AGREEMENT TO PURCHASE HARDWARE

EXHIBIT 10.9



AGREEMENT TO PURCHASE HARDWARE, RENDER SERVICES AND LICENSE AND SUBLICENSE DE USE OF SOFTWARE, EXECUTED ON ONE SIDE BY TELEFONOS DE MEXICO, S.A. DE C.V., REPRESENTED HEREIN BY ING. ADOLFO CEREZO PEREZ, IN HIS POSITION AS MANAGING AND FINANCE DIRECTOR, HEREINAFTER REFERRED TO AS "TELMEX", AND THE OTHER PART BY AMERICAN COMPUTER AND ELECTRONICS CORPORATION, REPRESENTED HEREIN BY MR. THOMAS RUSSOTTO, IN HIS POSITION AS VICE-PRESIDENT, HEREINAFTER REFERRED TO AS "ACEC" PURSUANT TO THE FOLLOWING RECITALS AND CLAUSES:



RECITALS:



I The representative of TELMEX states that:



a) His principal was incorporated as a Sociedad Anonima pursuant to Public Deed Number 34,726, dated December 23, 1947, which was attested before Notary Public number 54 of the Federal District, Mr. Graciano Contreras Saavedra, document which is currently registered under commercial record number 5229 of the Public Registry of Commerce of Mexico City, Federal District.



b) Under Public Deed number 79,436, dated April 10, 1984, granted before Notary Public number 54 of the Federal District, Mr. Graciano Contreras Saavedra, it was protocolized the General Ordinary and Extraordinary Shareholders Meeting of Telefonos de Mexico, S.A., held on March 15, 1984 in which it was adopted among others, including the variable capital regime, being recorded the first testimony in the above mentioned commercial record at the Public Registry of Commerce of the Federal District.



c) Through Public Deed number 94,333, dated December 11, 1990, granted before Notary Public number 54 of the Federal District, Mr. Graciano Contreras Saavedra it was protocolized the General Extraordinary Shareholders Meeting of Telefonos de Mexico, S.A. de C.V., held on July 15, 1990 in which it was agreed to increase the corporate capital and fully modify its corporate bylaws, being recorded the first testimony in the above mentioned commercial record in the Public Registry of Commerce of the Federal District.



d) The corporate of his principal is, among others, bill, install, maintain, operate and explode a Public Telephone and Telecommunications Network to render the public service of conducting voice, sound, data, text and image signals, at a local and long distance national and international level and the Public Service of Basic Telephone.



e) His principal has a Title of Concession granted by the Federal Government for a term of 50 years as of March 10, 1976, in accordance with the publication in the official Gazette of the Federation dated March 31, 1976 and the amendment to the Title of







Concession dated August 10, 1990 published in the official Gazette of the Federation on December 10, 1990 to render the services mentioned in the preceding paragraph.



f) Under Public Deed number 97,110 dated December 17, 1991, granted be-fore Notary Public number 54 of the Federal District, Mr. Homero Diaz Rodriguez whereby the authority to execute this agreement on behalf of its principal, same which has not been revoked nor modified.



g) His principal is domiciled in Parque Via 190, Col. Cuauhtemoc CP 06500, Mexico, D.F.



II The representative of ACEC declares under oath:



a) His principal is a corporation organized in accordance with the laws of the State of Maryland, United States of America, as evidenced with a copy of the bylaws, certified by the competent authority of the State of Maryland, United States of America.



b) Has the legal capacity to execute this agreement on behalf of its principal as evidenced in the Power of Attorney which is enclosed to this agreement.



c) The corporate purpose of his principal is, among others: design, manufacture, supply and service mediation devices for billing systems and fraud control for telephone companies.



d) His principal is currently in compliance with all its obligations as a supplier of equipment, software and rendering services before the corresponding authorities.



e) Has the financial and administrative ability to execute this agreement and the technical and economic conditions to perform the purposes of this agreement.



f) His Principal is domiciled at 209 Perry Parkway, Gaithersburg, Maryland, 20877 United States of America.



III Joint statements:



a) Both parties state through their representatives that they agree that this agreement does not restrict ACEC from rendering similar or equivalent professional services to the ones provided under this agreement to individuals or entities other than TELMEX, consequently this agreement shall not be considered at any moment as an exclusive agreement or as a labor agreement between the parties and therefore there shall not be made nor shall it be allowed to make any claim that may arise for these matters.



b)(sic) The clauses and titles of the same as well as the exhibits are listed below:













CLAUSE FIRST: PURPOSE OF THE AGREEMENT CLAUSE SECOND: PRICE CLAUSE THIRD: APPROVAL COMMITTEE CLAUSE FORTH: TERMS AND CONDITIONS OF PAYMENT CLAUSE FIFTH: DELIVERY CLAUSE SIXTH: DURATION CLAUSE SEVENTH: WORK PROGRAM CLAUSE EIGHTH: SITE ENGINEERING SERVICES CLAUSE NINTH: SOFTWARE SUPPLY CLAUSE TENTH: TRANSFER OF SOFTWARE CLAUSE ELEVENTH: DOCUMENTATION CLAUSE TWELFTH: TRAINING CLAUSE THIRTEENTH: CONDITIONS TO RENDER THE SERVICES CLAUSE FOURTEENTH: REPORT CLAUSE FIFTEENTH: CONVENTIONAL PENALTY CLAUSE SIXTEENTH: BOND CLAUSE SEVENTEENTH: WARRANTY CLAUSE EIGHTEENTH: INFORMATION AND CONFIDENTIALITY CLAUSE NINETEENTH: COPYRIGHTS CLAUSE TWENTIETH: PRIOR TERMINATION CLAUSE TWENTY FIRST: RESPONSIBILITY CLAUSE TWENTY SECOND: LABOR RESPONSIBILITY CLAUSE TWENTY THIRD: SUBCONTRACTING AND ASSIGNMENT

OF RIGHTS CLAUSE TWENTY FOURTH: FORCE MAJEURE CLAUSE TWENTY FIFTH: CAUSES OF TERMINATION CLAUSE TWENTY SIXTH: ACKNOWLEDGEMENT CLAUSE TWENTY SEVENTH: NOTICES CLAUSE TWENTY EIGHTH: AMENDMENTS CLAUSE TWENTY NINTH: DISPUTE RESOLUTION







l. - DESCRIPTION OF THE PROJECT 2. - DETAILED DESCRIPTION OF THE COSTS 3. - APPROVAL COMMITTEE 4. - WORK PROGRAM 5. - TRAINING 6. - DELIVERY PROCEDURE FOR THE PURPOSE OF PAYMENT 7. - CONDITIONS FOR THE UPGRADE OF THE DCMS LITE 8. - ALARMS 9. - TERMINOLOGY











c) Both parties state that having made the above statements, they agree to formalize this agreement pursuant to the following clauses and exhibits of the agreement.





CLAUSE FIRST. - PURPOSE OF THE AGREEMENT



ACEC is obligated with TELMEX to sell hardware, render professional services for the development and installation of the "TELEPROCESS PROJECT" described in Exhibit 1 of this agreement and to grant to TELMEX and its affiliated a license and sublicense to use the software as provided in this agreement and its exhibits. For these purposes, ACEC is obligated to supply, install and render the services which are described in Exhibit 1 hereof.



CLAUSE SECOND. - PRICE



The maximum amount that TELMEX will pay to ACEC for the development of the whole "TELEPROCESS PROJECT" shall be the amount of (Confidential material is omitted and has been filed separately with the Commission) without Value Added Tax, which is formed as follows:



Material and software (Confidential material is omitted and has been filed

separately with the Commission)



Services and royalties (Confidential material is omitted and has been filed

separately with the Commission)



Expenses (Confidential material is omitted and has been filed

separately with the Commission)



The price corresponding to expenses is an estimate therefore the final amount of the same shall be determined pursuant to the terms and conditions established in the clause Terms and Conditions of Payment of this agreement.



The above mentioned price includes a discount of (Confidential material is omitted and has been filed separately with the Commission) which ACEC undertakes to grant to TELMEX to support financing.



The detailed description of the costs related with the "TELEPROCESS PROJECT" are defined in Exhibit 2 of this agreement.



The price of the "TELEPROCESS PROJECT" also includes direct and indirect expenses that "ACEC" may have do to comply with this "AGREEMENT", except for those expressly mentioned in this "AGREEMENT".











CLAUSE THIRD. - APPROVAL COMMITTEE



In order to control the development of the "TELEPROCESS PROJECT" purpose of this "AGREEMENT", an Approval Committee shall be created, same which shall be formed by "TELMEX" personnel. This committee shall have the power to evaluate and approve the advances of the "TELEPROCESS PROJECT", issuing for these purposes a letter or approval to make the payment-



The Approval Committee is detailed in Exhibit 3 of this "AGREEMENT".



CLAUSE FORTH. - TERMS AND CONDITIONS OF PAYMENT



"TELMEX" shall pay in cash, pursuant to the conditions mentioned in Exhibit 6 of this "AGREEMENT", and prior authorization of the Approval Committee pursuant to the following:



ITEM PAYMENT Materials and software 40% upon delivery at "site" And royalties

50% upon start and test of equipment

5% upon connection with the Central

5% upon polling test with billing equipment



Services 100% upon delivery



Expenses 100% upon delivery



Payment of the software and hardware purpose of this "AGREEMENT", may be made by "TELMEX" by using any of its existing lines of financing, being obligated "ACEC" to provide the documents that "EXIMBANK" may require to make such payment.



Complementary documents that "ACEC" shall deliver to "TELMEX" for each item:



MATERIALS AND SOFTWARE. Commercial invoice of "ACEC" based on the price per unit indicated in Exhibit 2 of this "AGREEMENT" and the corresponding "Purchase Order" derived from this "AGREEMENT", enclosing the Certificate of Origin of the product and evidence that it was manufactured in the United States of America.



SERVICES AND ROYALTIES. Commercial invoice of "ACEC" based on the price per unit indicated in Exhibit 2 of this "AGREEMENT" and corresponding "Purchase Order" derived hereof.











If applicable, "TELMEX" shall withhold to "ACEC" the income tax (I.S.R.) in accordance with the applicable law.



EXPENSES. List of expenses, with enclosed documents and invoices, based on the price per unit indicated in Exhibit 2 of this "AGREEMENT". The above mentioned list shall include import duties, freight expenses, insurance and customs expenses of the software and hardware, purpose of this "AGREEMENT". ACEC shall deliver the original invoices and import certificate issued on behalf of "TELEFONOS DE MEXICO S.A. DE C.V.", and complying with all tax requirements then in effect. "TELMEX" will only reimburse to "ACEC" the expenses, provided that, they are related with the transportation, insurance or importation (including import duties) in accordance with the unit values indicated in Exhibit 2, table "A" of this "AGREEMENT" and pursuant to the transportation discount policies mentioned in Exhibit 2 and calculated in accordance with table "B" hereof.



Any excess in the expenses in relation to the price per unit indicated in Exhibit 2 table "A" shall be paid by "ACEC" except for any variation increasing import duties, that may not be controlled by "ACEC", as mentioned in Exhibit 2 hereof. In the event of a decrease in the expenses it shall be automatically reflected in the invoices that "ACEC" delivers to "TELMEX", such as the annual decrease of the duties applicable to the equipment pursuant to NAFTA, "ACEC" guarantees that the software and hardware supplied hereunder are of U.S. origin.



It shall be the responsibility of "ACEC" to import and make any customs proceedings required for the Software and Hardware purpose of this "AGREEMENT" on behalf and for the account of "TELMEX", paying the corresponding taxes, duties, expenses, import duties and value added tax.



"ACEC" shall obtain the documents with the fiscal requirements in effect, that evidence the legal importation of the Hardware and Software, and the expenses deriving from said importation, including insurance, transportation and customs agent and import duties.



"ACEC" shall be liable for any misuse of this power and hereby undertakes to maintain "TELMEX"'s interest safe from any damage, and to reimburse any damages that his misuse may cause without any legal or financial limitation.



"ACEC" undertakes to obtain a Surety Bond from those rendering services to "ACEC" related with the legal importation of the Software and Hardware purpose of this "AGREEMENT", under which they release "TELMEX" of any payment obligation to such individuals or entities in connection with this "AGREEMENT", being "ACEC" the only liable party before those individuals or entities for making the payments deriving from the services requested by "ACEC". This letter shall be delivered to "TELMEX" prior to the acceptance for reimbursement of any invoice issued by such individuals or entities.











It shall be deemed as a payment in cash, the one made by "TELMEX" after thirty (30) calendar days following the presentation of the invoices by "ACEC" with all the requirements, at the corporate domicile of "TELMEX" or at the place previously requested in writing by the latter, pursuant to the proceeding established by "TELMEX", and shall comply with the corresponding tax requirements. The invoices shall include the corresponding report of the activities developed, the advance of the "TELEPROCESS PROJECT" and the finished products, same which shall be approved by the Approval Committee.



Payments in American dollars in favor of "ACEC" deriving from the performance of the provisions of this "AGREEMENT" shall be made by wiretransfer in American dollars, within the Mexican legal framework authorizing the transfer of currency abroad, and considering the following information:



American Computer and Electronics Corporation 209 Perry Parkway 209 Perry Parkway Gaithersburg, Maryland 20877 U.S.A.



Citizens Bank of Maryland 14401 Sweitzer Lane Laurel, Maryland 20707 ABA # 055002969 Account # 121-030-0634



The reimbursement of expenses account denominated in National Currency (N$) shall be paid in cash in National Currency (N$), such as reimbursement of import duties, among others. "TELMEX" shall make the reimbursements through a wiretransfer of the amount of the invoices in National Currency (N$) to the account in National Currency (N$) indicated by "TELMEX" to "ACEC" in writing with enough anticipation, provided that such transfer is made outside of the national territory (Mexico), otherwise, "TELMEX" shall deliver a check in Nuevos Pesos (N$) in favor of AMERICAN COMPUTER AND ELECTRONICS CORPORATION.



CLAUSE FIFTH. - DELIVERY



"ACEC" shall deliver to "TELMEX" the Hardware and Software purpose of this "AGREEMENT" in "TELMEX" installations in Mexico, D.F. designated in the purchase orders deriving from this "AGREEMENT". "ACEC" has included in the costs mentioned in Exhibit 2 the redistribution of the Hardware and Software of the telephone Centrals designated by "TELMEX" to be installed by "ACEC".



The delivery proceeding for payment is established in Exhibit 6.











CLAUSE SIXTH. - DURATION



The term of this "AGREEMENT" shall be three (3) years as of the date of execution of the same, consequently it expires on indicated date, without need of a court notice.



The warranties established in this "AGREEMENT" shall continue in effect until its expiration.



The licenses and sublicenses to use the Software granted by "ACEC" to "TELMEX" and its Affiliates and that "TELMEX" has paid in whole shall be perpetual.



CLAUSE SEVENTH. - WORK PROGRAM



"ACEC" shall deliver to "TELMEX" within the following five days after the execution of this "AGREEMENT" a detailed WORK PROGRAM, which shall be submitted for "TELMEX" approval for its performance. "ACEC" undertakes to supply the Hardware, Software and services to "TELMEX" in the places and dates designated by the latter, and in accordance with the criteria set forth in Exhibit 4 to this "AGREEMENT".



In the event of changes to the WORK PROGRAM due to "TELMEX" needs, both parties shall agree in writing to the corresponding amendments.



CLAUSE EIGHTH. - "SITE" ENGINEERING SERVICES



"ACEC" shall provide in the initial stage of "site" engineering services, visiting each central, prior the issuance by "TELMEX" of a "Purchase Order" for the Hardware and Software for such centrals included under this "AGREEMENT" in order for "ACEC" to obtain the data required by "ACEC" for the "site survey" procedures or field survey.



Both parties agree that these services are required to determine the condition of the equipment, of the "upgrade", the condition of the electric installation, the location of the equipment and devices, wiring and interfaces among others.



The field surveys performed by "ACEC" shall be delivered to "TELMEX" in a series of reports grouped in binders by SOT, for its later use and validation.



The field reports shall be performed prior programming with "TELMEX".











CLAUSE NINTH. - SOFTWARE SUPPLY



For purposes of this "AGREEMENT", the software includes the operative Systems, the System Software (including the software for storage and delivery, software for management of the system, software for diagnosis and maintenance, software for automatic alarm report), Application Software and Network Management Software, whether "ACEC" is the author of said Software or has the authorization to license or sublicense the same.



"ACEC" shall provide to "TELMEX" the software as follows:



a) The supply of the Software shall be made with all the corresponding related documents, diskettes or magnetic means, in accordance with the date(s) established hereunder on the requests deriving herefrom.



b) With the purpose of protecting the industrial and intellectual property related with the Software subject of this "AGREEMENT", "TELMEX" hereby is obligated to reproduce in copies used as back-up the notices of being a trade secret and a copyright as applicable in accordance with "ACEC"'s indication then in effect.



c) "ACEC" undertakes to supply and install the Software or to be installed by "TELMEX" as the latter deems it convenient, in the equipment and dates designated in the WORK PROGRAM.



d) "ACEC" shall be responsible for submitting to "TELMEX" any new updated, if any, Software without additional cost for "TELEMEX", within the next fifteen (15) working days after the new product is released, during the duration of this "AGREEMENT".



e) "ACEC" undertakes to supply to the "TELEMEX'S" Systems library an original additional copy all the documents regarding the Software Application, including the main programs and documentation of the whole licensed and sublicensed Software and new versions (the "Documentation"), in the same delivery dates established in c) of this clause.



f) All Software shall be delivered based on executable programs except for Software Application, which shall be supplied along with the source code. With this code "TELMEX" will be able to modify the existing applications as well as modify the call registration format, increasing or decreasing its size and auditioning eliminating fields.



CLAUSE TENTH. - TRANSFER OF SOFTWARE



"TELMEX" may transfer the software subject of this "AGREEMENT" without additional cost for "TELMEX" within the Mexican Republic to a computer equipment of











similar configuration, if the latter substitutes the computer equipment designated by "TELMEX" or if the computer equipment designated by "TELMEX" were transferred to a different location within "TELMEX" whether within the territory of the Mexican Republic or abroad, provided "TELMEX" previously notifies "ACEC".



CLAUSE ELEVENTH. - DOCUMENTATION



"ACEC" shall deliver all documentation related with the use of the Software and Hardware in the terms and conditions established in this "AGREEMENT".



The following documents shall be delivered in Spanish:



- - DCMS user's manual - - DC4S Lite user's manual - - ANMS user's manual



CLAUSE TWELFTH. - TRAINING



"ACEC" undertakes to provide sufficiently broad training both in the theoretical and practical aspect, in order for "TELMEX" and INTTELMEX personnel to be able to train "TELMEX" personnel to perform the functions of: projecting, installing, testing, receiving, operating, maintaining, and supervising adequately and satisfactorily the systems and/or equipment purpose of this "AGREEMENT"; in the understanding that such training shall be for the time and quality required by "TELMEX" and INTTELMEX without any additional cost and complying the specifications contained in Exhibit 5 of this "AGREEMENT".



CLAUSE THIRTEENTH. - CONDITIONS TO RENDER THE SERVICES



a. "TELMEX" shall have the right to continuously supervise the quality control and to approve the performance of the works under this "AGREEMENT", at all times and until the end of the same.



b. Upon termination of the "TELEPROCESS PROJECT" dully accepted by "TELMEX", termination letter of the same shall be signed, provided that the works contained hereunder have been performed and finished in accordance with "TELMEX"'s requirements. Through this letter the services shall deemed to have been accomplished with "TELMEX" conformity.



C. "ACEC" shall provide the Hardware, Software and Services object of this "AGREEMENT" at "TELMEX" offices and/or in the places indicated in writing by "TELMEX".







"TELMEX" shall issue in advance a "Work Order" in which it will specify the equipment that shall be installed and where at. In addition it shall coordinate and inform the "TELMEX"'s personnel that shall be responsible for providing the operative support required in order for "ACEC" to make such installation or group of installations, likewise "TELMEX" shall allow access to its installations to "ACEC"'s personnel and shall proceed without delay to render the services.



"TELMEX"'s operational support shall be performed in advance upon initiation of the installations, in view of the fact that any delay by "TELMEX" shall be considered as not attributable to "ACEC" for purposes of compliance with the "WORK PROGRAM".



d "ACEC" is obligated that any alien personnel hired to perform the works established in this "AGREEMENT", shall have the necessary immigration quality and characteristics for the valid performance of the same, in accordance with the provisions of the applicable Mexican laws. For such effect, "ACEC" shall timely perform at its cost, any application, authorization, request or proceeding required before the competent authorities-



e. "ACEC"'s personnel shall perform the works object of this "AGREEMENT" complying with the general security measures established by "TELMEX", for the access and circulation in the premises of the latter and of those that may be provided to them.



f. In regard to the personnel used by "ACEC" or the services object of this "AGREEMENT", "TELMEX" shall at all times the ability to notify to "ACEC" that one or more of its employees are not accepted by "TELMEX", being enough for this purposes simple written notice justifying the causes or reasons for which the replacement of the personnel is requested. In such event, "ACEC" shall remove from "TELMEX" the employees and shall replace them with other(s), for the compliance of the purpose of this "AGREEMENT" within the time and quality required. All the expenses related with such change shall be borne by "ACEC".



g. The personnel designated by "ACEC" to perform the purpose of this "AGREEMENT" within the Mexican Republic, shall speak, understand and read the Spanish language. Thus all the work performed by "ACEC"'s personnel shall be in Spanish language except for those which by their own nature have to be in another language.



h. "ACEC" undertakes to have within the Mexican Republic a permanent representative for at least the term of this "AGREEMENT".



i. In the event of an "upgrade" of the DCMS Lite the conditions established in Exhibit 7 hereof shall apply.











j. "ACEC" shall additionally have a civil liability insurance to cover the damages that "ACEC" might cause to the Hardware and Software or to "TELMEX"'s personnel -in the performance of the installation works or during the transit at "TELMEX" premises.



CLAUSE FOURTEENTH. - REPORT



"ACEC" hereby is obligated to submit a weekly report before the Approval Committee that shall include the advance and final result of the works and the activities developed to accomplish the purpose of this "AGREEMENT". Said report shall be enclosed to the invoice for its payment duly authorized by the Approval Committee.



"ACEC" shall have the obligation to deliver to "TELMEX" all the information related to the status of the performance of the works related to the "TELEPROCESS PROJECT" whenever required by "TELMEX", in a term that shall no exceed 72 business hours as of the receipt of written request.



CLAUSE FIFTEENTH.- CONVENTIONAL PENALTY



The parties agree that in the event of any delay in any date compromise or time to answer deriving from this "AGREEMENT", including the guarantees or causes attributable exclusively to "ACEC", it shall pay to "TELMEX" a conventional penalty equivalent to 0.066% daily, calculating such percentage on the total price of the products (Hardware, Software and/or Services), corresponding to the Central in which such delay occurs, in accordance with the Purchase Order.



Such conventional penalty shall be subtracted from the payment of the corresponding invoice, provided there are bills pending of payment by "TELMEX" to "ACEC", otherwise or when the amount of the Conventional Penalty is greater than the amount of said invoice, "ACEC" undertakes to deliver to "TELMEX", when required by the latter, a cheque in favor of "TELEFONOS DE MEXICO, S.A. DE C.V.", for the amount resulting from the delay.



CLAUSE SIXTEENTH.- BOND



"ACEC" shall guarantee the obligations related to this "AGREEMENT" through a bond which shall be granted by a Mexican prestige institution, authorized by the Ministry of Finance, which shall be issued in favor of and to the satisfaction of "TELMEX" pursuant to the following:



a. The bond shall be granted in national currency, for ten percent (10%) of the total amount of this "AGREEMENT", considering the exchange rate published by Banco de Mexico in the Official Gazette of the Federation on the date of issuance of the bond, same











which shall be submitted to the Credit management Office and "TELMEX" "AGREEMENT" for its safekeeping, within the following thirty (30) natural days to the date of execution of this "AGREEMENT".



b. The bond shall be in order for "ACEC" to guarantee each and every of ...