Master Development Agreement - SunnComm Inc. and BTEK Software Inc.
MASTER DEVELOPMENT AGREEMENT Agreement Number: 00080401 March 6, 2001 THIS MASTER DEVELOPMENT AGREEMENT ("Agreement") is made and entered into this 6th day of March, 2001 ("Effective Date") by SunnComm, Inc. (hereinafter "Sponsor"), a Nevada Corporation with offices at 668 North 44th Street, Suite 220, Phoenix, AZ 85008, and BTEK Software, Inc. (hereinafter "Developer"), an Arizona Corporation with offices at 4636 East Elwood Street, Suite12, Phoenix, AZ 85040-1963. WITNESSETH THAT: WHEREAS, Sponsor desires to engage Developer from time to time pursuant to one or more Work Statements ("Work Statement") to develop, create, test, and deliver certain programming materials as "works made for hire" as such term is defined in the U.S. Copyright Act, and to assign, convey and transfer to Sponsor any and all right, title and interest Developer may have in any and all intellectual property rights related thereto, including but not limited to, patent, copyright and trademark/trade secret rights, and Developer is interested in accepting such engagements and assigning, conveying and transferring such rights, subject to the parties' further agreement on the scope and terms of each such Work Statement; and WHEREAS, Sponsor and Developer mutually desire to set forth in this Agreement certain terms and conditions applicable to all such engagements. NOW, THEREFORE, for and in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: <PAGE>85 Section 1 DEFINITIONS When used in this Agreement and in each Work Statement issued hereunder, the capitalized terms listed in this Section 1 shall have the following meanings: 1.1 Code -- shall mean computer-programming code. If not otherwise specified, Code shall include both Object Code and Source Code. Code shall include any Maintenance Modifications or Basic Enhancements thereto created by Developer from time to time, and shall include Major Enhancements thereto when added to the Code in connection with a Work Statement issued hereunder. 1.1.1 Object Code -- shall mean the machine-readable form of the Code. 1.1.2 Source Code -- shall mean the human-readable form of the Code and related system documentation including all comments and any procedural code such as job control language. 1.2 Confidential Information -- shall mean all: (i) non-public and/or proprietary information (including, without limitation, written, oral, visual or electronic information) owned, provided or disclosed by a disclosing party (regardless of whether in connection with this Agreement or otherwise), including, without limitation, trade secrets and formulae, (ii) all analyses, compilations, data, studies or other documents prepared by the recipient containing, or based in whole or part on, any such information, or reflecting its review of, interest in, or relationship with, the disclosing party and (iii) the terms of this Agreement. 1.3 Deliverables -- shall mean all Code, Documentation, processes, systems, designs and other materials developed for or delivered to Sponsor by Developer under this Agreement and under any Work Statement issued hereunder, including any and all right, title and interest Developer may have in any intellectual property rights related thereto, including but not limited to, patent, and copyright 1.4 Derivative Work -- shall mean a work that is based upon one or more preexisting works, such as a revision, modification, translation, abridgment, condensation, expansion, or any other form in which such preexisting works may be recast, transformed, or adapted, and that, if prepared without authorization of the owner of the copyright in such preexisting work, would constitute a copyright infringement. For purposes hereof, a Derivative Work shall also include any compilation that incorporates such a preexisting work. 1.5 Documentation -- shall mean user manuals and other written materials that relate to particular Code, including materials useful for design (e.g., logic manuals, flow charts, and principles of operation). Documentation shall include any Maintenance Modifications or Basic Enhancements thereto created by Developer from time to time, and shall include Major Enhancements thereto when added to the Documentation in connection with a Work Statement issued hereunder. 1.6 Enhancements -- shall mean changes or additions, other than Maintenance Modifications, to Code and related Documentation, including all new releases, that improve functions, add new functions, or significantly improve performance by changes in system design or coding. <PAGE>86 1.6.1 Basic Enhancements -- shall mean any Enhancements that are not Major Enhancements. 1.6.2 Major Enhancements -- shall mean changes or additions to Code and related Documentation that (1) have a value and utility separate from the use of the Code and Documentation; (2) as a practical matter, may be priced and offered separately from the Code and Documentation; and (3) are not made available to any of Developer's customers without separate charge. 1.7 Error -- shall mean any error, problem, or defect resulting from (1) an incorrect functioning of Code, or (2) an incorrect or incomplete statement of diagram in Documentation, if such an error, problem, or defect renders the Code inoperable, causes the Code to fail to meet the specifications thereof, causes the Documentation to be inaccurate or incomplete in any material respect, causes incorrect results, or causes incorrect functions to occur when any such materials are used. 1.8 Maintenance Modifications -- shall mean any modifications or revisions, other than Enhancements, to Code or Documentation that correct Errors, support new releases of the operating systems with which the Code is designed to operate, support new input/output (I/O) devices, or provide other incidental updates and corrections. 1.9 Discoveries -- shall mean any and all inventions, discoveries, improvements, designs, methods, systems, developments, know-how, ideas, suggestions, devices, trade secrets resulting from this Agreement and/or any Work Statement. 1.10 Net Factory Sales Price - shall mean the gross retail selling price of each single Deliverable less: (i) import and export taxes, and excise and other sales taxes; (ii) refunds for returned goods; (iii) custom duties; (iv) insurance and transportation costs, if separately billed, from the place of manufacture if in the U.S., or from the place of importation if manufactured abroad, to custom's premises or next point of distribution or sale; and (v) if Products are made abroad, less trade discounts actually allowed but not including advertising allowances or fees or commissions paid to employees or agents of Sponsor. 1.11 Sales - shall occur when Sponsor renders its invoice to any purchaser or recipient, whether or not paid when shipped, unless payment in full or partial is received by Sponsor in advance of such shipment or delivery, in which case a sale is made when such shipment is received. 1.12 Work Statement -- shall mean a purchase offer of Sponsor, a proposal of Developer, or another written instrument that meets the following requirements: 1. Includes substantially the following statement: "This is Work Statement Attachment XX under Master Development Agreement No 00080401 <PAGE>87 2. Is signed on behalf of both parties by their authorized representatives 3. Contains the following five mandatory items: 1) Description and/or specifications of the services to be performed and the Deliverables to be delivered to Sponsor; 2) The name and address of a Technical Coordinator for each of Sponsor and Developer; 3) The amount, schedule, and method of payment; 4) The time schedule for performance and for delivery of the Deliverables; and 5) Completion and acceptance criteria for the Deliverables. In addition, when applicable, the Work Statement may include: 1) Provisions for written and/or oral progress reports by the Developer; 2) Detailed functional and technical specifications and standards for all services and Deliverables, including quality standards; 3) Documentation standards; 4) Lists of any special equipment to be procured by Developer or provided by Sponsor for use in performance of the work; 5) Test plans and scripts; and 6) Such other terms and conditions as may be mutually agreeable between parties. In the event of conflicting or ambiguous terms and conditions between this Agreement and the Work Statement, subject Agreement shall control. Section 2 CONTRACT ADMINISTRATION 2.1 Contract Coordinator. Upon execution of this Agreement, each party shall notify the other party of the name, business address, and telephone number of its contract coordinator (hereinafter "Contract Coordinator"). The Contract Coordinators of each party shall be responsible for arranging all meetings, visits, and consultations between the parties that are of a non-technical nature. The Contract Coordinators shall also be responsible for receiving all notices under this Agreement and for all administrative matters such as invoices, payments, and amendments. 2.2 Issuance of Work Statements. The initial Work Statement(s) agreed to by the parties are set forth as attachments to this Agreement. Additional Work Statements, regardless of whether they relate to the same subject matter as the initial Work Statement(s), shall become effective, subject to Section 1.12, upon written execution by authorized representatives of both parties. <PAGE>88 Section 3 CHANGES Changes in any Work Statement or in any of the Specifications or Deliverables under any Work Statement shall become effective only when authorized representatives of both parties execute a written change request. Section 4 NOTICE OF DELAY Developer agrees to notify Sponsor promptly of any factor, occurrence, or event coming to its attention that may affect Developer's ability to substantially perform any Work Statement issued under this Agreement, or that is likely to occasion any material delay in delivery of Deliverables. Such notice shall be given in the event of any loss or reassignment of key employees, threat of strike, or major equipment failure. Section 5 COMPENSATION Amounts and modes of payment for all services to be performed and Deliverables shall be set forth in each Work Statement. The parties shall agree to use one of the following modes of payment: 5.1 Fixed Price. If Developer quotes a price for particular services or Deliverables and such price is specified without qualification in the applicable Work Statement, the amount quoted shall be deemed a fixed price ("Fixed Price"). Unless the Work Statement provides for progress payments or deferral of payment after completion, Sponsor shall pay the full amount of the Fixed Price upon Developer's satisfactory completion of the specified services or upon Sponsor's acceptance of particular Deliverables. A Work Statement may alternatively provide for payment to be based on a Fixed Price for certain services to be rendered over a specified period of time. Unless otherwise specified in the Work Statement, such payment for periodic services shall accrue on a monthly basis and be prorated for any partial periods. 5.2 Time and Materials. For services and Deliverables that are not suitable for payment on the basis of a Fixed Price, the Work Statement may provide for payment on the basis of time and materials ("Time and Materials"). Payment under this method shall be determined according to the hourly rates set for Developer's employees by skill level in the Statement of Rates set forth on an Attachment to the Work Statement. The Statement of Rates differentiates the employees of Developer assigned to Work Statements issued hereunder according to their skill level as a "designer architect," "software engineer," "programmer," "programmer trainee," "administrative support clerk," or "technical writer." 5.3 Time and Materials Subject to Fixed Ceiling. For certain Work Statements, Time and Materials charges pursuant to the Statement of Rates may be authorized subject to a maximum aggregate amount, designated as the "level of effort" expected or imposed for particular services or Deliverables. Developer shall use all reasonable effort to complete the specified services and/or Deliverables for no more than such aggregate amount. Further, should Developer determine at any time that it might be necessary to exceed such aggregate amount; Developer shall immediately notify Sponsor in writing. In such notice, Developer shall set forth Developer's best estimate of the cost to complete the pertinent services and/or Deliverables. <PAGE>89 Following receipt of such notice, Sponsor shall either instruct Developer to halt work with respect to such services and/or Deliverables, to continue on a Time and Material basis, or to suspend work pending further negotiation of a Fixed Price for completion. 5.4 Sales Royalty. At the election of the parties, the Work Statement may provide for payment based upon a certain percentage of sales ("Sales Royalty") wherein Sponsor agrees to pay to Developer a percent of the Net Factory Sales Price on all Sales or other disposition of the Deliverables per the work statement. 5.5 Statement of Rates. The hourly rates prescribed by the Statement of Rates shall be in lieu of compensation or reimbursement for any costs or burden incurred by Developer, including (without limitation) occupancy, supplies, utilities, payroll, management, and overhead. Rates quoted by Developer in its Statement of Rates are subject to change upon 30 days' advance notice, provided that any such change shall have no effect upon rates or charges for work already rendered or scheduled to be rendered within Thirty- (30) days of the issuance of such notice. Section 6 INVOICING Developer shall submit invoices to Sponsor for payment for work and/or Deliverables at such time or times as payment becomes due under each Work Statement. Invoices shall be due within 15 days of receipt, shall be addressed to Sponsor's Contract Coordinator, and shall be submitted no more frequently than monthly for charges due or accruing in each calendar month. All invoices shall specifically refer to the Work Statement to which they relate. An Administrative charge of 5% of the invoice shall be charged if not paid within 10 days. Section 7 EXPENSES Except as expressly agreed otherwise by Sponsor in a Work Statement, Developer shall bear all of its own expenses arising from its performance of its obligations under this Agreement and each Work Statement issued hereunder, including (without limitation) expenses for facilities, work spaces, utilities, management, clerical and reproduction services, supplies, and the like. Section 8 SITE VISITS Developer shall, from time to time and upon reasonable notice, allow access to its premises during normal business hours by Sponsor for purposes of design review, "walkthroughs," and discussions between Sponsor and Developer's management concerning the status and conduct of work being performed under any Work Statements issued hereunder; provided, however, all information to which Sponsor is permitted access to shall be deemed Confidential Information and treated as such in accordance with the provisions of Section 11 of this Agreement. Section 9 DELIVERY AND ACCEPTANCE Developer shall deliver all Deliverables, upon completion, to Sponsor's Technical Coordinator for testing and acceptance. Developer shall memorialize such delivery in a Delivery Confirmation that sets forth the nature and <PAGE>90 condition of the Deliverables, the medium of delivery, and the date of their delivery. Sponsor's Contract Coordinator shall countersign such Delivery Confirmation so as to indicate its receipt of the contents described therein, and the Delivery Confirmation shall thereupon be transmitted to the parties' Contract Coordinators. Unless a different procedure for testing and acceptance is set forth in a Work Statement, Sponsor's Technical Coordinator shall commence acceptance testing following its receipt of the Deliverables. Upon completion of such testing, Sponsor shall issue to Developer's Technical Coordinator within the time indicated in the Work Statement for acceptance, a notice of acceptance or rejection of the Deliverables. In the event of rejection, Sponsor shall give its reasons for rejection to Developer's Technical Coordinator in reasonable detail. Developer shall use all reasonable effort to correct any deficiencies or nonconformity's and resubmit the rejected items as promptly as possible. Section 10 OWNERSHIP AND RIGHTS 10.1 Work-for-Hire. Developer agrees that the Deliverable(s) have been specially ordered or commissioned by Sponsor, and accordingly, that said Deliverables shall be considered a "work made for hire" as contemplated by 17 U.S.C. 101 et seq.; and that Sponsor shall be considered the author of the Deliverables and by virtue of this writing, the Deliverable is the sole property of Sponsor free and clear from all claims of any nature relating to Developer's contributions, including the right to copyright same in the name of Sponsor as author and proprietor thereof and any termination rights thereto. In the event that: (a) the Deliverable is determined by a court of competent jurisdiction not to be a work made for hire and/or (b) there are any rights which do not accrue to Sponsor as a work made for hire, this Agreement shall operate as an irrevocable grant, transfer, sale and assignment to Sponsor of all right, title and interest, including all copyrights (and all renewals, extensions and revisions thereof) in the aforesaid Deliverable, in any media and for any purpose now or hereafter known. 10.2 Underlying Technology. Notwithstanding anything to the contrary contained herein, the Deliverables shall include the software, technology and/or code created by Developer, except to the extent such software, technology and/or code is subject to the rights of third parties. Further, it is expressly understood that Developer hereby transfers any and all of its right, title and interest in and tothe underlying technology, know-how, trade secrets or processes associated with the Work, including but not limited to any and all patent rights pertaining thereto. Section 11 CONFIDENTIAL INFORMATION 11.1 No Confidential Information of Developer Unless Specified. It is understood and agreed that Sponsor does not wish to receive from Developer any Confidential Information of Developer or of any third party and any information provided to Sponsor in the course of entering into this Agreement or any Work Statement or performing work under any Work Statement issued hereunder shall not be deemed Confidential Information of Developer unless specifically identified as Confidential Information by Developer. In such case, Developer shall designate such information as Confidential Information upon or prior to disclosure. All materials containing confidential information must have a restrictive marking of the disclosure at the time of disclosure, or if <PAGE>91 disclosed orally, identified as confidential at the time of disclosure. Notwithstanding the foregoing, all information disclosed by authorized access to a database, internal web site, server or computer network is Confidential Information. With respect to any Confidential Information of Developer delivered or divulged to Sponsor, Sponsor shall accord such Confidential Information the same protection it accords its own Confidential Information, but in no event less than a reasonable standard of care. 11.2 Confidential Information of Sponsor. From time to time Sponsor may provide its own Confidential Information to Developer in connection with the work to be performed by Developer under Work Statements issued hereunder. Sponsor shall designate such information as Confidential Information upon or prior to disclosure in accord with Section 11.1 above. In addition, the preparation and specifications of the Deliverables shall in all instances be treated as confidential. With respect to any Confidential Information of Sponsor delivered or divulged to Developer, Developer shall accord such Confidential Information the same protection it accords its own Confidential Information, but in no event less than a reasonable standard of care. 11.3 Nondisclosure and Use. This section shall apply to all Confidential Information disclosed during the period that begins on the Effective Date hereof and ends five (5) years thereafter. For the term of this Agreement, the parties shall (i) use the same care and discretion to avoid disclosure of the Confidential Information as they would use with their own similar information that they did not want disclosed or used improperly; (ii) shall not disclose any information to third parties; and (iii) shall use the Confidential Information only in connection with the express purpose of this Agreement and all Work Statements. The parties agree to exert best commercial efforts: (i) not to make public or authorize any disclosure or publication of Confidential Information, except as expressly agreed to in writing; (ii) to take all reasonable and necessary steps to enforce this Agreement and to assure that all principals, officers, agents, employees, representatives, consultants or any other persons affiliated in any manner with the parties do not disclose, or make public, or authorize any disclosure or publication of any Confidential Information; (iii) not to use the Confidential Information for any purpose other than the purposes related to this Agreement and Work Statements; (iv) to advise each other in writing of any misappropriation or misuse by any person or entity of Confidential Information immediately upon the notice thereof. The parties may disclose the Confidential Information to their respective officers, principals and employees only to the limited extent necessary to affect the purpose of this Agreement and Work Statements. To the extent that the parties desire to make disclosure to any persons other than its officers, principals or employees, as a condition precedent to disclosure, said disclosee must execute a confidentiality/non-use agreement in a form substantially similar to this Agreement. 11.4 Exceptions. Notwithstanding the provisions of Sections 11.1, 11.2 and 11.3, the receiving party shall have no liability to the disclosing party with regard to Confidential Information which: <PAGE>92 1. was generally known and available in the public domain at the time it was disclosed or becomes generally known and available in the public domain through no fault of the receiving party; 2. was known to the receiving party at the time of disclosure as shown by the files of the receiving party in existence at the time of disclosure; 3. is disclosed with the prior written approval of the disclosing party; 4. was independently developed by the receiving party (or by its employees or agents who have not been exposed to such Confidential Information) without any use of Confidential Information; 5. becomes known to the receiving party from a source other than the disclosing party without breach of this Agreement by the receiving party and otherwise not in violation of the disclosing party's rights; or 6. is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, that the receiving party shall provide prompt, advance notice thereof to enable the disclosing party to seek a protective order or otherwise prevent such disclosure and the disclosure shall be only to the extent of the order or requirement. Section 12 WARRANTIES 12.1 Warranties. Developer represents and warrants that the Deliverables shall: meet or exceed any specifications referred to in any Work Statement; be of merchantable quality; be free from all material defects in material and workmanship; and shall not infringe upon nor be subject to the rights of any third parties. Developer further represents and warrants that it has the right and authority to convey to Sponsor all intellectual property rights contemplated hereunder free and clear of any and all liens and encumbrances. The exclusive remedy for breach of this warranty shall be repair or replacement of the affected Deliverables, at Developer's option. Any warranties in this Section 12 are to the Sponsor only, and are contingent upon the proper use for which the Deliverables are intended, and do not cover Deliverables which have been modified in any way. EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, AND EXCEPT AS TO TITLE, THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, DESIGN, FUNCTIONING, OF SPONSOR'S OR ANY SUBSEQUENT PURCHASER'S USE, MERCHANTABILITY, FITNESS FOR ANY PURPOSE OR USE OF THIS PRODUCT, FREEDOM FROM INFRINGEMENT OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT TO THIS PRODUCT. DEVELOPER SHALL NOT BE LIABLE TO SPONSOR OR ANY SUBSEQUENT PURCHASER FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, LIABILITY, LOSS OR DAMAGE, INCLUDING, WITHOUT LIMITATION (INCLUDING STRICT LIABILITY AND TORT) CAUSED OR ALLEGED TO HAVE BEEN CAUSED BY THE USE OR INABILITY TO USE THE PRODUCT. Section 13 TERM AND TERMINATION 13.1 Term of Agreement. This Agreement shall be effective upon the date specified at the beginning hereof and shall remain in force for a period of Six (6) months, unless otherwise terminated as provided herein. However, this Agreement shall continue to remain in effect with respect to any Work <PAGE>93 Statements already issued hereunder at the time of such termination, until such Work Statements are themselves terminated and performance thereunder is completed. 13.2 Termination of Agreement. Either party may terminate this Agreement upon not less than 15 days notice to the other party. However, this Agreement shall continue to remain in effect with respect to any Work Statement already issued hereunder until such other Work Statement is itself terminated and/or performance thereunder is completed. 13.3 Survival. In the event of any termination of this Agreement, Sections, 10 through 15 hereof shall survive and continue in effect and shall inure to the benefit of and be binding upon the parties and their legal representatives, heirs, successors, and assigns. Section 14 INDEMNIFICATION 14.1 Indemnification of Developer by Sponsor. Sponsor shall hold Developer harmless from and indemnify and defend Developer and Developer's subsidiaries, affiliates, respective directors, officers, employees, agents and assigns from and against any suits, actions, claims, losses, demands, damages, liabilities and causes of action of every kind or character and nature as well as costs and expenses incident thereto (including reasonable attorneys' fees) arising out of Sponsor's business relationship with Designer Products, Inc., whether or not related to this Agreement. Section 15 MISCELLANEOUS 15.1 Force Majeure. Neither party hereto shall be responsible for any failures to perform its obligations under this Agreement (other than obligations to pay money) caused by an event reasonably beyond its control, including but not limited to, wars, riots, labor strikes, natural disasters, or any law, regulation, ordinance, or other act or order of any court, government, or governmental agency. Obligations hereunder, however, shall in no event be excused but shall be suspended only until the cessation of any cause of such failure. In the event that such force majeure should obstruct performance of the Agreement for more than one (1) month, the parties hereto shall consult with each other to determine whether this Agreement should be modified. The party facing an event of force majeure shall use its best endeavors in order to remedy that situation as well as to minimize its effects. A party experiencing an event of force majeure shall notify the other party as soon as possible after its occurrence. 15.2 No Agency. Developer, in rendering performance under Work Statements issued hereunder from time to time, is acting solely as an independent contractor. Sponsor does not undertake by this Agreement or otherwise to perform any obligation of Developer, whether by regulation or contract. In no way is Developer to be construed as the agent or to be acting as the agent of Sponsor in any respect, any other provisions of this Agreement or any Work Statements issued hereunder notwithstanding. 15.3 Multiple Counterparts. This Agreement may be executed in several counterparts, all of which taken together shall constitute one single Agreement between the parties. <PAGE>94 15.4 Section Headings; Exhibits. The section and subsection headings used herein are for reference and convenience only, and shall not enter into the interpretation hereof. The exhibits referred to herein and attached hereto, or to be attached hereto, including all Work Statements issued hereunder from time to time, are incorporated herein to the same extent as if set forth in full herein. 15.5 Required Approvals/Further Instruments. Where agreement, approval, acceptance, or consent by either party is required by any provision of this Agreement, such action shall not be unreasonably delayed or withheld. Developer shall execute such further assignments, instruments and documents upon the request of Sponsor as may be reasonably necessary to effectuate the transactions contemplated under this Agreement. 15.6 No Waiver. No delay or omission by either party hereto to exercise any right or power occurring upon any noncompliance or default by the other party with respect to any of the terms of this Agreement shall impair any such right or power or be construed to be a waiver thereof. A waiver by either of the parties hereto of any of the covenants, conditions, or agreements to be performed by the other shall not be construed to be a waiver of any succeeding breach thereof or of any covenant, condition, or agreement herein contained. Unless stated otherwise, all remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to either party at law, in equity, or otherwise. 15.7 Authority of Developer. Developer has the sole right and obligation to supervise, manage, contract, direct, procure, perform, or cause to be performed all work to be carried out by Developer hereunder unless otherwise provided herein. 15.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona. 15.9 Entire Agreement. This Agreement and the exhibits annexed hereto, together with the Work Statements issued from time to time hereunder, constitute the entire agreement between the parties. No change, waiver, or discharge hereof shall be valid unless it is in writing and is executed by the party against whom such change, waiver, or discharge is sought to be enforced. 15.10 Notices. Under this Agreement if one party is required to give notice to the other, such notice shall be deemed given if mailed by U.S. mail, certified first class, postage prepaid, and addressed as follows: SunnComm, Inc., 668 North 44th Street, Suite 220, Phoenix, AZ 85008 With a copy to: Gammage & Burnham, P.L.C., Two North Central Avenue, 18th Floor, Phoenix, Arizona 85004, Attention: William D. O'Neal, Esq. BTEK Software, Inc., 4636 East Elwood Street, Suite12, Phoenix, AZ 85040-1963 With a copy to : Greenberg Traurig LLP, One East Camelback Road, Suite 1100, Phoenix, AZ 85012, Attention: John Burton, Esq. 15.11 No Assignment. Neither party may, without the prior written consent of the other party, assign or transfer this Agreement or any obligation incurred hereunder, except by merger, reorganization, consolidation, or sale of all or substantially all of such party's assets. Any attempt to do so in contravention of this Section shall be void and of no force and effect. <PAGE>95 15.12 Compliance With Laws. Sponsor shall insure compliance with all laws and regulations applicable to this Agreement or performance under this Agreement, including, but not limited to, all local laws and regulations governing import/export, business practices (including advertising, competition/antitrust and the United States Foreign Practices Act), language requirements, product safety, consumer and purchaser protection and warranty. Sponsor shall be responsible for obtaining all approvals from governmental or other authorities, including without limitation, export licenses, in connection with this Agreement and any performance hereunder. The Sponsor shall be responsible for the payment of all costs of compliance, levies, taxes, fees or other obligations (including damages and/or fines). The Sponsor shall immediately notify Developer of all legal obligations or requirements and obtain Developer's prior approval of the Sponsor's plan for compliance. IN WITNESS THEREOF, Sponsor and Developer have caused this Agreement to be signed and delivered by their duly authorized officers, all as of the date first hereinabove written. SPONSOR DEVELOPER SUNNCOMM, INC. BTEK SOFTWARE, INC. By:_________________________________ By:_________________________________ John D. Aquilino, Chairman Stanley Babowicz, President Date: _____________________________ Date: ______________________________ Attachment 01 to Master Development Agreement # 00080401 WORK STATEMENT 0008040101 Title: CD Software Sentinel Date: March 6, 2001 1. GENERAL This is Work Statement Attachment 01 under Master Development Agreement No. 00080401. Parties in Agreement: -The Sponsor, SunnComm, Inc. at 668 North 44th Street, Suite 220, Phoenix, AZ 85008 - The Developer, BTEK Software, Inc. at 4636 East Elwood Street, Suite12, Phoenix, AZ 85040-1963 2. NAMES OF TECHNICAL COORDINATORS SunnComm, Inc. John D. Aquilino 602-267-7500 BTEK Software, Inc. Stanley Babowicz 480-303-9394 <PAGE>96 3. SUMMARY OF PURPOSE FOR STATEMENT OF WORK General description of work or services: -This effort consists of Software Programming and is classified as work made for hire. 4. IDENTIFICATION OF PRE-EXISTING WORKS None 5. EQUIPMENT AND PROGRAMMING TO BE PROVIDED BY SPONSOR, IF ANY CD-Players, DVD Players, CD Recorders, Mastering equipment, and any other equipment deemed necessary by sponsor and developer for testing. 6. OTHER DEVELOPER RESOURCES None 7. DESCRIPTION OF DELIVERABLES For purposes of this Work Statement, Deliverables and "Product" shall have the same meaning. 7.1 SUNNCOMM WAV CIPHER a. Design and development of software program or programs containing proprietary encryption software that will encrypt selected files at a separate location causing said files to be encrypted and protected. The program(s) shall work in: Windows (2000, NT, 98, 95) Mac OS 8.5, Linux 6.2, .WAV audio files 44.1Mhz 16 bit Stereo Redbook PCM. b. Design and development of proprietary encryption cipher that will encrypt and protect the executable of the program described herein. 7.2 SUNNCOMM SENTINEL COPY PROTECTION a. Design and development of software program or programs containing proprietary CD audio copy protection for .WAV audio files 44.1Mhz 16 bit Stereo Redbook PCM. The specification produced will be used to produce music CD's in large quantities. 7.3 SUNNCOMM SENTINEL a. Design and development of software program or programs that will let the user choose the proprietary encrypted files, create a custom play list, decrypt the files and write them in a single stream to most standard CD-R Drives in any order they wish. Design and development of an authorization code scheme allowing the end user to create multiple copies will be placed into the software. The audio files shall be able to be played in most currently available Compact disk players. The program(s) shall work in: Windows (2000, NT, 98, 95) Mac OS 8.5, Linux 6.2. .WAV audio files 44.1Mhz 16 bit Stereo Redbook PCM. b. Design and development of software program or programs containing proprietary Copy Protection method allowing for multiple levels of copy protection to be added to the CD-R to prevent the copying of files or the duplication of the disk. The program(s) shall work in: Windows (2000, NT, 98, 95) Mac OS 8.5, Linux 6.2, .WAV audio files 44.1Mhz 16 bit Stereo Redbook PCM. c. Design and development of proprietary encryption cipher that will encrypt and protect the executable of the programs described herein. <PAGE>97 7.4 SUNNCOMM PLAYER a. Design and development of software program or programs containing a proprietary code to "play" the SunnComm Wav Cipher encrypted files that reside on the local system. This program should decrypt the selected files on the fly, (in real time) in small intervals allowing the end user to listen to the program material. The purpose of the software should be to allow the end user the ability to listen to the music they have purchased on their personal computer while maintaining the integrity of the security protecting the data. The program(s) shall work in: Windows (2000, NT, 98, 95) .WAV audio files 44.1Mhz 16 bit Stereo Redbook PCM. b. Design and development of proprietary encryption cipher that will encrypt and protect the executable of the program described herein. 8. CONSIDERATION TO DEVELOPER a. In accordance with Section 5.1 of the Master Development Agreement No. 00080401, Sponsor agrees to pay Developer a Fixed Price in the amount of eight hundred seventy nine thousand dollars ($879,000.00) as partial consideration for the services rendered by Developer under Work Statement No. 0008040101. b. Additionally and in accord with Section 5.4 of the Master Development Agreement referenced in Section 8(a) above, Sponsor agrees to pay Developer one percent (1%) of the Net Factory Sales Price on all Sales or other disposition of the Deliverables. c. Sponsor agrees to grant stock options pursuant to Section 12 of this Work Statement. 9. TERMINATION: This Work Statement may be terminated by mutual consent of both parties by not less than thirty, (30) days written notice delivered in accordance with Section 13 of the Agreement. If terminated by Developer prior to final delivery, Developer shall refund the pro-rata balance of payments made in advance. Developer shall further deliver all work completed to that point including any and all documentation. 10. PAYMENT SCHEDULE As of March 1, 2001 Developer has received a total payment of $237,500.00. This contract will commence upon delivery of the signed work statement with additional payments to be made in accordance with the following payment schedule: SunnComm, Inc. Payment Schedule Fixed Price Portion of Work Statement #0008040101 Payable to BTEK software, Inc. Fixed Price Amount $879,000.00 Amount Received as of March 1, 2001 $237,500.00 <PAGE>98 Balance Due Work Statement #0008040101 $641,500.00 Payment Schedule for March 2001 through May 2001 Mar-2001$25,000.00 Apr-2001$25,000.00 May-2001 Promisory Note $97,500.00 Paid by May 30, 2001 $147,500.00 Balance Due as of June 1, 2001 $494,000.00 Payment Schedule for June 2001 through April 2002 Jun-2001 $35,000.00 Jul-2001 $35,000.00 Aug-2001 $40,000.00 Sep-2001 $40,000.00 Oct-2001 $47,000.00 Nov-2001 $47,000.00 Dec-2001 $50,000.00 Jan-2002 $50,000.00 Feb-2002 $50,000.00 Mar-2002 $50,000.00 Apr-2002 $50,000.00 11. SCHEDULE AND PERFORMANCE CRITERIA a. Developer will provide finalized schedules within thirty- (30) working days of the execution hereof, which schedule Sponsor shall approve. b. Developer will provide to Sponsor, via electronic communications, weekly status updates. c. Developer and Sponsor shall meet bi-monthly at a time and place to be mutually agreed upon. 12. STOCK OPTIONS Sponsor agrees to grant to below-designated employees of Developer the below-identified numbers of Sponsor's restricted common stock upon achievement of certain milestones as follows: a. To Mr. Stanley Babowicz 500,000 shares upon execution of this Agreement 250,000 shares upon successful final testing and unit integration 250,000 shares upon completion of deployment <PAGE>99 b. To Sandra Yvonne Walters 75,000 shares upon execution of this Agreement 37,500 shares upon successful final testing and unit integration 37,500 shares upon completion of deployment c. To Gail Janine Brown 12,500 shares upon execution of this Agreement 12,500 shares upon successful final testing and unit integration . All shares shall bear a restrictive legend in accordance with the rules and regulations of the Securities and Exchange Commission. Said shares mentioned in 12a,b,c in this paragraph shall be included in the next registration statement filed by the Company. Mr. Stanley Babowicz agrees that he shall not sell a total, in any one week period, that shall exceed one percent (1%) of his total Sunncomm, Inc. holdings during the first twelve (12) months of this agreement. 14. ACCEPTANCE AND TESTING PROCEDURES Time for Sponsor to accept work will be Thirty- (30) days from receipt of work. Testing will entail Test case design, Component testing, Usability testing, Integration testing, Performance testing, System testing, Regression testing, and Unit testing of the applications. 14. LOCATION OF WORK FACILITIES Substantially all of the work will be conducted by BTEK at its regular office located in Phoenix, AZ. ------------------------------------- FOR SUNNCOMM, INC. FOR BTEK SOFTWARE, INC. By:_________________________ By:__________________________ John D. Aquilino, Chairman Stanley Babowicz, PresidentDate: _______________________ Date: ________________________