Software Development Agreement

This Software Development Agreement (this “Agreement”) is entered into as of [___] (“Effective Date”) by and between ______________________________ (“Developer”), a[n] [_________] [________], having a principal place of business at __________________and]_________________ (“Client”), having a principal place of business at ______________________. Developer and Client are sometimes referred to in this Agreement individually as a “Party” and collectively as the “Parties.”

WHEREAS, Developer is engaged in the business of computer application development and possesses certain technical expertise in designing, developing, and testing software and related materials used in web and mobile applications; and

WHEREAS, Client wishes to engage Developer to deliver certain unique and proprietary software developed and/or customized specifically for Client (the “Software”) and Developer is willing to accept the engagement to develop such Software on the terms and subject to the conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the mutual promises and covenants set forth herein and intending to be legally bound, the Parties hereto agree as follows: 

1. ENGAGEMENT OF DEVELOPER

1.1 Scope of Engagement.  Subject to the terms and conditions of this Agreement, Client hereby retains the services of Developer to design, develop, and implement the Software in accordance with the specifications, requirements, and deliverables (“Specifications”) and the time schedule described in Exhibit “A” attached hereto and incorporated herein by reference (collectively, the “Work”).  Developer may use employees and/or contractors capable of designing and implementing the Software.  Client will cooperate with Developer’s reasonable requests for information necessary to accomplish the tasks and objectives for completion of the Work.  

1.2 Developer’s Duties and Responsibilities.  Developer and Client will jointly define the Specification and Developer will:  (a) Perform the Work in accordance with the Specification; (b) use reasonable efforts to deliver the Software to Client by the delivery deadline set out in the time schedule described in Exhibit “A” or as soon as commercially practicable in accordance with the Specification; and (c) assign a project manager who is responsible for managing the day-to-day activities, reporting and resource allocation.  Developer shall be responsible for delivering and performing only those professional services specifically identified in Exhibit “A”.  

1.3 Changes to Scope.  In the event Client wishes to make any modification to the Work, Client must provide a detailed proposal to Developer in writing specifying the desired changes (“Change Request”).  Developer will evaluate each Change Request at its standard rates and charges.  Developer shall submit to Client a written response to each Change Request within ____ (__) business days following receipt thereof (“Change Request Response”).  Developer’s Change Request Response shall include a statement of the availability of Developer’s personnel and resources, as well as any impact the proposed changes will have on the price, delivery dates, deliverables, or warranty provisions of this Agreement.  Client shall use its reasonable efforts to accept, reject, or propose modifications to each such Change Request Response within _______ (__) business days following receipt thereof.  Upon acceptance by Client of a Change Request Response and its corresponding Change request, the Work shall be amended by means of a written, jointly executed, addendum to Exhibit “A” of this Agreement.  

1.4 Support and Maintenance.  Any support and maintenance services, updates, versions, or new releases shall be contracted under a separate agreement between the Parties.  Maintenance and support rights or obligations for any third party products or equipment that are used in the Software and are available through the respective vendors or manufacturers of such content and equipment shall be assigned by Developer to Client.   Developer shall not use any intellectual property of any third party in the Software without Client’s written consent.

1.5 Marketing.  Client grants Developer the right to use Client’s name, service marks, and a description of its services in Developer’s marketing materials or other written promotional campaigns.  Either Party may elect to issue a press release related to this Agreement with prior approval from the other Party, which approval shall not be unreasonably withheld.

1.6 Independent Contractor.  Developer is not an employee of Client.  Developer shall not be eligible for any benefits given by Client to its employees.  The Parties are and remain independent contractors.  At its own expense, Developer may use employees or subcontractors to develop the Software or otherwise complete the Work.  Nothing in this Agreement will be deemed to create an agency, partnership, or joint venture between the Parties.  Neither Party has authority to bind the other or incur any liability or otherwise act on behalf of the other Party.

2. CLIENT RESPONSIBILITIES 

2.1 Assigned Tasks.  [Client agrees to perform all of the tasks assigned to Client as set forth in this Agreement and to provide all assistance and cooperation to Developer in order to complete timely and efficiently the Work and execute all Change Requests.  Client shall be responsible for making, at its own expense, any changes or additions to Clients’ current systems, software, and hardware that may be required to support operation of the Software.]     

2.2 Acceptance Testing.  [Client shall make available such personnel as necessary for testing the Software and training users of the Software and prepare complete acceptance test data for testing the Software.]     

2.3 Lawful Purpose.  Client will only use the Software for lawful purposes.

3. ACCEPTANCE OF SOFTWARE

3.1 Acceptance Test Plan.  Client shall, in cooperation with Developer, prepare and be responsible for a plan for the Client acceptance test (“Acceptance Test Plan”), with acceptance test procedures suitable for verifying that the Software meets the agreed requirements of the Specification.  The Acceptance Test Plan shall describe how the Client acceptance test will be carried out, and shall contain a detailed description of the tests to be performed, as well as the acceptance criteria. 

3.2 Acceptance Period.  Client will have the specified number of days following the date of delivery of the Software, as set forth in the Specification to inspect, test, and assess the Software and determine whether it satisfies the acceptance criteria in accordance with the procedures set forth in the Specification.  Client acceptance test shall be performed in accordance with the Acceptance Test Plan.

3.3 Approval.  If Client approves the acceptance test, then Client shall give Developer written notice to such effect without undue delay.  The acceptance test is deemed to be approved unless Client has notified Developer in writing, within _____(__) business days after the test was to be completed according to the Acceptance Test Plan, stating that it is not approved.  The acceptance test is also deemed to have been approved if Client elects to put the Software into operation before the test has been approved by Client.  

3.4 Rejection.  If Client refuses to approve the acceptance test, such rejection shall be explained in writing.  If Developer wishes to argue the rejection is unjustified, written notice shall be given to such effect, which notice shall be given within ______ (___) business days. If Client still refuses to approve the acceptance test, the dispute shall be resolved pursuant to Section 11.1 of this Agreement.  If Developer does not dispute the rejection, then Developer shall have _____(__) business days to send Client a timetable for repairing the errors associated with the Software.  Developer shall give written notice to Client when the repairs have been completed and Client shall promptly resume its acceptance test.  The approval period may only commence when the acceptance test has been approved by Client.

3.5 Commissioning.  The Software shall be put into regular operation after Client acceptance test has been successfully completed and approved.  

4. COMPENSATION AND PAYMENT

4.1 Fees and Expenses.  Client will pay Developer a fixed fee for the Work according to the payment schedule described in Exhibit “B” attached hereto and incorporated herein by reference (“Payment Schedule”).  A deposit of __________ percent (___ %) of the total amount is required to commence the Work.  All payments made to Developer under this Agreement must be in United States currency.  When travel is necessary to perform the Work, compensation will include reimbursement of all reasonable and necessary travel, living, and out-of-pocket expenses incurred by Developer in performing the Work.  Developer will obtain Client’s approval for billable travel prior to incurring any expense for such travel.  Client will reimburse Developer for the cost of any development software or commercial software libraries that Developer deems necessary to complete the Work, subject to approval by Client. 

4.2 Overdue Invoices.  Developer’s invoices for fees and expenses, if any, shall be due and payable in full immediately upon receipt by Client.  All such fees shall be fully earned when due and non-refundable when paid.  Invoices not paid within ________(__) days from the invoice date shall bear interest from the invoice date until paid at a rate of ____percent (__%) per day or the maximum rate permitted by applicable law, whichever is less.  Developer may suspend all Work on ______ (__) days written notice until the amounts outstanding are paid in full.  Time is of the essence for all payments under this Agreement, and in the event any payment due to Developer is collected at law or through an attorney-at-law, or under advice therefrom, or through a collection agency, Client agrees to pay all costs of collection, including, without limitation, all court costs and reasonable attorney’s fees.

5. TERM AND TERMINATION

5.1 Term.  This Agreement is effective as of the Effective Date and will continue in full force and effect until complete payment for the Work is received by Developer, unless earlier terminated as provided in this Agreement.

5.2 Termination.  Each Party may terminate this Agreement upon material breach by the other Party of one or more of the terms and conditions of this Agreement, provided that the breaching Party is notified in writing of the material breach and such breach is not cured within ______(__) days after receipt of such written notice.  Client’s termination of this Agreement will not relieve Client of its obligations to pay for any Work performed.  If Developer terminates this Agreement due to Client’s default: (a) Client shall, within _____(__) days of such termination, deliver to Developer all copies and portions of the Software and related materials and documentation in its possession furnished by Developer under this Agreement; and (b) all amounts payable or accrued to Developer under this Agreement shall become immediately due and payable.  Termination for breach will not alter or affect the terminating Party’s right to exercise any other remedy for breach.  Client may terminate this Agreement without cause upon _______(__) days advance written notice.  In the event of termination without cause, Client agrees to pay Developer for all Work performed up to the date of termination.

6. CONFIDENTIALITY

6.1 Client’s Confidential Information. All information relating to Client that is known to be confidential or proprietary, or which is clearly marked as such, will be held in confidence by Developer and will not be disclosed or used by Developer except to the extent that such disclosure or use is reasonably necessary to the performance of the Work.

6.2 Developer’s Confidential Information.  All information relating to Developer that is known to be confidential or proprietary, or which is clearly marked as such, will be held in confidence by Client and will not be disclosed or used by Client except to the extent that such disclosure or use is reasonably necessary to the performance of Client’s duties and obligations under this Agreement.

6.3 Survival.  These obligations of confidentiality will extend for a period of ______ (__) years after the termination of this Agreement, but will not apply with respect to information that is independently developed by the Parties, lawfully becomes a part of the public domain, or of which the Parties gain knowledge or possession free of any confidentiality obligation.

7. INTELLECTUAL PROPERTY RIGHTS

7.1 Work Made for Hire.  Developer agrees that the development of the Software (but excluding Developer Tools) is “work made for hire” within the meaning of the Copyright Act of 1976, as amended from time to time, and that the Software shall be the sole property of Client.  “Developer Tools”  means the materials, information, trade secrets, generic programming codes and segments, algorithms, methodologies, processes, tools, data, documents, notes, programming techniques, reusable objects, routines, formulae and templates that: (a) are developed prior to the Software and utilized by Developer in connection with the Software; (b) are designed to perform generalized functions not specific to the particular requirements of Client or the Software; (c) do not contain any of Client’s Confidential Information or other information or items provided by Client; and (d) cannot reasonably be expected to provide Client an advantage over its competitors.    

7.2 Assignment.  To the extent any Work performed by Developer does not qualify as a “work made for hire” under applicable law, Developer hereby irrevocably and unconditionally assigns to Client, without further compensation, all of its right, title and interest in and to the Software and any and all related patents, copyrights, trademarks, and trade names in the United States and elsewhere.  This assignment is conditioned upon full payment of the compensation due to Developer under this Agreement.  To the extent any of Developer’s rights in the Software, including without limitation any moral rights, are not capable of assignment under applicable law, Developer hereby irrevocably and unconditionally waives all enforcement of such rights to the maximum extent permitted under applicable law.  Developer will assist Client in obtaining and enforcing patent, copyright and other forms of legal protection for the Software in any country.  Upon request, Developer will sign all applications, assignments, instruments and papers and perform all acts necessary or desired by Client to assign the Software fully and completely to Client and to enable Client, its successors, assigns and nominees, to secure and enjoy the full and exclusive benefits and advantages of the Software at no charge to Client; however, Client shall reimburse Developer for reasonable out-of-pocket expenses.

8. WARRANTIES AND DISCLAIMERS

8.1 Software.  The Software furnished under this Agreement is provided on an “as is” basis, without any warranties or representations express, implied or statutory, including without limitation, warranties of quality, merchantability or fitness for a particular purpose.  Nor are there any warranties created by a course of dealing, course of performance or trade usage.  Developer does not warrant that the software will meet client’s needs or be free from errors or that the operation of the software will be uninterrupted.  The foregoing exclusions and disclaimers are an essential part of the Agreement and formed the basis for determining the price charged for the Software.

8.2 Performance Standard.  Developer warrants the Work will be performed in a workmanlike manner, and in conformity with generally prevailing industry standards.  Client must report any material deficiencies in the Work to Developer in writing within ______(__) days after Client receives the Work.  Client’s exclusive remedy for the breach of this warranty will be the re-performance of the Work within a commercially reasonable time.  THIS WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER WARRANTIES AND ANY ORAL OR WRITTEN REPRESENTATIONS, PROPOSALS, OR STATEMENTS MADE ON OR PRIOR TO THE EFFECTIVE DATE OF THIS AGREEMENT.  

8.3 No Infringement.  Developer warrants the Software will not infringe on any copyright, patent, trade secret or other intellectual property interest of any third party.  Developer will indemnify and hold Client harmless from and against all such infringement claims, losses, suits and damages including, but not limited to attorney’s fees and costs. Following any bona-fide claim of infringement, Developer shall promptly correct the Software so as not to be infringing, or secure (at its own expense) the right of Client to use the Software without infringement.

8.4 No Third Party Warranties.  Developer makes no warranty of any kind, whether express or implied, with regard to any products, software, content, equipment, or hardware obtained from third parties.

8.5 No Other Warranties.    THE WARRANTIES SET FORTH IN THIS AGREEMENT ARE THE ONLY WARRANTIES GRANTED BY DEVELOPER AND DEVELOPER DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

9. LIMITATION OF LIABILITY 

NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES ARISING AS A RESULT OF OR RELATED TO PERFORMANCE OF THE WORK, REGARDLESS OF THE TYPE OF CLAIM AND EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, SUCH AS, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS.  TO THE EXTENT ALLOWED BY LAW, CLIENT WILL INDEMNIFY AND HOLD DEVELOPER HARMLESS AGAINST ANY CLAIMS INCURRED BY DEVELOPER ARISING OUT OF OR IN CONJUNCTION WITH CLIENT’S BREACH OF THIS AGREEMENT, AS WELL AS REASONABLE COSTS, EXPENSES, AND ATTORNEY’S FEES INCURRED THEREIN.

10. NON-SOLICITATION

During the period of this Agreement and for _________ (__) months thereafter, regardless of the reason or cause for that termination, neither Party will directly or indirectly engage in any conduct that will substantially diminish the value of the other Party’s business including, without limitation: (a) solicit or attempt to solicit any business from any of the other Party’s customers, clients, or prospects; or (b) offer employment to or hire any employee or subcontractor of the other Party.  

11. GENERAL CONDITIONS

11.1 Governing Law.  This Agreement is governed by the laws of the United States and the state of [STATE], without reference to rules governing choice of laws.  If any dispute arises concerning this Agreement, venue shall be laid exclusively in the state and federal courts of [COUNTY] County, [STATE] which shall have exclusive jurisdiction over such dispute and the Parties consent to the personal jurisdiction of such courts.  If legal action or other proceeding of any nature whatsoever is brought in connection with any dispute arising out of this Agreement, the prevailing Party shall be entitled to recover from the non-prevailing Party all attorneys’ fees and costs incurred by the prevailing Party in connection with such dispute. 

11.2 Excusable Delays.  Developer shall not be responsible for delays or failures in performance resulting from acts beyond the control of Developer, including, without limitation, acts of God, strikes, riots, acts of war, epidemics, fire, communication and power line failures, earthquakes, and hurricanes.

11.3 Assignment.  The rights, duties, and privileges of a Party to this Agreement shall not be transferred or assigned by it, in whole or in part, without the prior written consent of the other Party.  If Client sells its business to a third party, such consent by Developer will not be unreasonably withheld. 

11.4 Entire Agreement; Amendment.  This Agreement constitutes the entire agreement between the Parties concerning the subject matter hereof and supersedes all written or oral prior agreements or understandings with respect thereto.  This Agreement may not be amended except by a writing signed by an authorized representative of both Parties.

11.5 Severability.  In case of any one or more of the provisions of this Agreement should be held invalid, illegal or unenforceable, each such provision shall be modified, if possible, to the minimum extent necessary to make it valid and enforceable, or if it cannot be so modified, then severed, and the remaining provisions contained in this Agreement shall not in any way be affected or impaired.

11.6 No Waiver.  Neither Party’s failure to enforce strict performance of any provision of this Agreement will constitute a waiver of a right to subsequently enforce such a provision.  No modification, extension or waiver of this Agreement shall be valid unless made in writing and signed by an authorized representative of the Party to be charged.  No written waiver shall constitute, or be construed as, a waiver of any other obligation or condition of this Agreement.    

11.7 Notices. All notices, demands or other communications required or permitted to be given under this Agreement by either Party to the other may be effected either by personal delivery in writing or by U.S. mail, registered or certified, postage prepaid with return receipt requested. Mailed notices shall be addressed to the other Party at the address appearing in the introductory paragraph of this Agreement, but each Party may change such address by written notice in accordance with this paragraph. Notices delivered personally will be deemed communicated as of actual receipt. Mailed notices will be deemed communicated as of two (2) days after mailing.

11.8 Counterparts. The Parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the Party that signed it, and all of which together constitute one agreement.  The signatures of all Parties need not appear on the same counterpart.  The delivery of signed counterparts by facsimile, email or other electronic transmission that includes a copy of the sending Party’s signature is as effective as signing and delivering the counterpart in person.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives, as of the Effective Date.

Exhibit “A”

Specification

1. Description of Software 
2. Preliminary Requirements for Software

                 a. Technical Requirements

         b. Phases in Software Development

                 The software development work will consist of the following three phases:

                 Phase I - Preparation and approval of a software requirements specification document.

                 Phase II - Development and installation of the software

                 Phase III - Acceptance and delivery of the software

                 c. Test Protocols

                 d. Technical Acceptance Criteria

    3.          Acceptance Test Plan.

                a. [Reserved for a description of how the acceptance test will be carried out by Client]

                b. Acceptance test will include the following specific tests:

• Function test
• Robustness test
• Integration test
• Capacity and response time test
• Review of all documentation
• Installation test
• Test of operating procedures

                c. [Reserved for a description of the acceptance test criteria] 

                d. The acceptance test will be based on the following definition of errors: 

Time Schedule and Milestones

Exhibit “B”

Delivery and Payment Schedule

1. Charge for Software Development Work.  The fixed price for the design, development, and implementation of the Software is $ ______ USD.

2. Terms of Payment.  Client agrees to compensate Developer as follows:

3.  Delivery and Payment Schedule.  Client agrees to compensate Developer for its efforts in accordance with the following schedule: