AMENDED AND RESTATED LICENSE AGREEMENT
THIS AMENDED AND RESTATED LICENSE AGREEMENT dated as of July 1st, 1997 (the
"Effective Date"), by and between COMPUTER-AIDED SOFTWARE INTEGRATION, INC. (the
"Licensor"), a Delaware corporation, and DATANET INTERNATIONAL, INCORPORATED
(the "Licensee"), a California corporation.
WHEREAS the Licensor and the Licensee are parties to a license agreement
dated as of April 30, 1997; and
WHEREAS the Licensor and the Licensee desire to amend such agreement and to
restate the agreement as so amended (as so amended and restated, this
"Agreement").
For and in consideration of the mutual covenants contained herein, it is
hereby agreed by and between the undersigned, intending to be bound thereby as
follows:
I. DEFINITIONS
A. SOFTWARE. The term "Software" means authorized copies of all of the
most recent versions of the Licensor computer software programs (in both object
and Source Code, as stipulated below) described in Exhibit A "Software" attached
hereto, including without limitation, technical manuals, user manuals, bug
reports and fixes, enhancements, upgrades, updates, sequels and technical
bulletins.
B. SOURCE CODE. The term "Source Code" means the complete instruction
set for the Software, including all comments and procedural code, such as
compilation switches, job control language statements and a description of
the system/program generation procedure, in a form intelligible to human
programmers and capable of being readily and easily translated into object
code for execution on computer equipment through minimal assembly or
compiling, together with all documentation to facilitate such translation,
assembly and compiling; including, without limitation, programmers' notes,
technical and functional specifications, flow charts, schematics, test
programs, statements of principles of operations, architectural and design
standards, and descriptions of data flows, data structures and control logic.
C. LICENSEE'S BUSINESS. The term "Licensee's Business" shall mean the
business of providing assembly, integration and configuration related solutions
and services to equipment manufacturers, software vendors, system integrators,
government and corporate entities and other businesses seeking such solutions
and services.
1
II. LICENSE
In accordance with the terms herein, Licensor grants to Licensee, and
Licensee accepts from Licensor, a worldwide, perpetual, nonexclusive (except as
to the countries comprising South America (excluding Central America) and
Malaysia where the license granted herein shall be exclusive for a term of five
years from the Effective Date) and non-transferable license to reproduce, use
and distribute, and reproduce, disclose to others for the purpose of
maintenance, use, change, modify and otherwise prepare derivative works based on
the Source Code ("License"). The License may be exercised only at Licensee's
configuration centers in Los Angeles or other configuration centers in or
outside of the United States where the equipment on which the Software is used
is more than 50% owned by Licensee or, in the event Licensee leases the
equipment, the Licensee is obligated for more than 50% of the lease payment for
such equipment when used in connection with the Software (collectively
"Permitted Configuration Centers"). The Software shall be used only in
connection with Licensee's Business. Licensee shall not permit any third party
to use the Software. A license may be temporarily transferred to back up
equipment if the particular scheduled equipment is inoperative for more than one
(1) hour. Licensee may make copies, and use the Software for testing purposes.
Licensee may exercise the License with respect to the Source Code upon and
after occurrence of any of the following events (but not prior to the occurrence
of such events):
A. Licensor or Glasgal Communications, Inc. ("Glasgal") ceases doing
business;
B. Licensor or Glasgal becomes insolvent or makes a general assignment
for benefit of creditors;
C. The filing of a petition by or against Licensor or Glasgal for relief
under the laws of bankruptcy;
D. The petition of an appointment or an actual appointment of a receiver
or other custodian for the business or assets of Licensor or Glasgal;
E. Licensor or Glasgal admits in writing its inability to pay its debts
generally as they become due; or
F. Licensor materially breaches any of its obligations under this
Agreement, or the Reseller Agreement between the parties, and such default or
breach has not been cured. As used above, material breach is hereby defined to
include, without limitation, any default or breach that results in a hinderance
to Licensee's ability to operate Licensee's Business.
2
III. COPIES
The License granted herein includes the right to copy the Software in
non-printed, machine readable form in whole or in part as necessary for
Licensee's Business. In order to protect Licensor's trade secret and copyrights
in the Software, Licensee agrees to reproduce and incorporate Licensor's trade
secret or copyright notice in any copies, modifications or partial copies.
Licensee shall maintain no more than three copies (or such greater number as
Licensor shall reasonably consent to) of the object code for the Software for
each Permitted Configuration Center at any time.
IV. PRICE AND PAYMENT
Licensee has paid Licensor a license fee of $1.1 million for the Software
and Source Code License, representing payment in full. As of the date hereof,
$150,000 of such fee has been paid to Licensor by Licensee in cash, and an
additional $950,000 of such license fee has been paid by execution and delivery
by Licensee to Licensor of the promissory note attached hereto and incorporated
herein by this reference as Exhibit "A" (the "Note").
Licensor hereby agrees that prior to entering into an agreement to license
the Software or Source Code to any third party for use in the countries
comprising Asia, Japan, the Pacific Rim and Australia, it shall first offer
Licensee the right to such license on terms and conditions, including price,
equivalent to those contained in the proposed third party agreement.
Any payment for any services or other performance by Licensor shall be
payable one hundred and eighty (180) days after receipt of a correct invoice
from Licensor; provided that portions of amounts disputed in good faith by
Licensee will be payable upon resolution of the dispute. Unless otherwise
expressly stated herein, there shall be no additional charges for any materials
and services provided under this Agreement.
V. SOFTWARE OWNERSHIP
Licensor represents and warrants that it is the sole owner (or is an
authorized licensee) of the Software and Source Code and all portions thereof
and that it has the right to modify same and to grant Licensee the Software and
Source Code License and that Licensee shall have no obligation or liability
toward any third parties for the exercise of the License and that Licensee's use
of the Software and Source Code will not infringe any third party rights in any
patent, copyright, trade secret or other proprietary right.
VI. INTENT TO COOPERATE
Both Licensor and Licensee acknowledge that successful implementation of
the Software pursuant to this Agreement shall require their full and mutual best
efforts. The
3
parties acknowledge that they shall timely fulfill their responsibilities set
forth in this Agreement.
VII. TITLE TO SOFTWARE SYSTEMS AND CONFIDENTIALITY
The Software and all programs developed hereunder by Licensor and all
copies thereof are proprietary to Licensor and title thereto remains in
Licensor. All applicable rights to patents, copyrights, trademarks and trade
secrets in the Software or any modifications made by Licensor shall remain in
Licensor. Licensee shall not sell, transfer, publish, disclose, display or
otherwise make available the Software or copies thereof to others in violation
of this Agreement. Licensee agrees to take reasonable efforts to secure and
protect each module, software product, documentation and copies thereof in a
manner which Licensee takes to secure and protect its own software in order to
maintain Licensor's rights therein and to take appropriate action by instruction
or agreement with its employees or consultants who are permitted access to each
program or software product to satisfy its obligations hereunder. All copies
made by the Licensee of the Software and other programs developed hereunder,
including translations, compilations, partial copies with modifications and
updated and derivative works, are the property of Licensee. Licensee
acknowledges Licensor's claim that the Software is confidential in nature and
not in the public domain, that the Licensor claims all intellectual and
industrial property rights granted by law therein on behalf of itself or the
licensor(s) and that the Licensor does not hereby grant nor otherwise transfer
any rights or ownership of the Software to the Licensee or any third party
except in accordance with this Agreement. Except as otherwise expressly
permitted hereunder, the Licensee agrees not to copy or otherwise reproduce the
Software, in whole or in part. The Licensee further agrees to take all
reasonable steps which Licensee takes to protect its own software to ensure that
no unauthorized persons shall have access to the Software and that all
authorized persons having access to the Software shall refrain from any such
disclosure, duplication or reproduction.
The Licensee agrees to accord the Software, and both parties agree to
accord all other confidential information relating to this Agreement and each
party's proprietary business information such as pricing and customer identities
at least the same degree and methods of protection as such party undertakes with
respect to its own confidential information, trade secrets and other proprietary
data.
The Licensee agrees not directly or through any agent or intermediary, to
register, apply for registration or attempt to acquire any legal protection for
the Software or any proprietary rights therein or to take any other action which
would or could infringe upon the Licensor's right, title or interest in or to
the Software in any jurisdiction.
Provided that Licensor provides sixty (60) days written notice to Licensee
specifically stating in sufficient detail the violation or breach and such
violation or breach, capable of being cured, is not cured during this sixty (60)
day period, the Licensee acknowledges that,
4
in the event of a breach or violation by the Licensee of its obligations under
this Section 7, the Licensor may immediately terminate its performance under
this Agreement without liability to the Licensee and may bring an appropriate
legal action to enjoin any such breach or violation hereof.
All copies of the Software shall retain the copyright notices and
proprietary markings contained in or appearing on the master copy thereof
supplied to the Licensee by the Licensor.
VIII. USE OF TRADE NAMES AND TRADEMARKS
Licensee hereby acknowledges Licensor's claim of ownership of the generic
trade names and marks "CASI", "COMPUTER-AIDED SOFTWARE INTEGRATION", and
"INTEGRATOR'S WORKBENCH PRODUCT SERIES", the Software names. Licensee further
acknowledges that it shall acquire no interest therein by virtue of this
Agreement or the performance by Licensee of its duties and obligations
hereunder, other than the License granted to Licensee under this Agreement.
Licensee agrees not to use the names "CASI" or "COMPUTER-AIDED SOFTWARE
INTEGRATION", or such Software names or marks (or any confusingly similar name
or symbol), in whole or in part, as part of the Licensee's business or trade
name.
The Licensee agrees to notify the Licensor promptly of any known use or
registration by third parties of any trade names or marks which might infringe
the Licensor's trade or Software names or marks. The Licensee acknowledges and
agrees that the Licensor shall have the sole right and duty to protect such
names and marks from a legal action or suit for infringement thereof.
IX. WARRANTY
A. The Licensor warrants that the Software will (i) conform, when
operated in Permitted Configuration Centers to Licensor's current published
specifications and documentation attached hereto or otherwise provided to
Licensee, including without limitation, those specifications set forth in
Licensor's so-called White Sheet Report; and (ii) will be free of defects which
affect the Software's performance. The Licensor does not warrant that the
Software will be defect or error free in all circumstances.
B. Licensor warrants that Licensee will not be required to obtain any
third-party software (other than third party operating system software) in order
to operate the Software or Source Code other than that which is set forth in
this Agreement and that the entering into and carrying out of the terms of this
Agreement will not violate or constitute a breach of any agreement binding on
Licensor.
C. Licensor warrants that the documentation and technical materials
provided by
5
Licensor to Licensee will be accurate and complete.
D. Licensor warrants that there is not any disabling code in the Software
or Source Code which would alter, destroy, or inhibit any use of the Software or
Source Code or the data contained therein.
E. Licensor warrants that it will not terminate or attempt to terminate,
by modem or by electronic means or by other means, use of the Software by
Licensee in connection with any dispute.
F. Licensor warrants that the Software is designed to operate in the year
2000 and beyond to store, calculate, process and print year 2000 dates and is
coded so that the progression from the year 1999 to 2000 (and beyond) will not
cause the Software to cease operating, to operate incorrectly or otherwise fail
to meet its documentation.
G. Licensor warrants that it will perform its obligations arising
pursuant to this Agreement in a diligent and professional manner and in
accordance with current industry standards.
H. Licensor warrants that as of the Effective Date Licensor has no
knowledge of any written notice asserting a claim which might reasonably be
expected to impair Licensee's right to use the Software.
I. Licensee must notify Licensor in writing, within twelve (12) months of
delivery of the Software, or any changes or additions to the Software, to
Licensee (not including delivery of any subsequent modifications to the
Software), of its claim of any such defect(s) which Licensee is aware of. If
the Software is defective, Licensor shall remedy such defect in accordance with
the time frames set forth in Exhibit B "SOFTWARE MAINTENANCE AGREEMENT" attached
hereto and incorporated herein by this reference. The Licensee agrees to
provide the Licensor with information available to Licensee to allow the
Licensor to remedy such defect. The Licensor is not responsible for any defect
or error, which Licensee is aware of but not reported within such twelve (12)
month period, or any defect or error in the Software caused by any Licensee
modification, misuse or damage, except as set forth in Exhibit B. Except as set
forth above, the Software is being licensed to the Licensee "AS IS" and without
warranty of any kind.
J. THE ABOVE IS A LIMITED WARRANTY AND THE WARRANTIES SET FORTH IN THIS
AGREEMENT ARE THE ONLY WARRANTIES MADE BY LICENSOR. LICENSOR MAKES AND LICENSEE
RECEIVES NO WARRANTY (EXCEPT AS SET FORTH IN THIS AGREEMENT) EXPRESS OR IMPLIED
AND THERE ARE EXPRESSLY EXCLUDED ALL WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. NEITHER PARTY SHALL HAVE ANY LIABILITY WITH RESPECT TO
ITS OBLIGATIONS UNDER THIS AGREEMENT
6
FOR INDIRECT, SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR INCIDENTAL DAMAGES EVEN IF
IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, INCLUDING, WITHOUT
LIMITATION ANY DAMAGE TO ANY PROPERTY OF THE LICENSEE EXCEPT IN THE CASE OF
WILFUL MISCONDUCT.
K. Correction for difficulties or defects traceable to the Licensee's
errors, or systems changes or modifications made by Licensee, shall be billed
pursuant to Section XVII Additional Consulting Services.
L. Either party's liability arising out of contract, negligence, strict
liability in tort or warranty shall not, except in the case of wilful
misconduct, exceed the amount paid by Licensee under this Agreement.
X. INDEMNITY
A. Licensor hereby agrees to indemnify, defend and hold harmless
Licensee, its shareholders, directors, officer, agents, employees, agents, and
representatives from and against any and all claims, expenses, damages, losses,
costs, fees, royalties or penalties (including reasonable attorneys' fees, costs
and expenses), liability, actions made or brought against Licensee arising out
of any allegation of any infringement of third party's rights, including without
limitation, patent, trademark, copyright, and trade secrets arising out of or
related to this Agreement, provided: (a) Licensee gives prompt written notice of
such claim to Licensor, b) Licensor has sole control of the defense and
settlement negotiation, on condition that Licensee may participate and appoint
any counsel to participate in any defense and settlement negotiation at
Licensee's expense, c) Licensee cooperates with Licensor in such defense and
settlement negotiation, at Licensor's expense and d) the infringement is based
on the use of the latest release of the Software made available to Licensee. In
no event shall Licensee settle any such claim, lawsuit or proceeding without
Licensor's prior written approval.
If, as a result of any claim of infringement against any patent, copyright,
license or other property right, Licensor is enjoined from using the Software,
or if Licensor believes that the Software is likely to become the subject of a
claim of infringement, Licensor at its option and expense may procure the right
for Licensee to continue to use the Software, or replace or modify the Software
so as to make it non-infringing, provided such replacement or modification is
reasonably acceptable to Licensee. If neither of these two options is reasonably
practicable or acceptable to Licensee, Licensor may discontinue the license
granted herein on one hundred and twenty days (120) days' written notice and
indemnify and hold Licensee harmless in accordance with the paragraph set forth
immediately above. The foregoing states the entire liability of Licensor with
respect to infringement of any copyrights, patents, license or other property
rights by the Software or any parts thereof. Upon the occurrence of any event
which triggers Licensor's obligation under this Agreement, Licensee may suspend
any of its obligations under this Agreement and deposit any amount
7
owed under this Agreement into an interest-bearing trust account pending final
resolution of such claim, action or liability.
B. Licensor shall defend, indemnify and hold harmless Licensee, and its
respective directors, officers, employees and agents from and against all
claims, demands, causes of action, expenses, damages, losses, costs, fees or
penalties (including reasonable attorneys' fees, expenses and costs of
settlement) whether based upon tort, breach of contract or otherwise of
whatsoever kind and nature arising out of or on account of, or resulting in
whole or part from, any misrepresentation or default in the performance of
Licensor's obligations pursuant to this Agreement, to the extent caused by any
act, error or omission of Licensor, employees of Licensor, or of any other
persons or entities who are directly or indirectly associated with Licensor.
Licensee shall give Licensor prompt notice of any claim or liability hereby
indemnified against by Licensor and thereupon Licensor shall be entitled to
control, and shall assume full responsibility for, the defense of such matter.
The indemnity contained herein shall not be deemed to be a waiver of or in
limitation of any other rights Licensee may have.
XI. BREACH
Except as otherwise specifically set forth herein, Licensor shall have the
right to terminate this Agreement and the license granted herein in the event
Licensee is in default of its obligations under this Agreement (including those
set forth immediately below); upon one hundred and eighty (180) days prior
written notice detailing the reason for termination and providing an opportunity
for Licensee to cure any such default during such period:
A. In the event that Licensee, its officers or employees violates any
provision of this Agreement including, but not limited to, confidentiality and
payment and such violation is not cured during such period;
B. In the event Licensee (i) terminates its business; (ii) becomes
subject to any bankruptcy or insolvency proceeding (whether voluntary or
involuntary) under Federal or state statute or (iii) becomes insolvent, is
otherwise unable to pay its debts as they become due or becomes subject to
direct control by a trustee, receiver or similar authority;
C. In the event the Licensee assigns or transfers this Agreement or any
of its rights or obligations hereunder, without the Licensor's prior written
consent, which shall not be unreasonably withheld; provided however, no consent
is required other than notice in the event Licensee assigns or transfers this
Agreement or any of its rights or obligations hereunder to an affiliate
controlled by, under common control with or controlling Licensee or a successor
to all or substantially all of Licensee's assets used in Licensee's Business.
D. Within five days after termination, Licensee will return to Licensor
the Software and all copies in the form provided by Licensor or as modified by
Licensee, or
8
upon request by Licensor destroy the Software and all copies, and certify in
writing that they have been destroyed. Termination shall not relieve Licensee
of its obligations regarding confidentiality of the Software. Termination will
be in addition to and not in lieu of any equitable remedies available to
Licensor.
Licensor shall be provided written notice by Licensee in the event of any
breach or default hereunder by Licensor. Licensor shall have fifteen (15) days
from receipt of such written notice to cure any such breach; provided however,
licensor shall have five days from receipt of such written notice to cure the
first occasion of any breach where Licensor has committed to a fixed time frame
for performance as expressly set forth in this Agreement. In any such instance,
time shall be considered of the essence.
XII. TAXES
Licensee shall, in addition to the other amounts payable under this
Agreement, pay all sales and other taxes, federal, state, or otherwise, however
designated, which are levied or imposed by reason of the transactions
contemplated by this Agreement, other than based on the income derived from
these transactions. Licensee shall pay to Licensor an amount equal to any such
items actually paid, or required to be collected or paid by Licensor at the time
the payment for the services performed or the License granted under this
Agreement.
XIII. HARDWARE REQUIREMENTS
Licensee shall make available for the Software implementation, at each
Permitted Configuration Center, computer equipment and software configurations
equivalent to any configuration which Licensor has approved prior to or during
the term of this Agreement for other licensees or customers.
XIV. DELIVERY, INSTALLATION AND TESTING
Licensee hereby acknowledges receipt of a previous version of the Software.
The Source Code shall be delivered within three days of an event occurring under
Section II that would allow Licensee access to the Source Code.
XV. CUSTOM MODIFICATIONS
All custom modifications to the Software, not including assisting Licensee
in implementation of the Software job control language, shall be undertaken by
Licensor in accordance with Section XVII Additional Consulting Services.
XVI. GENERAL
A. Each party acknowledges that it has read this Agreement, together with
the
9
Exhibits hereto, it understands it, and agrees to be bound by its terms, and
further agrees that this is the complete and exclusive statement of the
agreement between the parties, which supersedes and merges all prior proposals,
understandings and all other agreements, oral and written, between the parties
relating to this Agreement. This Agreement may not be modified or altered except
by written instrument duly executed by both parties.
B. Dates or times by which Licensor is required to make performance under
this Agreement shall be postponed automatically to the extent that Licensor is
prevented from meeting them by causes beyond its reasonable control, but no more
than thirty (30) days.
C. This Agreement and the rights, obligations and relations of the
parties hereunder shall be governed by the laws of the State of California
without regard to its rules of conflicts of law. In the event any legal
proceeding is brought to enforce or interpret the provisions of this Agreement
the parties hereby agree to submit to the jurisdiction of the courts of Los
Angeles, California, which shall be the exclusive venue for all such
proceedings.
D. If any provision of this Agreement is invalid under any applicable
statute or rule of law, it is to that extent to be deemed omitted, but this
Agreement shall otherwise remain in full force and effect.
E. Neither party may sell, assign, transfer, convey, delegate, encumber
or sub-license, without the prior written consent of the other party, its
rights, duties or obligations under this Agreement to any person or entity, in
whole or in part, which consent shall not be unreasonably withheld, except as
otherwise provided in Section XI(c). Notwithstanding anything in this Agreement
to the contrary, in the event of a proposed assignment or transfer of the
Agreement by Licensee, and the assignee's use of the Software would materially
increase beyond the anticipated future use of the Software by Licensee, i.e., an
increase to at least 150% of the anticipated future use of the Software by
Licensee, the Licensor shall have the right to charge such assignee an
additional reasonable license fee equivalent to the fees Licensor then charges
to companies that would use the Software in an amount reasonably equivalent to
such assignees' anticipated usage, minus the license fee(s) paid by Licensee
hereunder. In the event such assignee refuses to pay such equivalent fee,
Licensor may in its sole and absolute discretion, refuse to consent to such
assignment or transfer.
F. In the event of any dispute or legal proceeding between the parties
arising out of related to this Agreement or its breach, the prevailing party
shall be entitled to recover from the non-prevailing party all fees, costs and
expenses, including without limitation, all attorney's and expert witness fees
and disbursements incurred in connection with such dispute or legal proceeding.
G. The waiver or failure of either party to exercise in any respects any
right provided for herein shall not be deemed a waiver of any further right
hereunder.
10
H. All notices requests, reports, submissions and other communications
permitted or required to be given under this Agreement shall be deemed to have
been duly given if such notice of communication shall be in writing and sent by
personal delivery or by airmail, cable, telegram, telex, facsimile transmission
or other commercial means of rapid delivery, postage or costs of transmission
and delivery prepaid, to the parties at addresses specified herein until such
time as either party hereto shall give the other party hereto not less than ten
(10) days' prior written notice of a change of address in accordance with the
provisions hereof.
XVII. ADDITIONAL CONSULTING SERVICES
During the term of this Agreement, Licensor shall provide Licensee with
various business and technical consulting services as may be requested by
Licensee. Such services shall be provided subject to the following terms and
conditions.
A. Licensee shall be entitled to order services to be provided by
Licensor and Glasgal (or its subsidiaries) under the terms of this Agreement.
This Agreement includes the ability to require the services of any Licensor or
Glasgal "without limitations" (or its subsidiaries) personnel. Such services
shall be provided in a professional and workmanlike manner.
B. Unless otherwise cancelled in writing by Licensee, Licensee agrees to
pay Licensor $100,000 as a refundable Service Retainer Fee one week after the
beginning of each two month period beginning on the Effective Date (the "Service
Period") for all maintenance, installation, training, modification, support and
other services to be provided by Licensor that are not being provided by
Licensor pursuant to Exhibit "B". In the event that in any two month Service
Period the fees for the actual services provided by Licensor total less than
$100,000, Licensee shall subtract the remaining balance of the Service Retainer
Fee and shall pay Licensor the difference as the Minimum Service Fee for the
forthcoming Service Period.
If Licensee requests services during the first year after the execution date of
this Agreement in excess of $150,000 each Service Period, after deducting any
unused balance remaining from prior Service Periods, which by year end is in
excess of $900,000 (at the Exhibit D rates) all such excess requested services
will be provided by Licensor at the then current rate charged to a majority of
its customers. Licensor may charge for such excess services each Service
Period, subject to a year end reconciliation. To the extent total services for
the year (at the Exhibit D rates) are less than $900,000, Licensor shall
immediately refund any payments made by Licensee in excess thereof. After such
year, Licensor may charge for services requested by Licensee in excess of
$600,000 ($150,000 each Service Period), at its then current rates charged to a
majority of its customers, again subject to an annual reconciliation and
otherwise as set forth immediately above.
C. Licensee agrees to pay all reasonable out-of-pocket expenses. Licensee
shall
11
have the option to book travel arrangements for Licensor and/or Glasgal (or its
subsidiaries) personnel.
D. Service fees that exceed the Service Retainer Fee shall be due and
payable within thirty (30) days following the end of the Service Period and the
receipt of invoice.
E. Services shall be provided based upon job classifications and at the
hourly rates specified in Exhibit "D" "SCHEDULE OF SERVICE CLASSIFICATIONS AND
RATES" attached hereto and incorporated by this reference herein. In the event
Licensee chose not to pay the Service Retainer Fee for any Service Period,
Licensor has the sole option to change the rates specified in Exhibit "D"
through notification, in writing, to its then current standard rates.
F. Licensor shall submit time records in writing for each month detailing
the personnel, services and time provided to Licensee by the fifth day of the
following month. Licensee shall have five (5) business days to review such time
records for accuracy and submit discrepancies to Licensor. Licensor shall use
its best efforts to ensure that only time spent working on behalf of Licensee is
reported and billed.
G. Licensee agrees to provide Licensor with a purchase order for services
to be provided under the terms herein at least three (3) days prior to the
required start date for the provision of the services.
H. Licensor hereby agrees to provide the Maintenance Services, commencing
on the execution date, set forth in Exhibit "B" in consideration of the payment
by Licensee to Licensor of $6,250 per quarter, payable within thirty (30) days
of receipt of invoice. Such payment shall commence on March 1, 1998. In the
event Licensee chooses not to secure Maintenance Services it will no longer be
obligated to make such payment and Licensor will no longer be obligated to
provide Maintenance Services.
XVIII. TECHNICAL SUPPORT
Licensor will deliver to Licensee any changes, updates, upgrades, or
enhancements to Software (and Source Code when and if Licensee is entitled to it
under the provisions of Section II hereof), including without limitation
programming changes, releases, versions, and other enhancements, along with
updates or revisions to technical materials and documentation to the extent that
they relate to the Software and Source Code within thirty (30) days of the
release to Licensor's own technical, programming, or support staff and in any
event, no later than the release to any customer or licensee of Licensor or
Glasgal and as otherwise set forth in Exhibit B; provided that Licensee is then
current in its payment for Maintenance Services (as defined in Exhibit B). End
User documentation shall be updated on diskette in Microsoft Word for Windows or
such other industry standard program as mutually agreed to by the parties.
12
Licensor agrees to perform technically-feasible Software programming
changes requested by Licensee during the term of this Agreement, including
changes to or new formats for inclusion in the Software, in a timely manner and
at rates to be negotiated in good faith by the parties.
XIX. CORPORATE GUARANTEE
Glasgal unconditionally guarantees the performance of Licensor under the
Sections entitled Warranty and Indemnity of this Agreement, including without
limitation any obligation or liabilities of Licensor owed to Licensee
thereunder, heretofore, now or hereafter made, incurred or created, whether
voluntary or involuntary and however arising, whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, and
whether Licensor may be liable individually or jointly with others, or whether
recovery may be or hereafter become barred by any statute of limitations, or
whether such performance may be or hereafter become otherwise unenforceable.
Glasgal authorizes Licensee, without notice or demand and without affecting
its liability under this Agreement, from time to time to (a) renew, compromise,
extend, accelerate, or otherwise change, increase, or decrease Licensor's
performance or the terms of this Agreement
Glasgal waives any defense arising by reason of any disability or other
defense of Licensor or by reason of the cessation from any cause whatsoever of
the liability of Licensor. Until this Agreement has expired and all performance
of Licensor to Licensee shall have been fully performed, Glasgal shall have no
right of subrogation, and waives any right to enforce any remedy, which Glasgal
now has or may hereafter have against Licensor. Guarantor waives all demands
for performance, notices of nonperformance, protests, notices of protest, and of
the creation, or incurring of new or additional obligation or liability of
Licensor.
13
LICENSOR: LICENSEE:
COMPUTER-AIDED SOFTWARE DATANET INTERNATIONAL,
INTEGRATION, INC. INCORPORATED
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx Xxx
--------------------- ---------------------
Name: Xxxxx X. Xxxx Name: Xxxxx Xxx
Title: CFO Title: President
Address: 00000 X. Xxxxx Xx. Address: 0000 Xxxx Xxxx Xx
Xxxxx 000 Xxxxxxxx, XX 00000
Xxxxxx XX 00000
Glasgal Communications, Inc. EXECUTIVE DATE, September 15th, 1997
as to Section XIX Corporate Guaranty
[ILLEGIBLE]
By: /s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
Title: CFO
Address: 00X Xxxxxxxx Xxx
Xxxxxx, XX 00000
14
EXHIBIT A
SOFTWARE
Licensor's IWPS Configurator products, version 2.20 or higher. IWPS
Configurator shall include all modules, tools and utilities produced by Licensor
for use with the IWPS Configurator product line.
15
EXHIBIT B
SOFTWARE MAINTENANCE AGREEMENT
Article 1
DEFINITIONS.
Terms in this Maintenance Agreement which are capitalized have the meanings
set forth below, or as defined elsewhere in this Agreement.
"Error" means an instance of failure of the Software to meet the
requirements of Section XI, Warranty of this Agreement. An Error is a Class 1
Error if it renders continued use of the Software commercially infeasible in
Licensee's reasonable judgment. An Error is a Class 2 Error if it makes
continued use of the Software seriously inconvenient and substantially reduces
its value to Licensee, in Licensee's reasonable judgment. All other Errors are
Class 3 Errors; in particular, all documentation shortcomings and deviations and
cosmetic errors that do not have the economic consequences defined for Class 1
and Class 2 Errors shall be deemed Class 3 Errors.
Article 2
TERM AND TERMINATION.
2.1 TERM. Commencing upon delivery of the Software, the term for
providing Maintenance Services for such Software shall be three months and shall
automatically renew quarterly, unless Licensee notifies Licensor in writing of
its decision to not renew.
2.2 TERMINATION BY LICENSOR. Licensor may terminate the provision of
Maintenance Services at any time, whereupon Licensee's Source Code License shall
commence.
2.3 TERMINATION BILLING. Licensor shall refund any prepaid charges for
Maintenance Services pro rata from the effective date of any permitted
termination. Licensee shall pay any charges for Maintenance Services rendered
pro rata to the effective date of any permitted termination.
Article 3
CHARGES.
Charges for Maintenance Services shall be as stated in Section XVII.
Additional Consulting Services of the Agreement.
16
Article 4
SERVICE RESPONSIBILITIES.
4.1 MAINTENANCE. Licensor shall provide Licensee the maintenance services
described in this Exhibit and the Agreement with respect to the Software and
Source Code, including providing updates and corrections ("Maintenance
Services"). Licensor shall correct all Errors reported by Licensee by means of
the procedures established by this Exhibit. Maintenance Services shall be
performed in a timely and professional manner by qualified maintenance
technicians familiar with the Software and Source Code and its operation.
Licensor shall provide, upon Licensee's request, periodic reports on the status
of Maintenance Services requested by Licensee.
4.2 SUPPORT AND RESPONSE TIME.
(i) Licensor shall provide telephone support solely for the
reporting and correction of suspected Errors ("Support") Monday through Friday,
9:30 a.m. to 5:30 p.m., Mountain Standard Time, except Licensee holidays
("Maintenance Period"). Licensor will also have personnel on call outside of
the Maintenance Period during which time Licensee may request Maintenance
Services. Maintenance Services, both in and outside of the Maintenance Period,
shall be provided as set forth below.
(ii) Licensor shall provide to Licensee, and keep current, a list
of persons and telephone numbers ("Calling List") for Licensee to contact for
Support. Such Calling List shall include: (1) the first person to contact for
the answer or assistance desired, and (2) the persons in successively more
responsible or qualified positions to provide the answer or assistance desired.
(iii) If Licensee desires Maintenance Services, Licensee shall
contact Licensor's telephone Support service in accordance with the Calling
List. Licensor shall make best efforts to respond to Licensee's initial
telephone call with off-site telephone consultation, assistance and advice
relating to Support of the Software within thirty (30) minutes of Licensee's
first call for Maintenance Services or, as to requests for assistance not
involving suspected Class 1 or 2 Errors made outside of the Maintenance Period,
within thirty (30) minutes after the start of the next day occurring during the
Maintenance Period and, in any event, Licensor shall respond within two hours of
such allowed response times. If Licensor fails to so respond; or if Licensee is
unable, after three or more calls within a fifteen (15) minute period, to reach
Licensor's telephone Support service; or if the designated person from the
Calling List is not available when Licensee makes contact with Licensor to
obtain consultation and assistance, then Licensee shall attempt to contact the
next more responsible or qualified person on the Calling List until contact is
made and a designated person responds to the call.
17
(iv) After Licensee reports a suspected Class 1 or 2 Error,
Licensor shall provide a correction or workaround as soon as possible. Licensee
shall consult with Licensor to convey the severity of the Error. If Licensor
has not diagnosed and corrected a Class 1 or Class 2 Error on the same day as
Licensee's initial telephone call, Licensee shall submit to Licensor a listing
of output and such other data as Licensor may request and is reasonably
available to Licensee in order to reproduce operating conditions similar to
those present when Licensee detected such Error.
(v) For Class 1 Errors, Licensor shall provide a workaround
reasonable in Licensee's judgment, or a correction, in any event within three
days after receipt of output or other documentation of such Error. Licensor
shall, upon Licensee's request, without limitation, assign fully-qualified
technicians to work with Licensee at Licensee's site without interruption (i.e.,
24 hours per day) until Licensor provides a workaround reasonable in Licensee's
judgment, or a correction.
(vi) For Class 2 Errors, Licensor shall provide a workaround
reasonable in Licensee's judgment, or a correction, in any event within five
days after receipt of output or other documentation of such Error. Licensor
shall, upon Licensee's request, without limitation, assign fully-qualified
technicians to work with Licensee at Licensee's site during Licensee's regular
business hours until Licensor provides a workaround reasonable in Licensee's
judgment, or a correction.
(vii) For Class 3 Errors, Licensor shall correct such Error by
modifying the Software no later than the next update, unless Licensor has
scheduled release of such update less than thirty (30) days after Licensee's
notice, in which case Licensor shall correct the Error in the following update.
4.3 UPDATES. Licensor shall provide Licensee updates to the Software, the
earlier of whenever Licensor makes such updates generally available to its
customers or internally commences commercial use of such updates.
4.4 CONTINUING SUPPORT. Licensee may decline to install an update or
upgrade Licensor offers. In such event, Licensor shall continue the Maintenance
Services for whatever version of the Software that is installed at Licensee,
subject to Licensor's right to terminate this Maintenance agreement as permitted
in article 2.3 TERMINATION BY LICENSOR. Licensor may charge additionally for
such Maintenance Services pursuant to Section XX Additional Consulting Services
provided that Licensee is more than one update or upgrade behind and continues
to decline to install a prior update or upgrade that would cause the Software to
be in compliance with the Warranty.
4.5 COMPATIBILITY. Within ninety (90) days after the supplier of an
operating system ("OS") in use at a Permitted Configuration Center makes a new,
upgraded version or release of such OS generally available to its customers,
Licensor
18
shall deliver to Licensee, upon Licensee's request, an update to the Software
and Source Code to ensure its compatibility with such new OS release, or if no
update is necessary, Licensor shall so state to Licensee in writing within such
ninety (90) days. Licensor may charge Licensee for such upgrade pursuant to
Section XVII Additional Consulting Services. In such event, Licensee shall have
the exclusive right to such upgrade and Licensor shall not be entitled to
license, sell, market or distribute such upgrade to any third party.
4.6 EARLY VERSION. Licensor shall, upon Licensee's request, provide
early versions of updates or upgrades prior to general release in order to
provide development feedback. Licensee, at its request, will be included in
Licensor design meetings during the development cycle and Licensor shall make
all reasonable efforts to include general interest features suggested by
Licensee and develop the workpapers and modules that Licensee considers most
important. Licensee may send a reasonable number of employees to attend
end-user group meetings sponsored by Licensor. Licensee shall pay all
out-of-pocket expenses associated therewith.
4.7 TRANSITIONAL SUPPORT. If the provision of Maintenance Services to the
Software covered by this Exhibit is terminated by Licensor as allowed in
Article 2.3 TERMINATION BY LICENSOR, Licensor shall give Licensee at least one
hundred and eighty (180) days' prior notice, whereupon the Source Code License
shall become effective.
Article 5
LICENSEE RESPONSIBILITIES.
5.1 SUSPECTED ERRORS. If Licensee discovers any suspected Error in the
Software Licensee shall analyze the suspected Error to determine if it is the
result of Licensee's misuse or misunderstanding of the Software before seeking
Licensor's assistance.
5.2 LICENSEE RESPONSIBILITY. In the event Licensor determines that the
problem reported by Licensee is directly related to unauthorized alterations of
the Software by Licensee, then
(i) Licensor may charge for employee time expended in accordance with
Section XVII Additional Consulting Services in addition to reasonable
out-of-pocket expenses.
19
EXHIBIT C
PROMISSORY NOTE
$150,000 JULY 1, 1997
WHEREAS, Xxxxx Xxxxxxx (the "Lender") desires to loan to Data Net
International, Incorporated, a California Corporation (the "Borrower") and
the Borrower desires to borrow from the Lender, the principal amount of
$150,000 pursuant to the terms and conditions contained in this promissory
Note (the "Note").
NOW, THEREFORE, for good and valuable consideration herein
contained, lender hereby agrees to loan to Borrower, and Borrower hereby
promises to pay to the order of lender or his successors or assignees, the
principal amount of one hundred fifty thousand ($150,000) dollars on the
following schedule:
PAYMENT DATE PRINCIPAL PAYMENT
------------ ------------------
First Installment--November 31, 1997 $ 50,000
Second Installment--February 28, 1998 100,000
Provided, however, that (i) in the event that the Borrower in its sole
discretion consummates a qualified financing (as hereinafter defined) prior
to the payment of the first installment, $50,000 of the proceeds of such
qualified financing shall be immediately applied to repayment of the first
installment; and (ii) in the event that Borrower in its sole discretion
consummates a qualified IPO (as hereinafter defined) prior to payment of the
second installment, $100,000 of proceeds of such qualified financing shall be
immediately applied to prepayment of second installment.
For purposes of this Note, (i) a Qualified Financing shall mean a
subordinated debt or equity financing transaction or a series of subordinated
or equity financing transactions, which yield gross proceeds to the Borrower
or any of its subsidiaries of at least $1,000,000 and (ii) a Qualified IPO
shall mean an initial underwritten offering by the Borrower of its securities
to the public pursuant to a registration statement filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended.
Borrower also promises to pay interest on the $150,000 principal
amount of this Note at a rate of ten percent (10%) per
20
annum (on the basis of a 360 day year and actual number of days elapsed)
from and including the date hereof until such principal sum shall be paid in
full according to this formula of (10%) per annum. Beginning July 1st 1997,
interest accrued shall be included in the 1st and 2nd installments indicated
above.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in immediately
available funds to Lender, at his office located at c/o Glasgal
Communications Inc., 00 Xxxxxxxx Xxx, Xxxxxx, Xxx Xxxxxx 00000 or at such
other place as shall be designated in writing by Lender for such purpose.
Borrower hereby waves diligence, presentment, dishonor, demand,
notice and protest and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note.
The Borrower reserves the right to prepay the unpaid principal
balance of this Note in whole, at any time, without penalty or premium.
In the event that a qualified financing does not occur prior to
November 30, 1997, and as a result this Note is not paid in full on or prior
to Feb. 28, 1998, this Note shall be converted into such number of shares of
the common stock of the Borrower as shall equal the principal amount then
outstanding plus accrued interest divided by a fraction, the number of which
shall equal the greater of $20,000,000 or the fair market value of the
Borrower at the time of such conversion, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
conversion (the "Common Stock").
Whenever any payment on this Note shall be stated to be due on a
Saturday, a Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law, regulation or executive order to
remain closed (a "Legal Holiday"), such payments shall be made on the next
succeeding day which is not a Legal Holiday and such extension of time shall
be included in the computation of the payment of interest on this Note.
The terms of this Note are not subject to amendment except by
written agreement of Lender and Borrower and Borrower may not assign its
obligations hereunder without the prior written consent of Lender.
21
This Note shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without regard to
principles of conflicts of laws.
IN WITNESS WHEREOF, Borrower has duly executed this Note, the
day and year first above written.
DATA NET INTERNATIONAL, INCORPORATED
By:
---------------------------------
Name: Max Toghraie
Title: Chief Executive Officer
By: XXXXX XXXXXXX
Signed:
--------------------------------
22
EXHIBIT D
"SCHEDULE OF SERVICE CLASSIFICATIONS AND RATES"
Service Type Job Class Hourly Rate
------------ --------- -----------
Management Consulting Principal $135
Software Development Programmer $100
Technical Consulting Consulting Engineer $95
Deployment Technician (Std Hours) $45
Technician (Overtime) $55
Technician (Holidays) $70
The above rates reflect a preferred rate.
The above rates may be adjusted by Licensor on each anniversary of the
execution date of this Agreement, upon at least 60 days prior written notice to
Licensee, to rates no higher than the lowest effective rate for each category of
Job Class (or functionally equivalent Job Class) charged by Licensor to
Licensor's then most favored customers.
The above rates shall be adjusted by Licensor one year after the execution
date of this Agreement, and shall thereafter continue to be adjusted, as and
when necessary to reduce (but not increase) such rates to the lowest effective
rate for each category of Job Class (or functionally equivalent Job Class) then
charged by Licensor to Licensor's then most favored customers.
23
