Software Development And License Agreement

XEROX CORPORATION
555 SO. AVIATION BLVD.
MS M1 025
EL SEGUNDO, CA 90245
ATTN: HARVEY L. HUDDLESTON


Inquiries to the DEVELOPER concerning this Agreement should be addressed to:


T/R SYSTEMS, INC.
1300 OAKBROOK DRIVE
NORCROSS, GA 30093
ATTN: EDWARD GAUGHAN


TABLE OF CONTENTS


I. Definitions II. Title to Licensed Software and Marketing Exclusivity III. License Grant IV. License Fee V. Royalty VI. Marketing of Licensed Software VII. Enhancements to Licensed Software VIII. Specifications, Delivery and Acceptance IX. Warranty after Approval X. Technical Support XI. Termination XII. Indemnification XIII. Disclaimer XIV. Force Majeure XV. Ethical Standards XVI. Confidential Information XVII. Assignment XVIII. Modification XIX. Bankruptcy XX. Compliance with the Law XXI. Nonpublicity XXII. Controlling Law XXIII. General Provisions XXIV. Attachments


ATTACHMENT SCHEDULE


I. Specifications II. Delivery and Fee III. Royalty IV. Technical Support V. Distribution of Licensed Software VI. Product Packaging VII. End-User Agreement VIII. Licensed Software Xerox Printers Configuration & Communication
Functionality IX. Licensed Software Acceptance Test


This Agreement is made between T/R Systems ("DEVELOPER"), with offices at 1300 Oakbrook Drive, Norcross, Georgia 30093 and XEROX CORPORATION, ("XEROX") with offices at 555 South Aviation Blvd, El Segundo, CA. 90245, and shall be effective as of July 31, 2001 or the date on which the signature of the last party to sign is placed on the agreement.


RECITALS


DEVELOPER has either created, or has the rights to certain computer programs, DOCUMENTATION, and related written materials as defined in Attachment I, ("Underlying Software") and XEROX desires to acquire a right and license to market the Underlying Software as modified by DEVELOPER for XEROX, under the terms and conditions set forth in this Agreement; and


DEVELOPER is willing to grant such rights and licenses and is further willing to prepare modifications and additions to the Underlying Software and provide Technical Support as required herein; and:


In consideration of the mutual Agreements contained in this Agreement, DEVELOPER and XEROX hereby agree as follows:


I. DEFINITIONS


1.01 "LICENSED SOFTWARE" means all software, IMPROVEMENTS and DOCUMENTATION created or developed pursuant to this Agreement from the Underlying Software and conforming to the Specifications set forth in Attachment I hereof, and shall include all modifications, improvements, enhancements, additions, derivative works, updates, releases and versions thereof; provided, however, that the term "Licensed Software" as used throughout this Agreement shall be subject to XEROX' rights as set forth in Section 2.01.


1.02 "DERIVATIVE WORKS" means any work based on, and derived from, the IMPROVEMENTS, which


PAGE 1


* Confidential information has been omitted and filed separately with the
Commission


2 derivation was created or developed at the expense of, or on the initiative of, Xerox as additionally detailed in 2.01.


1.03 "IMPROVEMENTS" means the software program portions of the LICENSED SOFTWARE developed specifically for XEROX for interface with and connectivity to the Underlying Software.


1.04 "DOCUMENTATION" means all written text including but not limited to manuals, brochures, specifications and software descriptions, in electronic, printed and/or camera ready form, and related materials customarily needed for use with LICENSED SOFTWARE.


1.05 "XEROX COMPANIES" means Xerox Corporation, Fuji Xerox Co., Ltd., and their respective subsidiaries and affiliates, and "XEROX COMPANY" shall mean any one of the aforesaid companies.


1.06 "End-User" means a person or entity that acquires the LICENSED SOFTWARE from XEROX for use other than resale or distribution.


1.07 "Specification" means the Licensed Software description in Attachment I which may change from time to time and is expressly incorporated herein by this reference.


II. TITLE TO LICENSED SOFTWARE & MARKETING EXCLUSIVITY


2.01 Title to the UNDERLYING SOFTWARE resides in DEVELOPER. XEROX COMPANIES have the exclusive right to distribute the LICENSED SOFTWARE themselves, or through authorized dealers or distributors, under the terms and conditions set forth in Attachment V of this Agreement. Title to the IMPROVEMENTS and the DERIVATIVE WORKS shall reside in XEROX. If the DERIVATIVE WORKS are prepared by DEVELOPER, they shall be deemed a work-for-hire, and if any such work does not so qualify, DEVELOPER hereby assigns and transfers to XEROX the full copyright therein. Nothing herein shall restrict DEVELOPER's rights to the Underlying Software.


III. LICENSE GRANT


3.01 DEVELOPER grants and conveys to XEROX COMPANIES a perpetual, exclusive, world-wide right and license to market and distribute the LICENSED SOFTWARE pursuant to the terms set forth in this Agreement. No rights are granted to XEROX in the Underlying Software as a stand-alone product.


3.02 The license to market granted in this Agreement extends to and includes Releases [x.x.(x)] of the LICENSED SOFTWARE. These releases will include all error corrections. DEVELOPER will provide XEROX written notification of pending new updates, releases and versions and availability thereof, sufficiently in advance of publication in order for XEROX to react in a timely manner.


3.03 XEROX grants to DEVELOPER a perpetual, nonexclusive, royalty-free, world-wide right and license (with a right to sublicense) to copy the IMPROVEMENTS and DERIVATIVE WORKS for purposes of distributing the LICENSED SOFTWARE to XEROX pursuant to this Agreement.


IV. LICENSE FEE


4.01 If XEROX agrees to pay DEVELOPER a license fee for development of the LICENSED SOFTWARE, the specific items, maximum dollar value, and payment schedule of such fee will be defined in Attachment II, entitled "Delivery and Fee."


4.02 In the event the parties have identified a development fee in Attachment II, DEVELOPER shall provide to XEROX evidence that the applicable Delivery Milestones described on Attachment II have been met, and XEROX's obligation to pay DEVELOPER shall be contingent upon the receipt of such evidence. All payments shall be made [ * ] days following XEROX' receipt of DEVELOPER's invoice.


V. ROYALTY


5.01 DEVELOPER will charge the prices for each unit of LICENSED SOFTWARE set forth in Attachment III.


VI. MARKETING OF LICENSED SOFTWARE


6.01 DEVELOPER will provide to XEROX full, complete and accurate marketing information, technical specifications, and update descriptions related to the LICENSED SOFTWARE for the primary purpose of promotion thereof, so that XEROX COMPANIES can, on a periodic basis and as new changes or additions occur, distribute the same to its sales force and End-Users. During the term of this Agreement, XEROX COMPANIES may also include LICENSED SOFTWARE product description and information in any XEROX literature. The distribution of such literature by XEROX COMPANIES will be at the expense of XEROX COMPANIES. XEROX COMPANIES may, at their option and expense, prepare its own promotional literature relating to LICENSED SOFTWARE and distribute the same to its sales force and End-Users.


PAGE 2


* Confidential information has been omitted and filed separately with the
Commission 3 VII. ENHANCEMENTS TO LICENSED SOFTWARE


7.01 As DEVELOPER issues new releases of the Underlying Software, DEVELOPER agrees to issue new releases of the LICENSED SOFTWARE containing the enhancements to the Underlying Software contained in the new releases thereof, at DEVELOPER's expense, for future distribution by XEROX; provided that if such customizations of the LICENSED SOFTWARE are more than routine in nature or expense, XEROX will pay DEVELOPER such amounts as are mutually agreed to by the parties.


VIII. SPECIFICATIONS, DELIVERY AND ACCEPTANCE


8.01 DEVELOPER will develop the LICENSED SOFTWARE in accordance with the Specification defined in Attachment I and will deliver the LICENSED SOFTWARE to XEROX in accordance with Schedule A, B, or C of Attachment II, as appropriate.


8.02 XEROX reserves the right to make changes to the Specifications at any time prior to delivery of the LICENSED SOFTWARE in accordance with 8.01 and DEVELOPER agrees to make such changes; provided that XEROX and DEVELOPER have negotiated in good faith and agreed to an equitable adjustment in fees or time schedule, as necessary, for substantial changes to the specification and/or changes which affect the dates for scheduled delivery.


8.03 After delivery as stated in 8.01 of the LICENSED SOFTWARE, XEROX will have [ * ] days to test the same and to notify DEVELOPER in writing of either its Approval or reasons for non-conformance to the Specifications of Attachment I. The Acceptance Criteria in Attachment I shall serve as the criteria which Xerox will use in making its determination as to Approval.


8.04 Upon notification by XEROX in accordance with 8.03 that the LICENSED SOFTWARE does not meet the Specifications of Attachment I, DEVELOPER will correct the LICENSED SOFTWARE within a correction period of [ * ] days following receipt of written notice from XEROX, and XEROX will be relieved of its [ * ] day Approval obligation set forth in 8.03. If DEVELOPER subsequently delivers corrected LICENSED SOFTWARE to XEROX within said [ * ] day correction period, XEROX will have an additional [ * ] days from receipt to reevaluate the corrected LICENSED SOFTWARE.


8.05 If DEVELOPER is unable to meet the Specifications of Attachment I in the [ * ] day correction period of 8.04, or within [ * ] days of the delivery milestone dates set forth in Attachment I or II then as XEROX' sole remedy and at its option XEROX may:


(a) Extend the correction period by an amount of time as may be a
determined by XEROX; or


(b) Approve the LICENSED SOFTWARE with an equitable reduction in
the fee specified in Attachment II, Schedule B; or


(c) Reject the LICENSED SOFTWARE by notifying DEVELOPER of such in
writing and promptly returning all LICENSED SOFTWARE to
DEVELOPER with all copies made thereof upon DEVELOPER
refunding to XEROX any advances paid to DEVELOPER (if
applicable); or


(d) Elect to terminate the Agreement.


IX. WARRANTY AFTER APPROVAL


9.01 DEVELOPER represents and warrants that the LICENSED SOFTWARE, after Approval by Xerox as provided in Article VIII, will conform to the Specifications set forth in Attachment I in all material respects, including without limitation Year 2000 Performance Compliance and thus will be able to accurately process data (including but not limited to calculating, comparing and sequencing) from, into, and between the twentieth and twenty-first centuries, including leap year calculations, and will remain so for [ * ] days.


9.02 If any program errors as described in Section 9.01 are discovered by XEROX following Approval and during the [ * ] day period specified in Section 9.01, DEVELOPER shall correct such errors at no charge to XEROX within a correction period in accordance with Attachment IV following receipt of written notice from XEROX of such errors. DEVELOPER shall not be obligated to correct, cure or otherwise remedy any error if the same is caused by any unauthorized changes to the LICENSED SOFTWARE, use with hardware or in an operating environment other than that specified in the Specifications, or misuse or damage by an End User.


9.03 If the program errors of 9.02 cannot be eliminated by DEVELOPER in the correction period referred to in Section 9.02, then as XEROX' remedy and at its option XEROX may:


(a) Extend the correction period by an amount of time as may be
determined by XEROX; or


(b) Approve the LICENSED SOFTWARE with an equitable reduction in
the fee specified in Attachment II, Schedule B; or


PAGE 3


* Confidential information has been omitted and filed separately with the
Commission 4
(c) Reject the LICENSED SOFTWARE by notifying DEVELOPER of such in
writing and promptly returning all copies of LICENSED SOFTWARE
furnished by DEVELOPER to DEVELOPER upon DEVELOPER refunding
to XEROX any advances paid to DEVELOPER (if applicable).


9.04 EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH HEREIN, DEVELOPER HEREBY DISCLAIMS AND XEROX HEREBY EXPRESSLY WAIVES ANY AND ALL OTHER EXPRESS WARRANTIES OR REPRESENTATIONS OF ANY KIND OR NATURE, AND ANY AND ALL IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.


X. TECHNICAL SUPPORT


10.01 DEVELOPER shall provide technical support and maintenance of the LICENSED SOFTWARE to XEROX in conformity with the terms and conditions defined in Attachment IV, entitled "Technical Support."


XI. TERMINATION


11.01 The term of this Agreement shall be perpetual provided that neither party terminates or has terminated this Agreement as expressly provided below.


11.02 Either DEVELOPER or XEROX may terminate this Agreement by written notice of termination to the other party upon a material breach by DEVELOPER or XEROX which has not been cured within thirty (30) days of written notice of such breach. Termination of this Agreement shall also occur upon the rejection of the LICENSED SOFTWARE in accordance with 8.05(c) except that the obligations as to CONFIDENTIAL INFORMATION herein and any other remedies available, such as return of fees, shall not be waived and shall survive termination.


11.03 XEROX reserves the right, in whole or in part, in the exercise of its discretion, to terminate this Agreement upon not less than thirty (30) days written notice to DEVELOPER. In the event of termination or upon expiration of this Agreement, DEVELOPER shall return to XEROX any and all documents, materials, work product and all copies made thereof, which were obtained by DEVELOPER from XEROX or which were developed by DEVELOPER as a result of the work performed hereunder. In the event XEROX terminates this Agreement prior to its expiration date, XEROX' sole obligation shall be to pay DEVELOPER for the work completed as of the date of termination.


11.04 Subject to Attachment V, DEVELOPER reserves the right, in whole or in part, in the exercise of its discretion, to terminate the distribution portions of this Agreement upon not less than [ * ] days written notice to XEROX if DEVELOPER, in its sole discretion, determines that it shall discontinue the manufacture of the Underlying Software and therefore the LICENSED SOFTWARE. In the event of termination or upon expiration of this Agreement, XEROX shall return to DEVELOPER any and all documents, materials, work product and all copies made thereof, which were obtained by XEROX from DEVELOPER; provided, however, that XEROX may retain such portion of the foregoing to the extent necessary to continue to provide ongoing support to existing End-Users in accordance with Attachment IV, and further provided that such End-Users' right to use the LICENSED SOFTWARE shall continue subject to the terms of each individual End-User Agreement.


XII. INDEMNIFICATION


12.01 DEVELOPER represents and warrants that it has sufficient right, title and interest in and to the Underlying Software and the LICENSED SOFTWARE to enter into this Agreement and further warrants that it is not aware that the Underlying Software or LICENSED SOFTWARE infringes any patent, copyright or other proprietary right of a third party and that it has not been notified by a third party of a possibility that the Underlying Software or LICENSED SOFTWARE might infringe any patent, copyright or other proprietary right of a third party.


12.02 DEVELOPER shall indemnify, defend and hold XEROX COMPANIES harmless from, and pay any judgment for, any claim, action or other proceeding brought against any XEROX COMPANY arising from the use of the LICENSED SOFTWARE (including reasonable attorneys' fees incurred in connection with the foregoing), providing that such XEROX COMPANY promptly notifies DEVELOPER in writing of any action or claim, allows DEVELOPER, at DEVELOPER'S expense, to direct the defense, gives DEVELOPER full information and reasonable assistance required to defend such suit, claim or proceeding, at no out-of-pocket expense to XEROX, and allows DEVELOPER to pay any judgment, provided further that DEVELOPER shall have no liability for any claim, action or other proceeding based upon acts or omissions by XEROX or for settlements or costs incurred without the knowledge of DEVELOPER. Any claim for indemnification hereunder shall be calculated on an after-tax basis and shall be after consideration of any insurance recoveries received by any XEROX COMPANY. To avoid infringement, DEVELOPER may, at its option, and at no charge to XEROX, obtain a


PAGE 4


* Confidential information has been omitted and filed separately with the
Commission 5 license or right to continue the use of the LICENSED SOFTWARE, or modify the LICENSED SOFTWARE so it no longer infringes, but is still an equivalent of the LICENSED SOFTWARE, or substitute an equivalent of the LICENSED SOFTWARE, or, if none of the foregoing are commercially reasonable, refund to XEROX all fees paid for the LICENSED SOFTWARE. DEVELOPER shall not have any obligation under this Section 12.02 to the extent third-party claim is based on: (i) use of any altered version of the LICENSED SOFTWARE not authorized in writing by DEVELOPER. (ii) use, operation or combination of the LICENSED SOFTWARE on or with programs, data, equipment or documentation not provided by DEVELOPER; and/or (iii) any activities of XEROX or its representatives after DEVELOPER has notified XEROX that such activities may result in the infringement of the intellectual property rights of any third party. This Section 12.02 states that entire liability of DEVELOPER and the exclusive remedy of XEROX with respect to any alleged infringement of third-party rights by the LICENSED SOFTWARE or any part thereof.


12.03 XEROX shall indemnify and hold DEVELOPER free and harmless from and against any and all costs (including attorneys' fees), liabilities, expenses, claims, demands, actions, or causes of action that may be incurred by or threatened against DEVELOPER and that arise out of (i) the failure of XEROX or its employees, representatives, agents or dealers ("Representatives") to comply with XEROX's obligations under Attachment V; (ii) any misrepresentation by XEROX or its Representatives in connection with DEVELOPER or the LICENSED SOFTWARE; and (iii) any other wrongful conduct of XEROX and the Representatives in connection with this Agreement. Notwithstanding the foregoing, XEROX shall have no obligation under this Section 12.03 unless DEVELOPER promptly notifies XEROX in writing of any action or claim, allows XEROX, at XEROX's expense, to direct the defense, gives XEROX full information and reasonable assistance required to defend such suit, claim or proceeding, at no out-of-pocket expense to DEVELOPER, and allows XEROX to pay any judgment, provided further that XEROX shall have no liability for any claim, action or other proceeding based upon acts or omissions by DEVELOPER or for settlements or costs incurred without the knowledge of XEROX.


XIII. DISCLAIMER


13.01 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOST CONTRACTS OR LOST PROFITS OR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT HOWEVER CAUSED UNDER A CLAIM OF ANY TYPE OR NATURE BASED ON ANY THEORY OF LIABILITY (INCLUDING CONTRACT, TORT OR WARRANTY) EVEN IF THE POSSIBILITY OF SUCH DAMAGES HAS BEEN COMMUNICATED. DEVELOPER'S TOTAL LIABILITY TO XEROX FOR ANY OBLIGATION UNDER THIS AGREEMENT SHALL NOT EXCEED (i) THE FEES PAID BY XEROX TO DEVELOPER PURSUANT TO ATTACHMENT II, IF SUCH LIABILITY RELATES TO THE DEVELOPMENT OF THE LICENSED SOFTWARE, OR (ii) THE FEE PAID BY XEROX TO DEVELOPER PURSUANT TO ATTACHMENT III FOR THE SPECIFIC UNIT OF LICENSED SOFTWARE IN QUESTION, IF SUCH LIABILITY RELATES TO PURCHASED UNITS OF LICENSED SOFTWARE. THE LIMITATIONS SET FORTH IN THIS PARAGRAPH SHALL NOT APPLY TO THE PARTIES' INDEMNIFICATION OBLIGATIONS STATED IN ARTICLE 12, WHICH SHALL BE GOVERNED BY THEIR TERMS. Notwithstanding anything else to the contrary, DEVELOPER will in no event refund more than one license fee per unit of LICENSED SOFTWARE, which refund, if required, will be paid to XEROX who agrees that it will be remit such amount to the End User.


XIV. FORCE MAJEURE


14.01 Neither party shall be liable to the other for its failure to perform any of its obligations hereunder during any period in which such performance is delayed by circumstances beyond its reasonable control, provided that the party experiencing such delay promptly notifies the other party of the delay.


XV. ETHICAL STANDARDS


15.01 DEVELOPER agrees that, with respect to its role as supplier to XEROX including any interaction with any employee of XEROX, it shall not: (1) give or offer to give any gift or benefit to said employee, (2) solicit or accept any information, data, services, equipment, or commitment from said employee unless same is (i) required under a contract between XEROX and DEVELOPER, or (ii) made pursuant to a written disclosure Agreement between XEROX and DEVELOPER, or (iii) specifically authorized in writing by XEROX' management, (3) solicit or accept favoritism from said employee, and (4) enter into any outside business relationship with said employee without full disclosure to, and prior approval of, Xerox management. As used herein: "employee" includes members of the employee's immediate family and household, plus any other person who is attempting to benefit from his or her relationship to the employee.


PAGE 5


* Confidential information has been omitted and filed separately with the
Commission 6 "DEVELOPER" includes all employees and agents of DEVELOPER. "Gift or benefit" includes money, goods, services, discounts, favors and the like in any form but excluding low value advertising items such as pens, pencils and calendars. "Supplier" includes prospective, current and past suppliers, and "favoritism" means partiality in promoting the interest of DEVELOPER over that of other suppliers. Such activity by DEVELOPER shall constitute breach of contract by DEVELOPER and may further result in DEVELOPER'S debarment.


XVI. CONFIDENTIAL INFORMATION


16.01 This Agreement supersedes any prior agreement as to the Underlying Software or the LICENSED SOFTWARE.


16.02 Each party (the "Receiving Party") agrees not to intentionally disclose or intentionally make available to any third party information received from the other party (the "Disclosing Party") (hereinafter referred to as "CONFIDENTIAL INFORMATION") in any form without the express written approval of the Disclosing Party.


16.03 The Receiving Party shall not use such CONFIDENTIAL INFORMATION except to the extent necessary to perform under this Agreement and shall not intentionally circulate the CONFIDENTIAL INFORMATION within its own organization except to those with a specific need to know such CONFIDENTIAL INFORMATION. If written approval by the Disclosing Party is given to the Receiving Party to disclose CONFIDENTIAL INFORMATION to a third party, the Receiving Party shall impose similar confidential restrictions on such third party to whom it discloses such CONFIDENTIAL INFORMATION.


16.04 The obligations on the Receiving Party recited herein shall terminate with respect to any particular portion of such CONFIDENTIAL INFORMATION when and to the extent that it is or becomes:


(a) Part of the public domain through no fault of the Receiving
Party;


(b) Communicated by the Disclosing Party to a third party free of
any obligation of confidence;


(c) Independently developed by the Receiving Party without any
reference to the CONFIDENTIAL INFORMATION; or


(d) Known to the Receiving Party free of any obligation of
confidence.


16.05 In no event shall the obligation of the Receiving Party as recited in 16.03 with respect to the CONFIDENTIAL INFORMATION extend beyond three (3) years from the date of disclosure.


16.06 Upon request by the Disclosing Party after Approval by XEROX of the LICENSED SOFTWARE or termination of this Agreement, whichever occurs first, the Receiving Party agrees to promptly return the CONFIDENTIAL INFORMATION to the Disclosing Party.


XVII. ASSIGNMENT


17.01 This Agreement may not be assigned or transferred by either party without the prior written approval of the other party; provided that DEVELOPER may assign its rights to any purchaser of all or substantially all of its business, and XEROX may assign its rights hereunder, or any portion thereof, to any subsidiary or affiliate of XEROX or to any purchaser of all or substantially all of its business for which the LICENSED SOFTWARE is then licensed. Subject to the limitations heretofore expressed, this Agreement shall inure to the benefit of and be binding upon the parties, their successors, administrators, heirs and assigns.


XVIII. MODIFICATION


18.01 This Agreement constitutes the entire Agreement of the parties as to the subject matter hereof and supersedes all prior and contemporaneous communications. This Agreement shall not be modified, except by a written Agreement signed by duly authorized representatives of DEVELOPER and XEROX.


XIX. BANKRUPTCY


19.01 To the extent permitted by applicable law (including II U.S.C. Section 365) the non-defaulting party may terminate this Agreement immediately by written notice to the other in the event the other party makes an assignment for the benefit of its creditors, admits in writing an inability to pay debts as they mature, a trustee or receiver is appointed respecting all or a substantial part of the other party's assets, or a proceeding is instituted by or against the other party under any provision of the Federal Bankruptcy Act and is acquiesced in or is not dismissed within sixty (60) days, or results in an adjudication of bankruptcy. To the extent applicable law prevents the non-defaulting party from terminating this Agreement, if it should wish to do so as described above, then the parties shall have only those rights and remedies permitted by applicable law, including the United States Bankruptcy Act, including but not limited to II U.S.C. Section 365. However, XEROX, as the non-defaulting party, has the unrestricted right, at its option, not to terminate this Agreement and to continue as the exclusive distributor of the LICENSED SOFTWARE.


PAGE 6


* Confidential information has been omitted and filed separately with the
Commission 7 XX. COMPLIANCE WITH THE LAW


20.01 DEVELOPER represents and warrants compliance with all Federal, State and local laws, ordinances and regulations applicable to this Agreement including, but not limited to, applic ...