Joint Development & License Agreement

CERTAIN CONFIDENTIAL
TREATMENT CONTAINED IN
THIS DOCUMENT, MARKED BY
BRACKETS AND DENOTED BY AN
ASTERISK, HAS BEEN OMITTED
AND FILED SEPARATELY WITH
THE SECURITIES AND
EXCHANGE COMMISSION
PURSUANT TO 17 C.F.R.
SECTIONS 200.80(b)(4),
200.83 AND SECTION
230.406.


JOINT DEVELOPMENT AND LICENSING AGREEMENT


This Agreement is entered into this 30th day of September, 1994 by and between AirTouch Communications, Inc. (formerly known as PacTel Corporation), a California corporation ("AirTouch") and Coral Systems, Inc., a Colorado corporation ("Coral").


SECTION ONE


BACKGROUND


AirTouch is a provider of, among other things, cellular telecommunications services in portions of the United States and owns various equity interests in other providers of wireless telecommunications services throughout the world. AirTouch is the owner of two software applications relating to the detection of certain forms of fraud committed against providers of wireless telecommunications services. Similarly, Coral Systems owns and has developed computer software designed to detect certain forms of fraud perpetrated against providers of wireless telecommunications services. The parties desire to provide source code licenses to one another for their respective fraud detection softwares and provide a mechanism for the joint development of enhancements to these applications.


SECTION TWO


DEFINITIONS


2.1 AirTouch Applications. The two software applications owned by AirTouch one of which is designed to detect certain forms of fraud perpetrated against providers of wireless telecommunications services entitled the AirTouch Fraud Profiler(TM) and the other interfaces Unix based applications to the wireless fraud detection devise entitled PhonePrint(TM).


2.2 AirTouch Documentation. The documentation utilized in conjunction with the AirTouch Applications.


2.3 AirTouch Enhancements. Enhancements to the Coral Applications suggested and/or designed and paid for solely by AirTouch which are developed in accordance with the provisions of Section 6 below. 2
2.4 AirTouch Functional Specifications. The specifications of the AirTouch Applications set forth in Exhibit "A" attached hereto and any future version thereof provided by AirTouch to Coral.


2.5 AirTouch Markets. The following properties, markets and/or companies which provide cellular telecommunications services to the general public which are owned exclusively by AirTouch or in which AirTouch owns an equity interest: San Diego, Los Angeles and Sacramento, California; Atlanta, Georgia; the San Francisco Bay Area as owned by Bay Area Cellular Telephone Company; and the current Michigan and Ohio markets.


2.6 Coral Applications. The software applications owned and/or developed by Coral entitled FraudBuster(TM) version 2.0 which is designed to detect certain forms of potentially fraudulent usage of a cellular telecommunications system and, when developed, the PhonePrint Interface, as defined below.


2.7 Coral Documentation. The documentation utilized in conjunction with the Coral Applications which includes system and users guides.


2.8 Coral Enhancements. Changes or additions to the Coral Applications that add functionality or substantially improve the performance of the Coral Applications and which are not AirTouch or Joint Enhancements.


2.9 Coral Functional Specifications. The specifications of the Coral Applications set forth in Exhibit "B" attached hereto and any future versions thereof provided by Coral to AirTouch.


2.10 Error. A statement or condition in the Coral Applications or the AirTouch Applications that is not in material conformity with the relevant Functional Specifications.


2.11 Error Correction. A change to the AirTouch Applications or the Coral Applications to conform to the relevant Functional Specifications in all material respects.


2.12 Joint Enhancements. Enhancements to either the Coral Applications or the AirTouch Applications determined collectively by AirTouch and Coral for which AirTouch contributes a mutually agreed upon amount of the development costs, calculated at Coral's then current standard rates, and subject to the provisions of Section 6 below.


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2.13 Phone Print Interface. The interface between the FraudBuster portion of the Coral Applications and the PhonePrint portion of the AirTouch Applications developed by Coral in accordance with Section 9.4 below which integrates and facilitates the reasonable and limited interoperability between these two products.


SECTION THREE


GRANT OF LICENSE TO AIRTOUCH


3.1 Grant of License to AirTouch. Subject to the terms herein, Coral hereby grants to AirTouch the non-exclusive, non-transferable, fully paid, perpetual and irrevocable source code license to and for the Coral Applications subject to the sublicensing restrictions provided in Section 4 below for the limited purpose of (a) use and reproduction of the Coral Applications in AirTouch Markets (b) development of enhanced or modified versions of the Coral Applications for use in AirTouch Markets, and (c) sublicensing object code versions of the Coral Applications only as provided in Section 4 below. The foregoing license specifically excludes any licenses to the ancillary or third party software utilized by or in conjunction with the Coral Applications, all of which must be purchased separately from Coral or the manufacturers or distributors of the same.


3.2 Use of Name. Subject to the terms herein, Coral hereby grants to AirTouch the non-exclusive and non-transferable right to use the name of the Coral Applications in connection with any promotional, sales and marketing materials it produces, provided AirTouch identifies such name as the trademark of Coral. Additionally, AirTouch shall be permitted to sublicense the Coral Applications or any derivative thereof under any name it chooses other than the name of the Coral Applications. AirTouch accepts this license and agrees to use it in accordance with the provisions of this Agreement.


3.3 Coral Documentation. Coral grants to AirTouch the non-exclusive, non-transferable, fully paid, royalty free, perpetual and irrevocable license to and for the Coral Documentation subject to the sublicensing restrictions provided in Section 4 below to make such copies, amendments, modifications or other uses which are necessary and appropriate in connection with the exercise of the rights granted to AirTouch in this Section 3.


3.4 Delivery. Coral shall deliver to AirTouch complete electronic copies of the Coral Applications and the Coral Documentation within 30 days of the execution of this Agreement.


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CONFIDENTIAL TREATMENT REQUESTED


3.5 Ownership. The Coral Applications, the Coral Documentation and all patents, copyrights and other intellectual property rights contained or embodied in any of the forgoing shall be and remain the property of Coral subject to the licenses granted to AirTouch herein.


3.6 Reservation of Rights. All rights not specifically granted to AirTouch by this Agreement are reserved by Coral. Except as specifically provided hereunder, Coral grants to AirTouch no rights to any intellectual property in or to the Coral Applications or the Coral Documentation.


SECTION FOUR


SUBLICENSES GRANTED BY AIRTOUCH


4.1 Coral Applications Sublicense. AirTouch shall be permitted to sublicense the Coral Applications or any derivative thereof or other application incorporating any of the Coral Applications and the Coral Documentation only to those entities providing cellular telecommunication services in which AirTouch directly owns a 10% or greater equity interest. For purposes of the section, AirTouch shall be deemed to have the requisite equity interest in US WEST New Vector Group, regardless of the current phase of the proposed merger.


4.2 Sublicense Limitations. Absent written authorization to the contrary, AirTouch shall not be permitted to grant any sublicense of the Coral Applications, or any part thereof, to be used in the providing of service bureau work or remote computing services for or on behalf of any cellular service provider other than AirTouch for AirTouch Markets.


4.3 Sublicense Royalty. In providing the sublicenses authorized in this Section 4, AirTouch shall be permitted to determine the price and terms under which the sublicense shall be granted. In connection with each sublicense granted by AirTouch, AirTouch shall provide Coral with [*] of the list price for the Coral Applications, as such may vary from time to time, as a royalty for the sublicense rights provided to AirTouch in this Agreement. By December 1st of each year, Coral shall provide AirTouch with the domestic and international list prices for the Coral Applications for the next calendar year. In the event Coral fails to provide the amended list prices, the list prices from the previous year shall be applied. AirTouch shall provide the requisite compensation provided in this Section 4.3 within 30 days of receipt of payment from AirTouch's sublicensee.


4.4 Sublicense Acknowledgment. AirTouch shall submit to Coral an acknowledgment for each license or sublicense installation, sale or other


4 5 deployment involving the Coral Applications, or any portion or derivative thereof, with appropriate detail of the market, carrier, AirTouch equity interest, size and license or sublicense terms prior to installation or deployment of the same.


4.5 Audit. AirTouch shall keep accurate and complete records of all copies made and sublicenses granted of the Coral Applications. Coral shall be permitted, at its cost, to conduct a quarterly audit of those books and records of AirTouch relating to Coral Application sublicenses to determine the accuracy of the payments to Coral. In the event the audit reveals a 10% or greater discrepancy in the amount that should have been paid to Coral, AirTouch shall reimburse Coral the costs and expenses associated with such audit in addition to paying all sums owing.


SECTION FIVE


GRANT OF LICENSE TO CORAL


5.1 Grant of AirTouch Applications License to Coral. Subject to the terms herein, AirTouch hereby grants to Coral the non-exclusive, non-transferable, fully paid, royalty free, perpetual and irrevocable source code license to and for the AirTouch Applications to use, reproduce, and/or modify the Air Touch Applications to develop enhanced or modified versions of the Coral Applications for use by Coral in sublicensing object code versions to third parties.


5.2 Use of Name. Subject to the terms herein, AirTouch hereby grants to Coral the non-exclusive and non-transferable right to use the names of the AirTouch Applications in connection with any promotional, sales and marketing materials it produces, provided Coral identifies such name as the trademark of AirTouch. Additionally, Coral shall be permitted to license and sublicense the Coral Applications as modified by the incorporation of the AirTouch Applications under any name it chooses. Coral accepts this license and agrees to use it in accordance with the provisions of this Agreement.


5.3 AirTouch Documentation. AirTouch grants to Coral the non-exclusive, non-transferable, fully paid, royalty free, perpetual and irrevocable license to and for the AirTouch Documentation to make such copies, amendments, modifications or other uses which are necessary and appropriate in connection with the exercise of the rights granted to Coral in this Section 5.


5.4 Grant of DMX License to Coral. Subject to the terms herein, AirTouch grants to Coral the non-exclusive, non-transferable, fully paid, royalty


5 6 free, perpetual and irrevocable license, in object or source code form as may be received from time to time by AirTouch, to the Motorola DMX switch interface format (the "DMX license"). Coral acknowledges that AirTouch is in the process of attempting to obtain the foregoing license and may be unable to provide the DMX license.


5.5 Delivery. AirTouch shall deliver to Coral complete electronic copies of the AirTouch Applications and the AirTouch Documentation within 30 days of the execution of this Agreement.


5.6 Ownership. The AirTouch Applications and the AirTouch Documentation and all patents, copyrights and other intellectual property right contained or embodied in any of the foregoing shall be and remain the property of AirTouch subject to the licenses granted to Coral herein.


5.7 Reservation of Rights. All rights not specifically granted to Coral by this Agreement are reserved by AirTouch. Except as specifically provided hereunder, AirTouch grants to Coral no rights to any intellectual property in or to the AirTouch Applications or AirTouch Documentation.


SECTION SIX


APPLICATION ENHANCEMENTS


6.1 AirTouch Enhancements. In the event AirTouch desires Coral to undertake the development of any AirTouch Enhancements it shall provide a detailed description of such enhancement to Coral and provide reasonable assistance to Coral should further definition be required. Prior to commencing work on any AirTouch Enhancement, Coral shall submit to AirTouch a detailed summary of the work necessary, the approximate cost and the approximate time necessary to complete the AirTouch Enhancement. Coral shall have 45 days to submit the foregoing proposal from the date AirTouch provides Coral with a detailed written request for the AirTouch Enhancement. AirTouch shall have 45 days from the submission by Coral of the foregoing proposal to determine if it desires Coral to undertake the development of the AirTouch Enhancement. In the event AirTouch accepts the proposal or the parties negotiate a mutually acceptable alternative, Coral shall undertake and complete the AirTouch Enhancement. Coral reserves the right not to submit a proposal on any AirTouch Enhancement. The parties shall act reasonably and in good faith in their discussions regarding the development of AirTouch Enhancements. Nothing in this Section or this Agreement shall prevent AirTouch from developing any AirTouch Enhancement without the aid of Coral.


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CONFIDENTIAL TREATMENT REQUESTED


6.2 Joint Enhancements. Coral and AirTouch shall work together to develop the enhancements to the Coral Applications, the AirTouch Applications or any other application incorporating the code, ideas or concepts of any of the above. In the event the parties identify a Joint Enhancement, they shall collectively determine the detailed requirements for the same and Coral shall subsequently provide AirTouch with an estimate of the time and cost necessary for the development of the same. AirTouch shall have the option of paying Coral for a mutually agreed upon amount of the actual development time necessary to complete the Joint Enhancement calculated at Coral's then current development rates. All Joint Enhancements shall be the joint property of AirTouch and Coral. In the event AirTouch elects not to participate in the development of the Joint Enhancement, Coral shall be permitted to develop the same at its cost as a Coral Enhancement and AirTouch shall be provided the opportunity to license the same under terms to be mutually agreed upon.


6.3 Title to AirTouch and Joint Enhancements. Title to all Joint Enhancements developed by Coral shall be jointly held by AirTouch and Coral. Coral shall turnover to AirTouch an electronic copy of the source code for the AirTouch and Joint Enhancements upon completion of the project and provide reasonable assistance to AirTouch in the use and incorporation of the AirTouch or Joint Enhancement into the AirTouch network. Coral shall be permitted, without royalty or other obligation, to incorporate any Joint Enhancement developed by Coral into the Coral Applications [ * ] after the completion of the Joint Enhancement. Nothing in this section or this Agreement shall prevent or interfere with the ability of AirTouch or, after expiration of the appropriate period above, Coral, to license any Joint Enhancement to any entity either chooses. AirTouch shall be the exclusive owner of the AirTouch Enhancements with the sole discretion to license Coral certain of the AirTouch Enhancements under the terms hereof.


6.4 Enhancement Payments. All AirTouch or Joint Enhancements developed by Coral shall be billed at Coral's then current standard rates which is currently [ * ] per person week. Coral shall invoice AirTouch monthly for work associated with any AirTouch or Joint Enhancements. AirTouch shall pay all invoices within 60 days of receipt. AirTouch's liability for Coral developed AirTouch or Joint Enhancements shall be for the actual person weeks, or pro rata portion thereof, incurred by Coral multiplied by the appropriate percentage contribution (as negotiated by the parties on a case by case basis) plus all necessary and reasonable ancillary expenses, including travel and accommodations.


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CONFIDENTIAL TREATMENT REQUESTED


6.5 Coral Enhancements. Coral shall be permitted to develop any feature, function or application similar or identical to any AirTouch or Joint Enhancement at anytime, provided Coral develops the same independently of such enhancement. All enhancements which are not AirTouch Enhancements or Joint Enhancements shall be the sole property of Coral, subject, however, to AirTouch's right to receive the same under Section 8.5 below. AirTouch acknowledges that throughout the term of this Agreement, Coral shall be developing and deploying Coral Enhancements to the Coral Applications.


SECTION SEVEN


PAYMENTS TO CORAL


7.1 License Payment. AirTouch shall pay to Coral [ *
] upon the turnover to AirTouch of any electronic copy of (1) the source code for the FraudBuster portion of the Coral Applications and (2) the Coral Documentation.


7.2 Maintenance Fees. Coral shall provide the maintenance and support provided in Section 8 below in AirTouch Markets free of charge for the first year following execution of this Agreement. Beginning on the second anniversary of this Agreement, AirTouch shall pay Coral a minimum of [ * ] per year for such maintenance and support for AirTouch Markets. AirTouch or the appropriate sublicensee shall have the option of purchasing the support and maintenance provided in Section 8 below for the authorized sublicensee, within 30 days of the earlier of the execution of a sublicense agreement for or the installation of any portion of the Coral Applications, at the rate of [*] per annum of the sublicense price, provided such price is determined in a good faith, arm's length and market reflective transaction. Coral may adjust the annual fee charged for support and maintenance annually by providing written notice to AirTouch or the sublicensee at least 90 days prior to the anniversary date of maintenance and support services. Notwithstanding the foregoing, Coral may not raise the annual fee charged for support and maintenance by more than [*] per year with a cap of [*] over the life of the Agreement. Once commenced, maintenance and support shall automatically renew each year at the previous year's fee, or if proper notice is given, at the amended fee, unless AirTouch or the sublicensee provides Coral with 60 days prior written notice of its election to terminate the same.


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SECTION EIGHT


CORAL'S SUPPORT OBLIGATIONS


8.1 Application Installation. Coral shall install the Coral Applications in AirTouch Markets under a schedule to be determined by the mutual agreement of the parties. AirTouch shall reimburse Coral for its actual costs of installation, including travel, accommodations and actual personnel costs, at no uplift. Coral shall provide the Coral Applications and AirTouch shall provide all hardware, ancillary software, network connectivity and all such other interfaces and items as may be necessary for the installations.


8.2 Support & Maintenance. Coral shall have primary responsibility for the support and maintenance o ...