Software Development & License Agreement

EXHIBIT 10.4


SOFTWARE DEVELOPMENT
AND LICENSE AGREEMENT


AUGMENT SYSTEMS INCORPORATED
POLYBUS SYSTEMS CORPORATION


AS OF AUGUST 1, 1996


TABLE OF CONTENTS


INTRODUCTION PAGE - ------------ ----


1. SOFTWARE DEVELOPMENT..................................................................... 1 2. DELIVERY, TESTING AND ACCEPTANCE......................................................... 1
(a) Delivery...................................................................... 1
(b) Testing....................................................................... 2
(c) Acceptance.................................................................... 2 3. MODIFICATIONS............................................................................ 2 4. PROJECT MANAGEMENT....................................................................... 2
(a) Progress Reviews.............................................................. 2
(b) Status Reports................................................................ 2
(c) Project Staffing.............................................................. 3 5. WARRANTY; MAINTENANCE AND SUPPORT; TRAINING; ENHANCEMENTS................................ 3
(a) Warranty...................................................................... 3
(b) Maintenance and Support....................................................... 3
(c) Support and Training.......................................................... 4
(d) Enhancements and Modifications................................................ 4 6. OWNERSHIP OF SOFTWARE.................................................................... 4 7. GRANT OF LICENSE AND PAYMENTS OF ROYALTIES............................................... 5
(a) The License................................................................... 5
(b) The Binary License............................................................ 5
(c) The Source License............................................................ 6
(d) Prepaid Royalties............................................................. 6 8. REPRESENTATIONS AND WARRANTIES........................................................... 6
(a) No Conflict................................................................... 6
(b) Ownership..................................................................... 6
(c) Functional Specifications..................................................... 7
(d) Conformity, Performance and Compliance........................................ 7
(e) No Restrictions on Software. ................................................. 7 9. INDEMNIFICATION.......................................................................... 7 10. LIMITATIONS............................................................................. 8 11. CONFIDENTIALITY......................................................................... 8 12. NONCOMPETITION.......................................................................... 9 13. TERM.................................................................................... 10 14. TERMINATION............................................................................. 10 15. MISCELLANEOUS PROVISIONS................................................................ 11
(a) Waiver........................................................................ 11
(b) Governing Law................................................................. 11
(c) Force majeure................................................................. 11
(d) Severability.................................................................. 11


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INTRODUCTION PAGE - ------------ ----


(e) No Assignment................................................................. 11
(f) Required Approvals............................................................ 11
(g) Amendments in Writing......................................................... 11
(h) Counterparts.................................................................. 12
(i) Notice........................................................................ 12
(j) Headings...................................................................... 12
(k) Schedules and Exhibits........................................................ 12
(l) Authority..................................................................... 12
(m) Entire Agreement.............................................................. 12
(n) Legal and Equitable Remedies.................................................. 12


SCHEDULE A - PROJECT DESCRIPTION SCHEDULE B - TIMETABLE AND PREPAID ROYALTY PAYMENTS SCHEDULE C - COMPLETION CRITERIA SCHEDULE D - ROYALTY SCHEDULE SCHEDULE E - SOFTWARE COMPONENT OWNERSHIP SCHEDULE F - SOFTWARE MAINTENANCE AND SUPPORT FEES SCHEDULE G - EXAMPLES OF THE PRINTING AND PUBLISHING INDUSTRY APPLICATIONS


EXHIBIT A - FIREBIRD FILE MANAGER SOFTWARE SPECIFICATION AND PROJECT PLAN


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SOFTWARE DEVELOPMENT
AND LICENSE AGREEMENT


THIS AGREEMENT is made and entered into as of August 1, 1996 between Augment Systems, Incorporated ("AUGMENT"), a Delaware corporation having its principal place of business in Westford, Massachusetts and Polybus Systems Corporation ("POLYBUS"), a Delaware corporation having its principal place of business in Hudson, New Hampshire.


INTRODUCTION


AUGMENT is in the business of designing, developing, manufacturing and selling super servers for the printing and publishing market. POLYBUS specializes in software development and has the ability and expertise to develop file management software. Both parties desire to establish a relationship for the purpose of developing the software necessary for AUGMENT's hardware products utilizing complementary skills and strengths which each party may provide.


The purpose of this Agreement, therefore, is to set forth the terms and conditions upon which POLYBUS agrees with AUGMENT to develop, integrate and deliver the Software (as defined in Schedule A hereto) for a File Management Software System which will be fully integrated into the hardware products of AUGMENT for sale as a combined hardware/software product (the "System").


In consideration of the mutual covenants set forth in this Agreement, and other good and valuable consideration, the parties agree as follows:


1. SOFTWARE DEVELOPMENT.


a) POLYBUS agrees to undertake and complete the development, integration, and
delivery of the Software which meets the functional specifications and
requirements included on Schedule A attached hereto (the "Functional
Specifications") in accordance with the timetable set forth in Schedule B
hereto. POLYBUS acknowledges and agrees that time is of the essence in
performing its obligations under this Agreement.


b) The Software delivered by POLYBUS shall be useable on and compatible with
AUGMENT's hardware products, shall be delivered in binary and source form,
shall include all data files, make files, and other information required to
build the executable software from the source, and shall include
enhancements, improvements, modifications and additions thereto, as agreed
to in Section 5 herein.


2. DELIVERY, TESTING AND ACCEPTANCE.


a) Delivery. POLYBUS shall deliver the Alpha, Beta and final versions of the
Software to AUGMENT according to the timetable in Schedule B attached
hereto. POLYBUS shall memorialize each delivery in a written confirmation
that sets forth the nature and condition of the Software, the medium of
delivery, and the date of delivery. Receipt of the Software shall


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occur when AUGMENT countersigns each confirmation which countersigning will
not be unreasonably withheld or delayed.


b) Testing. AUGMENT shall have ten (10) business days from the date of delivery
of the applicable version of the Software to inspect, evaluate and test the
Software to determine whether it conforms to the Functional Specifications
and meets the Completion Criteria set forth in Schedule C.


c) Acceptance. Upon completion of evaluation and testing of each of the Alpha,
Beta and final versions of the Software, AUGMENT shall issue a notice of
acceptance or rejection of that version of the Software. In the event of
rejection, AUGMENT shall give its reasons for rejection in reasonable
detail. POLYBUS shall use all reasonable effort to correct any material
deficiencies or nonconformities and resubmit the rejected items within ten
(10) business days. Upon acceptance, AUGMENT shall deliver to POLYBUS a
signed, written Acceptance Certification indicating that the applicable
Completion Criteria are met. The applicable version of the Software shall be
considered accepted and the milestones defined in Schedule B shall be
considered met only after AUGMENT has provided POLYBUS with a signed
Acceptance Certification, or in the case of the final version of the
Software, upon the earlier of (i) the delivery of the final Acceptance
Certification to POLYBUS or (ii) the initial commercial shipment of the
final product which incorporates the final version of the Software (in
either event, acceptance of the final version shall hereinafter be the
"Acceptance Date").


3. MODIFICATIONS.


Neither party shall have the right to modify the Functional Specifications as defined in Schedule A without the prior written authorization of the other party and AUGMENT's Vice President of Engineering. POLYBUS agrees to notify AUGMENT promptly of any factor, occurrence or event coming to its attention that may affect POLYBUS' ability to meet its obligations under this Agreement, including, but not limited to, any loss or reassignment of Key Employees, major equipment failure or any other event or set of circumstances which may result in a change of schedule.


4. PROJECT MANAGEMENT.


a) Progress Reviews. POLYBUS shall work closely with the AUGMENT engineering
staff throughout the development of the Software and shall allow AUGMENT
personnel reasonable access to POLYBUS' documentation and personnel for
design review, "walkthroughs," and discussions concerning the status and
conduct of work being performed.


b) Status Reports. Upon the request of AUGMENT, Herb Jacobs of POLYBUS will
provide AUGMENT with a weekly verbal status report either in person or by
telephone (the "Weekly Status Report"), consisting of a brief discussion of
each of the following four areas:


(1) Priorities: the current short term priorities.


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(2) Progress: the tasks accomplished in the past week.


(3) Plans: the tasks to be worked on in the next week.


(4) Problems: the problems, if any, that need AUGMENT's attention and the
problems that may delay the achievement of a milestone set forth in
Schedule B. POLYBUS shall provide a detailed explanation of any
anticipated delays and a revised target completion date, if necessary.


In addition, at the request of the AUGMENT Vice President of Engineering or
the AUGMENT Senior Engineering Manager, POLYBUS personnel will attend review
meetings as scheduled by AUGMENT, until final acceptance of the project.
These meetings are to be held at AUGMENT's Westford facility and at mutually
agreeable times.


c) Project Staffing.
(i) POLYBUS agrees to assign and commit Herb Jacobs and Stanley Rabinowitz
as the two engineers to develop and complete the Software. Both of these
individuals shall be deemed "Key Employees". As long as POLYBUS performs its
obligations pursuant to this Agreement, POLYBUS reserves the right to change
its key employees due to unforeseen circumstances.


(ii) AUGMENT agrees to provide the equivalent of at least one full-time
engineer to participate in the development of the Software.


(iii) The parties shall obtain and maintain in effect written agreements
with their employees who participate in the development of the Software.
Such agreements shall contain terms sufficient for each party to comply with
the provisions of this Agreement and to support all grants and assignments
of rights and ownership hereunder, and shall impose an obligation of
confidentiality on such employees with respect to the Software and the other
party's Proprietary Information (as defined herein).


5. WARRANTY; MAINTENANCE AND SUPPORT; TRAINING; ENHANCEMENTS.


a) Warranty. POLYBUS represents and warrants for a period of ninety (90) days
from the Acceptance Date (the "Warranty Period") that the Software is free
of material defects in material and workmanship. POLYBUS further warrants
that during the Warranty Period the Software shall operate substantially in
accordance with the Functional Specifications. If during the Warranty
Period, a defect in the Software appears, POLYBUS will provide maintenance
and support to remedy the defect. If, during the Warranty Period, AUGMENT
requests that POLYBUS assist AUGMENT with a defect that is later determined
to be attributable to hardware or software solely developed by AUGMENT,
AUGMENT will pay POLYBUS for such work at POLYBUS's standard hourly rate.


b) Maintenance and Support. AUGMENT may purchase continued maintenance and
support for the Software from POLYBUS for one year periods following the end
of the Warranty Period


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for the purpose of prompt correction to remedy any and all design, interface
or implementation errors or problems with the Software reported in writing
by AUGMENT to POLYBUS. The term "errors" shall mean any deviations from the
Functional Specifications and any deviations from commonly accepted
standards for normal and current operation of computer software, even if not
explicitly mentioned in such Functional Specifications. This service does
not include requests for new features, support for new hardware, support for
new operating systems, version changes in the operating system, or any other
change to the software which is not a bug fix. The cost of the maintenance
and support service for the first year after the end of the Warranty Period
shall be as set forth in Schedule F hereto, such fee is not to exceed the
lowest fee paid by other POLYBUS customers for like service. The cost for
the service in future years is to be a fairly negotiated price based on the
actual costs of the maintenance in the preceding year, which may be either
higher or lower than the prior year's maintenance costs.


c) Support and Training. During the development phase, during the Warranty
Period and while the Software is under a maintenance and support agreement,
POLYBUS agrees to furnish promptly to AUGMENT full written responses to
AUGMENT's questions regarding the design, operation and content of the
Software. This support shall not be for training new AUGMENT employees.
Additionally, POLYBUS agrees to provide up to five (5) business days of
training for AUGMENT personnel and marketing assistance. Such training shall
be provided without charge and shall be scheduled to occur within ninety
(90) days after the Acceptance Date. Thereafter any further training shall
be subject to POLYBUS' standard charges.


d) Enhancements and Modifications. For a period of one year following the
Acceptance Date, POLYBUS will provide any bug fixes it may make to the
licensed Software to AUGMENT at no additional charge, unless such bug fixes
are specifically made in response to requests by AUGMENT and AUGMENT agrees
to additional fees in writing. All enhancements and modifications made by
POLYBUS will be owned by POLYBUS. AUGMENT may modify or enhance the Software
at any time. All enhancements and modifications to the Software made by
AUGMENT after the Acceptance Date will be owned by AUGMENT.


6. OWNERSHIP OF SOFTWARE.


a) The Software shall be owned by POLYBUS, and, all modifications and software
enhancements developed by POLYBUS after the Acceptance Date, including bug
fixes, shall be owned by POLYBUS.


b) All software independently developed by AUGMENT that is not included in the
definition of Software as set forth in Schedule A hereto shall be owned by
AUGMENT. In addition, AUGMENT shall own all enhancements to the Software
developed by AUGMENT subsequent to the Acceptance Date with the exception of
bug fixes made by AUGMENT to the Software within one year of the Acceptance
Date, which shall be owned by POLYBUS.


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c) Schedule E hereto sets forth additional information regarding the ownership
of the component parts of the Software and the ownership of Derivative
Works.


7. GRANT OF LICENSE AND PAYMENT OF ROYALTIES.


a) The License. The Binary License and the Source License as defined and set
forth below in this Section 7 (together, the "License") apply to the
Software, and all other software developed or integrated with the AUGMENT
hardware product, and all other software required to build the project,
including all additions, improvements and enhancements thereto and
modifications thereof made by or for POLYBUS during the term of this
Agreement and within one year after the Acceptance Date, and all proprietary
rights based thereon or resulting therefrom.


b) The Binary License. Subject to the royalty payments provided for in Schedule
D hereto (the "Royalties"), POLYBUS hereby grants to AUGMENT, and AUGMENT
hereby accepts, the following (the "Binary License"):


(1) a perpetual, irrevocable, royalty-free, nonexclusive right and license
to use the Software (and the Documentation) and all additions,
improvements and enhancements thereto and modifications thereof in
binary code form for internal use by AUGMENT for testing, development
and demonstration purposes.


(2) a perpetual, irrevocable, royalty-free, nonexclusive right and license
for up to ten (10) units of the Software (and the Documentation) and
all additions, improvements and enhancements thereto and modifications
thereof in binary code form for internal production use by AUGMENT.


(3) a perpetual, worldwide, irrevocable, nonexclusive right and license to
manufacture and distribute the Software in binary code form in
conjunction with the AUGMENT hardware products, with the right and
license to grant sub-licenses to third parties pursuant to shrink wrap
license agreements in connection therewith without account to POLYBUS
on a royalty basis in accordance with Schedule D hereto. Within 45 days
of the end of each calendar quarter, AUGMENT agrees to provide POLYBUS
with a report indicating Royalties due along with full payment of
Royalties for all Units shipped by AUGMENT during the calendar quarter.


(4) a perpetual, worldwide, irrevocable right and license to grant
sub-licenses to AUGMENT's OEM and VAR customers to manufacture and
distribute the Software in Binary Code form in conjunction with the ...