Exhibit 10.8
SUPPLY AGREEMENT
XXXX TELEPHONE COMPANY
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This Agreement is hereby made effective this 19th day of August, 1998, by
and between mPhase Technologies, Inc., having a place of business at 000
Xxxxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000-0000 (hereinafter referred to as
"mPhase"), and Xxxx Telephone Company, Inc., having a place of business at 000
Xxxxx Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000 (hereinafter referred to as "Xxxx").
mPhase and Xxxx are hereinafter referred to, individually and collectively, as
the context may require, as a "Party" or the "Parties".
WHEREAS, mPhase has developed the Traverser DVDDS, a digital video and data
delivery system for the simultaneous transmission of MPEG-2 Digital Video and
Broadband Internet Access over twisted pair copper wire transmitting,
interactively, video signals over fiber/copper hybrid telephone networks
(hereinafter referred to, individually and collectively, as the context may
require, as the "Traverser");
WHEREAS, Xxxx is interested in purchasing and installing a prototype
Traverser system on its telephone transmission network to demonstrate and
evaluate the performance thereof, and thereafter to purchase additional products
and services in order to extend the coverage of the Traverser system to
additional subscribers;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions
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For purposes of this Agreement, the following words and phrases shall have
the meanings stated below:
A. "mPhase Trademarks" shall mean the trademarks and service marks
mPhase, TRAVERSER, u0 XDSL, Intelligent Network Interface or INI, and such other
xxxx or marks relating to mPhase Proprietary Technology as mPhase shall
establish to identify its products and services relating to a digital subscriber
line business;
B. "Related Products and Services" shall mean systems, components, and
software, for transmission and reception over existing twisted-pair copper
analog telephone lines, using certain proprietary technology owned, controlled
by, or licensed to mPhase (see 1., C., below), for digital video programming and
Internet data, and associated services, involved in the operation of a digital
subscriber line business;
C. "mPhase Proprietary Technology" shall refer to the technology
owned, controlled by, or licensed to mPhase relating to the design, manufacture,
and use of systems and software which provide digital video and data
communications over copper twisted pair
telephone networks, including supporting documentation and software relating to
the operation of a digital subscriber line business;
D. "Related Company" means any company controlling, controlled by
(either directly or indirectly), or under common control with either Party.
2. Supply
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mPhase agrees to supply the Traverser system to Xxxx in the following
manner:
A. Technology Preview Unit, consisting of a point-to-point module
which provides one hundred (100) subscribers residential delivery of up to
sixteen (16) channels for Digital Video and Broadband Internet Access, said
module having the performance specifications and components described in
Exhibit I to this Agreement;
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B. Version 1.0 of the Traverser, which will provide delivery to one
thousand (1,000) subscribers (inclusive of the initial 100 served by the
Technology Preview Unit) of an operational digital subscriber line service
consisting of up to eighty (80) channels, with supporting functions such as
usage tracking, billing, access control, and expansion, said module having the
performance specifications and components described in Exhibit 2 to this
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Agreement.
3. Delivery
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A. The Technology Preview Unit will be delivered to Xxxx, at the
address indicated above, on or before October 31, 1998.
B. The Traverser Version 1.0 DVDDS will be delivered to Xxxx, at the
address indicated above, on or before June 30, 1999. The Parties understand that
certain components of the Technology Preview Unit are integral to the Traverser
system, but that other components will become obsolete and will be returned to
mPhase after installation of the Traverser system.
4. Installation
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A. The above systems shall be installed by mPhase, with the
cooperation of Xxxx, at central office and customer locations within Xxxx'x
coverage area, to be designated by Xxxx, the installation of each respective
system to be completed within thirty (30) days after its delivery to Xxxx.
X. Xxxx shall provide access to its facilities, permission from its
customers, and all network terminals and transmission lines, including satellite
links, needed to interface with the Technology Preview Unit and the Traverser
Version 1.0, and complete the installation thereof. Such facilities and
interface equipment shall be in accordance with the standard facility and
interface specifications provided by mPhase. Xxxx shall arrange for an
appropriate video
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feed to enable the testing of the installation and subsequent demonstrations as
required by mPhase. Xxxx shall provide sufficient staff to support the
installation of the system modules.
5. Maintenance, Training and Support
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mPhase will provide maintenance, training, and support services to Xxxx
in accordance with the terms and conditions contained in Exhibit 3 to this
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Agreement.
6. License
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mPhase hereby grants to Xxxx a non-exclusive license to use the
Traverser within Xxxx'x coverage area in accordance with the license contained
in Exhibit 4 to this Agreement.
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7. Payment
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Xxxx shall pay mPhase a total of One Million, Five Hundred Thousand
Dollars ($1,500,000) with respect to the delivery of the Traverser system herein
described, payable as follows:
A. $25,000, upon the execution of this Agreement;
B. $75,000, upon the delivery of the Technology Preview Unit;
C. $75,000, within thirty (30) days after the delivery of the
Technology Preview Unit;
D. $100,000, upon the completion of installation and demonstration of
the Technology Preview Unit, which shall be defined as the satisfactory
completion of the trial specified in paragraph 8., below;
E. $225,000, within thirty (30) days after the completion of
installation and demonstration of the Technology Preview Unit;
F. $500,000, upon the delivery of the Traverser DVDDS Version 1.0.
G. $500,000, upon the completion of installation and demonstration of
the Traverser DVDDS Version 1.0.
8. Demonstration
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A. mPhase shall, with the cooperation of Xxxx, conduct performance
trials for the Technology Preview Unit to demonstrate the functioning thereof to
third parties as required by mPhase. Both Parties shall jointly provide the
staff, time, and equipment necessary to
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successfully perform the trials. The satisfactory completion of the trials shall
be deemed to have occurred upon the determination by mPhase that the Technology
Preview Unit is functioning in accordance with the specifications contained in
Exhibit 1.
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B. mPhase shall notify Xxxx upon completion of the trials and provide
a report of the results of the trials. Unless mPhase is notified to the contrary
within fifteen (15) days after such notice, the satisfactory completion of the
installation and demonstration shall be deemed to have been accomplished, and
the remaining payment shall be due and payable.
C. In the event that mPhase shall fail to demonstrate the performance
of the Technology Preview Unit, then Xxxx shall have the right to terminate this
Agreement, in which event all sums theretofore paid by Xxxx to mPhase shall be
promptly refunded to Xxxx.
9. Risk of Loss and Ownership
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A. Risk of loss with respect to the Technology Preview Unit and the
Traverser shall pass to Xxxx upon delivery, and Xxxx agrees to obtain
appropriate insurance to insure the Technology Preview Unit and the Traverser,
identifying mPhase as Loss Payee.
B. mPhase shall retain a purchase money security interest in the
Technology Preview Unit and the Traverser, respectively, to secure payments due
under this Agreement, and Xxxx agrees to sign all documents reasonably required
by mPhase in order to perfect said security interest. Xxxx shall not remove or
obscure any markings placed on the Technology Preview Unit or the Traverser by
mPhase to confirm said security interest.
C. Ownership of the delivered Technology Preview Unit and the
Traverser, respectively, shall pass to Xxxx upon the full payment of the
respective sums indicated in paragraph 7.
10. Confidentiality of Proprietary Information
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A. In order to accomplish the work contemplated under this Agreement,
it may be necessary that mPhase disclose to Xxxx proprietary information
relating to mPhase Proprietary Technology and Related Products and Services.
Xxxx agrees that it will not use the information disclosed by mPhase for any
other purpose except as expressly stated herein.
X. Xxxx hereby acknowledges that, as between Xxxx and mPhase, the
information disclosed by mPhase and any information developed in the course of
work performed under this Agreement, is and shall remain the property of mPhase,
and Xxxx will maintain any such information in confidence and will not disclose
such information to others without the express prior written consent of mPhase.
C. The above restrictions shall not be applicable to: information that
is in the rightful possession of Xxxx, from an independent source, prior to its
disclosure by mPhase;
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information that is or becomes a part of the public domain other than by breach
of this agreement; and information which Xxxx acquires from an independent
source, a lawful right to reproduce, use or disclose.
D. mPhase shall own all rights to information, including inventions,
if any, resulting from the work performed by mPhase under this Agreement or
related purchase orders, relating to the structure, use, or operation of the
Traverser DVDDS, and Xxxx agrees to cooperate with mPhase in the preparation,
signing and filing of patent applications or other documents relating to such
rights. Provided, however, the Parties shall jointly own the rights to
inventions resulting from enhancements to the Traverser system developed by Xxxx
under this Agreement.
E. The Parties hereby agree that the terms and conditions of this
Agreement shall remain confidential, and that any press release relating to the
existence of this Agreement shall be issued only with the prior approval of both
Parties, which shall not be unreasonably withheld.
11. Termination
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X. Xxxx may terminate this Agreement upon the failure of the
Technology Preview Unit to perform in accordance with the trial specified in
paragraph 8., above, by giving thirty (30) days written notice to mPhase. Upon
such termination, no further payments shall be required with respect to this
Agreement, and all obligations of the parties shall cease, except to the extent
stated in Paragraph 12.,C., below .
B. Expiration or termination of this Agreement shall not affect the
rights and obligations of the parties with respect to the confidentiality of
mPhase Proprietary Technology received under this Agreement, and the provisions
of Paragraph 10 shall survive the termination of this Agreement for a period of
five (5) years thereafter.
C. Upon termination of this Agreement in accordance with its terms,
Xxxx shall, within thirty (30) days thereafter, return the Technology Preview
Unit, including without limitation all proprietary information, software,
equipment, documentation, and copies thereof received from mPhase. Further, upon
such termination, all licenses and rights granted by mPhase shall likewise
terminate, and Xxxx shall immediately cease all use thereof .
12. Warranty
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A. mPhase warrants that the Technology Preview Unit and the Traverser
DVDDS supplied to Xxxx hereunder will meet specifications established by mutual
Agreement of the Parties. Any Traverser DVDDS parts or components sold by mPhase
to Xxxx pursuant to this Agreement which, under normal operating conditions,
prove defective in material or workmanship within one (1) year from the date of
installation by mPhase, will be repaired or replaced, at the election of
mPhase, free of charge. This warranty is made in lieu of all other
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warranties, express or implied, including any warranty of merchantability or
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fitness for a particular purpose.
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B. mPhase makes no guarantees, warranties, or representations except
as specifically set forth in this Agreement. mPhase and its employees, officers
and directors shall not be liable for any incidental, indirect, consequential,
special or punitive damages, with respect to the use by Xxxx of mPhase,
equipment, proprietary information, software, or documentation in accordance
with this Agreement, and Xxxx shall indemnify and hold harmless mPhase in
respect of any claims or assertions, however arising, in respect thereto.
13. mPhase Customer Demonstrations
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For a period of one (1) year after the successful trial of the Technology
Preview Unit supplied under this Agreement, mPhase shall have the right, upon
reasonable notice, to use the Xxxx Traverser DVDDS to demonstrate its
functioning to potential customers. Such demonstrations shall be scheduled
during Xxxx'x normal business hours with the consent of Xxxx, which consent
shall not be unreasonably withheld.
14. Compliance
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Xxxx assumes the responsibility for compliance with all current laws or
regulations relating to the delivery of Related Products and Services in the
operation of a digital subscriber line business and agrees to indemnify and hold
mPhase harmless from any damages arising out of a failure to comply with such
laws or regulations. mPhase agrees to cooperate with Xxxx as reasonably
requested to accomplish such compliance.
15. Miscellaneous
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A. It is agreed by both Parties that this Agreement contains the
entire understanding between the Parties with respect to the subject matter
hereof, and that this Agreement supersedes and replaces any and all prior and
contemporaneous understandings or representations of the parties, written, oral,
or otherwise, with respect to the Technology Preview Unit or the Traverser
DVDDS.
B. It is further agreed that no modification to this Agreement shall
be binding on either Party unless such modification is in writing, referring
specifically to this Agreement, and signed by the individuals executing this
Agreement or their respective successors.
C. Except as stated herein, nothing in this Agreement shall be
construed as granting any right or license to Xxxx to use mPhase Trademarks or
mPhase Proprietary Technology, including without limitation equipment,
proprietary information, software, or documentation, or as granting any right or
license under any present or future patent.
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D. All notices or communications which either Party may desire, or be
required, to give to the other, shall be in writing and shall be deemed to have
been made if and when mailed by registered or certified mail, to the address
specified in the introduction to this Agreement or such other address as shall
have been designated by the respective Party in writing for such purpose.
E. The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Georgia. In the event
that any of the provisions contained in this Agreement shall for any reason be
held unenforceable in any respect, such unenforceability shall not affect the
remaining provisions of this Agreement.
X. Xxxx acknowledges that mPhase shall suffer irreparable injury in
the event Xxxx breaches any of its obligations (other than the payment of the
sums called for under Paragraph 7) under this Agreement with respect to mPhase
Proprietary Technology. Xxxx agrees that, in addition to all other remedies to
which mPhase may be entitled at law or in equity, mPhase shall be entitled to
seek any remedy in equity, including an injunction permanently restraining Xxxx
from breaching or further breaching such obligations. Xxxx agrees that it will
not oppose the seeking of such remedy on the basis that there exists an adequate
remedy at law for damages.
G. The rights and obligations of the Parties under this Agreement
shall not be assigned or delegated by either Party without the prior written
consent of the other, except that mPhase may assign its rights and obligations
under this Agreement to an entity controlling, controlled by, or under common
control with mPhase or to a successor to substantially all of the business of
mPhase to which this Agreement relates.
In acceptance of the foregoing provisions, the parties have executed this
Agreement by the signatures of their duly authorized representatives set forth
below.
mPhase Technologies, Inc. Xxxx Telephone Company, Inc.
By By
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Title Title
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Exhibit 1
Performance Specification
Technology Preview Unit
The mPhase/TM/ Technology Preview Units are to consist of one pair of
mPhase Traverser modems. Each pair is defined as a Central Office (CO) element
and an Intelligent Network Interface (INI) element.
Each Technology Preview unit shall have the ability to deliver up to 16
channels of MPEG-2 digital video and up to 1 Mbps of Internet access (via
10baseT Ethernet) over twisted pair without disrupting normal telephone service.
The Technology Preview Units shall operate at service distances of up to 9,000
feet of 24 AWG wire.
The Central Office (CO) Technology Preview element shall be configured as
either individually enclosed rack-mountable units or rack-mounted cards. The
Low Pass Filter (LPS) shall be configured as either individual units or rack-
mounted cards. The CO element of the Technology Preview shall also contain two
(2) DS-3 interface connections.
The INI Technology Preview element shall contain a remote control circuit,
an MPEG-2 decoder circuit both an S-video connection and a channel 3 or 4 RF
modulated output for television connection, an RJ-45 style 00xxxxX Xxxxxxxx port
connection and an RJ-11 style Low Pass Filter circuit for traditional telephone
service.
See attached block diagrams.
Exhibit 2
Performance Specifications
Digital Video and Data Delivery System version 1.0
The mPhase Traverser Digital/TM/ Video and Data Delivery System (DVDDS)
version 1.0 consists of common equipment located at both the Central Office (CO)
and the Programming and Control Center, equipment at the CO to support each
subscriber, and an Intelligent Network Interface (INI) at the customer premise
location.
The DVDDS version 1.0 shall be capable of delivering up to 80 channels of
MPEG-2 encoded digital video and up to 1 Mbps Internet access (via 10baseT
Ethernet) over twisted pair without disrupting traditional telephone service.
The DVDDS version 1.0 shall operate at a service distance of up to 10,000 feet
over 24 AWG wire.
The common equipment provided by mPhase as the DVDDS version 1.0 consists
of a Video Control Shelf, a System Management Workstation, System Management
Software, a Video Network Interface Shelf, a Video Distribution Shelf, a Central
Office Master workstation, and Central Office Master software modules. This
equipment is located either at the Programming and Control Center and/or the
serving Central Office and is not related to the number of subscribers being
served.
Subscriber-related equipment located at each serving Central Office
consists of an Access Shelf and a Low Pass Filter Shelf. Each Access Shelf card
and each Low Pass Filter Shelf card shall serve four subscribers.
The INI DVDDS version 1.0 element shall contain a remote control circuit,
an MPEG-2 decoder circuit, both an S-video connection and a channel 3 or 4 RF
modulated output for television connection, an RJ-45 style 00xxxxX Xxxxxxxx port
connection, and an RJ-11 style Low Pass Filter circuit for traditional telephone
service.
See attached block diagrams.
Exhibit 3
Maintenance, Training, and Support
Terms and Conditions
1. Basic Services
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Upon the completion of the installation of the Traverser DVDDS pursuant to
the Supply Agreement, and for a period of ninety (90) days thereafter, mPhase
will provide Xxxx with the following basic services and support:
A. mPhase will provide to Xxxx all upgrades to the software used in
the Traverser DVDDS installed and licensed by mPhase under the Supply Agreement.
B. mPhase will provide on-call technical assistance to resolve
operating problems with the Traverser DVDDS. This Hotline assistance will be
available from 8:00 am to 5:00 pm, EST, Monday through Friday, and may be
conducted by:
1) Verbal telephone consultation;
2) On-line remote diagnostics; or
3) On-site visitation.
C. mPhase will use its best efforts to correct Traverser DVDDS
problems if the Traverser DVDDS performance materially deviates from published
specifications.
X. Xxxx shall maintain the Traverser DVDDS installation environment
in accordance with the specifications provided by mPhase.
2. Training
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Pursuant to a mutually agreed-upon schedule, mPhase shall provide up to one
(1) day of training on the use and operation of the software for the benefit of
Xxxx'x representatives, in a single session at a location to be agreed. Such
training shall be at a cost to Xxxx of $1,000, plus mPhase's out-of-pocket
expenses. Any additional training requested by Xxxx shall be provided at
mPhase's standard rates then in effect.
3. Additional Services
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mPhase is capable of providing Xxxx with additional support services that
are beyond the scope of the basic services described in the previous section.
A. On-call technical assistance outside normal working hours
(8:00 AM - 5:00 PM).
B. Training assistance beyond that which is provided in the License
Agreement.
4. Fees and Charges
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A. Basic Services:
B. Additional Services:
Additional support services may be provided on a fixed price contact basis,
or on a time and materials basis. Charges for these services will be based on
mPhase's then-current rate schedule.
5. Out-of-Pocket Expenses
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In all cases, Xxxx shall further pay for reasonable and necessary out-of-
pocket travel and lodging expenses, tape charges, and on-line telephone charges
incurred by mPhase in providing the above services.
6. Termination
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Either Party to this Agreement may terminate the maintenance, training, and
support services of mPhase by giving thirty (30) days' written notice to the
other Party prior to annual renewal. If Xxxx elects to terminate this Agreement
and then at a later date decides to reinstate same, Xxxx will be charged a one-
time fee equal to the sum of the monthly charges that were not paid during the
period of time the Agreement was not in force.
7. License
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Upgrades, revised documents, and information supplied to Xxxx under this
Agreement shall be deemed part of the Traverser DVDDS and subject to all of the
terms and conditions of the Supply Agreement. NO ADDITIONAL WARRANTES SHALL BE
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IMPLIED BY THIS AGREEMENT.
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The Parties hereby confirm their acceptance of the foregoing terms and
conditions by the signatures of their duly authorized representatives set forth
below.
mPhase Technologies, Inc. Xxxx Telephone Company, Inc.
By By
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Title Title
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Exhibit 4
Software License
Terms and Conditions
1. License Grant
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mPhase hereby grants to Xxxx the nonexclusive, nontransferable right and
license to use the Traverser DVDDS Software only in association with Technology
Preview Unit and Traverser DVDDS which are the subject of the Supply Agreement
between mPhase and Xxxx dated August 18, 1998 (the "Designated Traverser
DVDDS"), and only for the specific purposes set forth in the Agreement. The
license does not include any right to sublicense any of the rights granted
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hereunder, or to allow others to use the Licensed Software, nor does it include
the right to transfer the Licensed Software to any system other than the
Designated Traverser DVDDS.
A. The Software and Documentation are collectively referred to in this
Agreement as the "Traverser DVDDS Software".
B. The Traverser DVDDS Software licensed to Xxxx under this Agreement will
not include source code, and Xxxx agrees that it will not reverse engineer, de-
compile, or disassemble said Traverser DVDDS Software, nor modify it in any way.
2. Term
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This License shall be in effect during the duration of Xxxx'x utilization of
the Designated Traverser DVDDS pursuant to the Supply Agreement
3. Proprietary Property
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X. Xxxx acknowledges that the Traverser DVDDS Software and all rights
therein are the property of mPhase and agrees that it will not utilize the
Traverser DVDDS Software in any manner or for any purpose except in accordance
with this Agreement. In addition, Xxxx agrees that it will not disclose any of
the information contained in the Traverser DVDDS Software to others without the
prior express written consent of mPhase.
X. Xxxx shall have the right to make one copy in machine-readable form of
the Traverser DVDDS Software for back-up purposes only, and agrees that it will
make no other copies without the prior express written consent of mPhase.
4. Delivery and Installation
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mPhase will deliver one (1) copy of the Traverser DVDDS Software to Xxxx in
accordance with the Supply Agreement. Upon Xxxx'x request, mPhase will assist
Xxxx in the installation of the Traverser DVDDS Software as part of the
installation of the Technology Preview Unit.
5. Disclaimer
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mPhase specifically DISCLAIMS ALL WARRANTIES RELATING TO TRAVERSER DVDDS
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SOFTWARE, INCLUDING THOSE IMPLIED BY LAW AS TO THE MERCHANTABILITY AND FITNESS
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FOR A PARTICULAR PURPOSE. Xxxx agrees that mPhase shall not be liable under any
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claim for any damage arising out of the use of the Traverser DVDDS Software by
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Xxxx, and that Xxxx shall indemnify and hold mPhase harmless from any such
damage.
6. Enforcement
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Xxxx acknowledges that mPhase will be irreparably damaged if the provisions
of this Agreement are breached.
7. Termination
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mPhase shall have the right to terminate this Agreement immediately in the
event of default or breach of the provisions of this Agreement by Xxxx.
Provided, however, the obligations contained in Paragraph 3 shall continue after
such termination. Upon termination, Xxxx agrees to cease all use of the
Traverser DVDDS Software and to return, destroy, or otherwise dispose of the
Traverser DVDDS Software in accordance with the instructions of mPhase.
The Parties hereby confirm their acceptance of the foregoing terms and
conditions by the signatures of their duly authorized representatives set forth
below.
mPhase Technologies, Inc. Xxxx Telephone Company, Inc.
By By
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Title Title
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