In this task, you're given a passage that represents a legal contract or clause between multiple parties, followed by a question that needs to be answered. Based on the paragraph, you must write unambiguous answers to the questions and your answer must refer a specific phrase from the paragraph. If multiple answers seem to exist, write the answer that is the most plausible.

Example Input: Exhibit 10.21

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*****]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

Network Management Outsourcing Agreement



Bank of South Pacific Ltd   Network Management Outsourcing Agreement







Datec Contact Details   [*****]   [*****]   [*****]   [*****]   [*****]   [*****]   [*****]   [*****]   [*****]   [*****]     Commercial in Confidence   Page 2   May 2004

Network Management Outsourcing Agreement   ***** CONFIDENTIAL TREATMENT REQUESTED





Bank Of South Pacific Ltd

Document outline prepared by Des Kearse: Datec PNG Ltd May 2004



Document Distribution, Approval and Revision History

Distribution

This document has been distributed to   Name   Title-Company [*****]   [*****]   [*****]   [*****]   [*****]   [*****]   [*****]

Approvals

This document requires the following approvals. Signed approval forms are filed in the Quality section of the Bank of South Pacific Limited and Datec PNG LTD.   Name   Title

Revision History   Date of this revision:   Date of Next revision: (date)   Revision Number   Revision Date   Summary of Changes   Changes marked                     Commercial in Confidence   Page 3   May 2004

Network Management Outsourcing Agreement   ***** CONFIDENTIAL TREATMENT REQUESTED





Abbreviations   Bank South Pacific Limited   BSP

Datec PNG Limited   Datec

Business Continuity Planning   BCP

Hardware, Maintenance, Support Services for designated Equipment   Break Fix

BSP Customer Business Manager   CBM

Disaster Recovery Plan   DRP

Financial Point of Sale   FPOS

Local Area Network   LAN

Managed Third Parties   MTP

Moves, Adds and Changes   MACs

Network Terminal Unit   NTU

Request for Service   RFS

Service Level Agreement   SLA

Single Point of Contact   SPOC

Wide Area Network   WAN   Commercial in Confidence   Page 4   May 2004

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Definitions

Agreement means this agreement. The Network Management Outsourcing Agreement.

CPI means an amount determined by reference to All Groups Indexes for Urban Areas being the figure relating to the weighted urban average for PNG contained in the Consumer Price Index published by the Papua New Guinea Bureau of Statistics each quarter in the Papua New Guinea Statistical Bulletin.

Help Desk means a physical location within Datec's head office designated as an immediate contact point to provide service assistance to customers.

Material Breach includes (but is not necessarily limited to) the occurrence of any or more of the following:

  (i) a breach, or series of breaches, of this agreement which causes a substantial disruption to the Services; or

  (ii) an accumulation of breaches which places unreasonable burdens on the BSP Personnel, or

  (iii) Datec commits a breach which at common law would justify termination of this agreement, or

  (iv) Datec commits multiple breaches of this agreement occurring within a 6 month period; or

  (v) Datec fails to comply with the Transition Plan.

Business Hours means Monday to Friday 07.30 hours to 18.00 hours.   Commercial in Confidence   Page 5   May 2004

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TABLE OF CONTENTS   OVERVIEW   1.1   Introduction   10 1.2   Document Structure   10 1.3   Agreement Assumptions   10 1.4   Contract Term   10 1.5   Hours of Support   10

The Datec (PNG) LTD Deliverables   2.1   General Statements   11 2.2   Physical Boundaries And Demarcation Points   11 2.3   Network Operations Management   12 2.4   Systems And Technical Support   13 2.5   Network Virus Management   14 2.6   Internet Services   14 2.7   Management Tools   14 2.8   Document Management   15 2.9   Related Software Distribution   15 2.10  Technology (Equipment) Refresh Planning And Implementation Recommendations   16 2.11   Performance Management   16 2.12  Capacity Management   17 2.13  Managed Third Parties (MTP)   18 2.14  Moves, Adds And Changes (MACs)   18 2.15  Help Desk Services   19 2.16  Hardware, Software And Equipment Support   20 2.17  User Logon And Password Administration for Wide Area Network (WAN)   21 2.18  Project Services   21 2.19  Asset Management   22 2.20  Security Services   22 2.21  Business Continuity Planning (BCP) And Disaster Recovery Plan   23 2.22  Change Management   23 2.23  Backup Requirements   24 2.24  Designated Locations   24

Performance Standards   3.1   General Requirements   25 3.2   Measurement And Monitoring Tools   25 3.3   All Data And Supporting Information Confidential   26

Reports   4.1   Reporting   26 4.2   Types Of Reports   26 4.3   Structure Of Reports   27   Commercial in Confidence   Page 6   May 2004

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Personnel   5.1   Standards Of Datec Personnel   27 5.2   Replacement At BSP's Request   28 5.3   No Right To Require Termination   28 5.4   Restraints On Engagement Of BSP Personnel   28 5.5   Enforceable Restraint   28 5.6   Employer Obligations   28 5.7   Security And Occupational Health And Safety   29

Audits And Record Keeping   6.1   Record Keeping   29 6.2   Access To The Datec's And Subcontractors Premises And Material   29 6.3   Regular Audits For BSP Reporting   29 6.4   Assistance   29

Subcontractors   7.1   Approval   30 7.2   Terms   30

Pricing   8.1   General Principles   30 8.2   Base Fees   30 8.3   Price Inclusive   30 8.4   Pricing Criteria   31 8.5   Rebates   31

Pricing Adjustments   9.1   CPI Adjustments   31 9.2   Pass - Through Expenses   32 9.3   Service Level Reviews   32

Extraordinary Events   10.1   Extraordinary Events   32

Confidentiality   11.1   Confidentiality   32   Commercial in Confidence   Page 7   May 2004

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Returning Material, Data, Hardware, Software And Information   12.1   Datec's Obligations   33 12.2   BSP's Obligations   33

Compliance With Laws   13.1   Compliance   33

Termination   14.1   Termination By BSP for Cause   33 14.2   Termination For Change Of Control   33 14.3   Termination By BSP For Convenience   34 14.4   Termination By Datec For Convenience   34 14.5   Termination Fee   34 14.6   Sole Remedy   34 14.7   Mitigation   34

General Indemnities   15.1   Indemnity By Datec (PNG) LTD   35 15.2   Enforcement Of Indemnities   36

Personal Injury, Property Damage Indemnity   16.1   Datec Indemnifies BSP   36 16.2   BSP Indemnifies Datec   36

Risk Management   17.1   Insurance Coverage   36 17.2   Terms Of Insurance   37

General Conditions   18.1   Assignment By Datec   37 18.2   Assignment By BSP   37 18.3   Governing Law   37

Dispute Resolution   19.1   Notice   37 19.2   Escalation   37 19.3   Expert Determination Or Mediation   38 19.4   Expert Determination Criteria   38 19.5   Selection Of Expert Or Mediator   38 19.6   Procedure   38   Commercial in Confidence   Page 8   May 2004

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Disengagement   20.1   Planning   39 20.2   Implementation Of Plan   39

Schedules   A:   Equipment List - Asset Register   42 B:   Service Level Agreement   45 C:   Pricing Schedule   50 D:   Sample Moves, Adds, and Changes Form - (MAC Form)   51 E:   Sample Request for Service Form - (RFS Form)   55   Commercial in Confidence   Page 9   May 2004

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OVERVIEW

1.1 Introduction

This Network Management Outsourcing Agreement incorporates the terms and conditions for the provision of Network Outsourcing Services and Deliverables by Datec (PNG) LTD (Datec) to the Bank of South Pacific Limited (BSP).

The parties further agree that they will provide best commercial efforts for the benefit of one another to ensure that neither the BSP nor Datec are disadvantaged throughout the fulfilment of this agreement.

The parties will therefore provide full assistance to each other and agree to work proactively together to:

  •   Improve and enhance the Services for the benefit of the BSP and

  •   Perform their respective obligations for the benefit of the BSP   1.2 Document Structure

This document is structured to capture the key conditions of the agreement in a logical order. It is understood that the agreement may be changed at any time by the mutual consent of both parties using the revision history and approval records contained in the Document Distribution, Approval and Revision History.   1.3 Agreement Assumptions

The following assumptions apply to this agreement:

  •   All tasks and the scope of work are covered by this agreement.

  •   This agreement is for the provision of management services covering the BSP Wide Area Network (WAN) and provided by Datec.

  •   The BSP existing WAN has been upgraded to the standard agreed to by Datec and the BSP as detailed in the Phase 3 Document dated 12th December 2003 entitled Audit Review Recommendation Costs' and the Memorandum of Understanding dated 7th May 2004.

  •   BSP is formally engaging Datec to be the network manager for the provision of service for the day-to-day operations of the wide area network (WAN) service.

  •   BSP will retain ownership of all the assets as listed in the Asset Register and contained in Schedule A.   1.4 Contract Term

The commencement date for this contract will be 16th June 2004.

The initial term of the contracted agreement is 5 years from the commencement date. The BSP then have the option to renew the agreement for another 5 years subject to any restructuring of the agreement as required by the parties.

Either party may advise the other of the impending expiry of the then current term, generally in accordance with section 14 .   1.5 Hours of Support

The normal business hours for services under this agreement will be Monday - Friday 07.30 hours to 1800 hours.

Twenty-Four Hour (24Hour) Help Desk will be provided Monday to Friday outside of normal business hours.   Commercial in Confidence   Page 10   May 2004

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The Datec (PNG) LTD Deliverables

2.1 General Statements

Datec will:

  (a) provide operational support services for designated Equipment and Networks;

  (b) perform moves, adds and changes (MACs) for data services;

  (c) provide pricing and perform MACs for data services;

  (d) take over where agreed and/or manage existing third party contracts (MTP'S) as agreed with the BSP;

  (e) act as the local BSP representative in matters directly related to the BSP, in a cooperative manner, with other Managed Third Parties (MTP) and take responsibility for the resolution of WAN related activity by acting as the vendor interface.

  (f) provide hardware maintenance support services for designated Equipment (break Fix) as defined in Schedule A,

Datec will deliver the following project related Services:

  (a) perform Site Surveys, Stage and configure new Equipment, deliver the Equipment, install the Equipment, manage the installation of the Network Services, test, and accept the Network as required.   2.2 Physical Boundaries And Demarcation Points

2.2.1 It is agreed that Datec will have operational responsibility on behalf of the BSP to manage the Wide Area Network (WAN), which is defined as Hosting the HUB and PIX Firewall plus the management of the network to each and including the main branch switch, including all Financial Point of Sale (FPOS) links owned by the BSP.

2.2.2 BSP will have operational responsibility from the main branch switch onwards and any equipment that is connected to this. This is considered to be the Local Area Network (LAN). FPOS links are excluded.   2.2.3 Datec will be responsible for providing BSP with updated site information for existing Sites as necessary to satisfy BSP's business and operational requirements as they may change overtime. Whenever required to install a new Site on the Network, Datec will conduct a physical survey of that Site to determine Site features, implementation readiness, and specific installation needs for required standards. Site Survey information will be recorded in a database in the network management system. Site Survey information will include definitions and clarification of:

  (a) current Network Services;   Commercial in Confidence   Page 11   May 2004

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  (b) Telecommunications vendor point of entry;

  (c) boundaries of responsibility;

  (d) power/UPS requirements;

  (e) space requirements;

  (f) Equipment related special requirements;

  (g) cabling and wiring requirements; and

  (h) relevant environmental requirements.   2.2.3 Floor Space

Certain hardware such as the Telikom Lease Line Circuits -NTU's (Network Terminal Units), Pix Firewall and content engine, plus and a number of routers and switches will need to be relocated to the Datec computer room. The computer room and the Datec building have been purposely built with a full disaster recovery management system in place with triple redundancies. The space that this equipment will occupy is based on the industry standards set for such equipment when placed in a computer room environment.   2.3 Network Operations Management

Datec will:

2.3.1 Maintain designated Equipment as listed in Schedule A, and any other equipment that may added from time to time within Papua New Guinea.

(i) BSP will provide Datec with tine required authority to acquire spares parts in order to complete any repairs /replacement that may be required

(ii) Datec will be responsible for the provision of any spare parts required to complete any repairs to the managed Network equipment.   2.3.2 Maintain a Single Point of Contact to interface with and coordinate problem determination and resolution with BSP's appropriate support personnel and third party service providers;   2.3.3 Perform Incident Management to closure. Datec will provide Level 1 support by:

(a) entering problem information into a problem record;

(b) performing incident source identification and severity impact level;

(c) providing feedback to users;

(d) invoking proper incident resolution resources;   Commercial in Confidence   Page 12   May 2004

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  (e) dispatching on site service resources, where applicable;

  (f) monitoring resolution status and document actions taken;

  (g) manage escalation or critical situation procedures;

  (h) compiling and maintain the incident resolution system;

  (i) confirming incident resolution with the end user prior to closure;

  (j) maintaining a second and third-level contacts list system including site access requirements for business and after hours site access;   2.3.4 Level 2 support responsibilities include:

  (a) performing problem analysis, trending and reporting;

  (b) accepting problems not completed by Level 1 support personnel;

  (c) investigating severe and recurring problems to determine the root cause, expediting problem resolution and, using historical data, to minimise the recurrence of duplicate or similar incidents;

  (d) working with vendors to resolve problems;

  (e) contacting other support groups and organisations;

  (f) interfacing with other systems, data networks and operating system environment personnel;

  (g) escalating delays in problem resolution; and

  (h) focusing on making fixes available to the first-level support team, to decrease resolution times.

2.3.5 provide problem reports to BSP on a periodic basis, including required information on problems, owner, location, Service Level Agreement (SLA) commitments achieved and status of any problems, including their impact on the required service level.   2.4 Systems And Technical Support

Datec Will:

  (a) be responsible for the installation support, management and control of the BSP WAN environment in Papua New Guinea.

  (b) be responsible for testing, certifying, configuring and deploying upgrades to any installed Software to the latest version available from the Software vendor as agreed with the BSP

  (c) work with BSP Personnel to communicate the effect and impact and compatibility of any changes to the Hardware and Software managed to ensure minimal business impact of such changes;   Commercial in Confidence   Page 13   May 2004

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  (d) advise BSP of new technologies that may provide BSP business benefit or improvements in efficiency. The BSP will assess benefits and risks and work with Datec to include on the approved lists as appropriate;

  (e) ensure that Datec staff are trained and skilled on all current and new technologies for the managed Hardware and Software.

  (f) centrally monitor performance of infrastructure components, where possible, to identify performance degradation, capacity and Hardware/Software problems and respond to identified performance tuning, problems and capacity needs;

  (g) tune infrastructure components to ensure optimum operating performance to meet Service Levels.

  (h) provide assistance and support to BSP Personnel as required;



(i) provide in-depth (Level 1 and 2) technical support for operating systems, standard software (for Software problems or questions, defect and non-defect related). It includes problem tracking, problem source identification, problem impact (severity) determination, bypass and recovery support, problem resolution, management reporting and trend analysis and interfacing with other Suppliers on behalf of the BSP;

  (j) provide support, in accordance with the BSP, manufacturers and vendors procedures;

  (k) install, set up and maintain configurations, to deliver the required Services;

  (l) coordinate and recommend system upgrades to BSP, and work with them in recommending proper hardware configurations and upgrades based on performance and capacity planning guidelines;

  (m) schedule and coordinate testing of network systems Software changes with the BSP   2.5 Network Virus Management -WAN

Datec will assist in detecting, fire-walling and blocking propagation of network viruses but are not responsible for virus detection or outbreaks that occur within the banks local area network. Datec will assist the BSP when requested to handle any virus issues that fall out side the scope of this agreement as per the terms of this agreement.   2.6 Internet Services

Datec will provide in accordance with BSP requirements Internet Services and follow on support as currently provided to the BSP under Datec's customer ISP services policy.   2.7 Management Tools

Datec will:

2.7.1 Install, configure and test the selected management tools used to support problem management (e.g. to generate automatic alerts for critical outages)   Commercial in Confidence   Page 14   May 2004

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2.7.2 Install, configure and test the selected management tools used to support performance and capacity management (e.g defining alert thresholds and performing notification)   2.8 Document Management

Datec will:

2.8.1 in a mutually agreed format provide documentation, configuration details or other data necessary for the BSP to perform their various business activities and functions;

2.8.2 provide such information that may be necessary to enable the BSP to develop Strategy and Architecture policies and guidelines, undertake benchmarking of Services provided and perform applications development functions.   2.9 Related Software Distribution

Datec will:

2.9.1 upon request from the BSP, distribute and implement software upgrades, software patches to the distributed network equipment as necessary to meet BSP's business requirements

2.9.2 ensure that software distribution windows are managed to ensure that minimal distribution impacts business operations and performance unless otherwise agreed with the BSP

2.9.3 ensure that the software installed are appropriately licensed;

2.9.4 ensure that all software distributions are reconciled to ensure completion;

2.9.5 ensure that all software distributions are virus free;

2.9.6 assist BSP End Users in performing any such upgrades that should be required. Such assistance will be provided via a Help Desk and may result in the dispatch of a support person to the End User location

2.9.7 inform BSP and take corrective action, as appropriate, for failed software distributions and problems resulting from software distribution.

2.9.8 take corrective action to overcome failed or problematic software or data distribution. Datec will fallback to previous (original) release of the affected software.

2.9.9 de-install software, as directed by the BSP, and remove it and any associated documentation to an area designated by the BSP; and

2.9.10provide verification of each completed software distribution, installation or de-installation, and update the asset management and software license management system(s) for that Software Supplier.   Commercial in Confidence   Page 15   May 2004

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2.10 Technology (Equipment) Refresh Planning And Implementation

Datec will be responsible for liaison with managed third parties (MTP's) in the procurement and management of installations, and deletion of and Tracking Network Services within the Network under instruction from BSP. Such responsibilities will include:

  (a) Management of the installation of Network Services;

  (b) Procurement of upgrades, changes or deletion of Network Services, as appropriate to accommodate BSP's changing requirements;

  (c) interfacing with the appropriate Network Services providers for problems related to Network Services; and

  (d) tracking relevant Network Service information .

Datec will be responsible for supporting, administering, managing and performing provisioning of Equipment and Equipment Software comprising the Network. Unless specifically exempted, the equipment is to be supplied by Datec and invoiced for payment according to Datec's normal terms of trade.

Datec will:

  (a) install Network Equipment and Equipment Software and monitor the fulfilment of each order for accuracy;

  (b) store, deliver and unpack all items of Equipment and remove and dispose of all packaging;

  (c) configure, install and test all Equipment and Equipment Software and transfer data and Equipment Software configurations as required prior to commissioning in the production environment

  (d) provide connectivity for the Equipment and Equipment Software at, or prior to, the time of installation;

  (e) remove BSP Equipment Software from displaced or retired Equipment to the extent required by BSP's security procedures;

  (f) remove displaced or retired Equipment and Equipment Software; and

  (g) ensure BSP is aware of all needs to promptly disconnect and end Network Services and remove related Equipment no longer needed by BSP upon termination of Services at a Site. Datec agrees to remove the applicable Equipment.   2.11 Performance Management

Datec will:

2.11.1monitor, measure, and report on the performance of the WAN environment;

2.11.2 enhance and continuously improve its performance of the Services;   Commercial in Confidence   Page 16   May 2004

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2.11.3 identify and recommend product and enhancement opportunities for improved performance;

2.11.4monitor, measure, analyse and report actual systems performance;

2.11.5 recommend changes to the Applications Software for BSP approval to improve system performance;

2.11.6 investigate and correct reported or observed system performance degradation or malfunctions and record for each the downtime, hardware or Software involved, nature of the problem, causes, nature of the fix and product provider. Such fixes will be completed within agreed service windows;

2.11.7monitor and report on capacity inadequacies;   2.12 Capacity Management

Datec will:

  (a) provide additional capacity as required to meet moves, adds and change (MAC) requests;

  (b) provide capacity to meet project requirements as required in conjunction with the BSP

  (c) monitor WAN infrastructure capacity and plan and implement sufficient infrastructure capacity as agreed with the BSP to meet BSP requirements and applicable Service Levels.

  (d) on an ongoing basis, manage the capacity of the environment to meet its obligations under the Service Levels and respond to BSP's operational requirements as they evolve over time;

  (e) monitor and report on Equipment capacity utilisation as it relates to established capacity thresholds, on a continuing basis and upon request by the BSP

  (f) monitor and measure the physical capacity and performance of the environment and report to the BSP when requested;

  (g) upgrade, remove, or add capacity to the environment as necessary to meet BSP's requirements; and

  (h) participate in joint capacity planning reviews with the BSP

Should it be determined that extra capacity is required this cost will be meet by the BSP working with Datec.   Commercial in Confidence   Page 17   May 2004

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2.13 Managed Third Parties (MTP)

In accordance with the Agreement, Datec will co-ordinate Managed Third Parties (MTP) where agreed with the BSP.

Datec will:

  (a) manage Third Parties, including monitoring operational day-to-day Network Service delivery, monitoring performance, escalating events for resolution, and maintaining technical support relationships;

  (b) work with BSP to establish and manage new and existing contractual relationships between BSP and MTP as needed to provide the Services;

  (c) escalate MTP performance failures to MTP management as necessary to achieve timely resolution as per the SLA;

  (d) monitor and Manage the MTP's efforts to remedy a failure;

  (e) communicate to designated personnel the status of MTP's efforts to remedy a failure.   2.14 Moves, Adds And Changes (MACs)

As a component of the base fee Datec will perform any required MACs that fall within the scope of work contained in this agreement.

Datec will also be required to provide MACs to the BSP with pricing and costs for tasks that fall outside the agreement such as project management or the acquisition of new equipment or upgrades but not just restricted to these items.

On approval of any MAC Datec will be required to assist in the supervision, management and implementation of changes related to the Network and the Services as necessary to satisfy BSP's business and operational requirements.

Datec will:

  (a) receive, log and track the completion of service requests and provide related information to the IBM Help Desk and billing system;

  (b) schedule the execution of the MAC;

  (c) for MACs, dispatch and manage the performance of appropriate technicians;

  (d) coordinate and communicate with designated personnel concerning scheduling and requirements, so as to eliminate the business impact on end users;

  (e) provide the necessary technical support to complete the MAC;

  (f) physically move Equipment, as required, and install any necessary in-scope cabling where appropriate;

  (g) notify the BSP contact person of completion of the MAC;   Commercial in Confidence   Page 18   May 2004

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  (h) confirm correct implementation of the MAC with the designated personnel and the BSP Help Desk, as appropriate;

  (i) track the completion of the MAC in a management system by updating relevant inventory and configuration information.   2.15 Help Desk Services

Datec will

2.15.1

provide a single-point-of-contact (SPOC) Help Desk. The Help Desk will support and have access to, and maintain, sufficient information that will facilitate knowledge of the BSP's business and technology environment;

2.15.2

provide one primary Help Desk contact phone number and enable contact fax, e-mail and browser for all technology requests. This includes, but is not limited to, communication faults, Hardware and Software failures, and general enquiries by the BSP.

2.15.3   record, analyse and report on a regular basis, as and when required by the BSP, on calls received by the Help Desk, including details of:

  •   call volumes and duration;

  •   problem trends;

  •   call abandon rate and wait times;

  •   Level 1 resolution rate;

  •   problem resolution time;

  •   provide Level 1 support for any end user IT problem;

  •   resolve problems at the first level, to decrease resolution times;

Provide Help Desk support, which includes:

  •   recording all problem calls, inquiries and requests for service;

  •   gathering the end user information;

  •   obtaining resource status;

  •   accessing on-line information;

  •   responding to end user requests with accurate and appropriate information;

  •   handling routine Hardware, Software, and usage problems;   Commercial in Confidence   Page 19   May 2004

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  •   transferring calls to the appropriate support group, although coordination and ownership of the problem and escalation management remains with the Level 1 support;

  •   opening the problem record and providing the end users with a unique problem identifier (e.g. number);

  •   informing the end user of the status;

  •   calling the end user for further information;

  •   closing the call, with the end user's agreement and ensuring end user survey is completed;

  •   escalating delays in problem resolution;

  •   notify users of system unavailability (scheduled and non-scheduled);

  •   report all suspected viruses to the BSP in a timely manner; and

  •   assist the BSP in removing viruses   2.16 Hardware, Software And Equipment Support

Datec will:

  (a) process warranty claims, as applicable;

  (b) coordinate and schedule maintenance activities with the BSP and third parties;

  (c) ensure that maintenance personnel follow documented recovery procedures;

  (d) maintain accurate documentation on the current location and status of Hardware and Equipment under repair;

  (e) update the problem management and asset management systems with relevant maintenance information;

  (f) diagnose and resolve complex network, operational and Software problems;

  (g) provide trouble shooting and problem resolution for all managed Hardware, Software, and Equipment;

  (h) provide Software and Equipment support including trouble shooting for problem determination;

  (i) resolve problems with long term fix or if problem cannot be resolved within an acceptable time frame, an alternative solution must be available in order to get the BSP working with the long term fix implemented at a later time;

  (j) identify and resolve user Hardware and Equipment problems including the management and execution of any Service Levels agreed in third party vendor maintenance agreements in place currently or in the future;d   Commercial in Confidence   Page 20   May 2004

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  (k) provide end user support and problem resolution for Software;

  (l) coordinate with other parties as necessary to resolve Hardware and Equipment problems;

  (m) order new Hardware and Equipment and schedule installation;

  (n) interface with Hardware and Equipment vendors for planning and problem resolution.   2.17 User Logon And Password Administration for Wide Area Network (WAN)

2.17.1Datec will provide a central point for the generation of new user logons and passwords as agreed with the BSP.

2.17.2Datec will reset passwords and perform logon ID administration in accordance with BSP's security guidelines.

2.17.3User logon and password administration include providing access and administering passwords for firewalls and internet requirements.   2.18 Project Services

Datec will provide project services as agreed with the BSP that fall outside the scope of this document.

2.18.1Datec will execute Projects according to the following guidelines: All new projects, new Requests for Service (RFS), and work considered out- of-scope of day-to-day operations will be treated as competitive

2.18.2BSP will ask Datec for a quote based on a Scope of Work

2.18.3Datec is to provide a relevant quote to the BSP Customer Business Manager (CBM)

2.18.4Quotes will be approved by the BSP CBM, who will then notify Datec.

BSP Customer Business Manager (CBM) contact details:

[*****]

[*****]

[*****]

[*****]

[*****]   Commercial in Confidence   Page 21   May 2004

Network Management Outsourcing Agreement   ***** CONFIDENTIAL TREATMENT REQUESTED





2.19 Asset Management

  2.19.1 Datec will assist the BSP in the ongoing management of an inventory of Equipment, Equipment Software and Network Services comprising the Network. Such inventory will record, Site locations and Equipment configuration (including hardware components and operating system software) as applicable to the Equipment, Equipment Software and Network Services in an agreed format.

  2.19.2 Datec will provide updates to the inventory that result from other processes including performance management, fault management, configuration and capacity planning. Updates from these processes will be tracked through work order activity. Datec will provide BSP with changes to the inventory in an agreed format.

Datec will:

  (a) within 30 days from each Site Acceptance Date, provide the necessary information to populate the inventory management database with information regarding that Site;

  (b) provide updated inventory data on a weekly basis as a result of performance management, fault management, and MAC activity; and

  (c) manage an inventory of spares made available for the purpose of facilitating the maintenance of critical Service components.   2.20 Security Services

As set forth below, Datec will manage physical security for the Network as necessary to satisfy BSP's business and operational requirements. Datec will be responsive to BSP changes in its physical Network security requirements as they may change over time. Datec will comply with relevant BSP information security policies, and government regulations. With respect to this responsibility,

Datec will:

  2.20.1 on an ongoing basis, identify Datec subcontractors and Personnel who are to be granted access to specific operations or BSP facilities related to the Services;

  2.20.2 follow a standard equivalent to the BSP physical security standard for the Network. If Datec security standards provide a greater degree of security, Datec will follow Datec standards for the Network;

  2.20.3 follow all security procedures in effect at the Installation Sites. BSP is responsible for site security at the Sites;   Commercial in Confidence   Page 22   May 2004

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  2.20.4 immediately report breaches of security evident during site visits to BSP. Such breaches are to include all unauthorised attempts to use or obtain physical access to BSP Network resources and information;

  2.20.5 for facilities under BSP's control, comply with BSP's physical security standards of which Datec receives reasonable advance written notice.   2.21 Business Continuity Planning (BCP) And Disaster Recovery Plan (DRP)

Datec will adhere to the BSP's DRP policy and procedures and will assist wherever possible to further enhance these within the scope of this agreement.   2.22 Change Management

Change management is both a communications process and a methodology that seeks to introduce change into any environment without adversely impacting service delivery and commitments and will usually be associated with a MAC document.

Datec will perform the change management functions below:

  (a) accept and enter authorised change requests into an information system for the purpose of tracking changes to the environment in accordance with the BSP processes, procedures and methodologies;     (b) for each change affecting the environment the Supplier will:

  (i) assess the necessity and impact of the proposed change on performance, connectivity and overall operation;

  (ii) in conjunction with BSP, develop acceptance test criteria and test the change;

  (iii) work with BSP to resolve acceptance test issues;

  (iv) schedule and manage testing and implementation of the change, including communication to and coordination with other affected functions in accordance with the change management procedures;

  (v) with BSP assistance, verify the successful implementation of the change. Notify the change requestor and customers of the outcomes following the change implementation;

  (vi) ensure diligence is applied in deciding upon time of day and day of week for implementation of change so that provision of service is continued;

  (vii) ensure all potential and/or actual business impacts expected as a consequence of the implementation of change are communicated to and understood by the BSP

  (viii) ensure potential conflicts between changes are identified and resolved in advance of implementation; and   Commercial in Confidence   Page 23   May 2004

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  (ix) ensure changes are bundled to ensure Services are not subject to more outages than are sensible or necessary.   2.23 Backup Requirements

Datec Will:

  (a) ensure that network configurations and O/S are fully backed up so that they can be reinstalled without delay in an emergency.

  (b) assist with the installation and decommissioning of equipment and associated hardware and software;

  (c) assist with the facilitation of scheduled hardware maintenance;

  (d) assist with the physical placement and movement of hardware, cables, connectors and installations;

  (e) maintain and distribute configuration diagrams and associated documentation;

  (f) assist with testing the recovery procedures required to re-establish, in the event of a failure, the functionality of systems included in the agreement, in compliance with BSP's requirements;

  (g) prepare, test and document backup and recovery procedures for both Datec and BSP

  (h) maintain the physical environment, and all equipment, in a safe and clean manner and in accordance with equipment vendors specifications.

  (i) manage physical site security in accordance with Datec and BSP security policies;

  (j) implement recovery processes and procedures, as required to ensure timely recovery following any environmental failure;

  (k) ensure regular testing of Datec's environmental components (eg. fire alarms, generators, UPS, etc); and

  (l) keep all equipment in good operating condition in accordance with equipment specifications, and such other performance criteria as contained in this Agreement so as to be able to effectively perform to specification.   2.24 Designated Locations

Datec will manage the BSP WAN operations from its Corporate Head Office located in Waigani Drive, Port Moresby.

In order for this to occur certain routers/switches and associated network equipment will be located at Datec   Commercial in Confidence   Page 24   May 2004

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The Current Router and Switch Locations that will be covered by this agreement are:         [*****]       [*****]       [*****]       [*****]       [*****]       [*****]       [*****]       [*****]       [*****]       [*****]       [*****]       [*****]       [*****]       [*****]       [*****]

Performance Standards

3.1 General Requirements

Throughout the term of the agreement Datec will:

  (a) meet or exceed the Service Levels identified within the service level agreement.

  (b) comply with industry standards; and

  (c) Datec will also maintain the BSP quality assurance procedures where applicable and agreed between the parties.   3.2 Measurement And Monitoring Tools

Datec will:

  (a) perform all Service Level reporting, in a manner acceptable to the BSP   Commercial in Confidence   Page 25   May 2004

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  (b) implement further automated measurement, monitoring tools and procedures as advised by the BSP to measure and report Datec's performance on a monthly basis should the existing tools be inadequate. The acquisition of new tools will be subject to a MAC and approval by the BSP for their acceptance of costs and purchase.   3.3 All Data And Supporting Information Confidential

Detailed supporting information and reports relating to service levels and performance will be confidential between the two parties.

Both parties will treat the terms of this agreement and any supporting documentation, such as emails, facsimiles and the like as confidential and may only disclose it:

  (a) to officers and employees who have signed a confidentiality agreement that imposes on that person confidentiality obligations and who:

  (i) have a need to know (and only to the extent that each has a need to know); and

  (ii) have been directed and have agreed to keep confidential the Confidential Information on terms consistent with this Statement of Work; or

  (b) to the extent, and to the persons, required by law.

Reports

4.1 Reporting

Datec is to provide a range of reports and/or data required to develop such reports in an agreed format to the BSP or its nominee on daily, weekly, monthly and ad hoc basis as requested by BSP.

Datec will undertake the following functions:

  4.1.1 respond to user report enquiries

  4.1.2 follow up errors with areas providing the source data

  4.1.3 manage reporting platform   4.2 Types Of Reports

Datec will make available to the BSP

  4.2.1 the reports identified in this document and the Service Level Agreement   Commercial in Confidence   Page 26   May 2004

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  4.2.2 the reports and documents which were provided by the BSP prior to the Commencement Date

  4.2.3 each month such reports as are necessary to ensure and validate the Supplier's performance and commitments made under the Service Level Agreement and

  4.2.4 such other reports as may be specified by the BSP from time to time.   4.3 Structure Of Reports

Datec must structure performance reporting so that it can be readily communicated to the management or end-user, business areas and business system owners in a mutually agreed format.

Personnel

5.1 Standards Of Datec Personnel

Datec will:

  (a) use an adequate number of Personnel to supply the Services outlined in this agreement

  (b) ensure all Personnel who perform Services are properly educated, trained and fully qualified for the Services they perform;

  (c) ensure that all Personnel comply with:

  (i) any protocols, codes of conduct or procedures specified by the BSP and advised by from time to time

  (ii) ensure any obligations under this agreement in respect of Confidential Information, Personal Information, data security and material

  (iii) all Laws; and

  (iv) any policies existing or introduced from time to time, including policies regarding occupational health and safety requirements, building access and physical security;     (d) comply with any authorisation procedures specified in this agreement before:

  (i) assigning any person to supply Services; or

  (ii) permitting that person to enter any premises of Datec or BSP, to handle any material or become aware of any Confidential Information or Personal Information; and

  (iii) ensure that only Datec Personnel who are currently authorised are involved in supplying the Services or given access to any BSP Material, Confidential Information or Personal Information.   Commercial in Confidence   Page 27   May 2004

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5.2 Replacement At BSP's Request

BSP may by notice to Datec, require Datec to replace any of the Supplier Personnel for the reasons stated in the notice and:

  i. in the case of breaches of security or confidentiality requirements, Datec must immediately replace that person with another person of suitable ability and qualifications; or



ii. in any other case, after receipt of that notice, Datec will have 48 hours in which to investigate the matters stated in the notice, discuss its findings with the BSP and resolve any problems with the person. If, following that period the BSP requests replacement of the person, Datec must replace that person, within 60 days with another person of suitable ability and qualifications.   5.3 No Right To Require Termination

BSP does not have the right to require Datec to terminate any person's employment or contract with Datec. It is only intended to give the BSP the right to require that Datec discontinue using a particular person in the performance of Services for the BSP.   5.4 Restraints On Engagement Of Datec - BSP Personnel

From the Commencement Date of the agreement both parties must ensure that they do not without mutual written consent solicit, entice or attempt to entice away any employee from either organisation during the Term and for 1 year after the termination date.   5.5 Enforceable Restraint

Clause 5.5 will not in any way restrict either organisation from hiring any person who has responded to any published advertisement of position or who has otherwise approached either organisation for employment unsolicited or its agents or Related Corporations.   5.6 Employer Obligations

Datec must ensure that it, and each of the approved subcontractors and employee's complies with all obligations relating to payment of tax instalment deduction, deductions from prescribed payments, fringe benefits tax, training guarantee levy, superannuation, payroll tax and any other taxes or levies imposed upon an employer which arise in respect of any amounts paid to the Datec under this agreement and that it complies with all requirements imposed on an employer under the relevant legislation to keep records, lodge returns and provide information in relation to such obligations.   Commercial in Confidence   Page 28   May 2004

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5.7 Security And Occupational Health And Safety

Datec must at all times comply with and ensure that its personnel and approved subcontractors comply with the laws and regulations on occupational health and safety.

Audits And Record Keeping

6.1 Record Keeping

Datec must keep, and must require subcontractors to keep, adequate accounts, documents and records to the extent required by the BSP as advised and in sufficient detail to enable Datec's compliance with this agreement and the accuracy of its invoices to be determined.   6.2 Access To Datec's And Subcontractors Premises And Material

Datec must give, and must ensure that its Subcontractors give, BSP and their Personnel, (including internal and external auditors and advisers) full access at all reasonable times and on reasonable notice to:

  (a) any premises at which or from which Datec supplies the Services

  (b) the Supplier Personnel; and

  (c) equipment, Software systems, data, accounts, documents and records relating to the Services provided both by Datec and by its Subcontractors, but excluding information relating to the Datec's internal costs and margins for the Services,

in order to enable the BSP to audit Datec's compliance with this agreement and for operational risk reasons.   6.3 Regular Audits For BSP Reporting

The BSP itself may also audit the Supplier's (and its subcontractors) records relevant to the supply of the Services for any reasonable purpose including processes, procedures and performance for operational risk assessment, regulatory requirements and annual reporting.   6.4 Assistance

For the purpose of complying with this clause, Datec must promptly and efficiently give the BSP and their Personnel any assistance they reasonably require, including, if requested, installing and operating audit software. BSP and their Personnel will comply with Datec's reasonable security requirements.   Commercial in Confidence   Page 29   May 2004

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Subcontractors

Datec may only subcontract its obligations under this agreement as follows:   7.1 Approval

Datec must obtain the BSP's approval for any subcontracts but may do so without its consent if:

  (a) it is in the ordinary course of business

  (b) Datec supplies BSP with advance notice

  (c) it does not result in a material change in the way Datec conducts its business

  (d) it does not adversely affect the BSP   7.2 Terms

The terms of any subcontract must be consistent with this agreement, unless the BSP agrees otherwise, including:

  i. confidentiality and intellectual property obligations;

  ii. BSP's approval rights (which must apply directly to the subcontractor);

  iii. compliance with BSP's policies and directions;

  iv. indemnities that protect BSP

  v. termination and disengagement rights; and

  vi. key personnel.

Pricing

8.1 General Principles

The BSP will pay Datec a base fee plus any other fees and charges that may be agreed too during the term of the agreement but excluding, travel, freight and tax related matters.

BSP will be responsible for any freight and or related travel costs incurred by Datec in the execution of the services as defined in this agreement. Prior to undertaking or committing to any freight and or related travel costs Datec must first obtain approval from BSP.   8.2 Base Fee

The base fee includes all things necessary to manage the WAN management services as provided for by the terms of this agreement.   8.3 Price Inclusive

The base fee includes all costs, expenses, taxes (except for GST/VAT), duties, levies or imposts relating to the services and Datec's performance of its obligations under this agreement.   Commercial in Confidence   Page 30   May 2004

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8.4 Pricing Criteria

Each month Datec will provide the BSP with an invoice including:

  (a) 1/12 of the Base Charge for the service

  (b) pass through expenses for the month

  (c) the annual Base Charge/s once established may still be adjusted from time to time by agreement between the parties.   8.5 Rebates

  1. Should Datec not achieve the agreed Service Levels contained in the Service Level Agreement as detailed in Schedule B, a monthly rebate will be applied as per the Rebate Table in Pricing Schedule C,

  2. Rebates will apply to Severity Levels One (1) and Two (2) during the agreed business hours detailed in Schedule B.

  3. The maximum rebate in any given month will be 50% of the monthly base fee. The rebate calculation will be completed before the 15th Day of the following month for the preceding month together with supporting monthly reports and provided to the BSP.

  4. For the purposes of determining SLA achievement the Time to Respond measurement will be used.

The following definition will apply:

Time to Respond means, the time between the problem being logged and the customer being given a job number and the technician beginning the job As this applies to Severity Levels One (1) and Two (2) this will also include the informing of Datec's senior operational management.

Pricing Adjustments

9.1 CPI Adjustments

No later than 30 days after the end of each contract year the Base Fee must be increased or decreased in accordance with the increase or decrease in the CPI and such increases or decreases will be calculated by using the following formula:

R2 = R1 x New CPI   Old CPI

Where:

R2 = the Base Fee payable for the relevant 12 month period of the Term

R1 = the Base Fee specified the previous year.

New CPI means the last published CPI for a complete quarter ending prior to the date of commencement of the relevant 12-month period of the term.

Old CPI means the last published CPI for a complete quarter ending prior to the date of this agreement.   Commercial in Confidence   Page 31   May 2004

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Should the CPI increase exceed more than 10% in any given year the maximum amount applied will be 10% or which ever is lower.   9.2 Pass - Through Expenses

These are expenses to be paid directly by the BSP with no margin or mark up added by Datec. Datec must provide the BSP with all information and material reasonably required to validate a pass through expense.   9.3 Service Level Reviews

The BSP may conduct a service level review at least once per 12-month period or as required with the agreement of Datec.

At least annually the parties will review the Service Levels to determine whether they still reflect the requirements of the BSP. Should the BSP decide that they do not, the BSP may:

  (a) conduct benchmarking on the relevant Services to establish appropriate service levels

  (b) require Datec to propose a means of improving performance.

Extraordinary Events

10.1 Extraordinary Events

The BSP may notify Datec that an Extraordinary Event has occurred or is likely to occur and provide details of such Extraordinary Event.

On receipt of such notice, Datec must promptly determine and report to the BSP the effect on:

  (a) the level of resources required to provide the Services ('Required Resources'); and

  (b) the Fees as a result of the Extraordinary Event.

The parties must use their efforts to agree on the level of required resources and, having agreed, will adjust the agreement accordingly to reflect this change. This will include the adjustment of the base fee and a suitable implementation plan.

Confidentiality

11.1 Confidentiality

All information exchanged between the parties under this agreement or during any negotiations undertaken at any time in respect of this agreement is confidential to those parties and must not be disclosed to any persons except:

  (a) as required by any law of the state of Papua New Guinea

  (b) to legal advisers, auditors, accountants and other consultants of either party requiring information for the purpose of this agreement

  (c) to directors and shareholders of the respective parties

  (d) with the consent of the party that supplied the information   Commercial in Confidence   Page 32   May 2004

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  (e) if the information is generally and publicly available other than as a result of the breach of confidence by the person receiving the information.

Returning Material, Data, Hardware, Software And Information

12.1 Datec's Obligations

Upon request from the BSP or at the end of the disengagement period Datec must:

  (a) promptly return all BSP data, physical and written records, hardware, software or any other medium whatsoever

  (b) if requested by the BSP destroy any relevant information and certify in writing that it has done so.   12.2 BSP's Obligations

At the end of the disengagement period the BSP will transfer any material, data, hardware, software and information from Datec to its chosen new location. Datec will assist where possible. The disengagement period will be as determined under Section 14 (Termination) of this agreement.

Compliance With Laws

13.1 Compliance

This agreement will be constructed in accordance with the laws of Papua New Guinea and the parties submit to the non-exclusive jurisdiction of the National Court of Justice of Papua New Guinea.

Termination

14.1 Termination By BSP for Cause

If so advised the BSP may terminate this agreement by giving written notice to Datec if:

  (a) Datec materially breaches the agreement and the breach (Material Breach) cannot be, or is not, rectified within 30 days after a notice from the BSP,

  (b) an Insolvency Event occurs in relation to Datec

  (c) any other event specified in this agreement as giving rise to a right for the BSP to terminate immediately occurs; or

  (d) Datec commits a series of breaches that together constitute a Material Breach.   14.2 Termination For Change Of Control

The BSP may after giving due consideration to all circumstances and not acting unreasonably, terminate this agreement by giving written notice to Datec if there is a change of control or major shareholding of Datec.   Commercial in Confidence   Page 33   May 2004

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In the case of the BSP requiring termination under this clause, the BSP will use its best commercial efforts to ensure that it gives due consideration to all the circumstances and does not act unreasonably in demanding such termination.

If the BSP gives such a notice of termination, then:

  (a) if the change of control:

  (i) results in a competitor of the BSP controlling Datec or

  (ii) is reasonably likely in the BSP's opinion, to have a detrimental effect on Datec's ability to provide the Services in accordance with the agreement,

then the BSP will pay Datec according to Section 14 - Termination of this agreement and the Termination Table in Schedule C.   14.3 Termination By BSP For Convenience

The BSP may terminate the whole or any part of this agreement for convenience at any time by giving Datec at least 6 months prior written notice.   14.4 Termination By Datec For Convenience

Datec may terminate the whole or any part of this agreement for convenience at any time by giving the BSP at least 6 months prior written notice.   14.5 Termination Fee

If the BSP terminates under clause 14.3 (Termination by BSP for Convenience) the BSP will pay Datec the Termination Fee calculated in accordance with Attachment C (Pricing).   14.6 Sole Remedy

The amount payable by the BSP under clause 14.3 (Termination Fee) will be Datec's sole remedy for the BSP terminating for convenience.   14.7 Mitigation

Datec must mitigate the cost of termination, including by using its best efforts to:

  i. redeploy personnel used to provide the Services

  ii. terminate contractors in accordance with the terms of their contracts so as to avoid any liability to pay compensation for early termination; and

  iii. redeploy any equipment used to provide the Services that is not acquired by the BSP   Commercial in Confidence   Page 34   May 2004

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General Indemnities

15.1 Indemnity By Datec PNG LTD

Datec must indemnify, defend and hold harmless the BSP, their employees, agents, successors and assigns, from any and all Damages arising from, in connection with, or based on allegations of, any of the following:

  (a) Datec's breach of;

  (i) any representation and warranty specified in this agreement or

  (ii) its obligations with respect to BSP Confidential Information

  (b) any claim, demand, proceeding or other action ('Claim') arising out of or related to occurrences Datec is required to insure against     (c) any Claim arising out of or in any way relating to:

  (i) Datec,

  (A) engaging a contractor; or

  (B) employing or terminating the employment of any person,;

  (ii) any fraudulent act or omission, or any fraudulent misrepresentation or deceit by Datec, its Personnel or subcontractors in connection with this agreement; or

  (iii) a decision by the BSP not to approve a subcontractor or to revoke its approval for an Approved Subcontractor under the agreement

  (d) any Claim whether or not the BSP is liable at law for the amount the subject of the Claim, which maybe made against the BSP by, or on behalf of:

  (i) the Tax Office in respect of any payroll tax or penalties that the office may seek to recover from the BSP in respect of any amounts paid to Datec under this agreement

  (ii) any revenue raising authority including the Commissioner of Taxation in respect of any other payment, liability, or penalty that the authority may seek to recover from the BSP in respect of any amounts paid to Datec under this agreement;     (e) any Claim arising from:

  (i) the Acquired Assets or

  (ii) managed Third Party Agreements to which Datec is or becomes a party as a consequence of the operation of this agreement; and   Commercial in Confidence   Page 35   May 2004

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  (iii) any Claim arising from any breach by Datec of its obligations under this agreement.   15.2 Enforcement Of Indemnities

It is not necessary for a party to incur expense or make payment before enforcing a right of indemnity conferred by this agreement.

Personal Injury, Property Damage Indemnity

16.1 Datec Indemnifies BSP

Datec indemnifies the BSP against all Damages that the company may sustain or incur (including those sustained or incurred as a result of a claim by a third party against the BSP as a result of:

  (a) any injury to or death of any person arising out of or in any way relating to this agreement; or

  (b) damage to any real or tangible property,

caused by an act or omission of Datec or its personnel   16.2 BSP Indemnifies Datec

The BSP indemnifies Datec against all Damages that Datec may sustain or incur (including those sustained or incurred as a result of a claim by a third party against Datec or any related company as a result of:

  (a) any injury to or death of any person arising out of or in any way relating to this agreement; or

  (b) damage to any real or tangible property,

caused by an act or omission of the BSP or its personnel.

Risk Management

17.1 Insurance Coverage

The BSP will provide full comprehensive replacement insurance cover for all assets contained in the Asset Register (Schedule A).   Commercial in Confidence   Page 36   May 2004

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17.2 Terms Of Insurance

The BSP will provide documentary evidence to Datec that such insurance is in place for the term of the agreement.

Datec will not be held liable for service level deficiencies related to insurance issues or an Act of God. Both parties agree to work together to resolve any such issues.

General Conditions

18.1 Assignment By Datec

Datec must not assign this agreement or any right under this agreement unless Datec

  (a) is not in breach of this agreement;

  (b) obtains the prior written consent of the BSP

  (c) ensures that the assignee agrees to be bound by all of the Datec's obligations under this agreement; and

  (d) acknowledges that it remains bound by this agreement   18.2 Assignment By BSP

BSP may:

  (a) assign all or part of this agreement to any person as part of a restructure; and

  (b) assign or novate all or part of the rights and obligations under this agreement to any of the BSP's Related Company's as part of a re- organisation of its business.   18.3 Governing Law

This agreement will be construed in accordance with the laws of Papua New Guinea and the parties submit to the non-exclusive jurisdiction of the National Court of Papua New Guinea.

Dispute Resolution

19.1 Notice

A party claiming that a dispute, difference or question arising out of this agreement (Dispute) has arisen must notify the other party in writing giving details of the dispute.   19.2 Escalation

Senior executive managers of both companies must meet together to negotiate in good faith with a view to resolving the dispute.   Commercial in Confidence   Page 37   May 2004

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19.3 Expert Determination Or Mediation

If the parties cannot resolve the Dispute within 30 days after the Notification, the parties must refer the Dispute to:

  (a) Expert determination or

  (b) Mediation

the cost of which will be at either parties own cost   19.4 Expert Determination Criteria

If a Dispute is referred for expert determination the expert must make a determination by reference to what is reasonable in the context of the overall service delivery environment but taking into account best practice standards and relevant benchmarks in Papua New Guinea.

Expert determination must be completed by a mutually acceptable independent expert such as an accountant, computer expert or other person/s as agreed between the parties to assist in the resolution of any such dispute with knowledge of the operating conditions within Papua New Guinea.

But whose decision will not be binding on the parties.

Neither party may terminate this agreement pending the decision of such expert, but either party may approach the court for urgent relief if it is though desirable   19.5 Selection Of Expert Or Mediator

The parties will attempt to agree an appropriate expert or mediator. If they are unable to agree either party may at its own cost, request the president of the Law Society of Papua New Guinea to appoint a suitably qualified person to decide the dispute and determine the cause of action which best meets the objectives of the parties under or in the context of this agreement.

That person will act as an expert and not as an arbitrator and the decision or determination must, so far as practicable, be made within 21 days of the request

The expert may request either of the parties to appear before him or to provide a written explanation as to the reasons for the dispute and as to the party's reasons for following a certain course of action.   19.6 Procedure

Each expert determination and mediation conducted in accordance with this clause will be conducted in accordance with the relevant sections of the this agreement and the appropriate laws of Papua New Guinea.

The parties agree that a determination made by an expert will not be binding on either party. Once a determination has been made, the parties will recommence negotiation to resolve the Dispute and if they fail may initiate court proceedings.   Commercial in Confidence   Page 38   May 2004

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Disengagement

20.1 Planning

The purpose of Disengagement is:

  (a) to enable the BSP or its nominee to perform the Disengaged Services from the end of the Disengagement Period; and

  (b) to eliminate or minimise any disruption to the Services (including the Disengaged Services) as a result of the handover of the Disengaged Services to the BSP or its nominee.

Datec must upon request from the BSP work with them to formulate a disengagement plan.

  (a) as part of the Disengagement Plan:

  (i) BSP's right to use any Software continues following Disengagement

  (ii) there is no degradation of service levels or quality of service during Disengagement;

  (iii) there is no interruption to the Services during Disengagement;     (b) the Disengagement Plan:

  (i) specifies the Datec Personnel and other resources that will provide Disengagement Assistance;

  (ii) specifies all things necessary to effect Disengagement as efficiently as possible as at the start of this Agreement to effect the transition to Datec;

  (iii) sets out a timetable and process for effecting Disengagement that will deal with each of the issues in this agreement and will enable the BSP to have completed Disengagement as quickly as possible without disrupting the quality of the Services; and

  (iv) contains all things necessary to ensure that Datec is able to comply with the clauses in this agreement.   20.2 Implementation Of Plan

Datec must ensure that, at all times during the agreement, on 60 days notice it is able to deploy all necessary resources to complete Disengagement in accordance with the agreed Disengagement Plan.

  (a) Datec must ensure there is no degradation of quality of service during Disengagement;

  (b) Datec acknowledges all Service Levels apply during Disengagement but subject to agreement of the viability of the Disengagement Plan   Commercial in Confidence   Page 39   May 2004

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  (c) Datec use its best efforts to ensure that the Disengagement Period ends on the intended date of termination for the Disengaged Services,

  (d) the BSP will be permitted (on its own or on behalf of its nominated third party) without interference from Datec (including counter- offers), to make offers to any Datec employees or contractors who were used solely or primarily by Datec to provide the Disengaged Services during the 12 month period prior to the commencement of Disengagement;

  (e) The BSP or its nominee will be permitted to acquire all of Datec's right, title and interest in any Equipment owned or leased by Datec or its Subcontractor that is used in the performance of the Disengaged Services

  (f) If the BSP appoints a third party to assume the BSP role in relation to any or all of the Disengagement, Datec must provide Disengagement assistance to that third party.   Commercial in Confidence   Page 40   May 2004

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EXECUTED as an agreement.

SIGNED SEALED AND DELIVERED by BANK SOUTH PACIFIC LIMITED by Garth Mcllwain its duly constituted Attorney in the presence of:

)



BANK OF SOUTH PACIFIC LIMITED by its Attorney who hereby states that at the time of his executing this instrument he has no notice of the revocation of the Power of Attorney Registered No. S.25458

AND I certify that the person executing this instrument is personally known to me   )   Under the authority of which he has executed this instrument   )     )

/s/ Illegible   )     /s/ Illegible Witness   )   Illegible Name (printed)   )

Signed for and on behalf of DATEC (PNG) LIMITED by the authority of the Directors and Management   )

/s/ Illegible   )   Signature of Authorised Officer   )

Financial Controller   )     Illegible Title   )   Name of Authorised Officer (Please Print)

/s/ Illegible    )     Illegible Signature of Witness   )   Name of Witness (Please Print)   Commercial in Confidence   Page 41   May 2004

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Schedule A:

Equipment List — Asset Register   Illegible   Illegible   Illegible   Illegible Daru   1721   Catalyst 1912   Fa/1 , E/1 and S/1 Klunga   1721   Catalyst 1912   E/2 Tabubil   1721   Catalyst 2950   E/1 and S/4 Kerema   1721     E/2 POM Admin 1   Cisco 3660   Catalyst 2912   Fa/2, S/10 and ATM/1 POM Admin 2   Cisco 3660   Catalyst 2912   Fa/2 and S/9 POM CC   Cisco 1721   Catalyst 2912   E/1 and S/2 Boroko CC   Cisco 3640   Catalyst 2950   E/2 and S/4 Ori Lavi   Cisco 805     E/1 and S/1 Waigani Drive CC     Catalyst 1912   E/1 and S/2 Security Base   Cisco 805   Catalyst 1912   E/1 and S/1 Gordons CC   Cisco 3662   Catalyst 2950 and Catalyst 1900   Fa/2 and S/12 Stores   Cisco 1605   Catalyst 1912   E/2 and S/1 Bunker nsc_adm1   Cisco 3660   Cataryst 3550   Fa/2, S/27 and ATM/1 Bunker nsc_adm2   Cisco 3660   Catalyst 3550   E/2 and S/8 Bunker NCD   Cisco 3640   Catalyst 3550   E/2 and S/16 Bunker EB   Cisco 3640   Cataryst 3550   E/2 and S/8 User Suppt   Cisco 1601     E/1 and S/1 Dev Suppt   Cisco 1601     E/1 and S/1 Waigani Junction CC     Catalyst 2924   Andersons Harbourside   Cisco 2610   Catalyst 2950   E/1 and S/1 TST 4 Mlle   Cisco 2610     E/1 and S1 Hitron         Commercial in Confidence   Page 42   May 2004

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Boroko Foodworld       Rainbow ATM Lobby   Cisco 805     E/1 and S/1 Jacksons   Cisco 805     E/1 and S/1 Alotau   1721   Catalyst 1912   E/1 and S/6 Popondetta   1721   Catalyst 1912   E/2 and S/2 Lae Town   Cisco 3640   Catalyst 2950   E/2 and S/11 Lae Market   1721   Catalyst 2924   E/1 and S/4 Lae CC   Cisco 2611   Catalyst 2950   E/2 and S/6 Lae - Vele Rumana   Cisco 805     E/1 and S/1 Eriku ATM Lobby   1721     E/1 and S/1 Bulolo   1721     E/2 Madang   1721   Catalyst 2924   E/2 and S/4 Madang - Beckslea Plaza   1721     E/2 and S/1 Wewak   Cisco 3640   Catalyst 1912   E/3 and S/4 Wewak ATM Lobby   1721     E/2 and S/1 Maprik   Cisco 806     E/2 Aitape   Cisco 806     E/2 Vanimo   1721   Catalyst 1912   E/2 and S/2 Kainantu   1721   Catalyst 1912   E/1 and S/2 Goroka   Cisco 3640   Catalyst 2950   Fa/1. E/1 and S/6 Bird Of Paradaise   Cisco 805     E/1 and S/1 Kundiawa   1721   Catalyst 1912   E/2 and S/2 Hagen   Cisco 3640   Catalyst 2924   E/2 and S/9 Hagen CC   Cisco 2611   Catalyst 1912   E/2 and S/10 Wabag CC   Cisco 2611   Catalyst 1913   E/2 and S/2 Wabag   Cisco 2611   Catalyst 2924   E/2 and S/2 Mendi   Cisco 2611   Catalyst 1912   E/2 and S/2 Lorengau   1721   Catalyst 1912   E/1 and S/1   Commercial in Confidence   Page 43   May 2004

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Kimbe   1721   Catalyst 2950   E/1 and S/4 Bialla   1721     E/2 Kokopo   Cisco 3640   Catalyst 2924   E/5 and S/B Kokopo IRO   Cisco 2611   Catalyst 1912   E/2 and S/6 Rabaul   1721   Catalyst 1912   E/2 and S/1 Kavleng   1721   Catalyst 1912   E/2 and S/2 Namatanai   1721   Catalyst 1912   E/2 Lihir   1721   Catalyst 1912   E/2 and S/3 Buka   1721   catalyst 1912   Fa/2 and S/2   Commercial in Confidence   Page 44   May 2004

Network Management Outsourcing Agreement





Schedule B

Datec Service Levels for BSP Networking Outsourcing Project

Services to be performed are defined in the Network Management Outsourcing Agreement. These include Data services, network services and internet services.

As referenced in Section 8.5 of this agreement, rebates will be applied as detailed in Pricing Schedule C, should Datec not achieve the agreed Service Levels. Rebates will apply to Severity Levels One (1) and Two (2) for all logged jobs during the agreed business hours contained in this agreement.   A. Helpdesk / Service Calls

1(a) During Business Hours (Monday to Friday 7.30 to 18.00)   Severity Level   Time to Respond   Escalation Time   Comments

1   15 minutes   1 hour   2   30 minutes   2 hours   3   1 hour   4 hours   4   8 hours   Next business day     Commercial in Confidence   Page 45   May 2004

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After hours assistance Monday through Friday will be available via the Datec Help Desk:

1(b). After Business Hours (Outside Business hours)   Severity Level   Time to Respond   Escalation Time   Comments

1   2 hours   3 hours   2   3 hours   4 hours   3   Next business day   Next business day   4   Next business day   Next business day     1(c). Severity Definitions   Severity Definitions Severity Level

Illegible   Illegible

2 High Impact

Required prompt corrective action. Product of service restricted. Business can operate at reduced capacity. Eg Less than 100 staff impacted, less than 10 branches / ATM's effected by the one event.

Illegible   Illegible   Commercial in Confidence   Page 46   May 2004

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1.1.1 B. Reporting   1.1.2   Report

1.1.3   Report Description   1.1.4   Frequency   1.1. 5   Delivery time   1.1.6   Distribution List

1.1.7

Start of Day Network Status Summary Report   1.1.8

Daily

1.1.9

08:00

1.1.10

1.1.11   Open / Closed Incident report   1.1.12  Daily   1.1.13   10:00   1.1.14

1.1.15

Network Utilisation Report

1.1.16

Weekly

1.1.17

17:00 (Friday)   1.1.18

1.1.19

Management Summary report

1.1.20

Monthly

1.1.21

17:00 (3rd Day of the month)   1.1.22

1.1.23

Details

Start of Day Network Status Summary Report

The report is to detail the status of all bank telecommunication circuits. For those circuits that are unavailable or service is impacted details of actions taken is to be included in the report.   Commercial in Confidence   Page 47   May 2004

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Open / Closed Incident Report

A summary of all calls logged to the Network Helpdesk, status and action taken.

Network Utilisation Report

The report is to provide graphical details of network utilisation statistics for all facets of the network inclusive of;

Banking Traffic

Internet Traffic

Line / Network availability statistics

Any anomalies are to be noted and appropriate commentary / recommendations made.

Monthly Management Report.

The report is detail in a summarised format Network and Operational performance for the month inclusive of;

Statistics of Incident Reports logged

Graphical presentation of Monthly Network Utilisation

Monthly Line / Network Availability Summary

SLA performance status

Staff Report

Management commentary.   Commercial in Confidence   Page 48   May 2004

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2. Managed Third Parties (MTP)

Datec will apply the appropriate severity level and take action as required with managed third party vendors when the resolution requires the involvement of a managed third party.

In the first instance Datec will liase with the managed third party vendor directly keeping records of the action for reporting purposes.

Should there be no successful resolution to this approach within the time durations within this SLA, Datec will escalate the matter directly to the BSP Customer Business Manager (CBM). In any event the CBM will be aware of the request to the MTP due to the daily reporting systems in place.

Once escalated to the BSP CBM, the BSP undertakes to take control of the liaison with the MTP to help Datec resolve the issue.   Commercial in Confidence   Page 49   May 2004

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Schedule C

Pricing Schedule   Annual Fees     Annual Base Fee   K3,524,322.00

Monthly Base Fee   K293,693.50   SLA Rebate Table                         % Of SLA Achieved   100%  95%  90%  85%  80%  75%

Monthly Rebate % applied   0%   10%  20%  30%  40%  50%

• Measured Monthly using the actual Response and Escalation times for logged jobs verse the agreed service times contained in the SLA in Schedule B

• Applies to Severity Levels 1 & 2 during normal business hours

• Maximum rebate will be 50% of the monthly base fee   Termination Fee Table

Contract Term Completed   0-Yrl  1-Yr2  2-Yr3  3-Yr4  4-Yr5  5-Yr6

% of Annual Base Fee Payable   50%   40%   30%   20%   10%   0%

Note: The Annual Base Fee will be adjusted in accordance with Section 9.1, CPI Adjustments, of this agreement   Commercial in Confidence   Page 50   May 2004

Network Management Outsourcing Agreement





Schedule D

Change Control Form (For MAC's)

Change Control Form

This form must be created as soon as the owner is aware of the change but at least two weeks prior to the implementation date. This is to notify all involved parties of impending change and to help the scheduling of change into production. For urgent fixes the change process is followed but needs to be processed immediately. Full details may not be available at this point, however the minimum requirements to be completed are:

Scheduled date and time of change: Date Time

Change Control Number: CMS

Equipment affected by the change:

Equipment (Applies to one or more hardware, software changes or configuration changes to one or more networks).   Equipment Details   Domain   Location                                       Commercial in Confidence   Page 51   May 2004

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1. Change to be carried out:

2. Reason for Change

3. Is there any impact on other areas?

4. Has agreement been obtained from the business? If so please give details.          Commercial in Confidence   Page 52   May 2004

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5. Has Financial Approval been obtained for this change? If so please give details.

6. Have representatives from both the client and the technical staff tested the software or hardware? Please give details.

7. How will the change be carried out?

8. Has any provision been made to back out the installation if necessary? Please give details.          Commercial in Confidence   Page 53   May 2004

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9. Have the details and the implications of the change been explained to the client and areas that will be affected? Please give details.

This change control must be reviewed and approved by at least one person from each of the following areas:   Area   Signatory   Signature  Date The Business   Head of Relationship Banking

  Head of Technology

  Others

Datec   Outsourcing

  Delivery Manager



Office Automation Manager       Commercial in Confidence   Page 54   May 2004

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Schedule E

REQUEST FOR SERVICE (RFS)

Service Request Form   Commercial in Confidence   Page 55   May 2004

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BSP: Service Request Form

Compulsory section or fields are marked with: F

F SR Number:   (Completed by BSP)

-RFS-

  F Date       F Request Type (Cross) F Region (Cross)



¨ POM

¨ Other (Specify)



¨ Project Request

¨ Support Request

¨ Other: Please Specify

F 1.0 Request Details   Service Request Title

Project Name   BSP Project Code

Description

Provide a brief outline of the project scope including high-level business requirements, technical impacts. Where appropriate, provide details of other areas impacted by this project including external parties     Commercial in Confidence   Page 56   May 2004

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Background

Provide any relevant information, which assists in defining the business imperatives for the project, (e.g. Business Requirements)     List of Attachments supporting this Service Request   Attachment / Filename (Content)

2.0 Contract Reference

The terms and conditions will be applied as per the Network Management Outsourcing Agreement dated May 2004 between the Bank of South Pacific Limited and Datec PNG LTD.   F 3.0 Requestor Information

Initiator of Request   Name   (   Mobile

  Position   e-mail   Fax Prime Contact

(if different from Requestor)

Name



(



Mobile

  Commercial in Confidence   Page 57   May 2004

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  Position   e-mail   Fax

Requesting Business Area

Billing Cost Centre

Project Manager1   Name   (   Mobile   F 4.0 Key Dates (attach Project Plan or relevant documents as appropriate) BSP Phase(s)

Completion Date(s)

/ / / / Datec Phases(s)

Completion Date(s)

/ / / / Priority: (Cross those applicable)   ¨ Regulatory

¨ Normal

  Commercial in Confidence   Page 58   May 2004

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  ¨ Compliance   ¨ Fastpath

Implementation Date(s):   User Acceptance Testing

  Production

  Other (specify)   / /   5.0 BSP/Datec Purchase Order Details

F Purchase Order No.2   F BSP/Datec

Is this Request In-Scope or Out-of-Scope of the Services Agreement   Provide details of components if Out of Scope.

  Commercial in Confidence   Page 59   May 2004

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F 6.0 BSP Managerial Approval Authorised Approver   Name:

  Title:

  Date:   7.0 BSP Executive Approval Approval      Approval Approved / Not Approved for release to Datec PNG LTD on behalf of the Bank of South Pacific Limited by:     Approved / Not Approved for release to Datec PNG LTD on behalf of the Bank of South Pacific Limited by:

                For and on behalf of the Bank South Pacific Limited     For and on behalf of the Bank South Pacific Limited / /     / / Explanation for Non -approval (if appropriate)       Commercial in Confidence   Page 60   May 2004

Network Management Outsourcing Agreement 
Question: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
Example Output: The BSP will provide documentary evidence to Datec that such insurance is in place for the term of the agreement.

Example Input: CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY [*]. THE  CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

                             SPONSORSHIP AGREEMENT

This agreement (Agreement) is entered into as of the 15th day of December, 1997 (Effective Date), by and between Excite, Inc., a California corporation, located at 555 Broadway, Redwood City, California 94063 (Excite), and NetGrocer, Inc. a Delaware corporation, located at 333 Seventh avenue, 11th Floor, New York, NY 10001 (NetGrocer).

                                    RECITALS

A.       Excite maintains a site on the Internet at http://www.excite.com (the          Excite Site) and owns and/or manages related World Wide Web sites          worldwide (collectively, the Excite Site and the related web sites are          referred to as the Excite Network) which, among other things, allow          its users to search for and access content and other sites on the          Internet.

B.       Within the Excite Site, Excite currently organizes certain content          into topical channels, including a Shopping Channel.

C.       NetGrocer operates an online supermarket service at its Web site          located at http://www.netgrocer.com (the NetGrocer Site).

D.       NetGrocer wishes to promote use of the NetGrocer Site to Excite's          users by sponsoring the Excite Shopping Channel and purchasing banner          advertising and other promotional links on the Excite Site.

1.       SPONSORSHIP

         a)       Excite will promote NetGrocer in the Excite Shopping Channel                   as follows:

                  i)       For the term of this Agreement, Excite will display                            a text and/or graphic link (consistent with the                            format used on similar links on the same page) to                            the NetGrocer Site on the Excite Shopping Channel                            main page.

                  ii)      Excite will display a text and/or graphic link                            (consistent with the format used on similar links on                            the same page) to the NetGrocer Site in the home                            page of the Excite Shopping Channel Such a Deal                            promotion in four separate one-week segments during                            each year of the term of the Agreement, once every                            calendar quarter.

                  iii)     Excite will display a text and/or graphic link                            (consistent with the format used on similar links on                            the same page) to the NetGrocer Site in the home                            page of the Excite Shopping Channel Shop Here                            First promotion in four separate one-week segments                            during the term of the Agreement, once every                            calendar quarter. Excite shall not display the link                            under this Section 1 (a)(iii) in the same weeks as                            the promotional link under Section 1 (a)(ii).

                  iv)      For the term of the Agreement, Excite will display a                            text and/or graphic link (consistent with the format                            listed on similar links on the same page) to the                            NetGrocer Site on the front page of the Gourmet and                            Groceries department of the Excite Shopping                            Channel.

                  v)       Excite will display a text and/or graphic link                            (consistent with the format used on similar links on                            the same page) to the NetGrocer Site in the Shop                            Here First promotion in the Gourmet and Groceries                            department of the Excite Shopping Channel for the                            term of the Agreement. Such link will be displayed                            as the left-most link or top-most link at least                            fifty percent (50%) of the time.

                  vi)      Excite currently plans to develop a coupon promotion                            area in the Excite Shopping Channel, tentatively                            called Coupon Corner. When launched, Excite will                            display an advertising banner or text or graphic                            link (consistent with the format used on similar                            links on the same page) to the NetGrocer Site will                            Coupon Corner for the remainder of the term of the                            Agreement.

         b)       Excite will promote NetGrocer in the Excite Site as follows:





                  i)       For the term of the Agreement, Excite will display a                            link to the NetGrocer Site (consistent with the                            format used on similar links on the same page) in                            the default configuration of the Favorite Links                            listing of Web sites on the home page of the Health                            & Fitness and the Food & Drink departments of the                            Lifestyle Channel, and the home page of the                            Lifestyle Channel in the Excite Site.

                  ii)      For the term of the Agreement, Excite will display a                            text and/or graphic link (consistent with the format                            used on similar links on the same page) to the                            NetGrocer Site on the Exciting Stuff' promotion on                            the home page of the Lifestyle Channel and the home                            page of the Food & Drink department of the Lifestyle                            Channel in the Excite Site.

                  iii)     Excite will display a text and/or graphic link                            (consistent with the format used on similar links on                            the same page) to the NetGrocer

                                      -2-

                           Site in the area reserved for promotional rotations                            on the home page of the Excite Site for one week in                            each year of the term of the Agreement.

                  iv)      Excite will display NetGrocer's advertising banners                            in the Lifestyle and Shopping Channels on the Excite                            Site.

                  v)       Excite will display a link (consistent with the                            format used on similar links on the same page) to a                            co-branded version of the NetGrocer Site in the                            Try, These First area on Excite Search results                            pages in response to mutually determined relevant                            search terms. The co-branded version of the                            NetGrocer Site will comply with Excite's                            then-current standards applicable to third party                            sites promoted through Try, These First links.

                  vi)      For the term of the Agreement, Excite will display a                            link to the NetGrocer Site (consistent with the                            format used on similar links on the same page) in                            the default configuration of the services or                            comparable module on the default configuration of                            the My Excite Channel.

         c)       Excite will display NetGrocer's advertising banners on Excite                   Search results pages on the Excite Site in response to                   mutually determined keywords, including the following:                   NetGrocer, Peapod, Oncart, Shoppers Express, grocery,                   groceries, women, female, disabled, senior, military, family,                   baby, kids, children, pets, dogs, cats staples, supermarket,                   drug store, and club store. Excite will work with NetGrocer                   to develop a more extensive list of keywords and, when Excite                   implements keyphrase advertising banners, Excite will                   work-with NetGrocer to develop a mutually-determined list of                   keyphrases.

         d)       For the term of the Agreement, Excite will display                   NetGrocer's advertising banners in general rotation on the                   Excite Site, on the MailExcite free email service and on                   Excite's Internet chat service.

         e)       Excite will use reasonable commercial efforts to deliver [*]                   Impressions of the promotional placements and advertising                    banners described in Sections 1 (a) - (d) in the first year                    of the term of the Agreement and to deliver [*] Impressions                   of the promotional placements and advertising banners                    described in Sections 1 (a) - (d) in the second year                   of the term of the Agreement. For the purposes of this                   Agreement, an Impression is defined as any link to the                   NetGrocer Site, whether graphic, text or any combination of                   graphic and text, served by Excite to a user as part of an                   HTML page, part of the Excite's Internet chat service or part                   of search results displayed in Excite Shopping Service                   powered by Jango.

                                      -3-

         f)       Excite guarantees that it will deliver [*] Click-throughs on                   the promotional placements and advertising banners described                   in Section 1 (a) - (d) in the first year of the term of the                   Agreement by delivering [*] of the annual guaranteed                   Click-throughs in the first quarter of the first year of                   the term of the Agreement, a cumulative total of [*] of the                   annual guaranteed Click-throughs in the second quarter of                   the first year of the term of the Agreement, a cumulative                   total of [*] of the annual guaranteed Click-throughs in                   the third quarter of the first year of the term of the                   Agreement and a cumulative total of 100% of the annual                   guaranteed Click-throughs in the fourth quarter of the





                  first year of the term of the Agreement. Excite guarantees                   that it will deliver four million fifty thousand (4,050,000)                   Click-throughs on the promotional placements and                   advertising banners described in Section 1(a) - (d) in the                   second year of the term of the Agreement by delivering [*] of                   the annual guaranteed Click-throughs in the first quarter                   of the second year of the term of the Agreement, a cumulative                   total of [*] of the annual guaranteed Click-throughs in the                   second quarter of the second year of the term of the                   Agreement, a cumulative total of [*] of the annual guaranteed                   click-throughs in the third quarter of the second year of                   the term of the Agreement and a cumulative total of 100% of                   the annual guaranteed Click-throughs in the fourth quarter                   of the second year of the term of the Agreement. For the                   purposes of this Agreement, a Click-through occurs when a                   user activates the link to the NetGrocer Site (the address or                   addresses of which are provided by NetGrocer for such                   Impression) contained in an Impression and (i) the activation                   of the link to the NetGrocer Site is recorded by Excite's                   servers or (ii) in the case of Try These First links only,                   until Excite has the technical capability to count the                   activation of Try These First links to the NetGrocer Site,                   the user is referred to the NetGrocer Site through the                   activation of a Try These First' link and the referral is                   recorded by NetGrocer's servers. Until Excite has the                   technical capability to count the activation of Try These                   First links to the NetGrocer Site, NetGrocer will report to                   Excite the number of Try These First referrals it records                   within twenty (20) days following the end of each calendar                   month.

         g)       If Excite misses any quarterly guaranteed Click-through                   amount, Excite will make good the difference within [*]                   days following the end of such quarter. If Excite does                   not make good the difference within [*] days, NetGrocer may                    suspend (but not eliminate) its payments of the sponsorship                    and advertising fees described in Section 5(b) and 5(c) until                   the make-good is delivered, at which time NetGrocer will                    resume its payments of the sponsorship and advertising fees.

         h)       Excite will use commercially reasonable efforts to maintain                   the Excite Network and display the promotional placements and                   advertising banners

                                      -4-

                  described in Section 1 (a) - (d) during the term of the                   Agreement and to display the promotional placements and                   advertising banners on the Excite Site in the following                   proportions: [*] in the Shopping Channel, [*] in the other                   targeted Channels and keyword banners and [*] in general                   rotation.

         i)       The content and design of the advertising banners described                   in Section 1(a) - (d) will be created by NetGrocer subject to                   Excite's then-current standards applicable to advertising                   banners.

         j)       Excite will provide account management support for                   NetGrocer's sponsorship of the Excite Site. Excite and                   NetGrocer will hold monthly review of the performance of the                   promotional placements and advertising banners described in                   Section 1 (a) - (d) and the sponsorship objectives.

2.       LAUNCH DATE

         a)       The Launch Date is the date of the first display of the                   promotional placements and advertising banners described in                   Sections 1 (a) - (d). The parties intend that the Launch Date                   will be December 15, 1997.

         b)       NetGrocer and Excite will use reasonable efforts to achieve                   the scheduled Launch Date provided that, no later than                   fourteen (14) days prior to the scheduled Launch Date,                   NetGrocer provides final versions of all graphics, text,                   keywords, banner advertising, promotional placements, other                   promotional media and valid URL links necessary to implement                   the promotional placements and advertising banners described                   in Section 1 (a) - (dj (collectively, Impression Material)                   to Excite.

         c)       In the event that NetGrocer fails to provide the Impression                   Material to Excite fourteen (14) days in advance of the                   scheduled Launch Date, Excite may (i) reschedule the Launch                   Date according to the availability of Excite's engineering                   resources after delivery of the complete Impression Material                   or (ii) commence delivery of Impressions based on Impression                   Material in Excite's possession at the time.

         d)       NetGrocer may revise, update and/or replace the Impression                   Material at any time in its sole discretion. Within three (3)                   business days of Excite's receipt of any revised advertising                   banners, Excite shall replace the former advertising banners                   with the updated advertising banners. Text and/or graphics in                   the Exciting Stuff' and Such A Deal promotions may be





                  replaced with new text and/or graphics twice per month. All                   other text links may be replaced with new text links once per                   month.

                                      -5-

3.       EXCLUSIVITY

         a)       For the term of the Agreement, Excite will not enter into any                   agreement to display and shall not display on the Excite Site                   content created by Excite promoting NetGrocer's                   Competitors, content created by NetGrocer's Competitors,                   promotional placements and/or advertising banners from                   NetGrocer's Competitors or make available on the Excite Site                   online supermarket sales offered by NetGrocer's Competitors.

         b)       For the purposes of this Agreement, Competitors means                   online supermarkets, which offer selections of consumer                   packaged goods and groceries comparable to NetGrocer or                   off-Web supermarkets, as listed in Exhibit A. The parties may                   amend Exhibit A from time to time and Excite will not                   unreasonably withhold its consent to the inclusion of bona                   fide Competitors submitted by NetGrocer.

         c)       In the event of a dispute between the parties regarding the                   inclusion or exclusion of an online supermarket from Exhibit                   A or the display on the Excite Site of advertising or                   promotional material from an online supermarket, the parties                   will follow the dispute resolution process described in                   Section 13(c) without the prerequisite of submitting the                   dispute to mediation. In the event that it is determined that                   Excite violated the Agreement by excluding a bona fide                   NetGrocer Competitor from Exhibit A or displayed on the                   Excite Site advertising or promotional material from a bona                   fide NetGrocer Competitor, Excite will be obligated to (i)                   immediately add the online supermarket to Exhibit A, (ii)                   immediately remove from the Excite Site any advertising or                   promotional material from the online supermarket and (iii)                   provide NetGrocer with advertising and promotional value,                   without additional cost, equal to the advertising and                   promotional value provided to the online supermarket prior to                   the removal of its advertising and promotional material from                   the Excite Site.

         d)       Notwithstanding the foregoing, Excite may display Excite                   Search results links to NetGrocer's Competitors in Excite                   Search results pages in response to user queries, may display                   links to NetGrocer's Competitors in Excite's general                   directory of Web sites and, after giving NetGrocer reasonable                   advance notice, in search results displayed in Excite                   Shopping Service powered by Jango. For the term of this                   Agreement. Excite will display links to the NetGrocer Site as                   search results displayed in Excite Shopping Service powered                   by Jango for the categories for which NetGrocer carries                   products until requested not to do so by NetGrocer.

                                      -6-

4.       CUSTOMER INFORMATION

         NetGrocer retains all right, title and interest to information          regarding customers who access the NetGrocer Site pursuant to the          Agreement.

5.       SPONSORSHIP, ADVERTISING AND CLICK-THROUGH FEES

         a)       A one-time sponsorship initiation fee of [*] is due and will                   be paid to Excite upon execution of the Agreement as                   compensation for costs of initiating access to the Excite                   Network, set-up costs and other expenses associated with                   Excite's initiation of the links, placements, advertisements                   and promotions contemplated by this Agreement.

         b)       Separate and apart from the one-time sponsorship initiation                   fee NetGrocer shall pay to Excite sponsorship and advertising                   fees for the first year of the term of the Agreement in the                   total amount of [*] payable in nine equal monthly                   installments of [*], commencing on March 15, 1998. NetGrocer                   will pay the remainder of the monthly installments on or                   prior to the fifteenth day of each of the next eight (8)                   calendar months.

         c)       Separate and apart from the one-time sponsorship initiation                   fee, NetGrocer shall pay to Excite sponsorship and                   advertising fees for the second year of the term of the                   Agreement in the total amount of [*] payable in equal monthly                   installments of [*], commencing on December 15, 1998.                   NetGrocer will pay the remainder of the monthly installments                   on or prior to the fifteenth day of each of the next eleven                   (11) calendar months.

         d)       Separate and apart from the one-time sponsorship initiation                   fee and sponsorship and advertising fees, NetGrocer will pay





                  Excite [*] for each Click-through on the promotional                   placements and advertising banners described in Section 1(a)                   - (d) occurring during that year in excess of [*] during the                   first year of the term of the Agreement. NetGrocer will make                   these Click-through payments (if any) to Excite within thirty                   (30) days of Excite's monthly report and invoice reflecting                   Click-throughs during the first year of the term of the                   Agreement in excess of [*]

         e)       Separate and apart from the one-time sponsorship initiation                   fee and sponsorship and advertising fees, NetGrocer will pay                   Excite [*] for each Click-through on the promotional                   placements and

                                      -7-

                  advertising banners described in Section 1(a) - (d) in excess                   of [*] occurring in the second year of the term of the                   Agreement. NetGrocer will make these Click-through payments                   (if any) to Excite with within thirty (30) days of Excite's                   monthly report and invoice reflecting Click-throughs during                   the second year of the term of the Agreement in excess of [*]

         f)       In its sole discretion, during the first year of the term of                   the Agreement NetGrocer may elect to terminate the display of                   its banner advertising on the Excite Network for the                   remainder of the first year of the term of the Agreement once                   the number of Click-throughs on the promotional placements                   and advertising banners described in Section 1 (a) - (d)                   exceeds [*] in the first year of the term of the Agreement.                   This election will not relieve NetGrocer of its obligation to                   make Click-through payments on non--banner Impressions.

         g)       In its sole discretion, during the second year of the term of                   the Agreement, NetGrocer may elect to terminate the display                   of its banner advertising on the Excite Network once the                   number of Click-throughs on the promotional placements and                   advertising banners described in Section 1 (a) - (d) exceeds                   [*] in the second year of the term of the Agreement. This                   election will not relieve NetGrocer of its obligation to make                   Click-through payments on non-banner Impressions.

         h)       The one-time sponsorship initiation fee, sponsorship and                   advertising fees and Click-through payments are net of any                   agency commissions to be paid by NetGrocer.

         i)       During the term of the Agreement, on a weekly basis, Excite                   will provide NetGrocer with a detailed report showing the                   number of Impressions of the advertising banners described in                   Section 1 (a) - (d) and the number of Click-throughs on the                   advertising banners described in Section 1 (a) - (d).

         j)       During the term of the Agreement, within twenty (20) days                   following the end of each calendar month, Excite will send                   NetGrocer a detailed report showing the number of Impressions                   of the different promotional placements and text links                   described in Section 1 (a) - (d) and the number of                   Click-throughs on the promotional placements described in                   Section 1 (a) - (d).

         k)       Excite will maintain accurate records with respect to                   calculation of all payments due under this Agreement.                   NetGrocer may, upon no less than thirty (30) days prior                   written notice to Excite cause an independent Certified                   Public Accountant to inspect the records of Excite reasonably

                                      -8-

                  related to the calculation of such payments during Excite's                   normal business hours. The fees charged by such Certified                   Public Accountant will be paid by NetGrocer unless the audit                   finds a discrepancy of more than five percent (5%) with                   respect to the item being audited, in which case Excite shall                   be responsible for the payment of the reasonable fees for                   such inspection.

6.       PUBLICITY

                  Neither party will make any public statement, press release                   or other announcement relating to the terms of or existence                   of this Agreement without the prior written approval of the                   other party, except as may be required to the extent advised                   by counsel for a party that such disclosure is necessary or                   appropriate to comply with applicable law. Notwithstanding                   the foregoing, the parties agree to issue an initial press                   release regarding the relationship between Excite and                   NetGrocer, the timing and wording of which will be mutually                   agreed upon,.

7.       OTHER BUSINESS OPPORTUNITIES

         a)       Excite currently plans to develop a consumer packaged goods                   (CPG) program that would combine the broad reach of the                   Excite Network with the depth of CPG merchants' industry





                  contacts and sales staffs. Under this program, Excite and                   each CPG merchant would develop co-branded Web pages on the                   Excite Network that would promote the merchant's goods cr                   provide content of interest to Excite's users. Excite would                   run dual promotional efforts, one that sends consumers to                   each CPG merchant's co-branded area and a second that sends                   consumers to the portion of the Excite Network that promotes                   the entire CPG program. Excite and NetGrocer agree to                   negotiate in good faith to establish the terms and conditions                   for NetGrocer's participation in Excite's CPG program when                   and if launched.

         b)       Excite currently plans to make available sponsorship                   opportunities on its WebCrawler Site (located at                   http://www.webcrawler.com) generally similar to the                   opportunity described by this Agreement, with the significant                   exception that merchants will not be granted category                   exclusivity or rights to exclude competitors on the                   WebCrawler Site. Excite and NetGrocer agree to negotiate in                   good faith to establish the terms and conditions for                   NetGrocer's participation in available sponsorship                   opportunities on the WebCrawler Site when and if launched.

                                      -9-

8.       TERM AND TERMINATION

         a)       The term of this Agreement will begin on December 15, 1997                   and will end the later of (i) December 15, 1999 or (ii)                   Excite's delivery of all of the guaranteed Click-throughs                   described in Section 1(f).

         b)       Either party may terminate this Agreement, in the event that                   the other party materially breaches its obligations or                   guarantees hereunder and such breach remains uncured for                   sixty (60) days following written notice to the breaching                   party of the breach.

         c)       All payments that would be due pursuant to Sections 5(b) -                   (d) up to the date of any termination or expiration of this                   Agreement will be payable in full within thirty (30) days                   following such termination or expiration.

         d)       The provisions of Section 4 (Customer Information), Section                   9(a) and 9(b), Section 10 (Confidentiality), Section 11                   (Warranty and Indemnity), Section 12 (Limitation of                   Liability) and Section 13 (Dispute Resolution) will survive                   any termination or expiration of this Agreement.

9.       TRADEMARK OWNERSHIP AND LICENSE

         a)       NetGrocer retains all right, title and interest in and to the                   NetGrocer Site, its trademarks, service marks and trade names                   worldwide, subject to the limited license granted to Excite                   hereunder.

         b)       Excite will retain all right, title and interest in and to                   its trademarks, service marks and trade names worldwide,                   subject to the limited license granted to NetGrocer                   hereunder.

         c)       Each party hereby grants to the other a non-exclusive,                   limited license to use its trademarks, service marks or trade                   names only as specifically described in this Agreement. All                   such use shall be in accordance with each party's reasonable                   policies regarding advertising and trademark usage as                   established from time to time.

         d)       Upon the expiration or termination of this Agreement, each                   party will cease using the trademarks, service marks and/or                   trade names of the other and Excite will cease the display of                   any banner advertising and/or links to the NetGrocer Site                   except as the parties may agree in writing.

10.      CONFIDENTIALITY

         a)       For the purposes of this Agreement, Confidential                   Information means information received from the disclosing                   party or any of its affiliates or representatives about the                   disclosing party's (or its suppliers') business or

                                      -10-

                  activities that is proprietary and confidential, which shall                   include all business, financial, technical trade secret and                   other information of a party marked or designated by such                   party as confidential or proprietary.

         b)       Confidential Information will not include information that                   (i) is in or enters the public domain without breach of this                   Agreement, (ii) the receiving party lawfully receives from a                   third party without restriction on disclosure and without                   breach of a nondisclosure obligation or (iii) the receiving                   party knew prior to receiving such information from the





                  disclosing party or develops independently.

         c)       Each party agrees (i) that it will not disclose to any third                   patty or use any Confidential Information disclosed to it by                   the other except as expressly permitted in this Agreement and                   (ii) that it will take all reasonable measures to maintain                   the confidentiality of all Confidential Information of the                   other party in its possession or control, which will in no                   event be less than the measures it uses to maintain the                   confidentiality of its own information of similar importance.

         d)       Notwithstanding the foregoing, each party may disclose                   Confidential Information (i) to the extent required by a                   court of competent jurisdiction or other governmental                   authority or otherwise as required by law or (ii) on a                   need-to-know basis under an obligation of confidentiality                   to its employees, legal counsel, accountants, banks and other                   financing sources and their advisors.

         e)       The terms and conditions of this Agreement will be deemed to                   be the Confidential Information of each party and will not be                   disclosed without the written consent of the other party.

11.      WARRANTY AND INDEMNITY

         a)       NetGrocer will indemnify, defend and hold harmless Excite,                   its affiliates, officers, directors, employees, consultants                   and agents from any and all third party claims, liability,                   damages and/or costs (including, but not limited to,                   reasonable attorneys fees) arising from:

                           i)       The breach of any warranty, representation                                     or covenant in this Agreement; or

                           ii)      Any claim that the advertising banners                                     created by NetGrocer infringe or violate                                     any third party's copyright, patent, trade                                     secret, trademark, right of publicity or                                     right of privacy or contain any defamatory                                     content; or

                                      -11-

                           iii)     Any claim arising from content displayed on                                     the NetGrocer Site;

                  provided that Excite will promptly notify NetGrocer of any                   and all such claims and will reasonably cooperate with                   NetGrocer with the defense and/or settlement thereof; and                   provided further that, if any settlement requires an                   affirmative obligation of, results in any ongoing liability                   to or prejudices or detrimentally impacts Excite in any way                   and such obligation, liability, prejudice or impact can                   reasonably be expected to be material, then such settlement                   shall require Excite's written consent (not to be                   unreasonably withheld or delayed) and Excite may have its own                   counsel in attendance at all proceedings and substantive                   negotiations relating to such claim.

         b)       EXCEPT AS SPECIFIED IN THIS AGREEMENT, NEITHER PARTY MAKES                   ANY WARRANTY IN CONNECTION WITH THE SUBJECT MATTER OF THIS                   AGREEMENT AND HEREBY DISCLAIMS ANY AND ALL IMPLIED                   WARRANTIES, INCLUDING ALL IMPLIED WARRANTIES OF                   MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE                   REGARDING SUCH SUBJECT MATTER.

12.      LIMITATION OF LIABILITY

         EXCEPT UNDER SECTION 11(a), IN NO EVENT WILL EITHER PARTY BE LIABLE TO          THE OTHER FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,          WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR          OTHERWISE, WHETHER OR NOT THAT PARTY HAS BEEN ADVISED OF THE          POSSIBILITY OF SUCH DAMAGE. THE LIABILITY OF EXCITE FOR DAMAGES OR          ALLEGED DAMAGES HEREUNDER, WHETHER IN CONTRACT, TORT OR ANY OTHER          LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED, THE TOTAL AMOUNTS          PREVIOUSLY PAID OR TO BE PAID BY NETGROCER TO EXCITE HEREUNDER [*]

13.      DISPUTE RESOLUTION

         a)       The parties agree that any breach of either of the parties'                   obligations regarding trademarks, service marks or trade                   names and/or confidentiality would result in irreparable                   injury for which there is no adequate remedy at law.                   Therefore, in the event of any breach or threatened breach of                   a party's obligations regarding trademarks, service marks or                   trade names or confidentiality, the aggrieved party will be                   entitled to seek equitable relief in addition to its other                   available legal remedies in a court of competent                   jurisdiction.

                                      -12-

         b)       In the event of disputes between the parties arising from or                   concerning in any manner the subject matter of this





                  Agreement, other than disputes arising from or concerning                   trademarks, service marks or trade names and/or                   confidentiality, the parties will first attempt to resolve                   the dispute(s) through good faith negotiation. In the event                   that the dispute(s) cannot be resolved through good faith                   negotiation, the parties will refer the dispute(s) to a                   mutually acceptable mediator for hearing.

         c)       In the event that disputes between the parties arising from                   or concerning in any manner the subject matter of this                   Agreement, other than disputes arising from or concerning                   trademarks, service marks or trade names and/or                   confidentiality, cannot be resolved through good faith                   negotiation and mediation, the parties will refer the                   dispute(s) to the American Arbitration Association for                   resolution through binding arbitration by a single arbitrator                   pursuant to the American Arbitration Association's rules                   applicable to commercial disputes.

14.      GENERAL

         a)       Assignment. Neither party may assign this Agreement, in whole                   or in part, without the other party's written consent (which                   will not be unreasonably withheld), except that no such                   consent will be required in connection with (i) a merger,                   reorganization or sale of all, or substantially all, of such                   party's assets or (ii) the assignment and/or delegation of                   such party's rights and responsibilities hereunder to a                   wholly-owned subsidiary or joint venture in which that party                   holds an interest. Any attempt to assign this Agreement other                   than as permitted above will be null and void.

         b)       Governing Law. This Agreement will be governed by and                   construed in accordance with the laws of the State of                   California, notwithstanding the actual state or country of                   residence or incorporation of NetGrocer.

         c)       Notice. Any notice under this Agreement will be in writing                   and delivered by personal delivery, express courier,                   confirmed facsimile, confirmed email or certified or                   registered mail, return receipt requested, and will be deemed                   given upon personal delivery, one (1) day after deposit with                   express courier, upon confirmation of receipt of facsimile or                   email or five (5) days after deposit in the mail. Notices                   will be sent to a party at its address set forth below or                   such other address as that party may specify in writing                   pursuant to this Section.

         d)       No Agency. The parties are independent contractors and will                   have no power or authority to assume or create any obligation                   or responsibility on behalf of each other. This Agreement                   will not be construed to create or imply any partnership,                   agency or joint venture.

                                      -13-

         e)       Force Majeure. Any delay in or failure of performance by                   either party under this Agreement will not be considered a                   breach of this Agreement and will be excused to the extent                   caused by any occurrence beyond the reasonable control of                   such party including, but not limited to, acts of God, power                   outages and governmental restrictions. Notwithstanding the                   foregoing, either party may terminate the Agreement in the                   event that a delay due to force majeure continues for a                   period of sixty (60) uninterrupted days.

         f)       Severability. In the event that any of the provisions of this                   Agreement are held by to be unenforceable by a court or                   arbitrator, the remaining portions of the Agreement will                   remain in full force and effect.

         g)       Entire Agreement. This Agreement is the complete and                   exclusive agreement between the parties with respect to the                   subject matter hereof, superseding any prior agreements and                   communications (both written and oral) regarding such subject                   matter. This Agreement may only be modified, or any rights                   under it waived, by a written document executed by both                   parties.

NetGrocer                                   Excite, Inc.

By: /s/ Daniel Nissan                       By: /s/ Robert C. Hood    --------------------------                  -------------------------- Name: Daniel Nissan                         Name: Robert C. Hood      ------------------------                    ------------------------ Title: President & CEO                      Title: EVP-CFO       -----------------------                     ----------------------- Date: 12/30/97                              Date: 12-31-97      ------------------------                    ------------------------

333 Seventh Avenue                          555 Broadway 11th Floor                                  Redwood City, California 94063 New York, New York 10001                    650.568.6000 (voice                                             650.568.6030 (fax)





                                      -14-

                                   EXHIBIT A

                         LIST OF NETGROCER COMPETITORS

Peapod

Shoppers Express/Oncart

                                      -15- 
Question: Highlight the parts (if any) of this contract related to Cap On Liability that should be reviewed by a lawyer. Details: Does the contract include a cap on liability upon the breach of a party’s obligation? This includes time limitation for the counterparty to bring claims or maximum amount for recovery.
Example Output: EXCEPT UNDER SECTION 11(a), IN NO EVENT WILL EITHER PARTY BE LIABLE TO          THE OTHER FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,          WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR          OTHERWISE, WHETHER OR NOT THAT PARTY HAS BEEN ADVISED OF THE          POSSIBILITY OF SUCH DAMAGE. THE LIABILITY OF EXCITE FOR DAMAGES OR          ALLEGED DAMAGES HEREUNDER, WHETHER IN CONTRACT, TORT OR ANY OTHER          LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED, THE TOTAL AMOUNTS          PREVIOUSLY PAID OR TO BE PAID BY NETGROCER TO EXCITE HEREUNDER [*]

Example Input: EXHIBIT 10.9    DISTRIBUTOR AGREEMENT     This Distributor Agreement (the 'Agreement') dated [*] is between     Lucid Inc., a New York corporation, having a principal place of business at 2320 Brighton Henrietta T/L Road, Rochester NY 14623 And [*]  ('Distributor')     For good and valuable consideration, the parties hereby agree:     1. Appointment     A) Lucid appoints the Distributor and the Distributor accepts appointment as an exclusive authorized Lucid Distributor. The Distributor will be  entitled to purchase certain Lucid products and resell them to End User customers within the following market segments:- hospital and medical  research centres, including but not limited to dermatology, pathology, plastic surgery and mohs surgery departments, clinical research centres,  small animal research facilities, cosmetic and cosmeceutical companies.      B) The relationship of the parties under this Agreement is that of independent contractors and nothing contained herein shall be construed as  creating any partnership, joint venture or agency relationship between the Distributor and Lucid. Under no circumstances shall any employees of  one party be deemed the employees of the other for any purpose. The Distributor shall not have the authority to assume or create any obligation,  or make any representation of any kind on behalf of Lucid.     2. Term     A) The initial term of this Agreement shall be three (3) calendar years from the Agreement date. After the initial term, unless terminated, this  Agreement will automatically renew for periods of one (1) calendar year each.     3. Products     A) Lucid agrees to sell the following products to the Distributor: -      VivaScope in-vivo Confocal Microscope Model VS1500  VivaScope ex-vivo Confocal Microscope Model VS2500  VivaSCOPE in-vivo Confocal Microscope Model VS3000     B) Further products manufactured by Lucid will be discussed with the Distributor and by agreement will be added to this Agreement.





     4. Territory     A) The Distributor is appointed as an exclusive Distributor within the following territories: [*].     B) The Distributor agrees to act as a Distributor for Lucid within the above Territories and not to solicit any sales of the Product(s) outside the  above Territories.     5. Duties of The Distributor     A) The Distributor will use his best efforts to actively promote and sell the Product to all relevant End Users within all relevant market segments  within the Territory.      B) The Distributor agrees to undertake detailed sales demonstrations of the Product(s) to potential End Users within all relevant market segments  within the Territory.     C) The Distributor agrees to allow the End User to undertake sales evaluations (trials) of the product(s), using the Distributor's own  Demonstration Equipment as necessary.     D) The Distributor agrees to promote the Product(s) at all relevant trade shows, seminars and exhibitions held within the Territory. Lucid may, at  it's discretion, and in co-ordination with the Distributor when Lucid deems it necessary, at its own expense and in its own name, engage in  advertising activities of or hold or participate in exhibitions of the Product in the Territory.     E) The Distributors will not develop, manufacture or sell any equipment or service, which in any way can be considered to be competitive to the  equipment or service offered by Lucid to the Distributor as Product. Lucid reserves the right to inform the Distributor from time to time of specific  products and companies that Lucid considers to be competitive. A competitive product includes, but is not limited to, any product that would  infringe any claim of any Lucid owned or licensed patent issued or pending worldwide, whether or not corresponding patent claims are in force in  the Distributors territory or the sale of which would restrict sale of Lucid product.     F) The Distributor will provide to the End User, full installation and customer training of the Product(s).





     6. Personnel     A) The Distributor will employ as a minimum one full-time Lucid dedicated Product Manager sales professional, giving one hundred per cent of  their time to the promotion and sale of Lucid products.     7. Demonstration Equipment     A) The Distributor agrees to purchase demonstration products as new products are released subject to special pricing. The Distributor agrees to  use the demonstration equipment for the duties as noted in 5 A, B, C, D as above and not to re-sell this demonstration equipment to End Users.     8. Training     A) The Distributor agrees to have all sales professionals employed on Lucid products undergo sales training at an agreed location and to a level  approved by Lucid.     B) The Distributor agrees to allow Lucid to accompany the Distributor sales professionals during sales calls within the Territory as required.     C) The Distributor agrees to allow Lucid to participate in sales meetings for training purposes, held within the Distributor's facility.     9. Information     A) The Distributor will supply to Lucid, on a monthly basis, a detailed listing of all sales prospects within the Territory. A sales prospect is  considered by Lucid to be any End User who has expressed an interest in purchasing Lucid products.     B) The Distributor agrees to supply to Lucid on a monthly basis a detailed sales forecast, highlighting potential order dates of product.     C) The Distributor agrees to supply to Lucid, from time to time, with any competitive data emanating from the Territory.     D) The Distributor agrees to supply Lucid, on an annual basis, with a detailed sales plan for the Product(s), broken down by sales for each  individual country within the Territory. Any country or part of the territory that does not meet the sales expectations as forecasted by the  Distributor will be subject to review by Lucid and may subsequently be removed from the Territory. The first sales plan will be presented to Lucid  within three (3) months of the signing of this agreement and annual sales plans will be due on November 30 each year.





     E) The distributor agrees to keep Lucid informed of details of forthcoming and installed units together with customer details including customer  name, address and email details at a level sufficient to fulfil all requirements of US Government Export Administration Regulations and Lucid  quality audits.     10. Sub-Distribution     The Distributor shall not be entitled to engage sub-distributors or any other third party as his sub-agent for sales of the Product, without having  obtained Lucid's prior written approval. Such approval shall not be unreasonably withheld.     11. Intellectual Property     A) Lucid is the sole owner of all trademark symbols and logos under which the products will be sold. Lucid agrees that the Distributor may use the  appropriate trademarks to promote the sale of products in the Territory. Such use is only with Lucid's permission and must be related to the sale of  Lucid products. The Distributor acquires no rights to Lucid trademarks by selling Lucid products. The Distributor may not use Lucid trademarks,  symbols or logos as part of its business or corporate names.     B) The Distributor will assist Lucid in protecting Lucid's patents, copyright, trademarks and logos. The Distributor will inform Lucid of any known  or suspected violations of Lucid's patents, copyright, trademarks, symbols and logos. If Lucid requests, the Distributor will assist in protecting  such intellectual property from infringement.     12. Duties of Lucid     A) Lucid will supply to the Distributor, free of any charge, reasonable quantities of Product datasheets.     B) Lucid will supply to the Distributor, free of charge, images of skin in vivo. Lucid will make every reasonable effort to supply images of skin to  the Distributor, which are required by the Distributor for a particular End User application.     C) Lucid will make available free of charge to the Distributor the services of at least one suitable sales professional.     D) Lucid will make available free of charge to the Distributor the services of at least one Clinical Research Engineer. This person will normally  reside at Lucid's USA Headquarters but may from time to time assist the Distributor within the Territory.





     E) Lucid will make its facility in the USA available, from time to time, to the Distributor and the Distributor's sales force for sales training purposes.  Lucid will also offer this service to the Distributor for the introduction of potential End Users from the Territory.     13. Prices, Terms & Conditions of Sale     A) The Distributor may purchase Products from Lucid at the price published by Lucid, from time to time, in the International Distributor price list  (attached). Lucid agrees to allow the Distributor a discount of thirty (30) per cent against the published International Distributor price list.     B) All orders from the Distributor to Lucid will be subject to Lucid's standard terms and conditions of sale.     C) All prices are quoted by Lucid in US Dollars and are sold Ex Works, becoming the Distributor's property when despatched from the Lucid  facility.     14. Minimum Purchase Obligation     The Distributor agrees to purchase from Lucid minimum agreed quantity of product in the first, second and third years of the Agreement, excluding  demonstration product. These quantities to be agreed by both parties in the initial detailed sales plan noted in clause 9D and amended with further  agreement in subsequent annual sales plans     15. PAYMENT TERMS     The Distributor agrees to abide by Lucid's standard payment terms, which are as follows; One Hundred (100) per cent of order value by sixty ( 90 )  day irrevocable letter of credit when order is placed on Lucid.     16. TERMINATION     A) Either party may terminate this agreement by giving written Notice to the other party if:     i) The other party fails to perform or satisfy any of the conditions, covenants or obligations of this Agreement.  ii) The other party files or has filed against it, a petition seeking relief under any bankruptcy, insolvency, reorganisation, moratorium, liquidation or  similar law affecting creditors' rights     B) In addition, Lucid may terminate this agreement by giving the Distributor Written Notice if there is any change of control, ownership or  management of the Distributor.





     C) Either party may terminate this agreement by providing Ninety days Written Notice.     17. EFFECT OF TERMINATION     A) Upon the termination of this Agreement:     1. The Distributor shall terminate any registration it has made as a Lucid Distributor.  2. Distributor will immediately return any samples, sales literature, promotional materials and other documents supplied to the Distributor free of  charge from Lucid.  3. Any right to use Lucid patents, copyrights, trademarks, symbols and logos shall immediately cease.     B) If this Agreement is terminated Lucid shall not be liable for any incidental, indirect; special punitive of consequential damages of any kind,  including any perceived or real market development costs.     18. Incident and Traceability Reporting     A) DISTRIBUTOR will IMMEDIATELY report via telephone communication to Lucid any incidents that involve the use of PRODUCTS sold by the  DISTRIBUTOR to end users that affect patient safety or well-being (an INCIDENT). Such oral incident reporting will be followed immediately by  a written incident report that documents the detailed conditions that resulted in the INCIDENT and Distributor shall thereafter co-operate with  Lucid in the investigation of any and all conditions that led to, or resulted from the INCIDENT.     B) DISTRIBUTOR will routinely, but not less than annually, report in writing to Lucid, documenting the end users to which PRODUCTS have been  sold, including the address, telephone number and name of a person who is the primary emergency contact. Lucid will use this information in the  event of Lucid issuing a product recall of the PRODUCT for safety or other reasons. If such an event occurs, and upon Lucid's request, the  DISTRIBUTOR will immediately provide Lucid with the names, addresses, telephone numbers and emergency contact personnel of any end user  sites not previously reported to Lucid.     19. LIMITATION OF LIABILITY     A) Lucid does not guarantee delivery of Product by any particular date. If Lucid accepts Distributor's order and fails to deliver ordered products,  Distributors sole remedy will be limited to refund of money paid to Lucid for any undelivered products.     B) Lucid will not have any liability or responsibility to Distributor or any other person or entity for any consequential, indirect, special, punitive or  incidental damages or lost profits, whether foreseeable or unforeseeable, based on





     claims of Distributor or Distributor's customers (including but not limited to, claims for loss of data, goodwill, profits, use of money or use of  product, interruption in use or availability of data stoppage or other work or impairment or assets) arising out of breach or failure of express or  implied warranty, breach of contract, misrepresentation, negligence, strict liability in tort or otherwise, except only in the case of death or personal  injury where and to the extent that applicable law requires such liability. In no event will the aggregate liability incurred by Lucid in any action or  proceeding exceed the total amount actually paid to Lucid by Distributor for the purchase of the products that actually caused the damage or loss.     20. Governing Law     A) This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, USA without regard to conflict of  laws principles.     21. NOTICE     A) All notices required herein (NOTICE) shall be given in English language. Notices must be sent postage pre-paid, and (a) delivered personally  against written receipt (b) transmitted via facsimile or (c) sent by nationally recognised overnight courier service, or (d) sent via first class certified  mail, return receipt requested, to the address listed above. Any change of addresser fax number must be designated in writing and served in  accordance with this Section. Notice shall be effective (a) upon receipt if personally delivered (b) upon confirmation of transmission if sent via  facsimile and (c) two (2) business days after deposit with the courier or an official depository of the US Post Office, if sent via recognised  overnight courier of via Certified Mail, as the case may be.     22 ENTIRE AGREEMENT:     A) This Agreement, including the Price List attached hereto, as amended from time to time, constitutes the entire understanding between the  parties with respect to the subject matter of this Agreement and supersedes and replaces all previous proposals, both oral and written,  negotiations, representations, commitments, writings, contracts, agreements and all other communications between the two parties.     Signatures on the next page





     IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written.





                                LUCID Inc.    [*]              By    By              Marcy K. Davis-McHugh    [*]              TITLE    TITLE:              Corporate Vice President



          DATE [*]    DATE: [*]



                    SIGNATURE    SIGNATURE 
Question: Highlight the parts (if any) of this contract related to Cap On Liability that should be reviewed by a lawyer. Details: Does the contract include a cap on liability upon the breach of a party’s obligation? This includes time limitation for the counterparty to bring claims or maximum amount for recovery.
Example Output:
If Lucid accepts Distributor's order and fails to deliver ordered products,  Distributors sole remedy will be limited to refund of money paid to Lucid for any undelivered products.