EXHIBIT 10.23
SYSTEM ACQUISITION AGREEMENT Ser. No. 97-0183
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SYSTEM ACQUISITION AGREEMENT
THIS SYSTEM ACQUISITION AGREEMENT (the "AGREEMENT") is hereby entered
into between ACE*COMM Corporation ("ACE*COMM") located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and SpectraNet International Inc.
("SPECTRANET") with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇ on the following terms and conditions:
Article I.
DEFINITIONS
"CUSTOM WORK PRODUCT" means (i) all original work product arising out of
professional services rendered by ACE*COMM hereunder including, without
limitation, functional and technical design documentation, software programs,
modules, routines, algorithms and associated user documentation, authorized
custom enhancements, modifications, interfaces and changes to Third Party
Software Products, Standard Software Products or Embedded Software in
furtherance of the Specifications, including without limitation the software
products and functionality described in the Gap Analysis, and (ii) all new
versions, upgrades, improvements, fixes and/or patch-tapes with respect to
the foregoing delivered by ACE*COMM to SpectraNet pursuant to the Maintenance
Agreement. Custom Work Product does not include any Embedded Software,
Standard Software Products or Third Party Software Products.
"DELIVERABLES" means (i) all equipment, cabling, Third Party Software
Products, Standard Software Products, Embedded Software, Custom Work Product,
documentation, goods, supplies, services, training, "know how," technology or
other things provided under this Agreement by or through ACE*COMM, and (ii)
with respect to the foregoing equipment, cabling, goods, supplies, all
replacement parts and components, all new versions, upgrades, improvements,
fixes and/or patch-tapes delivered by ACE*COMM to SpectraNet pursuant to the
Maintenance Agreement.
"EMBEDDED SOFTWARE" means (i) any pre-existing computer software
programs, modules, routines, algorithms and related documentation owned by
ACE*COMM and provided to SpectraNet for the purpose of incorporating or
"embedding" it in whole or in part into Custom Work Product, and (ii) all new
versions, upgrades, improvements, fixes and/or patch-tapes with respect to
the foregoing delivered by ACE*COMM to SpectraNet pursuant to the Maintenance
Agreement.
"GAP ANALYSIS" means the "SpectraNet Functional Description and Phase
List" attached hereto as Exhibit B and which document has the serial number
N97-0183.
"MAINTENANCE AGREEMENT" means that certain Support and Maintenance
Agreement by and between ACE*COM and SpectraNet dated as of the date hereof.
"MAJOR ALARM" means a warranty call under Section 11 concerning an
error, malfunction or other problem with a Deliverable covered by warranty
that prevents the Deliverable from
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operating at a level of Substantial Functionality. "Minor Alarm" means any
warranty call that is not a Major Alarm.
"SOFTWARE" means, collectively, the Third Party Software Products, the
Standard Software Products, Embedded Software and the Custom Work Products.
"SPECIFICATIONS" means all descriptions of Deliverables, including
associated functional and technical designs, drawings and samples included in
ACE*COMM's proposal, the Statement of Work, the Gap Analysis, ACE*COMM's
existing product documentation and any other material information created or
specifically adopted by ACE*COMM as the basis for discharging its
responsibilities hereunder. The order of precedence for such documents shall
be (i) the Statement of Work, (ii) the Gap Analysis, (iii) ACE*COMM's
existing product documentation and (iv) all other applicable documentation.
"STANDARD SOFTWARE PRODUCTS" means (i) all computer software programs
and related documentation owned by ACE*COMM and itemized on the Statement of
Work and provided to SpectraNet in a form generally available to the public
without substantial customization or modification, and (ii) all new versions,
upgrades, improvements, fixes and/or patch-tapes with respect to the
foregoing delivered by ACE*COMM to SpectraNet pursuant to the Maintenance
Agreement.
"STATEMENT OF WORK" means the attached description of professional
services, software products, equipment and devices, project work schedule,
job categories, prices, special payment terms, special license terms, and
other Deliverables or relevant descriptions of what ACE*COMM is to provide
hereunder and which is attached hereto as Exhibit A.
"SUBSTANTIAL FUNCTIONALITY" of a Deliverable means that such Deliverable
operates in accordance with the Specifications such that there are no
material errors or defects in any function that is used or is planned to be
used by SpectraNet and which cannot be accommodated or "worked around"
through relatively minor adjustments in work habits, operating procedures or
otherwise.
"THIRD PARTY SOFTWARE PRODUCTS" means (i) software programs, modules,
routines and related documentation of third party vendors (other than
ACE*COMM), including operating system software and application software, and
(ii) all new versions, upgrades, improvements, fixes and/or patch-tapes with
respect to the foregoing delivered by ACE*COMM to SpectraNet pursuant to the
Maintenance Agreement.
"WARRANTY PERIOD" means, with respect to each of Phase 1, 2 or 3, the
ninety (90) day period commencing upon Acceptance of the Deliverables that
are delivered as part of such phase, such that each of Phase 1, 2 or 3 shall
have separate 90 day Warranty Periods.
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ARTICLE II.
GENERAL UNDERTAKING
1. TERM OF AGREEMENT. The term of this Agreement ("TERM") shall
commence on the date last below written and shall continue in full force and
effect until terminated in accordance with Section 16.
2. SCOPE OF WORK
(a) GENERALLY. ACE*COMM agrees to provide, and SpectraNet agrees to
obtain and pay for, the Deliverables described in the Statement of Work at
the prices set forth therein according to the Specifications and this
Agreement.
(b) CHANGES IN SCOPE OF WORK. SpectraNet may request changes in
the Specifications or the Statement of Work or may request additional or
different work ("CHANGE ORDER"). If any Change Order causes an increase in
the price of, or the time required for performance of, the Statement of Work,
ACE*COMM shall notify SpectraNet of the additional time required for
performance and/or increase in price resulting from the Change Order and
shall proceed with work under the Change Order only upon written approval of
such changed terms and/or prices by SpectraNet. If a Change Order will not
cause an increase in the price of, or the time required for performance of,
the Statement of Work, ACE*COMM shall proceed with the Change Order. Upon the
approval by SpectraNet of the changed terms and/or prices that are caused by
such Change Order, such Change Order shall be included in the applicable
portion of the Specifications and/or Statement of Work.
3. PRICES. Pricing for the Statement of Work is broken down into
three (3) separate phases, as follows:
(a) PHASE 1. The first phase requires ACE*COMM to deliver
SpectraNet's initial business and technical needs, providing a current,
operational version of all of the Deliverables except for the Custom Work
Product, as more fully explained in the Statement of Work. The Standard
Software Products, Embedded Software Products and Third Party Software
Products will include, but not be limited to, the functionality described in
the Statement of Work for Fault Configuration, Accounting, Performance and
Security Management. ACE*COMM shall deliver all of the Phase 1 Deliverables
at the "firm fixed price" set forth in the Statement of Work, provided that
Section 2(b) shall apply to any proposed changes to the Deliverables to be
delivered as part of Phase 1.
(b) PHASE 2. In Phase 2, ACE*COMM shall begin processing
SpectraNet transactions as defined in the Data Processing Agreement and
deliver a current, operational version of all those portions of the Custom
Work Product that are to be delivered as part of Phase 2 as indicated in the
Gap Analysis and as more fully explained in the Statement of Work. ACE*COMM
shall deliver all of the Phase 2 Deliverable at the "firm fixed price" set
forth in the Statement of Work, provided that Section 2(b) shall apply to any
proposed changes to the Deliverables to be delivered as part of Phase 2.
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(c) PHASE 3. In Phase 3, ACE*COMM shall deliver a current,
operational version of all those portions of the Custom Work Product that are
to be delivered as part of Phase 3 as indicated in the Gap Analysis and as
more fully explained in the Statement of Work. ACE*COMM shall deliver all of
the Phase 3 Deliverables at the "firm fixed price" set forth in the Statement
of Work, provided that Section 2(b) shall apply to any proposed changes to
the Deliverables to be delivered as part of Phase 3.
(d) TAXES. SpectraNet shall be responsible for any state and local
sales or use tax based on SpectraNet's payment of fees, and use of the
Software, under this Agreement. ACE*COMM shall be responsible for taxes based
on ACE*COMM's net income, gross income, receipts, capital or net worth as
well as all minimum taxes, doing business taxes and franchise taxes.
4. CERTAIN OUT-OF-POCKET COSTS. Except as otherwise specifically set
forth in this Agreement, prices quoted do not include and SpectraNet shall
reimburse ACE*COMM for its reasonable cost of travel (air & cab fare,
lodging, or auto rental).
5. SHIPPING, RISK OF LOSS, TITLE. Unless otherwise set forth on the
Statement of Work, all equipment purchased by SpectraNet shall be shipped FOB
Gaithersburg, Md. to SpectraNet according to ACE*COMM's (or the
manufacturer's) normal procedures, and SpectraNet shall pay all associated
shipping, insurance and handling charges. Title to all equipment, cabling and
hardware delivered to SpectraNet hereunder shall transfer to SpectraNet
concurrently with SpectraNet's payment to ACE*COMM (or, if applicable, to the
vendor of such equipment, cabling or hardware) with respect to such
equipment, cabling or hardware.
6. INSTALLATION & ACCEPTANCE.
(a) GENERAL. ACE*COMM and SpectraNet shall cooperate to develop
acceptance test procedures ("ATPs") that shall provide guidelines to
determine whether or not the Deliverables substantially perform as set forth
in the applicable Specifications and which ATPs shall be subject to
SpectraNet's approval. The parties acknowledge that nothing contained in the
ATPs is intended to reduce SpectraNet's rights to report any errors or
defects in any Deliverables and have such errors or defects repaired by
ACE*COMM pursuant to this Section 6 and/or Section 11. ACE*COMM shall install
and provide on-site installation assistance for the Deliverables that are to
be delivered as part of Phases 1, 2 and 3 pursuant to the schedule set forth
in the Statement of Work. For each such phase, SpectraNet shall accept or
reject the Deliverables that are part of such phase within 30 days after
ACE*COMM'S successful installation of such Deliverables at the last of the
locations designated by SpectraNet on or before May 15, 1997 to have such
Deliverables installed; provided, however, that such 30 day period shall be
extended by up to 30 days in the event that SpectraNet reports any reasonable
errors or defects in such Deliverables that are not remedied by ACE*COMM
within the initial 30 day period. SpectraNet shall provide ACE*COMM with a
reasonably detailed description of any such errors or defects and the portion
of the Specifications at issue. ACE*COMM shall use all commercially
reasonable efforts to correct such reported error or defect. At the end of
such 30
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day testing period (as extended if applicable), the ATPs shall be executed and
SpectraNet shall accept such Deliverables by written notice to ACE*COMM if
(i) such Deliverables successfully completes each step of the applicable
ATPs, and (ii) such Deliverables do not contain, in SpectraNet's reasonable
judgment, any material and substantial non-conformances when compared to the
applicable Specifications ("ACCEPTANCE" or "ACCEPTED"). If such standards for
Acceptance have not been met, SpectraNet may reject such Deliverables.
Following Acceptance of a Deliverable, any defects in such Deliverable shall
be subject to Section 11.
(b) DECISION NOT TO ACCEPT. If the standards for Acceptance as set
forth in Section 6(a) have not been met with respect to the Deliverables that
are part of either Phase 1 on the one hand, or Phases 2 and 3 on the other
hand, and SpectraNet has rejected such Deliverables, then SpectraNet shall
pay ACE*COMM a maximum of 40% of the license fees and service fees listed in
the Statement of Work payable with respect to the rejected phases. If (i)
SpectraNet has elected to pay the license fees on a monthly payment schedule
as provided for in the Statement of Work, and (ii) at the time of the
rejection of the applicable phase(s), SpectraNet has paid in excess of 40% of
the license fees and service fees for such rejected phase(s) (not including
any accrued interest that is payable or has been paid), then ACE*COMM shall
refund to SpectraNet the amount of any license and/or service fees (together
with any accrued and paid interest) that SpectraNet has paid in excess of 40%
of the license fees and service fees for such rejected phase(s).
7. PAYMENT, INVOICES AND LATE CHARGES. ACE*COMM shall invoice
SpectraNet for the Deliverables pursuant to the payment schedule set forth in
the Statement of Work. The amounts shown on such invoices shall be due within
30 days from SpectraNet's receipt of such invoice. ACE*COMM reserves the
right to delay its performance hereunder without prejudice if amounts are not
paid when due. ACE*COMM retains a purchase money security interest and the
right to assert appropriate liens with respect to all Deliverables until all
amounts due are paid in full. Any late payment shall be subject to any costs
of collection (including reasonable legal fees) and shall bear interest at
the rate of one and one-half (1.5) percent per month or fraction thereof
until paid.
8. TRAINING & DOCUMENTATION. ACE*COMM shall provide training and
technical or user documentation in support of the Deliverables to the extent
and at the prices, if any, set forth on the Statement of Work. Any additional
training or documentation shall be provided at ACE*COMM's then prevailing
rates or at such other rates as the parties may agree with in writing.
9. OWNERSHIP AND LICENSING OF TECHNOLOGY.
(a) GRANT OF LICENSE. Subject to the terms and conditions of this
Agreement, SpectraNet is hereby granted (i) a paid-up, nonexclusive,
perpetual license to use, copy and execute in object code form only the
Standard Software Products, the Embedded Software Products and the Custom
Work Product and, (ii) subject to Section 9(b), a paid-up, nonexclusive,
perpetual sublicense to use, copy and execute in object code form only the
Third Party Software.
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SpectraNet may make as many additional copies as it deems necessary
(including for back-up and archival purposes) but may only use and execute in
a "live production" environment (a) one (1) copy of the Software at a time,
(b) for use by its employees, contractors and temporary employees in support
of SpectraNet's (and its affiliates') internal business operations and not
for purposes of providing "service bureau" services to third parties, (c) for
installation at the single office building (or contiguous set of buildings) at
which the Software is first installed, and (d) for use in connection with the
number of separate subscriber "lines" set forth in the Statement of Work,
which number of subscriber lines may be increased upon payment by SpectraNet
of the applicable expansion fees set forth in the Statement of Work. Any such
back-up and archival copy may be stored away from SpectraNet's site. The
full amount of the license fees payable by SpectraNet with respect to the
license granted hereunder to the Standard Software Products is set forth in
the Statement of Work.
(b) THIRD PARTY SOFTWARE PRODUCTS. The sublicense to the Third
Party Software granted by ACE*COMM pursuant to Section 9(a) shall be granted
to the maximum extent permitted by ACE*COMM's original vendor license
agreements and SpectraNet hereby agrees to be bound and governed by the
terms and conditions of such original vendor license agreements accompanying
such Third Party Software Products or, if no such license agreement is
included, by the vendor's standard license terms generally applicable to the
particular product, provided such terms are typical and ordinary and, in all
cases, do not impose any obligations upon SpectraNet in addition to
SpectraNet's obligations as set forth in this Agreement.
(c) RELOCATION OF SOFTWARE; NETWORK USE. Subject to Article III
of the Maintenance Agreement, the Software may be relocated to any other
SpectraNet location, provided no more than one (1) copy is used and executed
in a "live production" environment at any one time. Notwithstanding the
limitation that the Software may only be installed at a single location, the
system located at such location may be a networked or distributed system
(including a client/server system) and "use," "execute" and "installation" as
such terms are used in this Section 9 shall include use and installation in
connection with such networked or distributed system and access to such
network from remote locations.
(d) TRANSFER OF LICENSE. Such license shall be transferable by
SpectraNet in object code form only pursuant to Section 21 upon the
transferee's written agreement to be bound by the terms and conditions
contained in this Agreement applicable to the license hereunder. Subject to
the release of the Escrow Materials (as defined below) pursuant to
Section 17, the transfer of any license in source code form shall always
require ACE*COMM's prior written approval. Upon any transfer of Software in
any form, SpectraNet shall destroy all copies of the transferred Software in
its possession and cease all further use.
(e) TITLE. Subject only to the licenses granted to SpectraNet
hereunder, ACE*COMM shall retain all right, title and interests in the
Standard Software Products, Embedded Software Products and Custom Work
Product. SpectraNet expressly acknowledges and agrees that in no event shall
Custom Work Product be deemed to constitute "work made for hire" under the
Copyright Act (17 U.S.C. Sec. 101) and, alternatively, SpectraNet hereby
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irrevocably assigns all ownership or other rights it might have in Custom Work
Product to ACE*COMM. This Agreement does not grant to SpectraNet any ownership
interest in the Third Party Software.
(f) SPECTRANET'S DATA. ACE*COMM understands and acknowledges that
SPECTRANET will (i) manage, modify, maintain and update substantial amounts of
pre-existing data and information, and (ii) generate, manage, modify, maintain
and update substantial amounts of additional data and information
(collectively, "SPECTRANET DATA") using the Software. SpectraNet shall retain
all right, title and interest in and to SpectraNet Data. Nothing contained in
this Agreement shall be deemed or construed to limit or prevent SpectraNet from
using the Software (or any other process, program or device) to copy, modify,
sell, license, distribute, transmit, reformat, reconfigure or manipulate
SpectraNet Data in any way. SpectraNet or any employee, third-party
consultant, contractor or subcontractor or temporary employee of SpectraNet may
at any time (including after any termination of this Agreement) access by any
means any program, communications or computer equipment, network and/or
database in which, or in connection with which, SpectraNet Data is then stored
to do any of the foregoing and nothing in this Agreement shall be deemed or
construed to require that SpectraNet use Deliverables by ACE*COMM in order to
access any SpectraNet Data.
10. CONFIDENTIAL INFORMATION.
(a) ACKNOWLEDGMENT OF CONFIDENTIALITY. Each party hereby
acknowledges that it may be exposed to confidential and proprietary information
of the other party including, without limitation, any trade secrets embodied in
the source code for Standard Software Products, the Custom Work Product, the
Embedded Software and other technical information (including functional and
technical specifications, designs, drawings, analysis, research, process,
source code versions of computer programs, algorithms, methods, ideas, "know
how" and the like), business information (sales and marketing research,
materials, plans, accounting and financial information, personnel records and
the like) and other information that has been clearly designated in writing as
confidential ("Confidential Information"). Confidential Information does not
include (i) information previously known or independently developed by the
recipient; (ii) information in the public domain through no wrongful act of the
recipient, or (iii) information received by the recipient from a third party
who was free to disclose it.
(b) COVENANT NOT TO DISCLOSE. With respect to the other party's
Confidential Information, the recipient hereby agrees that during the Term and
at all times thereafter it shall not use, commercialize or disclose such
Confidential Information to any person or entity, except to its own employees
(and in the case of SpectraNet, to its temporary employees and to any
contractors retained to perform data entry or related services) having a "need
to know" (and who are themselves bound by similar nondisclosure restrictions),
and to such other recipients as the other party may approve in a signed writing;
provided, that all such recipients shall have first executed a confidentiality
agreement in a form acceptable to the owner of such information. Each party
shall use at least the same degree of care in safeguarding the other party's
Confidential Information as it uses in safeguarding its own confidential
information. Neither
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party nor any recipient may alter or remove from any software or associated
documentation owned or provided by the other party hereunder, any proprietary,
copyright, trademark or trade secret legend, nor may it attempt to decompile or
reverse engineer such software. The provisions of this Section 10 shall survive
termination of this Agreement.
(c) REMEDIES FOR BREACH OF CONFIDENTIALITY. Each party acknowledges
that the unauthorized use, commercialization or disclosure of the other party's
Confidential Information would cause irreparable harm to such other party. The
parties acknowledge that remedies at law would be inadequate to redress the
actual or threatened unauthorized use, commercialization or disclosure of such
Confidential Information and that a party may seek temporary and permanent
injunctive relief to enforce the foregoing restrictions. Each party shall pay
its own costs and expenses (including attorneys' fees) incurred in any
proceeding arising under this Section 10.
(d) NORMAL USE. Except as otherwise specifically set forth in
Section 9, nothing in this Section 10 shall be deemed to restrict SpectraNet
from using any of SpectraNet's Data or any Deliverable in the ordinary course
of its business it being understood that many employees, subcontractors and
others will use the Confidential Information in completing their duties for
SpectraNet and that it may become necessary for SpectraNet to interface
Confidential Information constituting software to other systems utilized by
SpectraNet, its customers, its suppliers, and its consultants.
11. WARRANTIES.
(a) EQUIPMENT, THIRD PARTY SOFTWARE PRODUCTS. ACE*COMM hereby
assigns to SpectraNet, to the extent assignable, all warranties and indemnities
provided by manufacturers of equipment and associated devices, and by vendors
of Third Party Software Products provided to SpectraNet hereunder. SpectraNet
will look solely to the applicable manufacturer or vendor of Third Party
Software Products for all warranty claims with respect to those items and shall
hold ACE*COMM harmless therefrom; provided, however, that ACE*COMM shall remain
obligated to SpectraNet as set forth below for the performance of the
Deliverables as a system. ACE*COMM warrants that the Equipment and Third Party
Software Product when installed with the other Deliverables will be sufficient
to deliver the service levels and functionality described in the statement of
Work for each applicable delivery date in the Statement of Work.
(b) NONINFRINGEMENT WARRANTY; INDEMNIFICATION. ACE*COMM represents
and warrants that during the Term hereof (i) the Deliverables (not including
the Third Party Software Products), when properly used as contemplated herein
and in the Statement of Work, will not infringe or misappropriate any United
States copyright, trademark, patent, or the trade secrets of any third persons,
and (ii) the use of the Third Party Software Products in combination or in
connection with the remaining Deliverables when properly used as contemplated
herein and in the Statement of Work, will not infringe or misappropriate any
United States copyright, trademark, patent, or the trade secrets of any third
persons. ACE*COMM shall indemnify and hold SpectraNet harmless for any
damages, suits, claims, actions, costs, expenses, settlements arising out of
the breach of ACE*COMM's representation and warranty in the preceding
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sentence provided that (i) ACE*COMM is given prompt written notice of such
claim; (ii) ACE*COMM is given the right to control and direct the
investigation, preparation, defense or settlement of any claim; (iii)
SpectraNet reasonably cooperates with ACE*COMM in the investigation,
preparation, defense or settlement of any claim provided that (1) ACE*COMM
shall reimburse SpectraNet for its reasonable out-of-pocket expenses incurred
in providing such cooperation and (2) the foregoing notwithstanding,
SpectraNet shall be solely responsible for the cost of retaining its own
attorneys after ACE*COMM has taken control of the defense of such claim; and
(iv) SpectraNet is not in material breach of this Agreement, and (v) the
alleged infringement was not caused by SpectraNet's alteration of the product
or use of it in combination with other software, equipment or technology not
supplied or authorized by ACE*COMM. In the event that an injunction is
sought or obtained preventing SpectraNet's use of the Deliverables as
contemplated herein and in the Statement of Work, then in addition to any
other obligations ACE*COMM may have under this Section 11(b), it shall do one
or more of the following, such choice being in ACE*COMM's sole discretion;
(i) defend through litigation or obtain through negotiation the right of
SpectraNet to continue using the product; (ii) rework the product so as to
make it noninfringing while preserving the original functionality and
performance; (iii) replace the product with software having substantially
equivalent functionality and performance, or (iv) terminate this Agreement
with respect to such infringing product upon advance written notice to
SpectraNet and refund an equitable portion of license fees actually paid by
SpectraNet for the infringing product. THESE ARE THE SOLE AND EXCLUSIVE
REMEDIES AVAILABLE FOR BREACH OF THE WARRANTY PROVIDED IN THIS SUBSECTION.
(c) LIMITED PERFORMANCE WARRANTY. ACE*COMM represents and warrants
that during the Warranty Period, all Deliverables (not including the Third
Party Software) shall operate at a level of Substantial Functionality and
shall operate with and/or interface with the Third Party Software at a level
of Substantial Functionality provided that (i) SpectraNet shall provide
notice to ACE*COMM of such failure of the Software to operate at a level of
Substantial Functionality, (ii) the applicable Deliverable is installed and
implemented substantially in accordance with all written user or technical
documentation previously supplied by ACE*COMM; (iii) SpectraNet has properly
installed and paid all applicable fees for all updates made available and
required by ACE*COMM with respect to the Deliverables and SpectraNet has
further installed any updates required by ACE*COMM with respect to any other
equipment or software that materially affect the performance of the
Deliverables; (iv) SpectraNet has properly maintained all associated
equipment, software and environmental conditions substantially in accordance
with applicable Specifications and reasonable industry standards; (v) the
failure to meet Substantial Functionality is not caused directly or
indirectly by equipment or software not supplied or otherwise authorized by
ACE*COMM; (vi) SpectraNet is not in material breach of this Agreement; (vii)
SpectraNet has made no changes (nor permitted any changes to be made) other
than by or with the express approval of ACE*COMM to the Software source code.
Any failure by SpectraNet to satisfy the foregoing conditions shall not be a
breach of this Agreement but shall delay or suspend ACE*COMM's warranty
response obligations set forth in Section 11(d); provided, however, that (a)
any such delay or suspension by ACE*COMM shall not extend the applicable
Warranty Period, and (b) ANY UNAUTHORIZED
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CHANGES TO THE SOFTWARE SOURCE CODE WILL VOID THE WARRANTY PROVIDED UNDER
THIS SUBSECTION.
(d) WARRANTY RESPONSE.
(i) GENERAL. During the Warranty Period, upon being notified
by SpectraNet in accordance with ACE*COMM's standard "trouble report"
procedures (written copies of which have been or shall be provided to
SpectraNet) of a Major Alarm that is covered by the warranty set forth
in Section 11(c), ACE*COMM shall respond by telephone to acknowledge the
Major Alarm within 4 business hours and, with the cooperation of
SpectraNet (including installation of dial-in contact via modem), shall
promptly commence diagnosis and error correction efforts and shall use
all commercially reasonable efforts to correct such Major Alarm.
(ii) MINOR ALARMS. Minor Alarms shall be diagnosed and
corrected by ACE*COMM within a reasonable time by telephone support or
through the issuance of periodic updates. ACE*COMM acknowledges that a
large accumulation of Minor Alarms may collectively be characterized and
treated by SpectraNet as a Major Alarm if not corrected within a
reasonable time. All corrections issued in response to Major Alarms and
Minor Alarms shall during the original Warranty Period only be warranted
against defects to the same extent as the original Deliverable.
(iii) OUT OF POCKET EXPENSES. Out-of-pocket travel expenses
and reasonable costs of labor incurred by ACE*COMM in providing on-site
assistance required to correct problems not covered by warranty shall be
borne by SpectraNet and, in any event SpectraNet shall bear all travel
expense associated with problems that are covered by warranty.
(e) WARRANTY DISCLAIMER. EXCEPT AS SPECIFICALLY PROVIDED IN THIS
SECTION 11, ACE*COMM HEREBY DISCLAIMS WITH RESPECT TO ALL DELIVERABLES
PROVIDED HEREUNDER, ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, TITLE OR FITNESS FOR A PARTICULAR PURPOSE.
(f) DISCLAIMER REGARDING GOVERNMENTAL LAWS AND REGULATIONS. THE
PARTIES HEREBY AGREE THAT, TO THE EXTENT ANY DELIVERABLE HEREUNDER IS USED
FOR THE PURPOSE OF GENERATING OUTPUT USED IN COMPLYING WITH GOVERNMENTAL LAWS
AND REGULATIONS (INCLUDING TAX LAWS AND REGULATIONS), SPECTRANET SHALL ASSUME
ALL RESPONSIBILITY FOR HAVING THE DELIVERABLES THOROUGHLY TESTED BY
QUALIFIED PROFESSIONALS TO ENSURE THE OUTPUT IS ACCURATE AND COMPLETE,
PROVIDED, HOWEVER, THAT ANY ERRORS DISCOVERED BY SPECTRANET WITH REGARD TO
SUCH OUTPUT SHALL BE SUBJECT TO REPAIR BY ACE*COMM PURSUANT TO THIS SECTION
11.
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12. LIMITATION OF REMEDIES & LIABILITIES. The parties acknowledge that
the following provisions have been negotiated by them and reflect a fair
allocation of risk:
(a) REMEDIES. Except for (i) SpectraNet's Acceptance rights under
Section 6, (ii) certain injunctive relief authorized under Sections 10, 16
and 17 and (iii) indemnification authorized under Sections 11(b), 18, 26 and
27, SpectraNet's sole and exclusive remedies for ACE*COMM's default hereunder
shall be (i) to obtain the repair, replacement or correction of the defective
Deliverable, or, if ACE*COMM reasonably determines that such remedy is not
economically or technically feasible and (ii) to obtain in accordance with
the specific provisions of this Agreement an equitable partial or full refund
of amounts paid with respect to the defective Deliverable.
(b) LIMITATION ON ACE*COMM'S LIABILITY. EXCEPT FOR DAMAGES ARISING
FROM BODILY INJURY CAUSED BY THE NEGLIGENCE OF ACE*COMM, DAMAGES COVERED BY
THE INDEMNIFICATION AUTHORIZED UNDER SECTIONS 11(b), 18 AND 26, AND ANY
INJUNCTIVE RELIEF AUTHORIZED PURSUANT TO THIS AGREEMENT, (i) ACE*COMM SHALL
NOT BE LIABLE FOR ANY AMOUNT EXCEEDING THE PORTION OF THE TOTAL CONTRACT
PRICE ACTUALLY PAID BY SPECTRANET, AND (ii) IN NO EVENT SHALL ACE*COMM BE
LIABLE, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR
ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFIT OR
BUSINESS INTERRUPTION EVEN IF ACE*COMM IS NOTIFIED IN ADVANCE OF SUCH
POSSIBILITY) ARISING OUT OF OR PERTAINING TO THE SUBJECT MATTER OF THIS
AGREEMENT.
(c) LIMITATION ON SPECTRANET'S LIABILITY. EXCEPT FOR CHANGE ORDERS
AGREED TO BY THE PARTIES UNDER SECTION 2(b), IN NO EVENT SHALL SPECTRANET BE
LIABLE TO ACE*COMM OR TO ANY THIRD PARTY, WHETHER IN CONTRACT, TORT
(INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFIT, BUSINESS INTERRUPTION OR COST
OF COVER EVEN IF SPECTRANET IS NOTIFIED IN ADVANCE OF SUCH POSSIBILITY)
ARISING OUT OF ANY USE BY ACE*COMM OF ANY INFORMATION, DATA, DESIGN, ADVICE
OR OTHER MATERIALS OBTAINED FROM SPECTRANET OR ANY FAILURE BY SPECTRANET TO
DELIVER ANY SUCH INFORMATION, DATA, DESIGN, ADVICE OR OTHER MATERIALS.
Article III.
NOTICES; TERMINATION:
RESOLUTION OF DISPUTES
13. NOTICES. Notices sent to either party shall be effective when
delivered in person or when transmitted in good form by telecopier ("fax")
machine; one (1) day after being sent by
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overnight courier, or two (2) days after being sent by first class mail
postage prepaid to the address set forth below, or to such other address as
the parties may from time to time give notice:
SpectraNet Address: ACE*COMM Address
Mr. ▇▇▇▇ ▇▇▇▇▇ Mr. S. ▇▇▇▇▇▇ ▇▇▇▇
Vice President, Network Operations Vice President, Net*Comm
SpectraNet International ACE*COMM, Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
14. ARBITRATION. Except for certain injunctive relief authorized under
Sections 10,11, 16 and 17, which may be sought at any time, any dispute
between the parties arising out of or relating to this Agreement or a breach
hereof which dispute is not resolved within 10 days after receipt of notice
by the allegedly breaching party, such dispute shall immediately be referred
for resolution jointly by senior executives of the parties who are authorized
to negotiate a resolution to such dispute. If such individuals are unable to
agree upon a resolution within 20 days after referral of such dispute to them
(such 20 day period together with the preceding 10 day period being referred
to as the "RESOLUTION PERIOD;" provided, however that the Resolution Period
shall in no event be less than 30 days), then either party may, upon notice
to the other party pursuant to Section 13, refer the dispute for final,
binding arbitration to J.A.M.S./Endispute or its successor organization for
arbitration before a panel of three arbitrators (with each party choosing one
arbitrator and the third arbitrator being chosen by the first two
arbitrators) in Washington DC. Such arbitration shall be conducted under the
administrative rules of J.A.M.S./Endispute; provided, however, that in the
event of any conflict between such administrative rules and this Section 14,
the provisions of this Section 14 shall govern. Each party shall bear its own
costs and attorneys' fees with respect to such arbitration. The award of the
arbitrators shall include a written explanation of their decision. The
parties hereby agree that arbitration before J.A.M.S./Endispute pursuant to
this Section 14 shall be the parties' exclusive remedy and that the
arbitration decision and award, if any, shall be final, binding upon, and
enforceable against, the parties, and may be confirmed by the judgment of a
court of competent jurisdiction.
15. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF MARYLAND.
16. TERMINATION.
(a) If SpectraNet materially breaches this Agreement at any time
before it has Accepted either Phase 1,2 or 3, then ACE*COMM may terminate
this Agreement with respect to any Uncompleted Phases (as defined below)
effective no earlier than the expiration of the applicable Resolution Period
upon prior written notice to ACE*COMM. Upon a termination
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pursuant to this Section 16(a), SpectraNet shall return or destroy all
Deliverables theretofore delivered by ACE*COMM with respect to any Uncompleted
Phases and SpectraNet shall pay ACE*COMM an aggregate amount for such
Uncompleted Phase that (i) does not exceed the license and service fees for
such Uncompleted Phase as set forth in the Statement of Work, and that (ii)
reasonably reflects ACE*COMM's costs and expenses for performing the work
completed on such Uncompleted Phase as of the date of termination. ACE*COMM
shall refund any amount already paid by SpectraNet that exceeds the amount that
is determined to be owed to ACE*COMM under phrase (ii) of the preceding
sentence. An "UNCOMPLETED PHASE" shall be any of Phase 1, 2 or 3 for which
SpectraNet has not made the final license fee and service fee payment as set
forth in the payment schedule in the Statement of Work. In no event shall
ACE*COMM enjoin or otherwise prevent or seek to prevent any use by SpectraNet
of any Deliverables that have been Accepted by SpectraNet and which use is
otherwise authorized under this Agreement. In the event of any such
unauthorized use of any such Accepted Deliverable by SpectraNet, ACE*COMM shall
be entitled to seek injunctive relief with respect to the unauthorized use,
without posting bond or other security, and without the necessity of proving
actual damages.
(b) Any notice from a party with respect to an alleged breach by the
other party shall conform to the requirements of Section 13 and shall identify
the contract provision at issue and describe in reasonable factual detail how
such party believes the other party has materially violated such provision.
Article IV.
MISCELLANEOUS PROVISIONS
17. SOURCE CODE ESCROW.
(a) ESCROW AGREEMENT. ACE*COMM shall enter into a source code
escrow agreement with Data Securities International, Inc., (the "ESCROW
HOLDER") in the form attached hereto as Exhibit C pursuant to which SpectraNet
shall be a named beneficiary (the "ESCROW AGREEMENT"). ACE*COMM shall
continually maintain such Escrow Agreement. SpectraNet shall be responsible
for any fees due under the Escrow Agreement that are charged by the Escrow
Holder with respect to the Escrow Materials (as defined below) that are being
held for the benefit of SpectraNet. ACE*COMM shall deposit and continually
maintain in escrow with the Escrow Holder a copy of the most current version of
the source code for any and all portions of the Software which have been
Accepted and for which ACE*COMM is authorized to sublicense the source code
(including at a minimum the Standard Software Products, the Embedded Software
and the Custom Work Product) together with all additional relevant
documentation required for an experienced programmer/analyst to reasonably
understand and maintain such portion of the Product, brought up to date to the
date of delivery of such Software (collectively the "ESCROW MATERIALS"), and
ACE*COMM shall continue to update such Escrow Materials as the applicable
software is modified or improved in accordance with this Agreement.
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(b) RELEASE EVENTS. The Escrow Materials shall be released to
SpectraNet solely upon the occurrence of one or more of the following "RELEASE
EVENTS":
(i) If ACE*COMM ceases to provide or is unable to continue
to provide its repair, support and maintenance obligations for the
Software under either Section 11 (during the Warranty Period) or
under the Maintenance Agreement.
(ii) If the Escrow Agreement expires or is terminated
without ACE*COMM entering into a new Escrow Agreement and naming a
new Escrow Holder pursuant to Section 17(d).
(iii) If ACE*COMM fails to deposit or maintain with the
Escrow Holder all required Escrow Materials promptly after such Escrow
Materials become available.
(iv) Upon any other breach of this Agreement by ACE*COMM
that is not cured by ACE*COMM within 30 days after notice by
SpectraNet and which breach is determined to be a material breach of
this Agreement by ACE*COMM under an arbitration proceeding pursuant
to Section 16.
(v) If ACE*COMM (a) fails to continue to do business in
the ordinary course, (b) voluntarily or involuntarily dissolves or
winds-up its affairs, (c) becomes insolvent, (d) files for
bankruptcy, makes a general assignment for the benefit of its
creditors, or fails within 30 business days to dismiss any
involuntary proceeding seeking the entry of an order for relief under
any bankruptcy or related laws or the appointment of a receiver on
account of the insolvency of ACE*COMM and ACE*COMM or its successor in
interest fails to perform its obligations under this Agreement within
30 days after such filing or appointment.
(c) LICENSE. Upon the occurrence of any Release Event, SpectraNet
is hereby granted a license to take all actions with respect to such Escrow
Materials reasonably necessary to continue to support, maintain and use the
Software for the purposes authorized under this Agreement.
(d) REPLACEMENT OF ESCROW HOLDER. ACE*COMM shall have the right to
replace Escrow Holder with another qualified escrow holder pursuant to another
escrow agreement substantially similar to the Escrow Agreement. ACE*COMM shall
notify SpectraNet, in writing, of the new escrow holder and shall certify in
writing that a new copy of the Escrow Materials have been deposited with the
new escrow holder. ACE*COMM shall enter into such supplementary agreement(s)
with SpectraNet and the new escrow holder as are necessary to make SpectraNet a
named beneficiary of such new escrow agreement. Upon such change and
replacement, the subsequent escrow holder shall become for all purposes the
Escrow
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Holder and the subsequent escrow agreement shall become the Escrow Agreement
for all purposes.
(e) INJUNCTIVE RELIEF. ACE*COMM and SpectraNet each acknowledge
that the release of the Escrow Materials to SpectraNet upon the occurrence of
a Release Event is essential to protect the legitimate business interests of
SpectraNet and that ACE*COMM's or Escrow Holder's failure to release such
Escrow Materials upon the occurrence of the applicable Release Event will
result in irreparable injury to SpectraNet, and that in such event the exact
amount of damages is now and will be difficult to ascertain and the remedies
at law for any such failure would not be reasonable or adequate compensation.
Accordingly, ACE*COMM and SpectraNet agree that if ACE*COMM or Escrow Holder
fail to release the Escrow Materials following the applicable Release Event,
SpectraNet shall be entitled to specific performance and injunctive relief,
without posting bond or other security, and without the necessity of proving
actual damages.
18. INDEPENDENT ACE*COMM STATUS. Each party and its people are
independent contractors in relation to the other party with respect to all
matters arising under this Agreement. Nothing herein shall be deemed to
establish a partnership, joint venture, association or employment
relationship between the parties. Each party shall remain responsible for and
shall indemnify and hold harmless the other party for the withholding and
payment of all Federal, state and local personal income, wage, earnings,
occupation, social security, unemployment, sickness and disability insurance
taxes, payroll levies or employee benefit requirements (under ERISA, state
law or otherwise) now existing or hereafter enacted and attributable to
themselves and their respective people.
19. ENTIRE AGREEMENT, AMENDMENT. This document, the Statement of Work,
the accompanying Specifications and any applicable provisions under Section
25, which are hereby incorporated by reference, constitute the entire
agreement between the parties and supersede all other representations,
understandings or communications, whether written or verbal, with respect to
the subject matter hereof. This Agreement is expressly limited to its terms
and any different or additional provisions of any purchase order, invoice or
similar documentation or printed form are specifically rejected and shall
have no effect. Any amendment, modification or waiver of this Agreement, or
any part hereof, shall be binding upon the parties only if such amendment,
modification or waiver specifically references this agreement and has been
signed by representatives of both parties specifically authorized to execute
such binding amendments. Waiver of any provision of this Agreement in one
instance shall not preclude future enforcement of it in future situations.
20. SEVERABILITY. If any provision hereof is determined by a tribunal
of competent jurisdiction to be illegal or unenforceable, it shall
automatically be deemed conformed to the minimum requirements of law and,
along with all other provisions hereof, shall thereupon be given full force
and effect. Headings are for reference purposes only and have no substantive
effect.
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21. ASSIGNMENT, SUBCONTRACTING. Upon the consent of ACE*COMM (which
consent shall not be unreasonably withheld), SpectraNet may transfer or
assign this Agreement, including the licenses granted hereunder, to any
parent, subsidiary or other affiliate controlled by any of the foregoing
(where "control" for purposes of this Section 21 means a 50% ownership
interest); provided, however, that if such transfer or assignment by
SpectraNet is done as part of a public offering of securities by SpectraNet,
by an entity that directly or indirectly controls SpectraNet, or by an entity
directly or indirectly controlled by SpectraNet, then SpectraNet shall
provide written notice to ACE*COMM of such transfer or assignment, but
ACE*COMM's consent to such transfer or assignment shall not be required.
ACE*COMM reserves the right to subcontract discrete portions of the Statement
of Work with SpectraNet's consent, which shall not unreasonably be withheld.
This Agreement is binding upon and is enforceable by the parties and their
authorized successors and assigns. Except as otherwise provided in this
Section 21, neither party may assign this Agreement or any of its rights or
obligations hereunder without the written consent of the other party and any
attempt to do so shall be void and of no legal effect. In any permitted
transfer, assignment or subcontracting of this Agreement, the transferring,
assigning or subcontracting party shall remain liable and responsible for all
transferred, assigned or subcontracted rights and obligations.
22. FAX COUNTERPARTS. A facsimile of this Agreement and notices sent
according to Section 13 generated in good form from a telecopier "fax"
machine (as well as a photocopy thereof) shall be treated as "original"
documents admissible into evidence unless a document's authenticity is
genuinely placed in question.
23. FORCE MAJEURE. Excluding any of SpectraNet's payment obligations
under this Agreement, neither party shall be liable for delays or failure to
perform as a direct result of causes beyond its reasonable control, including
acts of god (such as fire, storm, earthquake), electrical outages, labor
disputes or delay or failure by others to provide proper site or
environmental conditions, or in the performance of any co-contractor or
subcontractors selected by the other party.
24. NONSOLICITATION. During the Term and for a period of one (1) year
thereafter, each party agrees not to solicit, nor attempt to solicit, the
services of any employee of the other party without the prior written consent
of the other party. If this provision is violated, the violating party shall
pay liquidated damages equal to one hundred fifty (150) percent of the
solicited person's annual compensation; provided that upon making such
payment, the violating party shall not be in breach of this Agreement.
25. SECURITY, NO CONFLICTS. Each party agrees to inform the other party
of any information made available to it that is classified or restricted
data, agrees to comply with the security requirements imposed by any state or
local government, or by the United States Government, and shall return all
such material upon request. Each party represents that its participation in
this Agreement does not create any conflict of interest prohibited by the
United States Government or any other domestic or foreign government and
shall promptly notify the other party if any such conflict arises during the
Term.
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26. INSURANCE INDEMNITY. ACE*COMM shall maintain during the Term hereof
reasonable insurance protection for ACE*COMM's workers and their work
hereunder and shall to the extent of such coverage indemnify SpectraNet for
bodily injury and physical property damage directly and solely attributable
to the negligent or intentional acts of its employees occurring within the
scope of their employment. SpectraNet shall maintain secure, up-to-date
archival copies of all valuable data, software programs and the like, as well
as adequate liability, casualty and business interruption insurance and
appropriate disaster recovery plans.
27. COMPLIANCE WITH EXPORT REGULATIONS. SpectraNet has or shall obtain
in a timely manner all necessary or appropriate licenses, permits or other
governmental authorizations or approvals; shall indemnify and hold ACE*COMM
harmless from, and bear all expense of, complying with all foreign or
domestic laws, regulations or requirements pertaining to the importation,
exportation, or use of the technology to be developed or provided herein.
SpectraNet shall take no action, nor omit to take any required action, which
would cause either party to violate the Foreign Corrupt Practices Act of 1977
or the U.S. Export Administration Regulations.
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IN WITNESS WHEREOF, and intending to be legally bound, the parties
hereto have caused this Agreement to be executed by their duly authorized
representatives.
SpectraNet International Inc. ACE*COMM, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ S. ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------- ---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇ Name: S. ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------- ---------------------------------
Title: Sr. Vice President Title: Vice President
-------------------------------- ---------------------------------
Date: JUNE 19, 1997 Date: May 28, 1997
-------------------------------- ---------------------------------
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