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01-0206_ADVANCED UTILLITY SYSTEMS_Software Licence and Implementation Agreement 4 SOFTWARE LICENCE AND IMPLEMENTATION AGREEMENT BETWEEN ADVANCED UTILITY SYSTEMS CORPORATION - and— CAPISTRANO VALLEY WATER DISTRICT 2235 SHEPPARD AVE EAST SUITE 1102 TORONTO ON M2J 585 � www.ausc.COM PATRICIA SORBARA PRESIDENT & D N D CHIEF EXECUTIVE OFFICER TEL (416) 496 0149 EXT 225 FAX(416) 4963910 UTILITY SYSTEMS CELL(4 16) 4026644 psorbara@ausc.com Advanced Utility Systems Corporation 2235 Sheppard Avenue E.,Suite 1702 + Toronto, Ontario M2J 5B5 TABLE OF CONTENTS Page No. ARTICLE I INTERPRETATION...........................................................................................1 1.1 Definitions............................................................................................................. 1 1.2 Time of the Essence............................................................................................... 3 -1.3 Currency................................................................................................................3 1.4 Headings................................................................................................................3 1.5 Plurals and Gender.................................................................................................3 1.6 Schedules...............................................................................................................3 ARTICLE II SOFTWARE LICENCES..................................................................................3 2.1 Grant of Licenses...................................................................................................3 2.2 Term of Licenses ...................................................................................................4 2.3 Restrictions on Use................................................................................................4 2.4 Derivation, Modification and Copyright.................................................................4 2.5 Acceptance of Software .........................................................................................4 2.6 Ownership of Software and Confidential Information ............................................4 2.7 Escrow...................................................................................................................5 2.8 Ownership and Disposition of Documents.............................................................7 ARTICLE III CONSULTING SERVICES.............................................................................7 3.1 The Consultant's Services......................................................................................7 3.2 Performance by Consultant....................................................................................7 3.3 Performance by District......................................................................................... 8 3.4 Support Agreement................................................................................................ 8 ARTICLE IV REPRESENTATIONS AND WARRANTIES................................................8 4.1 Warranty of Performance....................................................................................... 8 4.2 Intellectual Property Rights....................................................................................9 4.3 Corrections ............................................................................................................9 4.4 No Other Warranties..............................................................................................9 ARTICLE V FEES AND PAYMENTS.................................................................................10 5.1 Fees and Payments............................................................................................... 10 ARTICLE VI REMEDIES AND LIABILITY......................................................................11 6.1 Remedies and Liability......................................................................................... 11 6.2 Intent ................................................................................................................... 12 6.3 Remedies............................................................................................................. 12 ARTICLE VII INDEMNITY.................................................................................................13 7.1 Indemnity............................................................................................................. 13 ARTICLEVIII GENERAL....................................................................................................13 8.1 Force Majeure...................................................................................................... 13 8.2 Confidentiality..................................................................................................... 13 8.3 Termination ......................................................................................................... 14 8.4 Procedure on Termination.................................................................................... 15 8.5 Arbitration .............................................................Error! Bookmark not defined. 8.6 Accounts and Records.......................................................................................... 15 8.7 Addresses for Notice............................................................................................ 16 8.8 Assignment.......................................................................................................... 16 (i ) Page No. 8.9 Reorganzations ......................................................Error! Bookmark not defined. 8.10 Binding Agreement and Enurement..................................................................... 17 8.11 Entire Agreement................................................................................................. 17 8.12 Governing Law.................................................................................................... 17 8.13Invalidity.............................................................................................................. 17 8.14 Waiver................................................................................................................. 17 8.15 Counterparts ........................................................................................................ 18 8.16 Further Assurances .............................................................................................. 18 Schedule "A" - Detailed Description of Software Schedule "Al" - Consultant's Response to the Request for Proposal Schedule "B" - Implementation Process Checklist and Timetable Schedule "C" - Support Agreement Schedule "D" - Fee Structure and Payment Schedule ( ii ) SOFTWARE LICENCE AND IMPLEMENTATION AGREEMENT THIS AGREEMENT made as of the day of rc 1 , 2001. BETWEEN: ADVANCED UTILITY SYSTEMS CORPORATION ("Consultant') - and - CAPISTRANO VALLEY WATER AUTHORITY ("District') RECITALS 1. The Consultant owns the Software (as defined below); 2. The District wishes to (a) acquire a license to utilize the Software, and (b) retain the Consultant to perform the Services (as defined below); and 3. The Consultant wishes to (a) grant the District a license to utilize the Software, and (b) provide the Services to the District, all upon the terms and conditions set out in this Agreement. NOW THEREFORE, in consideration of the mutual covenants set out in this Agreement and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties agree as follows: ARTICLE I INTERPRETATION 1.1 Definitions Throughout this Agreement, except as otherwise expressly provided, the following words and expressions shall have the following meanings: (a) "Agreement", "this Agreement", "the Agreement", "hereof', "herein", "hereto", "hereby", "hereunder" and similar expressions mean this Software Licence and Implementation Agreement, including all of its Schedules and all instruments supplementing, amending or confirming this Agreement. All references to "Articles" or "Sections" mean and refer to the specified Article or Section of this Agreement. (b) "Completion of Services" means that all conversion, installation, configuration, training, testing and other implementation procedures as described in the A-1 implementation process checklist and timetable attached hereto as Schedule"B" have been successfully completed and the Software is fully operational and performing in conformity with the specifications set out herein. For purposes of this Agreement, Completion of Services will be deemed to have occurred on the date which the District commences using the Software as its predominate billing system. (c) "Designated Staff Members" means those staff members of the District designated by the District in Schedule `B" as "Designated Staff Members" for the purposes of this Agreement. (d) "Project Manager" has the meaning set out in Section 3.3(c) hereof. (e) "Required Programs" has the meaning set out in Section 3.3(b) hereof. (f) "Services" has the meaning set out in Section 3.1 hereof. (g) "Server Licence" means the non-exclusive license granted to the District pursuant to Section 2.1(a) hereof, to configure and install the Software on the District's server computers to enable Users to access and use the Software pursuant to User Licences. (h) "Software" means the utility billing and customer service computer software programs owned and developed by the Consultant, in machine readable, object code form, collectively called CIS Infinity, together with the media and other related materials, all as more particularly described in Schedule "A" and Schedule "Al" attached hereto. (i) "Support Agreement"has the meaning set out in Section 3.4 hereof. (j) "User" means each individual granted access to the Software pursuant to a User License. (k) "User Licence" means each license granted pursuant to Section 2.1(b) of this Agreement, to allow an individual to access the Software within the District's computer network. (1) "Warranty Period" means a period of three months from the date of Completion of Services, during which time the Consultant shall correct any errors or malfunctions reported to the Consultant by the District in accordance with Section 4.3 of this Agreement. (m) "General Manager" means the City Manager of the District or the designee of the City Manager. A-2 1.2 Time of the Essence Time shall be of the essence in and of this Agreement and every part hereof. Any extension, waiver or variation of any provision of this Agreement shall not be deemed to affect this provision and there shall be no implied waiver of this provision. 1.3 Currency Unless otherwise specified, all references to amounts of money in this Agreement refer to U.S. currency. 1.4 Headines The descriptive headings preceding Articles and Sections of this Agreement are inserted solely for convenience of reference and are not intended as complete or accurate descriptions of the content of such Articles or Sections. The division of this Agreement into Articles and Sections shall not affect the interpretation of this Agreement. 1.5 Plurals and Gender The use of words in the singular or plural, or referring to a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such persons or circumstances as the context otherwise permits. 1.6 Schedules The Schedules described below and appended to this Agreement shall be deemed to be integral parts of this Agreement. Schedule "A" - Detailed Description of Software Schedule"Al" - Consultant's Response to the Request for Proposal Schedule `B" - Implementation Process Checklist and Timetable Schedule "C" - Support Agreement Schedule "D" - Fee Structure and Payment Schedule ARTICLE H SOFTWARE LICENCES 2.1 Grant of Licenses Subject to the terms and conditions of this Agreement, the Consultant hereby grants to the District: (a) a non-exclusive Server Licence; and (b) 6 non-exclusive User Licenses to allow no more than 6 concurrent Users in the District to utilize the Software within the District's computer network. A-3 2.2 Term of Licenses The licenses granted herein commence on the date of this Agreement and are of indefinite duration unless terminated pursuant to the terms hereof. 2.3 Restrictions on Use The licenses granted hereunder are restricted to use by the District to perform the basic functions of billing and customer service District, which functions are more particularly set out in the chart constituting part of Schedule "A" and Schedule"Al". 2.4 Derivation, Modification and Copvrieht (a) The District agrees that it will not attempt to derive, or permit or help others to derive the source code relating to the Software or attempt to otherwise convert or alter the Software into human readable code. The District further agrees that it will not attempt to duplicate, or permit or help others to duplicate, the source code relating to the Software. (b) The District agrees that it will not copy or otherwise reproduce the Software and that any additional copies as are reasonably necessary for the use of the Software shall be provided to the District through the issuance of additional User Licenses at the Consultant's then current charges, except that any additional User Licenses required by the District within 90 days of signing this Agreement shall be issued to the District in exchange for the User License fee specified in Schedule "D" to this Agreement. 2.5 Acceptance of Software The District shall promptly test the Software upon delivery and if the City Manager finds that the Software conforms in all respects to the specifications set forth in the description of the Software set forth in Schedule "A" and Schedule "Al" to this Agreement, the District shall accept the Software. The District shall be deemed to have accepted the Software if the General Manager does not give a written statement of errors, malfunctions, or deviations from the specifications to the Consultant within the Warranty Period. 2.6 Ownership of Software and Confidential Information (a) The District acknowledges that the Software contains proprietary and confidential information of the Consultant which shall, at all times, remain the property of the Consultant. Through the grant of licenses pursuant to Section 2.1, the District is only entitled to use of the Software in accordance with the terms of this Agreement. (b) The District will ensure that the Universal Copyright Convention symbol and other copyright and proprietary notices of the Consultant will remain on the Software in machine-readable form. The District will take the same care to safeguard the Software as it takes to safeguard its own confidential information and such care A-4 shall not be any less than would be taken by a reasonable person to safeguard its own confidential information. (c) No third parry, other than duly authorized agents or employees of the District authorized pursuant to the User Licenses issued hereunder, shall have access to or use of the Software. (d) In order to assist the Consultant with the protection of its proprietary rights with respect to the Software and to enable the Consultant to ensure that the District is complying with its obligations with respect to the proprietary nature and confidentiality of the Software, the District shall permit the Consultant, at no cost to the District, to visit during normal business hours any premises at which the Software is used and shall provide the Consultant with access to such Software. 2.7 Escrow (a) The Consultant shall keep a copy of the source code for the Software (the "Source") with a third-party escrow service provider selected by the Consultant from time to time (the "Escrow Agent'). As of the date of this Agreement, the Escrow Agent is Lincoln-Parry and Associates. (b) The Consultant hereby grants the District a contingent licence, subject to the conditions of Sections 2.7(c) and 2.7(d)herein, to use the copy of the Source maintained by the Escrow Agent for support purposes only. (c) The contingent licence referred to in Section 2.7(b) shall only be available to the District to the extent that the District has a Support Agreement in effect with the Consultant immediately prior to the occurrence of any event specified in Section 2.7(d). If no such Support Agreement is in effect, the District may retain the licences granted to it pursuant to Section 2.1, but will relinquish its rights to receive any updates or modification of the Software or continuing support from the Consultant. Furthermore, the District will relinquish its rights to access the Source upon the occurrence of any of the events specified in Section 2.7(d). To the extent that the District terminates its Support Agreement, the provisions in this Agreement respecting the use of the Software and the terms of the licences granted hereby, will continue to apply following any such termination. (d) The contingent licence granted pursuant to Section 2.7(b) shall, to the extent it remains available to the District, become exercisable if and when any of the following events occur: (i) the Consultant ceases to do business for any reason whatsoever; (ii) the Consultant fails or refuses to perform its obligations under this Agreement or provide the District with support for the Software pursuant to the Support Agreement (except as a result of a failure by the District to comply with its obligations under this Agreement or the Support A-5 Agreement), the District has issued written notice to the Consultant in respect of such failure or refusal pursuant to Section 8.3(a), and the Consultant has not cured the failure or refusal indicated in such written notice or issued a written notice of its own to the District disputing the default alleged by the District; (iii) the Consultant commits any act of bankruptcy within the meaning of the Bankruptcy Act, and fails to cure such act within 30 days of the commission of such act; and (iv) the Consultant institutes or has instituted against it bankruptcy, receivership, insolvency, re-organization, dissolution, liquidation or other similar proceedings under any federal or provincial laws and, in the case of any proceedings instituted against the Consultant, it fails to stay such proceedings or vacate or dismiss any order resulting therefrom within 60 days of the initiation of such proceedings or the issuance of such order, as the case may be. (e) On the occurrence and during the continuance of any of the conditions listed in Section 2.7(d) , and at the District's request, validation of Source shall be performed as follows: (i) the Consultant or a duly qualified computer programmer selected by the District (the "Programmer") shall retrieve the Source from the Escrow Agent and shall perform the necessary Source verification and testing procedures at the premises of the District on the District's computer systems; (ii) the Programmer shall proceed to carry out the steps necessary to correct any deficiencies in the existing Software utilizing the Source; and (iii) following the completion of said verification and correction procedures, the Consultant or Programmer shall return the Source to the Escrow Agent. (f) The provisions of this Section 2.7, and the requirement of the Escrow Agent to perform its duties in accordance with this Section 2.7, shall be subject to: (i) the District executing any standard form documentation containing reasonable terms required by the Escrow Agent in connection with the performance of its duties and obligations hereunder; and (ii) the payment by the District of the fees specified by the Escrow Agent from time to time, as more particularly set out in Section 5.1(e) of this Agreement. A-6 2.8 Ownership and Disposition of Documents The District shall be the exclusive owner of all materials and documents which were developed or prepared by the Consultant specifically for the District pursuant to this Agreement. All materials and documents which were developed or prepared by the Consultant for general use and which are not the copyright of any other party or publicly available, including educational materials, the Software and any other computer applications, shall continue to be the property of the Consultant. ARTICLE III CONSULTING SERVICES 3.1 The Consultant's Services Prior to the Completion of Services, the Consultant agrees, subject to the terms and conditions of this Agreement, to perform the following services (the "Services") for the District: (a) Oversee and implement the conversion from the District's existing utility billing and customer service system to CIS Infinity substantially in accordance with the implementation process checklist and timetable attached hereto as Schedule "B". (b) Install the Software, perform necessary set up and configuration operations, perform initial testing and parallel testing as described in Schedule"B" attached hereto. (c) Provide the training outlined on Schedule "B" attached hereto to Designated Staff Members of the District. 3.2 Performance by Consultant (a) Manner of Performance -- The Consultant shall perform the Services in an efficient, competent and timely manner and exercise reasonable care, skill and diligence in the performance thereof. (b) Consultant's Discretion -- The Consultant shall determine in its sole discretion the manner and means by which the Services shall be performed. (c) Conduct on District's Premises -- The Services shall be performed with the District's full co-operation, on the premises of the District or, if agreed to by both parties, at an alternative location. The Consultant agrees, while working on the District's premises, to observe the District's rules and policies relating to the security thereof, access to or use of all or part of the District's premises and any of the District's property, including proprietary or confidential information. (d) Inquiries by District -- The Consultant shall respond expeditiously to any inquiries pertaining to this Agreement from the District. A-7 3.3 Performance by District (a) Co-operation by District -- The District acknowledges that the success and timeliness of the implementation process shall require the active participation and collaboration of the District and its Designated Staff Members and agrees to act reasonably and co-operate fully with the Consultant to achieve the Completion of Services. (b) Required Programs. The District acknowledges that the use of the Software requires that the District obtain and install additional required software programs (the "Required Programs"), as detailed in the attached Schedule"A", and the District agrees that the acquisition of the Required Programs shall be at its sole cost and that the cost thereof is not included in the fees herein. The District further acknowledges that the operation of the Software requires the District's hardware to be of sufficient quality, condition and repair, and the District agrees to maintain its hardware in the appropriate quality, condition and repair at its sole cost and expense, in order to facilitate the achievement of Completion of Services. (c) Project Manager — The District shall appoint a project manager (the "Project Manager") who shall work closely with the Consultant to facilitate the successful completion of the implementation process and who shall be responsible for supervising the Designated Staff Members of the District and their co-operation with and participation in such process. 3.4 Sunnort Agreement Concurrently with the execution and delivery of this Agreement, the Consultant and the District have entered into a support agreement (the "Support Agreement") in the form of and on the terms set out in the attached Schedule"C" which shall apply in respect of the ongoing services and support to be provided by the Consultant to the District following the expiry of the Warranty Period. Notwithstanding the ongoing application of the Support Agreement, the terms and conditions of this Agreement shall continue to apply and the Support Agreement is not intended to, nor will it, apply to the exclusion of this Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.1 Warranty of Performance The Consultant warrants to the District that the Software will perform for the Warranty Period, if the Software is properly used in accordance with the Consultant's instructions. This warranty is void if the District or any other third parry changes or modifies the Software. Examples of such changes or modifications include, but are not limited to, data modifications from third parry software, the de-compiling and modifying of the source code, and tampering with the base set-up of the system. A-8 4.2 Intellectual Property ftlits The Consultant warrants: (a) that it has the full right, authority and power to enter into this Agreement and to grant to the District the licenses and rights conveyed by this Agreement; and (b) that the Software is an original work of authorship and does not infringe the intellectual property rights of others. 4.3 Corrections The Consultant covenants that it will make corrections of program malfunctions which are reported in writing to the Consultant during the Warranty Period and which are necessary for the Software to conform to the description provided in Schedule "A" and Schedule "Al". The District agrees to allow the Consultant the opportunity to make repeated efforts within a reasonable time to correct programming errors or malfunctions as warranted in this Agreement. 4.4 No Other Warranties The express warranties contained above are in lieu of all other representations, warranties and conditions, express or implied, whether arising by statute or otherwise in law or from a course of dealing, or usage of trade. Without limiting the generality of the foregoing, the Consultant does not represent or warrant and the District acknowledges that there are no further representations or warranties: (a) that the functions contained in the Software will operate in the combinations which may be selected for use by the District or will meet the District's requirements and satisfy its intended results; or (b) that the operation of the Software will be error free or that: (i) any programming errors will be corrected after the Warranty Period, or (ii) any updates of, or modifications to, the Software will be made available to the District after the Warranty Period, in each case unless there is an effective Support Agreement in place after the Warranty Period in respect of the period of time during which any such programming errors require correction, or any updates of, or modifications to, the Software, are developed by the Consultant and made available to the other licensees of the Software. A-9 ARTICLE V FEES AND PAYMENTS 5.1 Fees and Payments (a) The District agrees to pay the Consultant total licence fees of $40,000.00, consisting of fees for both the Server License and the User Licenses. In addition, the District agrees to pay Consultant an hourly rate of $120.00 per hour as compensation for providing the Services to the District. The fee structure and payment schedule is outlined in the attached Schedule "D". (b) The Services will be charged to the District at the rates and under the schedule set forth in Schedule D, on a not-to-exceed basis subject to the maximum cost to the District of$111,400,00 as set forth in Schedule D. As used in this Article V, "not- to-exceed" means that Consultant will perform its obligations under this Agreement even if it is required to expend more than the number of hours used to determine the cost set forth in Schedule D and will not charge the Organization for such excess hours unless otherwise permitted under this Agreement. In no event will the cost to the Organization of the Services exceed the maximum contract price as set forth in Schedule D, unless agreed upon in advance in writing signed by authorized representatives of both parties. Services to be provided by Consultant under any duly authorized Change Orders that increase the maximum contract price will be provided at then current hourly rates. (c) As part of its regular reports to the District during the term of this Agreement, the Consultant shall advise the District whether additional time beyond the estimate provided in Schedule "B" may be required. The District may then request a meeting with the Consultant to negotiate the terms of any such additional time. Should an agreement not be reached within 10 business days of such meeting, the parties agree to have the terms of the additional hours settled pursuant to the arbitration provisions contained herein. (d) The District shall reimburse the Consultant for its direct expenses, including, but not limited to: (i) courier services; (ii) photocopying, faxing and reproduction; (iii) all reasonable travel costs including a travel time rate of $50.00 per hour, meal expenses of not more than $40.00 per diem (receipts provided), accommodation costs capped at a rate pre-established by the District and agreed to by the Consultant, and a mileage charge of$.24 per km; (iv) long distance telephone calls; and (v) all other reasonable expenses incurred in the performance of the Consultant's duties. A-10 (e) In addition to all other amounts payable under this Agreement, the District shall pay any initial and annual fees charged by the Escrow Agent for performing its obligations under Section 2.7. The Consultant shall use its commercially reasonable efforts to negotiate the best possible fee structure with the Escrow Agent. The Escrow Agent may charge a one-time annual fee or a fee based on the number of beneficiaries entitled to access the Source. In either case, the Consultant shall be entitled to pass on to the District any fees relating to the Escrow Agent reasonably attributable to the District, provided that the District remains entitled to access the Source pursuant to Section 2.7(c). Upon receiving any invoice from the Escrow Agent that requires payment by the District, the Consultant shall submit the relevant invoice to the District, together with background documentation confirming the amount attributable to the District and evidence that the Consultant has paid the fees that are subject to such invoice. Within 30 days following receipt of such invoice, the District shall reimburse the Consultant for the amounts attributable to the District, as more particularly set out in the documentation submitted by the Consultant. The Consultant reserves the right to change the Escrow Agent from time to time in order to obtain the most appropriate package of fees and services, as determined by the Consultant, in its sole discretion. In the event that the Escrow Agent is replaced, prompt written notice of such replacement shall be provided to the District and the District shall execute any documentation reasonably required by the Escrow Agent in order to give effect to the provisions of this Agreement. (f) The District shall be liable for the payment of any sales or use tax in the event any sales tax or use tax is assessed on the District's purchase of the Software. The fees herein do not include sales, uses, excise, personal property or other taxes or custom charges or duties or other duties of any locality or jurisdiction and any such taxes or duties, including the Goods and Services Tax and Provincial Sales Tax, shall be the responsibility of and be paid by the District. To the best of the Consultant's knowledge, as at the date hereof, there are no applicable additional charges, including any taxes, custom charges or duties. ARTICLE VI REMEDIES AND LIABILITY 6.1 Remedies and Liability (a) Termination of this Agreement shall not affect any right of action of either party arising from anything which was done or not done, as the case may be, prior to the termination taking effect. (b) The District and the Consultant recognize that circumstances may arise entitling the District to damages for breach or other fault on the part of the Consultant arising from this Agreement. The parties agree that in all such circumstances the District's remedies and the Consultant's liabilities will be limited as set forth below A-11 and that these provisions will survive notwithstanding the termination or other discharge of the obligations of the parties under this Agreement. (i) For breach or default by the Consultant or otherwise in connection with this Agreement, including a breach or default entitling the District to rescind or be discharged from the provisions of this Agreement and whether in the nature of a breach of condition or a fundamental breach, the District's exclusive remedy, in addition to electing if so entitled to rescind or be discharged from the provisions of this Agreement, shall be payment by the Consultant of the District's direct damages to a maximum amount equal to, and the Consultant shall in no event be liable in excess of, the lesser of(x) the fees payable to the Consultant provided for herein, and (y) the amount actually paid by the District under this Agreement up to and including the date of termination. (ii) In no event shall any damages include, nor shall the Consultant be liable for, any special, indirect or consequential damages even if the Consultant has been advised of the possibility thereof. Without limiting the generality of the foregoing, the Consultant shall not be liable for lost profits, lost business revenue, failure to realize expected savings, other commercial or economic loss of any kind, or for any claim whatsoever against the District by any other party. (iii) Clauses (i) and (ii) shall apply in respect of any claim, demand or action by the District irrespective of the nature of the cause of action underlying such claim, demand or action, including, but not limited to, breach of contract or tort. 6.2 Intent tent The parties hereby confirm that the waivers and disclaimers of liability, releases from liability, limitations and apportionments of liability, and exclusive remedy provisions expressed throughout this Agreement shall apply even in the event of default, negligence (in whole or in part), strict liability or breach of contract of the person released or whose liability is waived, disclaimed, limited, apportioned or fixed by such remedy provision, and shall extend to such person's affiliates and to its shareholders, directors, officers, employees and affiliates. 6.3 Remedies Where remedies are expressly afforded by this Agreement, such remedies are intended by the parties to be the sole and exclusive remedies of the District for liabilities of the Consultant arising out of or in connection with this Agreement, notwithstanding any remedy otherwise available at law or in equity. A-12 ARTICLE VII INDEMNITY 7.1 Indemnity (a) District's Indemnity--The District shall indemnify and save harmless the Consultant, its successors and assigns together with its officers, directors, employees, agents and those for whom it is in law responsible, only from and against any and all liabilities, damages, costs, expenses, causes of action, claims, suits, proceedings and judgments (collectively "Claims") which they may incur or suffer or be put to by reason of or in connection with or arising solely from any breach, violation or non-performance by the District of any obligation contained in this Agreement to be observed or performed by the District, or any wrongful act or negligence of the District or its agents or employees which relates to this Agreement, howsoever arising. The District acknowledges and agrees that this indemnity shall survive any termination of this Agreement. (b) Consultant's Indemnity--The Consultant shall indemnity and save harmless the Organization,its successors and assigns together with its officers, directors, employees, agents and those for whom it is in law responsible, only from and against any and all Claims which they may incur or suffer or be put to by reason of or in connection with or arising solely from any breach, violation or non-performance by the Consultant of any obligation contained in this Agreement to be observed or performed by the Consultant or any wrongful act or negligence of the Consultant or its agents or employees which relates to this Agreement, howsoever arising, and such liability shall not exceed the Consultant's liability under Section 4.2 (b) of this Agreement. The Consultant acknowledges and agrees that this indemnity shall survive any termination of this Agreement. ARTICLE VIII GENERAL 8.1 Force Maieure Neither party shall be liable for delay or failure in performance resulting from acts beyond the control of such party including, but not limited to, acts of God, acts of war or of the public enemy, riots, fire, flood, or other natural disaster, acts of government, strike, walkout, communication line or power failure, failure in operability or destruction of the District's computer (unless by reason of the negligence of a parry to this Agreement) or failure or inoperability of any software other than the Software. 8.2 Confidentiality (a) Duty Owed to the District -- The Consultant acknowledges that it may receive information from the District or otherwise in connection with this Agreement or the performance of the Services. Except for information in the public domain, unless such information falls into the public domain by disclosure or other acts of the Consultant or through the fault of the Consultant, the Consultant agrees: (i) to maintain this information in confidence; A-13 (ii) not to use this information other than in the course of this Agreement; (iii) not to disclose or release such information except on a need-to-know only basis; (iv) not to disclose or release such information to any third person without the prior written consent of the District, except for authorized employees or agents of the Consultant; and (v) to take all appropriate action, whether by instruction, agreement or otherwise, to ensure that third persons with access to the information under the direction or control or in any contractual privity with the Consultant, do not disclose or use, directly or indirectly, for any purpose other than for performing the Services during or after the term of this Agreement, any material or information, including the information, without first obtaining the written consent of the District. (b) Duty Owed to the Consultant -- The parties agree that if the District shall breach any term of Section 0 of this Agreement entitled "Ownership of Software and Confidential Information", then the Consultant shall have the right to terminate this Agreement and the grant of licences herein forthwith without giving notice as set forth in Section 8.3(b). 8.3 Termination (a) If the Consultant should neglect to perform the Services properly or otherwise fail to comply with the requirements of this Agreement, the District must notify the Consultant in writing of such default (a "Default Notice"). Upon receipt of a Default Notice, the Consultant must either correct the default at no additional cost to the District, or issue a written notice of its own disputing the alleged default, in either case within 30 days immediately following receipt of a Default Notice. If the Consultant fails to correct the default, or issue a notice disputing the alleged default, in either case within 30 days following receipt of the Default Notice, the District may terminate the part of this Agreement relating to the provision of Services and in such case will be responsible for payment to the Consultant of only that part of the fee earned by the Consultant for those Services performed up to the time of communication of such notice of termination to the Consultant. (b) If the District should fail to comply with its obligations under this Agreement, the Consultant must notify the District in writing of such default (a "Default Notice"). Upon receipt of a Default Notice, the District must correct the default at no additional cost to the Consultant, or issue a written notice of its own disputing the alleged default, in either case within 30 days immediately following receipt of a Default Notice. If the District fails to correct the default, or issue a notice disputing the alleged default, in either case within 30 days following receipt of the Default Notice, the Consultant may terminate the whole of this Agreement including the grant of licence to the Software and in such case the District will be responsible for A-14 payment to the Consultant of only that part of the fee earned by the Consultant for that part of the Services performed in accordance with this Agreement up to the time of communication of such notice of termination to the District. (c) In the event of the issuance of a Default Notice under this Agreement, both parties shall continue performing their respective obligations under this Agreement during the 30-day period following issuance of the Default Notice. Compliance with this section shall be a condition precedent to any legal action and such compliance shall not be a waiver of any parry's right to take legal action in respect of the subject matter of the Default Notice. (d) The Consultant and the City Manager, and such additional persons working for the Consultant and the District as the parties believe may be helpful in the resolution of any dispute arising under this Agreement, whether or not relating to the issuance of a Default Notice, shall meet and confer in an effort to resolve each dispute in an amicable manner prior to the initiation of any legal proceeding to enforce any of the terms of this Agreement. Nevertheless, save and except as set out in Section 8.3(c), neither parry shall be prevented from taking legal action to protect or enforce its rights under, or in respect of, this Agreement. 8.4 Procedure on Termination If this Agreement is terminated prior to the Completion of Services, then within 15 days following such termination, the District shall return the Software to the Consultant and shall. certify, under the hand of a duly authorized officer of the District, that all copies of the Software or any part thereof, in any form, within the possession or control of the District have been returned to the Consultant. If this Agreement is terminated following the Completion of Services, then the District may retain the copy of the Software in its possession as of the Completion of Services but it shall not be entitled to any additional User Licences, nor will it receive updates of, or modifications to, the Software made by the Consultant. Finally, it will not be entitled to access the Source through exercise of the licence granted pursuant to Section 2.7 of this Agreement. Notwithstanding the foregoing, the District will remain subject to the obligations imposed upon it pursuant to this Agreement with respect to the Software, including, but not limited to, such obligations relating to ownership of the Software and confidentiality. 8.5 Accounts and Records The Consultant shall: (a) keep proper and detailed accounts in accordance with accepted accounting practices of all factors entering into the computation of the amounts payable pursuant to this Agreement; and (b) for a period of two years from the date of Completion of Services by the Consultant, preserve all accounts and other documentation relating to the District and keep them available for inspection by the District or its representative, at any A-15 time. The Consultant agrees that this obligation shall survive any termination of this Agreement. 8.6 Addresses for Notice Any notice required or permitted to be given to any parry to this Agreement shall be given in writing and shall be delivered personally, mailed by prepaid registered post or sent by facsimile to the appropriate address or facsimile number set out below. Any such notice shall be conclusively deemed to have been given and received on the day on which it is delivered or transmitted (or on the next succeeding business day if delivered or received by facsimile after 5:00 p.m. local time on the date of delivery or receipt, or if delivered or received by facsimile on a day other than a business day), if personally delivered or sent by facsimile or, if mailed, on the third business day following the date of mailing, and addressed, in the case of the Consultant, to: ADVANCED UTILITY SYSTEMS CORPORATION 2235 Sheppard Avenue East, Suite 1702, Toronto, Ontario, Canada M2J 5B5 Attention: Patricia Sorbara Telephone: 416-496-0149 extension 225 Fax: 415-496-3910 and in the case of the District, to: CAPISTRANO VALLEY WATER DISTRICT City of San'Juan Capistrano 32450 Paseo Adelanto San Juan Capistrano, California 92657 Attention: Jim Widner Telephone: 949-487-4303 Fax: 949-483-1053 Each party may change its particulars respecting notice, by issuing notice to the other parry in the manner described in this Section 8.6. 8.7 Assignment (a) This Agreement is not assignable by the District without the prior, express, written permission of the Consultant, which may not be unreasonably withheld. The licenses granted hereunder and the Software may not be sublicensed, assigned or transferred. (b) Without derogating from the Consultant's right to withhold its consent to an assignment of this Agreement, no permission shall be granted unless the assignee executes an assumption agreement in favour of the Consultant, in form and A-16 substance satisfactory to the Consultant. Furthermore, as a condition to granting its consent to any assignment of the Agreement by the District, the Consultant may require that the assignee agree to pay an additional server license fee based on any additional User Licenses it purchases within a one year period following the assignment. The Server License fee set out in Schedule "D" hereto has been established on the basis of the Server License supporting approximately 6 User Licenses. To the extent that the Agreement is assigned by the District, and the assignee requires additional User Licenses to support its customer base, then in addition to the then applicable User License fee, the Consultant shall be entitled to receive, and the assignee shall pay, an additional Server License Fee equal to the then prevailing price of the equivalent server license fee required by the assignee within one year following the said assignment. The provisions of this Section 8.3(b) shall apply mutatis mutandis to any subsequent assignments occurring after the fust assignment. 8.8 Binding Agreement and Enurement This Agreement shall be binding upon the parties hereto and their respective successors and assigns. This Agreement shall enure to the benefit of the parties hereto and their respective successors and permitted assigns. 8.9 Entire Agreement This Agreement shall constitute the entire agreement between the parties pertaining to the provision of Services, and will supersede all prior and contemporaneous agreements, understandings, negotiations and discussions between the Consultant and the District whether oral or written in respect of this matter. There are no representations, warranties, collateral agreements, conditions or other agreements between the parties hereto in connection with the subject matter hereof except as specifically set forth herein. 8.10 Governing Law The parties agree that this Agreement was entered into in the City of San Juan Capistrano, California. This Agreement shall be construed and enforced in accordance with the laws of the State of the California and the United States. 811 Invalidity The invalidity or unenforceability of any provision or covenant contained in this Agreement shall not affect the validity or enforceability of any other provision or covenant herein contained and any such invalid provision or covenant shall be deemed to be severable. A-17 8.12 Waiver A term or condition of this Agreement may be waived or modified only by written consent of both parties. Forbearance or indulgence by either party in any regard shall not constitute a waiver of the term or condition to be performed, and either party may evoke any remedy available under the Agreement or by law despite such forbearance or notice. 8.13 Counterparts This Agreement may be executed in counterparts (whether by facsimile signature or otherwise), each of which when so executed shall constitute an original and all of which together shall constitute one and the same instrument. 8.14 Further Assurances The parties shall do all such things and provide all such reasonable assurances as may be required to consummate the transactions contemplated hereby, and each party shall provide such further documents or instruments required by any other party as may be reasonably necessary or desirable to effect the purposes of this Agreement and carry out its provisions. IN WITNESS WHEREOF the parties hereto have duly executed this Agreement on the day and year first written above. ADVANCED UTILITY SYSTEMS CORPORAT�yf; Per: ----�� Name: Patricia Sorbara Title: President Per: Name: hilip Mayfair Title: Vice-President APPROVED AS TO FORM CAPIST VALL WATER DISTRIC Per: John Shai Counsel Nam Geo e Scarborough Title: Ge ral Manager ATTEST Per: Name: Ch 1 JAMSOTI Title: Clerk of the Board A-18 Schedule"A" Detailed Description of Software 1. The Software CIS Infinity is 32 -bit object-oriented software that operates in a Windows 95/98/2000/NT environment. The basic CIS Infinity package is comprised of the following individual modules and sub-modules that perform the basic functions of a billing and customer service operation and includes all media and other materials related thereto: MODULES AND SUB-MODULES • Arrangement System • Menu System • Billing (Electric, Water, Sewer) • Move In/Move Out Process Cycle Billing • Multiple Receivables Final Billing • New Services Regular Billing • Payment Processing Manual Billing Adjustments Flat Rate Billing Cash Register Meter Add/Remove Deposits Rate Code Changes Payments Service Add/Remove Penalties • Bill Journal/Cash Journal Archive Post Dated Cheques • Collections • Period End Routines • Contact Management System • Point of Sale System • Correspondence System • Post Billing Functions • Customer Service Inquiries Bill Cancel and Re-bill • Deposits Bill Inquiries • G/L Integration with Third Party Bill Reprint Software • Pre-Authorized Payment • Inventory • Reports • Electric Meter • Service Order System Gas Meter Instrument Transformer Remote Transformer/Loading Water Heater Water Meter 2. Required Programs - Windows 95/98/2000/NT Appropriate Network Software P.C. Anywhere 8.0 A-19 Schedule "Al" Consultant Response to the Reauest for Proposal—Utility Billin¢System issued by the City of San.Tuan Capistrano. California (ATTACHED) A-20 Schedule `B" Implementation Process Checklist and Timetable I. DESIGNATED STAFF MEMBERS • To be determined by the District and the Consultant II. COMPLETION OF SERVICES —GLOBAL TIMETABLE 1. Project Commencement Date: To be determined 2. Estimated Project Completion Date: To be determined 3. Consultant's Project Manaeer: To be determined 4. District's Project Manaeer: To be determined 5. Project Schedule: To be determined III. COMPLETION OF SERVICES —KEY PHASE TIMETABLES 1. Conversion Process Projected Commencement Date: To be determined Projected Completion Date: To be determined Estimated Hours Required: 170 INIMagm Diagnose existing systems 70 a) Determine what data is available b) Determine what data is not available a) Determine what data can be trusted Map data fields from the existing systems to news stem 15 Programming/testing of conversion code on the existing system 15 Identify and correct exceptions and problems in conversion 35 Perform ongoing conversions and ensure data mapping is correct 25 Formulate, develop and execute a"Go Live" strategy 10 TOTAL: 170 B-1 2. Installation/Set-up Projected Commencement Date: To be determined Projected Completion Date: To be determined Estimated Hours Required: 225 Install Server Software 10 Install Client Software 10 Configuration of the control files 55 Set up the interface with third party packages 35 Test billings/cash processingladjustments with installed settings 25 Full testing of processes of CIS Infinity with existing systems. Advanced 55 Utility Systems staff on-site during parallel testing and live. (i) Project Management 35 TOTAL: 1 225 3. Training Estimated Hours 200 The parties will agree upon an appropriate training schedule based on, among other things, the modules in respect of which training is required and the skills and availability of Designed Staff Members. B-2 Schedule"C" Support Aereement This support agreement (the "Agreement") is entered into pursuant to a software license ffld implementation agreement (the "Software License and Implementation Agreement") dated & Ze�n I between Advanced Utility Systems Corporation ("Consultant") its principal place 61 business at 2235 Sheppard Avenue East, Suite 1702, Toronto, Ontario, M2J 5135, and Capistrano Valley Water District ("District"), with its principal place of business at 32450 Paseo Adelanto, San Juan Capistrano, California 92675 and becomes effective immediately upon the expiry of the Warranty Period. Unless otherwise defined herein, all defined terms used herein shall have the meaning ascribed to them in the Software License and lmplementation Agreement. 1. Subject to the terms and conditions of this Agreement, Consultant shall provide subscription and support service which includes revisions, updates and enhancements to CIS Infinity and related materials for the version of CIS Infinity specified in Schedule "A" and Schedule "Al" attached to the Software License and Implementation Agreement. 2. Subject to the terms and conditions of this Agreement, Consultant shall provide software support via telephone and electronic mail, and site visits when necessary, Monday through Friday, 8:00 a.m. to 5:00 p.m., Pacific Standard Time, excluding Consultant observed holidays. To enable Consultant to provide effective support, District will establish a dedicated auto-answer modem to allow Consultant to access the Software effectively. For emergency situations and after-hour assistance, Consultant will be available to District by pager number and electronic mail to provide support. 3. In consideration for the support services specified in Section 2, District shall pay the Annual Support Fee set forth in Schedule "D" attached to the Software License and Implementation Agreement. Consultant may change the Annual Support Fee from time to time, provided that any such change must be made for all clients of Consultant. In addition to the Annual Support Fee, District shall reimburse Consultant for its direct expenses in providing support services pursuant to this Agreement, including, but not limited to: (a) courier services; (b) photocopying, faxing and reproduction services; (c) all reasonable travel costs, including a travel time rate of $50.00/hour, meal expenses of not more than $40.00 per diem (receipts provided), accommodation costs capped at a rate pre-established by the District and agreed to by the Consultant and a mileage charge of$.29/km; (d) long distance telephone calls; and (e) all other reasonable expenses incurred in the performance of Consultant's duties hereunder. C-1 Consultant may update its reimbursement policies from time to time, in which case such updated policies shall apply for purposes of this Agreement, provided that such updated reimbursement policies must generally apply to all clients of Consultant. 4. All support services provided by Consultant to District other than those specified in Section 2 (such as, but not limited to, on-site support), shall be provided to District by Consultant at Consultant's then prevailing prices, hourly rates, policies and terms. For certainty, any updates of, or enhancements to, the Software will be made available to District free of charge (with respect to the actual updates or enhancements), but all services provided by Consultant with respect to such updates or enhancements will be subject to the Consultant's then-prevailing prices, hourly rates, policies and terms, meaning that such then-prevailing prices will apply to matters such as set-up and training relating to such updates or enhancements. 5. All payments hereunder shall be in U.S. dollars and shall be net of any taxes, tariffs or other governmental charges. 6. The initial term of this Agreement shall be for one year beginning on the date set out above. The Agreement shall continue thereafter on an annual basis provided that District shall pay the then prevailing Annual Support Fee set forth in Schedule "D" attached to the Software License and Implementation Agreement, unless terminated by either party upon giving to the other not less than 90 days notice in writing prior to the end of the first year or any subsequent anniversary of such date. If the Support Agreement is terminated by District, it shall be entitled to retain the Software licensed to it as at the date of such termination, but it will relinquish its rights to receive upgrades of, or enhancements to, the Software, services for the Software, or access to the Source in escrow upon the occurrence of any event specified in Section 2.7(d) of the Software Licence and Implementation Agreement. For certainty, and without mitigating the application of the Software License and Implementation Agreement during the term of this Support Agreement, the terms and conditions of the Software Licence and Implementation Agreement will continue to apply to District following the termination of this Agreement. 7. Title to and ownership of all proprietary rights in the Software and all related proprietary information shall at all times remain with Consultant, and District shall acquire no proprietary rights by virtue hereof. 8. Unless terminated pursuant to Paragraph 6 hereof, this Agreement shall remain in full force and effect except as terminated as follows: (a) if either party neglects or fails to perform, observe or cure within (30) days of written notice of such failure to perform any of its existing or future obligations. (b) If District attempts to assign this Agreement or any of its rights hereunder, or undergoes a reorganization, without complying with the Software License and Implementation Agreement. C-2 9. Unless otherwise agreed to by the parties, all notices required hereunder shall be made in accordance with the provisions of the Software License and Implementation Agreement. 10. Either parry's lack of enforcement of any provision in this Agreement in the event of a breach by the other shall not be construed to be a waiver of any such provision and the non-breaching parry may elect to enforce any such provision in the event of any repeated or continuing breach by the other. 11. A valid contract binding the parties hereto shall come into being only upon execution of this Agreement by a duly authorized agent, officer or representative of both parties. 12. This Agreement is the exclusive statement of the entire support agreement between Consultant and District. No change, termination or attempted waiver of any of the provisions hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced. 13. The parties hereto agree that the terms and conditions contained herein shall prevail notwithstanding any variations on any orders submitted by District. 14. The particular provisions of this Agreement shall be deemed confidential in nature and neither District nor Consultant shall divulge any of its provisions as set forth herein to any third parry except as may be required by law. 15. Portions of the data supplied by Consultant may be proprietary in nature and will be marked as such. District will abide by the terms of such markings and will be liable for all loss or damage to Consultant from any failure to so abide by such markings or from all unauthorized disclosure of such proprietary data to any other party. Consultant retains for itself all proprietary rights in and to (1) all designs, engineering details, and other data pertaining to CIS Infinity (2) all original works, computer programs, discoveries, inventions, patents, know-how, and techniques arising out of work done wholly or in part by Consultant in connection with this Agreement, and (3) any and all product(s) developed as a result of such work, including the sole right to manufacture any and all such Products(s). 16. In no event will Consultant be liable to District for any special, indirect or consequential damages arising from this Agreement. Without limiting the generality of the foregoing, Consultant shall not be liable for lost profits, lost business revenue, failure to realize expected savings, other commercial or economic loss of any kind, or for any claim whatsoever against District by any other party arising out of or in connection with this Agreement or the use or performance of the Software whether in an action based on contract or tort, including negligence. 17. This Agreement shall be governed by, subject to and construed in accordance with the laws of the State of California. C-3 18. This Agreement may not be assigned by the District unless, concurrently with any such assignment, the District assigns its rights under, and complies with the provisions of, the Software License and Implementation Agreement. 19. This Agreement shall be binding upon the successors and assigns of the parties and enure to the benefit of the successors and permitted assigns of the parties. 20. This Agreement is to be read and construed as an ancillary agreement to the Software and Implementation Agreement. If a conflict or inconsistency exists between a provision of this Agreement and a provision of the Software and License Agreement, then the provisions of the Software and Implementation Agreement shall prevail. 21. Time shall be of the essence of this Agreement. 22. The invalidity or unenforceability of any provision or covenant contained in this Agreement shall not affect the validity or enforceability of any other provision or covenant herein contained and any such invalid provision or covenant shall be deemed to be severable. 23. The parties shall do all such things and provide all such reasonable assurances as may be required to consummate the transactions contemplated hereby, and each party shall provide such further documents or instruments required by any other party as may be reasonably necessary or desirable to effect the purposes of this Agreement and carry out its provisions. C-4 Y 24. This Agreement may be executed in counterparts (whether by facsimile signature or otherwise), each of which when so executed shall constitute an original and all of which together shall constitute one and the same agreement. IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the date first written above. ADVANCED UTILITY SYSTEMS CORPORATIO Per: -4, 7uf� Name: Pat is Sorbara Title: Presi nt Per: ""'4444 Name: P lip Playfair Title: Vice-President APPROVED AS TO FORM CAPIST VA Y WATER DISTRICT Per: i Jo S egal Counsel Name or e Scarborough Title: Gene all Manager ATTEST Per: Name:Chery o on Title: Clerk of the Board C-5 Schedule"D" Fee Structure and Payment Schedule Note: Fees for Services listed below are based on best estimates of the number of hours of work required to complete the Services outlined on Schedule `B" to this Agreement. Accordingly, the total of such fees will increase or decrease as the number of actual hours worked is greater than or less than such estimates. Server License $ 25,000.00 User Licenses 6 @ $2,500.00 $ 15.000.00 Subtotal: $ 40,000.00 Conversion 170 hours @ $120.00 $ 20,400.00 Set-up and Install 225 hours @ $120.00 $ 27,000.00 Training 200 hours @ $120.00 $ 24,000.00 Sub-total: $ 71,400.00 TOTAL: $11].aIN1.00 Payment Schedule: A. Licence Fees: 1. On execution of this Agreement: (25% of license fee) ......................$10,000.00 2. On completion of Set-up and Installation:(25% of licence fee) .........$10,000.00 3. On completion of the "Completion of Services" as described in Section 1.1(b)...........................................................................$20,000.00 B. Consulting and Training Fees: Invoiced bi-weekly on the basis of actual hours of work to the completion of the project. C. Annual Support Fee......................................................................................$10.000.00 D-1