F Preferred Stock in December
1995.
(6) In December 1995 and January 1996 the Registrant issued and sold shares
of Series F Preferred Stock convertible into an aggregate of 11,090,612
shares of Common Stock to a total of 14 investors for an aggregate purchase
price of $29,279,221.
(7) In December 1995 the Registrant issued to each of Volpe, Welty &
Company and Hambrecht & Quist LLC a warrant to purchase 56,818 shares of
Common Stock at an exercise price of $2.64 per share in consideration of
services rendered in connection with the Registrant's issuance and sale of
Series F Preferred Stock. In addition, the Registrant paid to Volpe, Welty
& Company and Hambrecht & Quist LLC a brokerage fee equal to 5% of the
gross proceeds received from the sale of the Series F Preferred Stock to
certain investors.
(8) In July 1996 the Registrant issued and sold shares of Series G
Preferred Stock convertible into an aggregate of 272,750 shares of Common
Stock to a wholly-owned subsidiary of Fruit of the Loom, Inc., one of the
Registrant's customers, for an aggregate purchase price of $3,000,250.
(9) As of June 30, 1996, 314,890 shares of Common Stock had been issued
upon exercise of options and 3,037,056 shares of Common Stock were issuable
upon exercise of outstanding options under the Registrant's 1989 and 1996
Stock Option Plans.
(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 26(a).
The issuance described in Item 26(a)(1) will be exempt from registration
under Rule 145 under the Securities Act on the basis that such transaction
will not involve a "sale" of securities. The issuances described in Items
26(a)(2) through 26(a)(8) were deemed to be exempt from registration under the
Securities Act in reliance upon Section 4(2) thereof as transactions by an
issuer not involving any public offering. The issuances described in Item
26(a)(9) were deemed to be exempt from registration under the Securities Act
in reliance upon Rule 701 promulgated thereunder in that they were offered and
sold either pursuant to written compensatory benefit plans or pursuant to a
written contract relating to compensation, as provided by Rule 701. The
recipients of securities in each such transaction represented their intentions
to acquire the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate legends where
affixed to the securities issued in such transactions. All recipients had
adequate access to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
1.1+ Form of Underwriting Agreement.
2.1+ Form of Agreement and Plan of Merger between the Registrant and
Connect, Inc., a California corporation.
3.1+ Certificate of Incorporation of the Registrant.
3.2+ Bylaws of the Registrant.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
3.3+ Form of Amended and Restated Certificate of Incorporation of the
Registrant.
4.1+ Form of the Registrant's Common Stock Certificate.
5.1+ Opinion of Venture Law Group, a Professional Corporation.
9.1+ Amended Stockholders Agreement dated July 3, 1996 by and among
the Registrant and certain holders of the Registrant's
securities.
10.1+ Form of Indemnification Agreement.
10.2+ 1989 Stock Option Plan, as amended, and form of stock option
agreement.
10.3+ 1996 Stock Option Plan and form of stock option agreement.
10.4+ 1996 Employee Stock Purchase Plan and form of subscription
agreement.
10.5+ 1996 Directors' Stock Option Plan and form of stock option
agreement.
10.6+ Amended and Restated Registration Rights Agreement dated July 3,
1996 between the Registrant and certain holders of the
Registrant's securities.
10.7+ Lease Agreement dated September 19, 1994 between the Registrant
and BRE Properties, Inc.
10.8+ Master Equipment Lease dated January 19, 1995 between the
Registrant and Phoenix Leasing Incorporated.
10.9+# Software License Agreement dated February 5, 1996 between the
Registrant and Entex Information Services Inc.
10.10**# Software License Agreement dated March 26, 1996 between the
Registrant and Union Underwear Company, Inc.
10.11+# Software License Agreement dated November 7, 1995 between the
Registrant and PhotoDisc, Inc.
10.12+# Amendment to Software License Agreement dated March 29, 1996
between the Registrant and PhotoDisc, Inc.
10.13+# Software Development and Distribution License Agreement dated
September 16, 1994 between the Registrant and Fulcrum
Technologies Inc. and related Amending Agreement, Amending
Agreement No. 2 and Amending Agreement No. 3.
10.14+# OEM Master License Agreement dated June 30, 1995 between the
Registrant and RSA Data Security, Inc.
10.15+ Letter Agreement dated May 10, 1995 between the Registrant and
Hambrecht & Quist Incorporated and related mutual release dated
June 6, 1996.
10.16+ Option agreement dated January 16, 1996 between the Registrant
and Thomas P. Kehler.
10.17+ Option agreement dated January 16, 1996 between the Registrant
and Gordon J. Bridge.
10.18+ Option agreement dated April 24, 1996 between the Registrant and
Gordon J. Bridge.
10.19+ Letter agreement dated October 19, 1995 between the Registrant
and Gordon J. Bridge, and related interpretive letter.
10.20+ Consulting Agreement dated March 9, 1992 between the Registrant
and Quaestus Limited Partnership.
10.21+ Form of Common Stock Warrant issued to Hambrecht & Quist LLC and
Volpe, Welty & Company on December 27, 1995.
10.22+# Business Alliance Program Agreement dated June 11, 1996 between
the Registrant and Oracle Corporation and related Runtime
Sublicense Addendum, and Amendments One and Two to Runtime
Sublicense Addendum.
10.23+ Agreement and Mutual Release dated May 24, 1996 between the
Registrant and Henry V. Morgan.
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.24+# Development and License Agreement dated March 29, 1996 between the
Registrant and Time Warner Cable.
11.1+ Statement Regarding Computation of Per Share Earnings.
23.1+ Consent of Independent Auditors.
23.2+ Consent of Counsel (included in Exhibit 5.1).
24.1+ Power of Attorney.
27+ Financial Data Schedule.
</TABLE>
- --------
**Supercedes exhibit previously filed.
+Previously filed.
#Confidential treatment requested.
(b) Financial Statement Schedule
Schedule II--Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification is against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part if this
Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registration pursuant to Rule 424(b)(1), or (4),
or 497(h) under the Act shall be deemed to be a part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each post-
effective amendment that contains a form of Prospectus shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE UNDERSIGNED
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 5 TO THE REGISTRATION STATEMENT
ON FORM S-1 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF MOUNTAIN VIEW, STATE OF CALIFORNIA, ON AUGUST 1,
1996.
CONNECT, INC.
/s/ Thomas P. Kehler
By: __________________________________
THOMAS P. KEHLER,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO
THE REGISTRATION STATEMENT ON FORM S-1 HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Gordon J. Bridge* Chairman of the August 1, 1996
- ------------------------------------ Board, Director
(GORDON J. BRIDGE)
/s/ Thomas P. Kehler President, Chief August 1, 1996
- ------------------------------------ Executive Officer
(THOMAS P. KEHLER) and Director (Principal
Executive Officer)
/s/ Joseph G. Girata* Vice President of August 1, 1996
- ------------------------------------ Finance and
(JOSEPH G. GIRATA) Administration and
Secretary (Chief
Financial Officer
and Principal
Accounting Officer)
/s/ Promod Haque* Director August 1, 1996
- ------------------------------------
(PROMOD HAQUE)
/s/ Rory T. O'Driscoll* Director August 1, 1996
- ------------------------------------
(RORY T. O'DRISCOLL)
/s/ Richard H. Lussier* Director August 1, 1996
- ------------------------------------
(RICHARD H. LUSSIER)
/s/ Terry R. McGowan* Director August 1, 1996
- ------------------------------------
(TERRY R. MCGOWAN)
/s/ Richard W. Weening* Director August 1, 1996
- ------------------------------------
(RICHARD W. WEENING)
/s/ William B. Welty* Director August 1, 1996
- ------------------------------------
(WILLIAM B. WELTY)
*By: /s/ Thomas P. Kehler
--------------------------------
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER PAGE
------- ------------
<C> <S> <C>
1.1+ Form of Underwriting Agreement.
2.1+ Form of Agreement and Plan of Merger between the
Registrant and Connect, Inc., a California
corporation.
3.1+ Certificate of Incorporation of the Registrant.
3.2+ Bylaws of the Registrant.
3.3+ Form of Amended and Restated Certificate of
Incorporation of the Registrant, to be filed prior to
completion of the offering.
4.1+ Form of the Registrant's Common Stock Certificate.
5.1+ Opinion of Venture Law Group, a Professional
Corporation.
9.1+ Amended Stockholders Agreement dated July 3, 1996 by
and among the Registrant and certain holders of the
Registrant's securities.
10.1+ Form of Indemnification Agreement.
10.2+ 1989 Stock Option Plan, as amended, and form of stock
option agreement.
10.3+ 1996 Stock Option Plan and form of stock option
agreement.
10.4+ 1996 Employee Stock Purchase Plan and form of
subscription agreement.
10.5+ 1996 Directors' Stock Option Plan and form of stock
option agreement.
10.6+ Amended and Restated Registration Rights Agreement
dated July 3, 1996 between the Registrant and certain
holders of the Registrant's securities.
10.7+ Lease Agreement dated September 19, 1994 between the
Registrant and BRE Properties, Inc.
10.8+ Master Equipment Lease dated January 19, 1995 between
the Registrant and Phoenix Leasing Incorporated.
10.9+# Software License Agreement dated February 5, 1996
between the Registrant and Entex Information Services
Inc.
10.10**# Software License Agreement dated March 26, 1996
between the Registrant and Union Underwear Company,
Inc.
10.11+# Software License Agreement dated November 7, 1995
between the Registrant and PhotoDisc, Inc.
10.12+# Amendment to Software License Agreement dated March
29, 1996 between the Registrant and PhotoDisc, Inc.
10.13+# Software Development and Distribution License
Agreement dated September 16, 1994 between the
Registrant and Fulcrum Technologies Inc. and related
Amending Agreement, Amending Agreement No. 2 and
Amending Agreement No. 3.
10.14+# OEM Master License Agreement dated June 30, 1995
between the Registrant and RSA Data Security, Inc.
10.15+ Letter Agreement dated May 10, 1995 between the
Registrant and Hambrecht & Quist Incorporated and
related mutual release dated June 6, 1996.
10.16+ Option agreement dated January 16, 1996 between the
Registrant and Thomas P. Kehler.
10.17+ Option agreement dated January 16, 1996 between the
Registrant and Gordon J. Bridge.
10.18+ Option agreement dated April 24, 1996 between the
Registrant and Gordon J. Bridge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER PAGE
------- ------------
<C> <S> <C>
10.19+ Letter agreement dated October 19, 1995 between the
Registrant and Gordon J. Bridge, and related
interpretive letter.
10.20+ Consulting Agreement dated March 9, 1992 between the
Registrant and Quaestus Limited Partnership.
10.21+ Form of Common Stock Warrant issued to Hambrecht &
Quist LLC and Volpe, Welty & Company on December 27,
1995.
10.22+# Business Alliance Program Agreement dated June 11,
1996 between the Registrant and Oracle Corporation and
related Runtime Sublicense Addendum, and Amendments
One and Two to Runtime Sublicense Addendum.
10.23+ Agreement and Mutual Release dated May 24, 1996
between the Registrant and
Henry V. Morgan.
10.24+# Development and License Agreement dated March 29, 1996
between the Registrant and Time Warner Cable.
11.1+ Statement Regarding Computation of Per Share Earnings.
23.1+ Consent of Independent Auditors.
23.2+ Consent of Counsel (included in Exhibit 5.1).
24.1+ Power of Attorney.
27+ Financial Data Schedule.
</TABLE>
- --------
**Supercedes exhibit previously filed.
+Previously filed.
#Confidential treatment requested.
<PAGE>
EXHIBIT 10.10
CONNECT, INC.
SOFTWARE LICENSE AGREEMENT
This Software License Agreement ("AGREEMENT") is entered into as of March 26
1996____ (the "EFFECTIVE DATE") by and between Connect, Inc., a California
corporation, with principal offices at 515 Ellis Street, Mountain View, CA
94043-2242 ("CONNECT") and Union Underwear Company, Inc. a New York corporation,
------------------------------
with principal offices at One, Fruit of the Loom Drive, Bowling Green, Kentucky
-------------------------------------------------------
42102 ("Customer")
- -----
CONNECT and Customer are entering into a Software License Agreement for CONNECT
to license its OneServer(TM) Software and OneManager(TM) Software to Customer
and to sub-license certain third-party-owned software to Customer. In addition,
Customer may request CONNECT to develop additional Customer Application Software
for Customer's use with the CONNECT Software on a "work for hire" basis, as
described herein or as defined in Exhibit B (Scope of Work) attached to this
---------
Agreement, with Supplemental terms and conditions applying only to such Customer
Application Software and Maintenance Services as defined in Exhibit C ,with
----------
supplemental terms and conditions applying only to such services.
CONNECT and Customer, therefore, agree as follows:
SECTION 1 - DEFINITIONS
The following defined terms shall govern the interpretation of this Agreement:
1.1 "CONNECT SOFTWARE" means the OneServer Software and the OneManager
Software, and associated Documentation. The OneServer and OneManager products
are built on the ORACLE relational database, Fulcrum text search engine, RSA
encryption software and provide an application platform for on-line business
services over public and private networks. The OneServer platform functions as
a world-wide-web server, a private network server, or a combination of both.
OneServer Software offers a modular framework with access control, usage
tracking, and reference counts. Creation and maintenance of all OneServer data
types is possible either from a UNIX command line, from within common gateway
interface ("CGI") scripts, or from the OneManager client.. The OneServer
Software is based on a data type called a node model that is both relational and
highly structured. The standard ways to manage data, such as setting
permissions, retrieving and labeling, can be done on an entire node or on a part
of the data contained in the node. The node model allows a number of
operations, including a sophisticated querying method. SIGNIFICANT NODES FOR THE
PURPOSES OF CUSTOMER'S APPLICATION, INCLUDE THE FOLLOWING NODES,
PROCESSES, AND FEATURES:-
PRODUCT/SKU
ORDER/SHOPPING CART NODE
BULLETIN BOARD/EMAIL NODE
USER PROFILE NODE
CREDIT CARD AUTHORIZATION PROCESS
USER REGISTRATION PROCESS
TEMPLATE ENGINE
USAGE TRACKING
MULTI-THREADING CONCURRENT ACCESS TO ONESERVER DATABASE
1.2 "DESIGNATED PLATFORM" means the computer "Platform" (meaning a series of
computers that support the Licensed Software) and operating system software
located at the installed location designated on EXHIBIT A to this Agreement,
---------
which will be the only Platform and operating system on which, and the single
location at which, the Licensed Software is licensed for installation and use
under this Agreement. Notwithstanding anything herein to the contrary, CONNECT
agrees that the "development/staging server" Platform and the "OneServer with
transaction engine, ORACLE, Fulcrum, RSA" Platform may be in separate physical
locations. In the event that Customer designates a location change for a
Platform, CONNECT will provide 48 hour overlap service at the designated site
location.
1.3 "DOCUMENTATION" means any user documentation provided by CONNECT to
Customer for use in connection with the Licensed Software, including without
limitation an overview of the software, including a clear and detailed narrative
of the organization of the Licensed Software. Such documentation is
incorporated herein and made a part hereof.
<PAGE>
1.4 "LICENSED SOFTWARE" means the CONNECT SOFTWARE and the THIRD PARTY
SOFTWARE.
1.5 "TERRITORY" means the United States of America and its territories and
possessions.
1.6 "THIRD PARTY SOFTWARE" means the number of copies of the third party owned
software sublicensed to Customer by CONNECT as specified in Exhibit A.
---------
1.7 "CUSTOMER APPLICATION SOFTWARE" means software developed by CONNECT as a
"work made for hire "or "commissioned work" for Customer in conformance with
section 2.7 stated below and a mutually agreed Scope of Work outlined in Exhibit
-------
B, and supplemental terms and conditions solely relating to such services.
- -
SECTION 2 - LICENSE GRANTS AND OWNERSHIP
2.1 CONNECT SOFTWARE LICENSE. SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, CONNECT GRANTS CUSTOMER (1) A NON-EXCLUSIVE, PERPETUAL, NON-
TRANSFERABLE LICENSE, WITHOUT RIGHT OF SUBLICENSE, TO INSTALL AND EXECUTE THE
CONNECT SOFTWARE IN OBJECT CODE FORMAT, SOLELY ON THE DESIGNATED PLATFORM OR
OTHER SINGLE COMPARABLE PLATFORM AND SOLELY FOR REMOTE ACCESS.
2.2 [ DELETED ]
2.3 THIRD PARTY SOFTWARE LICENSE. Subject to the terms and conditions of this
Agreement, CONNECT grants to Customer a non-exclusive, perpetual , non-
transferable license, without right of sublicense, to use Third Party Software,
solely on the Designated Platform or other comparable platform, solely for the
permitted number of processors. Customer may not make any use of the Third
Party Software on its own or with any other program besides the CONNECT
Software. Customer acknowledges and agrees that CONNECT's licensors for such
Third Party Software are intended third party beneficiaries of the terms of this
Agreement relating to Customer's use of the Third Party Software and as such
have the right to enforce such terms directly against Customer in their own
names.
2.4 DOCUMENTATION LICENSE. Subject to the terms and conditions of this
Agreement, CONNECT grants Customer the right to copy and distribute three (3)
copies of the User Documentation for each copy of the CONNECT Software licensed
to Customer. Further User Documentation reproduction rights may be negotiated.
Customer may request Documentation in electronic format subject to current
availability from CONNECT.
2.5 ARCHIVAL COPIES; COPYING; MARKINGS. Customer may make one (1) copy of the
Licensed Software for archival purposes. Each copy of the Licensed Software and
User Documentation is subject to the provisions of this Agreement. Customer may
not copy the User Documentation except as stated in Section 2.4 or to replace
lost or destroyed copies. Additional copies of the User Documentation are
available from CONNECT for a separate fee. All titles, trademarks, copyright
notices and other proprietary markings must be reproduced on all permitted
copies of the Licensed Software and User Documentation, in whatever format, and
Customer will not cause or permit the removal of same.
2.6. OWNERSHIP OF LICENSED SOFTWARE. Except for the limited licenses and right
granted herein, all right, title, and interest in the Licensed Software, Third
Party Software and User Documentation, including without limitation all patent,
rights, copyrights, trade secrets, know-how, and other intellectual property
rights, will remain the property of CONNECT or CONNECT's licensors. All aspects
of the Licensed Software and Third Party Software, including without limitation
programs, methods of processing, specific design and structure of individual
programs and their interaction and unique programming techniques employed
therein, as well as screen formats, will remain the sole and exclusive property
of CONNECT or its licensors. Customer may not rent, lease, loan, sell or
otherwise distribute the Licensed Software, Third Party Software, or User
Documentation or any derivative works based thereon in whole or in part.
Customer acknowledges that the Licensed Software, Third Party Software and User
Documentation are proprietary and contain confidential and valuable trade
secrets of CONNECT and its licensors, which Customer agrees to safeguard as
provided for under Section 10.1 Confidentiality, below.
2.7 OWNERSHIP OF CUSTOMER APPLICATION SOFTWARE. Customer shall own and hold
title to the Customer Application Software as defined in Exhibit B and all
---------
reproductions, and modifications thereof or derivative works of the Customer
Application Software made by any person, including without limitation all patent
rights copyrights, trade secrets, know how and other intellectual property
rights. CONNECT acknowledges the Customer Application Software is a "work made
for hire" and "commissioned work" and CONNECT and its employees and agents
hereby assign all right, title, and interest therein to
Page 2
<PAGE>
Customer and agree to take any and all actions and execute all necessary
documents and agreements requested by Customer to effectuate such assignment.
The Customer Application Software will be delivered free and clear of any
claims, liens or agents of CONNECT, its employees and rights and third parties.
CONNECT, except as may be agreed to in writing by Customer, shall have no right
to disclose or use the Customer Application Software for any purpose whatsoever
and CONNECT acknowledges and agrees that such software and its source code and
documentation is proprietary to Customer and has been specifically developed for
Customer's use. CONNECT shall certify to Customer that it has no copies of the
software, source code, and documentation, other than those Customer agrees in
writing to permit CONNECT to retain. CONNECT agrees to deliver to Customer the
source code and object code versions and all documentation and programmer notes,
including an overview of the Customer Application Software, a description of its
organizations, operations and database structures, security systems, help
messages and error codes of the Customer Application Software or their
equivalents in any computer languages concurrently with the delivery of the
Customer Application Software on or before June 30, 1996. Customer acknowledges
that CONNECT shall be responsible only for the creation and delivery of Customer
Application Software written by CONNECT and that Customer will contract for any
supplemental application software from third parties independent of CONNECT.
CONNECT agrees that the representations and warranties contained in Section 7
and indemnification rights contained in section 8 apply to this provision.
2.8 REVERSE ENGINEERING. As to all Licensed Software provided to Customer in
object code format only, Customer agrees not to (i) reverse engineer, decompile,
or otherwise attempt to obtain the source code corresponding to such object
code, or (ii) modify or create derivative works of the Software except as
specifically permitted by CONNECT.
2.9 COMPETITIVE PRODUCTS. Nothing herein shall be construed to prevent either
party from developing or marketing other applications, software, or components
thereof, either alone or with others, which are comparable to or competitive
with those licensed under this Agreement, provided that such development and
marketing does not infringe the Proprietary Rights of the other party and does
not involve any unauthorized use of any Confidential Information of the other
party under this Agreement and has been reduced to writing in a mutually agreed
upon non-disclosure agreement. Notwithstanding the foregoing, CONNECT agrees for
a period of 9 months from the Effective Date hereof, that it will not solicit or
perform the same or similar services or offer the Licensed Software or similar
software to any person or entity who manufactures apparel products directly
competitive with Customer's "[*] Products" (meaning those offered in Customer's
1995 "[*] Catalogue") including without limitation the following companies:
1. [*]
2. [*]
3. [*]
2.10 BACKUP HARDWARE. Customer may use a single back-up or replacement
Platform as a substitute for a Designated Platform server at any time, provided
- --------
that Customer provides CONNECT with written notice of such hardware
substitution, including the information required for the Designated Platform CPU
---
in Exhibit A within three (3) business days after such substitution.
---------
2.11 CUSTOMER'S ENHANCEMENTS OF CUSTOMER APPLICATION SOFTWARE
CONNECT agrees that any and all improvements, updates, revisions, enhancements,
modification s and additions to the Customer Application Software which may be
made from time to time hereafter by Customer or any of its employees,
independent contractors or agents shall not be deemed to be part of the Licensed
Software, and CONNECT hereby disclaims releases and agrees to transfer to
Licensee any and all rights and interests which such party may have or acquire
in and of Customer's Enhancements to the Customer Application Software other
than as expressly provided herein. Customer agrees that , if CONNECT shall have
performed all of its obligations hereunder strictly in accordance with the terms
thereof, Customer shall engage in good faith bargaining concerning any proposed
licensing to CONNECT from Customer of any of Customer's enhancement s to the
Customer Application Software or interests therein.
SECTION 3 - SOFTWARE MAINTENANCE/UPDATES
3.1 LICENSED SOFTWARE TECHNICAL AND CUSTOMER SUPPORT. Customer, at its sole
option, may order yearly maintenance services with respect to the Licensed
Software pursuant to the supplemental terms and conditions of CONNECT's standard
Software Maintenance exhibit executed and attached hereto as Exhibit C. The
---------
yearly fees for maintenance services are set forth in Exhibit A. Such fees
---------
shall include the right to updates of the Licensed Software.
Page 3
- ---------------------
*Confidential Treatment requested
<PAGE>
SECTION 4 - PAYMENT
4.1 LICENSE FEES. THE FEES FOR THE LICENSE AND OTHER SERVICES GRANTED UNDER
THIS AGREEMENT ARE SET FORTH ON EXHIBIT A. PAYMENT TERMS WILL BE NET 30
RECEIPT OF INVOICE, BUT TWO (2%) DISCOUNT IF PAYMENT RECEIVED BY MARCH 29,
1996. CUSTOMER SHALL WIRE ALL PAYMENTS DUE UPON EXECUTION OF THIS AGREEMENT TO
THE MERCHANT ACCOUNT LISTED BELOW. All other fees and charges will be invoiced
by CONNECT to Customer and must be paid in full within thirty (30) days after
receipt of invoice or as otherwise specified on EXHIBIT A to this Agreement.
---------
All payments are due in United States dollars. CONNECT reserves the right to
apply a service charge to any unpaid balance at the rate of 1% per month (but in
no event more than the maximum rate allowed by law) for any fee or charge not
paid within thirty (30) days after receipt of invoice. If Customer fails to
pay any invoice when due, CONNECT will have the right to institute collection
procedures to recover same, and Customer will be responsible for all reasonable
costs of collection incurred by CONNECT, including without limitation litigation
costs, reasonable attorneys' fees and court costs. CONNECT also reserves the
right to discontinue or suspend any services to Customer, including the
termination of this Agreement for Customer's failure to make timely payment of
applicable fees or charges, without penalty to CONNECT.
WIRING INSTRUCTIONS:
Bank of America
Attn.: Janet Velez
Sunnyvale Main Office 0041
444 South Mathilda Avenue
Sunnyvale, CA 94086
ABA: 121-000-0358
Telephone No.: (408) 991-8303
CONNECT Inc.
515 Ellis Street
Mountain View, CA 94043-2242
Merchant Account #: 00415-20739
4.2 TAXES. All sales, use, value-added, personal property, and other taxes
(other than CONNECT income tax), customs and duties arising out of the licenses
granted or services provided under this Agreement will be paid by Customer, or,
if CONNECT is required to pay any of the same, will be reimbursed to CONNECT by
Customer.
4.3 AUDIT. During the term of this Agreement, and for a period of two (2)
years thereafter, Customer will maintain books and records in connection with
its use and distribution of the Licensed Software pursuant to this Agreement in
sufficient detail to permit CONNECT to verify Customer's compliance with the
terms and conditions of this Agreement. CONNECT will have the right upon ten
business days prior written notice through its independent auditors to inspect
Customer's facilities (including its computers) and records to verify compliance
with the terms and conditions of this Agreement, including the amount of license
fees, and other amounts payable to CONNECT hereunder. Any such audit will be
conducted during regular business hours at Customer's offices and will not
interfere unreasonably with Customer's business activities. Audits will be made
no more than once annually. If an audit reveals that Customer has underpaid
fees and/or charges to CONNECT in excess of five percent (5%), then Customer
will pay CONNECT's reasonable costs of conducting the audit, in addition to the
underpaid amounts, plus interest as provided in Section 4.1 above.
SECTION 5 - TERM AND TERMINATION
5.1 TERM AND TERMINATION. This Agreement is effective until terminated. Upon
prior written notice, either party may terminate this Agreement if the other
party becomes insolvent, ceases doing business in the regular course, files a
petition in bankruptcy or is subject to the filing of an involuntary petition
for bankruptcy which is not rescinded within a period of forty-five (45) days,
or fails to cure a material breach of any term or condition of this Agreement
within thirty (30) days after receipt of written notice specifying such breach.
In addition, Customer may terminate this Agreement upon ninety (90) days prior
written notice to CONNECT.
5.2 EFFECT OF TERMINATION. Termination of this Agreement or any license
granted hereunder will not limit either party from pursuing any other remedies
available to it, including injunctive relief, nor will termination relieve
Customer of its obligation
Page 4
<PAGE>
to pay all fees and charges that accrued prior to the effective date of
termination. The following provisions will survive any termination of this
Agreement: Sections, 5.2, 7.3 , 8, 9, and sections 10.1 through 10.12,
inclusive.
5.3 RETURN OF LICENSED SOFTWARE. Upon termination of this Agreement or any
license granted hereunder, Customer will make no further use of the applicable
Licensed Software and Documentation. Within thirty (30) days after such
termination, Customer will either destroy or return to CONNECT the originals and
all copies of the Licensed Software and Documentation and any source code in
the possession or under the control of Customer and will certify to CONNECT that
Customer has complied with the foregoing requirements.
SECTION 6 - DELIVERY, TESTING, ACCEPTANCE
6.1 LICENSED SOFTWARE
6.1(a) DELIVERY. All initial deliverables of Licensed Software and
Documentation are listed in EXHIBIT A of this Agreement and will be delivered to
---------
the shipping destination on or about a mutually agreed shipping date not to be
later than March 31, 1996. CONNECT will deliver one copy of the Licensed
Software for each Designated Platform specified on EXHIBIT A to this Agreement
---------
in the form of a tape of the Licensed Software and related User Documentation.
Customer will have 15 days from receipt of the shipment to verify that all
deliverables have been received
6.1(b) ACCEPTANCE. Licensed Software will be accepted by Customer if it
performs substantially as described in this Agreement and the then current
applicable User Documentation. Failure of Customer to inform CONNECT of
acceptance or non-acceptance within the fifteen(15)) day period following
completed delivery will constitute acceptance.
6.2 CUSTOMER APPLICATION SOFTWARE. If Customer has requested that CONNECT
provide Customer Application Software, CONNECT will provide such software as
defined in accordance with any executed Scope of Work and Supplemental Terms and
Conditions relating to testing, acceptance, and delivery outlined in any
executed Exhibit B, applicable only to such Customer Application Software.
---------
SECTION 7 - LIMITED WARRANTY (LICENSED SOFTWARE ONLY)
7.1 RIGHT TO LICENSE. CONNECT warrants (1) that it has the right to license
the Licensed Software and user Documentation to Customer on the terms and
conditions set forth in this Agreement, and (2) that the Licensed Software
contains no viruses, or implanted bugs, or other programming designed by
Licensor to cause the Licensed Software to cease to properly function at
CONNECT's instruction. and (3) that CONNECT's execution of this Agreement, and
delivery of the Licensed Software, nor its performance of its obligations
hereunder shall violate or conflict with any agreement, statute, court order,
administrative order or ruling , regulation or other federal, state or local
law, , which is binding upon Licensor, nor the provisions of the Universal
Copyright Convention, (4) that CONNECT is a corporation which is duly
organized, validly existing and in good standing under the laws of the State of
California, and that CONNECT has all the necessary corporate power and
authority to grant the rights granted hereunder and to enter into this
Agreement, (5)CONNECT's services hereunder will be performed in a timely and
professional manner by qualified professionals and equal or exceed standards
generally observed in the software services industry, and (6) that CONNECT
understands the general purpose of electronic commerce Customer intends for the
Licensed Software and represents that the Licensed Software will meet such
general requirements.
7.2 LICENSED SOFTWARE. WARRANTY OBLIGATIONS CONNECT warrants (1) that, during
the period of ninety (90) days following delivery of the Licensed Software (the
"WARRANTY PERIOD"), the Licensed Software (other than as modified by Customer)
will perform substantially and materially in accordance with the provisions
hereof and CONNECT's then current applicable Documentation, when properly
installed and used on the applicable Designated Platform, and (2) CONNECT will
replace without charge tapes, diskettes or other media embodying the Licensed
Software that are defective under normal use and (3) CONNECT will at its expense
promptly correct defects and programming errors to keep the Licensed Software
operating in accordance with this warranty provision.
7.3 LIMITED WARRANTY. OTHER THAN THE WARRANTIES EXPRESSLY STATED ABOVE, THERE
ARE NO EXPRESS OR IMPLIED WARRANTIES RELATING TO THE LICENSED SOFTWARE, THE
DOCUMENTATION OR THE SERVICES COVERED BY THIS AGREEMENT, AND CONNECT EXPRESSLY
DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NONINFRINGEMENT.
Page 5
<PAGE>
SECTION 8 - INDEMNIFICATION
8.1 INFRINGEMENT INDEMNIFICATION BY CONNECT. CONNECT agrees to indemnify, hold
harmless ,defend or settle any claim or suit for loss, liability, damage, or
expense , including without limitation attorney's fees (collectively "claims"),
brought against Customer, or pay any final judgment awarded by a court of
competent jurisdiction related to any claims to the extent such claims arise
from Customer's reasonable reliance upon CONNECT's limited warranty and
representations as provided for in sections 7.1 and 7.2, Customer's liability
based solely upon CONNECT's negligent errors or omissions, or any claims which
are based on a claim that the Licensed Software or Documentation furnished and
used within the scope of the licenses granted under this Agreement infringes any
third party's patent, copyright, trademark, trade secret, copyright, or
proprietary right or rights; provided that (i) Customer shall give CONNECT in
writing within five (5) days after receiving written notice of the claim or suit
giving rise to such infringement action, (ii) CONNECT has sole control of the
defense of such action and all related settlement negotiations, and (iii)
Customer provides CONNECT with all reasonable assistance, information and
authority necessary to carry forth such defense and settlement negotiations.
Reasonable "out-of-pocket" expenses incurred by Customer in providing such
assistance as may be requested by CONNECT will be reimbursed by CONNECT.
CONNECT's obligation to indemnify and defend Customer hereunder shall survive
termination or expiration of this Agreement.
8.2 [DELETED]
8.3 CONNECT OPTIONS. In the event that any such final judgment of infringement
is entered, or CONNECT believes is likely to be entered, CONNECT may at its sole
option and expense: (i) modify the Licensed Software and/or Documentation to be
non-infringing, (ii) functionally equivalent software reasonably acceptable to
Customer and related documentation or (iii) terminate the applicable license and
provide Customer a full refund of all fees paid hereunder.
8.4 ENTIRE LIABILITY. THE FOREGOING STATES THE ENTIRE LIABILITY AND OBLIGATION
OF CONNECT WITH RESPECT TO INFRINGEMENT OR ALLEGED INFRINGEMENT OF ANY KIND OF
THIRD PARTY INTELLECTUAL PROPERTY RIGHTS BY THE LICENSED SOFTWARE OR
DOCUMENTATION OR ANY PART THEREOF.
8.5[DELETED]
SECTION 9 - LIMITATION OF LIABILITY
9.1 IN NO EVENT WILL CONNECT OR ITS LICENSORS BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION LOSS OF PROFITS, REVENUES, DATA OR USE, WHETHER IN
AN ACTION IN CONTRACT OR TORT OR ANY OTHER FORM OF ACTION, EVEN IF CONNECT HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
9.2 CONNECT'S TOTAL LIABILITY FOR DAMAGES IN CONNECTION WITH THIS AGREEMENT,
WHETHER IN AN ACTION IN CONTRACT OR TORT OR ANY OTHER FORM OF ACTION, WILL IN NO
EVENT EXCEED THE AMOUNT OF FEES ACTUALLY PAID BY CUSTOMER TO CONNECT UNDER THIS
AGREEMENT.
9.3 No action may be brought by Customer for any dispute arising out of or in
connection with this Agreement at any time more than twelve (12) months after
the facts occurred giving rise to the cause of action or dispute.
9.4 Notwithstanding anything to the contrary; nothing in sections 9.1, and 9.2
shall in any way limit Customer's rights of indemnification hereunder.
SECTION 10 - GENERAL
10.1 CONFIDENTIALITY. Both parties acknowledge that, in the course of dealings
between them, each party will acquire information, about the other party, its
business activities and operations, its technical information and trade secrets,
of a highly confidential and proprietary nature. Each party will hold such
information, to be confidential. The parties further agree to hold the
Licensed Software and Documentation and the terms of this Agreement in strict
confidence. Neither party to this Agreement
Page 6
<PAGE>
shall use the name of the other in any publicity or advertising or promotional
materials without securing the prior written consent of the other party.
10.2 NOTICES. All notices, including notices of address change, given under
this Agreement must be in writing and will be deemed effective when delivered in
person or by a reputable "next day guaranteed" courier service, by facsimile (if
a confirming copy is dispatched by one of the other permitted means of dispatch
under this Section 10.2) after being delivered via certified mail, return
receipt requested, to the appropriate contact points and addresses shown below
in the signature block and/or Exhibit A.
---------
10.3 ASSIGNMENT AND SUCCESSORS. Except as specifically provided for herein,
neither party shall assign, transfer or convey any of its rights or licenses
under this Agreement without the other's prior written consent, which will not
be unreasonably withheld. Subject to the foregoing, this Agreement will bind
and inure to the benefit of each party's respective successors and permitted
assigns.
10.4 EXPORT. Customer will only export, re-export or otherwise transfer the
Licensed Software or Documentation to a country other than the United States in
full compliance with the provisions of the United States Export Administration
Act and the rules and regulations thereunder, and both the Licensed Software and
the Documentation will be deemed "technical data" for purposes thereof.
10.5 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the United States and the State of California, and
the parties expressly submit to such jurisdiction. The parties agree that the
United Nations Convention on Contracts for the International Sale of Goods
(1980) is specifically excluded from application to this Agreement
10.6 FORCE MAJEURE. Except for the obligation to make payments, nonperformance
of either party shall be excused to the extent that performance is rendered
impossible by strike, fire, flood, governmental acts, orders or restrictions,
failure of suppliers, or any other reason where failure to perform is beyond the
control and not caused by the negligence of the non-performing party.
10.7 [*] CONNECT represents that the [*} and [*] of [*] are [*] than those
[*] to its [*] for similar products and similar services as follows: (a) with
regard to the [*], for a [*]; and (b) with regard to [*] and [*] hereunder, for
[*].
10.8 WAIVER AND SEVERABILITY. The waiver by either party of a breach or right
under this Agreement will not constitute a waiver of any other or subsequent
breach or right. In the event any provision of this Agreement is held invalid
or unenforceable, the remaining provisions will continue in full force and
effect.
10.9 AMENDMENT. This Agreement may be amended or modified only in a written
document signed by an authorized representative of CONNECT and Customer.
10.10 CUSTOMER OFFER. This Agreement is binding upon execution by an
authorized representative of Customer and execution by an authorized
representative of CONNECT.
10.11 U.S. GOVERNMENT RESTRICTED RIGHTS. All software is provided with
RESTRICTED RIGHTS. Use, duplication, or disclosure by the Government is subject
to restrictions as set forth in subparagraph (c)(1)(ii) of the Rights in
Technical Data and Computer Software Clause at 252.227-7013 or subparagraphs
(c)(1)(2) of the Commercial Software--Restricted Rights at 48 CFR 52.227-19, as
applicable. Contractor/manufacturer is Connect, Inc., 515 Ellis Street,
Mountain View, CA 94043-2242.
10.12 INSURANCE. CONNECT shall maintain during the term hereof the following
insurance: workman's compensation, public liability, product liability, and
property damage against all loss, claims, demands, proceedings, damages, costs
and expenses for injuries or damages to any person or property arising out of or
in connection with this Agreement which are directly or indirectly caused by
CONNECT.
10.13 ENTIRE AGREEMENT. This Agreement, together with any executed exhibits
attached hereto, is the complete and exclusive statement of the agreement
between the parties and supersedes all previous and contemporaneous agreements,
proposals and communications, written or oral, with respect to this subject
matter. In particular, the preprinted terms and conditions of any
* Confidential treatment requested
<PAGE>
purchase order issued or to be issued by Customer with respect to Licensed
Software or related CONNECT services are hereby expressly and superseded by this
Agreement. A Customer purchase order that references this Agreement and that is
accepted by CONNECT may serve as a supplement to this Agreement with respect to
Customer's order of additional Licensed Software or related services; provided
that such purchase order will be effective only as to product or services
identification, quantity and price, and otherwise will be governed by terms and
conditions of this Agreement.
<TABLE>
<CAPTION>
CONNECT, INC. UNION UNDERWEAR COMPANY, INC.
<S> <C>
By: /s/ Thomas P. Kehler By: /s/ Charles M. Kirk
----------------------------- --------------------------
Name: Tom Kehler Name: Charles M. Kirk
--------------------------- -----------------------
Title: CEO/President Title: Senior Vice President and Chief Information Officer
-------------------------- ---------------------------------------------------
Date: March 28, 1996 Date: March 26, 1996
----------------------------- -----------------------
Telephone: (415) 254-4000 Telephone: 502/781-6400
-------------- -------------------
Fax: (415) 254-4800 Fax: 502/781-6493
-------------- -------------------------
</TABLE>
Page 8
<PAGE>
SOFTWARE LICENSE AGREEMENT
EXHIBIT A
1. CONNECT'S ONESERVER SOFTWARE LICENSE
------------------------------------
<TABLE>
<CAPTION>
===================================================================================================================================
LICENSE DESCRIPTION MACHINE LIST PRICE DISCOUNT AMOUNT IF EXTENDED AMOUNT IF
COMMITTED BY 3/29/96 COMMITTED BY 3/29/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Development/ Staging Server SPARC 20 $ [ * ] $ [ * ] $ [ * ]
(Up to 2 Processors)
- -----------------------------------------------------------------------------------------------------------------------------------
OneServer with Transaction SPARC 1000 $ [ * ] $ [ * ] $ [ * ]
Engine, Oracle, Fulcrum, (Up to 4 Processors)
RSA
- -----------------------------------------------------------------------------------------------------------------------------------
OneServer Web Component SPARC 20 $ [ * ] $ [ * ] $ [ * ]
Server (Up to 2 Processors)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS $ [ * ] $ [ * ] $ [ * ]
===================================================================================================================================
</TABLE>
2. SOFTWARE MAINTENANCE AND SUPPORT SERVICES FEE
---------------------------------------------
(a) Fee for Licensed Software Maintenance Services
as described in Exhibit C the Software Maintenance
---------
Addendum (exclusive of per diem and out-of-pocket
expenses) $ [ * ]
(b) Fee for Update Releases as described in Exhibit C the
---------
Software Maintenance Addendum (exclusive of per diem
and out-of-pocket expenses) $ [ * ]
TOTAL SOFTWARE MAINTENANCE AND SUPPORT FEES $[ * ]
===========
Maintenance is offered at 18% of the license price which half is for License
Software Maintenance Service and the other half is for Optional Update
Releases. Subject to any reduction by CONNECT per section 10.7 of the Agreement,
the parties agree that CONNECT will not increase the Maintenance and Suport
Services Fee prior to the third anniversary date of the Agreement and thereafter
CONNECT may increase such fees to account for inflation no more than once per
agreement year and not to exceed the Consumer Price Index Average for all Urban
Consumers for the Nashville, TN Metropolitan Statistical Area (base year 1982-
4=100) published by the Bureau of Labor Statistics of the U.S. Department of
Labor. In addition, Customer may elect not to pay the update release portion of
such fees,commencing upon renewal of the second yearly maintenance period subect
to section 3.1 of Exhibit C, the Software Maintenance Addendum.
3. ONESERVER TRAINING
------------------
The following standard training rates apply for training. CONNECT will invoice
according to the payment provision listed on this Agreement and as services are
rendered by CONNECT.
<TABLE>
<CAPTION>
======================================================================================
NUMBER OF DAYS PER COURSE LIST PRICE PER STUDENT
- --------------------------------------------------------------------------------------
<S> <C> <C>
Client Administration Course 2 $ 700.00
- --------------------------------------------------------------------------------------
Host Administration Course 2 $ 700.00
- --------------------------------------------------------------------------------------
Developer Course 5 $1,750.00
- --------------------------------------------------------------------------------------
</TABLE>
4. DESIGNATED PLATFORM AND INSTALLATION LOCATION
---------------------------------------------
a. Brand and model: Sparc 20, Sparc 1000, Sparc 20
------------------------------
b. RAM and CPU
c. Designated Platform Operating System: As specified by Customer
in writing.
d. Designated Platform Location: As notified in writing by Customer
from time to time.
* Confidential treatment requested.
Page 9
<PAGE>
5. PAYMENT ATTACHMENT
------------------
See payment schedule listed on Attachment A to this Exhibit A attached hereto
and incorporated herein.
CONNECT, INC UNION UNDERWEAR COMPANY,
------------------------
Initial: /s/ Connect, Inc. Initial: /s/ Union Underwear Company
----------------- ---------------------------
Date: March 28, 1996 Date: March 26, 1996
-------------- --------------
ATTACHMENT A TO EXHIBIT A
<TABLE>
<CAPTION>
ITEM DESCRIPTION MACHINE AMOUNT DUE PAYMENT
DUE DATE
<S> <C> <C> <C>
Development/ Staging Server SPARC 20 $ [ * ] March 29, 1996
(Up to 2
Processors)
OneServer w/Transaction SPARC 1000 $ [ * ] March 29, 1996
Engine, Oracle, Fulcrum, (Up to 4
RSA Processors)
OneServer Web Component SPARC 20 $ [ * ] March 29, 1996
Server (Up to 2
Processors)
TOTAL SOFTWARE $ [ * ]
Additional 2% Software $ [ * ] March 29, 1996
Discount if Payment is
Transferred via wire by
3/29/96
Software Maintenance and MAINTENANCE: (a) [ * ] March 29, 1996
Support calculated as 18%
of discounted of $[ * ].
UPDATES: (b) [ * ] March 29, 1996
TOTAL MAINTENANCE $ [ * ]
CONNECT Professional $ [ * ] Billed two
Services as referenced on weeks net 30
Exhibit B attached hereto. after receipt
of invoice
</TABLE>
*Confidential treatment requested.
Page 10
<PAGE>
SOFTWARE LICENSE AGREEMENT
EXHIBIT B
SCOPE OF WORK AND SUPPLEMENTAL TERMS AND CONDITIONS FOR
CUSTOMER APPLICATION SOFTWARE ONLY
In the event both Customer and CONNECT have executed this Exhibit B, then the
---------
following terms and conditions will apply to the development of Customer
Application Software:
1.1 ACCEPTANCE TEST PLAN. After CONNECT completes development of the Customer
Application Software such that CONNECT believes it substantially conforms with
the Scope of Work outlined in this Exhibit, CONNECT will prepare and present to
Customer an Acceptance Test Plan on or before June 30, 1996, specifying testing
and acceptance procedures for the Customer Application Software. The Acceptance
Test Plan when accepted by Customer will enable CONNECT and Customer to verify
on or before June 30, 1996 that the Customer Application Software performs
substantially in accordance with the specifications contained in the Scope of
Work.
1.2 ACCEPTANCE TESTING BY CONNECT. After Customer approves the Acceptance Test
Plan, CONNECT will follow the Acceptance Test Plan to establish that the
Customer Application Software, as tested or after further development and
testing by CONNECT, conforms to the Scope of Work. After CONNECT is satisfied
that the Customer Application Software conforms to the Scope of Work, CONNECT
will deliver the Customer Application Software together with CONNECT's written
results of its testing, to Customer.
1.3 ACCEPTANCE TESTING BY CUSTOMER. Customer will have ten (10) business days
to test the Customer Application Software using the Acceptance Test Plan.
Customer shall perform the tests contained in the Acceptance Test Plan and
report the results to CONNECT in the format requested by CONNECT. CONNECT will
provide to Customer, its representatives and consultants such documentation and
assistance as may reasonably be needed by Customer to perform such testing. If
Customer determines at any time during the acceptance testing period that the
Customer Application Software does not conform to the Scope of Work or otherwise
demonstrates Major Errors, Customer shall notify CONNECT of the nature and
specifics of the nonconformity or Major Errors. Customer shall also notify
CONNECT of all Minor Errors, which CONNECT will use reasonable efforts to
correct in a timely and prompt manner. For the purposes of this exhibit, "Major
Error" means any system error in the Customer Application Software which (a) is
demonstrable on either the host computer installed at CONNECT's facility or on
the Customer's computer system and which in the environment for which it was
designed that causes the Customer Application Software to halt, (b) causes or is
likely to cause data to be lost or destroyed, (c) prevents the Customer
Application Software from being installed or executed on the host computer in a
properly configured environment or consistently prevents the Customer
Application Software from running or being accessed by a substantial number of
client computer systems, or (d) prevents the user from running any major
subsystem of the Customer Application Software. "Minor Error" means any system
error which is demonstrable in the Customer Application Software which does not
rise to the level of a Major Error. Customer's failure to provide CONNECT with
a written acceptance or written statement of nonconformity or Major Errors
within the 10 business day period shall be deemed an acceptance of the Customer
Application Software.
1.4 CHANGES IN THE SCOPE OF WORK. Any changes in the Customer Application
Software after Customer's approval of the Scope of Work must be requested by
Customer in writing. Upon CONNECT's receipt of the change order request, CONNECT
will review the impact of the requested change on the development project,
including possible revisions to the Scope of Work and/or completed programming,
and reassess the estimated charges for development of the Customer Application
Software as so changed. CONNECT reserves the right not to accept changes
because of possible cost, feasibility factors, resource limitations, or
potential interference with the performance of the Customer Application
Software. Upon completion of its review, CONNECT will submit proposed changes
to the Scope of Work and any additional charges to Customer for approval. If
Customer approves the changes and any additional charges, Customer shall provide
CONNECT with written notice of the approval and payment of the additional
charges. Such charges, as outlined in section 2.2, will remain at the hourly
rate referred to therein. If Customer does not approve the proposed changes,
CONNECT shall not be responsible for implementation of the proposed changes.
1.5 LIMITED WARRANTY (FOR CUSTOMER APPLICATION SOFTWARE ONLY. CONNECT warrants
that for a period of ninety(90) days after Customer acceptance; the Customer
Application Software, when integrated with the Licensed
Page 11
<PAGE>
Software and operated on the Designated Platform for which it is licensed, will
perform substantially in accordance with the Scope of Work. CONNECT will correct
all Major Errors identified by Customer prior to or during this warranty period,
subject to CONNECT being able to reproduce the defect or error. CONNECT does not
warrant that the Customer Application Software will meet any of Customer's
particular requirements, or that operation of the Customer Application Software
will be error-free.
1.6 WARRANTY OBLIGATIONS. CONNECT's sole obligations are: (i) to replace
without charge tapes, diskettes or other media embodying the Customer
Application Software that are defective under normal use, and (ii) to use
reasonable commercial efforts to correct any Major Error as defined in Section
1.3 above reported by Customer to CONNECT in the Customer Application Software
that is reproducible by CONNECT on a similarly configured CPU and operating
system. If, after using reasonable commercial efforts, CONNECT is unable to
make the Customer Application Software operate as warranted, Customer will be
entitled, upon return of all copies of the Customer Application Software, to a
full refund of all fees paid to CONNECT for the Customer Application Software.
1.7 LIMITED WARRANTY. OTHER THAN THE WARRANTIES EXPRESSLY STATED ABOVE, THERE
ARE NO EXPRESS OR IMPLIED WARRANTIES RELATING TO THE CUSTOMER APPLICATION
SOFTWARE, , OR RELATED SERVICES, AND CONNECT EXPRESSLY DISCLAIMS ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT.
2. SCOPE OF WORK. (TO BE NEGOTIATED)
2.1. DELIVERY SCHEDULE. (TO BE NEGOTIATED)
2.2. LABOR RATES
This Agreement is a Time and Material Contract. The following hourly rates apply
for all worked performed. CONNECT will invoice every two weeks and Customer
shall pay net 30 after receipt of invoice.
<TABLE>
<CAPTION>
Resource Unit Labor Rate
<S> <C> <C>
Project Manager/Senior Engineer hourly $187.00
</TABLE>
2.3. OTHER RATES
Customer shall be responsible for all reasonable travel, living, and out-of-
pocket expenses incurred in the performance of services pursuant to this
Agreement.
CONNECT, INC. UNION UNDERWEAR COMPANY, INC.
-----------------------------
Initial: /s/ Connect, Inc. Initial: /s/ Union Underwear Company, Inc.
----------------- --------------------------------
Date: March 28, 1996 Date: March 26, 1996
-------------- --------------
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<PAGE>
SOFTWARE LICENSE AGREEMENT
EXHIBIT C
SUPPLEMENTAL TERMS AND CONDITIONS FOR MAINTENANCE ONLY
In the event Customer has initialed this Exhibit, then the following terms and
conditions will apply solely for yearly Maintenance services for Licensed
Software and Maintenance Updates and Releases thereto. The Fees for such
maintenance are outlined in Exhibit A of this Agreement. THIS EXHIBIT DOES NOT
---------
APPLY TO MAINTENANCE OR SUPPORT SERVICES FOR CUSTOMER APPLICATION SOFTWARE WHICH
MAY BE REQUESTED FROM CONNECT UNDER A SEPARATE EXHIBIT OR AGREEMENT.
SECTION 1 - DEFINITIONS
The following defined terms, and other capitalized terms defined herein, shall
govern the interpretation of this Exhibit. Capitalized terms that are used and
not otherwise defined shall have the meaning set forth in the Software License
Agreement.
1.1 "ERROR" means a material failure of the Licensed Software to conform to its
functional specifications as described in the applicable User Documentation,
which failure is demonstrable in the environment for which the Licensed Software
was designed and causes it to be inoperable, to operate improperly in the
environment for which it was designed, or produces results different from those
described in the applicable User Documentation. Failures resulting from
Customer's negligence or improper use of the Licensed Software, modifications or
damage to the Licensed Software by Customer, and Customer's use of the Licensed
Software on a CPU or with an operating system other than the Designated Platform
or in combination with any third party software not provided by CONNECT or
identified as compatible by CONNECT, are not considered Errors.
1.2 "ERROR CORRECTION" means either a modification or addition that, when made
or added to the Licensed Software, brings the Licensed Software into material
conformity with its functional specifications, or a procedure or routine that,
when observed in the regular operation of the Licensed Software, avoids the
practical adverse effect of such nonconformity.
1.3 "MAJOR ERROR" means any Error in the Licensed Software which (a) is
demonstrable in the environment for which it was designed that causes the
Licensed Software to halt, (b) causes cause data to be lost or destroyed, (c)
prevents the Licensed Software from being installed or executed on the properly
configured environment, or (d) prevents the user from running any major
subsystem of the Licensed Software.
1.4 "MINOR ERROR" means any Error which is demonstrable in the Licensed
Software that does not rise to the level of a Major Error.
1.5 "MAINTENANCE UPDATE" means an updated revision of the Licensed Software
that includes Error Corrections. Maintenance Updates are normally provided to
Customer on diskette or tapes.
SECTION 2- MAINTENANCE SERVICES
2.1 ERROR CORRECTION.
(a) Major Errors. CONNECT shall, within twenty four (24)) hours of the receipt
-------------
of written notice of any Major Error, via email or fax initiate work to verify
such Major Error. If the Major Error is reproduced, then CONNECT will initiate
work to correct such Major error within the twenty four (24) hour period and
use its best efforts to correct the Major Error, including any necessary
modification to the Licensed Software. In the event that CONNECT is unable to
provide correction for any Major Error within such twenty four (24)) hour
period, Customer shall have the right to request written assurances from CONNECT
that it is using its best efforts to provide correction for the Major Error and
is likely to do so within a commercially reasonable time. In the event that
CONNECT is unable to correct any Major Error within sixty (60) calendar days
after receipt of notice of the Major Error,
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<PAGE>
Customer shall have the right to terminate this Agreement, including all
licenses, rights, and obligations hereunder and receive a full refund of
maintenance fees paid hereunder
(b) Minor Errors. CONNECT may or may not at its sole discretion correct Minor
--------------
Errors.
2.2 CUSTOMER RESPONSIBILITIES. Customer agrees to notify CONNECT in writing
promptly following the discovery of any Error. Further, upon discovery of an
Error, Customer agrees, if requested by CONNECT, to submit to CONNECT a listing
of output and any other data that CONNECT may require in order to reproduce the
Error and the operating conditions under which the Error occurred or was
discovered. In addition, if the Licensed Software is not hosted on a CONNECT
CPU, under the terms of a separate Hosting Agreement or Exhibit to the License
Agreement, Customer is responsible for procuring, installing, and maintaining
all equipment, telephone lines, communications interfaces, and other hardware
necessary for CONNECT to provide maintenance services to Customer.
2.3 TELEPHONE SUPPORT. At all times, on a five day basis, Monday through
Friday from 7.00 a.m. to 6:00 p.m. PST, CONNECT will make a member of its
maintenance staff available by telephone to Customer's designated support
coordinator (Customer's named employee responsible for liaison with CONNECT
relating to the Software Maintenance requested hereunder) to assist Customer's
use of the Licensed Software. Customer's System Administrator will be
responsible for daily maintenance of the Licensed Software per the applicable
Documentation. Additional extended service plans are available from CONNECT at
Customer's request.
2.4 FIELD MAINTENANCE. Upon request, CONNECT will provide field support and
maintenance services at any Customer field sites at CONNECT's then current
hourly field maintenance rates, together with reimbursement of applicable travel
and related expenditures, at CONNECT's cost.
2.5 ADDITIONAL TRAINING. Subject to space availability, Customer may enroll
its employees in additional or advanced training classes at CONNECT's hourly
rates listed on Exhibit A of this Agreement.
---------
2.6 EXCLUSIONS FROM MAINTENANCE SERVICES. Maintenance services under this
Exhibit do not include initial installation support, system administration
training, operations training, network management setup for the Licensed
Software, travel and living expenses for installation and training, file
conversion costs, optional products and services, directories, consulting
services, shipping charges, or the costs of any recommended hardware.
This Exhibit also does not cover maintenance services for any failure or defect
in the Licensed Software caused by any of the following:
(a) the improper use, alteration, or damage of the Licensed Software by
Customer or persons other than CONNECT employees;
(b) modifications to the Licensed Software not made or authorized by CONNECT;
(c) Software other than the Licensed Software;
(d) application interfacing between the Licensed Software and other software;
(e) use of Licensed Software (i) with hardware that has not been approved by
CONNECT, or (ii) other than the Designated Platform; or
(f) Errors in any version of the Licensed Software other than the most recent
Update.
SECTION 3 - MAINTENANCE AND MAJOR RELEASES AND RELATED SUPPORT
3.1 MAINTENANCE RELEASES. CONNECT may, from time to time, issue maintenance
updates of the Licensed Software containing Error Corrections. CONNECT will
provide Customer with one (1) copy of each Maintenance Update for each copy of
the Licensed Software being maintained under this Agreement, without additional
charge. CONNECT will provide reasonable assistance to Customer by telephone to
install and operate each Maintenance Update. CONNECT provides both major and
minor maintenance releases. Major releases are bundled with documentation and
shipped to customer. For maintenance release, Customer will be notified that the
release is available and CONNECT will ship the release. Major releases are
numbered as 1.2,
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<PAGE>
1.3, or 2.0, 2.1. Maintenance releases will be numbered 1.1.1 or 1.1.2 or 2.0.1.
or 2.11. Major releases will include enhancements and bug fixes, and will be on
a release cycle. With each major release new documentation will be shipped along
with software releases. Each software module will be replaced at that time.
Upgrade scripts will be provided if required to migrate from the prior release
to the new release. CONNECT will not support upgrade scripts from other than the
current release to the new release. Maintenance releases will be for bug fixes
only, and will be scheduled by CONNECT. CONNECT will notify customers of each
new maintenance release. Because maintenance updates are cumulative, the
Customer may not apply only a partial update. [EXAMPLE] 1.1.1 is a bug fix for
1.1 and can replace the binaries for 1.1, Release 1.1.2 will include all bug
fixes done for 1.1.1 and the new fixes for 1.1.2.] Customer may not selectively
choose which fixes to apply. Release documentation will accompany all
maintenance releases. CONNECT will support the current release until superseded
and replaced. The previous release will be supported for six months after the
release of the current release, however such support will be for priority 1. bug
fixes only on a commercially reasonable basis and subject to availability of
support staff.
3.2. DISCONTINUATION OF SERVICES. Notwithstanding anything herein to the
contrary, Customer shall have the right after the first agreement year to
discontinue maintenance and support services herunder, without terminating the
underlying license for the Licensed Software, on 30 days prior written notice to
CONNECT.
CONNECT, INC. UNION UNDERWEAR COMPANY, INC.
-----------------------------
By: /s/ Thomas P. Kehler By: /s/ Charles M. Kirk
-------------------- -------------------
Name: Tom Kehler Name: Charles M. Kirk
-------------------- -------------------
Title: CEO/President Title: Senior VP & CIO
-------------------- -------------------
Date: March 28, 1996 Date: March 26, 1996
-------------------- -------------------
Telephone: (415) 254-4000 Telephone: 502/781-6400
-------------- ------------
Fax: (415) 254-4800 Fax: 502/781-6493
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