Software Development Agreement

SOFTWARE DEVELOPMENT AGREEMENT


PARTIES


This Software Development Agreement ("Agreement") is made as of the 3rd day of January, 2000 ("Effective Date"), by and between The Men's Wearhouse, Inc., a Texas corporation ("TMW"), and Chelsea Market Systems, L.L.C., a Delaware limited liability company ("Chelsea").


INTRODUCTION


Chelsea has undertaken to develop, test and complete certain computer software known as * (collectively the "Systems"). TMW has agreed to fund the development of the Systems in exchange for a non-exclusive license to use the Systems. In consideration of the premises, conditions and covenants herein contained, Chelsea and TMW agree as follows:


I. DEFINITIONS


1.1 "Acceptance Date" shall mean with respect to each System, that date upon which TMW accepts the System as completely developed in accordance with the specifications and development schedule to be agreed to in writing by TMW and Chelsea and when so agreed attached hereto as Exhibit A, as evidenced by the parties' signature on Exhibit A.


1.2 "Development Period" shall mean the development time period for the Systems subsequent to the signing of this Agreement and prior to termination of this Agreement.


1.3 "Development Costs" shall mean direct costs incurred by Chelsea related to development of the Systems, including, but not limited to, taxes, labor, overhead and other expenses.


1.4 "Documentation" shall mean documentation developed by Chelsea related to the Object Code or Source Code of the Systems.


1.5 "Improvements" shall mean any improvements, advancements, modifications, alterations, or derivative works related to the Documentation, Object Code or Source Code of the Systems authored, developed, conceived or reduced to practice by Chelsea, whether or not


- -------------------- * Omitted pursuant to Rule 24b-2 of the General Rules and Regulations Under the Securities Exchange Act of 1934 and filed separately with the Commission.


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protectable by patent, trade secret or copyright and whether or not fixed in a tangible medium of expression.


1.6 "Object Code" shall mean the machine language code of the individual program units of the Systems that are linked together to create an executable form of the Systems.


1.7 "Payment Period" shall mean a calendar year.


1.8 "Software Package" shall mean the Improvements, Object Code, Source Code and Documentation of the Systems.


1.9 "Source Code" shall mean the human readable computer code for the Systems.


1.10 "Surplus Amount" shall have the meaning ascribed in Section 3.3.


1.11 "Systems Completion" shall mean the Acceptance Date for the last to be delivered of the Systems.


II. SOFTWARE PACKAGE RIGHTS


2.1 Ownership and License Rights. Chelsea shall own all right, title and interest in and to the Software Package and shall grant TMW a non-exclusive, perpetual license in the Software Package. The non-exclusive license granted to TMW shall:


(i) allow TMW and TMW's subsidiaries and affiliates to use, reproduce, make derivative works of, and internally distribute copies of the Software Package;


(ii) obligate Chelsea to provide TMW with Software Package support services pursuant to the Maintenance Agreement separately executed by both parties; and


(iii) obligate TMW to reimburse Chelsea for Chelsea's actual costs associated with obtaining of licenses from third parties necessary to complete and deliver the Software Package.


2.2 Transfer in the Event of Termination Prior to Acceptance Date. In the event of termination of this Agreement prior to the Acceptance Date for any of the Systems, Chelsea shall: (1) execute all such documents necessary to assign to and vest in TMW, and subject to Section 5.1, the other Members of Chelsea any and all rights to the Software Package related to such System, including, but not limited to, any patent rights, copyrights, trademarks, or trade secrets; and (2) cause its respective officers, employees and agents to execute such documents necessary to assign to and vest in TMW, and subject to Section 5.1, the other Members of Chelsea any and all such rights.


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2.3 Not withstanding the above, TMW's rights do not extend to the ability to market or sublicense such Software Package.


III. BUDGETING AND COSTS


3.1 Development Budget. Chelsea shall prepare and submit a budget and schedule of anticipated costs at the signing of this Agreement. This budget and schedule shall become Exhibit "B" appended hereto and incorporated by reference. In any given Payment Period, Chelsea shall not exceed any budgeted line item by more than 10% without, to the extent practicable, notifying and consulting with TMW prior to the incurrence thereof.


3.2 Costs. TMW shall reimburse Chelsea for all reasonable Development Costs provided the aggregate of all such costs shall not exceed $ * . Chelsea shall submit copies of invoices from third parties directly to TMW for payment. Chelsea shall also bi ...