Document:

Exhibit 10.45

 

EXHIBIT 10.45

 

 

Convenience Translation

 

 

ARTICLES OF ASSOCIATION

 

OF

AUDIBLE GMBH

 

 

	1.	Name and Seat of the Company

 

	1.1	The name of the Company is:

Audible GmbH.

 

	1.2	The seat of the Company is Munich.

 

 

	2.	Purpose of the Company

 

	2.1	
The purpose of the Company is the offering of internet services in connection with the download of digital audio books and spoken audio content through a mainly German language website or websites and primarily using German language content to customers mainly in the Federal Republic of Germany, Austria, Switzerland, Grand Duchy of Luxembourg, Principality of Liechtenstein, Alto Adige and the German-speaking cantons of Belgium. 

 

	2.2	
The Company is authorized to perform any and all acts and steps directly or indirectly appropriate for the promotion of the above mentioned purpose. 

 

 

	3.	Nominal Capital; Shares

 

The nominal capital of the Company amounts to

 

EUR 49,000.00

 

 

	4.	Term of the Company; Fiscal Year

 

	4.1	The Company has been established for an indefinite period of time.

 

	4.2	The fiscal year equals the calendar year. 

 

	 
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	5.	Announcements

 

Statutory announcements of the Company shall be published exclusively in the Federal Gazette of the Federal Republic of Germany (when and to the extent this becomes permissible only in the electronic version thereof). 

 

 

	6.	Bodies of the Company

 

The Company has the following corporate bodies:

 

	a.	the Management,

 

	b.	the Shareholders' Meeting, and

 

	c.	the Supervisory Board. 

 

 

	7.	Representation and Management

 

	7.1	
The Company has one or more Managing Directors. If only one Managing Director is appointed, he represents the Company alone. If several Managing Directors are appointed, the Company is represented jointly by two Managing Directors or by one Managing Director together with a person vested with commercial power of representation (Prokurist).

 

	7.2	
The Managing Directors are appointed and dismissed and their compensation set by the Supervisory Board by a vote of 4/5 of the votes cast. For the first appointment of a managing director after these Articles of Association have become effective and the initial setting of his compensation, a unanimous vote is required. The Supervisory Board can grant individual, several or all Managing Directors sole powers of representation even if there are more than one Managing Directors. It can exempt Managing Directors from the restrictions of sec. 181 of the German Civil Code (BGB).

 

	7.3	
The Managing Directors operate the business of the Company according to statutory laws, the Articles of Association, the employment agreements, the rules of procedure and the instructions given by the Shareholders' Meeting or the Supervisory Board in general or in the individual case.

 

	7.4	
The Shareholders' Meeting decides on the discharge of the Management together with the resolutions on the annual accounts and on the adoption of the balance sheet and the use of the profits (sec. 8.6).

 

	7.5	
In the internal relationship the Management requires prior consent of the Supervisory Board in order to be allowed to effect the following measures except to the extent the measures are specifically contained in the budget approved by the Supervisory Board:

 

		a.	
Adoption of the operating and capital budget (including personnel plan, cash flow plan, profit and loss account, plan balance sheet, investment plan) for the period ending 31 Decem-ber 2005;

 

	 
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		b.	
Adoption of the annual operating and capital budget (including personnel plan, cash flow plan, profit and loss account, plan balance sheet, investment plan) for fiscal years as of 1 January 2006. 

 

		c.	Change of the business program and inclusion of new and/or abandonment of existing markets or business fields; 

 

		d.	
Conclusion, amendment and termination of partnership agreements, profit-pooling, domination and similar agreements that result in restrictions of substantial entrepreneurial functions (e.g. on cooperations or restrictions on competition);

 

		e.	Conclusion, amendment and termination of all lease and tenancy agreements that

 

		-	result in the individual case or together in an annual financial burden of more than EUR 25,000.00 or

 

		-	
result together with similar agreements in an annual financial burden that exceeds the level of the last balance sheet date by EUR 50,000.00 

 

		f.	
Entering into loan agreements if they are not included in the financial budget; accepting bills payable (drawing, acceptance, recourse guarantee) - with exception of liabilities arising from the passing of trade acceptances (endorsement) as well as the acceptance of suretyships, guarantees and joint liabilities, in each case to the extent that they may result, in encumbrances for the Company amounting to more than EUR 10,000.00  in the individual case or to more than EUR 25,000.00 in total;

 

		g.	Granting of loans; 

 

		h.	
Futures contracts of any kind, especially foreign exchange, goods and securities as far as they are not hedged by firm orders concerning the business;

 

		i.	
Investments (acquisition of assets, newly built houses or rebuilding or any other use on real estates) that exceed in the individual case the amount of EUR 100,000.00 ;

 

		j.	
Establishment of companies, production plants or enterprises; take over of participations in other companies;

 

		k.	
Sale of the Company as a whole or partial and disposition of participations in other companies;

 

		l.	
Acquisition, sale of and encumbrances of real estate, rights in real estate, and obligations to effect such actions;

 

		m.	
Conclusion, amendment and termination of agreements entered into with the shareholders or close persons or affiliated companies;

 

		n.	
Profit or equity participations in the Company, especially of employees and participations in sale;

 

		o.	
Conclusion and amendment of employment agreements with employees receiving an annual remuneration exceeding EUR 60,000.00 (including bonuses / royalties);

 

	 
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		p.	
Granting and increase of bonuses and similar special payments to employees and the granting of pension benefits .

 

		q.	Material changes to the Company's accounting policies, practices or principles; 

 

		r.	
Entering into exclusive license agreements, in particular exclusive sub-licenses with regard to software and other intellectual property rights used by the Company; 

 

		s.	Entering into agreements other than on an arms' length basis; 

 

		t.	acquisition of treasury shares; 

 

		u.	
changing the business of the Company outside of the scope of the existing licence agreement between the Company and Audible, Inc. such that the business is not involved with the digital download and delivery of content of any type. 

 

		v.	
Exercise of voting and other rights resulting from shares in a Company and shares held by the Company in other companies

 

	7.6	
In the cases of sec. 7.5 lit. a., m. and u. the resolution of the Supervisory Board must be made by unanimous vote. In the cases of sec. 7.5 lit.  b., d. i, j, k, l, n, o, p, and v. the resolution of the Supervisory Board must be made with a majority of 4/5 of the Supervisory Board Members. All other cases require a resolution of the Supervisory Board with simple majority. For the appointment and dismissal of managing directors, the majority requirements set forth in sec. 7.2 shall apply. 

 

	7.7	
According to sec. 7.5 consent can be granted to individual or to all Mangers for individual kinds of transactions in advance, especially in the Employment Agreement for Managing Directors. The Shareholders' Meeting can determine further consent requirements by resolution in addition to sec. 7.5.

 

 

	8.	Shareholders' Meeting

 

	8.1	
The Shareholders' Meeting is the supreme corporate body of the Company. It is responsible for all issues of the Company which are not expressly transferred to another organ by law, these Articles of Association or shareholder resolutions. The Shareholders' Meeting shall regularly take place at the seat of the Company or at the place of any German stock exchange or at such other place as agreed by all shareholders. The position of the Chairman of the Shareholders' Meeting shall rotate in alphabetical order of the name of the shareholders (beginning with A = Audible for the first meeting). 

 

	8.2	
Each Shareholders' Meeting has to be called in by the Management by registered letter or telefax to each shareholder to the last address notified in writing to the Company with a notice of 2 (two) weeks. The notice period starts with the day following dispatch of the telefax or registered letter. The day the Shareholders' Meeting takes place shall not be included in the term. The agenda has to be announced in the same way required for the notice of the meeting at least 3 (three) days before the meeting takes place. 

 

	8.3	
The Shareholders' Meeting can also take resolutions that are legally binding with the consent of all shareholders without complying to the abovementioned form and terms if all shareholders are present or represented and have waived all formal requirements set forth in the Articles of Association. In the same way resolutions can be taken by letter, telefax or by phone or e-mail if all shareholders take part in the decision-making and if no shareholder opposes to the way the resolution is taken. Informal resolutions taken by the shareholders have to be confirmed in writing by the Chairman of the last Shareholders' Meeting; sec. 8.8 applies mutatis mutandis.

 

	 
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	8.4	
The Shareholders' Meeting shall have a quorum if shareholders representing at least 75% of the nominal capital are present or represented. If no quorum can be achieved, a new Shareholders' Meeting with the same agenda shall be called on request of the Management or of a shareholder. This Shareholders' Meeting is competent to pass resolutions irrespective of a quorum, if this has been indicated expressly in the invitation and if the Shareholders' Meeting does not take place later than 6 weeks after the Shareholders' Meeting not competent to pass resolutions; sec. 8.2 applies mutatis mutandis to the notice of the meeting.

 

	8.5	
The resolutions of the Shareholders' Meeting shall be taken with simple majority as far as no other majority is required by law or these Articles of Association. Any Amendment of the Articles of Association (especially capital increases) as well as resolutions on domination or profit-pooling agreements and conversion or merger proceedings are subject to the statutory requirement of a majority of 75% of the votes cast.

 

The voting right is determined according to the nominal value of the share in the Company. Each EUR 50.00 of a share in the Company grants one vote.

 

	8.6	
The ordinary Shareholders' Meeting shall take place as soon as the annual accounts have been established and the auditor's report has been presented. In the ordinary Shareholders' Meeting decisions shall be made with respect to:

 

		a.	Adoption of the annual accounts on proposal of the Management;

 

		b.	use of profits;

 

		c.	discharge of the Management;

 

		d.	other items on the agenda.

 

	8.7	Extraordinary Shareholders' Meetings have to be called, 

 

		a.	if the Management is of the opinion that this is necessary for the safeguarding of the Company's interest or

 

		b.	upon the request of shareholders holding in the aggregate at least 10% of the nominal capital (sec. 50 Limited Liability Companies Act).

 

	8.8	Every Shareholders' Meeting shall be recorded in respective minutes. The minutes shall include the following:

 

		a.	day, place and time of the meeting;

 

		b.	names of the present or represented shareholders;

 

		c.	agenda and motions;

 

	 
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		d.	result of the vote and the wording of the resolutions taken;

 

		e.	information about the discharge of any motion.

 

The record has to be signed by the chairman of the Shareholders' Meeting and by the person who keeps the minutes.

 

	8.9	
Shareholders who have not been present and who have not been represented in the Shareholders' Meeting have to be informed without undue delay about all resolutions taken by way of submitting to them a written notification containing the minutes of the meeting including the wording of all resolutions adopted. A shareholder who participated in the decision or who has been present when the decision was taken, can challenge the decision made, it at all, only within one month after the day of the resolution; other shareholders can challenge a resolution only within one month after the day they have been informed about it according to sentence 1.

 

	8.10	
Each shareholder can be represented for the resolutions by another shareholder or by legal, tax or business consultants (e.g. lawyers, tax consultants, management consultants or participation consultants) who are obliged to professional confidentiality, or by a senior employee. The representatives have to provide a written power of attorney.

 

 

	9.	Supervisory Board

 

	9.1	The Company has a Supervisory Board. The Supervisory Board is composed of 5 members. 

 

	9.2	
Tasks, rights and obligations of the Supervisory Board result from the Articles of Association that are valid at the respective time. The Supervisory Board shall advise and supervise the Management and assent to the activities of the Managing Directors according to sec. 7.5. As long as no Supervisory Board or no Supervisory Board composed of 5 members is appointed, the Shareholders' Meeting shall have the tasks and competencies of the Supervisory Board. To the extent the Supervisory Board decides with a majority of 4/5 according to its rules of procedure or these Articles of Association, a majority of 75% of the votes cast is necessary in the Shareholders' Meeting. To the extent the Supervisory Board resolution must be made unanimously, a 85% majority of the votes cast in the Shareholder Meeting shall be required. 

 

	9.3	
The shareholder Audible, Inc. shall be entitled to appoint three members of the Supervisory Board. This appointment right shall cease (i) with regard to one member if the percentage interest of Audible, Inc. in the nominal capital is reduced to less than 35%, (ii) with regard to an additional member if the percentage interest is reduced to less than 20%, and (iii) with regard to the last member if the percentage interest is reduced to less than 10%. The shareholders MNO Beteiligungs GmbH and Holtzbrinck networXs AG (or their respective successors and assignees, as the case may be) are each entitled to appoint one Supervisory Board Member, as long as the respective person has not ceased to hold at least 10% of the nominal capital. Sales of shares to affiliates (verbundene Unternehmen) within the meaning of secs. 15 et seq. of the German Stock Corporations Act (AktG) In case of any transfer of shares to third parties, the transferor shall have the right to transfer the appointment right to the transferee. 

	 
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	9.4	
The term of office of a Supervisory Board Member ends in accordance with the following after the expiry of his term of office, by dismissal, by resignation from office, death or loss of the capacity to enter into agreements:

 

		a.	
The term of office of an Supervisory Board Member ends with termination of the Shareholders' Meeting that resolves on the discharge of the Management for the second fiscal year after the beginning of the term of office of the Supervisory Board Member if no shorter period of office has been determined when he was appointed, but not before a successor has been appointed. The business year in which the term of office begins shall not be included.

 

		b.	
Each Member of the Supervisory Board may be dismissed by a party who has appointed such Member in accordance with sec. 9.3; the respective Member shall be entitled to appoint a successor in accordance with sec. 9.3. 

 

		c.	
Any Supervisory Board Member can resign from his office before the expiry of his term of office by written declaration to the persons responsible for his appointment with one month's notice.

 

In case of premature resignation of a Supervisory Board Member, a new Member has to be appointed immediately by exercising the appointment right again for the remaining term of office of the Supervisory Board Member resigned. 

 

	9.5	
Shareholders and / or members of the Management may become members of the Supervisory Board. Persons that work for any company which competes with the Company, or has a subsidiary which competes with the company, can not become members of the Supervisory Board.

 

	9.6	
The chairman of the Supervisory Board shall represent the Supervisory Board towards the other organs of the Company and third parties. The vice chairman shall be incumbent of the rights and obligations of the chairman if he is prevented. The chairman and the vice chairman shall be elected by the Supervisory Board. 

 

	9.7	
The Supervisory Board shall decide with simple majority except as stated otherwise herein or in the rules of procedure, if any. Each member of the Supervisory Board has one vote during Supervisory Board Resolutions. Supervisory Board members are not restricted from voting on matters which affect the party which has appointed the respective member. Member of the Supervisory Board may be represented by a proxy under written power of attorney. 

 

	9.8	
The internal organization of the Supervisory Board may be resolved in the rules of procedure that may be adopted by the Supervisory Board itself by a unanimous resolution.

 

	9.9	
Each Member of the Supervisory Board is, at any time, entitled to examine the accounts, the documents and the assets of the Company and its subsidiaries. Furthermore, the Supervisory Board or any of its members can request from the Managing Directors information on any issue concerning the Company.

 

	9.10	
Sec. 52 of the German Limited Companies Act (GmbHG) does not apply to the Supervisory Board.

 

	 
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	9.11	The Shareholders' Meeting shall determine possible remuneration for activities in the Supervisory Board.

 

	9.12	In exercising their activities the Supervisory Board Members are only liable for wrongful intent and gross negligence.

 

	9.13	
The Supervisory Board Members must maintain strictly confidential any and all non-public information and secrets of the Company and its subsidiaries they get to know by virtue of their activities as Supervisory Board Member. This continues to apply after the Board Member's resignation from his office. The Supervisory Board Member has to return any and all confidential documents concerning the Company to the chairman of the Supervisory Board when resigning from the Supervisory Board. The resigning Supervisory Board Member has no right to retain documents.

 

 

	10.	Annual Accounts, Use of Profits

 

	10.1	
Mandatory statutory provisions shall apply to the annual accounts, the report on the situation and the obligations of disclosure thereof and ancillary documents. 

 

	10.2	
The annual accounts and the report on the situation have to be examined by an auditor even if it is not required by mandatory law. The legal provisions for statutory audit apply also to the voluntary auditing. The auditor shall be appointed by unanimous vote of the Supervisory Board.

 

	10.3	The Shareholders' Meeting shall decide on the use of the annual profit.

 

 

	11.	Disposal of Shares

 

	11.1	
Disposition of shares or parts of shares of any kind requires the approval of the Shareholders' Meeting in order to become effective - if nothing different has been determined expressly within these Articles of Association. The same shall apply to the establishment of sub-participations, silent partnerships, nomineeship agreements, participation in profit or similar legal relationships.

 

	11.2	
A shareholder willing to sell his share has to inform the other shareholders by registered letter about his intention to sell his share or parts of it ("Offer Letter"). In this letter he has to state the prospective buyer's name, the anticipated sales conditions (consideration and its due date, transfer of profit rights) offered by such party. Should a shareholder intend to sell his share or parts of it, then each of the remaining shareholders will be entitled to purchase the share and / or partial share offered in the Offer Letter at the conditions stated by the shareholder willing to sell. The right to purchase may be exercised only by written statement within a period of 4 weeks after receipt of the Offer Letter. Registered letters are considered to be received 5 (five) days after sending. Should several parties entitled to buy choose to exercise their right to purchase, they will acquire such part of the offered share that corresponds to the percentage of their participation in the nominal capital in proportion to the total participation of all shareholders exercising their right to purchase. The nominal amount of the partial shares created in this context has to be divisible by 50; if arithmetically this would not be the case in accordance with the above regulation, maximum amounts will be allotted to the party entitled to purchase who is holding the highest participation in the nominal capital; in case of equal shareholdings, the parties acquire fractional ownership. The right to purchase can only be exercised in total. In the event that some shareholders have exercised the right, but not for the total number of shares, a new notice shall be sent to each such shareholder offering the opportunity to purchase the remaining shares. This second right to purchase may be exercised only by written statement within a period of two (2) weeks after receipt of such notice. If those statements indicate requests to purchase more than the remaining shares the shareholders shall be entitled to purchase the remaining shares pro rata to the holdings of all such shareholders. 

 

	 
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	11.3	
As far as the above rights to purchase are not exercised or if all of them are expired and as far as the selling shareholder met his obligations according to sec. 11.2, the approval of the Shareholders' Meeting in accordance with sec. 11.1 to the sale to a third party at the conditions stated in the Offer Letter has to be granted within 30 days. If the transfer is not completed within these 30 days, the selling shareholder again has to make the offer described in sec. 11.2 prior to such transfer.

 

	11.4	
In case of an exchange or a gratuitous transfer, secs. 11.2 and 11.3 shall apply mutatis mutandis. In case of a gratuitous transfer the purchase price equals the price according to sec. 13.3. In case of an exchange the purchase price corresponds to the fair market value of the shares received in return. For companies listed on a stock exchange, the fair market value is the quoted value on the day of sending of the Offer Letter; for other companies the fair market value has to be assessed by an auditor to be appointed by the shareholders by mutual consent (and / or, if no agreement can be reached, by the president of the Chamber of Industry and Commerce in Munich) as of the first day of the month of sending of the notification. Sec. 13.3 shall apply mutatis mutandis. 

 

	11.5	
Secs. 11.1 through 11.4 shall not apply to transfers by a shareholder to an affiliated entity within the meaning of secs. 15 et seq. of the German Stock Corporations Act. 

 

 

	12.	Redemption

 

	12.1	The redemption of a shareholder's share is permissible with the consent of such shareholder.

 

	12.2	The redemption of a shareholder's share is permissible without the consent of the shareholder if,

 

		a.	the share is seized by a creditor of the shareholder or if there is a foreclosure of any kind against the share and if the foreclosure is not levied within two months;

 

		b.	
bankruptcy proceedings are opened against the assets of the shareholder or if the commencement of such proceedings is denied for insufficiency of assets or if the shareholder has to make an affirmation in lieu of an oath;

 

		c.	there is good cause for the exclusion arising in the person of the shareholder;

 

		d.	
the shareholder does not comply with essential provisions of these Articles of Association, in particular the provision of sec. 11 or 

 

		e.	he became a shareholder by way of intestate succession.

 

	 
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	12.3	
In case several persons are joint owners or co-owners of a single share, the redemption is also permissible if the requirements according to sec. 12.2 have been met only with regard to one of such persons.

 

	12.4	
The Shareholders' Meeting shall resolve on the redemption. The respective shareholder shall be excluded from voting in this decision.

 

	12.5	
The voting right of the respective shareholder shall be suspended from the time the notification of the decision on redemption is received by the shareholder up to the time the redemption is effective.

 

 

	13.	Compensation for Redemption

 

	13.1	The redemption shall be made for compensation.

 

	13.2	
In the cases according to sec 12.2 lit. a. through d., the compensation consists of a total amount corresponding to the amount of the book value (nominal capital including open reserves and possible net earnings for the year or less a possible net loss for the year of the Company at the fixed day), which corresponds to the proportion of the redeemed share to the nominal capital. The fixed day is the date of the balance sheet, which precedes the decision of the redemption. Hidden reserves or goodwill shall not be taken into consideration. 

 

	13.3	
In the cases according to sec. 12.2 lit. e., the compensation consists of a total amount corresponding to the amount of the fair market value of the redeemed shares at the time of the resignation. The fair market value is the capitalized value determined on the basis of returns achieved on an ongoing basis before interest and taxes on profits at the point in time at which the current value is determined. If the parties cannot agree on the fair market value of the redeemed shares, it has to be determined by an auditor commissioned jointly by the parties. This determination is binding for all parties. The auditor has to give all parties the opportunity to make statements before the fair market value is determined. An auditor who is appointed as auditor by the Company or who has a consultancy relationship to the Company shall not be appointed. The auditor also decides on the costs of his services according to the provisions of secs. 91 et seq. of the German Civil Code (ZPO). If the parties cannot agree on the auditor within a month of the resolution to redeem the shares, the President of the German Chamber of Industry and Commerce in Munich shall determine one of the "Big Four" of the auditing companies on request of one shareholder.

 

	13.4	
The compensation for redemption shall be paid in 5 (five) equal partial amounts. The first partial amount is payable 6 (six) months after the declaration of the redemption by the Management of the Company. The following partial amounts are payable each 6 (six) months after the preceding partial amount became due. The Company is, at any time, entitled to make payment before maturity. Interest exceeding the basic interest rate of the European Central Bank by 2 percentage points shall be paid on the outstanding amounts of the compensation for redemption.

 

	13.5	
If, as far and as long as payments violate sec. 30 para. 1 GmbHG, compensation payments shall be deferred bearing interest at the above rate, interest payment shall be deferred without interest.

 

	 
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	13.6	The resigning shareholder is not entitled to request any security for the outstanding payments including interest.

 

 

	14.	Assignment instead of Redemption

 

	14.1	
If and to the extent redemption is permissible, the Shareholders' Meeting - without a voting right of the resigning shareholder - can request that the share shall be assigned to the Company or to a person named by the Company including persons who are shareholders. The Company can also request that the share is only partially redeemed and assigned to the Company or to a person named by the Company.

 

	14.2	
If the Company demands the assignment of the share, instead of its redemption to the Company or to a person named by the Company, the provisions of sec. 13, together with the requirement that the compensation for the share assigned is owed by the purchaser of the share and that the Company is liable as guarantor for the payment, shall apply. Sec. 30 para. 1 GmbHG shall remain unaffected.

 

 

	15.	Liquidation 

 

	15.1	The liquidation of the Company shall be effected according to statutory law. 

 

	15.2	Sec. 7 (in particular secs. 7.1 and 7.2) shall apply mutatis mutandis for the liquidator(s) of the Company. 

 

 

	16.	Final Provisions

 

	16.1	
In the event any provision of these Articles of Association becomes invalid, or these Articles of Association contain any gaps, the validity of the remaining provisions shall not be affected. The shareholders commit themselves that instead of the invalid provision, such valid provision shall be agreed upon which most closely corresponds to the sense and the purpose of the invalid provision. In the event these Articles of Association contain gaps, the shareholders commit themselves to make decisions and implement the decisions of the Articles of Association which corresponds to the provision that would have been agreed on if the matter would have been taken into consideration before.

 

	16.2	
Place of jurisdiction for any claims in connection with these Articles of Association is Munich, as far as it is legally permissible.

 

	16.3	
Only the German version of these Articles of Association shall be legally binding; the English text constitutes merely a convenience translation. 

 

 

Signed September 8, 2004 in Munich.

 

/s/ Signature illegible

 

	 
		11Exhibit 10.1

SOFTWARE LICENSE AND SERVICES AGREEMENT

DoD-WIDE ENTERPRISE LICENSE

FOR AN AUTOMATED

SECURE CONFIGURATION REMEDIATION INITIATIVE (SCRI) TOOL

This Software License and Services Agreement (“Agreement”) is effective September 24, 2004 and entered into by and between DigitalNet Government Solutions, LLC (“DigitalNet” or “Licensee”), a Delaware limited liability company with its principal offices at 2525 Network Place, Herndon, Virginia 20171, and Citadel Security Software Inc., (“Citadel” or “Licensor”), a Delaware corporation with its principal offices at 8750 North Central Expressway, Suite 100, Dallas, Texas 75231.

	1.0	INTRODUCTION

 

1.1       WHEREAS, DigitalNet is currently obligated to provide information assurance services to the Defense Information Systems Agency (the “Government”) under Prime Contract No. DCA200-00-D-5021, Delivery Order No. 0025, entitled “DOD-wide Enterprise License for an Automated Secure Configuration Remediation Initiative (SCRI) Tool” (the “Prime Contract”) in accordance with the Statement of Work and clarifications thereof which are attached as Exhibits A and B hereto; and 

1.2       WHEREAS, in order to perform the Prime Contract in accordance with its terms, DigitalNet desires to obtain an enterprise perpetual use-license, and subsequently convey a sublicense with the same rights to the Government, to use the proprietary SCRI software toolset owned by Citadel, herein defined as the Hercules automated vulnerability remediation (AVM) tool (the “Licensed Software”), and acquire certain training and technical support services for specific performance of the Prime Contract; and 

1.3       WHEREAS, Citadel desires to issue the enterprise perpetual use-license to DigitalNet with the intent that a subsequent sublicense will be issued to the Government on a Department of Defense (DoD)-wide enterprise basis in accordance with the terms and conditions of this Agreement. “DoD-wide Enterprise Basis” means Department of Defense (DoD) Combatant Commands, DoD Intelligence Community (non-Title 50) elements, Military Departments, DoD Agencies, Coast Guard, National Guard, and the Reserves, hereinafter referred to as the “ENTERPRISE.” All “ENTERPRISE” owned and leased computers and networks are covered under this Agreement, regardless of the persons operating the computer systems.

1.4       NOW THEREFORE, the Parties hereto agree as follows:

	2.0	LICENSE GRANT

2.1       Grant of Rights. 

 

(a)   Citadel hereby grants DigitalNet (including DigitalNet’s affiliates, as hereafter defined) a perpetual non-transferable (except as specified in Section 2.5), and non-exclusive Enterprise License to distribute, copy, and use the Hercules computer programs (including third party software contained therein, if any) in object code format only, optional features, if any, and any related materials (collectively, the “Licensed Software”) for the sole purpose of and use on a Department of Defense (DoD)-wide enterprise basis under Prime Contract No. DCA200-00-D-5021, Delivery Order No. 0025, except in the event of termination under Section 9.0 herein. “DoD-wide Enterprise Basis” means Department of Defense (DoD) Combatant Commands, DoD Intelligence Community (non-Title 50) elements, Military Departments, DoD Agencies, Coast Guard, National Guard, and the Reserves, hereinafter referred to as the “ENTERPRISE.” All “ENTERPRISE” owned and leased computers and networks are covered under this Agreement, regardless of the persons operating the computer systems. 

	[****] CONFIDENTIAL TREATMENT REQUESTED 
	 	1	 
	

	 

(b)   If annual Technical Support is not purchased in accordance with Section 8.2 herein, DigitalNet and the Government (Enterprise) will remain entitled to use the Licensed Software in perpetuity, but will not receive the benefit of any updates and/or upgrades or technical support to the Licensed Software during the lapsed period of technical support.

(c)   Citadel shall comply with Exhibit A, 6.2.1, Subtask 1 concerning National Information Assurance Partnership (NIAP) Certification requirements.

2.2       Definition of Licensed Software. This Agreement applies to, and the definition of Licensed Software means, all program code, intellectual property rights, the published technical specifications for the use and operation of the Licensed Software (“Documentation”), and any subsequent enhancements, versions or releases of the Licensed Software delivered to DigitalNet and/or the Government.

2.3       Affiliates. “Affiliates” of DigitalNet means entities directly or indirectly controlling or controlled by, or under direct or indirect common control with, DigitalNet; and “control” means the power, directly or indirectly, to direct, or cause the direction of, the management and policies of such entities through the ownership of voting securities, by contract or otherwise.

2.4       Proprietary Rights. The Licensed Software is licensed, not sold. Title to the Licensed Software remains with Citadel. Title to any third party software used by the Licensed Software remains with the third party. Except as expressly provided in this Agreement, Citadel and/or its suppliers retain any and all right, title and interest in and to the Licensed Software. This Agreement grants no additional express or implied license, right or interest in any copyright, patent, trade secret, trademark, invention or other intellectual property right of Citadel or its suppliers. DigitalNet and the Government receive no rights to and will not distribute, sublicense, sell, assign (except as provided in Sections 2.5 and 2.6), lease, market, transfer, encumber or suffer to exist any lien or security interest on the Licensed Software, nor will DigitalNet or the Government take any action that would cause the Licensed Software to be placed in the public domain. DigitalNet and the Government will not (a) modify or create any derivative works of the Citadel Software, including customization, translation or localization; or (b) decompile, disassemble, reverse engineer, or otherwise attempt to derive the source code for the Citadel Software. DigitalNet and the Government will not remove, or allow to be removed, any Citadel copyright, trade secret or other proprietary rights notice from the Licensed Software. DigitalNet and the Government will not make any warranties with respect to the Licensed Software beyond those made to DigitalNet and the Government by Citadel under this Agreement. Citadel and its suppliers reserve all rights not specifically granted under this Agreement.

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2.5       Assignment. DigitalNet shall not assign, delegate, or otherwise transfer this Agreement or any of its rights and obligations hereunder to any entity unaffiliated with DigitalNet without Citadel’s prior written consent, except that Citadel hereby grants DigitalNet, as the Prime Contractor, the right to transfer use of the Licensed Software to the Government on a restricted rights basis in accordance with FAR 52.227-19, Commercial Computer Software-Restricted Rights (provided in full text below), for the purpose of specific performance under Prime Contract No. DCA200-00-D-5021, Delivery Order No. 0025.

2.6       Government Restricted Rights.

52.227-19 Commercial Computer Software-Restricted Rights

 

As prescribed in 27.409(k), insert the following clause: 

 

Commercial Computer Software-Restricted Rights (June 1987)

 

(a)   As used in this clause, "restricted computer software" means any computer program, computer data base, or documentation thereof, that has been developed at private expense and either is a trade secret, is commercial or financial and confidential or privileged, or is published and copyrighted. 

 

(b)   Notwithstanding any provisions to the contrary contained in any Contractor's standard commercial license or lease agreement pertaining to any restricted computer software delivered under this purchase order/contract, and irrespective of whether any such agreement has been proposed prior to or after issuance of this purchase order/contract or of the fact that such agreement may be affixed to or accompany the restricted computer software upon delivery, vendor agrees that the Government shall have the rights that are set forth in paragraph (c) of this clause to use, duplicate or disclose any restricted computer software delivered under this purchase order/contract. The terms and provisions of this contract, including any commercial lease or license agreement, shall be subject to paragraph (c) of this clause and shall comply with Federal laws and the Federal Acquisition Regulation. 

 

(c)  (1)   The restricted computer software delivered under this contract may not be used, reproduced or disclosed by the Government except as provided in paragraph (c)(2) of this clause or as expressly stated otherwise in this contract. 

(2)   The restricted computer software may be- 

(i)   Used or copied for use in or with the computer or computers for which it was acquired, including use at any Government installation to which such computer or computers may be transferred; 

(ii)   Used or copied for use in or with backup computer if any computer for which it was acquired is inoperative; 

(iii)   Reproduced for safekeeping (archives) or backup purposes; 

(iv)   Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software incorporating any of the delivered, restricted computer software shall be subject to same restrictions set forth in this purchase order/contract; 

(v)   Disclosed to and reproduced for use by support service Contractors or their subcontractors, subject to the same restrictions set forth in this purchase order/contract; and 

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(vi)   Used or copied for use in or transferred to a replacement computer. 

(3)   If the restricted computer software delivered under this purchase order/contract is published and copyrighted, it is licensed to the Government, without disclosure prohibitions, with the rights set forth in paragraph (c)(2) of this clause unless expressly stated otherwise in this purchase order/contract. 

(4)   To the extent feasible the Contractor shall affix a Notice substantially as follows to any restricted computer software delivered under this purchase order/contract; or, if the vendor does not, the Government has the right to do so: 

 

Notice-Notwithstanding any other lease or license agreement that may pertain to, or accompany the delivery of, this computer software, the rights of the Government regarding its use, reproduction and disclosure are as set forth in Government Contract (or Purchase Order) No. DCA200-00-D-5021. 

 

(d)   If any restricted computer software is delivered under this contract with the copyright notice of 17 U.S.C. 401, it will be presumed to be published and copyrighted and licensed to the Government in accordance with paragraph (c)(3) of this clause, unless a statement substantially as follows accompanies such copyright notice: 

 

Unpublished-rights reserved under the copyright laws of the United States. 

 

(End of clause)

2.7       Consideration. In consideration of the grant of license to DigitalNet to use the Licensed Software and subsequently transfer the same to the Government, DigitalNet agrees to pay Citadel the Enterprise License fee listed in Section 4.0, subject to the terms and conditions of this Agreement.

3.0       TERM OF THIS AGREEMENT

3.1       Initial Term. The initial term of this Agreement shall be from September 24, 2004 through September 23, 2005.

3.2       Option Terms. In the event the Government exercises its option to purchase Technical Support Services beyond the initial term of the Prime Contract and this Agreement, DigitalNet shall extend the term of this Agreement for the periods cited below:

 

		·	
Option Year 1:  September 24, 2005 through September 23, 2006

		·	Option Year 2:  September 24, 2006 through September 23, 2007

		·	Option Year 3:  September 24, 2007 through September 23, 2008

		·	Option Year 4:  September 24, 2008 through September 23, 2009

 

3.3       Renewal Notice. DigitalNet shall provide written notice of its intent to renew upon the Government’s notice, but no later than fifteen (15) days prior to the expiration of the then current term of this Agreement. If DigitalNet exercises any/all options, Citadel shall abide by the terms and conditions outlined herein.

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4.0       FEES

4.1       Initial Term

	 	 License Fees	 
	 	
·
	
Enterprise License: Hercules AVM Tool 
	 
	 	 	
(Exh A, 6.1.8, Subtask 8)
	
$[****]

	 	 	 	 
	 	 Service Fees	 
	 	
·
	
Virtual On-Demand Training for SCRI Tool
	 
	 	 	
(Exh A, 6.4.1, Subtask 1)
	
$[****]

	 	
·
	
Classroom Training Support
	 
	 	 	
(Exh A, 6.4.2, Subtask 2)
	 
	 	 	
20 Classes CONUS
	
$[****]

	 	 	
5 Classes Pacific
	
$[****]

	 	 	
5 Classes Europe
	
$[****]

	 	 	
5 Classes Southwest Asia
	
$[****]

	 	 	
Hands-on Training Environment
	
$[****]

	 	 	
Course Material
	
$[****]

	 	 	
Travel
	
$[****]

	 	
·
	
Support for SCRI Tool During 120-Day Rapid 
	 
	 	 	
Deployment Plan (Exh A, 6.4.4, Subtask 5)
	
$[****]

	 	
·
	
Contractor Training Options 
	 
	 	 	
(Exh A, 6.4.5, Subtask 6)
	 
	 	 	
Option 1: CONUS 50 Seats
	
$[****]

	 	 	
Option 1: OCONUS 75 Seats
	
$[****]

	 	 	
Option 2: CONUS 65 Seats
	
$[****]

	 	 	
Option 2: OCONUS 60 Seats
	
$[****]

	 	 	 	 
	 	
4.2
	
Option Year 1
	 
	 	
·
	
Technical Support (Exh A, 6.4.3, Subtask 4)
	
$[****]

	 	 	 	 
	 	
4.3
	
Option Year 2
	 
	 	
·
	
Technical Support (Exh A, 6.4.3, Subtask 4)
	
$[****]

	 	 	 	 
	 	
4.4
	
Option Year 3
	 
	 	
·
	
Technical Support (Exh A, 6.4.3, Subtask 4)
	
$[****]

	 	 	 	 
	 	
4.5
	
Option Year 4
	 
	 	
·
	
Technical Support (Exh A, 6.4.3, Subtask 4)
	
$[****]

T&M means “Time-and-Materials”

NTE means “Not-to-Exceed”

FFP means “Firm Fixed Price”

5.0       PAYMENT TERMS

Initial Term:

5.1       Enterprise License Fee. Citadel may invoice DigitalNet the Enterprise License fee of $[****] upon delivery of the Licensed Software and documentation to DigitalNet and/or the Government. DigitalNet agrees to pay Citadel within forty five (45) days from DigitalNet’s receipt of Citadel’s invoice for the Enterprise License fee.

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5.2       Virtual On-Demand Training for SCRI Tool. Citadel may invoice DigitalNet a firm fixed price of $[****] upon Government acceptance of deliverables called out in Exhibit A, 6.4.1, Subtask 1. DigitalNet agrees to pay Citadel within thirty (30) days of receipt of Citadel’s invoice.

5.3       Classroom Training Support. Citadel may invoice DigitalNet the following amounts upon Government acceptance of deliverables called out in Exhibit A, 6.4.2, Subtask 2 on a not-to-exceed time-and-materials and/or firm fixed price basis. DigitalNet agrees to pay Citadel within thirty (30) days of receipt of Citadel’s invoice.

	
(a)
	
20 Classes/CONUS @ $[****]/hr
	
$[****]

	
(b)
	
5 Classes/Pacific @ $[****]/hr
	
$[****]

	
(c)
	
5 Classes/Europe @ $[****]/hr
	
$[****]

	
(d)
	
5 Classes/Southwest Asia @ $[****]/hr 
	
$[****]

	
(e)
	
Hands-on Training Environment
	
$[****]

	
(f)
	
Course Materials
	
$[****]

	
(g)
	
Travel Expenses
	
$[****]

5.4       Support for SCRI Tool During 120-Day Rapid Deployment. Citadel may invoice DigitalNet a firm fixed price of $[****] at the conclusion of the 60-day rapid deployment period called out in Exhibit A, 6.4.4, Subtask 5. DigitalNet agrees to pay Citadel within thirty (30) days of receipt of Citadel’s invoice.

5.5       Contractor Training Options. Citadel may invoice DigitalNet the following amounts on a firm fixed price basis after Government acceptance of deliverables called out in Exhibit A, 6.4.5, Subtask 6. DigitalNet agrees to pay Citadel within thirty (30) days of receipt of Citadel’s invoice.

	
(a)
	
1: CONUS 50 Seats @ $[****]/Seat
	
$[****]

	
(b)
	
1: OCONUS 75 Seats @ $[****]/Seat
	
$[****]

	
(c)
	
2: CONUS 56 Seats @ $[****]/Seat
	
$[****]

	
(d)
	
2: OCONUS 60 Seats @ $[****]/Seat
	
$[****]

Option Terms:

5.6       Technical Support for SCRI Tool. Upon DigitalNet’s written notice of intent to renew annual Technical Support services, Citadel may invoice DigitalNet for the applicable firm fixed price annual support fee per Exhibit A, 6.4.3, Subtask 4. DigitalNet agrees to pay Citadel within thirty (30) days of receipt of Citadel’s invoice.

	
(a)
	
Option Year 1
	
$[****]

	
(b)
	
Option year 2
	
$[****]

	
(c)
	
Option Year 3
	
$[****]

	
(d)
	
Option year 4
	
$[****]

5.7          Bill to address: 

DigitalNet 

2525 Network Place

Herndon, VA 20171

Attention: Accounts Payable

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5.8          Ship to addresses:

	 	(a)	DigitalNet for Prime Contract No. DCA200-00-D-5021, Delivery Order No. 0025 

2525 Network Place

Herndon, VA 20171

Attention: Sandeep Kaul

		(b)	DISA Field Security Operations

Letterkenny Army Depot

1 Overcash Drive

Building # 1

Chambersburg, PA 17201

5.9           Shipping point: 

FOB Origin.

6.0          SOFTWARE ESCROW

6.1       Within ninety (90) days from the effective date of this Agreement, the parties hereto agree to enter into a Software Escrow Agreement providing for Citadel to place the Licensed Software logic, programs and source code and other code and scripts (the "Escrowed Materials") into escrow with DSI Technology Escrow Services, or other such escrow agent mutually acceptable to DigitalNet and Citadel, to provide DigitalNet and the Government access to and use of the code under circumstances to be stated therein. All expenses of the escrow will be paid by DigitalNet. The Escrowed Materials shall be accurate and complete and shall delineate and explain the structure, organization, sequencing, and operation of the Licensed Software in sufficient detail to permit a reasonably skilled programmer to maintain, modify, and enhance the Licensed Software; subject to periodic review for sufficiency by a third party reasonably acceptable to both parties; and shall be seasonably updated as changes or additions are made to the Licensed Software. Request for delivery of the Deposit Materials may occur due to the occurrence of the following: 

(a) the dissolution, liquidation or winding up of Citadel, via bankruptcy or otherwise, or the authorization by the Board of Directors of Citadel to dissolve, liquidate or wind-up the business and affairs of Citadel, or 

(b) if Citadel is acquired or merged with another Company and the new entity does not accept this agreement, or 

(c) if Citadel elects to discontinue support of the Licensed Software or otherwise fails to meet its warranty obligations (Sections 7.3, 7.4, and 7.5) or Technical Support obligations (Sections 8.1 and 8.2) with respect thereto. 

6.2       In any event, upon receipt of the escrowed Licensed Software, DigitalNet or the Government may only use the Escrowed Materials to maintain, modify and enhance the Licensed Software. The maintained, modified or enhanced Licensed Software may only be used in accordance with this Agreement.

7.0          WARRANTIES

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7.1       Citadel warrants to DigitalNet that it has clear and exclusive title to the Licensed Software. Citadel further warrants to DigitalNet that it has all necessary rights, power and authority to enter into this Agreement and to grant the rights granted under this Agreement. All applicable rights to copyrights, trade secrets, patents and trademarks in the Licensed Software or any modifications or enhancements made by Citadel shall remain with Citadel. The Licensed Software is protected by copyright and other intellectual property laws and by international treaties.

7.2       Citadel warrants that the Licensed Software as delivered to DigitalNet and/or the Government does not contain any deactivating mechanisms or is not contaminated by harmful computer programming code.

7.3       Citadel warrants that the Licensed Software, in its unmodified form, as initially delivered to DigitalNet and/or the Government, will perform substantially in accordance with furnished Documentation and meet the general performance requirements and objectives for the Licensed Software outlined in Exhibit A hereto. Such warranty shall be in effect for a period of ninety (90) days from the date of delivery of the Licensed Software to DigitalNet and/or the Government (the “Warranty Period”). The Licensed Software media shall be free of defects in materials and workmanship.

7.4       In the event the Licensed Software fails in a material respect to operate in accordance with the Documentation, or meet the general performance requirements and objectives outlined in Exhibit A during the Warranty Period, Citadel agrees to use reasonable commercial efforts to promptly correct any such material defect or deficiency at its own expense. “Material Defect” means defects or deficiencies in the Licensed Software which materially affect an end user’s ability to operate the Licensed Software in accordance with the Documentation, or to meet the stated contractual performance requirements in Exhibit A hereto.

7.5       All warranty claims not made in writing and received by Citadel within such period shall be deemed waived. DigitalNet shall have no authority to extend such warranty to any third party except as provided herein. Citadel’s obligation and liability, and Licensee’s remedy, with respect to any breach of the foregoing warranty shall be for Citadel at Citadel’s option: (a) to bring the performance of the Licensed Software into substantial compliance with its Documentation; or (b) by mutual agreement, DigitalNet may take possession of the Escrowed Materials in accordance with Section 6.0, such possession shall be limited to completing corrections to the identified defects and deficiencies only. Upon completion of such corrections, the Escrowed materials shall be returned to escrow and Citadel shall retain all ownership rights in the Licensed Software. The costs and expenses, if any, incurred by DigitalNet to correct material defects and deficiencies in the Licensed Software shall be charged to Citadel’s account under this Agreement, or at (c) Citadel’s sole option to return any payment received by Citadel with respect to the applicable Licensed Software. 

7.6       In the event DigitalNet elects to take possession of the Escrowed Materials in accordance with Section 6.0, such possession shall be limited to completing corrections to the identified defects and deficiencies only. Upon completion of such corrections, the Escrowed materials shall be returned to escrow and Citadel shall retain all ownership rights in the Licensed Software. The costs and expenses, if any, incurred by DigitalNet to correct material defects and deficiencies in the Licensed Software shall be charged to Citadel’s account under this Agreement.

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7.7       Disclaimer. EXCEPT AS OTHERWISE PROVIDED HEREIN, THE LICENSED SOFTWARE AND THE ACCOMPANYING WRITTEN DOCUMENTATION ARE PROVIDED "AS IS" WITHOUT EXPRESS OR IMPLIED WARRANTY OF ANY KIND. CITADEL FURTHER DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Citadel DOES NOT WARRANT THAT THE SOFTWARE WILL BE ERROR FREE OR WILL OPERATE WITHOUT INTERRUPTION OR THAT THE SOFTWARE DOES NOT INFRINGE ANY COPOYRIGHT, PATENT, ETC. OF ANY THIRD PARTY. THE ENTIRE RISK ARISING OUT OF THE USE OR PERFORMANCE OF THE SOFTWARE AND ACCOMPANYING WRITTEN MATERIALS REMAINS WITH THE USER. IT IS THE USER’S RESPONSIBILITY TO TAKE ALL APPROPRIATE FAIL-SAFE, ENCRYPTION, BACK UP AND OTHER MEASURES TO ENSURE THE SAFE USE OF THE LICENSED SOFTWARE.

8.0         MAINTENANCE, UPDATES AND UPGRADES

8.1       Warranty Maintenance and Technical Support. Payment of the Enterprise License fee in accordance with this Agreement entitles DigitalNet and the Government to receive warranty support (for first 90 days) and technical services which shall include all bug fixes, updates/releases and upgrades to the Licensed Software during the initial one (1) year term of this Agreement (the “Initial Maintenance Term”) at no additional charge to DigitalNet. Without limitation, maintenance and technical support entitles DigitalNet and the Government to: 

(a)   telephone support from Citadel’s support personnel during Citadel’s normal business hours and in accordance with Citadel’s normal practices (except as otherwise required in Exhibit A hereto), and 

(b)   prompt maintenance fixes and work-around solutions for programming errors and software problems.

8.2       Annual Technical Support (After Initial Term). DigitalNet and the Government shall be entitled to the technical support described in Section 8.1 at no charge during the initial term of this Agreement. Thereafter, the annual technical support fee must be paid in order to receive such technical support. Upon receipt of the payment by Citadel, all benefits of the annual fee will be available to DigitalNet and the Government. If the annual payment is not made, DigitalNet and the Government will not be entitled to updates and upgrades to the Licensed Software or technical support. However, if DigitalNet does not pay the annual fee and chooses to reinstate the benefits provided by the annual technical support fee at a later date, DigitalNet may do so by bringing all fees current by remitting 100% of the unpaid fees plus the current applicable fee.

9.0         TERMINATION

9.1       Termination for Default. DigitalNet may terminate this Agreement for default if:

(a)  Citadel breaches the warranties defined in Section 7.0 by failing, after a reasonable cure period mutually agreed to by the Parties, to correct any material defect or deficiency identified in the Licensed Software, or

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(b)  Citadel fails to fulfill its Technical Support obligations under this Agreement, or

(c)  Citadel breaches any other material term of this Agreement and shall have failed to remedy such breach within 60 days of receipt of such written notice from DigitalNet.

9.2       Remedies. In the event of termination for default, DigitalNet’s sole and exclusive remedy and Citadel’s sole and exclusive liability shall be a full refund of the Enterprise License fee, if any, paid by DigitalNet to Citadel for use of the Licensed Software. Within ten (10) days of termination, DigitalNet and/or the Government shall return to Citadel all copies or destroy all copies of the Licensed Software and all of its component parts, and shall certify in writing to Citadel that such destruction has occurred.

10.0       DISPUTES

10.1       Good-Faith Negotiations and Legal Recourse. If any dispute arises under this Agreement that is not settled promptly in the ordinary course of business, the Parties shall seek to resolve such dispute between them first by negotiating promptly with each other in good faith negotiations. These negotiations shall commence upon the written request of either party and shall be conducted by the designated senior management representative of each party. If the Parties are unable to resolve the dispute between them within 15 business days (or within such longer period as the parties shall otherwise agree) through these negotiations, then either party may resort to the judicial process to pursue its claims. Any such action shall be filed in a competent court in the Commonwealth of Virginia.

10.2       Sponsored Claims to the Government. Any claims by Citadel arising as a result of actions by the Government and which may properly be submitted for a decision of the Government under the Disputes Clause of the Prime Contract shall be resolved exclusively by DigitalNet forwarding such claim to the Government for decision, provided that DigitalNet can comply with any certification requirements applying to such claims. The Customer’s decision on such claim shall be final, conclusive and binding upon Citadel. Citadel shall bear all expenses associated with such claim.

11.0       INDEMNITY

11.1       Infringement. Citadel shall defend, indemnify and hold harmless DigitalNet and the Government for any liability for infringement of any United States patent, copyright or trade secret rights of a third party caused by the use of the Licensed Software in accordance with the Documentation or as otherwise instructed or recommended by Citadel, provided that the infringement is not caused by the combination of the Licensed Software with any other item not provided by Citadel or not intended by Citadel for use with the Licensed Software, including but not limited to software, data, or hardware, (unless the use of the Licensed Software, works of authorship or work product constitutes contributory or inducement of infringement apart from the combination). 

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11.2       Notice of Infringement. DigitalNet shall notify Citadel in writing within ten (10) days of DigitalNet’s first knowledge of a charge of infringement of patent, copyright or trade secret rights by another party or Citadel otherwise receives written notice of such a claim. DigitalNet agrees to allow Citadel to fully control any litigation and settlement of such infringement charges provided any such settlement does not require DigitalNet to make any payment or to enter into any obligation. Indemnification shall include payment of all costs, expenses, judgments, settlements and attorneys' fees. At its own expense, Citadel shall employ counsel and shall assume the defense of such a claim. DigitalNet at its expense may be represented by counsel of its own selection, but it has no obligation to obtain separate representation. If an injunction is obtained against Licensee’s use of the Software as a result of a third party infringement claim, Citadel may, at its sole option and expense, (a) procure for Licensee the right to continue using the affected Software, (b) replace or modify the affected Software with functionally equivalent software that does not infringe, or, if either (a) or (b) is not commercially feasible, (c) terminate the license and refund the license fees received from DigitalNet for the affected Licensed Software.

11.3       General Indemnity. The parties shall indemnify and hold harmless the other parties and the Government, their officers and employees, from any direct, verifiable (in writing), reasonable out-of-pocket loss, cost, damage, expense or liability of every nature and kind which DigitalNet, Citadel and/or the Government can demonstrate, verify and confirm have been directly and specifically caused by the negligent party’s performance under this Agreement.

11.4        DigitalNet shall indemnify and defend Citadel and hold it harmless against any claims asserted by third parties that arise out of Licensee’s use of any Licensed Software not in accordance with this Agreement.

12.0        CONSEQUENTIAL DAMAGES

Citadel shall not be liable to DigitalNet or the Government for indirect, special, incidental, exemplary, punitive, or consequential damages (including, without limitation, lost profits) related to this Agreement or resulting from DigitalNet’s or the Government’s use or inability to use the Licensed Software, arising from any cause of action whatsoever, including without limitation, contract, warranty, strict liability, or negligence, even if notified of the possibility of such damages.

13.0         LIMITATION OF LIABILITY

UNDER NO CIRCUMSTANCES, INCLUDING NEGLIGENCE, SHALL EITHER PARTY BE LIABLE FOR ANY INCIDENETAL, SPECIAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN NO EVENT SHALL CITADEL’S TOTAL LIABILITY FOR ALL DAMAGES EXCEED THE ENTERPRISE LICENSE FEE PAID FOR THE LICENSED SOFTWARE.

14.0        HIRING OF EMPLOYEES

During the period that this Agreement is in force and for one (1) year after the termination of this Agreement, the Parties agree that neither shall directly recruit or solicit or assist in the recruiting or soliciting for employment, including as a consultant, any technical or professional employees of the other assigned to work on the Agreement, without the prior written approval of the party whose employee is being considered for employment. Either party may, however, without violating this provision, place mass media advertisements or conduct job fairs for the purpose of recruiting employees generally. The parties acknowledge and agree that in the event of a violation of this paragraph, there will be no adequate remedies at law and that the party against whom the solicitation was directed will suffer irreparable harm entitling it to immediate injunctive relief in addition to other available legal remedies. 

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15.0        CUSTOMER INTERFACE AND PUBLICITY

 

15.1       Customer Interface. All contacts with the Government concerning the work to be performed under the Prime Contract, including Citadel’s services under this Agreement, shall be the responsibility of DigitalNet. Citadel shall not contact the Government, except as authorized by DigitalNet. Citadel shall promptly report to DigitalNet any communications initiated by the Government directly with Citadel concerning the work hereunder. All meetings and other contacts involving Citadel personnel and/or their representatives with representatives of the Government relative to the effort herein, shall be prearranged through DigitalNet’s Program Manager. Citadel is further reminded that only DigitalNet can direct Citadel and/or modify the terms and conditions of this Agreement.

15.2       Publicity. Citadel shall not issue any news release, public announcement, advertisement or any other form of public statement concerning the existence of, or efforts in connection with this Agreement without obtaining prior written approval from DigitalNet.

16.0        GENERAL PROVISIONS

16.1       ENTIRE AGREEMENT AND AMENDMENTS. This Agreement, including all attachments whether incorporated by reference or otherwise, constitutes the entire Agreement and supersedes all other agreements and understandings whether oral or written between the Parties. This Agreement may not be modified or altered except as agreed to between the Parties in writing.

16.2       HEADINGS AND INTERPRETATIONS. The article and section headings and table of contents used in this Agreement are for reference and convenience only and shall not enter into the interpretation thereof.

16.3       WAIVERS. No waiver shall be deemed effective unless given in writing and signed by the authorized representative of the party granting such waiver. No waiver by a party of any of its rights or remedies hereunder shall be construed as a waiver by such party of any other rights or remedies that such party may have under this Agreement.

16.4       SEVERABILITY. If any of the provisions of this Agreement or part of such provisions are or become invalid or unenforceable, the remaining provisions shall continue to be effective.

16.5       FORCE MAJEURE. Citadel shall not be responsible for any delays, errors, failures to perform, interruptions or disruptions in the Citadel Licensed Software caused by any acts of God, strikes, lockouts, riots, acts of war, changes in law or regulations, fire, flood, earthquake, storm, power failure or failures of the Internet. 

16.6       CHOICE OF LAW. The validity, construction, scope and performance of this Agreement shall be governed by the laws of the Commonwealth of Virginia.

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16.7       FLOW DOWN PROVISIONS. Required provisions of the Federal Acquisition Regulation (FAR) pertaining to the acquisition of commercial items are hereby incorporated into this Agreement in Exhibit B hereto.

IN WITNESS WHEREOF, the parties hereto have caused this Subcontract to be executed by their duly authorized officers as written below.

DIGITALNET GOVERNMENT SOLUTIONS, LLC

 

BY:  /s/ Christopher Wolf

NAME:   Christopher Wolf

TITLE:   Senior Vice President & 

Chief Administrative Officer

DATE:   September 29, 2004

 

 

CITADEL SECURITY SOFTWARE INC.

 

BY:  /s/ Paul Modessa

NAME:  Paul Modessa

TITLE:  Director Public Sector Contracts

DATE:  September 29, 2004

 

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