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Confidential materials submitted and filed separately with the Securities and
Exchange Commission. Four asterisks are used to denote omissions.
Exhibit 10.1
A-I-NET(R) SCN APPLICATION DEVELOPMENT AGREEMENT
THIS AGREEMENT ("Agreement"),dated as of 4/4/96, ("Effective Date")
is between Lucent Technologies Inc. (Lucent) with offices at 2000 N. Naperville
Road., Naperville, Illinois 60566-7033 and TeleCommunication Systems, Inc.
("TCS") a Maryland corporation, with offices at Suite 400, 275 West Street,
Annapolis, Maryland 21401.
WHEREAS, TCS is in the business of providing a full range of
information technology services, including consulting, systems development,
systems integration, systems installation and implementation and systems
management for a variety of industries; and
WHEREAS Lucent is in the business of providing products to enable the
development of advanced telecommunications services, generally known as Advanced
Intelligent Network Services ("AIN"); and
WHEREAS, Lucent has developed and owns certain Software and Hardware
known as Lucent A-I-Net(R) products, consisting of, without limitation, the
Service Circuit Node ("SCN"),the Service Control Point ("SCP"), the Service
Creation Environment ("SCE"), and the Service Management System ("SMS"), which
include modules or subsystems which it has developed and/or acquired licensing
rights from various vendors, being referred to collectively herein as "AIN
Products Group",
NOW, THEREFORE, Lucent and TCS hereby agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following terms and their definitions
shall apply:
"Affiliate" of a corporation means its subsidiaries, any company of
which it is a subsidiary, and other subsidiaries of such company
controlled by such party. For the purposes of this Agreement
"controlled" means having directly or indirectly a majority of the
voting rights of such entity.
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"Applications" means any software and associated documentation produced
using Lucent's SCE (with or without additional outside components) that
provides utility to either Lucent, TCS, or users of SCNs.
"Application Development Plan," means the mutually agreed upon plan for
development of each Application pursuant to this Agreement, including,
but not limited to, time frames for development, lab time requirements,
procedures for modifications to the Application Development Plan, joint
marketing and sales arrangements, Application maintenance and
warranties, Application revenue projections, billing procedures,
Application updates and Application acceptance criteria. Each
Application Development Plan shall be included as addenda to this
Agreement.
"Development Start Date" means the mutually agreed upon date to
commence Application development at TCS premises.
"Documentation" means Lucent's AIN Products Group documentation,
technical specifications and such other information which is
customarily provided to Lucent's commercial customers. Such
documentation shall encompass one (1) hard copy (if available) and one
(1) MS/DOS CD-ROM version (software only), with updates and releases as
applicable.
"Firmware" means a combination of (1) Hardware and (2) Software
represented by a pattern of bits contained in such Hardware.
"Hardware" means the equipment components of the SCE (i.e., Compile
Server) as described in this Agreement and provided by Lucent to TCS as
specified in this Agreement.
"Revenues" are the proceeds from the sale of the software only
component of Applications l and 2 either by Lucent, TCS or jointly.
It does not include the proceeds from the sale of maintenance
agreements on the Applications, any future enhancements done by TCS
on the Applications, or any hardware and other software that may be
associated with the total sale.
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"SCE" means Lucent's Service Creation Environment Software, including a
Compile Server, and the necessary number of tokens required by TCS to
complete the development of the Applications as specified in each of
the Application Development Plans.
"SCE Documentation" means a subset of documentation within the AIN
Products Group, pertaining to the Service Creation Environment.
"SCE Release" means a new release of SCE for the purpose of introducing
new features or functions to the SCE.
"SCE Tokens" means licensing authority granted by Lucent to TCS in
order to allow TCS employees to utilize the SCE for Application
development.
"SCE Update" means a change to an existing SCE Release to correct
problems found by customers in the field.
"SCN" means Lucent's Service Circuit Node in any of Lucent's then
current configurations.
"SCN Lab Time" means time allocated to TCS in an operational SCN lab
configuration in support of TCS Application development and testing
pursuant to this Agreement.
"SCP" means Lucent's Service Control Point in any of Lucent's then
current configurations.
"SMS" means Lucent's Service Management System in any of Lucent's then
current configurations.
"Software" means the computer programs and Documentation excluding
Source Code for which licenses are granted by Lucent under this
Agreement.
"Source Code" means any version of Software incorporating high-level or
assembly language that generally is not directly executable by a
processor.
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"Specifications" means Lucent's or its vendor's technical
specifications, which are normally provided to Lucent's commercial
customers.
"Territory" means the United States and the District of Columbia.
"Use" with respect to Software means loading the Software, or any
portion thereof, into a processor for execution of the instructions and
tables contained in such Software.
2. SCOPE
Lucent and TCS wish to enter into an agreement for the development of
Applications. To aid in the development, Lucent has provided TCS the use of the
SCE, SCE Documentation, SCE Updates, SCE Releases and SCN Lab Time, and a
complete set of Documentation. TCS will utilize the Hardware, Software and
Documentation provided under this Agreement to design and develop two
Applications which shall be owned by Lucent. In consideration for such
development, Lucent agrees to share equally the revenue from both Applications
with TCS.
Lucent and TCS shall mutually agree upon and identify the two Applications to
be developed pursuant to this Agreement. Lucent and TCS will specify the terms
and conditions associated with each Application agreed to in the appropriate
Application Development Plan, incorporated as addenda hereto. Such terms and
conditions include but are not limited to: (1) billing/collection; (2)
procedures for modifications to the Application Development Plan; (3)
Application delivery deadlines; (4) acceptance criteria; (5) lab time
requirements; (6) ongoing Application maintenance support; (7) joint
marketing/sales arrangements, and (8) revenue projections. Any further
Applications to be developed by TCS shall covered by a separate agreement
between the parties
3. AGREEMENT
During the term of this Agreement, TCS and Lucent will have the respective
rights and obligations set out in this Agreement.
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4. TERM
The term of this Agreement will commence, subject to execution by each party, on
the Effective Date and will end two years from the Effective date, unless
previously terminated in accordance with the provisions of this Agreement or
extended by mutual consent of the parties.
5. TCS RESPONSIBILITIES
A. TCS shall design and develop two (2) Applications using the
SCE and SCN Lab Time for the A-I-Net SCN, as well as the
associated documentation for the Applications in accordance
with the following:
(i) Pursuant to the Application Development Plans jointly
developed between TCS and Lucent, TCS personnel shall
develop the Applications on TCS' premises and will be
supported by reasonable assistance from Lucent in the
areas of Application requirements refinement and test
plan coverage.
(ii) The completed Applications shall undergo acceptance
testing by: (1) TCS utilizing the SCN Lab Time; and
(2) By Lucent at Lucent's premises, according to the
Application Development Plan. Upon acceptance of the
first Application by Lucent, which acceptance shall
not unreasonably be withheld pursuant to satisfaction
of the Application acceptance criteria, TCS shall be
recognized by Lucent as an approved A-I-Net
Application Developer. TCS shall not represent or
imply to customers or others that Lucent is
certifying or in any way warranting that the
Applications will operate properly.
(III) TCS has the right to reject the first and second
Applications identified by Lucent based on TCS'
determination that said Application will not reach
mutually agreeable revenue thresholds within nine
(9) months of commencement of the Application
development or expand its overall knowledge of the
AIN Product Group; however, agreement on the
choice of Application shall not be unreasonably
withheld. Once TCS and Lucent have agreed upon an
Application and the associated Application
Development Plan,
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changes to the development of that Application by TCS
shall not be permitted without written consent from
Lucent. Where Lucent desires to change an Application
pursuant to this agreement, such change shall require
mutual written consent and an Application Development
Plan must be constructed for the new Application.
(iv) Lucent shall provide training for up to six (6) TCS
personnel either at Lucent Training centers or
suitcased at TCS sites whichever Lucent deems
economical. For classes conducted at Lucent's sites,
Lucent offers to provide the recommended training
courses and seat allocation listed below. Lucent
waives the course fees on the allocated seats as
indicated. TCS will be responsible for the: 1) Travel
and living expenses of the trainees, 2) Differential
costs associated with class suitcasing (e.g. travel
and living for instructor etc.), 3) any additional
courses/training required beyond the listed courses
and seat allocation. The courses are non transferable
and must be completed during the term of this
Agreement. The following table identifies the
A-I-Net(R) courses required:
<TABLE>
<CAPTION>
COURSE ID COURSE NAME SEATS
--------- ----------- -----
<S> <C> <C>
ES0713 SCN/SCP/SCE INTRODUCTION 6
ES0714 SCN NODE OPERATION MAINTENANCE 6
ES0718 SCN/SCP ENGINEERING 6
ES0723 SCP - OPERATIONS AND MAINTENANCE 2
ES0731 SCE PROGRAMMING 6
</TABLE>
(v) TCS shall dedicate at all times the equivalent of at
least two (2) full time developers working on the
applications.
(vi) TCS shall deliver Source Code and related
documentation for two Applications to Lucent.
B. TCS shall complete design and development activities related
to the first Application within twelve (12) calendar months
from the mutually agreed upon Development Start Date. Any
changes to this delivery schedule shall be delineated in the
Application Development Plan. If TCS fails to develop the
first Application within twelve (12) months from the
Development Start Date Lucent
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may terminate this Agreement and TCS shall immediately return
the Software, Hardware not purchased but provided by Lucent,
and Documentation provided under this Agreement. TCS shall
forfeit all unused training offered and future revenues from
such first Application. Subject to termination of the
Agreement, Lucent and TCS may negotiate the delivery of any
work in progress on the first Application to Lucent at a
negotiated price.
C. If TCS has not completed development of the second Application
within twenty-four (24) months from the Effective Date, of
this Agreement Lucent may terminate this Agreement in which
case TCS shall immediately return the Software, Hardware not
purchased but provided by Lucent, and Documentation to Lucent
and forfeit all unused training offered and future revenues
from such second Application. Subject to termination of the
Agreement, Lucent and TCS may negotiate the delivery of any
work in progress on the second Application at a negotiated
price.
D. The terms and conditions by which Application software and
documentation versions and updates would be provided to Lucent
or a mutual customer shall be delineated in the Application
Development Plan.
E. Non-performance criteria, if any, placed upon TCS and Lucent
shall be specified as part of the Application Development
Plan. Incentives and penalties, if any, placed upon TCS and
Lucent associated with Application delivery and sales shall
also be specified as part of the Application Development Plan.
F. TCS will be responsible for warranty and ongoing maintenance
support on the Applications developed pursuant to this
Agreement with terms and conditions reflected in the
appropriate Application Development Plan. In any case that
this may not apply, the terms and conditions shall be agreed
upon and specified in the Application Development Plan.
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6. LUCENT RESPONSIBILITIES
A. Pursuant to the terms of this Agreement, Lucent shall provide
one (1) copy of the SCE to include the required number of SCE
Tokens as specified in the Application Development Plan, a
Compile Server and related SCE Documentation; (2) SCN Lab Time
which shall be identified in each Application Development
Plan; (3) all SCE Updates and new SCE Releases with
appropriate Documentation during the term of this Agreement,
and (4) Other Documentation relevant to the AIN Products
Group, including updates and releases. Lucent shall also
provide engineering and installation services for the SCE as
requested by TCS upon terms and conditions to be agreed upon
by the parties at the time of such request.
B. For each Application provided by this Agreement, Lucent will
support TCS's Application development efforts by providing a
"hotline" consultative service from its customer support
organizations in accordance with Lucent's then current
offerings at no cost to TCS. The duration of the free
consultative services will be mutually agreed upon based on
the complexity of the Application and will be specified in the
Application Development Plan. For Consultation hours in excess
of the specified duration, TCS will be charged at a mutually
agreed upon rate. The consultancy service will answer
questions concerning the SCN Platform, Service Creation
Environment, language support for SLL, SPA architecture,
design guidelines and SPA debugging support. In addition to
the consultancy services, Lucent will provide TCS with
technical reviewers on requirements definition and test plan
coverage.
C. Lucent shall upon its acceptance of the first Application, in
good faith, promote TCS as an approved A-T-Net Applications
developer, the extent of such promotion to be determined at
Lucent's sole discretion.
D. Lucent shall deliver the SCE to TCS and provide telephone
assistance during installation as needed.
E. Lucent shall bill, collect and distribute the Revenues from
the first and second Applications developed pursuant to this
Agreement in accordance with a mutually agreed upon
billing/collection and Revenue distribution plan between TCS
and Lucent. Such billing/ collection and Revenue terms and
conditions for each Application will be established for each
Application in the appropriate Application Development Plan.
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F. Lucent Revenue distributions to TCS shall be executed no later
than thirty (30) days after Lucent invoices the customer.
G. Lucent shall provide TCS with SCN Lab Time during the
development phase of the Application as specified in the
Application Development Plan. Lucent agrees to waive the fees
associated with the development and testing of each
Application pursuant to this agreement. The Lab Time will be
allocated to TCS according to the prevailing allocation
practices. After the acceptance of the Application by Lucent,
SCN Lab Time used by TCS for the support and maintenance of
the Application will be charged to TCS at a mutually agreed
upon rate.
7. USE OF TRADEMARKS
A. TCS and Lucent shall cooperate with each other in preparing
materials to promote the Applications developed hereunder,
including, but not limited to, brochures, slides, and other
presentation materials.
B. Neither party will, without the other's express written
permission, use in marketing, advertising, publicity, or
otherwise any trade name, trademark, trade device, service
mark, symbol, code, or specification or any abbreviation,
contraction, or simulation thereof ("Mark") of the other
party. Nor shall a party claim any ownership therein. The
parties shall not remove, deface, alter or otherwise obscure
any Mark of the other party or their Affiliated companies
which is on Products sold and/or licensed under this
Agreement; nor shall the parties place any Mark of any other
company on any such Products. Any such usage shall inure to
the benefit of the Mark owner.
C. Notwithstanding Subsection B immediately above, both parties
may use the name of the other party
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in its promotional materials to make factually correct
statements for the purpose of informing the purchasing public
that TCS Applications developed pursuant to this agreement are
compatible with Products. TCS understands that it may not use
the Mark "Lucent" to identify its Applications or to suggest
that the source of such Applications is Lucent. In order to
ensure that either party's promotional materials use the name
of the other party in a factually correct way and in keeping
with each party's reputation, both parties agree to submit all
such materials to each other for approval prior to use and
both parties further agree not to use the Mark of the other
party on any materials for which it does not have written
approval from the other party. If either party, in its sole
discretion, believes that the other is misusing its Mark, that
party reserves the right to withdraw all permission to use its
Mark upon written notice to the other party.
D. In consideration of the mutual benefits anticipated from a
successful relationship, each party shall bear its own
respective costs and expenses incurred in marketing the
Applications, any future Applications and related services
except as otherwise agreed in this Agreement.
B. SOFTWARE WARRANTY
A. Lucent warrants to TCS only, that Software provided by Lucent
will substantially conform to Lucent specifications referenced
in the order and Lucent further warrants that it has the right
to grant the licenses to Use Software it grants under this
Agreement.
B. Lucent makes no warranty with respect to defective conditions
or nonconformities resulting from the following: TCS
modifications, misuse, neglect, or accident; events outside
Lucent's control; use, or maintenance in a manner not in
accordance with Lucent's specifications, operating
instructions, or license-to-use; or failure of TCS to apply
previously applicable Lucent modifications and corrections. In
addition, Lucent makes no warranty with respect to defects
related to TCS' data base errors. Moreover, no warranty is
made that Software will run error free or without
interruption.
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C. THE FOREGOING SOFTWARE WARRANTIES ARE EXCLUSIVE AND ARE IN
LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES, INCLUDING
BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. TCS' SOLE AND EXCLUSIVE REMEDY SHALL
BE LUCENT'S OBLIGATION TO CORRECT OR REPLACE DEFECTIVE
SOFTWARE.
9. TITLE/RISK OF LOSS
Title to Software and Hardware shall not pass to TCS, but shall remain with
Lucent or its vendors, as the case may be. Risk of loss to the Software and
Hardware shall pass upon delivery.
10. OWNERSHIP OF FURTHER APPLICATIONS
It is the intent of the parties that further Applications developed beyond the
first two Applications under this Agreement shall be the property of the
developer (TCS or Lucent, as the case may be) unless mutually agreed otherwise
in writing. Notwithstanding any other provision in this Agreement, TCS and
Lucent retain all in and to any and all software, software development tools,
know how, methodologies, processes, technologies or algorithms used in providing
services under this Agreement or under any other agreement which are based upon
trade secrets or proprietary information of TCS or Lucent, respectively, or
otherwise owned or licensed by TCS or Lucent.
11. PATENTS, TRADEMARKS, AND COPYRIGHTS
In the event of any claim, action, proceeding or suit by a third party against
TCS alleging an infringement of any United States patent, United States
copyright, or United States trademark, or a violation in the United States of
any trade secret or proprietary rights by reason of the use, in accordance with
Lucent's specifications, of any Software furnished by Lucent to TCS under this
Agreement, Lucent, at its expense, will defend TCS, subject to the conditions
and exceptions stated below. Lucent will reimburse TCS for any cost, expense or
attorney's fee, incurred at Lucent's written request or authorization, and will
indemnify TCS against any liability assessed against TCS by final judgment on
account of such infringement or violation arising out of such use.
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If TCS' use shall be enjoined or in Lucent's opinion is likely to be enjoined,
Lucent will, at its expense and at its option, either (1) replace the enjoined
Software furnished pursuant to this Agreement with a suitable substitute free of
any infringement, (2) modify it so that it will be free of the infringement, or
(3) procure for TCS a license or other right to use it. If none of the foregoing
options is practical, Lucent will remove the enjoined Software and this
Agreement will terminate.
No undertaking of Lucent under this clause shall extend to any such alleged
infringement or violation to the extent that it: (1) arises from adherence to
design modifications, specifications, drawings, or written instructions which
Lucent is directed by TCS to follow, but only if such alleged infringement or
violation does not reside in corresponding commercial Software of Lucent's
design or selection; or (2) arises from adherence to instructions to apply TCS'
trademark, trade name, or other company identification; or (3) resided in a
Software which is not of Lucent's origin and which is furnished by TCS to Lucent
for use under this Agreement; or (4) relates to uses of Software provided by
Lucent in combinations with other Software, furnished either by Lucent or
others, which combination was not installed, recommended or otherwise approved
by Lucent. In the foregoing cases numbered (1) through (4), TCS will defend and
save Lucent harmless, subject to the same terms and conditions and exceptions
stated above with respect to the Lucent's rights and obligations under this
clause.
The liability of Lucent and TCS with respect to any and all claims, actions,
proceedings, by third parties alleging infringement of patents, trademarks, or
copyrights or violation of trade secrets or proprietary rights because of, or in
connection with, any items furnished pursuant to this Agreement shall be limited
to the specific undertakings contained in this clause.
12. SOFTWARE LICENSE
Lucent grants to TCS personal, nontransferable and nonexclusive license to use
in the Territory, Software and related Documentation (hereinafter referred to as
"Licensed Materials", with either the original Hardware or any comparable
replacement, if the original Hardware becomes inoperative, until the original
Hardware is restored to operational status.
No source code versions of Software are included in "Licensed Materials".
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The License grants TCS no right to and TCS will not sublicense such Licensed
Materials nor shall TCS modify, decompile, or disassemble Software furnished as
object code to generate corresponding Source Code.
All Licensed Materials (whether or not part of firmware) furnished by Lucent and
all copies thereof made by TCS, including translations, compilations, and
partial copies, are the property of Lucent.
Except for any part of such Licensed Materials which is or becomes generally
known to the public through acts not attributable to TCS, TCS shall hold
Licensed Materials in confidence and shall not, without Lucent's prior written
consent, disclose, provide or otherwise make available, in whole or in part, any
Licensed Materials to anyone, except to its employees having a need-to-know. TCS
shall not copy Software embodied in firmware. TCS shall not make any copies of
Licensed Materials except in conformance with this Agreement and TCS may make
one (1) copy for archival purposes. TCS shall reproduce and include any
copyright and proprietary notice of Lucent on all such necessary copies of the
Licensed Materials. TCS shall also mark all media containing such copies with a
warning that the Licensed Materials are subject to restrictions contained in an
agreement between TCS and Lucent and that such Licensed Materials are the
property of Lucent.
TCS shall maintain records of the number and location of all copies of the
Licensed Materials.
TCS shall take appropriate action by instruction, agreement or otherwise, with
the persons permitted access to the Licensed Materials so as to enable TCS to
satisfy its obligations under this Agreement.
When the Licensed Materials are no longer needed by TCS or if TCS's license is
canceled or terminated, TCS shall return all copies of such Licensed Materials
to Lucent or follow written disposition instructions provided by Lucent.
Prior to shipment, Lucent may at any time modify the specifications relating to
its Licensed Materials. Lucent may substitute modified Licensed Materials,
provided the modifications, under normal and proper use, do not adversely affect
the use, function, or performance of the Licensed Materials, and Lucent shall
advise TCS in writing thirty (30) days prior to implementation of such changes.
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Lucent shall furnish to TCS, at no additional charge, one set of Documentation
that is customarily provided to customers. Lucent shall also furnish to TCS, at
no additional charge, a hardcopy of the Lucent SCE Documentation. If
documentation from Lucent's vendors is available at a separate charge, such
documentation will be provided to TCS at cost. The first copy of such
documentation shall be provided prior to or included with provision of Software
by Lucent to TCS. Additional copies of such documentation will be provided at
cost, upon request from TCS. Documentation is for TCS internal use only and
should not be sold or transferred without Lucent's written consent.
Additional copies of the Documentation are available at Lucent's then current
cost.
If TCS fails to comply with any of the material provisions of this License and
such failure continues beyond ten (10) days after receipt of written notice
thereof by TCS, Lucent, upon written notice to TCS, may cancel any affected
license for Licensed Materials.
Unless otherwise agreed, TCS is not granted any right to modify Software
furnished by Lucent under this Agreement.
13. REMEDIES AND LIMITATION OF LIABILITY
A. THE EXCLUSIVE REMEDIES AND THE ENTIRE LIABILITY OF THE PARTIES
FOR ANY CLAIM, LOSS, DAMAGE, OR EXPENSE OF EITHER PARTY OR ANY
OTHER ENTITY ARISING OUT OF THIS AGREEMENT, OR THE USE OR
PERFORMANCE OF ANY SOFTWARE, APPLICATIONS OR SERVICES, WHETHER
IN AN ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT, TORT,
INCLUDING NEGLIGENCE, INDEMNITY, OR STRICT LIABILITY SHALL BE
AS FOLLOWS:
(1) FOR INFRINGEMENT--THE REMEDY SET FORTH IN THE
"PATENTS, TRADEMARKS, AND COPYRIGHTS" CLAUSE;
(2) FOR THE PERFORMANCE OR NON-PERFORMANCE OF HARDWARE,
SOFTWARE, APPLICATIONS AND SERVICES OR CLAIMS THAT
THEY DO NOT CONFORM TO A WARRANTY--THE REMEDY SET
FORTH IN THE APPLICABLE "WARRANTY" CLAUSE;
(3) FOR EVERYTHING OTHER THAN AS SET FORTH ABOVE--THE
AMOUNT OF THE DIRECT DAMAGES NOT TO
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EXCEED $100,000 INCLUDING AWARDED COUNSEL FEES AND
COSTS.
B. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, NEITHER PARTY AND ITS AFFILIATES AND THEIR
EMPLOYEES AND AGENTS SHALL BE LIABLE FOR ANY
INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGE OR LOST
PROFITS, REVENUES OR SAVINGS ARISING OUT OF THIS
AGREEMENT, OR THE USE OR PERFORMANCE OF ANY SOFTWARE,
APPLICATIONS OR SERVICES, WHETHER IN AN ACTION FOR OR
ARISING OUT OF BREACH OF CONTRACT, TORT, INCLUDING
NEGLIGENCE INDEMNITY, OR STRICT LIABILITY. THIS
CLAUSE SHALL SURVIVE FAILURE OF AN EXCLUSIVE OR
LIMITED REMEDY.
C. EACH PARTY SHALL GIVE THE OTHER PROMPT NOTICE OF ANY
CLAIM. ANY ACTION OR PROCEEDING MUST BE BROUGHT
WITHIN TWENTY-FOUR (24) MONTHS AFTER THE CAUSE OF
ACTION ACCRUES.
14. CONFIDENTIALITY
Each party agrees that during the term of this Agreement and for a period of
seven (7) years thereafter, each party shall prevent the disclosure and to
protect the confidentiality of both (i) written information received from the
other party which is marked or identified as confidential, and (ii) oral or
visual information identified as confidential at the time of disclosure which is
summarized in writing and provided to the other party in such written form
promptly after such oral or visual disclosure ("Confidential Information"). The
foregoing shall not prevent either party from disclosing Confidential
Information which belongs to such party or is (i) already known by the recipient
party without an obligation of confidentiality other than under this Agreement,
(ii) publicly known or becomes publicly known through no unauthorized act of the
recipient party, (iii) rightfully received from a third party, (iv)
independently developed by the recipient party without use of the other party's
Confidential Information, (v) disclosed without similar restrictions to a third
party by the party owning Confidential Information, (vi) approved by the other
party for disclosure, or (vii) required to be disclosed pursuant to a
requirement of a governmental agency or law so long as the disclosing party
provides the other party with notice of such requirement prior to any such
disclosure. Each party represents that it has the right to disclose information
that it has made and will make available to the other hereunder.
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15. USE OF INFORMATION
All information which bears a legend or notice restricting its use, copying or
dissemination, shall remain the property of the furnishing party. The furnishing
party grants to the receiving party a right to use such information only as
follows. Such information (1) shall not be reproduced or copied, in whole or
part, except for use as authorized in this Agreement; and (2) shall, together
with any full or partial copies thereof, be returned or destroyed when no longer
needed. Moreover, when Lucent is the receiving party, Lucent shall use such
information only for the purpose of performing under this Agreement, and when
TCS is the receiving party, shall use such information only (1) to order, (2) to
evaluate Lucent's Products or (3) TCS may use such information to develop
Applications created using the SCE.
16. EXPORT CONTROL
The parties acknowledge that any products, software, and technical information
(including, but not limited to services and training) provided under this
Agreement are subject to U.S. export laws and regulations and any use or
transfer of such products, software, and technical information must be
authorized under those regulations. Each party agrees that it will not use,
distribute, transfer, or transmit the products, software, or technical
information (even if incorporated into other products) in violation of U.S.
export laws and regulations. Each party assures the other party it will not
directly or indirectly "export" or "reexport" software or "technical data"
disclosed to it by the other party or the direct product of such software or
"technical data" to: (1) Albania, Armenia, Azerbaijan, Belarus, Bulgaria,
Cambodia, Cuba, Estonia, Georgia, Haiti, Iran, Iraq, Kazakhstan, Kyrgystan,
Laos, Latvia, Libya, Lithuania, Mongolia, North Korea, People's Republic of
China, Romania, Russia, Syria, Tajikistan, Turkmenistan, Ukraine, Uzbekistan,
Vietnam, Yugoslavia, or (2) any citizen or resident of any of the aforementioned
countries, in violation of U.S. export laws and regulations.
17. TERMINATION
Except as otherwise provided herein, either party may terminate this Agreement
if the other commits any material breach of its obligations hereunder and fails
within thirty
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<PAGE> 17
(30) days after receipt of written notice to cure such breach.
18. MEDIA RELEASES
All media releases, public announcements, and public disclosures by Lucent or
TCS or their respective employees or agents relating to this Agreement or its
subject matter, including without limitation promotional or marketing material
(but not including any announcement intended solely for internal distribution at
Lucent or TCS, as the case may be, or any disclosure required by legal,
accounting, or regulatory requirements beyond the reasonable control of Lucent
or TCS, as the case may be) shall be coordinated with and approved by Lucent and
TCS prior to the release thereof.
19. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws,
other than choice of law rules, of the State of New York.
20. FORCE MAJEURE
Each party shall be excused from performance hereunder to the extent that it is
prevented from performing pursuant hereto, in whole or in part, as a result of
delays caused by the other or an act of God, war, civil disturbance, court
order, labor dispute, or other cause beyond its reasonable control. Such
nonperformance shall not be a default hereunder or ground for termination hereof
unless such force majeure condition exists for ninety (90) days. At such time
the party to which the force majeure condition does not apply may, at its sole
discretion, terminate this Agreement in whole or in part.
21. EMPLOYEES
Unless otherwise agreed to in writing, the parties hereto agree that during the
term of this Agreement and for a period of one (1) year after the expiration or
termination of this Agreement, neither party shall knowingly employ nor
specifically solicit for employment any person or persons employed by the other,
working under the Agreement of any contract and/or subcontract that may be
awarded as a result of this Agreement. Any employment resulting from responses
to job placement solicitations in widely distributed publications or other
widely distributed communication medium shall not be prohibited.
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<PAGE> 18
22. NO THIRD PARTY BENEFICIARY
Nothing in this Agreement may be relied upon or shall benefit any party other
than the parties hereto.
23. RELATIONSHIP OF PARTIES
Each of the parties will act as, and will be, independent in all aspects of
their performance of this Agreement. Neither party will act or have authority to
act as agent for the other party for any purpose whatsoever. Nothing will
constitute either party as agent for the other or grant either party the
authority to make representations or agreements on behalf of the other, and both
parties covenant not to make any representations or to take any actions
inconsistent with the foregoing. Nothing in this Agreement will be deemed to
constitute or create a joint venture, partnership, pooling arrangement,
contractor arrangement or other formal business entity or fiduciary relationship
between TCS and Lucent, and nothing in this Agreement shall be construed as
providing for the sharing of profits or losses arising out of the efforts of
either of Lucent or TCS under this Agreement. The parties understand and agree
that each of them individually may engage in, and may perform services for third
parties.
24. APPROVALS AND SIMILAR ACTIONS
Where agreement, approval, acceptance, consent or similar action by either party
hereto is required by any provision of this Agreement, such action shall not be
unreasonably delayed or withheld.
25. DISPUTES RESOLUTION
If a dispute arises out of or relates to this Agreement or its breach and the
dispute cannot be settled through negotiation, the parties agree to submit the
dispute to a sole mediator selected by the parties or, at any time at the option
of a party, to mediation by the American Arbitration Association ("AAA"). If
not thus resolved, it shall be referred to a sole arbitrator selected by the
parties within thirty (30) days of the mediation or, in the absence of such
selection, to AAA arbitration which shall be governed by the United States
Arbitration Act. The award shall be made within six (6) months of selection of
the arbitrator and may be entered in any court having jurisdiction. The
mediation and arbitration shall be held in New York City. The arbitrator shall
determine issues of arbitrability but may not limit expand or otherwise modify
the terms of the
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<PAGE> 19
Agreement nor have authority to award punitive or other damages in excess of
compensatory damages and each party irrevocably waives any claim thereto. Each
party shall bear its own expenses but those related to the compensation of the
mediator and arbitrator shall be borne equally. The parties, their
representatives, other participants and the mediator and arbitrator shall hold
the existence, content and result of mediation and arbitration in confidence.
26. NOTICES
Wherever under this Agreement one party is required or permitted to give written
notice to the other, such notice shall be deemed given the third day after its
mailing by one party, postage prepaid to the other party addressed as follows:
In the case of TCS:
President
TeleCommunication Systems, Inc.
275 West Street, Suite 400
Annapolis, MD 21401
Attention: Maurice Tose
with a copy to:
Senior Vice President and
General Counsel
TeleCommunication Systems, Inc.
275 West Street, Suite 400
Annapolis, MD 21401
Attention: Byron Marchant
In case of Lucent:
Lucent Technologies Inc.
2000 N. Naperville Road.
Naperville, IL 60566-7033
Attention: Edwin Crabill
Strategic Planning Manager
with a copy to:
Lucent Technologies Inc.
2000 N. Naperville Road
Naperville, IL 60566-7033
Attention: Dave Barclay
Core Offer Manager
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<PAGE> 20
Any writing which may be mailed pursuant to the foregoing may also be delivered
by hand or transmitted by telegraph, telex, or telecopier and shall be effective
when received by the addressee. Either party may from time to time specify as
its address for purposes of this Agreement any other address upon giving ten
days written notice thereof to the other party.
27. SEVERABILITY
If any term or provision (other than a term or provision relating to any payment
obligation) of this Agreement thereof to any person or circumstances shall to
any extent, be held invalid or unenforceable, the remainder of this Agreement or
the application of such term or provision to persons or circumstances other than
those as to which it is invalid or unenforceable shall not be affected thereby,
and each term and provision of this Agreement shall be valid and enforceable to
the extent permitted by law.
28. WAIVER
No delay or omission by either party hereto to exercise any right or power
hereunder shall impair such right or power or be construed to be a waiver
thereof. A waiver by either of the parties hereto of any of the covenants to be
performed by the other or any breach thereof shall not be construed to be a
waiver of any succeeding breach thereof or of any other covenant herein
contained. All remedies provided for in this Agreement shall be cumulative and
in addition to and not in lieu of any other remedies available to either party
at law, in equity or otherwise.
29. ASSIGNMENT
This Agreement shall not be assignable and delegable by either party without the
other party's written consent; provided, however, that Lucent may assign this
Agreement without TCS'S consent to any Affiliate.
30. SURVIVAL
The obligations of the parties under this Agreement which by their nature would
continue beyond the expiration, termination or cancellation of this Agreement,
including without limitation, the obligations in the Articles entitled
TRADEMARKS, CONFIDENTIALITY, USE OF INFORMATION, SOFTWARE LICENSE, REMEDIES AND
LIMITATION OF LIABILITY, and EXPORT CONTROL, shall survive any expiration,
assignment, termination or cancellation of this Agreement.
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<PAGE> 21
31. ENTIRE AGREEMENT
This Agreement, including any attachments referred to herein and attached
hereto, each of which is incorporated in this Agreement for all purposes,
constitutes the entire agreement between the parties with respect to the subject
matter of this Agreement and there are no representations, understanding or
agreements relating to this Agreement which are not fully expressed herein. No
change, waiver, or discharge hereof shall be valid unless in writing and signed
by an authorized representative of the party against which such change, waiver,
or discharge is sought to be enforced.
IN WITNESS WHEREOF, TCS and Lucent have caused this Agreement to be signed and
delivered by its duly authorized officer, all as of the date first set forth
above.
Telecommunication Systems, Inc. Lucent Technologies Inc.
By: Byron F. Marchant By: J.J. Ospital
----------------------------- --------------------------------
Title: Sr. V.P. & General Counsel Title: Director, Business Management
-------------------------- -----------------------------
Date: 4/5/96 Date: 4/4/96
--------------------------- -------------------------------
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and Exchange Commission. Four asterisks are used to denote omissions.
<PAGE> 22
Confidential materials submitted and filed separately with the Securities and
Exchange Commission. Four asterisks are used to denote omissions.
A-1-NET(R) SCN APPLICATION DEVELOPMENT AGREEMENT
MODIFICATION 01
THIS MODIFICATION 01 ("MODIFICATION"), dated as of September 11, 1997.
("EFFECTIVE DATE") is between Lucent Technologies, Inc. ("LUCENT") with offices
at 2000 N. Naperville Road, Naperville, Illinois 60566-7033 and
TeleCommunication Systems, Inc. ("TCS") a Maryland corporation, with offices at
275 West Street, Suite 400, Annapolis, MD 21401.
WHEREAS, Lucent and TCS entered into an "A-1-Net(R) SCN Application
Development Agreement" (the "AGREEMENT") effective April 4, 1996 to provide for
the development of two software Applications for advanced telecommunication
services, generally known as Advanced Intelligent Network Services ("AIN"); and
WHEREAS, the Agreement is hereby incorporated by reference herein; and
WHEREAS, both Lucent and TCS wish to provide for the survival of the
Agreement and thereby to avoid the untimely expiration of the Agreement; and
WHEREAS, both Lucent and TCS wish to modify certain provisions of the
Agreement to address the interests of the parties in the Applications and to
provide a clearer understanding of the continuing obligations of the parties
under the Agreement.
NOW, THEREFORE, Lucent and TCS hereby agree to modify the Agreement as
follows:
1. DEFINITIONS
Any capitalized terms used in this Modification shall have the meaning ascribed
to them in the Agreement.
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<PAGE> 23
2. MODIFICATIONS
A. Article 1. DEFINITIONS: Change the definition of "Revenues" to read:
"Revenues" are the proceeds from the sale of the software only
component of Applications 1 and 2 developed under this Agreement either
by Lucent, TCS or jointly. It does not include the proceeds from the
sale of maintenance agreements on the Applications or any hardware and
other software that may be associated with the total sale. Revenues
also does not include proceeds from any future enhancements to the
Applications developed by TCS for a third party if Lucent is not
directly or indirectly involved in the transaction; this applies even
if Lucent was responsible for the sale of the Application or the Lucent
Platform to the third party.
Change the definition of SCN to read:
"SCN" means Lucent's Service Circuit Node in any of Lucent's then
current configurations. In this Agreement, SCN shall also include
Lucent's Service Control Point ("SCP") in any of Lucent's then current
configurations.
Change the definition of SCN Lab Time to read:
"SCN Lab Time" means time allocated to TCS in an operational SCN or SCP
lab configuration in support of TCS Application development and testing
pursuant to this Agreement.
Change the definition of "Affiliate" to read:
"Affiliate" of a corporation means its subsidiaries, any company of
which it is a subsidiary, and other subsidiaries of such company
controlled by such party. For the purposes of this Agreement
"controlled" means having directly or indirectly greater voting rights
over such entity than any other person or entity, or control of
sufficient voting rights of such entity as to be able to exercise
control over policy and management decisions of such entity.
Add the definition of Platforms:
"Platforms" means the Lucent developed and manufactured hardware and
software systems that comprise the AIN architecture upon which the TCS
Applications will operate.
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<PAGE> 24
Add the definition of Lucent:
"Lucent" means Lucent Technologies Inc. and any Affiliates of Lucent
Technologies Inc.
Add the definition of TCS:
"TCS" means Telecommunication Systems, Inc. and any Affiliates of
TeleCommunication Systems, Inc.
B. Article 2. SCOPE, Paragraph 1: Change to read:
Lucent and TCS wish to enter into an agreement for the development of
Applications. To aid in the development, Lucent has provided TCS the
use of the SCE, SCE Documentation, SCE Updates, SCE Releases and SCN
Lab Time, and a complete set of Documentation. TCS will utilize the
Hardware, software and Documentation provided under this Agreement to
design and develop Applications. The first two Applications developed
under this Agreement shall be owned jointly by Lucent and TCS. In
consideration for such development, Lucent agrees to share equally the
revenue from both Applications with TCS. Lucent and TCS further agree
to charge a mutually agreeable price for the Applications developed
under this Agreement.
C. Article 4: Change to read:
The term of this Agreement will commence, subject to execution by each
party, on the Effective Date. This Agreement will remain in force until
terminated by mutual written agreement of the parties unless
previously terminated in accordance with the provisions of this
Agreement. Notwithstanding any other provision in this or subsequent
modifications or riders to this Agreement, terminating events or
occurrences will be construed to terminate this Agreement only as to
the Application or product that is the object of the terminating
event and this Agreement will remain in force as to any other
existing or contemplated Application or product.
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<PAGE> 25
D. Article 10, OWNERSHIP OF FURTHER APPLICATIONS: Delete this clause in
its entirety, and replace with the following:
10. OWNERSHIP OF APPLICATIONS
A. First Two Applications
(1) The copyright interests in the first two
(2) Applications produced by TCS under
this Agreement shall be owned jointly by
TCS and Lucent. Subject to any limitations
associated with other Intellectual Property
Rights of either party or third parties,
each party shall have the right to exploit
any relevant copyright interest and grant
licenses thereto, subject to the Revenue
sharing provisions of Article 2, paragraph
1 requiring that the Revenue from both
Applications be shared equally between TCS
and Lucent.
(2) Any inventions or discoveries created or
provided by Lucent for the first two
Applications shall be owned by Lucent.
(3) Any inventions or discoveries created or
provided by TCS for the first two
Applications shall be owned by TCS.
(4) Each party agrees to take such further
action and execute, or cause its employees,
agents, and contractors to execute, such
other instruments as may be necessary to
give effect to the ownership provisions of
this Agreement.
B. Further Applications
It is the intent of the parties that further
Applications developed beyond the first two
Applications under this Agreement shall be the
property of the developer (TCS or Lucent, as the
case may be) unless mutually agreed otherwise in
writing.
C. All Applications Under this Agreement
Notwithstanding any other provision in this
Agreement, unless specifically agreed otherwise, TCS
and Lucent retain all right, title, and interest in
and to any and all software, software development
tools, know how, methodologies, processes,
technologies or alogrithms used in providing
services under this Agreement which are based
upon trade secrets or proprietary information of
TCS or Lucent respectively, or otherwise owned or
licensed by TCS or Lucent.
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<PAGE> 26
E. Article 12. SOFTWARE LICENSE: delete paragraph 8 and
replace with the following:
TCS retains a perpetual right to use, but
not sell or license, all copies of the Licensed
Materials and upgrades, modifications, or revisions
thereto received by TCS from Lucent. When no
further development work or modifications are
contemplated as to any Applications developed by TCS
under this Agreement or if TCS's license to use the
Licensed Materials is canceled or terminated, TCS
shall no longer be entitled to receive without
charge upgrades, modifications, or revisions to the
Licensed Materials. TCS may, however, purchase such
updates, revisions, or modifications at a mutually
agreeable price.
F. Article 17. TERMINATION: Add:
By mutual written agreement, the parties may
terminate the Revenue sharing obligations imposed by
Article 2 of the Agreement upon the rendering of a
negotiated lump-sum payment from Lucent to TCS in
consideration thereof.
G. Article 30. SURVIVAL: Change to read:
(1) The obligations of the parties under this
Agreement which by their nature would continue beyond
the expiration, termination or cancellation of this
Agreement, including without limitation, the
obligations in Articles entitled TRADEMARKS,
CONFIDENTIALITY, USE OF INFORMATION, SOFTWARE
LICENSE, REMEDIES AND LIMITATION OF LIABILITY,
OWNERSHIP OF APPLICATIONS, and EXPORT CONTROL, and
the Article 2 Revenue-sharing obligations from the
Applications, shall survive any expiration,
assignment, termination or cancellation of this
Agreement.
(2) TCS's right to use the software development tools
or any other Licensed Materials provided to TCS by
Lucent under this Agreement
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<PAGE> 27
shall survive any expiration, assignment, termination, or cancellation
of this Agreement.
IN WITNESS WHEREOF, TCS and Lucent have caused this Modification to be
signed and delivered by its duly authorized officer, as of the date first set
forth above.
TELECOMMUNICATIONS SYSTEMS, INC. LUCENT TECHNOLOGIES INC.
By: /s/ Maurice B. Tose By: Jennifer Smith Byrns
---------------------------- -------------------------------
Maurice B. Tose Title: Advanced Network Services &
Title: President Operations Product
Management Director
-------------------------- -----------------------------
Date: 28 Aug 97 Date: 9/11/97
-------------------------- -----------------------------
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<PAGE> 28
Confidential materials submitted and filed separately with the Securities and
Exchange Commission. Four asterisks are used to denote omissions.
AMENDMENT #02 TO TCS/LUCENT AGREEMENT
This Amendment #02 dated 6/28/99 is to the A-1-Net SCN Application Development
Agreement dated April 4, 1996 between Lucent Technologies Inc. ("Lucent"), and
TeleCommunication Systems, Inc. ("TCS").
The Parties identified above hereby agree to the above change:
Article 6F is changed to read as follows:
"Lucent revenue distributions to TCS shall be executed within thirty (30) days
of either TCS Application installation acceptance as confirmed by
Lucent/customer signoff or Lucent invoice to the customer, whichever occurs
sooner".
All other terms and conditions remain unchanged.
APPROVED AND AGREED TO:
TELECOMMUNICATION SYSTEMS INC. LUCENT TECHNOLOGIES INC.
By: /s/ Thomas M. Brandt, Jr. By: /s/ Doreen H. Anding
------------------------------ ------------------------------
Name: Thomas M. Brandt, Jr. Name: Doreen H. Anding
---------------------------- ----------------------------
(Name and title printed or typed) (Name and title printed or typed)
Title: Sr. Vice President & CFO Title: Director, Product Mgmt.
--------------------------- ---------------------------
Date: 6/22/99 Date: 6/28/99
---------------------------- ----------------------------
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and Exchange Commission. Four asterisks are used to denote omissions.
<PAGE> 29
Confidential materials submitted and filed separately with the Securities and
Exchange Commission. Four asterisks are used to denote omissions.
AMENDMENT #03 TO TCS/LUCENT AGREEMENT
This Amendment #03 dated 10 April, 2000 is to the A-1-Net SCN Application
Development Agreement dated April 4, 1996 between Lucent Technologies, Inc.
("Lucent") and TeleCommunication Systems, Inc. ("TCS").
The parties identified above hereby agree to the following change.
Article 5F is changed to read as follows:
"For Applications developed pursuant to this agreement, TCS shall be responsible
for warranty and ongoing maintenance support in accordance with the terms and
conditions set forth on Attachment A."
APPROVED AND AGREED TO:
TeleCommunication Systems, Inc. Lucent Technologies, Inc.
By: /s/ Richard Young By: /s/ Peter M. Geimer
----------------------------- -----------------------------
Name: Mr. Richard Young Name: Peter M. Geimer
Title: Chief Operating Officer Title: Director, INV Alliances
Date: April 10, 2000 Date: April 11, 2000
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<PAGE> 30
Attachment A
MAINTENANCE PROGRAM
TCS will provide a 90-day warrant period on all service applications. Lucent
will provide its end-users Level 1 support (i.e., response to customer calls,
managing the trouble tickets, and referring the trouble report to the tier 2
support), and TCS will train the Lucent Level 1 support personnel as
appropriate. TCS will provide Level 2 and 3 support (isolating and fixing the
customer problems). Level 2 and 3 support will comply with Lucent's CTS
requirements as demonstrated by standard procedures used in SMS 33 and Prepaid
12 deployments. Regardless of which party bills the service provider customer
for on-going maintenance, the parties will split the collected revenues as
follows: Lucent will receive 1/6th of the collected maintenance fees; TCS the
other 5/6ths. In support of TCS's warranty and maintenance obligations described
above, TCS will provide the following annual standard technical maintenance and
support as follows:
1. GENERAL REQUIREMENTS. TCS will provide a toll-free telephone Hotline
support number available 24 x 7, a toll-free facsimile number and an
Internet address. TCS warrants that such toll free number, toll free
facsimile number and Internet address shall be maintained by qualified
support specialists who shall answer questions from and provide support to
Lucent regarding the Software.
2. RESPONSE AND RESOLUTION SCHEDULE.
a) Lucent will classify each error or defect in the Software or related
Documentation and will report such error or defect to TCS for
correction based on the following criteria:
<TABLE>
<CAPTION>
ERROR CLASSIFICATION CRITERIA
-------------------- --------
<S> <C>
Level 1 Fatal: Errors preventing all useful work from being done as reasonably
determined by Lucent.
Level 2 Severe Impact: Errors which disable major functions from being performed as
reasonably determined by Lucent.
Level 3 Degraded Operations: Errors disabling only certain nonessential functions
as reasonably determined by Lucent.
Level 4 Minimal Impact: Includes all other as reasonably determined by Lucent.
</TABLE>
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<PAGE> 31
Confidential materials submitted and filed separately with the Securities and
Exchange Commission. Four asterisks are used to denote omissions.
A-I-NET SCN APPLICATION DEVELOPMENT AGREEMENT
AMENDMENT FOUR
APRIL 21, 2000
This Amendment ("Amendment"), dated as of April 21, 2000 is between Lucent
Technologies Inc. ("Lucent") with offices at 2000 N. Naperville Road,
Naperville, IL 60566 and TeleCommunication Systems, Inc. ("TCS") a Maryland
corporation, with offices at 275 West Street, Suite 400, Annapolis, MD 21401.
WHEREAS, Lucent and TCS entered into an A-I-Net SCN Applications Development
Agreement ("Agreement"), effective April 4, 1996 to provide for the development
of two software Applications for Advanced Intelligent Network Services ("AIN");
and
WHEREAS, the Agreement has been modified three times, respectively September 11,
1997, June 28, 1999, and April 11, 2000; and
WHEREAS, both Lucent and TCS desire to amend certain provisions of the Agreement
to provide a clearer understanding of the continuing obligations of the parties
under the Agreement with respect to each party's separate prepaid applications;
NOW, THEREFORE, Lucent and TCS hereby agree to modify the Agreement further by
adding the following:
1. DEFINITIONS
(a) "TCS Prepaid Application" shall be defined as all object code, source code,
design documentation, user documentation, test drivers, test plans, installation
documentation, sales presentations, price tools and proposal boilerplate related
to PPW1.5 hairpinning and PPW3.1 triggers that has been developed by TCS under
the Agreement.
(b) "Lucent Converged Prepaid Application" shall be defined as all object code,
source code, design documentation, user documentation, test drivers, test plans,
installation documentation, sales presentations, price tools and proposal
boilerplate related to the prepaid application that has been developed
independently by Lucent.
(c) "Prepaid Applications" shall mean the Lucent Prepaid Application and the TCS
Prepaid Application collectively.
(d) "Lucent INU Advantage Platform" shall be defined as Lucent's then-current
SLL middleware-based Advantage platform and its SLL successors.
(e) "Prepaid Revenue" shall be defined as proceeds from the licensing of the
Prepaid Applications, provided that the Prepaid Applications (i) runs on a
Lucent INU Advantage (or its SLL successors) Platform and (ii) falls within the
indicated subscriber configuration as described in the attached Exhibit A
"ANSI-41Market Definition." This definition of Prepaid Revenue specifically
excludes:
- Proceeds from the sale of maintenance on the Prepaid Applications
(allocation of maintenance revenues on the Prepaid Applications is
addressed in Section 5(a) below)
- Proceeds from any sale of any hardware associated with the license
of the Prepaid Applications
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<PAGE> 32
- Proceeds from the license or sale of any other software associated
with the license of the Prepaid Applications. For the avoidance of
doubt, bundling of other software into the Prepaid Applications
will not prevent the Prepaid Application revenue from counting
toward Prepaid Revenue.
Proceeds shall accrue on the date that Lucent recognizes the proceeds as revenue
pursuant to GAAP and payments thereof shall be made to TCS within 30 days of the
date on which such proceeds accrue. Revenue from new subscriber sales to
customers will be split according to the percentages in effect when the sale
occurs regardless of the version number of the Prepaid Application and shall be
paid to TCS within 30 days of the date Lucent recognizes the accrual of the
proceeds from such upgrades. However, revenue from software upgrades and
enhancements separate from new subscriber license fees will not contribute to
Prepaid Revenue.
2. REVENUE SHARING FOR PREPAID APPLICATIONS.
(a) REVENUE SHARING. Lucent will share revenue from the Prepaid Applications (as
defined above) as follows:
Period 1= April 1, 2000 ("Effective Date")
through March 31, 2001= 50% of Prepaid Revenue during the period
Period 2= April 1, 2001 through March 31, 2002= 25% of Prepaid Revenue during
the period
Period 3= April 1, 2002 through March 31, 2003= 20% of Prepaid Revenue during
the period
Period 4= April 1, 2003 through March 31, 2004= 20% of Prepaid Revenue during
the period
After March 31, 2004, TCS shall no longer be entitled to any share of Revenues
from the license by Lucent of the Prepaid Application.
(b) PER-DEAL PREPAID APPLICATION REVENUE FLOOR.
Lucent may offer the license to the Prepaid Application to customers at any
price in its discretion, provided that Prepaid Revenue for a given transaction
will be calculated as follows:
The ****
(For example- If the discounted percentage of the floor price of the total
Lucent Intelligent Networking/Messaging Systems ("Lucent INMS") portion of the
transaction of which the Prepaid Application license is part is **** of the
floor price, the **** number will be multiplied by the Floor Price applicable
to the appropriate subscriber level. That number will be compared to the actual
Prepaid Revenue received by Lucent for the Prepaid Application and the greater
number will be considered the Prepaid Revenue for that transaction.)
The Floor Prices shall be set forth in Exhibit B.
However, nothing herein shall be construed as a guarantee or representation by
Lucent that any minimum level of Prepaid Revenue will occur.
Lucent will provide a quarterly report of Prepaid Revenue calculations signed
by a director-level manager or higher on a quarterly basis. No more than once
per year TCS may, at its option and at its expense, request an audit performed
by an mutually agreed auditor to verify Lucent's adherence to the terms of this
Amendment. If Lucent fails to make a commercially reasonable effort to track
Prepaid Revenue calculations, Lucent will pay all reasonable costs of the
audit. Provided however even where Lucent has made such commercially reasonable
efforts,if the auditor finds more than 15% error in Lucent's adherence
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<PAGE> 33
to the terms of this Amendment, then Lucent agrees to pay all reasonable costs
of the audit up to a capped amount of $10,000 per audit, and TCS may increase
its frequency of audits to no more than two times per year. In all other cases
TCS will bear the costs of the audit. Additionally, in the event that the
auditor discovers error in Lucent's compliance with the terms of this
Amendment, Lucent agrees to pay the balance due to TCS within 30 days. The
auditor must agree to sign a non-disclosure agreement with Lucent and the audit
report will be limited to a written verification of compliance without
revealing specific financial data, unless non-compliance is discovered. In the
event of non-compliance, the auditor will be allowed to reveal summary
financial data in sufficient detail to support the shortfall and calculation of
amounts due to TCS. The summary financial data will be masked so as to disguise
the identity of individual customers. There will be no late fees imposed the
first time any shortfall amount is identified by an audit. Thereafter, in
addition to paying the amount of any shortfall identified by an audit Lucent
will pay late fees in the amount of 1% per month on the unpaid shortfall from
the date such payments were due until paid in full.
3. SATISFACTION OF TCS APPLICATION DEVELOPMENT OBLIGATION
Upon execution of this Amendment, TCS shall be deemed to have satisfied its
obligations to design and develop two Applications under section 5 of the
Agreement.
4. OWNERSHIP OF THE TCS PREPAID APPLICATION
(a) OWNERSHIP OF THE TCS PREPAID APPLICATION. All right, title and interest in
and to the TCS Prepaid Application, and all right, title and interest in and to
all patents, copyrights, mask work rights, trade secrets, trademarks and other
intellectual property contained in or derived from the TCS Prepaid Application
are hereby agreed by TCS to be, upon TCS's creation thereof, jointly owned by
Lucent and TCS, without any right of accounting, other than as set forth in
Section 5(e) of the Amendment. TCS shall obligate its employees, to provide, and
shall supply to Lucent at no additional charge, all such assignments, rights and
covenants as reasonably requested by Lucent to assure and perfect such transfer,
assignment or other vesting of such joint ownership rights. Except as set forth
in Section 5(c), each party shall have the unrestricted right to develop and
distribute derivative works.
TCS agrees, and shall obligate TCS's employees to agree, that any Lucent
Confidential Information contained within such TCS Prepaid Application shall be
kept in confidence by TCS and TCS's employees, shall be used only in the
performance of this Agreement, and may not be used for other purposes except
upon such terms as may be agreed upon between the parties in writing. Lucent
shall not acquire under this Agreement any title to any software or other
information that was not developed by or on behalf of TCS for Lucent under or in
anticipation of this Agreement (collectively referred to as the "Background
Information"). The term "Background Information" includes the pre-existing
software and other intellectual property used by TCS to create the TCS Prepaid
Application. TCS grants and agrees to grant to Lucent, an irrevocable,
unrestricted, non- exclusive, royalty free, perpetual license to use, have used,
reproduce, sublicense, sell, distribute and modify, in whole or in part, such
Background Information. Each party shall have all right, title and interest in
their respective modifications.
(b) SPECIAL PROVISIONS FOR PATENT RIGHTS. The following provisions of this
Section shall apply to patents rights for Joint Inventions that arise out of the
TCS Prepaid Application.
(i) Lucent shall have the first right to file a patent application in
the United States on such Joint Invention and it shall notify TCS
within 30 days of any TCS request whether it elects to file such
application, and shall supply a draft of the patent application
for review by TCS within 60 days of notifying TCS of such election
or forfeit its first right to file.
(ii) TCS shall have the right to file a patent application in the
United States on such Joint Invention in any case in which Lucent
does not elect to file pursuant to Section (i) hereof.
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<PAGE> 34
(iii) The party which elects to file a patent application on such Joint
Invention in the United States shall have the first right of
election to file a corresponding patent application in each
foreign country or, where applicable, community of countries. Such
party shall notify the other party of those foreign countries, if
any, in which it elects to file such patent applications. The
other party shall have the right to file patent applications on
such Joint Inventions in all other foreign countries.
(iv) The expenses for preparing, filing and prosecuting each
application, and for issue of the respective patents, shall be
borne by the party which prepares and files the application. The
other party shall have the right to review and comment on each
such application prior to its filing, and shall furnish the filing
party with all documents, information, or other assistance that
may be necessary for the preparation, filing and prosecution of
each such application. The filing party shall keep the other party
current on the status of the application.
(v) In the case of an application for patent which is filed in a
country which requires the payment of taxes or annuities on a
pending application or on an issued patent, the party which files
the application may pay such taxes or annuities on the pending
application or the issued patent, and in the event such party does
not wish to pay any particular tax or annuity, such party shall so
notify the non-filing party, in writing, at least two (2) months
before the due date for payment of such tax or annuity. The
failure of the filing party to pay any such tax or annuity shall
not affect such party's rights in such application or patent under
this Agreement.
(vi) The parties shall each have an equal title interest in each
application and patent for such Joint Inventions, with TCS holding
an undivided one-half (1/2) interest and Lucent holding an
undivided one-half (1/2) interest. Each shall have the right to
grant nonexclusive licenses under patents covering such Joint
Inventions, without accounting therefor to the other party.
5. ADDITIONAL TERMS
(a) MIGRATION FROM EXISTING TCS PREPAID APPLICATION. TCS will develop a
migration plan for the existing TCS Prepaid Application customers to migrate
their current prepaid applications to the Lucent Converged Prepaid Application
version 1.x. Until all such TCS Prepaid Application customers are successfully
migrated to the Lucent Converged Prepaid Application, and so long as TCS is
receiving the same percentage of maintenance revenue from the TCS Prepaid
Application as TCS receives under arrangements existing as of the Effective Date
of this Amendment, TCS will provide maintenance support and installation for
existing TCS Prepaid Application customers, including sales assistance and
technical support as necessary. TCS will also make available, as needed, no less
than the equivalent of three full technical engineers skilled in the technical
operation of the TCS Prepaid Application to assist in migration efforts for the
lesser of one year or until the migration effort is completed to Lucent's
reasonable satisfaction.
(b) OTHER MIGRATION DUTIES. TCS will develop and deliver scripts to migrate
Prepaid 1.5 and Prepaid 3.1 triggers application data to the Lucent Converged
Prepaid Application version 1.x. TCS will provide Lucent with the source code
and unrestricted license to use the source code for any code developed as an
augmentation or enhancement to the Lucent Converged Prepaid Platform during the
migration period.
(c) TCS PREPAID APPLICATION COMPETITION CLAUSE.
In consideration for the Revenue Sharing set forth above, TCS agrees (i) to
refrain for a period of one year from the Effective Date of this Amendment from
marketing any application that competes with the Prepaid Applications to those
customers set forth on Exhibit C hereto and (ii) to refrain for a period of four
years
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<PAGE> 35
from the Effective Date of this Amendment from marketing any application that
competes with the Prepaid Applications through any Lucent channel, business
unit, or sales organization.
(d) INDEMNIFICATION. (a) TCS shall indemnify and defend Lucent against any claim
that the TCS Prepaid Application infringes any valid United States (i) patent,
(ii) copyright, or (iii) trade secret, provided that TCS is given prompt written
notice of the claim and is given information, reasonable assistance, and sole
authority to defend or settle the claim. In the defense or settlement of a
claim, TCS shall, in its reasonable judgment, and at its option and expense: (i)
obtain for Lucent the right to continue using the TCS Prepaid Application, (ii)
replace or modify the TCS Prepaid Application so that it becomes noninfringing,
or (iii) if, in TCS's opinion, obtaining the remedies in (i) or (ii) is not
commercially reasonable, as TCS's sole obligation, refund the amount paid to TCS
for the infringing TCS Prepaid Application. (b) TCS shall not have any liability
to Lucent under subsection (a) above to the extent that any infringement or
claim thereof is based upon (i) use of the TCS Prepaid Application in
combination with equipment or software not supplied by TCS where the TCS Prepaid
Application would not themselves be infringing, (ii) use of the TCS Prepaid
Application with an application which was not specified in the applicable
software product description, (iii) modifications of the TCS Prepaid Application
not made by TCS, or (iv) TCS's compliance with Lucent's designs, specifications,
or instructions. (c) The foregoing states TCS's entire liability, and Lucent's
sole and exclusive remedy, with respect to any claim of infringement of any
patent, copyright, trade secret or other intellectual property or proprietary
right which a third party may have against Lucent.
(e) Notwithstanding anything else to the contrary in this Amendment, if TCS
sells the TCS Prepaid Application or any other work primarily based upon the TCS
Prepaid Application (e.g. ported, translated or mapped code or logic flow as
well as upgrades or enhancements to the TCS Prepaid Application ), then the
parties will split all revenues therefrom in accordance with the percentages
provided for in the Agreement.
(f) ENTIRE AGREEMENT AND ORDER OF PRECEDENCE. This Amendment constitutes the
entire agreement between the parties with respect to its subject matter and to
the extent of any conflict between this Amendment and the Agreement or any of
its modifications, attachments, exhibits, or prior amendments, this Amendment
shall take precedence with respect to its subject matter.
<TABLE>
<S> <C>
LUCENT TECHNOLOGIES INC. TELECOMMUNICATION SYSTEMS, INC.
By: /s/ PETER M. GEIMER By: /s/ RICHARD A. YOUNG
------------------------------------- -------------------------------------
Print Name: Peter M. Geimer Print Name: Richard A. Young
------------------------------ ------------------------------
Title: Director, INMS Bus. Mgmt Title: Chief Operating Officer
----------------------------------- -----------------------------------
</TABLE>
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<PAGE> 36
EXHIBIT A
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AND EXCHANGE COMMISSION. FOUR ASTERISKS ARE USED TO DENOTE OMISSIONS.
<PAGE> 37
[TCS LOGO] ANSI-41 MARKET DEFINITION [LUCENT TECHNOLOGIES LOGO]
--------------------------------------------------------------------------------
SUBS APPLICABLE TO TCS ANSI-41 LICENSE FEE... (TCS SUBS) AMENDMENT 4
EXHIBIT A
NETWORK A NETWORK B
[GRPAHIC] [GRAPHIC]
(IS 41 WIRELESS SUBS) (IS 41 WIRELESS SUBS ONLY, NOT GSM)
SS7 SIGNALING (E.G. TRIGGERS, ISUP, ETC.)
VOICE FACILITIES (PRI, BRI, ETC.) AND
ASSOCIATED SIGNALING (TYPE 2A, ISUP, ETC.)
NOTES
1. SCP/CSN - LUCENT INU ADVANTAGE OR SLL ENABLED SUCCESSOR
2. MSC - WIRELESS SWITCH
3. SSP - WIRELINE SWITCH
tcs and lucent company confidential Page 1 of 3
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<PAGE> 38
[TCS LOGO] ANSI-41 MARKET DEFINITION [LUCENT TECHNOLOGIES LOGO]
--------------------------------------------------------------------------------
SUBS APPLICABLE TO TCS ANSI-41 LICENSE FEE... (TCS SUBS) AMENDMENT 4
EXHIBIT A
NETWORK C
[GRAPHIC]
(IS 41 WIRELESS SUBS ONLY, NOT WIRELINE)
SS7 SIGNALING (E.G. TRIGGERS, ISUP, ETC.)
VOICE FACILITIES (PRI, BRI, ETC.) AND
ASSOCIATED SIGNALING (TYPE 2A, ISUP, ETC.)
NOTES
1. SCP/CSN - LUCENT INU ADVANTAGE OR SLL ENABLED SUCCESSOR
2. MSC - WIRELESS SWITCH
3. SSP - WIRELINE SWITCH
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<PAGE> 39
[TCS LOGO] ANSI-41 MARKET DEFINITION [LUCENT TECHNOLOGIES LOGO]
--------------------------------------------------------------------------------
SUBS APPLICABLE TO TCS ANSI-41 LICENSE FEE... (TCS SUBS) AMENDMENT 4
EXHIBIT A
NETWORK D
[GRAPHIC]
(IS 41 WIRELESS SUBS ONLY, NOT CARD WIRELINE)
SS7 SIGNALING (E.G. TRIGGERS, ISUP, ETC.)
VOICE FACILITIES (PRI, BRI, ETC.) AND
ASSOCIATED SIGNALING (TYPE 2A, ISUP, ETC.)
NOTES
1. SCP/CSN - LUCENT INU ADVANTAGE OR SLL ENABLED SUCCESSOR
2. MSC - WIRELESS SWITCH
3. SSP - WIRELINE SWITCH
tcs and lucent company confidential Page 3 of 3
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<PAGE> 40
EXHIBIT B
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AND EXCHANGE COMMISSION. FOUR ASTERISKS ARE USED TO DENOTE OMISSIONS.
<PAGE> 41
CONFIDENTIAL MATERIALS SUBMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. FOUR ASTERISKS ARE USED TO DENOTE OMISSIONS.
<TABLE>
<CAPTION>
4/20/00 YEAR 1
Subscribers Floor Price
not Including Floor Price
Asia Pacific Asia Pacific
------------------------------------------------------------------------
<S> <C> <C>
**** **** ****
**** **** ****
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**** **** ****
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<CAPTION>
YEAR 2 Discount ****%
=
Subscribers Floor Price
not Including Floor Price
Asia Pacific Asia Pacific
------------------------------------------------------------------------
<S> <C> <C>
**** **** ****
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<CAPTION>
YEAR 3 Discount ****%
=
Subscribers Floor Price
not Including Floor Price
Asia Pacific Asia Pacific
------------------------------------------------------------------------
<S> <C> <C>
**** **** ****
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</TABLE>
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AND EXCHANGE COMMISSION. FOUR ASTERISKS ARE USED TO DENOTE OMISSIONS.
<PAGE> 42
<TABLE>
<CAPTION>
YEAR 4 Discount ****%
Subscribers Floor Price =
not Including Floor Price
Asia Pacific Asia Pacific
------------------------------------------------------------------------
<S> <C> <C>
**** **** ****
**** **** ****
**** **** ****
**** **** **** ****
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</TABLE>
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AND EXCHANGE COMMISSION. FOUR ASTERISKS ARE USED TO DENOTE OMISSIONS.
<PAGE> 43
EXHIBIT C
**** CONFIDENTIAL MATERIALS SUBMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. FOUR ASTERISKS ARE USED TO DENOTE OMISSIONS.
<PAGE> 44
CONFIDENTIAL MATERIALS SUBMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. FOUR ASTERISKS ARE USED TO DENOTE OMISSIONS.
INU CUSTOMER LIST**
1 AAPT
2 Allegiance
3 Alltel
4 Alltel Mobile
5 Antel (Urugray)
6 AT&T
7 BAM
8 BCP-TESS (Brazil)
9 Bell Atlantic-Core
10 Bell South (inc. BS Intl)
11 BLU +
12 Brazil--Megatel
13 Brazil--Megatel/Vesper
14 British Telecom +
15 Broadwing
16 Bouygues Telecom +
17 Carolina PCS +
18 Cell-C +
19 Centenial Puerto Rico
20 CHT - LDM
21 Clearnet
22 CTI - Movil; Argentina
23 Dakota/McLeod
24 DTMS-Germany +
25 Enertel-Netherlands +
26 E-Plus +
27 Escotel +
28 Frontier Cellular
29 Glenayre
30 GTE/PCS Argentina
31 HIL India
32 Horizon
33 ICG
34 KDD-Japan
35 KMC
36 LDTA - Taiwan
37 Movicom
38 Megatel-Brazil
39 MTNL +
40 NCIC - Taiwan
**** CONFIDENTIAL MATERIALS SUBMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. FOUR ASTERISKS ARE USED TO DENOTE OMISSIONS.
<PAGE> 45
41 NEC - Japan
42 Omnitel +
43 OneTel +
44 Orange +
45 Pae Tec
46 Retevision +
47 Sagebrush
48 Saudi Arabia PTT +
49 Shyam Telelink
50 Smart +
51 SBC / Williams/Ameritech/Pacbell
52 SBMS
53 Sprint LDD/NIS
54 Sprint PCS
55 Telecel Portugal +
56 Telecel Venezuela
57 Telecom Italia +
58 Telecom New Zealand
59 Telefonica Chile
60 Telefonica-Brazil
61 Telefonica PR
62 Telefonica-Guatemala/El Salvador
63 TFNE - Taiwan
64 Unicom - China
65 US Cellular
66 US LEC
67 US West
68 US West Wireless
69 USXchange
70 Verizon/Vodaphone
71 VoiceStream +
+ GSM
** To the extent that the entities on this list are wireline and
wireless service providers this list applies to the provider's
wireless services only.
This list includes the assigns and successors of the listed
companies.
**** CONFIDENTIAL MATERIALS SUBMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. FOUR ASTERISKS ARE USED TO DENOTE OMISSIONS.
<PAGE> 46
Confidential materials submitted and filed separately with the Securities and
Exchange Commission. Four asterisks are used to denote omissions.
APPLICATION DEVELOPMENT PLAN
BETWEEN
LUCENT TECHNOLOGIES
AND
TELECOMMUNICATION SYSTEMS, INC.
FOR
TDMA INTERIM AND STANDARD OTAF
**** Confidential materials submitted and filed separately with the Securities
and Exchange Commission. Four asterisks are used to denote omissions.
<PAGE> 47
TABLE OF CONTENTS
1. General .................................................... 1
2. Application Definition ..................................... 1
3. Source Code Exchange ....................................... 2
3.1 Relevant Software and Timing ........................... 2
3.2 Ownership Exchanged and Retained ....................... 2
3.3 Confidentiality ........................................ 3
3.4 Limitation of Liability ................................ 3
3.5 Indemnification ........................................ 3
4. Equipment and Software Requirements ........................ 3
5. Lucent Laboratory (Lab) Requirements ....................... 4
6. Training Requirements ...................................... 4
7. Documentation .............................................. 4
Feature Definition Document ................................ 5
8. Deployment ................................................. 5
9. Warranty and Maintenance ................................... 5
10. Application Pricing and Revenue Sharing .................... 5
11. Branding ................................................... 6
12. Marketing .................................................. 6
13. Schedule ................................................... 6
13.1 Time Frames for Development and ....................... 7
13.2 Application Delivery Dates ............................ 7
14. Test and Acceptance ........................................ 7
14.1 Basic Behavior of the System .......................... 7
14.2 Platform Requirements and Timing Constraints .......... 7
14.3 Application Acceptance Criteria ....................... 7
15. Project/Offer Management ................................... 8
16. Penalties .................................................. 8
17. Entire Agreement ........................................... 8
ii
**** Confidential materials submitted and filed separately with the Securities
and Exchange Commission. Four asterisks are used to denote omissions.
<PAGE> 48
1. GENERAL
This Agreement for Application Development Plan (the "Plan") is made pursuant
to the provisions of the A-I-Net(R) SCN Application Development Agreement dated
April 4, 1996, as amended, (the "Agreement") between Lucent Technologies, Inc.
(Lucent), and TeleCommunication Systems, Inc. (TCS). Except as provided herein,
the provisions of the Agreement are a part of and applicable to this Plan.
2. APPLICATION DEFINITION
The Over The Air Function (OTAF) application provides activation and
programming capabilities via a TDMA Air Interface. The Standard Time Division
Multiple Access (TDMA) OTAF has been developed by Lucent Technologies. TCS will
undertake supporting (maintenance, bug fixes) and enhancing (including creation
of new features) the Standard TDMA OTAF product such that it supports all IS-41
standard TDMA OTAF features and/or is comparable with major competitive offers.
TCS will develop TDMA Interim OTAF such that it can be sold together with
Standard TDMA OTAF as a stand-alone independent offer. TCS also may choose to
develop TDMA Interim OTAF such that it can be bundled with the TCS Short Message
Service Center (SMS-C) product and sold independently of Standard TDMA OTAF.
TCS will work with Lucent with the objective of developing a common Customer
Service Center (CSC) provisioning interface for TDMA and Code Division Multiple
Access (CDMA) OTAF. Should this development occur, TCS and Lucent will share
the cost of this development evenly. Should this development not occur, TCS
will bear the cost for developing a TDMA CSC interface.
- TCS agrees to develop, support and test the TDMA OTAF with Lucent/TCS mutually
agreed upon CSC interface options (e.g. Lucent's Actiview, dedicated TDMA OTAF
provisioning interface, and a documented API for customers who choose to do
their own interface development) to be ready for deployment on a mutually
agreeable date. TCS also agrees to work with customers who require custom CSC
interface development rather than one of the standard interfaces.
- TCS will be required to use the Lucent SCE for developing the TDMA OTAF
product. Lucent will provide required software and training.
- TCS will be responsible for SMS development and SMS upgrade migrations on the
New SMS in support of TDMA OTAF product. Lucent will provide required software
and training. TCS agrees to follow the same mutually agreed practices used in
development of existing SMSC and Prepaid applications.
- TCS agrees to develop, maintain and make available the over-all product
requirements documents, following existing procedures used with SMSC and
Prepaid applications, (including CSC interface requirements) which consists of
all the existing and in-development features of the product. TCS agrees to
keep all product requirements up to date.
- Lucent and TCS agree to conduct joint high-level requirements reviews.
1
**** Confidential materials submitted and filed separately with the Securities
and Exchange Commission. Four asterisks are used to denote omissions.
<PAGE> 49
- Lucent agrees to provide Lucent SMF, and System Engineering support (ie. MSC,
HLK, Actiview, SCP) necessary for TCS to conduct high level design of OTAF
products.
- TCS agrees that any changes to OTAF interfaces (Actiview, MSC, etc.) must be
communicated to Lucent in a timely fashion in advance of any actual coding.
- TCS agrees to work with identified parties to make sure the TDMA OTAF SPA
works together with other Lucent SPAs on the same SCP. TCS agrees to obey the
rules of the WIN Platform API as established for SMSC and Prepaid
applications.
- TCS agrees to obtain and maintain a minimum SEI level 3 rating or higher by
December 2000.
3. SOURCE CODE EXCHANGE
3.1 RELEVANT SOFTWARE AND TIMING
In order to provide for timely development of the application(s), Lucent and
TCS have agreed to the exchange of certain software source code (the "Source
Code") within sixty days of signing this Application Development Plan. TCS will
provide Lucent the Source Code for Short Message Peer-to-Peer Protocol (SMPP),
and Lucent will provide TCS the Source Code for Standard TDMA OTAF.
In the event that either party discontinues availability of the product as
defined in this document, the other party will have continued access at no
charge to that software indefinitely via a source-code escrow under mutually
agreed terms.
3.2 OWNERSHIP EXCHANGED AND RETAINED
The Party providing the Source Code is the Developer, except as otherwise
provided herein, after the exchange of Source Code, each party shall have equal
joint ownership, without right of accounting, of all right, title, and interest
in and to the Source Code. Thereafter, all copies and all modifications and
enhancements thereto created by a party (including ownership of all copyrights,
parents and other intellectual property rights) shall be solely owned by the
party creating such copies, modifications and/or enhancements. Notwithstanding
the foregoing, such title in copies, modifications or enhancements, shall
not extend to any ideas, methods, inventions, or concepts and the like embodied
in the Source Code or to any portion of the Source Code delivered by the
Developer which shall remain subject to the terms of this Agreement.
Furthermore, each party retains the right to independently develop its own
derivative works based on the Source Code.
Developer makes no warranties that the Source Code will be error-free in all
circumstances or that the Source Code will satisfy the other party's particular
purpose. EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH, DEVELOPER SHALL HAVE
NO LIABILITY FOR THE SOURCE CODE OR ANY SERVICES PROVIDED, INCLUDING ANY
LIABILITY FOR NEGLIGENCE; DEVELOPER MAKES AND THE OTHER PARTY RECEIVES NO
WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS
AGREEMENT OR ANY OTHER COMMUNICATION; AND
2
**** Confidential materials submitted and filed separately with the Securities
and Exchange Commission. Four asterisks are used to denote omissions.
<PAGE> 50
DEVELOPER SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE.
3.3 CONFIDENTIALITY
Lucent and TCS agree to maintain in confidence the Source Code by using at least
the same physical and other security measures as used for its own confidential
technical information and documentation. Each further agrees not to disclose the
Source Code, or any aspect thereof, to anyone other than employees or
contractors who have a need to know or obtain access to such information in
order to support authorized use of the Source Code and are bound to protect such
information against any other use or disclosure. These obligations shall not
apply to any information generally available to the public, independently
developed or obtained without reliance on Developer's information, or approved
for release by Developer without restriction.
3.4 LIMITATION OF LIABILITY
The cumulative liability of Developer to the other party for all claims relating
to the Source Code provided hereunder, in contract, and, or otherwise, shall not
exceed $10,000. This limitation shall not apply to the indemnification provided
in the following paragraph. In no event shall either party be liable to the
other for any consequential, indirect, special, or incidental damages, even if
such party has been advised of the possibility of such potential loss or damage.
The foregoing limitation of liability and exclusion of certain damages shall
apply regardless of the success or effectiveness of other remedies.
3.5 INDEMNIFICATION
If a third party claims that the Source Code infringes any U.S. patent,
copyright, or trade secret, Developer will defend the other party against such
claim at Developer's expense and pay all damages that a court finally awards,
provided that the other party promptly notifies Developer in writing of the
claim, and allows Developer to control, and cooperate with Developer in, the
defense or any related settlement negotiations. If such a claim is made or
appears possible, Developer may, at its option, secure for the other party the
right to continue to use the Source Code, modify or replace the Source Code so
it is non-infringing, or, if neither of the foregoing options is available in
Developer's judgment, require the other party to return the Source Code.
However, Developer has no obligation for any claim based on a modified version
of the Source Code or its combination, operation, or use with any product, data
or apparatus not provided by Developer. THIS PARAGRAPH STATES DEVELOPER'S ENTIRE
OBLIGATION TO THE OTHER PARTY WITH RESPECT TO ANY CLAIM OF INFRINGEMENT.
4. EQUIPMENT AND SOFTWARE REQUIREMENTS
TCS will purchase the appropriate Lucent Intelligent Network (IN) platform
hardware that will be necessary to develop the application. Lucent will offer
this hardware to TCS at a discounted price for lab development use. Lucent will
offer the applicable IN platform software Right To
3
**** Confidential materials submitted and filed separately with the Securities
and Exchange Commission. Four asterisks are used to denote omissions.
<PAGE> 51
Use (RTU) at no charge. Lucent will continue to provide TCS with SCE platform
software and F.F. updates.
5. LUCENT LABORATORY (LAB) REQUIREMENTS
TCS will be allowed to utilize Lucent lab facilities, as available, on an
as-needed basis, and will be charged under the terms and practices followed for
other applications. If remote testing is required, Lucent will assist with
arranging facilities and TCS will bear the cost of any applicable remote access
fees. TCS will participate in joint review of requirements and test plans with
the appropriate Lucent personnel and will work with the Lucent SMS team to
ensure data and validation alignment. Lucent will provide TCS with access to
early releases of platform software (Q6/5) to ensure proper alignment. TCS will
work with Lucent on joint planning for Service Package Application/SMS
Intersystem and Service Interval Testing (SIT) testing.
6. TRAINING REQUIREMENTS
Lucent will provide Intelligent Network (IN) platform training and support to
TCS using current pricing models. TCS will provide training to Lucent on TDMA
Interim OTAF. Training will include marketing, sales, technical and end-user
components. TCS will provide end-user training to TDMA Interim OTAF customers.
Upon TCS and Lucent mutual agreement, Lucent training personnel will undertake
end-user training, based upon partner training materials, for future customers.
7. DOCUMENTATION
Each application must have end-user and Operation, Administration & Maintenance
(OA&M) documentation. TCS will provide such documentation, and Lucent will
review the documentation to ensure quality standards. TCS will be responsible
for updating, translating (where mutually agreed to), and distributing
documentation for all of its applications.
- TCS agrees to write and maintain Wireless Feature Definitions Document
(FDD) equivalent documents and make available on line at Lucent.
- TCS will be responsible for creating and maintaining customer documentation
in Lucent specified format as defined by SMS 33 and Prepaid 12. Internal
documents can be created and maintained in any mutually agreed format.
The following list of the documents or equivalents should be produced and be
available for both Lucent and TCS communities.
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<TABLE>
<CAPTION>
TYPE OF THE DOCUMENT PRIMARY USER COMMENTS
-------------------- ------------ --------
<S> <C> <C>
Feature Definition Document Systems Engineering, and
Development
Feature Specification Document Systems Engineering, and
Development
System Requirements Document Systems Engineering, and
Development
Product/Feature Installation Manual NPI engineers, Product Gives the detail steps of the
Installers, and customers product installation
WIN TDMA OTAF OAEM ????? CUSTOMERS
WIN TDMA OTAF Service Market Managers, Lucent High level description of the
Description Document Customer terms, Offer and product with a clear view of
(may consist of update to existing product management features functionality and product
SMSC document) feature evaluation
Release Notes NPI, Customers
</TABLE>
8. DEPLOYMENT
TCS will install the application(s) for each sale, at then-current customary
fees. Lucent will be the prime contractor and will provide project management
for the TCS portion of each installation.
9. WARRANTY AND MAINTENANCE
Shall be as provided for in the Agreement and any amendments thereto.
10. APPLICATION PRICING AND REVENUE SHARING
The price established for each service application shall be based on market
conditions and will be reviewed on an as-needed basis to ensure that prices are
in line with similar offers in the market. The price invoiced by Lucent to the
end-user shall be the price supplied by TCS. The pricing must be flexible
enough to allow for below floor prices to end-users where applicable. TCS must
participate and share in any below floor pricing decisions. TCS will invoice
Lucent for the actual customer price, less the Lucent share of revenue provided
for below.
Lucent and TCS agree to the following revenue sharing allocations:
- If TCS and Lucent swap SMPP and Standard TDMA OTAF Source Code as
discussed above, TCS and Lucent agree to split TDMA OTAF (standard and
interim) service application revenues, including any derivative works or
modifications as follows: 60% to Lucent and 40% to TCS for a period of one
year from the date TCS releases Standard TDMA OTAF Phase II (as defined in
attached document) and Interim OTAF, whichever occurs last. After one year,
revenue sharing on TDMA OTAF (standard and interim) service application
will convert to an equal 50/50% split.
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- Revenue for the CSC Provisioning Interface for TDMA OTAF will be allocated
as follows:
- Actiview; Lucent - 100%
- TCS developed GUI interface; same as above for service application
- Lucent developed GUI interface; Lucent - 80%, TCS - 20% unless otherwise
agreed
- Product Upgrades: same allocation as above for service application
- Maintenance: TCS - defined above
- Installation: TCS - 100%
- End-user Training: Deployer of training - 100%
- Custom Development: TBD on a case-by-case basis.
- List Pricing is on per Subscriber basis beginning at $**** List, less 20%
for floor. Discounts below floor to be agreed to on a per bid basis.
A process will be established to integrate TCS's application(s) into the Lucent
standard order stream.
11. BRANDING
TDMA OTAF as defined in this Agreement, will be presented under the Lucent
brand. TCS will be identified in the salesware as a development partner on the
application.
12. MARKETING
Lucent and TCS will work together to develop a tactical sales and marketing plan
for CDMA OTAF. This plan will be updated as needed based upon market conditions.
TCS agrees to develop product offer planning marketing information (both
internal to Lucent/TCS and external to Lucent/TCS) in close association with the
Lucent product offer manager. TCS and Lucent agree to work together to conduct
primary and secondary market research and to put together customer business
cases and value propositions for the product(s) as required by market conditions
or to respond to market opportunities as jointly agreed. The Partnership will
allow for joint press releases, tradeshow appearances, proof-of-concept
demonstrations (both in-house and at customer site) and electronic
presentations. It is expected that each party will actively market (participate
in tradeshows, demos, etc.) the application. Each party will bear all expenses
associated in participating in these activities. TCS agrees to participate in
responding to the customer's RFPs, RFIs, and pro-actively offer proposals with
respect to the TDMA OTAF product in close association with Lucent.
13. SCHEDULE
TCS will perform schedule management of both Time Frames for Development and
Application Delivery Dates. TCS and Lucent will trade high-level milestone
schedule necessary to coordinate shared resources during the product development
life cycle.
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13.1. TIME FRAMES FOR DEVELOPMENT AND
TCS development includes design, code, Execution Environment test and unit
testing necessary to prepare for Lucent acceptance testing of the application.
Lab time necessary for unit testing shall be coordinated with Lucent
Intelligent Networking Unit. This lab time may include access to Lucent CS PSP
labs and Lucent Wireless labs necessary to simulated unit test environment or
provide end-to-end testing.
13.2 APPLICATION DELIVERY DATES
TCS Development of the Interim TDMA OTAF code is expected to be complete in
Q2-00. The integration of the Lucent Standards based TDMA OTAF code is
expected by Q3-00. Lucent and TCS shall jointly agree to schedule adjustments.
14. TEST AND ACCEPTANCE
TCS will conduct unit testing when possible at TCS labs. Some unit testing is
expected to be conducted at the Lucent CS and Wireless labs. TCS is expected to
support Lucent CS acceptance testing of the application during the Lucent SIT
process.
- Lucent and TCS agree to create joint testing schedules necessary to secure
appropriate labs for TCS unit, feature and regression testing.
- Lucent and TCS agree to publish and maintain System (TCS) and SIT (Lucent)
test plans on line.
14.1 BASIC BEHAVIOR OF THE SYSTEM
The Interim and Standards base OTAF application are to support UWCC and IS-735
specifications.
14.2 PLATFORM REQUIREMENTS AND TIMING CONSTRAINTS
The Interim and Standards based OTAF application is expected to run on the
Lucent Advantage SCP R9.2 or latest supported customer configuration. The
application may be compiled to run on the CSN and or SN should both Lucent and
TCS agree to support the configuration.
14.3 APPLICATION ACCEPTANCE CRITERIA
TCS shall deliver the Interim and or Standards based OTAF application to Lucent
for Application Acceptance Criteria process defined as Lucent SIT Process as
used for SMSC and PPW applications (example releases sms33, sms42, ppw12,
ppw13).
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15. PROJECT/OFFER MANAGEMENT
* TCS and Lucent will jointly agree on product release dates and release
functionality to meet customer needs, but not less than one (1) release per
year with feature enhancements and bug fixes.
* TCS agrees to integrate their internal processes with Lucent Q-gate
process. TCS agrees to provide specified information at pre-defined Q-gate
milestones as currently followed with existing applications, SMSC and
Prepaid.
* TCS agrees to adhere to Lucent's SIT entrance criteria as currently
followed for SMSC and Prepaid applications.
16. PENALTIES
Lucent will pass through any customer imposed penalties that have been jointly
agreed to in writing in advance (if such are invoked by the customer) for
missed deadlines directly attributable to TCS. Lucent will take financial
responsibility for any such penalties that are not directly attributable to TCS.
17. ENTIRE AGREEMENT
This Plan, including the Agreement and any attachments referred to herein and
attached herein, each of which is incorporated in this Plan for all purposes,
constitutes the entire agreement between the parties with respect to the
subject matter of this Plan and there are no representations, understanding or
agreements relating to the Plan which are not fully expressed herein. No
change, waiver, or discharge hereof shall be valid unless in writing and signed
by an authorized representative of the party against which such change, waiver,
or discharge is sought to be enforced.
In witness whereof, TCS and Lucent have caused this Plan to be signed and
delivered by its duly authorized office, all as of the date set forth below.
TeleCommunication Systems, Inc. Lucent Technologies, Inc.
By: /s/ Richard A. Young By: /s/ Peter M. Geimer
Name: Mr. Richard Young Name: Peter M. Geimer
Title: Chief Operating Officer Title: Director, Business Agent in Alliance
Date: April 10, 2000 Date: 4/11/00
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