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PCL DEVELOPMENT & LICENSE AGREEMENT JUNE 14, 1993

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EXHIBIT 10.10



PCL DEVELOPMENT AND LICENSE AGREEMENT





This PCL Development and License Agreement ("Agreement") is made by and between PEERLESS SYSTEMS CORPORATION, a California corporation with its principal place of business located at 2381 Rosecrans Avenue, El Segundo, California 90245 ("Peerless"), and ADOBE SYSTEMS INCORPORATED, a California corporation with its principal place of business located at 1585 Charleston Road, Mountain View, California 94039 ("Adobe"). This Agreement is effective as of June 14, 1993 (the "Effective Date").





A. Peerless is in the business of developing and/or sublicensing proprietary computer software programs and products.



B. Adobe desires to obtain from Peerless, and Peerless desires to grant Adobe, a license to distribute and to sublicense certain of Peerless' computer software programs.





1. DEFINITIONS.

-----------



1.1 "Adobe Intermediary" shall mean any third party authorized by Adobe or any sublicensee hereunder to grant licenses with respect to the Licensed Object Code or Object Derivative to third parties other than End Users.



1.2 "Adobe Object Licensee" shall mean any third party that acquires from Adobe or an Adobe Intermediary a license to distribute some or all of the Licensed Object Code or Object Derivative to End Users.



1.3 "Adobe PCL5E" shall mean the Adobe PostScript Version 2015 based PCL5E described in Exhibit A (PostScript 2015 Based PCL5E Specifications).

---------



1.4 "Adobe Printer Environment" shall mean (i) a printer operating environment developed by Adobe that is wed by one or more Page Description Languages or (ii) a PostScript language interpreter.



1.5 "Adobe Products" shall mean any products, including without limitation hardware products or software packages, which are (i) marketed under Adobe's own name and trademarks or (ii) manufactured by or for Adobe.



1.6 "Adobe Source Licensee" shall mean any third party that acquires from Adobe a sublicense to use some or all of the Licensed Source Materials pursuant to Section 2.1(iv) hereof.

---------------



1.7 "Adobe Sub-licensee" shall mean any Adobe Intermediary, Adobe Object Licensee or Adobe Source Licensee.



1.8 "Acceptance Date" with respect to the Licensed Software shall mean the earliest to occur of (i) acceptance of the Licensed Software pursuant to the terms of Section 4 (Acceptance); or (ii) the date Adobe first commercially ships

--------- a revenue bearing release of Licensed Object Code or an Object Derivative, which has met Adobe's quality assurance testing.



1.9 "Authorized Independent Contractor" shall mean an independent contractor engaged by Adobe to provide services to Adobe provided such independent contractor has executed a written agreement in substantially the form attached hereto as Exhibit B (Independent Contractor Agreement).

---------



1.10 "Development Schedule" shall mean the milestone schedule, attached to this Agreement as Exhibit C (Development Schedule), for the performance of

--------- the parties' development obligations with respect to the Adobe PCL5E.



1.11 "End User" shall mean a customer who acquires the Licensed Object Code or Object Derivatives for its ordinary and customary business purposes and not for further distribution.



1.12 "Enhancements" shall mean any modifications, updates, enhancements and changes to, and any new versions of, the Hewlett-Packard PCL, other than Generation Changes or PCL Color Products, that Hewlett-Packard has implemented in a printer that is commercially available and that are either documented in generally available Hewlett-Packard documentation or, if undocumented, are verified by standard industry test suites and are used in one or more applications that generate data for a commercially available Hewlett-Packard printer.



1.13 "Generation Changes" shall mean any modifications, updates, enhancements and changes to, and any new versions of, the Hewlett-Packard PCL, other than PCL Color Products, that Hewlett-Packard identifies with a new release or version name, and shall only include such modifications, updates, enhancements and changes or new versions that Hewlett-Packard has implemented in a printer that is commercially available and that are either documented in generally available Hewlett-Packard documentation or, if undocumented, are verified by standard industry test suites and are used in one or more applications that generate data for a commercially available Hewlett-Packard printer. By way of example, PCL5 and PCL5E are each Generation Changes, while the changes to PCL5 required to operate with the HP Laser Jet IlIP and lIlsi are Enhancements.



1.14 "Genoa Test Suite(s)" shall mean the software test programs known as HP LaserJet IV ATS and HP Laser Jet W (PCL5E) CET and ATS, developed and licensed by Genoa Technology, Inc., that are intended to test software emulators of the same specification as Adobe PCL5E.

1.15 "Licensed Software" shall mean (i) Adobe PCL5E, (ii) any PCL computer programs developed subsequent to the Effective Date by Peerless to implement Enhancements, Generation Changes or PCL Color Products (all such versions are hereinafter referred to as "New PCL Products"), and (iii) any changes, alterations, corrections or enhancements to the Licensed Software supplied by Peerless to Adobe pursuant to the terms of this Agreement. As used herein, unless the context otherwise requires, Licensed Software shall include the source code, object code and related documentation.



1.16 "Licensed Object Code" shall mean machine-readable object code for the Licensed Software.



1.17 "Licensed Software Derivative" shall mean any derivative work of the Licensed Software (as defined in the U.S. Copyright Act) and any work that is based upon, derives from, or incorporates all or any portion of the Licensed Software, including modified and enhanced versions thereof, whether created by Peerless, Adobe or any Adobe Source Licensee.



1.18 "Licensed Source Materials" shall mean the source code listing and all other delivered items embodying the source code (in whole or in part) for the Licensed Software.



1.19 "New PCL Release" shall mean a release of a New PCL Product which contains substantial or material Enhancements or that is a Generation Change or a PCL Color Product.



1.20 "Object Derivative" shall mean machine-readable object code for any Licensed Software Derivative.



1.21 "PeerlessPage" shall mean the proprietary software operating system program owned and licensed by Peerless.



1.22 "Peerless Test Suite(s)" shall mean the software test programs developed by Peerless, if any, that are intended to test Adobe PCL5E.



1.23 "PCL Color Products" shall mean any modifications, updates, enhancements and changes to, and any new versions of, the Hewlett-Packard PCL that permit the Hewlett-Packard PCL to operate with color printers, and shall only include such modifications, updates, enhancements and changes or new versions that Hewlett-Packard has implemented in a printer that is commercially available and that are either documented in generally available Hewlett-Packard documentation or, if undocumented, are verified by standard industry test suites and are used in one or more applications that generate data for a commercially available Hewlett-Packard printer



1.24 "Test Suites" shall mean the Genoa Test Suites and the Peerless Test Suites.



2. Grant of Licenses.

-----------------

2.1 Peerless hereby grants to Adobe a non-exclusive, world-wide license:



(i) To reproduce and use for internal development purposes the Licensed Source Materials (but limited by the access and confidentiality provisions of Section 7 (Ownership, Title, and Proprietary Rights)).

---------



(ii) To reproduce, use, distribute and sublicense the Licensed Object Code (other than for use in the Adobe Printer Environment), either directly or through one or more Adobe Intermediaries, solely to Adobe Object Licensees and End Users.



(iii) To authorize Adobe Intermediaries to sublicense all of the rights granted to Adobe in the Licensed Object Code (other than for use in the Adobe Printer Environment) in accordance with Subsection 2.1 (ii) above.

------------------



(iv) Subject to Section 2.3 and Section 2.4 below, to

----------- ----------- sublicense the Licensed Source Materials solely to Adobe Source Licensees for use for internal development purposes by such Adobe Source Licensees.



2.2 Peerless hereby grants to Adobe an exclusive, world-wide license:



(i) To reproduce, use, distribute and sublicense the Licensed Object Code for use in the Adobe Printer Environment, either directly or through one or more Adobe Intermediaries, solely to Adobe Object Licensees and End Users.



(ii) To authorize Adobe Intermediaries to sublicense all of the rights granted to Adobe in the Licensed Object Code for use in the Adobe Printer Environment in accordance with subsection 2.2(i) above.

----------------



2.3 This license includes the right of Adobe to create Licensed Software Derivatives and to reproduce, use, distribute and sublicense the machine-executable form of any such Licensed Software Derivatives and the right of Adobe to authorize Adobe Source Licensees to create Licensed Software Derivatives and to reproduce, use, distribute and sublicense the machine- executable form of the Licensed Software and any such Licensed Software Derivatives, provided, however, that:



(i) all Licensed Software Derivatives shall be distributed only in the form of Object Derivatives and only as permitted in Section 2.1 and

----------- Section 2.2 with respect to the Licensed Object Code; and - -----------



(ii) all copies of such Object Derivatives shall be subject to the payment obligations of Section 8 (Payments) hereof .

---------



2.4 Adobe shall have the right to sublicense the Licensed Source Materials and the source code for any Licensed Software Derivatives to an Adobe Source Licensee (with no further rights granted to such Adobe Source Licensee to sublicense), provided that such Adobe Source Licensee also has a license to Adobe Printer Environment source code or support source code, such Adobe Source Licensee agrees to use the Licensed Source Materials solely to create Object Derivatives for use in the Adobe Printer Environment, Adobe pays Peerless the fee specified in Section 8

--------- (Payments) and Adobe enters into a license agreement with such Adobe Source Licensee containing the minimum terms and conditions set forth in Exhibit D

--------- (Minimum Terms of Source Sub-license). Adobe agrees that it will only sublicense the Licensed Source Materials or the source code for any Licensed Software Derivatives to (i) entities who distribute page description software bundled with a printer engine, (ii) licensees of Adobe's Configurable PostScript Interpreter (CPSI) who ship CPSI with output devices and (iii) other parties if Adobe has obtained the prior written approval of Peerless to sublicense to such other parties, which approval will not be unreasonably withheld. Peerless shall have the right to withhold such approval if the proposed sublicensee is a direct competitor of Peerless and offers products and services similar to the products and services of Peerless.



2.5 Adobe shall have the right to sublicense reproduction of the Licensed Object Code or Object Derivatives to an Adobe Sub-licensee, provided Adobe enters into a license agreement with such Sub-licensee containing the minimum terms and conditions set forth in Exhibit E (Minimum Terms of Object

--------- Reproduction Sub-license).



2.6 In the event Adobe or any Adobe Sub-Licensee distributes the Licensed Object Code or Object Derivative on magnetic or optical media rather than silicon chip(s) media, Adobe will take reasonable steps to ensure that each such copy of the Licensed Object or Object Derivatives distributed by Adobe or any Adobe Sub-Licensee is accompanied by a copy of an End User Agreement containing the minimum terms and conditions set forth in Exhibit F (Minimum

--------- Terms and Conditions of End-User License) hereto. The End User Agreement may be a written agreement signed by the customer or a written agreement in the package containing the Licensed Object or Object Derivatives or the end user documentation therefor that the customer accepts by opening the package.



2.7 In the event that Adobe corrects Identified Non-Conformities pursuant to Section 4 (Acceptance), Adobe grants to Peerless a non-exclusive,

--------- perpetual, worldwide license:



(i) To reproduce and use for internal development purposes the source code for such corrections (provided that Peerless limits access to and maintains the confidentiality of this source code to the same extent as it does for its own source code).



(ii) To reproduce, use, distribute and sublicense the object code for such corrections.



(iii) To authorize third parties to sublicense all of the rights granted to Peerless in accordance with subsection 2.7 (ii) above.

------------------



(iv) To sublicense the source code for such corrections to third parties solely for internal development purposes by such third parties, provided that such third parties have also licensed Peerless PCL source code from Peerless or a Peerless authorized sublicensee and have agreed to limit access to and maintain the confidentiality of the source code for such corrections to the same extent as for the Peerless PCL source code.





3. Development.

-----------



3.1 Adobe PCL5E.

-----------



(i) Development Responsibilities. The Development Schedule

---------------------------- sets forth the responsibilities of the parties with respect to the development of Adobe PCL5E. Development tasks are shown in the column entitled "Task." The party or parties responsible for a particular task are shown in the same row as that task under the column entitled "Responsibility." The date upon which a particular task is to be completed is shown in the same row as that task under the column entitled "Date." Each party agrees to complete the tasks for which it is responsible as shown on the Development Schedule and to provide any deliverables in connection with those tasks on the relevant dates set forth on the Development Schedule. The parties agree that any delay by a party in completing a task upon which tasks of the other party are contingent will extend the completion date for such other tasks on a one-for-one basis for each day of delay (contingency of tasks is indicated in the Development Schedule by defining the date upon which the contingent task is to be completed as the completion of a prior milestone plus some number of days).



(ii) Design Review. Upon delivery by Peerless to Adobe of the

------------- specifications for Adobe PCL5E under milestone 6 of the Development Schedule, Peerless and Adobe shall commence a joint design review of such specifications and shall use their best efforts to reach mutual agreement upon the final form of such specifications within fifteen (15) days after such delivery. If the parties are unable to reach mutual agreement within such period, they shall continue to use best efforts to reach mutual agreement upon the final form of such specifications until they have reached such mutual agreement and any completion dates in the Development Schedule contingent on completion of the design review milestone will be extended on a one-for-one basis for each day of delay in completion of the design review milestone beyond such fifteen (15) day period.



(iii) Specification Changes. The final specifications for Adobe

--------------------- PCL5E as determined by the design review process under milestone 6 of the Development Schedule may not be changed without the prior approval of both parties, which approval will not be unreasonably withheld.



3.2 Other Licensed Software.

-----------------------



(i) Parallel Implementations. In the event that Peerless

------------------------ undertakes the development of New PCL Products subsequent to the Effective Date, Peerless will concurrently develop parallel implementations of each such New PCL Product in the then-current Adobe printer operating environment (which currently is Version 2015 and which in the future will consist of successors to Version 2015) and the PeerlessPage environment; provided, however, that (x) prior to commencing development of the Adobe implementation, Peerless shall notify Adobe of its intention to do so and shall not proceed to develop the Adobe implementation if Peerless is notified by Adobe within ten (10) business days after Adobe's receipt of such notice that Adobe waives Peerless' obligation to develop that implementation, and (y) the obligation under this Section 3.2(i) will terminate if, commencing in the sixth

-------------- (6th) year after the Effective Date, Adobe has paid to Peerless under this Agreement less than [*] (including royalties, source code access fees, support fees or any other amounts and without taking into account any recoupment or offset) during the year ending with the calendar quarter immediately preceding the calendar quarter in which Peerless commences the development of each New PCL Product. Peerless will use a hardware/development platform chosen by Adobe for the Adobe implementation, provided that this platform must be based upon a microprocessor acceptable to Peerless. Peerless will deliver such implementation to Adobe as follows:



(a) If the New PCL Product does not require changes to the then-current Adobe printer operating environment, Peerless will deliver to Adobe (i) an engineering (alpha) release of the product in the then-current Adobe printer operating environment within thirty (30) days of the delivery of the PeerlessPage version to Peerless QA, (ii) a pre-production (beta) release of the product in the then-current Adobe printer operating environment within thirty (30) days of Peerless' first pre-production release, and (iii) a final release of the product in the then-current Adobe printer operating environment within thirty (30) days of the completion of the final release of the Peerless product.



(b) If the New PCL Product requires changes to the then-current Adobe printer operating environment, Peerless will concurrently determine what changes need to be made to both the then-current Adobe printer operating environment and the PeerlessPage environment, and will promptly notify Adobe of the required changes and the PeerlessPage based internal development schedule. If Adobe delivers to Peerless a functioning then-current Adobe printer operating environment, modified based upon the changes identified by Peerless, at or prior to the time that Peerless completes the necessary modifications to the PeerlessPage environment, Peerless will comply with the delivery schedule set forth in Section 3.2(i)(a). Delay in Adobe's delivery of the functioning

----------------- modified environment will extend Peerless' delivery schedule on a one-for-one basis for each day of delay.



(ii) Withholding Royalty Payments. In the event that Peerless fails to meet its obligations under Section 3.2(i), Adobe shall be entitled to

-------------- either (a) withhold payment of all royalties due to Peerless under this Agreement until such time as Peerless makes the agreed upon deliveries, at which time Adobe will bring Peerless current as to all unpaid royalties, or, (b) after Adobe has given written notice to Peerless of such failure and Peerless has not cured such failure within five (5) business days after receipt of such notice, to treat Peerless' failure as a withdrawal under Section 3.2(iii), to use the

---------------- Licensed Source Materials to undertake development of the Adobe implementation of the New PCL Product and to pay royalties to Peerless for such implementation in accordance with Section 8.2(i) (as if such implementation was Adobe Enhanced

------------- PCL for purposes of Section 8.2).

------------



[*Confidential Treatment Requested]

(iii) Generation Changes. In the event that Peerless withdraws

------------------ from developing Licensed Software that implements Generation Changes, for any reason, Adobe shall be entitled to use the Licensed Source Materials to create software implementing such Generation Changes (the "Adobe Enhanced PCL"). Any revenue bearing Adobe Enhanced PCL shipped within eighteen (18) months after Peerless' withdrawal shall bear reduced royalties in accordance with Section 8

--------- (Payments). For purposes of this Agreement Peerless shall be deemed to have withdrawn from developing Licensed Software implementing Generation Changes if, within thirty (30) days after Peerless receives the Hewlett-Packard documentation for such Generation Changes, Peerless does not commit to Adobe that Peerless will develop Licensed Software that implements those Generation Changes. If Peerless has committed to Adobe that Peerless will develop Licensed Software that implements Generation Changes, Peerless will provide Adobe with a good faith estimate of the schedule for such development within ninety (90) days after Peerless receives the Hewlett-Packard documentation for such Generation Changes.



(iv) Enhancements. Adobe shall have the right to request that

------------ Peerless provide it with Licensed Software implementing Enhancements at any time and from time to time during the term of this Agreement, and Peerless shall have thirty (30) days to accept or reject such request and to negotiate a mutually agreeable schedule within which to provide such Enhancements. Should Peerless indicate to Adobe that Peerless is unwilling or unable to deliver such Enhancements to Adobe in accordance with a mutually agreeable schedule, then Adobe shall have the right to use the Licensed Source Materials to create software implementing such Enhancements itself and to pay to Peerless reduced royalties in accordance with Section 8 (Payments).

---------



3.3 PCL Color Products. Adobe shall have the right to request that

------------------ Peerless provide it with software implementing PCL Color Products at any time and from time to time during the term of this Agreement, and Peerless shall have sixty (60) days to accept or reject such request and to negotiate a mutually agreeable schedule within which to provide such software. Along with its request, Adobe shall provide Peerless with a good faith estimate, and the basis for this estimate, of the number of units of software implementing the particular PCL Color Product that Adobe believes it will ship during the first two (2) years such software is available to Adobe. It is Adobe's intent that it will not make such formal request without having at least one potential or existing customer who has expressed a verbal intention to develop a PCL Color Product. If at any time thereafter Adobe does not have at least one (1) potential or existing customer who has expressed a verbal intention to develop a PCL Color Product, Adobe agrees to relieve Peerless of its obligation to develop the PCL Color Product until such time as Adobe provides Peerless with another formal request pursuant to this section. Should Peerless indicate to Adobe that Peerless is unwilling or unable to deliver such software to Adobe in accordance with a mutually agreeable schedule, then Adobe shall have the right to use the Licensed Source Materials to create software implementing such PCL Color Products itself (the 'Adobe Enhanced Color PCL") and to pay to Peerless reduced royalties in accordance with Section 8 (Payments).

---------



4. Acceptance.

----------

4.1 Upon completion of a final production version of Adobe PCL5E that operates in accordance with the specifications described in Exhibit A

--------- (PostScript 2015 Based PCL5E Specifications) as determined by all Test Suites, Peerless shall deliver to Adobe such software and the additional deliverables described in Exhibit G (Other Deliverables).

---------



4.2 Adobe shall have a period of forty-five (45) days following delivery of such software or any subsequent New PCL Release provided by Peerless pursuant to this Agreement (the "Acceptance Test Period") to conduct testing to verify that such software operates in accordance with the specifications described in Exhibit A PostScript 2015 Based PCL5E Specifications) (or mutually

--------- agreed upon specifications for any New PCL Releases). During the Acceptance Test Period, Adobe shall provide Peerless at least once per week a written report of any specification non-conformities identified by Adobe ("Weekly Non-Conformity Report"), and not later than the last day of the Acceptance Test Period, Adobe shall deliver to Peerless a comprehensive list of all specification non- conformities identified by Adobe during such period, with a suggested priority for correcting such specification non-conformities ("Comprehensive Non- Conformity Report").



4.3 If, by the end of the Acceptance Test Period, Peerless has corrected all specification non-conformities identified by Adobe in the Comprehensive Non-Conformity Report (the "Identified Non-Conformities") and Adobe has confined the corrections, the software shall be deemed to have been accepted by Adobe as of the end of such period.



4.4 If, by the end of the Acceptance Test Period, Peerless has not corrected all Identified Non-Conformities, Peerless shall have a period of seventy (70) days to correct all Identified Non-Conformities and to deliver a revised version of the software incorporating such corrections to Adobe. Adobe shall have a period of forty-five (45) days following delivery of such version (the "Correction Test Period") to conduct testing to verify that all Identified Non-Conformities have been corrected. During the Correction Test Period, Adobe shall provide Peerless at least once per week a written report of any Identified Non-Conformities that Adobe determines have not been corrected, and not later than the last day of the Correction Test Per
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