Software Development Agreement

SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT


THIS SOFTWARE DEVELOPMENT AGREEMENT (the "Agreement") is made as of the 19th day of January, 1999 by and between AUTOMATED TRAVEL SYSTEMS, INC. ("ATSI"), a Delaware corporation having an office at 119 West 40th Street, 12th Floor, New York, New York 10018, and GLOBAL DISCOUNT TRAVEL SERVICES, LLC, a Nevada limited liability company with its principal place of business at 980 Kelly Johnson Drive, Las Vegas, NV 89119 ("Global").


WHEREAS, ATSI is designing and developing a travel database booking system (the "Booking Engine System") providing access to airline fare, routing, rules, travel information and computer reservation systems necessary to create a PNR and facilitating airline reservations;


WHEREAS, pursuant to a certain Booking Database License Agreement dated the date hereof between ATSI and Global (the "License Agreement"), ATSI has agreed to license to Global the Booking Engine System for use in connection with Global's travel reservation business;


WHEREAS, Global desires to have ATSI develop for Global's use in connection with Global's on-line ticket booking service a booking engine software application to provide access to the Booking Engine System and to permit users to make airline and other travel reservations over the World Wide Web (such software system including the source code and all documentation related thereto, as enhanced or modified from time to time, is referred to herein as the "Web Site Front End System"); and


WHEREAS, Global will develop the integrated site navigation software to be used to provide navigation consistency throughout the Web Site Front End System (the "Global Modules").


NOW, THEREFORE, in consideration of the mutual promises, covenants, undertakings and agreements set forth herein and in the License Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties mutually agree as follows:


1. Development of the Web Site Front End System; Training; and Support.


(a) Engagement. Global hereby engages ATSI, and ATSI hereby agrees to be engaged by Global, (i) to develop the Web Site Front End System in accordance with the specifications attached hereto as Exhibit A as amended from time to time by the parties (the "Specifications"), (ii) to provide Global personnel or its designees with reasonable support in the integration of the Web Site Front End System into the Global Modules and 2 (ii) to provide training and support with respect to the Web Site Front End System as more specifically described in this Section 1 below (the development, training and support services to be provided hereunder are collectively referred to herein as the "Services"), it being acknowledged and agreed that ATSI shall have no obligation to provide training or support services with respect to the Global Modules. Global agrees to provide ATSI with all information reasonably requested by ATSI as required to carry out ATSI's duties under this Agreement.


(b) Time Commitment. In connection with the development of the Web Site Front End System and the training of Global personnel in the operation and programming of the Web Site Front End System, unless this Agreement is sooner terminated as hereafter provided, ATSI shall deliver the Web Site Front End System on or before March 1, 1999 (the "Delivery Date").


(c) Subsequent Maintenance, Training and Support. For a period of 60 days after the Delivery Date, ATSI shall provide Global, without charge other than payment of expenses as stated in Section 3(d) below, support and training services as reasonably required by Global for the implementation of the Web Site Front End System. An initial response to or acknowledgment of a request for support shall be made by ATSI within four hours of receipt of the request.


(d) No Other Support. Except as expressly provided in this Agreement, ATSI shall not be obligated under this Agreement to provide any other support or assistance to Global or any third party.


2. License; Delivery; Acceptance; Testing.


(a) License. Upon the terms and subject to the conditions of this Agreement, unless this Agreement is terminated in accordance with the terms hereof, ATSI grants to Global a perpetual, non-exclusive, non-transferable, royalty-free right and license (the "License") solely (i) to use the Web Site Front End System on Global's servers where such servers are principally located (the "Global Facility") in connection with Global's on-line travel booking business, (ii) to upgrade, update, replace, revise, enhance, add t o or convert the Web Site Front End System (the "System Enhancements") for the purposes stated in (i) above, and (iii) to develop and test Global Modules (the foregoing are referred to as the "Permitted Uses"). Global shall have no right to grant sublicenses under, nor to transfer, the Web Site Front End System. Global shall also have the right to maintain not more than one back-up copy of the Web Site Front End System for: (i) non-productive, archival purposes and (ii) for use at a facility other than the Global Facility in the event of an emergency that renders inoperable the servers located in the Global Facility. In the event ATSI shall develop modifications or enhancements to the Web Site Front End System (the "Modifications"), and if the Modifications are not developed exclusively for a third party, then ATSI shall make the Modifications available to Global


-2- 3 on terms and conditions (including cost) not less favorable than the terms and conditions which the Modifications are offered to other third parties.


(b) Delivery; Acceptance. The Web Site Front End System shall function in accordance with the Specifications on or before the 15th day after the Delivery Date. For all work product deliverables in connection with the development of the Web Site Front End System, Global shall, within sixty (60) days of receipt of ATSI's statement that the deliverable is complete, place the deliverable in productive use and review it and accept it or notify ATSI in writing of non-acceptance if the deliverable does not conform to the Specifications, documenting in reasonable detail any and all material defects in the deliverable. ATSI shall, upon receipt of such notice, use its reasonable efforts to correct any such material failures and shall notify Global of its completion of the correction. Global shall, after receipt of said notice, review the corrected deliverable and report to ATSI. Global shall do so promptly using diligent efforts, but in no event shall such process exceed twenty (20) days. This cycle shall be repeated only as is reasonably necessary. A deliverable shall be deemed accepted by Global on the earlier to occur of : (i) Global notifies ATSI in writing of its acceptance, in which event the acceptance date shall then be the date of such notice; or (ii) Global fails to notify ATSI in writing of any defect in the deliverable within the 60-day period described above, in which event the acceptance date shall be the last day of said period.


(c) Rights Respecting Source Code. As the deliverable under this Agreement, ATSI shall deliver to Global the Web Site Front End System in source code form, together with all technical documentation relating thereto. Global may not (i) permit any third party access to the source code for the Web Site Front End System, except as provided elsewhere herein or (ii) otherwise permit any third parties to use the Web Site Front End System to create a derivative work, except, in any case, consultants retained on a "work-for-hire" basis (who have agreed in writing that all rights relating to the Web Site Front End System belong to ATSI) and who are subject to confidentiality provisions no less stringent than those set forth herein. Global shall not, and shall not permit, any third party to use, reproduce, sublicense, distribute or dispose of the Web Site Front End System, in whole or in part, except as expressly permitted under the terms of this Agreement.


(d) Intellectual Property Notices. In order to protect ATSI's trade secrets and copyrights in the Web Site Front End System, Global agrees to reproduce and incorporate ATSI's trade secret or copyright notices in the Web Site Front End System.


(e) Reservation of Rights.


(i) Nothing contained in this Agreement shall prohibit ATSI from making, using, licensing, distributing, selling or granting any rights in and to the Web Site Front End System, or any portion thereof or making derivative works from the Web


-3- 4 Site Front End System and granting any rights with respect thereto, except with respect to those portions of the source code of the Web Site Front End System which are specifically identified on Exhibit BC hereto, as such Exhibit shall be amended from time to time upon the mutual agreement of Global and ATSI (such specific portions of the source code are referred to as the "Global Property"), and ATSI agrees it shall not permit any third party to use the Global Property. Global shall have no rights in or to the Web Site Front End System (including its source code and technical documentation) or to any product or service offered by ATSI except as contemplated hereby or in other agreements between the parties hereto. Global shall not market, distribute, provide or license, or permit any third party to market, distribute, provide or license, the Web Site Front End System for any uses other than as provided herein. The Board of Directors of ATSI shall determine to whom in the leisure travel business a license for the Web Site Front End System may be granted.


(ii) Subject to the underlying intellectual property rights of ATSI in and to the Web Site Front End System, nothing contained in this Agreement shall prohibit Global from making, using, licensing, distributing, selling or granting any rights in and to the Global Property or the Global Modules or any portion thereof or making derivative works from the Global Property or the Global Modules and granting any rights with respect thereto, which ATSI agrees it shall not permit any third party to use. ATSI shall have no rights in or to the Global Property, the Global Modules, the System Enhancements, or any product or service offered by Global except as contemplated hereby or in other agreements between the parties hereto. ATSI shall not market, distribute, provide or license, or permit any third party to market, distribute, provide or license, the Global Property, the Global Modules or the System Enhancements for any uses other than as provided herein.


3. Payments.


(a) License Fees. The fees set forth in the License Agreement shall constitute full and complete payment for the services set forth herein.


(b) Expenses. Each party shall bear its expenses arising from the performance of its obligations under and relating to this Agreement, including (without limitation) expenses for facilities, employee salaries, work spaces, utilities, license fees (subject to Section 5(d) below), clerical and reproduction services and supplies. Notwithstanding the foregoing, Global shall reimburse ATSI for its actual out-of-pocket expenses which are reasonable and necessary under this Agreement incurred in connection with ATSI personnel's travel to and from Global's places of business (including accommodations and meals) within 45 days after receipt of an invoice therefor; provided, however, that ATSI shall obtain prior approval from Global for expenditures in excess of $100 per person per day. Travel arrangements and hotel accommodations shall be arranged through Global.


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(c) Taxes. Global shall pay for, or reimburse ATSI for, all sales, use, transfer or other taxes and all duties, whether international, national, state, or local however designated, which are levied or imposed by reason of the transactions contemplated hereby; excluding, however, taxes based upon ATSI's revenue, income or profits.


4. Ownership of Intellectual Property and Confidentiality.


(a) Title to the Web Site Front End System. ATSI represents that it is or will be the owner of all right, title and interest in and to the Web Site Front End System, other than the Global Property, and has the right to grant the License to, and will have the right to deliver the source code to, Global. Global acknowledges and agrees that the Web Site Front End System contains and will contain valuable trade secrets and/or proprietary and confidential information of ATSI, and, except as provided in this Agreement, any right, title and interest to the Web Site Front End System shall vest in ATSI, including any patents, copyrights, trademarks, trade secrets, methods of processing, design and structure of individual programs and their interaction and programming techniques employed therein. The Web Site Front End System shall belong exclusively to ATSI, with ATSI having the right to obtain and to hold in its own name patent registrations, copyright registrations, or such other protections as may be appointed to the subject matter and any extensions or renewals thereof. Global agrees to give ATSI reasonable assistance, at ATSI's sole cost and expense, required to perfect and protect the rights defined in this Section 4(a). Glob ...