EXHIBIT 10.19
SOFTWARE LICENSE
AGREEMENT
This Software License Agreement
("Agreement") is made and entered into this 3rd day of November,
2004, (the "Effective Date") by and between Espial Group Inc., a
Canadian corporation with its principal place of business at 200
Elgin Street, Suite 901, Ottawa, Ontario, Canada K2P 1L5, on behalf
of itself, and its subsidiaries (hereinafter individually and
collectively referred to as "Espial"), and mPhase, Inc. with its
principal place of business at 587 Connecticut Avenue, Norwalk, CT
06854-1711("Licensee"). Espial and Licensee are each a "Party", and
together are "Parties", to this Agreement.
WHEREAS, Licensee wishes to
license certain software and obtain certain services from Espial
under the terms and conditions set forth below; and
WHEREAS, Espial wishes to license
software, the associated documentation and provide certain services
to Licensee under the terms and conditions set forth
below.
NOW THEREFORE, the Parties
mutually agree as follows:
1.
DEFINITIONS
"Confidential Information" shall
mean the terms and conditions of this Agreement and any and all
information that is disclosed under this Agreement (i) in oral,
written, graphic, machine recognizable, and/or sample form, being
clearly designated, labeled or marked as confidential or its
equivalent, or (ii) obtained by examination, testing or analysis of
any hardware, software or any component part thereof provided by
one Party ("Disclosing Party") to another Party ("Receiving
Party"). Confidential Information that is disclosed orally shall be
identified as confidential at the time of disclosure and confirmed
by the Disclosing Party by submitting a written document to the
Receiving Party within thirty (30) days after such disclosure. The
written document shall contain a summary of the Confidential
Information and shall be labeled or marked as confidential or its
equivalent. "Confidential Information" includes the Software,
business plans, market projections, marketing plans, price data and
similar proprietary information of the parties, as well as the
terms of this Agreement.
"Development Project" shall mean
the software development project undertaken by Licensee employing
the Software Development Kit with the assistance of the
Professional Services, if any, to create a customized version of
the Embedded Software to support the Product.
"Embedded Software" shall mean
run-time versions of Espial's proprietary software and Sublicensed
Supplier Software (if any) more fully described in Exhibit A,
licensed to Licensee hereunder which may, pursuant to this
Agreement, be customized pursuant to the Development Project
described herein and distributed as an embedded program within
Licensee's Products, and shall include documentation and any future
versions, improvements, updates, enhancements, modifications or
derivative works which may be supplied by Espial as part of
Espial's Support Services or Professional Services.
"End User" means a third party
licensed to use Licensee's Product.
"End User Agreement" means a
written agreement between the Licensee and an End User governing
the use of Licensee's Product containing the terms and conditions
set forth in Section 3.4 hereto.
"Espial Mark(s)" shall mean the
Espial trademark(s) as more fully described in Exhibit
C.
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"Intellectual
Property Rights" shall mean all rights in any invention, discovery,
improvement, utility model, copyright, industrial design or mask
work right, and all rights of whatsoever nature in computer
software and data, Confidential Information, trade secrets or
know-how, and all intangible rights and privileges of a nature
similar to the foregoing, in every case in any part of the world
and whether or not registered, and shall include all rights in any
applications and granted registrations for any of the
foregoing.
"Product(s)"
shall mean any and all of Licensee's devices described in Schedule
A that operate on the unique combination of operating system
("OS"), central processing unit ("CPU that are specified in Exhibit
A and that following modification pursuant to the Development
Project, incorporates a customized version of the Embedded
Software. Any product or follow-on product with different
functionality or which utilizes a different CPU & OS, than
those specified in Exhibit A shall be deemed a new or different
Product.
"Professional
Services" shall mean the technical design, programming and
development services provided to Licensee by Espial or its
subcontractors in accordance with the Statement of Work, if any,
for the purpose of customizing the Embedded Software to operate
with the Product.
"Software"
shall mean the Software Development Kit and the Embedded
Software.
"Software
Development Kit" shall mean the Espial proprietary software and the
Sublicensed Supplier Software described in Exhibit A and includes
any future versions, improvements, Updates, enhancements,
modifications or derivative works which may be supplied by Espial
in the course of providing Professional Services and/or Support
Services.
"Statement of
Work" shall mean the mutually agreed list of services, if any, set
forth in Exhibit B as may be amended by mutual agreement from time
to time, or as otherwise mutually agreed upon by the Parties, that
are to be performed by Espial to customize the Embedded Software to
operate with the Products.
"Sublicensed
Supplier Software" means Supplier Software licensed to Espial under
licenses that permit Espial to offer Company sublicenses in such
Supplier Software under the terms of this Agreement and the
additional terms specified in Exhibit D;
"Supplier
Software" means all or any part of the software:
(i) for which
all right, title and interest (including all intellectual property
rights) are owned by a third party ("Supplier"); and (ii) that in
modified or unmodified form is or may be incorporated into, or
executed in association with, Espial's proprietary
software.
"Support
Services" shall mean routine telephonic and e-mail technical
support and copies of any Updates that may be released during the
period of the Support Services to be provided by Espial to Licensee
pursuant to Section 4.
"Updates"
shall mean error corrections, bug fixes and such interim releases
of the Software as may be officially released by Espial to its
customers receiving support services similar to or identical to the
Support Services.
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2.
PROFESSIONAL SERVICES
2.1 In the event the parties
agree to implement a Statement of Work, the terms and conditions of
this Section 2 shall apply to all Professional Services provided
hereunder.
2.2. Espial will use commercially
reasonable efforts to provide all Professional Services according
to the Statement of Work.
2.3. Licensee will make available
at its own expense computer systems and appropriate personnel to
the extent necessary for Espial to perform the Professional
Services. Licensee will ensure that any Licensee computer systems
will be fully functional, accompanied by complete and accurate user
documentation and that Licensee will make technical support
available in a timely manner as is reasonably required. The parties
agree that any Statement of Work delivery date or work requirement
will be adjusted for any delay in performance of the Professional
Services that results from failure of Licensee computer systems to
perform, inadequate documentation, insufficient technical support
or failure to make timely payments under this Agreement and that
any costs and expenses incurred as a result of such delay shall be
borne by Licensee.
2.4. Espial will invoice Licensee
for Professional Services as specified in the Statement of
Work.
2.5. Professional Services fees
shall be payable by Licensee upon Licensee's receipt of Espial's
invoice. If Licensee's procedures require that an invoice be
submitted against a purchase order before payment can be made,
Licensee will be responsible for issuing such purchase order, but
such procedure shall not affect Licensee's obligation to pay an
invoice in accordance with Section 5.5. Espial's terms and
conditions as provided herein shall apply at all times,
notwithstanding subsequent receipt on a purchase order of
Licensee's terms and conditions.
2.6. Licensee will pay or
reimburse Espial for all reasonable expenses incurred to provide
the Professional Services, including, without limitation, expenses
related to travel and the acquisition of any hardware or software
systems specific to the Development Project.
2.7. All Professional Services
shall be provided on a non-exclusive basis.
3.
GRANT OF LICENSE RIGHTS
3.1 Espial hereby grants to
Licensee, subject to the terms and conditions contained herein,
including but not limited to the payment of all associated fees and
the terms and conditions specific to the Sublicensed Supplier
Software contained in Exhibit D hereto: (a) a non-exclusive,
non-transferable, limited license which may be subject to further
limitations specified in Schedule A to have employees use the
Software Development Kit for the express purpose of undertaking the
Development Project; and (b) a non-exclusive, non-transferable,
royalty-bearing, worldwide, limited license to (i) to integrate the
Embedded Software into the Products; (ii) to reproduce the Embedded
Software as integrated into the Products, and (iii) to distribute
the Embedded Software as integrated into the Products solely to End
Users who are subject to an End User Agreement.
3.2. Licensee agrees that it will
conspicuously display the Espial Mark in the form attached hereto
as Exhibit C on each Product in one of the following formats: (i)
silk-screened or affixed as a sticker on the Product on the same
side of the Product as the Product's main screen display; or (ii)
as a screen shot displayed on the Product's screen display during
boot. In either case, the minimum dimensions of the Espial Mark as
displayed in or on the Product will be 10.1mm wide x 4.2mm high.
Licensee may display
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the Espial Mark in red and black,
white or black, as may be reasonably deemed appropriate in light of
the background colors.
3.3. Espial hereby grants to
Licensee a nonexclusive, nontransferable limited license to use,
reproduce and display the Espial Mark solely in accordance with
Section 3.1(b) and 3.2 above and in connection with the
distribution, advertising, marketing and promotion of Licensee's
Products incorporating the Embedded Software, provided that
appropriate trademark notices are included and the use conforms to
Espial's guidelines regarding the use of trademarks, which will be
provided at Licensee's request. Licensee agrees that Espial is the
sole and exclusive owner of the Espial Mark and all goodwill
associated therewith. Except as expressly provided herein, Licensee
is granted no right, title or license to, or interest in, any
Espial Marks. Licensee agrees not to: (i) challenge Espial's
ownership or use of the Espial Marks; (ii) attempt to register any
of the Espial Marks, or any mark or logo substantially similar
thereto; or (iii) incorporate any Espial Mark into Licensee's own
trademarks, product names, services marks, company names, or domain
names.
3.4. End User Agreements shall
include the following terms and conditions:
3.4.1 Prohibition against
distribution and copying.
3.4.2 Prohibition against
modifications or derivative works.
3.4.3 Prohibition against
decompiling, reverse engineering, disassembling, or otherwise
reducing the software to a human-perceivable form.
3.4.4 Provision indicating
ownership of software by Licensee and its suppliers.
3.4.5 Disclaimer of all
applicable statutory warranties, to the full extent allowed by
law.
3.4.6 Limitation of liability not
to exceed price of Licensee Product and provision that sole remedy
shall be a right of return and refund, if any, from
Licensee.
3.4.7 Disclaimer of indirect,
special, incidental, punitive or consequential damages.
4.
SUPPORT SERVICES
4.1. Support Services are for a
one-year term and renew annually. The support fee for each of the
first two years of the Term is specified in Exhibit A. Licensee may
renew Support Services in subsequent years paying the then
applicable Support Fee. Espial shall not be obligated to renew
Support Services if Licensee has discontinued Support Services in
any year. Annual Support shall renew automatically at the
then-current fees and policies unless Licensee notifies Espial at
least sixty (60) days prior to the expiration of an annual support
term of its desire to cancel Support Services for the following
year.
4.2. Espial reserves the right to
discontinue the Support Services should Espial, in its sole
discretion, determine that continued support for any Software is no
longer economically practicable and will give Customer at least six
(6) months prior written notice of any such discontinuance of
Support Services and will refund any unused Support Services fees
Licensee may have prepaid with respect to the affected Software.
Espial reserves the right to suspend performance of the Support
Services if Customer fails to pay any amount that is payable to
Espial under the Agreement within thirty (30) days after such
amount becomes due.
5.
LICENSE FEES AND PAYMENT TERMS
5.1. The fees and other charges
applicable to the Software and/or any services provided by Espial
are set out in Exhibit A.
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5.2. A per copy royalty is
payable for each copy of Embedded Software that is to be embedded
in Product. The per copy royalty fee is to be purchased in the
block quantities specified in Schedule A prior to the Embedded
Software being embedded in Product. The block quantities shall be
purchased quarterly based on Licensee's projected requirements. In
the event that additional requirements are later identified,
additional block quantities may be purchased during the
quarter.
5.3. All prepaid royalty fees are
non-recourse nonrefundable regardless of whether or not the minimum
number of copies to which such prepaid royalty fee relates is
actually distributed. Prepaid royalty fees are treated as a credit
against royalties otherwise payable and therefore upon committing
to a specific prepaid royalty, no royalties are payable until the
credit of
