1999-0329_NATIONAL INSTRUMENTS CORPORATION_Agreement to IndemnityMay 4,1999
REGULAR MEETING OF THE CAPISTRANO VALLEY WATER DISTRICT
BOARD OF DIRECTORS
CLOSED SESSION (610.85) - None
RECESS UNTIL 7:00 P.M. BUSINESS SESSION
The Regular Meeting of the Board of Directors of the Capistrano Valley Water District was called
to order by Chairman Jones, at 9:01 p.m. in the City Council Chamber,
ROLL CALL: PRESENT: Gil Jones, Chairman
John Greiner, Vice Chairman
Collett Campbell, Director
Wyatt Hart, Director
David M. Swerdlin, Director
ABSENT: None
STAFF PRESENT: George Scarborough, General Manager; Jennifer Murray, Assistant City
Manager; John Shaw, Interim City Attorney; Cheryl Johnson, Clerk ofthe Board; Cynthia L. Russell,
Administrative Services Director; William M. Huber, Engineering and Building Director; Thomas
Tomlinson, Planning Director; Amy Amirani, Public Works Director; Al King, Community Services
Director, Lt. Rick Stahr, Orange County Sheriffs Department; Bonnie Sanchez, Recording Secretary.
CONSENT CALENDAR
It was moved by Director Swerdlin, seconded by Director Hart, that the staff recommendations be
accepted for the following items listed on the Consent Calendar. The motion carried by the
following vote:
AYES: Directors Swerdlin, Greiner, Hart, Campbell, and Chairman Jones
NOES: None
ABSENT: None
APPROVAL OF MINUTES - REGULAR MEETING OF APRIL 6. 1999
The Minutes of the Regular Meeting of April 6, 1999, were approved as submitted.
C V WD Minutes -1- 5/4/99
2. APPROVAL OF PLANS AND SPECIFICATIONS AND CALL FOR BIDS -
HOLLYWOOD WELL INTER -TIE PROJECT (600.70)
As set forth in the Report dated May 4, 1999, from the Public Works Director, the plans and
specifications for the Hollywood Well Inter -tie Project were approved and the Clerk of the
Board was authorized to solicit bids.
APPROVAL OF PLANS AND SPECIFICATIONS AND CALL FOR BIDS -
MUNICIPAL SUPPLY WATER WELL - NORTH AREA DOMESTIC WELL
60( 0.70)
As set forth in the Report dated May 4, 1999, from the Public Works Director, the plans and
specifications for the Municipal Supply Water Well - North Area Domestic Well were
approved and the Clerk of the Board was authorized to solicit bids.
4. APPROVAL OF AGREEMENT FOR MODIFICATIONS TO WATER
FACILITIES TO SERVE TRACT 14196, PACIFIC POINT (SJD PARTNERS.
LTD./SUNCAL, (6� 00.70)
As set forth in the Report dated May 4, 1999, from the Engineering and Building Director,
the Agreement with SID Partners, Ltd., providing for removal of the McCracken Hill
Reservoir and construction of an interim water pipeline system and appurtenances, at the
Developer's expense, to compensate for the McCracken Hill Reservoir until permanent
replacement facilities are constructed, was approved.
BOARD ACTIONS
APPROVAL OF AGREEMENT TO INDEMNIFY RELATING TO USE OF
"LOOKOUT" SOFTWARE (NATIONAL INSTRUMENTS CORPORATION)
600.70
Written Communications:
Report dated May 4, 1999, from the Public Works Director, forwarding an agreement with
National Instruments Corporation to, at its own expense, defend and indemnify the District
against any litigation resulting from the purchase and/or use of National Instruments
Corporation "Lookout" Software to the extent that the litigation alleges that the software
infringes on the proprietary rights of TESCO Controls, Inc. The current existing Supervisory
Control and Data Acquisition (SCADA) computer, software and peripheral equipment are
obsolete; the peripheral equipment drivers are unique to the TESCO software; TESCO has
stopped marketing the operating software and will no longer provide factory support. The
Report advised that the District intended to use the software developed by National
Instruments as the applications software for the new Supervisory Control and Data
Acquisition (SCADA) computer system enhancement project. The "Lookout" software
would be able to communicate with existing TESCO remote terminal units until such time
as the District replaced them. The District would be able to move to an open architecture
CV WD Minutes -2- 5/4/99
system and free the SCADA system from the high maintenance costs associated with
TESCO's proprietary system and from the TESCO proprietary drivers.
Amy Amirani, Public Works Director, made an oral report.
Approval of Agreement:
It was moved by Director Swerdlin, seconded by Director Hart and unanimously carried to
approve the Agreement to Indemnify with National Instruments Corporation.
ADJOURNMENT
There being no further business before the Board, the meeting was adjourned at 9:03 p.m., to the
next meeting date of Tuesday, May 18 p.m at 5:30 p.m., in the City Council Chamber.
Respectfully submitted,
CHERYL JOHNSON, CITY CLERK
ATTEST:
GIL JONES, CHAIRMAN
CV WD Minutes -3- 5/4/99
AGREEMENT TO INDEMNIFY
This Agreement to Indemnify, hereinafter referred to as the Agreement, is made between the
Capistrano Valley Water District, a subsidiary district of the City of San Juan Capistrano, hereinafter
referred to as the "District", and National Instruments Corporation, hereinafter referred to as NI.
WHEREAS, the District desires to utilize NI's Lookout software and NI's TESCO-
compatible driver in an upgrade of their facility;
WHEREAS, the District has been put on notice by TESCO Controls, Inc. (hereinafter
"Tesco") that NI's TESCO-compatible driver violates TESCO proprietary rights;
WHEREAS NI wants the District to purchase NI's Lookout software and NI's TESCO-
compatible driver (the "Products") in the upgrade of their facility, and the District, prior to
purchasing the Products requires a specific indemnity against any future claims made by TESCO;
NOW, THEREFORE, the parties hereto, for and in consideration of the agreements and
covenants to be performed as hereinafter set forth, agree as follows:
1. In consideration of the District's use of the Products, NI shall, at its own expense,
defend and indemnify the District against any litigation resulting from the purchase and/or use of
the Products to the extent that such litigation alleges that the Products or any part thereof infringes
any United States patent, copyright, or trademark, provided that District notifies NI immediately
upon its obtaining notice of such impending claim and cooperates fully with NI in preparing a
defense. This indemnity expressly applies to any claim made by TESCO Controls, Inc. and/or
its principals or agents, that the use of the Products or any part thereof infringes upon any
alleged proprietary rights of TESCO Controls, Inc. If District provides to NI the authority,
assistance, and information NI needs to defend or settle such claim, NI shall pay any final award of
damages in such suit and any expense District incurs at NI's written request, but NI shall not be
liable for a settlement made without its prior written consent. If the Products are held to be
infringing and the use thereof is enjoined, NI shall, at its option, either (i) procure for the District the
right to use the Products, (ii) replace the Products with others which do not constitute infringement,
or (iii) remove the infringing Products and refund the payment(s) made therefor by District. The
foregoing states the District's sole remedy for, and NI's entire liability and responsibility for,
infringement of any patent, trademark, or copyright relating to the Products provided hereunder.
THIS INDEMNITY IS IN LIEU OF ANY OTHER STATUTORY OR IMPLIED WARRANTY
AGAINST INFRINGEMENT.
2. Further, upon written request, NI will provide to the entity who is integrating the
Products into the District's system (the "Integrator"), the following indemnity:
In consideration of the Integrator's use of the Products, NI shall, at its own expense, defend
and indemnify the Integrator against any litigation resulting from the purchase and/or use of
the Products to the extent that such litigation alleges that the Products or any part thereof
infringes any United States patent, copyright, or trademark, provided that Integrator notifies
NI immediately upon its obtaining notice of such impending claim and cooperates fully with
NI in preparing a defense. This indemnity expressly applies to any claim made by
TESCO Controls, Inc. and/or its principals or agents, that the use of the Products or
any part thereof infringes upon any alleged proprietary rights of TESCO Controls, Inc.
If Integrator provides to NI the authority, assistance, and information NI needs to defend or
settle such claim, NI shall pay any final award of damages in such suit and any expense
Integrator incurs at NI's written request, but NI shall not be liable for a settlement made
without its prior written consent. If the Products are held to be infringing and the use thereof
is enjoined, NI shall, at its option, either (i) procure for the Integrator the right to use the
Products, (ii) replace the Products with others which do not constitute infringement, or (iii)
remove the infringing Products and refund the payment(s) made therefor by Integrator. The
foregoing states the Integrator's sole remedy for, and NI's entire liability and responsibility
for, infringement of any patent, trademark, or copyright relating to the Products provided
hereunder. THIS INDEMNITY IS IN LIEU OF ANY OTHER STATUTORY OR
IMPLIED WARRANTY AGAINST INFRINGEMENT.
3. In consideration of the foregoing indemnities, District agrees not to eliminate the
Products from consideration for inclusion in its facility upgrade.
4. If for any reason a court of competent jurisdiction finds any provision of this
Agreement, or any portion thereof, to be unenforceable, such provision will be enforced to the
maximum extent permissible so as to implement the intention of the parties, and the remainder of
this Agreement shall continue in full force and effect.
5. The parties hereto, and each of them, shall perform any and all acts and execute and
deliver any and all documents which may be or become necessary and proper to give effect to and
carry out the terms hereof.
6. It is further expressly agreed that this Agreement may be signed in two identical
original counterparts, one of which shall be kept in the possession of each party hereto, and each of
which shall be deemed an original for all purposes.
Ll
0
7. Each parry acknowledges that this Agreement has been carefully read, understood,
and considered prior to execution. Each party hereto acknowledges that they have had the
opportunity to discuss this Agreement with counsel of its own choosing, if they so desire. Each
parry further acknowledges that this Agreement constitutes the full and complete agreement between
the parties for the matter discussed herein, and this Agreement is not executed by either party hereto
based upon any representation, statement or warranty not specifically set forth in this Agreement.
EXECUTED this � day of 1999.
National Instruments
David ue
Generall Counsel sell
National Instrumerits Corporation
The Capistrano Valley Wter District
By'�—�"l
Prinfe-&Name: Gil Jones 5/4/99
Title: Chairman
ATTEST
AGENDA ITEM
TO:
FROM:
SUBJECT:
May 4, 1999
George Scarborough, General Manager
Amy Amirani, Public Works Director
Consideration of Agreement to Indemnify Relating to Use of "Lookout"
Software (National Instruments Corporation)
RECOMMENDATION
By motion, authorize the Chairman of the Board to accept National Instrument's offer of
indemnify, and enter into a contract with National Instruments to indemnify the District and its
contractors.
This agenda item considers the acceptance of National Instrument's offer of indemnify the
Capistrano Valley Water District, and /or any of its agents or contractors against any legal action
brought by TESCO or its agents, for use of National Instrument's "Lookout" software. An
integrally related item, the contract for the SCADA System Enhancements, is presented in a
separate agenda item. For convenience, an abbreviated version of the SCADA System
Enhancements agenda item is given below as background information.
Background:
The initial phase of a Supervisory Control and Data Acquisition (SCADA) computer system was
designed in 1988 and installed in 1989 to monitor and control 20 critical reservoirs, booster
stations, wells and an import connection. The existing SCADA central computer and software
have served well but are approaching the end of their useful life. The computer and peripheral
equipment are obsolete and the District is experiencing difficulty in repairing or replacing worn
out components. The central computer is not year 2000 compliant. The drivers for the peripheral
equipment are unique to the TESCO software and must be rewritten for updated equipment.
TESCO stopped marketing the Siteglass 75 operating software in 1992 and informed us that they
no longer provide factory support on this product.
In August 1996, the Capistrano Valley Water District Board of Directors adopted the Supervisory
Control and Data Acquisition (SCADA) System Master Plan for the District. CyberNet
Consulting Ltd. prepared an Overall SCADA System Upgrade Report dated October 16, 1997
which clarified options presented in the Master Plan.
The proposed first phase of the SCADA system upgrade is the replacement of the central
computer and operating software. The majority of the SCADA software is now Windows-based
FOR CITY COUNCIL AGEN6 V wD
c,
0
Agenda Item
National Instruments
PA
May 4, 1999
and integrates with commonly used software, such as Excel and Word, rather than unique report
generation routines. Current SCADA software now operates in an "open -architecture"
environment where the central computer can communicate with remote units of several
manufacturers over a common protocol. The District proposes to use Lookout SCADA
software, marketed by National Instruments, due to its ability to communicate over multiple
protocols. Permitting the flexibility of continuing to use the existing TESCO remote terminal units
(RTL) or replace them with any manufacturer's RTU when necessary.
The proposed SCADA System Enhancements can be divided into three phases.
Phase I A — The central computer:
• Update the central computer system to include built-in safeguards for reliable continuous
service.
• Link the central SCADA system into the existing Water/Public Works computer network.
Provide remote access to the system from a laptop computer and phone connection.
Phase 1B — System expansion:
• Add six (6) additional sites onto the system to monitor key existing facilities.
Phase 2 — Modifications to eleven (11) existing system sites:
Conversion from phone line to radio communication.
Expanded programming to include monitoring suction pressure, well groundwater level and
flow.
Provide for time -of -use pumping and variable frequency drive control where applicable.
Issue:
The District intends to use "Lookout" software, developed by National Instruments as the
"applications software" (running on the central computers) for the New SCADA System
Enhancement project. This choice, recommended in the Overall SCADA System Upgrade Report
by CyberNet, dated October 1997, was made primarily because of the Lookout's ability to
communicate with the District's existing TESCO manufactured Liquitronic (Liq) IV and V series
RTUs and models manufactured by other competitors
In September, 1998, Tesco's National Sales Manager informed the District that National
Instruments does not have Tesco's consent in offering Liq IV & V drivers to their customers.
TESCO's lawyers are in contact with NI's working toward a resolution, with no completion set
date. The District subsequently received correspondence from National Instruments
representative including a Terms and Conditions of Quotation and Sale, and from TESCO raising
"intellectual property" concerns, regarding sale of Lookout software that would include Liq IV &
V drivers.
In the final analysis the District was faced with three alternatives: 1) Spend an additional $120,000
to replace the existing TESCO RTUs in 1999. This is five to ten years before these units will
P:\ENG\CPTL\SCADA\AGND\LGL NI NOTICE.DOC
Agenda Item May 4, 1999
National Instruments
reach the theoretical end of their service life. Note that they could last longer. 2) Purchase driver
software from TESCO at a cost of $20,000. The TESCO driver software duplicates the function
already provided in the National Instruments "Lookout" software. 3) Get National Instruments
to indemnify the District and/or its subcontractors, for any claim made by TESCO Controls, Inc.,
and/or it principals or agents.
The District selected the third option for three reasons: A) It allows the District to move to a
completely open architecture system, and free its SCADA system from the high maintenance costs
associated with TESCO's proprietary system. And to free its system from the proprietary drivers
TESCO offers to sell to communicate with the Liq IV and V RTUs. B) The District can
determine the true cost of replacing the TESCO RTUs only in the bid process for the SCADA
System Enhancements. The bid will include a line item to replace the TESCO RTUs, a second
line item providing a credit for the avoided cost of integrating the Liq IV & V units with the base
station the contractor proposes to install. C) Accepting the offer to indemnify from National
Instruments cost less nothing.
The District's attorney has worked with National Instruments to develop and indemnification
agreement meeting all the Districts legal concerns. National Instruments has agreed to indemnify
the District and/or its subcontractors. , National Instruments has signed the indemnification
agreement, and a copy of the agreement is attached.
Cyrus Moaveni, President, CyberNet Consulting Ltd., 145 Vallecitos de Oro, Suite 207, San
Marcos, CA 92069.
National Instruments Corporation, 11500 North Mopac, Building B, Austin, Texas 78759
FINANCIAL CONSIDERATION
None
None
ALTERNATE ACTIONS
By motion, authorize the Chairman of the Board to accept National Instrument's offer of
indemnify, and enter into a contract with National Instruments to indemnify the District and
its contractors.
2. Request more information from staff
P:\ENGkCPTL\SCADA\AGND\LGL-NI-NOTICE.DOC
• 0
Agenda Item
National Instruments
RECOMMENDATION
May 4, 1999
By motion, authorize the Chairman of the Board to accept National Instrument's offer of
indemnify, and enter into a contract with National Instruments to indemnify the District and its
contractors.
Respectfully submitted,
Qmtk�
Amy Amirani
Public Works Director
Attachment: Agreement to Indemnify
P:\ENG\CPTLNSCADA\AGND\LGL-NI-NOTICE.DOC
Prepared
%bye
Eric Bauman
Associate Engineer
0
•
Capistrano Talley- Water District
May 7, 1999
National Instruments Corporation
11500 North Mopac, Building B
Austin, Texas 78759
Re: Agreement to Indemnify
Gentlemen:
At their meeting of May 4, 1999, the Capistrano Valley Water District Board of Directors
approved the "Agreement to Indemnify" relating to the District's use of the "Lookout"
software and a TESCO-compatible driver.
A fully -executed copy of the Agreement is enclosed for your files. Please feel free to
contact Eric Bauman at 949-487-4312 if you have any questions.
Very truly yours, n
Cheryl Johnson
Clerk of the Board
Enclosure
cc: Cybernet Consulting
Public Works Director (with enclosure)
Eric Bauman (with enclosure)
P.O. Box 967, San Juan Capistrano, California 92693 1 Phone 714493-1515
32450 Paseo Adelanto • San Juan Capistrano, California 92675
FAX 714-4933955