o
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2016
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
|
o
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report ____________
|
Title of Each Class
|
Name of Each Exchange on Which Registered
|
|
Ordinary Shares, NIS 0.20 par value per share
|
NASDAQ Capital Market
|
|
|
|
3G
|
|
3G (also known as UMTS) is the third generation of wireless mobile telecommunications technology. This is based on a set of standards used for mobile devices and mobile telecommunications use services and networks that comply with the International Mobile Telecommunications -2000 (IMT-2000) specifications by the International Telecommunication Union.
|
4G
|
|
4G (also known as LTE) is the fourth generation of wireless mobile telecommunications technology, succeeding 3G. In March 2008, the International Telecommunications Union-Radio communications sector (ITU-R) specified a set of requirements for 4G standards, named the International Mobile Telecommunications Advanced (IMT-Advanced) specification. On December 6, 2010, ITU-R recognized that other technologies that go beyond-3G technologies that do not fulfill the IMT-Advanced requirements, could be considered "4G", provided they represent forerunners to IMT-Advanced compliant versions and "a substantial level of improvement in performance and capabilities with respect to the initial third generation systems now deployed."
|
CEM
|
|
Customer Experience Management
. A solution to support the strategy that focuses the operations and processes of a business around the needs of the individual customer.
|
CSP
|
|
Communication Service Provider. Includes all service providers offering telecommunication services or some combination of information and media services, content, entertainment and applications services over communication networks. CSPs include the following categories: Telecommunications carrier and cable service provider.
|
CDR
|
Call Detail Record is a data record containing metadata that describe a specific instance of a telecommunication transaction, but does not include the content of that transaction. A call detail record can include such data as the phone numbers of both the calling and receiving parties, the start time, and duration of that call.
|
GSM
|
|
Global System for Mobile Communications is a standard developed by the European Telecommunications Standards Institute (ETSI) to describe the protocols for second-generation (2G) digital cellular networks used by mobile phones, first deployed in Finland in July 1991.
|
HSPA
|
|
High-Speed Packet Access
. An amalgamation of two mobile protocols, High Speed Downlink Packet Access (HSDPA) and High Speed Uplink Packet Access (HSUPA), that extends and improves the performance of existing 3G mobile telecommunication networks using the WCDMA protocols. A further improved 3GPP standard, Evolved High Speed Packet Access (also known as HSPA+), was released late in 2008.
|
IMS
|
|
IP Multimedia Subsystem. An internationally recognized standard defining a generic architecture for offering Voice Over IP and multimedia services to multiple-access technologies.
|
IoT
|
Internet of Things. Internet of things is the internetworking of physical devices, vehicles (also referred to as "connected devices" and "smart devices"), buildings, and other items—embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data. IoT is expected to offer advanced connectivity of devices, systems, and services that goes beyond machine-to-machine (M2M) communications and covers a variety of protocols, domains, and applications
|
|
IP
|
Internet Protocol. The Internet Protocol is the method or protocol by which data is sent from one computer to another on the Internet.
|
|
KPI
|
Key Performance Indicators.
A set of quantifiable measures that a company uses to gauge its performance over time.
|
|
KQI
|
Key Quality Indicators are used to gauge the quality of service and can relate to both customer service and technological issues.
|
|
LTE
|
|
Long Term Evolution. LTE is a set of enhancements to the UMTS which was introduced in 3rd Generation Partnership Project (3GPP) Release 8. Much of 3GPP Release 8 focuses on adopting 4G mobile communications technology, including an all-IP flat networking architecture.
|
LTE-A
|
Long Term Evolution – Advanced. A mobile communication standard and a major enhancement of the LTE standard. LTE-A is a standard for high-speed wireless communication for mobile phones and data terminals, based on the GSM/EDGE and UMTS/HSPA technologies.
|
|
M2M
|
Machine-2-Machine.
Direct communication between devices using any communications channel, including wired and wireless. Typically, M2M refers to isolated instances of device-to-device communication, and IoT refers to a grander scale, synergizing software stacks to automate and manage communications between multiple devices.
|
|
NFV
|
|
Network Function Virtualization. NFV is a software-centric design approach for building complex information technology (IT) networks and applications, particularly for use by CSPs. NFV virtualizes entire classes of network functions into building blocks that may be connected, or chained together to create services in software-based, virtualized network environments. NFV offers a new way to design, deploy and manage networking services. NFV decouples network functions, such as network address translation (NAT), firewalling, intrusion detection, domain name service (DNS), caching, etc., from proprietary hardware appliances, so that these functions can run as virtualized software applications. It is designed to consolidate and deliver the networking components needed to support a fully virtualized infrastructure – including virtual servers, storage and even other networks. It utilizes standard IT virtualization technologies that run on high-volume service, switch and storage hardware to virtualize network functions. It is applicable to any data plane processing or control plane function in both wired and wireless network infrastructures.
|
MANO
|
NFV Management and Orchestration (MANO) is the ETSI-defined framework for the management and orchestration of all resources in the cloud network. This includes computing, networking, storage and virtual machine (VM) resources.
|
|
OSS
|
|
Operational Support System. A suite of programs that enables the enterprise to monitor, analyze and manage a network system. Used in general to mean a system that supports an organization's network operations.
|
OSSii
|
Operations Support Systems interoperability initiative. The initiative has Ericsson, Huawei and Nokia as initiating parties. A system enabling easier interoperability between OSS systems, reducing overall OSS integration costs and enabling shorter time-to-market.
|
|
Protocol
|
|
A specific set of rules, procedures or conventions governing the format, means and timing of transmissions between two devices.
|
QoE
|
Quality of Experience
. A measure of a customer's experiences with a service (web browsing, phone call, TV broadcast, call to a call center), focuses on the entire service experience, and is a more holistic evaluation than the more narrowly focused user experience (focused on a software interface) and customer-support experience (support focused).
|
|
Session
|
|
A lasting connection between a user (or a user agent) and a peer, typically a server, usually involving the exchange of many packets between the user's computer and the server. A session is typically implemented as a layer in a network protocol.
|
SDN
|
Software-Defined Networking. An approach to computer networking that allows network administrators to programmatically initialize, control, change, and manage network behavior dynamically via open interfaces and abstraction of lower-level functionality.
|
|
SIGTRAN
|
|
The name, derived from signaling transport, of a defunct Internet Engineering Task Force (IETF) working group that produced specifications for a family of protocols that provide reliable datagram service and user layer adaptations for Signaling System 7 (SS7) and ISDN communications protocols. The SIGTRAN protocols are an extension of the SS7 protocol family and are used today together with IMS.
|
TCP
|
|
Transmission Control Protocol. TCP provides a reliable stream delivery and virtual connection service to applications through the use of sequenced acknowledgment with retransmission of packets when necessary. It is one of the core protocols of the IP Suite. TCP is one of the two original components of the suite (the other being IP), so the entire suite is commonly referred to as TCP/IP. Whereas IP handles lower-level transmissions from computer to computer as a message makes its way across the Internet, TCP operates at a higher level, concerned only with the two end systems, for example a Web browser and a Web server.
|
Triple Play
|
|
A marketing term for the provisioning of the three services: high-speed Internet, television (Video on Demand or regular broadcasts) and telephone service over a single broadband connection.
|
UMTS
|
|
Universal Mobile Telecommunications Service. A third-generation digital high-speed wireless technology for packet-based transmission of text, digitized voice, video, and multimedia that is the successor to GSM.
|
VM-to-VM
|
Virtual Machine-to-Virtual Machine. communications. In a physical network the communications between functions are between a physical element. In a software-defined network, functions such as network elements are virtual machines. VM-to-VM communication is the line of communication between the different VMs.
|
|
VoIP
|
|
Voice over Internet Protocol (Voice over IP, VoIP and IP telephony) is a methodology and group of technologies for the delivery of voice communications and multimedia sessions over IP networks, such as the Internet.
|
VoLTE
|
Voice over Long Term Evolution. VoLTE is GSM's adoption of the "One Voice" initiative, which describes standard configurations for carrying (packet) voice over LTE. VoLTE eliminates the need for 2G/3G voice, the whole problem of multiple networks, certain extra components and costs of devices by carrying the voice over the LTE channel using adaptive multi rate (AMR) coding. Using IMS specifications developed by 3GPP as its basis, GSM has expanded upon the original scope of One Voice work to address the entire end-to-end voice and short message service (SMS) ecosystem by also focusing on roaming and interconnect interfaces, in addition to the interface between customer and network.
|
|
·
|
our plans to become the market leader for service assurance to leading CSPs and increase our sales;
|
|
·
|
our plans to focus our expansion efforts in tier 1 and other leading CSPs in the North American, European, and Asian markets and our success in doing so;
|
|
·
|
our ability to leverage our technology leadership and our cumulative experience to implement one of the largest and most comprehensive NFV deployments;
|
|
·
|
our expectations to maintain our technological advantage over our competitors;
|
·
|
Our failure to meet any guidance we may give to the public from time to time
|
|
|
·
|
delivering and implementing successfully our solutions to AT&T;
|
|
·
|
our ability to identify, market and sell our solutions to CSPs migrating to the NFV, LTE, VoLTE and 5G;
|
|
·
|
our expectation that the NFV market will continue gaining momentum during 2017;
|
|
·
|
mobile data services to become a significant revenue source for CSPs; and
|
|
·
|
increased spending by CSPs of next-generation services and increased usage of such services and increase of the potential need for service assurance solutions.
|
10 | |||
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 10 | ||
OFFER STATISTICS AND EXPECTED TIMETABLE | 10 | ||
KEY INFORMATION | 10 | ||
A.
|
SELECTED FINANCIAL DATA
|
10 | |
B.
|
CAPITALIZATION AND INDEBTEDNESS
|
12 | |
C.
|
REASONS FOR THE OFFER AND USE OF PROCEEDS
|
12 | |
D.
|
RISK FACTORS
|
12 | |
INFORMATION ON THE COMPANY | 28 | ||
A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
28 | |
B.
|
BUSINESS OVERVIEW
|
29 | |
C.
|
ORGANIZATIONAL STRUCTURE
|
41 | |
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
41 | |
UNRESOLVED STAFF COMMENTS | 42 | ||
OPERATING AND FINANCIAL REVIEW AND PROSPECTS | 42 | ||
A.
|
OPERATING RESULTS
|
45 | |
B.
|
LIQUIDITY AND CAPITAL RESOURCES
|
50 | |
C.
|
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
|
54 | |
D.
|
TREND INFORMATION
|
54 | |
E.
|
OFF–BALANCE SHEET ARRANGEMENTS
|
55 | |
F.
|
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
55 | |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 56 | ||
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
56 | |
B.
|
COMPENSATION
|
59 | |
C.
|
BOARD PRACTICES
|
61 | |
D.
|
EMPLOYEES
|
65 | |
E.
|
SHARE OWNERSHIP
|
66 | |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 67 | ||
A.
|
MAJOR SHAREHOLDERS
|
67 | |
B.
|
RELATED PARTY TRANSACTIONS
|
68 | |
C.
|
INTERESTS OF EXPERTS AND COUNSEL
|
70 | |
FINANCIAL INFORMATION | 70 | ||
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
70 | |
B.
|
SIGNIFICANT CHANGES
|
70 | |
THE OFFER AND LISTING | 70 | ||
A.
|
OFFER AND LISTING DETAILS
|
70 | |
B.
|
PLAN OF DISTRIBUTION
|
71 | |
C.
|
MARKETS
|
71 | |
D.
|
SELLING SHAREHOLDERS
|
72 | |
E.
|
DILUTION
|
72 | |
F.
|
EXPENSES OF THE ISSUE
|
72 | |
ADDITIONAL INFORMATION | 72 | ||
A.
|
SHARE CAPITAL
|
72 | |
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
72 | |
C.
|
MATERIAL CONTRACTS
|
79 | |
D | EXCHANGE CONTROLS | 79 | |
E.
|
TAXATION
|
79 | |
F.
|
DIVIDENDS AND PAYING AGENTS
|
85 | |
G.
|
STATEMENT BY EXPERTS
|
86 | |
H. |
DOCUMENTS ON DISPLAY
|
86 | |
I.
|
SUBSIDIARY INFORMATION
|
86 | |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 86 | ||
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 87 |
A.
|
SELECTED FINANCIAL DATA
|
Statement of Operations Data:
|
Year Ended December 31,
(in thousands of U.S. dollars except share and per share data)
|
|||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||||||||
Revenues:
|
||||||||||||||||||||
Products and related services
|
$
|
8,642
|
$
|
15,500
|
$
|
18,342
|
$
|
17,917
|
$
|
12,480
|
||||||||||
Projects
|
17,534
|
622
|
2,205
|
|||||||||||||||||
Warranty and Support
|
3,334
|
2,551
|
3,089
|
2,565
|
3,306
|
|||||||||||||||
29,510
|
18,673
|
23,636
|
20,482
|
15,786
|
||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||
Products and related services
|
5,603
|
3,924
|
7,863
|
7,540
|
5,765
|
|||||||||||||||
Projects
|
2,902
|
117
|
487
|
-
|
-
|
|||||||||||||||
Warranty and Support
|
477
|
285
|
343
|
350
|
417
|
|||||||||||||||
8,982
|
4,326
|
8,693
|
7,890
|
6,182
|
||||||||||||||||
Gross profit
|
20,528
|
14,347
|
14,943
|
12,592
|
9,604
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Research and development
|
8,047
|
6,071
|
5,812
|
5,615
|
6,102
|
|||||||||||||||
Less - royalty-bearing participation
|
1,693
|
1,582
|
1,664
|
1,537
|
1,567
|
|||||||||||||||
Research and development, net
|
6,354
|
4,489
|
4,148
|
4,078
|
4,535
|
|||||||||||||||
Sales and marketing, net
|
8,528
|
7,834
|
7,295
|
7,592
|
8,515
|
|||||||||||||||
General and administrative
|
4,523
|
2,393
|
2,262
|
2,051
|
2,107
|
|||||||||||||||
Total operating expenses
|
19,405
|
14,716
|
13,705
|
13,721
|
15,157
|
|||||||||||||||
Operating income (loss)
|
1,123
|
(369
|
)
|
1,238
|
(1,129
|
)
|
(5,553
|
)
|
||||||||||||
Financial income (expenses), net
|
816
|
(433
|
)
|
(332
|
)
|
(291
|
)
|
(314
|
)
|
|||||||||||
Income (loss) before taxes on income
|
1,939
|
(802
|
)
|
906
|
(1,420
|
)
|
(5,867
|
)
|
||||||||||||
Taxes on income
|
(24
|
)
|
(121
|
)
|
(180
|
)
|
---
|
(120
|
)
|
|||||||||||
Net income (loss)
|
1,915
|
(923
|
)
|
726
|
(1,420
|
)
|
(5,987
|
)
|
||||||||||||
Basic net income (loss) per ordinary share
|
$
|
0.18
|
$
|
(0.11
|
)
|
$
|
0.09
|
$
|
(0.19
|
)
|
$
|
(0.93
|
)
|
|||||||
Weighted average number of ordinary shares used to compute basic net income (loss) per ordinary share
|
10,406,897
|
8,572,681
|
8,088,974
|
7,340,056
|
6,442,068
|
|||||||||||||||
Diluted net income (loss) per ordinary share
|
$
|
0.18
|
$
|
(0.11
|
)
|
$
|
0.08
|
$
|
(0.19
|
)
|
$
|
(0.93
|
)
|
|||||||
Weighted average number of ordinary shares used to compute diluted net income (loss) per ordinary share
|
10,779,547
|
8,572,681
|
8,592,387
|
7,340,056
|
6,442,068
|
|||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Working capital
|
$
|
38,854
|
$
|
9,643
|
$
|
10,062
|
$
|
7,762
|
$
|
5,194
|
||||||||||
Total assets
|
$
|
54,568
|
$
|
20,135
|
$
|
20,318
|
$
|
19,645
|
$
|
19,867
|
||||||||||
Shareholders' equity
|
$
|
40,143
|
$
|
9,863
|
$
|
10,262
|
$
|
7,499
|
$
|
4,997
|
||||||||||
Share capital
|
$
|
523
|
$
|
372
|
$
|
361
|
$
|
335
|
$
|
251
|
Month
|
High (NIS)
|
Low (NIS)
|
||||||
March (through March 24, 2017)
|
3.693
|
3.614
|
||||||
February 2017
|
3.768
|
3.659
|
||||||
January 2017
|
3.860
|
3.769
|
||||||
December 2016
|
3.867
|
3.787
|
||||||
November 2016
|
3.876
|
3.799
|
||||||
October 2016
|
3.856
|
3.778
|
||||||
September 2016
|
3.786
|
3.746
|
Year
|
Average (NIS)
|
|||
2017 (through March 24, 2017)
|
3.740
|
|||
2016
|
3.841
|
|||
2015
|
3.884
|
|||
2014
|
3.577
|
|||
2013
|
3.609
|
|||
2012
|
3.858
|
B.
|
CAPITALIZATION AND INDEBTEDNESS
|
C.
|
REASONS FOR THE OFFER AND USE OF PROCEEDS
|
D.
|
RISK FACTORS
|
|
·
|
the variation in size and timing of individual purchases by our customers;
|
|
·
|
seasonal factors that may affect capital spending by customers, such as the varying fiscal year-ends of customers;
|
|
·
|
the relatively long sales cycles for our products;
|
|
·
|
the request for longer payment terms from us or long-term financing of customers' purchases from us, as well as additional conditions tied to such payment terms;
|
|
·
|
competitive conditions in our markets;
|
|
·
|
the timing of the introduction and market acceptance of new products or product enhancements by us and by our customers, competitors and suppliers;
|
|
·
|
changes in the level of operating expenses relative to revenues;
|
|
·
|
product quality problems;
|
|
·
|
supply interruptions;
|
|
·
|
changes in global or regional economic conditions or in the telecommunications industry;
|
|
·
|
delays in or cancellation of projects by customers;
|
|
·
|
changes in the mix of products sold;
|
|
·
|
the size and timing of approval of grants from the Government of Israel; and
|
|
·
|
foreign currency exchange rates.
|
|
·
|
increased price competition;
|
|
·
|
local sales taxes which may be incurred for direct sales;
|
|
·
|
increased industry consolidation among our customers, which may lead to decreased demand for and downward pricing pressure on our products;
|
|
·
|
changes in customer, geographic or product mix;
|
|
·
|
our ability to reduce and control production costs;
|
|
·
|
increases in material or labor costs;
|
|
·
|
excess inventory and inventory holding costs;
|
|
·
|
obsolescence charges;
|
|
·
|
reductions in cost savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand;
|
|
·
|
changes in distribution channels;
|
|
·
|
losses on customer contracts; and
|
|
·
|
increases in warranty costs.
|
|
·
|
the time involved for our customers to determine and announce their specifications;
|
|
·
|
the time required for our customers to process approvals for purchasing decisions;
|
|
·
|
the complexity of the products involved;
|
|
·
|
the technological priorities and budgets of our customers; and
|
|
·
|
the need for our customers to obtain or comply with any required regulatory approvals.
|
|
·
|
delays in delivery could interrupt and delay delivery and result in cancellations of orders for our products;
|
|
·
|
suppliers could increase component prices significantly and with immediate effect;
|
|
·
|
we may not be able to locate alternative sources for product components; and
|
|
·
|
suppliers could discontinue the supply of components used in our products. This may require us to modify our products, which may cause delays in product shipments and/or delivery, increased production costs and increased product prices.
|
|
·
|
substantial cash expenditures;
|
|
·
|
potentially dilutive issuances of equity securities;
|
|
·
|
the incurrence of debt and contingent liabilities;
|
|
·
|
a decrease in our profit margins; and
|
|
·
|
amortization of intangibles and potential impairment of goodwill.
|
·
·
|
legal and cultural differences in the conduct of business;
challenges in staffing and managing foreign operations due to the limited number of qualified candidates, employment laws and business practices in foreign countries, any of which could increase the cost and reduce the efficiency of operating in foreign countries;
|
·
|
our inability to comply with import/export, environmental and other trade compliance and other regulations of the countries in which we do business including additional labor laws, particularly in Brazil and India, together with unexpected changes in such regulations;
|
·
|
insufficient measures to ensure that we design, implement, and maintain adequate controls over our financial processes and reporting in the future;
|
·
|
our failure to adhere to laws, regulations, and contractual obligations relating to customer contracts in various countries;
|
·
|
our inability to maintain a competitive list of distributors and resellers for indirect sales;
|
·
|
tariffs and other trade barriers;
|
·
|
economic and political instability in foreign markets;
|
·
|
wars, acts of terrorism and political unrest;
|
·
|
language and cultural barriers;
|
·
|
lack of integration of foreign operations;
|
·
|
currency fluctuations;
|
·
|
variations in effective income tax rates among countries where we conduct business;
|
·
|
potential foreign and domestic tax consequences and withholding taxes that limit the repatriation of earnings;
|
·
|
technology standards that differ from those on which our products are based, which could require expensive redesign and retention of personnel familiar with those standards;
|
·
|
laws and business practices favoring local competitors; |
·
|
longer accounts receivable payment cycles and possible difficulties in collecting payments, which may increase our operating costs and hurt our financial performance; and
|
·
|
failure to meet certification requirements.
|
|
·
|
our results of operations;
|
|
·
|
market conditions or trends in our industry and the global economy as a whole;
|
|
·
|
political, economic and other developments in the State of Israel and worldwide;
|
|
·
|
actual or anticipated variations in our quarterly operating results;
|
|
·
|
announcements by us or our competitors of technological innovations or new and enhanced products;
|
|
·
|
announcements by us or our competitors of significant contracts or capital commitments;
|
|
·
|
actual or anticipated variations in our competitors quarterly operating results, and changes in the market valuations of our competitors;
|
|
·
|
introductions of new products or new pricing policies by us or our competitors;
|
|
·
|
trends in the communications or software industries, including industry consolidation;
|
|
·
|
regulatory changes that impact our pricing of products and services and competition in our markets;
|
|
·
|
acquisitions or strategic alliances by us or others in our industry;
|
|
·
|
changes in estimates of our performance or recommendations by financial analysts;
|
|
·
|
operating results that vary from the expectations of financial analysts and investors;
|
|
·
|
changes in our shareholder base;
|
|
·
|
changes in status of our intellectual property rights;
|
|
·
|
future sales of our ordinary shares;
|
|
·
|
fluctuations in the trading volume of our ordinary shares; and
|
|
·
|
addition or departure of key personnel.
|
A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
B.
|
BUSINESS OVERVIEW
|
· |
advanced software-based architecture;
|
· |
ease of deployment and management;
|
· |
improved customer retention;
|
· |
reduced subscriber churn rates;
|
· |
improved service availability and quality;
|
· |
unique ability to correlate session information and provide an end to end view;
|
· |
greater ability to install the solution as a virtual network function for seamless integration into all NFV infrastructures;
|
· |
scalability for next-generation services;
|
· |
enhanced ability to collect all network packets for a complete and comprehensive view of the network and the customer experience;
|
· |
increased operational efficiency and lower costs;
|
· |
the inclusion of support for multiple protocols for end-to-end network coverage;
|
· |
the existence of both network-wide views and drilldown to an individual subscriber level;
|
· |
the support for terabyte networks;
|
· |
accelerated deployment of new services and migration to NFV;
|
· |
substantially quicker and smoother deployment of our solution;
|
· |
real-time capabilities; and
|
· |
end to end view of the customer experience.
|
·
|
Targeting CSPs who are evaluating and/or migrating to NFV
.
The majority of the industry’s largest
CSPs are either evaluating NFV or have started deploying virtualized solutions for their network functionality. We believe we are better positioned than competitors who offer service assurance and CEM solutions that do not support (or have not yet been deployed) in large-scale NFV environments. In order to transition to NFV, CSPs generally need to replace or upgrade their service assurance solution with a software that can support both existing networks as well as NFV-based architectures. Our solution, which monitors both existing networks and NFV, ensures a smooth migration and enables CSPs to future-proof their investment in a service assurance solution. Our selection in December 2015 by AT&T has been noted by many CSPs, as this CSP is well regarded in leading the industry. As a result, as other CSPs look for vendors to support their existing networks and NFV, we believe we are well positioned to leverage our vast experience in true software-based and fully virtualized service assurance in order to successfully expand our deployment base to other CSPs.
|
·
|
Investing in North America, Western Europe and developed markets
. With our advanced deployment and our growing reputation as a technology leader in the industry, we are expanding our presence in North America and Western
Europe and engaging with selected CSPs in developed markets, a segment of the overall geographical market where we expect to see a large share of investments taking place around NFV. Accordingly, we are focusing our sales and marketing activities on these regions. We are specifically engaging tier 1-2 CSPs in those territories for potential opportunities and cross-country implementation of our solutions.
|
·
|
Targeting service providers migrating to LTE, VoLTE and 5G. We have begun to benefit from the deployments by leading service providers of VoLTE and LTE networks. We are seeing increased deployments of multiple technology (3G, LTE, IMS and Next Generation Network) networks, which involve greater complexity and require more sophisticated service assurance and CEM solutions than legacy networks. We believe that our ability to secure customers with deployments of our solution in multiple types of networks positions us to benefit from this trend. |
·
|
We view ourselves as market leaders introducing to the market optimized costing models. As a true software-based company we offer our existing and potential customers an appealing commercial model that combines both predictable spending on capital and operating expenditures with lower spending on service assurance and CEM solutions, in comparison to the appliance-based legacy solutions our competition continues to offer. With our optimized commercial model, we offer our customers several alternatives that enable them to grow their business and traffic on the network without impacting their spending with the Company. |
·
|
As NFV market leaders, we participate in key industry programs such as Intel Network Builders, Amdocs Network Cloud Service, OpenNFV Partner Program. Open Source MANO (OSM) and ECOMP (Enhanced Control, Orchestration, Management & Policy). The ECOMP platform was created by AT&T, committed to open source in February 2017 and is now part of ONAP (Open Network Automation Platform) which is the merger of Open Source ECOMP and Open-O, two of the leading open source MANO initiatives. |
·
|
Drive business expansion and long term relationship with our install base.
Our solutions are typically purchased initially for a specific purpose within a CSP. As other parts of a CSP’s organization seek to use our solution for other purposes, we benefit from additional sales. Furthermore, as CSPs upgrade and expand their networks, such as adding capacity or launching new services, our customers tend to purchase additional solutions from us assuring end-to-end monitoring of their subscribers' behavior.
|
·
|
Focus our analytics capabilities to enhance the business value of our solution.
We aim to position our MaveriQ analytics as extending our business intelligence suite beyond standard reporting and dashboards to include advanced capabilities ranging from ad hoc querying, self-business intelligence (BI), multi-dimensional analyses, data mining, forecasting and optimization. We aim to have our MaveriQ analytics being used for improving core operations, customer experience management and marketing for discerning trends and creating forecasts, allowing the CSP to gain insights in real-time.
|
|
·
|
deployment of next-generation networks such as LTE, high-speed downlink packet access and Triple Play
;
|
|
·
|
integration of new architectures such as HSPA, LTE, VoLTE and IMS;
|
|
·
|
migration of the network core to IP technology using IMS or SIGTRAN
;
|
|
·
|
successful delivery of advanced, complex services such as VoIP IMS and video conferencing; and
|
|
·
|
pro-active management of call quality on existing and next-generation service providers' production networks, along with maintenance of high-availability, high-quality voice services over packet telephony.
|
|
·
|
Troubleshooting
– the
MaveriQ solution
enables CSPs to "drill down" to identify the source of specific problems, using tools ranging from call or session tracing to a full decoding of the call flow.
|
|
·
|
Performance monitoring
– CSPs use the
MaveriQ solution
to analyze the behavior of network components and customer network usage to understand trends and performance level and optimization, with the goal of identifying faults before they compromise the end-user experience
|
|
·
|
Fault detection
– CSPs use the
MaveriQ
solution’s automatic fault detection and service KPIs to alert them to network problems as they arise.
|
|
·
|
Pre-Mediation
– the
MaveriQ solution
generates CDRs (call detail records) needed to feed third-party OSSs or other solutions.
|
· |
Qinsight delivers rich, interactive dashboards and visualizations, with options to drill, sort, filter, and group the data on the fly with smart drag-and-drop capabilities. This lets the CSP filter through huge amounts of network and subscriber data to focus on specific areas for deep marketing insights. Qinsight also provides advanced data analytics: trending, forecasting, priority ranking, period over period, states and formulas as well as self-BI that provides the CSP a user-initiated, easy ad hoc dashboard creation and customization tool.
|
· |
Marketing Analytics allows the CSP to understand usage patterns and data to build a plan and leverage the insight and data we provide from the network to build and update service profile, that better fits the needs of the customer, and to stay ahead of competitors. Marketing Analytics aggregates and correlates data from network, device, app and browsing usage, framing a comprehensive 360° view of the customer. This allows CSPs to deliver a truly personalized service, with adjusted subscriber plans, optimized device troubleshooting, enhanced upsell options, and more effectively marketed campaigns.
|
· |
Customer Care Application, or QiCare, helps CSPs to reduce churn by monitoring and maintaining a high level of satisfaction for the individual subscriber, groups of subscribers, and the entire subscriber base. QiCare enables CSPs to view subscriber reports for individual subscribers and helps them to understand the subscriber's behavior and the quality of the different services being used online.
|
· |
QVIP reports SLA for defined subscriber groups. In today's saturated telecom market, subscribers often abandon their CSP due to frustration over quality of service, with customer churn contributing to significant loss of revenue. RADCOM's QVIP application helps CSPs to monitor and maintain a high level of satisfaction for the individual subscriber, a group of subscribers and an entire network.
|
· |
QRoam yields detailed roaming analysis, enabling service providers to continually verify the quality of service subscribers are receiving as they roam. Network issues are more rapidly resolved, and voice and data services are maintained at a high standard for all the CSP’s roaming subscribers as well as incoming roaming customers, increasing revenue rewards.
|
· |
QMyHandset enables identification of problematic handsets, and provides analysis of the cause of the problem. By identifying problematic handsets, CSPs can quickly make the required adjustments to their network to provide support for more handset models, thus improving the customer experience and hopefully preventing customer churn
.
|
· |
QCell analyzes performance quality, and QoE, by geographical cell and cell sector. QCell identifies underutilized or congested cells by location and time frame, letting you know where to realign or redistribute cell traffic. QCell also shows location-based service utilization for marketing statistics purposes.
|
Year ended December 31, | ||||||||||||
2016
|
2015
|
2014
|
||||||||||
(In thousands of U.S. dollars) | ||||||||||||
The MaveriQ (including OmniQ)
|
$
|
28,841
|
$
|
18,498
|
$
|
23,023
|
||||||
Others
|
$
|
669
|
$
|
175
|
$
|
613
|
||||||
Total
|
$
|
29,510
|
$
|
18,673
|
$
|
23,636
|
Year ended December 31,
(in millions of U.S. dollars)
|
Year ended December 31,
(in percentages)
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2016
|
2015
|
2014
|
|||||||||||||||||||
North America
|
19.2
|
1.0
|
1.9
|
65.1
|
5.4
|
8.1
|
||||||||||||||||||
Europe
|
0.9
|
1.2
|
3.2
|
3.1
|
6.4
|
13.5
|
||||||||||||||||||
Asia (Excluding Philippines)
|
0.3
|
0.6
|
0.8
|
1.0
|
3.1
|
3.6
|
||||||||||||||||||
Philippines
|
5.0
|
8.1
|
3.5
|
16.9
|
43.2
|
15.0
|
||||||||||||||||||
South America (Excluding Brazil)
|
0.8
|
2.4
|
4.2
|
2.7
|
13.2
|
17.9
|
||||||||||||||||||
Brazil
|
2.5
|
3.5
|
6.5
|
8.5
|
18.7
|
27.3
|
||||||||||||||||||
Others
|
0.8
|
1.9
|
3.5
|
2.7
|
10.0
|
14.6
|
||||||||||||||||||
Total revenues
|
29.5
|
18.7
|
23.6
|
100
|
%
|
100
|
%
|
100
|
%
|
· |
our leadership in providing full service assurance solutions for NFV networks;
|
· |
the advanced technology (such as real-time processing, big data support and high capacity performance that underlies our solutions);
|
· |
the multi-technology correlation capabilities that supports all major technologies – 3G, 4G, LTE, IMS, VoLTE and VoIP - within the same solution;
|
· |
our solution being full software-based providing cost-efficiency, rapid deployment times and agility in development;
|
· |
Support for both physical and NFV networks to allow CSPs who have yet to transform to the NFV, to accelerate NFV deployments and smoothly transition from physical infrastructure whilst using the same solutions; and
|
· |
proven flexibility and responsiveness in a dynamic customer and technology environment.
|
|
·
|
Enhancement of support:
We are dedicated to the provision of timely, effective and professional support for all our customers. On-call support is provided by our direct sales/support force as well as by our representatives, distributors, and Original Equipment Manufacturer, or OEM, partners. In addition, we routinely contact our customers to solicit feedback and promote full usage of our solutions. We may provide our customers with a free warranty period which includes bug-fixing and a hardware warranty on our products. After the initial warranty period, we offer extended warranties which can be purchased for multi-year periods. Generally, the cost of the extended warranty is an annual maintenance fee based on a percentage of the overall cost of the product.
|
|
·
|
Customer-oriented product development:
With the goal of continuously enhancing our customer relationships, we meet regularly with customers, and use the feedback from these discussions to improve our products and guide our R&D roadmap.
|
|
·
|
Regional technical support:
As the sale of a system and solutions requires a high level of technical skill, we decided to enhance our support with local experts located in our regional offices. This strategy is advantageous in terms of the time zone, culture and language. For example, in our Brazil and India offices we established local support teams responsible for first level engagements with customers (tier 1).
|
|
·
|
Support of our representatives and distributors:
We provide a high level of pre- and post-sale technical support to our distributors and representatives in the field. We use a broad range of channels to deliver this support, including help desks, technical training and others.
|
C.
|
ORGANIZATIONAL STRUCTURE
|
Name of Subsidiary
|
Jurisdiction of Incorporation
|
RADCOM US
|
New Jersey
|
RADCOM Investments
|
Israel
|
RADCOM Brazil
|
Brazil
|
RADCOM India
|
India
|
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
|
·
|
We focused on leveraging our AT&T NFV implementation and our value proposition to leading tier 1 and other carriers in North America, Western Europe and selected carriers from other developed markets;
|
|
·
|
In parallel, in developing markets, including South America, Eastern Europe and Asia, we targeted customers rolling out LTE, IMS, 3G and VoIP services; this included expanding our business with our key existing customers and other carries in those territories;
|
||
|
·
|
We pursued strategic partnerships, including OEM partnerships, and teaming agreements; and
|
|
·
|
We took part and continue to take part in leading technology programs for NFV, including Open Source Mano (OSM) and AT&T’s Enhanced Control, Orchestration, Management, and Policy (ECOMP) platform (now ONAP - Open Network Automation Platform due to consolidation with Open-O initiative).
|
||
|
A.
|
OPERATING RESULTS
|
Year ended December 31, | ||||||||
|
2016
|
2015
|
||||||
Revenues
|
100
|
%
|
100
|
%
|
||||
Cost of revenues
|
30.4
|
23.2
|
||||||
Gross profit
|
69.6
|
76.8
|
||||||
Operating expenses:
|
||||||||
Research and development
|
27.3
|
32.5
|
||||||
Less royalty-bearing participation
|
5.7
|
8.5
|
||||||
Research and development, net
|
21.6
|
24.0
|
||||||
Sales and marketing ,net
|
28.9
|
42.0
|
||||||
General and administrative
|
15.3
|
12.8
|
||||||
Total operating expenses
|
65.8
|
78.8
|
||||||
Operating income (loss)
|
3.8
|
(2.0
|
)
|
|||||
Financial income (expenses), net
|
2.8
|
(2.3
|
)
|
|||||
Income (loss) before taxes on income
|
6.6
|
(4.3
|
)
|
|||||
Taxes on income
|
(0.1
|
)
|
(0.7
|
)
|
||||
Net income (loss)
|
6.5
|
(5.0
|
)
|
Revenues by product line | ||||||||||||||||||||
Year ended December 31,
(In millions of U.S. dollars)
|
% Change | |||||||||||||||||||
2016
|
2015
|
2014
|
2016 vs. 2015
|
2015 vs. 2014
|
||||||||||||||||
The MaveriQ (including the Omni-Q family)
|
28.8
|
18.5
|
23.0
|
56
|
(20
|
)
|
||||||||||||||
Others
|
0.7
|
0.2
|
0.6
|
250
|
(67
|
)
|
||||||||||||||
Total revenues
|
29.5
|
18.7
|
23.6
|
58
|
(21
|
)
|
Year Ended December 31,
(in millions of U.S. dollars)
|
Year Ended December 31,
(as percentages)
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2016
|
2015
|
2014
|
|||||||||||||||||||
North America
|
19.2
|
1.0
|
1.9
|
65.1
|
5.4
|
8.1
|
||||||||||||||||||
Europe
|
0.9
|
1.2
|
3.2
|
3.1
|
6.4
|
13.5
|
||||||||||||||||||
Asia (Excluding Philippines)
|
0.3
|
0.6
|
0.8
|
1.0
|
3.1
|
3.6
|
||||||||||||||||||
Philippines
|
5.0
|
8.1
|
3.5
|
16.9
|
43.2
|
15.0
|
||||||||||||||||||
South America (Excluding Brazil)
|
0.8
|
2.4
|
4.2
|
2.7
|
13.2
|
17.9
|
||||||||||||||||||
Brazil
|
2.5
|
3.5
|
6.5
|
8.5
|
18.7
|
27.3
|
||||||||||||||||||
Other
|
0.8
|
1.9
|
3.5
|
2.7
|
10.0
|
14.6
|
||||||||||||||||||
Total revenues
|
29.5
|
18.7
|
23.6
|
100
|
%
|
100
|
%
|
100
|
%
|
Cost of Revenues and Gross Profit
|
||||||||||||
Year Ended December 31,
(in millions of U.S. dollars)
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Cost of revenues – Products and related services
|
5.6
|
3.9
|
7.9
|
|||||||||
Cost of revenues - Projects
|
2.9
|
0.1
|
0.5
|
|||||||||
Cost of revenues – Warranty and support
|
0.5
|
0.3
|
0.3
|
|||||||||
Total Cost of revenues
|
9.0
|
4.3
|
8.7
|
|||||||||
Gross profit
|
20.5
|
14.3
|
14.9
|
Year ended December 31,
(in millions of U.S. dollars)
|
% Change
2016 vs 2015
|
% Change
2015 vs. 2014
|
||||||||||||||||||
2016
|
2015
|
2014
|
||||||||||||||||||
Research and development
|
8.0
|
6.1
|
5.8
|
31.1
|
5.2
|
|||||||||||||||
Less royalty-bearing participation
|
1.7
|
1.6
|
1.7
|
6.3
|
(5.9
|
)
|
||||||||||||||
Research and development, net
|
6.4
|
4.5
|
4.1
|
42.2
|
9.8
|
|||||||||||||||
Sales and marketing, net
|
8.5
|
7.8
|
7.3
|
9.0
|
6.8
|
|||||||||||||||
General and administrative
|
4.5
|
2.4
|
2.3
|
87.5
|
4.3
|
|||||||||||||||
Total operating expenses
|
19.4
|
14.7
|
13.7
|
32.0
|
7.3
|
Year ended December 31, | ||||||||
|
2015
|
2014
|
||||||
Revenues
|
100
|
%
|
100
|
%
|
||||
Cost of Revenues
|
23.2
|
36.8
|
||||||
Gross profit
|
76.8
|
63.2
|
||||||
Operating expenses:
|
||||||||
Research and development
|
32.5
|
24.6
|
||||||
Less royalty-bearing participation
|
8.5
|
7.1
|
||||||
Research and development, net
|
24.0
|
17.5
|
||||||
Sales and marketing ,net
|
42.0
|
30.9
|
||||||
General and administrative
|
12.8
|
9.6
|
||||||
Total operating expenses
|
78.8
|
58.0
|
||||||
Operating income (loss)
|
(2.0
|
)
|
5.2
|
|||||
Financial income (expenses), net
|
(2.3
|
)
|
(1.4
|
)
|
||||
Income (loss) before taxes on income
|
(4.3
|
)
|
3.8
|
|||||
Taxes on income
|
(0.7
|
)
|
(0.8
|
)
|
||||
Net income (loss)
|
(5.0
|
)
|
3.0
|
Year Ended December 31,
(in millions of U.S. dollars)
|
Year Ended December 31,
(as percentages)
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Europe
|
1.2
|
3.2
|
6.4
|
13.5
|
||||||||||||
North America
|
1.0
|
1.9
|
5.4
|
8.1
|
||||||||||||
Asia (Excluding Philippines)
|
0.6
|
0.8
|
3.1
|
3.6
|
||||||||||||
Philippines
|
8.1
|
3.5
|
43.2
|
15.0
|
||||||||||||
South America (Excluding Brazil)
|
2.4
|
4.2
|
13.2
|
17.9
|
||||||||||||
Brazil
|
3.5
|
6.5
|
18.7
|
27.3
|
||||||||||||
Other
|
1.9
|
3.5
|
10.0
|
14.6
|
||||||||||||
Total revenues
|
18.7
|
23.6
|
100
|
%
|
100
|
%
|
B.
|
LIQUIDITY AND CAPITAL RESOURCES
|
C.
|
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
|
D.
|
TREND INFORMATION
|
E.
|
OFF–BALANCE SHEET ARRANGEMENTS
|
F.
|
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
|
Payments due by period
|
|||||||||||||||||||
Contractual Obligations
|
Total
|
Less than
1 year
|
1-3
years
|
4-5
Years
|
More than
5 years
|
|||||||||||||||
|
(in thousands of U.S. dollars)
|
|||||||||||||||||||
Operating leases obligation (1)
|
$
|
2,992
|
$
|
847
|
1,430
|
715
|
--
|
|||||||||||||
Open purchase orders (2)
|
123
|
123
|
--
|
--
|
--
|
|||||||||||||||
Other long-term commitments (3)
|
479
|
--
|
--
|
--
|
--
|
|||||||||||||||
Total
|
$
|
3,594
|
$
|
970
|
1,430
|
715
|
--
|
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
Name
|
|
Age
|
|
Position
|
Rachel (
Heli) Bennun
|
|
63
|
|
Executive Chairman of our Board of Directors
|
Uri Har (1)(2)(3)(4)(5)
|
|
80
|
|
Director
|
Irit Hillel (1)(2)(4)(5)
|
|
54
|
|
Director
|
Matty Karp (2)(4)(5)
|
|
67
|
|
Director
|
Zohar Zisapel
|
|
68
|
|
Director
|
Yaron Ravkaie
|
48
|
Chief Executive Officer
|
||
Eyal Harari
|
|
40
|
|
Chief Executive Officer of RADCOM US*
|
Ran Vered
|
38
|
Chief Financial Officer**
|
||
Hilik Itman
|
|
44
|
|
Vice President, Research and Development
|
Harel Givon
|
44
|
Chief Business Officer***
|
||
Rami Amit
|
51
|
Chief Technology Officer and Head of Product****
|
||
Keren Rubanenko
|
40
|
Vice President Professional Services ****
|
B.
|
COMPENSATION
|
Name and
Principal
Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Equity-Based
Compensation ($)* |
All Other
Compensation ($)** |
Total ($)
|
||||||||||||||||
Yaron Ravkaie
CEO
|
2016
|
265,966
|
242,945
|
592,153
|
55,000
|
1,156,064
|
||||||||||||||||
Eyal Harari
CEO of RADCOM US***
|
2016
|
255,593
|
113,544
|
303,096
|
92,831
|
765,064
|
||||||||||||||||
Heli Bennun
Executive Chairman of the Board of Directors
|
2016
|
78,296
|
80,000
|
400,854
|
21,895
|
581,045
|
||||||||||||||||
Ronen Hovav,
Director of Sales
|
2016
|
173,641
|
84,000
|
17,338
|
49,000
|
323,979
|
||||||||||||||||
Hilik Itman
VP R&D
|
2016
|
150,519
|
32,723
|
76,039
|
41,000
|
300,281
|
C.
|
BOARD PRACTICES
|
· |
a majority of the shares of non-controlling shareholders and shareholders who do not have a personal interest in the election of the candidate (other than a personal interest that is unrelated to a relationship with the controlling shareholders) voted at the meeting, voted in favor of the external director's election; or
|
· |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the election of the candidate (other than a personal interest that is unrelated to a relationship with the controlling shareholders) that voted against the election of the external director, does not exceed two percent of the aggregate number of voting rights in the company.
|
NASDAQ Requirements
|
Israeli Companies Law Requirements
|
|
·
|
the knowledge, skills, expertise and accomplishments of the relevant office holder;
|
|
·
|
the office holder’s roles and responsibilities and prior compensation agreements with him or her;
|
|
·
|
the relationship between the terms offered and the average compensation of the other employees of the company, including those employed through human resource companies;
|
|
·
|
the impact of disparities in salary upon work relationships in the company;
|
|
·
|
the possibility of reducing variable compensation at the discretion of the Board of Directors or the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and
|
|
·
|
as to severance compensation, the period of service of the office holder, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contributions towards the company’s achievement of its goals and the maximization of its profits and the circumstances under which the person is leaving the company.
|
|
·
|
the link between variable compensation and long-term performance and measurable criteria
;
|
|
·
|
the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation;
|
|
·
|
the conditions under which a director or executive would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company’s financial statements;
|
|
·
|
the minimum holding or vesting period for variable, equity-based compensation; and
|
|
·
|
maximum limits for severance compensation.
|
D.
|
EMPLOYEES
|
E.
|
SHARE OWNERSHIP
|
Name
|
Number of Ordinary
Shares Beneficially
Owned
(1)
|
Percentage of
Outstanding Ordinary
Shares Beneficially
Owned
(2)(3)
|
||||||||
Zohar Zisapel
|
3,003,383
|
(4) |
25.7
|
%
|
||||||
All directors and executive officers as a group, except Zohar Zisapel (10 persons)
|
175,187
|
(5) |
1.5
|
%
|
(1)
|
Except as otherwise noted and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to all ordinary shares listed as owned by such person. Shares beneficially owned include shares that may be acquired pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 24, 2017.
|
(2)
|
In determining the percentage owned by each person or group, ordinary shares for each person or group includes ordinary shares that may be acquired by such person or group pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 24, 2017.
|
(3)
|
The number of outstanding ordinary shares does not include 5,189 shares held by RADCOM US, a wholly owned subsidiary, and 30,843 shares that were repurchased by us.
|
(4)
|
Includes (i) 2,381,472 ordinary shares held by Mr. Zohar Zisapel, (ii) 13,625 ordinary shares held by Klil & Michael Ltd., an Israeli company wholly owned by Mr. Zohar Zisapel, (iii) 299,416 ordinary shares held by Michael & Klil Holdings (93) Ltd or Klil, an Israeli company, wholly owned by Mr. Zohar Zisapel, (iv) 298,870 ordinary shares held by Lomsha Ltd. or Lomsha, an Israeli company wholly owned by Mr. Zohar Zisapel, and (v) 10,000 ordinary shares issuable upon exercise of options, with an average exercise price per share of $14.52, expiring in 2020. The options listed above are exercisable currently or within 60 days of March 24, 2016. Mr. Zohar Zisapel is a principal shareholder and our former Chairman of the Board of Directors of RAD Data Communication, or RDC. Mr. Zohar Zisapel and his brother, Mr. Yehuda Zisapel, have shared voting and dispositive power with respect to the shares held by RDC. Mr. Zisapel disclaims beneficial ownership of these ordinary shares except to the extent of his pecuniary interest therein. This information is based on information provided to the Company by Mr. Zohar Zisapel.
|
(5)
|
Each of the directors and executive officers not separately identified in the above table beneficially owns less than 1% of our outstanding ordinary shares
,
including options or warrants held by each such party, which are vested or shall become vested within 60 days of March 24, 2017 and have, therefore, not been separately disclosed. The amount of shares is comprised of 175,187 ordinary shares issuable upon exercise of options exercisable within 60 days March 24, 2017.
|
A.
|
MAJOR SHAREHOLDERS
|
Name
|
Number of Ordinary
Shares
(1)
|
Percentage of
Outstanding Ordinary
Shares
(2)
|
||||||||
Zohar Zisapel
|
3,003,383
|
(3) |
|
25.7
|
%
|
|||||
Yelin Lapidot Holdings Management Ltd.
|
1,164,838
|
(4) |
|
10.0
|
%
|
(1)
|
Except as otherwise noted and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to all ordinary shares listed as owned by such person. Shares beneficially owned include shares that may be acquired pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 24, 2016.
|
|||||||||
(2)
|
The percentage of outstanding ordinary shares is based on
11,671,660
ordinary shares outstanding as of March 24, 2017. In determining the percentage owned by each person, ordinary shares for each person includes ordinary shares that may be acquired by such person pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 24, 2017. The number of outstanding ordinary shares does not include 5,189 ordinary shares held by RADCOM US, a wholly owned subsidiary and 30,843 ordinary shares that were repurchased by us.
|
|||||||||
(3)
|
Includes (i) 2,381,472 ordinary shares held by Mr. Zohar Zisapel, (ii) 13,625 ordinary shares held by Klil &Michael Ltd., (iii) 299,416 ordinary shares held by Klil, (iv) 298,870 ordinary shares held by Lomsha, (v) 10,000 ordinary shares issuable upon exercise of options, with an average exercise price per share of $14.52, expiring in 2020. The options listed above are exercisable currently or within 60 days of March 24, 2017. Mr. Zohar Zisapel and his brother, Mr. Yehuda Zisapel, have shared voting and dispositive power with respect to the shares held by RDC. Mr. Zohar Zisapel is a principal shareholder and former Chairman of the Board of Directors of RDC and, as such, Mr. Zisapel may be deemed to have voting and dispositive power over the ordinary shares held by RDC. Mr. Zisapel disclaims beneficial ownership of these ordinary shares except to the extent of his pecuniary interest therein. This information is based on information provided to the Company by Mr. Zohar Zisapel.
|
|||||||||
(4)
|
The information with respect to the holdings of Yelin Lapidot Holdings Management, Ltd. is based on a Schedule 13G/A filed with the SEC by Dov Yelin, Yair Lapidot, Yelin Lapidot Holdings Management Ltd. Yelin Lapidot Mutual Funds Management Ltd. and Yelin Lapidot Provident Funds Management Ltd. on February 8, 2017.
|
B.
|
RELATED PARTY TRANSACTIONS
|
C.
|
INTERESTS OF EXPERTS AND COUNSEL
|
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
B.
|
SIGNIFICANT CHANGES
|
A.
|
OFFER AND LISTING DETAILS
|
Annual
|
High
|
Low
|
||||||
2016
|
$
|
21.89
|
$
|
11.29
|
||||
2015
|
$
|
14.93
|
$
|
9.59
|
||||
2014
|
$
|
13.23
|
$
|
4.65
|
||||
2013
|
$
|
7.35
|
$
|
2.21
|
||||
2012
|
$
|
5.69
|
$
|
2.08
|
||||
Quarterly 2017
|
||||||||
First Quarter (Through March 24)
|
$
|
21.20
|
$
|
17.00
|
||||
Quarterly 2016
|
||||||||
Fourth Quarter
|
$
|
21.89
|
$
|
17.65
|
||||
Third Quarter
|
$
|
20.49
|
$
|
11.69
|
||||
Second Quarter
|
$
|
14.35
|
$
|
11.29
|
||||
First Quarter
|
$
|
16.63
|
$
|
11.72
|
||||
Quarterly 2015
|
||||||||
Fourth Quarter
|
$
|
14.93
|
$
|
9.60
|
||||
Third Quarter
|
$
|
11.65
|
$
|
9.67
|
||||
Second Quarter
|
$
|
10.93
|
$
|
9.59
|
||||
First Quarter
|
$
|
11.97
|
$
|
9.62
|
||||
Most recent six months | ||||||||
March 2017 (Through March 24)
|
$
|
21.20
|
$
|
18.10
|
||||
February 2017
|
$
|
19.15
|
$
|
17.00
|
||||
January 2017
|
$
|
18.85
|
$
|
17.10
|
||||
December 2016
|
$
|
18.95
|
$
|
17.65
|
||||
November 2016
|
$
|
19.95
|
$
|
17.65
|
||||
October 2016
|
$
|
21.89
|
$
|
19.70
|
||||
September 2016
|
$
|
20.49
|
$
|
18.72
|
||||
B.
|
PLAN OF DISTRIBUTION
|
C.
|
MARKETS
|
D.
|
SELLING SHAREHOLDERS
|
E.
|
DILUTION
|
F.
|
EXPENSES OF THE ISSUE
|
A.
|
SHARE CAPITAL
|
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
|
·
|
information regarding the advisability of a given action submitted for his or her approval or performed by him or her by virtue of his position; and
|
|
·
|
all other important information pertaining to such actions.
|
|
·
|
refrain from any conflict of interest between the performance of his or her duties for the company and the performance of his or her other duties or personal affairs;
|
|
·
|
refrain from any activity that is competitive with the company;
|
|
·
|
refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself, or for others; and
|
|
·
|
disclose to the company any information or documents relating to the company's affairs which the office holder has received due to his or her position as an office holder.
|
|
·
|
not in the ordinary course of business;
|
|
·
|
not on market terms; or
|
|
·
|
is likely to have a material impact of the Company's profitability, assets or liabilities.
|
|
·
|
a majority of the shares of shareholders who have no personal interest in the transaction and are present and voting, in person, by proxy or by written ballot, at the meeting, vote in favor of the transaction; or
|
|
·
|
the shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than two percent of the voting power of the company.
|
·
|
a breach of an office holder's duty of care to us or to another person;
|
|
·
|
a breach of an office holder's duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice our interests;
|
|
·
|
a financial obligation imposed on him in favor of another person; and
|
|
·
|
reasonable litigation expenses, including attorneys' fees, incurred by the office holder as a result of administrative enforcement proceedings instituted against him.
Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the office holder in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, 5728-1968, as amended (the "Israeli Securities Law") and expenses that the office holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Israeli Securities Law, including reasonable legal expenses, which term includes attorneys' fees.
|
|
·
|
a financial obligation imposed on him in favor of another person by a court judgment, including a compromise judgment or an arbitrator's award approved by court
;
|
|
·
|
reasonable litigation expenses, including attorneys' fees, expended by the office holder as a result of an investigation or proceeding instituted against him by a competent authority, provided that such investigation or proceeding was concluded without the filing of an indictment against him and either (A) concluded without the imposition of any financial liability in lieu of criminal proceedings or (B) concluded with the imposition of a financial liability in lieu of criminal proceedings but relates to a criminal offense that does not require proof of criminal intent; or in connection with an administrative enforcement proceeding or a financial sanction. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the office holder in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, and expenses that the office holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Israeli Securities Law, including reasonable legal expenses, which term includes attorney fees; and
|
|
·
|
reasonable litigation expenses, including attorneys' fees, expended by an office holder or charged to the office holder by a court, in a proceeding instituted against the office holder by the Company or on its behalf or by another person, or in a criminal charge from which the office holder was acquitted, or in a criminal proceeding in which the office holder was convicted of an offense that does not require proof of criminal intent.
|
|
·
|
in advance, provided that in respect of bullet number 1 above, the undertaking is restricted to events which our Board of Directors deems to be foreseeable in light of our actual operations at the time of the undertaking and limited to an amount or criteria determined by our Board of Directors to be reasonable under the circumstances, and further provided that such events and amounts or criteria are set forth in the undertaking to indemnify; and
|
|
·
|
retroactively.
|
|
·
|
a breach by the office holder of his duty of loyalty unless, with respect to insurance coverage or indemnification, the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
|
|
·
|
a breach by the office holder of his duty of care if the breach was done intentionally or recklessly (other than if solely done in negligence);
|
|
·
|
any act or omission done with the intent to derive an illegal personal benefit
|
|
·
|
a fine, civil fine or ransom levied on an office holder, or a financial sanction imposed upon an office holder under Israeli Law.
|
C.
|
MATERIAL CONTRACTS
|
D.
|
EXCHANGE CONTROLS
|
E.
|
TAXATION
|
General Corporate Tax Structure
|
Capital Gains Tax on Sales of Our Ordinary Shares
|
Taxation of Non-Residents on Dividends
|
|
• an individual who is a citizen or resident of the United States for U.S. federal income tax purposes;
|
|
• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States or any political subdivision thereof or the District of Columbia;
|
|
• an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
|
|
• a trust (i) if, in general, a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person.
|
|
• are broker-dealers or insurance companies;
|
|
• have elected mark-to-market accounting;
|
|
• are tax-exempt organizations or retirement plans;
|
|
• are financial institutions;
|
|
• hold our ordinary shares as part of a straddle, "hedge" or "conversion transaction" with other investments;
|
|
• acquired our ordinary shares upon the exercise of employee stock options or otherwise as compensation;
|
|
• own directly, indirectly or by attribution at least 10% of our voting power;
|
|
• own our warrants;
|
|
• have a functional currency that is not the U.S. dollar;
|
|
• are grantor trusts;
|
|
• are S corporations;
|
• are certain former citizens or long-term residents of the United States; or
|
|
|
• are real estate investment trusts or regulated investment companies.
|
Taxation for Non-U.S. Holders of Ordinary Shares
|
|
·
|
such item is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States and, in the case of a resident of a country which has a treaty with the United States, such item is attributable to a permanent establishment or, in the case of an individual, a fixed place of business, in the United States; or
|
|
·
|
the Non-U.S. Holder is an individual who holds the ordinary shares as a capital asset and is present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met.
|
Information Reporting and Backup Withholding
|
F.
|
DIVIDENDS AND PAYING AGENTS
|
G.
|
STATEMENT BY EXPERTS
|
H.
|
DOCUMENTS ON DISPLAY
|
I.
|
SUBSIDIARY INFORMATION
|
|
2016
|
2015
|
||||||
Audit Fees
|
$
|
224,500
|
$
|
149,500
|
||||
Audit Related Fees
|
$
|
3,000
|
$
|
3,000
|
||||
Tax Fees
|
$
|
15,500
|
$
|
15,500
|
||||
All Other Fees
|
$
|
95,000
|
0
|
|||||
Total
|
$
|
338,000
|
$
|
168,000
|
Audit Committee's Pre-Approval Policies and Procedures
|
|
·
|
Distribution of periodic reports to shareholders;
proxy solicitation
. As opposed to the
NASDAQ
Listing Rules, which require listed issuers to make such reports available to shareholders in one of a number of specific manners, Israeli law does not require us to distribute periodic reports directly to shareholders, and the generally accepted business practice in Israel is not to distribute such reports to shareholders but to make such reports available through a public website. In addition to making such reports available on a public website, we currently make our audited financial statements available to our shareholders at our offices and will only mail such reports to shareholders upon request. As a foreign private issuer, we are generally exempt from the SEC's proxy solicitation rules.
|
|
·
|
Compensation of officers.
Israeli law and our amended and restated articles of association do not require that the independent members of our Board of Directors (or a compensation committee composed solely of independent members of our Board of Directors) determine an executive officer’s compensation, as is generally required under the NASDAQ Listing Rules with respect to the Chief Executive Officer and all other executive officers. Instead, compensation of executive officers is determined and approved by our Compensation Committee and our Board of Directors, and in certain circumstances by our shareholders, either in consistency with our office holder compensation policy or, in special circumstances in deviation therefrom, taking into account certain considerations stated in the Israeli Companies Law.
Shareholder approval is generally required for executive officer compensation in the event (i) approval by our Board of Directors and our Compensation Committee is not consistent with our office holders compensation policy, or (ii) compensation required to be approved is that of our chief executive officer who is not a director or an executive officer who is also the controlling shareholder of our company (including an affiliate thereof). Such shareholder approval shall require a majority vote of the shares present and voting at a shareholders meeting, provided either (i) such majority includes a majority of the shares held by non-controlling shareholders who do not otherwise have a personal interest in the compensation arrangement that are
voted on at the meeting, excluding for such purpose any abstentions of disinterested shareholders,
or (ii) the total shares held by non-controlling and disinterested shareholders voted against the arrangement does not exceed 2% of the voting rights in our company.
Additionally, approval of the compensation of an executive officer, who is also a director, shall generally require a simple majority vote of the shares present and voting at a shareholders meeting, if consistent with our office holders compensation policy. Our Compensation Committee and Board of Directors may, in special circumstances, approve the compensation of an executive officer (other than a director, a chief executive officer or a controlling shareholder) or approve the compensation policy despite shareholders’ objection, based on specified arguments and taking shareholders’ objections into account. Our Compensation Committee may further exempt an engagement with a nominee for the position of chief executive officer, who meets the non-affiliation requirements set forth for an external director, from requiring shareholders’ approval, if such engagement is consistent with our office holders compensation policy and our Compensation Committee determines based on specified arguments that presentation of such engagement to shareholders’ approval is likely to prevent such engagement. To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval is required once every three years.
A director or executive officer may not be present when the board of directors of a company discusses or votes upon the terms of his or her compensation, unless the chairman of the board of directors determines that he or she should be present to present the transaction that is subject to approval.
|
|
·
|
Shareholder approval.
We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Israeli Companies Law, rather than seeking approval for corporation actions in accordance with NASDAQ Listing Rule 5635. In particular, under this NASDAQ rule, shareholder approval is generally required for: (i) an acquisition of shares/assets of another company that involves the issuance of 20% or more of the acquirer's shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of equity compensation arrangements; and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares. By contrast, under the Israeli Companies Law, shareholder approval is required for, among other things: (i) transactions with directors concerning the terms of their service or indemnification, exemption and insurance for their service (or for any other position that they may hold at a company), for which approvals of the compensation committee, board of directors and shareholders are all required, (ii) extraordinary transactions with controlling shareholders of publicly held companies, which require the special approval described below under “Approval of Related Party Transactions under Israeli Law
–
Disclosure of personal interests of controlling shareholders,” and (iii) terms of employment or other engagement of the controlling shareholder of the Company or such controlling shareholder's relative, which require the special approval described below under “Approval of Related Party Transactions under Israeli Law
–
Disclosure of personal interests of a controlling shareholder and approval of transactions.” In addition, under the Israeli Companies Law, a merger requires approval of the shareholders of each of the merging companies.
|
|
·
|
a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or
|
|
|
·
|
the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than 2% of the voting rights in the company.
|
Index to the Consolidated Financial Statements |
Page
|
F-2 - F-3
|
|
F-4 - F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
|
F-9 - F-10
|
|
F-11 - F-46
|
Exhibit No.
|
Description
|
1.1
|
Memorandum of Association, as amended
(1)
.
|
1.2
|
Amended and Restated Articles of Association, as amended
(2)
.
|
2.1
|
Form of ordinary share certificate
(3)
|
4.1
4.2
|
2003 Share Option Plan
(3)
2013 Share Option Plan, as amended
(4)
|
4.3
|
Share and Warrant Purchase Agreement, dated as of April 23, 2013, by and between RADCOM Ltd. and the purchasers listed therein
(5)
.
|
4.4
|
Master Subcontract Agreement, dated March 23, 2015, by and between Amdocs Inc. and RADCOM US
(2)*
.
|
4.5
|
Value Added Reseller Agreement, dated December 30, 2015, by and between Amdocs Software Systems Limited and the Company
(2)*
.
|
4.6
|
Addendum to the Value Added Reseller Agreement, dated December 30, 2015, by and between Amdocs Software Systems Limited and the Company
(2)*
.
|
4.7
4.8
|
Supplemental Agreement, dated December 30, 2015, by and between Amdocs Software Systems Limited and the Company
(2)*
.
Radcom Compensation Policy for Executive Officers and Directors, as amended on August 16, 2016.
(7)
|
8.1
|
List of Subsidiaries
(6)
.
|
11.1
|
Code of Ethics
(8)
|
12.1
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(2)
.
|
12.2
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(2)
.
|
13.1
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(9)
.
|
13.2
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(9)
.
|
15.1
|
Consent of Kost Forer Gabbay & Kasierer, a member of Ernst and Young Global, dated March 30, 2017
(2)
.
|
101
|
The following financial information from RADCOM Ltd.'s Annual Report on Form 20-F for the year ended December 31, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014; (ii) Consolidated Statement of Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014 (iii) Consolidated Balance Sheets at December 31, 2015 and 2014; (iv) Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2016, 2015 and 2014; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014; and (vi) Notes to Consolidated Financial Statements
(2)
.
|
(1)
Incorporated herein by reference to the (i) Registration Statement on Form F-1 of RADCOM Ltd. (File No. 333-05022), filed with the SEC on June 12, 1996, (ii) Form 6-K of RADCOM Ltd., filed with the SEC on April 1, 2008 and (iii) Exhibit 99.2 to Form 6-K of RADCOM Ltd., filed with the SEC on November 23, 2015.
|
(2)
Filed herewith.
|
(3)
Incorporated herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year ended December 31, 2012, filed with the SEC on April 22, 2013.
|
(4)
Incorporated herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year ended December 31, 2014, filed with the SEC on March 26, 2015.
|
(5)
Incorporated herein by reference to the Form F-3/A of RADCOM Ltd., filed with the SEC on July 3, 2013.
|
(6)
Incorporated herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year ended December 31, 2015, filed with the SEC on March 29, 2016.
|
(7)
Incorporated herein by reference to the Form 6-K of RADCOM Ltd., filed with the SEC on July 12, 2016.
|
(8)
Incorporated herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year ended December 31, 2003, filed with the SEC on May 6, 2004.
|
(9)
Furnished herewith.
|
|
RADCOM LTD.
|
|
|
|
|
|
|
|
By:
|
/s/
Yaron Ravkaie
|
|
|
Name: Yaron Ravkaie
|
|
|
|
Title: Chief Executive Officer
|
|
|
|
Date: March 30, 2017
|
|
Page
|
|
F-2 - F-3
|
|
F-4 - F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
|
F-9 - F-10
|
|
F-11 - F-46
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
|
Tel-Aviv, Israel
|
/s/ KOST FORER GABBAY & KASIERER
|
March 30, 2017
|
A Member of Ernst & Young Global
|
Tel:
972 (3)6232525
Fax: 972 (3)5622555
www.ey.com/il
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
|
Tel-Aviv, Israel
|
/s/ KOST FORER GABBAY & KASIERER
|
March 30, 2017
|
A Member of Ernst & Young Global
|
December 31,
|
||||||||
2016
|
2015
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
42,886
|
$
|
8,727
|
||||
Restricted bank deposit
|
32
|
32
|
||||||
Trade receivables (net of allowances for doubtful accounts amounted to $9 and $0 as of December 31, 2016, and 2015, respectively)
|
4,388
|
3,684
|
||||||
Inventories
|
623
|
1,532
|
||||||
Other accounts receivable and prepaid expenses
|
1,960
|
2,087
|
||||||
Total
current assets
|
49,889
|
16,062
|
||||||
SEVERANCE PAY FUND
|
2,788
|
3,181
|
||||||
OTHER LONG - TERM RECEIVABLES
|
375
|
508
|
||||||
PROPERTY AND EQUIPMENT, NET
|
1,516
|
384
|
||||||
Total
assets
|
$
|
54,568
|
$
|
20,135
|
Year ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Revenues:
|
||||||||||||
Products and related services
|
$
|
8,642
|
$
|
15,500
|
$
|
18,342
|
||||||
Projects
|
17,534
|
622
|
2,205
|
|||||||||
Warranty and Support
|
3,334
|
2,551
|
3,089
|
|||||||||
29,510
|
18,673
|
23,636
|
||||||||||
Cost of revenues:
|
||||||||||||
Products and related services
|
5,603
|
3,924
|
7,863
|
|||||||||
Projects
|
2,902
|
117
|
487
|
|||||||||
Warranty and Support
|
477
|
285
|
343
|
|||||||||
8,982
|
4,326
|
8,693
|
||||||||||
Gross profit
|
20,528
|
14,347
|
14,943
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development
|
8,047
|
6,071
|
5,812
|
|||||||||
Less - royalty-bearing participation
|
1,693
|
1,582
|
1,664
|
|||||||||
Research and development, net
|
6,354
|
4,489
|
4,148
|
|||||||||
Selling and marketing, net
|
8,528
|
7,834
|
7,295
|
|||||||||
General and administrative
|
4,523
|
2,393
|
2,262
|
|||||||||
Total
operating expenses
|
19,405
|
14,716
|
13,705
|
|||||||||
Operating income (loss)
|
1,123
|
(369
|
)
|
1,238
|
||||||||
Financial income (expenses), net
|
816
|
(433
|
)
|
(332
|
)
|
|||||||
Income (loss) before taxes on income
|
1,939
|
(802
|
)
|
906
|
||||||||
Taxes on income
|
(24
|
)
|
(121
|
)
|
(180
|
)
|
||||||
Net income (loss)
|
$
|
1,915
|
$
|
(923
|
)
|
$
|
726
|
|||||
Basic net income (loss) per Ordinary Share
|
$
|
0.18
|
$
|
(0.11
|
)
|
$
|
0.09
|
|||||
Diluted net income (loss) per Ordinary Share
|
$
|
0.18
|
$
|
(0.11
|
)
|
$
|
0.08
|
|||||
Weighted average number of Ordinary Share used in computing basic net income (loss) per share
|
10,406,897
|
8,572,681
|
8,088,974
|
|||||||||
Weighted average number of Ordinary Share used in computing diluted net income (loss) per share
|
10,779,547
|
8,572,681
|
8,592,387
|
Year ended
December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Net
income (
loss)
|
$
|
1,915
|
$
|
(923
|
)
|
$
|
726
|
|||||
Other comprehensive income (loss):
|
||||||||||||
Foreign currency translation adjustments
|
201
|
(1,698
|
)
|
(257
|
)
|
|||||||
Total other comprehensive income (loss)
|
2,116
|
(1,698
|
)
|
(257
|
)
|
|||||||
Comprehensive income (loss)
|
$
|
2,116
|
$
|
(2,621
|
)
|
$
|
469
|
Number of
shares
|
Share capital amount
|
Additional
paid-in capital
|
Accumulated other comprehensive loss
|
Accumulated deficit
|
Total shareholders' equity
|
|||||||||||||||||||
Balance as of January 1, 2014
|
7,911,308
|
$
|
335
|
$
|
65,791
|
$
|
(805
|
)
|
$
|
(57,822
|
)
|
$
|
7,499
|
|||||||||||
Share-based compensation
|
-
|
-
|
579
|
-
|
-
|
579
|
||||||||||||||||||
Exercise of warrants into Ordinary Shares
|
5,974
|
*
|
)
|
21
|
-
|
-
|
21
|
|||||||||||||||||
Exercise of options into Ordinary Shares
|
493,993
|
26
|
1,668
|
-
|
-
|
1,694
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
726
|
726
|
||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
(257
|
)
|
-
|
(257
|
)
|
||||||||||||||||
Balance as of December 31, 2014
|
8,411,275
|
$
|
361
|
$
|
68,059
|
$
|
(1,062
|
)
|
$
|
(57,096
|
)
|
$
|
10,262
|
|||||||||||
Share-based compensation and RSUs
|
-
|
-
|
1,409
|
-
|
-
|
1,409
|
||||||||||||||||||
Exercise of warrants into Ordinary Shares
|
22,921
|
1
|
79
|
-
|
-
|
80
|
||||||||||||||||||
Exercise of options into Ordinary Shares
|
185,989
|
9
|
724
|
-
|
-
|
733
|
||||||||||||||||||
RSUs vested
|
18,500
|
1
|
(1
|
)
|
-
|
-
|
-
|
|||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(923
|
)
|
(923
|
)
|
||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
(1,698
|
)
|
-
|
(1,698
|
)
|
||||||||||||||||
Balance as of December 31, 2015
|
8,638,685
|
$
|
372
|
$
|
70,270
|
$
|
(2,760
|
)
|
$
|
(58,019
|
)
|
$
|
9,863
|
|||||||||||
Issuance of Ordinary Shares, net of issuance costs of $1,721, upon follow-on public offering
|
2,090,909
|
108
|
21,171
|
-
|
-
|
21,279
|
||||||||||||||||||
Share-based compensation and RSUs
|
-
|
-
|
2,471
|
-
|
-
|
2,471
|
||||||||||||||||||
Exercise of warrants into Ordinary Shares
|
310,985
|
16
|
1,069
|
-
|
-
|
1,085
|
||||||||||||||||||
Exercise of options into Ordinary Shares
|
508,149
|
25
|
3,304
|
-
|
-
|
3,329
|
||||||||||||||||||
RSUs vested
|
37,500
|
2
|
(2
|
)
|
-
|
-
|
-
|
|||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
1,915
|
1,915
|
||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
201
|
-
|
201
|
||||||||||||||||||
Balance as of December 31, 2016
|
11,586,228
|
$
|
523
|
$
|
98,283
|
$
|
(2,559
|
)
|
$
|
(56,104
|
)
|
$
|
40,143
|
*) |
Represents an amount lower than $1.
|
Year ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$
|
1,915
|
$
|
(923
|
)
|
$
|
726
|
|||||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||||||
Depreciation
|
286
|
123
|
87
|
|||||||||
Share-based compensation and RSUs
|
2,471
|
1,409
|
579
|
|||||||||
Change in:
|
||||||||||||
Severance pay, net
|
4
|
73
|
(7
|
)
|
||||||||
Trade receivables, net
|
(329
|
)
|
1,053
|
61
|
||||||||
Other account receivables and prepaid expenses
|
524
|
(1,266
|
)
|
800
|
||||||||
Inventories
|
794
|
311
|
1,379
|
|||||||||
Trade payables
|
1,273
|
(278
|
)
|
(705
|
)
|
|||||||
Employees and payroll accruals
|
999
|
174
|
276
|
|||||||||
Other accounts payable and accrued expenses
|
266
|
531
|
584
|
|||||||||
Deferred revenue and advances from customers
|
1,248
|
677
|
(394
|
)
|
||||||||
Net cash provided by operating activities
|
9,451
|
1,884
|
3,386
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Maturity of restricted bank deposits
|
-
|
-
|
1,477
|
|||||||||
Purchase of property and equipment
|
(1,331
|
)
|
(97
|
)
|
(65
|
)
|
||||||
Net cash provided by (used in) investing activities
|
(1,331
|
)
|
(97
|
)
|
1,412
|
|||||||
Cash flows from financing activities:
|
||||||||||||
Repayment of short-term bank credit, net
|
-
|
-
|
(629
|
)
|
||||||||
Proceeds from issuance of Ordinary Shares, net of issuance costs upon follow-on public offering
|
21,279
|
-
|
-
|
|||||||||
Exercise of warrants into Ordinary Shares
|
1,085
|
80
|
21
|
|||||||||
Exercise of options into Ordinary Shares
|
3,329
|
733
|
1,694
|
|||||||||
Net cash provided by financing activities
|
25,693
|
813
|
1,086
|
|||||||||
Year ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Foreign currency translation adjustments on cash and cash equivalents
|
346
|
(721
|
)
|
(221
|
)
|
|||||||
Increase in cash and cash equivalents
|
34,159
|
1,879
|
5,663
|
|||||||||
Cash and cash equivalents at beginning of year
|
8,727
|
6,848
|
1,185
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
42,886
|
$
|
8,727
|
$
|
6,848
|
(a) |
Non-cash investing activities:
|
||||||||||||
Purchase of property and equipment
|
$
|
81
|
$
|
21
|
$
|
4
|
|||||||
(b) |
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
-
|
$
|
-
|
$
|
13
|
|||||||
Taxes on income
|
$
|
24
|
$
|
121
|
$
|
180
|
NOTE 1: - |
GENERAL
|
a. |
RADCOM Ltd. (the "Company") is an Israeli corporation which provides service assurance and customer experience management solutions for Communication Service Providers ("CSP"). The Company's solutions support the CSPs ongoing needs to monitor their networks (fixed and mobile) and assure the delivery of a quality service to their subscribers; both on virtual ("NFV") networks and non-virtual networks. The Company specializes in solutions for next- mobile and fixed networks, including LTE, VoLTE, IMS, VoIP, WiFi, VoWiFi and mobile broadband. The Company's comprehensive, carrier-grade solutions, are designed for big data analytics on terabit networks, and are used to enhance customer care management, network operations, engineering capabilities, network service management, network planning and marketing. The Company's shares
(the "Ordinary Shares") are listed on the NASDAQ Capital Market under the symbol RDCM.
|
b. |
The Company has an accumulated deficit of $56,104 as of December 31, 2016. In addition, in 2016 the Company generated positive cash flow of $9,451 from its operating activities. The Company believes that its existing capital resources and expected cash flows from operations will be adequate to satisfy its expected liquidity requirements at least for the next 12 months.
|
c. |
In December 2015, the Company entered to a multi-year sales agreement with Amdocs Software Systems Limited (“Amdocs”) for the resale of MaveriQ to AT&T, a leading North American Tier-1 telecom operator (the “AT&T Engagement”).
During 2016
, the Company signed expansion agreements, as well as multi-year maintenance agreements with Amdocs in connection with the AT&T Engagement. As of December 31, 2016, the Company recognized $18,310 pursuant to the AT&T Engagement and its related agreements, which represents 62% of the total consolidated revenues of the Company (see also Note 11d).
|
NOTE 1: - |
GENERAL (Cont.)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES
|
a. |
Use of estimates:
|
b. |
Financial statements in U.S. dollars (“$” "dollar" or "dollars"):
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
c. |
Principles of consolidation:
|
d. |
Cash and cash equivalents:
|
e. |
Restricted bank deposit:
|
f. |
Concentration of credit risk:
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
g. |
Inventories:
|
h. |
Property and equipment:
|
%
|
||
Computers and electronic equipment
|
15 - 33
|
|
Office furniture and equipment
|
6 - 33
|
|
Leasehold improvements
|
At the shorter of the lease period or
useful life of the leasehold improvement
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
i. |
Impairment of long-lived assets:
|
j. |
Revenue recognition:
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
k. |
Cost of revenues:
|
l. |
Share-based compensation:
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
2016
|
2015
|
2014
|
||||
Dividend yield
|
0%
|
0%
|
0%
|
|||
Expected volatility
|
50.7%-59.4%
|
51.4%-62%
|
70%-74%
|
|||
Risk-free interest
|
0.8%-1.4%
|
0.6%-1.7%
|
0.6%-0.8%
|
|||
Expected life (in years)
|
2.79-4.99
|
2.39-4.58
|
2.81
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
m. |
Research and development costs:
|
n. |
Government grants:
|
o. |
Income (loss) per share:
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
p. |
Income taxes:
|
q. |
Income tax uncertainties:
|
r. |
Severance pay:
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
s. |
Fair value of financial instruments:
|
t. |
Legal contingencies:
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
1. |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on identifying performance obligations.
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
2. |
In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory." Under this accounting guidance, inventory will be measured at the lower of cost and net realizable value and other options that currently exist for market value will be eliminated. ASU 2015-11 defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. No other changes were made to the current guidance on inventory measurement. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
3. |
In February 2016, the FASB issued ASU 2016-02 - Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The ASU is expected to impact the Company’s consolidated financial statements as it has certain operating lease arrangements. ASU 2016-02supersedes the previous leases standard, ASC 840, “Leases”. The standard will be effective on January 1, 2019, with early adoption permitted. The ASU has not yet been adopted and the Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its financial statements.
|
NOTE 3: - |
INVENTORY
|
December 31,
|
||||||||
2016
|
2015
|
|||||||
Raw materials
|
$
|
57
|
$
|
126
|
||||
Finished products (*)
|
566
|
1,406
|
||||||
$
|
623
|
$
|
1,532
|
(*) |
Includes amounts of $176 and $373 for 2016 and 2015, respectively, with respect to inventory delivered to customers but for which revenue criteria have not been met yet.
|
December 31,
|
||||||||
2016
|
2015
|
|||||||
Indirect taxes
|
$
|
58
|
$
|
54
|
||||
Government of Israel – grants to receive
|
46
|
622
|
||||||
Prepaid expenses
|
692
|
701
|
||||||
Advances to suppliers
|
16
|
10
|
||||||
Related party (see note 11a(5))
|
585
|
-
|
||||||
Tax balance to receive from customers
|
461
|
613
|
||||||
Others
|
102
|
87
|
||||||
$
|
1,960
|
$
|
2,087
|
NOTE 5: - |
PROPERTY AND EQUIPMENT, NET
|
December 31,
|
||||||||
2016
|
2015
|
|||||||
Cost:
|
||||||||
Computers and electronic equipment
|
$
|
1,885
|
$
|
649
|
||||
Office furniture and equipment
|
615
|
499
|
||||||
Leasehold improvements
|
442
|
424
|
||||||
2,942
|
1,572
|
|||||||
Accumulated depreciation:
|
||||||||
Computers and electronic equipment
|
603
|
373
|
||||||
Office furniture and equipment
|
410
|
408
|
||||||
Leasehold improvements
|
413
|
407
|
||||||
1,426
|
1,188
|
|||||||
$
|
1,516
|
$
|
384
|
NOTE 6: - |
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
December 31,
|
||||||||
2016
|
2015
|
|||||||
Royalties - IIA payable
|
$
|
938
|
$
|
655
|
||||
Commissions to distributors
|
333
|
395
|
||||||
Accrued expenses
|
810
|
440
|
||||||
$
|
2,081
|
$
|
1,490
|
NOTE 7: - |
COMMITMENTS AND CONTINGENCIES
|
a. |
Royalty commitments:
|
1. |
The Company receives research and development grants from the IIA. In consideration for the research and development grants received from the IIA, the Company has undertaken to pay royalties as a percentage of revenues from products developed from research and development projects financed. If the Company does not generate sales of products developed with funds provided by the IIA, the Company is not obligated to pay royalties or repay the grants.
|
NOTE 7: - |
COMMITMENTS AND CONTINGENCIES (Cont.)
|
2. |
In April 2012 and in April 2014, the MOE approved the Company's application for participation in funding the setting up of the Company’s India subsidiary and China branch as part of a designated grants plan for setting up and establishing a marketing agency in India and China. The grant is intended to cover up to 50% from the costs of the office establishment, logistics expenses and hiring employees and consultants in India and China, respectively, based on the approved budget for the plan over a period of three years.
|
3. |
According to the Company's agreements with the Israel-U.S Bi-National Industrial Research and Development Foundation ("BIRD-F"), the Company is required to pay royalties at a rate of 5% of sales of products developed with funds provided by the BIRD-F, up to an amount equal to 150% of BIRD-F's grant, linked to the United States Consumer Price Index (“CPI”) relating to such products. The last funds from the BIRD-F were received in 1996. In the event the Company does not generate sales of products developed with funds provided by BIRD-F, the Company is not obligated to pay royalties or repay the grants.
|
NOTE 7: - |
COMMITMENTS AND CONTINGENCIES (Cont.)
|
b. |
Operating leases:
|
As of the year ended December 31,
|
Premises
|
Motor
vehicles
|
Total
|
|||||||||
2017
|
$
|
782
|
$
|
65
|
$
|
847
|
||||||
2018
|
$
|
715
|
-
|
$
|
715
|
|||||||
2019
|
$
|
715
|
-
|
$
|
715
|
|||||||
2020
|
$
|
715
|
-
|
$
|
715
|
|||||||
$
|
2,927
|
$
|
65
|
$
|
2,992
|
c. |
Bank guarantee:
|
NOTE 7: - |
COMMITMENTS AND CONTINGENCIES (Cont.)
|
d. |
In December 2014, one of the Company's customers (the "Customer") in Latin America sent a termination notice with respect to the agreement between the parties, claiming for refund of all amounts previously paid and damages. On August 30, 2015, the Company sent a counter notice to the Customer and rejected completely all the Customer's claims. Currently, the Company concludes that no potential loss with respect to the claim to refund or damages is considered probable.
|
NOTE 8: - |
TAXES ON INCOME
|
a. |
Israeli taxation:
|
NOTE 8: - |
TAXES ON INCOME (Cont.)
|
NOTE 8: - |
TAXES ON INCOME (Cont.)
|
b. |
Foreign subsidiaries:
|
1. |
The U.S subsidiary is taxed under United States federal and state tax rules.
Income
tax is calculated based on a 40% rate.
|
2. |
The U.S subsidiary's tax loss carryforward amounted to $8,448 and $274 for federal and state tax purposes, respectively, as of December 31, 2016. Such losses are available to offset any future U.S taxable income of the U.S subsidiary and will expire in the years 2017-2026 for federal tax purposes and in the years 2017-2024 for state tax purposes.
|
3. |
The U.S subsidiary has not received final tax assessments since incorporation. In accordance with the tax laws, tax returns submitted up to and including the 2012 tax year can be regarded as final.
|
NOTE 8: - |
TAXES ON INCOME (Cont.)
|
1. |
The Brazilian subsidiary is taxed under Brazilian tax rules. Income tax is calculated based on a 34% rate.
|
2. |
The Brazilian subsidiary's tax loss carryforward amounted to $2,670 as of December 31, 2016, for tax purposes. Tax losses may be carried forward indefinitely, but can only be offset up to 30% of the subsidiary's taxable income for a tax period.
|
3. |
The Brazilian subsidiary has not received final tax assessments since incorporation. In accordance with the tax laws, tax returns submitted up to and including the 2011 tax year can be regarded as final.
|
1. |
The Indian subsidiary is taxed under Indian tax rules. Income tax is calculated based on a 30% rate.
|
2. |
The Indian subsidiary has not received final tax assessments since incorporation. In accordance with the tax laws, tax returns submitted up to and including the 2009 tax year can be regarded as final
|
c. |
Deferred taxes:
|
December 31
|
||||||||
2016
|
2015
|
|||||||
Deferred tax assets:
|
||||||||
Carryforward tax losses
|
$
|
11,892
|
$
|
14,205
|
||||
Research and development credit
|
601
|
396
|
||||||
Accrued social benefits and other
|
683
|
791
|
||||||
13,176
|
15,392
|
|||||||
Less - valuation allowance
|
(13,176
|
)
|
(15,392
|
)
|
||||
Net deferred tax assets
|
$
|
-
|
$
|
-
|
NOTE 8: - |
TAXES ON INCOME (Cont.)
|
d. |
Taxes on income are comprised from withholding taxes that were deducted by the Company's customers as well as tax expenses of the Company’s subsidiary in India.
|
e. |
The components of income (loss) before income taxes are as follows:
|
Year ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Domestic
|
$
|
3,018
|
$
|
(755
|
)
|
$
|
3,350
|
|||||
Foreign
|
(1,079
|
)
|
(47
|
)
|
(2,444
|
)
|
||||||
Income (loss) before income taxes
|
$
|
1,939
|
$
|
(802
|
)
|
$
|
906
|
NOTE 8: - |
TAXES ON INCOME (Cont.)
|
f. |
Reconciliation of the theoretical tax benefit and the actual tax expense:
|
Year ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Income (loss) before income taxes, as reported in the statements of operations
|
$
|
1,939
|
$
|
(802
|
)
|
$
|
906
|
|||||
Statutory tax rate in Israel
|
25
|
%
|
26.5
|
%
|
26.5
|
%
|
||||||
Theoretical tax benefit
|
$
|
485
|
$
|
(213
|
)
|
$
|
240
|
|||||
Increase (decrease) in income taxes resulting from:
|
||||||||||||
Tax rate differential on foreign subsidiaries
|
(98
|
)
|
(2
|
)
|
(176
|
)
|
||||||
Non-deductible expenses and other permanent differences
|
683
|
446
|
222
|
|||||||||
Differences in taxes arising from foreign currency exchange, net
|
(324
|
)
|
641
|
1,715
|
||||||||
Losses and timing differences for which valuation allowance was provided, net
|
(1,102
|
)
|
(451
|
)
|
(2,326
|
)
|
||||||
Withholding taxes that were deducted by the Company's customers
|
6
|
121
|
180
|
|||||||||
Other
|
374
|
(421
|
)
|
325
|
||||||||
Income taxes
|
$
|
24
|
$
|
121
|
$
|
180
|
g. |
Accounting for uncertainty in income taxes:
|
NOTE 9: - |
SHAREHOLDERS' EQUITY
|
a. |
The number of Ordinary Shares outstanding at December 31, 2016 and 2015 does not include 5,189 Ordinary Shares issued, which are held by a subsidiary, and 30,843 Ordinary Shares issued which are held by the Company.
|
1. |
Ordinary Shares confer all rights to their holders, e.g. voting, equity and receipt of dividends.
|
2.
|
On December 30, 2015, the annual general meeting of the Company's shareholders approved an increase the number of the Company's authorized share capital to $ 1,026 and the number of authorized Ordinary Shares to 20,000,000.
|
c. |
Share option plan:
|
1. |
The Company has granted options under option plan as follows:
|
NOTE 9: - |
SHAREHOLDERS' EQUITY (Cont.)
|
a) |
The 2013 Share Option Plan:
|
b) |
On February 19, 2015, the Company's Board of Directors adopted an amendment to the 2013 Share Option Plan pursuant to which the Company may grant options to purchase its Ordinary Shares, restricted shares and RSUs to its employees, directors, consultants and contractors. The 2013 Share Option Plan expires on April 2, 2023.
|
c) |
During the year ended December 31, 2016, the Company's Board of Directors approved the grant of 281,800 options and 216,300 RSUs to certain employees, officers and directors of the Company. The options were granted at an exercise price range between $11.29 to $14.51 per share, which was equal to the market value of the Company’s Ordinary Shares at the date of grant. Such options and RSUs
have vesting schedules of between three to four years, commencing as of the date of grant.
|
2. |
Grants of options in 2016, 2015 and 2014 were at exercise prices equal to the market value of the Ordinary Shares at the date of grant.
|
NOTE 9: - |
SHAREHOLDERS' EQUITY (Cont.)
|
Number of options
|
Weighted average exercise price
|
Weighted average remaining contractual term
(in years)
|
Aggregate intrinsic value
|
|||||||||||||
Outstanding at January 1, 2016
|
856,986
|
7.75
|
3.28
|
$
|
6,157
|
|||||||||||
Granted
|
281,800
|
11.68
|
||||||||||||||
Exercised
|
(508,149
|
)
|
6.55
|
|||||||||||||
Expired and forfeited
|
(6,200
|
)
|
10.33
|
|||||||||||||
Outstanding at December 31, 2016
|
624,437
|
10.47
|
3.55
|
$
|
4,576
|
|||||||||||
Vested and expected to vest at December 31, 2016
|
624,437
|
10.47
|
3.55
|
$
|
4,576
|
|||||||||||
Exercisable at December 31, 2016
|
330,337
|
9.41
|
2.75
|
$
|
2,771
|
NOTE 9: - |
SHAREHOLDERS' EQUITY (Cont.)
|
4. |
As of December 31, 2016, stock options under the 2013 Share Option Plan, as amended are as follows for the year ended December 31, 2016:
|
Options outstanding
at December 31, 2016
|
Options exercisable
at December 31, 2016
|
||||||||||||||||||||||||
Exercise price
|
Number
outstanding
|
Weighted
average exercise
price
|
Weighted average remaining contractual life
|
Number
exercisable
|
Weighted average exercise price
|
Weighted
average remaining contractual life
|
|||||||||||||||||||
$
|
$
|
In years
|
$
|
In years
|
|||||||||||||||||||||
2.56 - 4.86
|
50,587
|
3.28
|
1.76
|
50,587
|
3.28
|
1.76
|
|||||||||||||||||||
5.17 - 8.60
|
70,750
|
6.49
|
2.16
|
70,750
|
6.49
|
2.16
|
|||||||||||||||||||
10.49 – 14.52
|
503,100
|
11.75
|
3.93
|
209,000
|
11.88
|
3.19
|
|||||||||||||||||||
624,437
|
330,337
|
5. |
RSUs for the year ended December 31, 2016 under the Company’s 2013 Share Option Plan are as follows:
|
Number of RSUs
|
Weighted average remaining contractual term
(in years)
|
Aggregate intrinsic value
|
||||||||||
Outstanding at January 1, 2016
|
15,500
|
0.1
|
$
|
231
|
||||||||
Granted
|
216,300
|
|||||||||||
Vested
|
(37,500
|
)
|
||||||||||
Cancelled
and forfeited
|
(1,150
|
)
|
||||||||||
Outstanding at December 31, 2016
|
193,150
|
2.02
|
$
|
3,438
|
||||||||
Vested and expected to vest at December 31, 2016
|
193,150
|
2.02
|
$
|
3,438
|
6. |
The weighted average fair values of options granted during the years ended December 31, 2016, 2015 and 2014 were $6.68, and $4.90 and $2.70, respectively.
|
7. |
The weighted average fair value of RSUs granted during the year ended December 31, 2016 and 2015 was $14.69 and $10.60 per share, respectively. No RSUs were granted during 2014.
|
NOTE 9: - |
SHAREHOLDERS' EQUITY (Cont.)
|
8. |
The following table summarizes the departmental allocation of the Company's share-based compensation charges:
|
Year ended December 31,
|
||||||||||||
2016 (*)
|
2015 (*)
|
2014
|
||||||||||
Cost of revenues
|
$
|
118
|
$
|
33
|
$
|
12
|
||||||
Research and development, net
|
625
|
529
|
178
|
|||||||||
Selling and marketing, net
|
199
|
380
|
146
|
|||||||||
General and administrative
|
1,529
|
467
|
243
|
|||||||||
$
|
2,471
|
$
|
1,409
|
$
|
579
|
(*) |
Including $1,331 and $342 of compensation cost related to RSUs for the year ended December 31, 2016 and 2015, respectively.
|
9. |
Share-based compensation:
|
d. |
Warrants:
|
NOTE 10: - |
SELECTED STATEMENTS OF OPERATIONS DATA
|
a. |
The Company applies ASC 280, "Segment Reporting". The Company operates in one reportable segment (see also Note 1 for a brief description of the Company's business).
|
b. |
The following table presents total revenues for the years ended December 31, 2016, 2015 and 2014 and long-lived assets as of December 31, 2016, 2015 and 2014:
|
1. |
Revenues from sales to unaffiliated customers:
|
Year ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
North America
|
$
|
19,167
|
$
|
1,018
|
$
|
1,922
|
||||||
Europe
|
946
|
1,204
|
3,189
|
|||||||||
Asia (Excluding Philippines)
|
355
|
576
|
847
|
|||||||||
Philippines
|
4,959
|
8,071
|
3,544
|
|||||||||
South America (Excluding Brazil)
|
785
|
2,456
|
4,235
|
|||||||||
Brazil
|
2,496
|
3,487
|
6,448
|
|||||||||
Other (Including Israel)
|
802
|
1,861
|
3,451
|
|||||||||
$
|
29,510
|
$
|
18,673
|
$
|
23,636
|
Total revenues are attributed to geographic areas based on the location of the end-customer.
|
2. |
Property and equipment, net, by geographic areas:
|
Year ended December 31,
|
||||||||
2016
|
2015
|
|||||||
Israel
|
$
|
1,422
|
$
|
339
|
||||
Other
|
94
|
45
|
||||||
$
|
1,516
|
$
|
384
|
NOTE 10: - |
SELECTED STATEMENTS OF OPERATIONS DATA (Cont.)
|
3. |
Major customer data as a percentage of total revenues:
|
c. |
Financial expenses, net:
|
Years ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Financial Income:
|
||||||||||||
Interest income
|
$
|
489
|
$
|
229
|
$
|
170
|
||||||
Foreign currency exchange gain
|
424
|
36
|
193
|
|||||||||
913
|
265
|
363
|
||||||||||
Financial expenses:
|
||||||||||||
Interest and bank charges
|
(23
|
)
|
(23
|
)
|
(40
|
)
|
||||||
Foreign currency exchange loss
|
(74
|
)
|
(675
|
)
|
(655
|
)
|
||||||
(97
|
)
|
(698
|
)
|
(695
|
)
|
|||||||
$
|
816
|
$
|
(433
|
)
|
$
|
(332
|
)
|
NOTE 10: - |
SELECTED STATEMENTS OF OPERATIONS DATA (Cont.)
|
d. |
Net income (loss) per share:
|
Years ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Numerator:
|
||||||||||||
Numerator for basic net income (loss) per share
|
$
|
1,915
|
$
|
(923
|
)
|
$
|
726
|
|||||
Effect of dilutive securities:
|
||||||||||||
Options and warrants issued to grantees and investors, respectively
|
-
|
-
|
-
|
|||||||||
Numerator for dilutive net income (loss) per share
|
$
|
1,915
|
$
|
(923
|
)
|
$
|
726
|
|||||
Denominator:
|
||||||||||||
Denominator for dilutive net income (loss) per share - weighted average number of Ordinary Shares
|
10,406,897
|
8,572,681
|
8,088,974
|
|||||||||
Effect of dilutive securities:
|
||||||||||||
Options and warrants issued to grantees and investors, respectively
|
372,650
|
-
|
503,413
|
|||||||||
Denominator for diluted net income (loss) per share - adjusted weighted average number of Ordinary Shares
|
10,779,547
|
8,572,681
|
8,592,387
|
NOTE 11: - |
RELATED PARTY BALANCES AND TRANSACTIONS
|
a. |
The Company carries out transactions with related parties as detailed below. Certain principal shareholders of the Company, which as of December 31, 2016, have joint ownership of approximately 29% in the Company's equity, are also principal shareholders of affiliates known as the RAD-BYNET Group.
|
1. |
The Company was a party to a distribution agreement with Bynet Electronics Ltd. ("BYNET"), a related party, giving BYNET the exclusive right to distribute the Company's products in Israel.
Revenues related to this distribution agreement are included in Note 11g below as "revenues". No revenues from such distribution agreement were recorded during the year ended December 31, 2016. For the year ended December 31, 2015 and 2014, revenues aggregated for a total amount of $62 and $19, respectively.
|
2. |
The Company is a party to a reseller agreement with Allot Communications Inc, or Allot, a company where Company’s controlling shareholder is an interested party of, giving Allot the right to distribute Company's products.
Revenues related to this reseller agreement are included in Note 11g below as "revenues". For the year ended December 31, 2016, 2015 and 2014, revenues aggregated for a total amount of $139, $107 and $53, respectively.
|
3. |
Certain premises occupied by the Company and its U.S. subsidiary are rented from related parties (see also Note 7b). The U.S. subsidiary also sub-leases certain premises to a related party. The aggregate net amounts of lease and maintenance expenses were $604, $411 and $417 in 2016, 2015 and 2014, respectively.
|
4. |
Certain entities within the RAD-BYNET Group provide the Company with administrative and IT services. Such amounts expensed by the Company are disclosed in Note 11g below as part of “Expenses”
and “capital expenses”.
|
5. |
During 2016 the Company renovated its Israeli located offices. The lessor, which is considered a related party (see Note 11a3), committed to participate in the renovation and reimburse expenses of up to $730. As of December 31, 2016, there is a balance to receive related to such renovation and reimburse expenses of $585 which disclosed in Note 11f below as part of the “Other accounts receivable and prepaid expenses”.
|
NOTE 11: - |
RELATED PARTY BALANCES AND TRANSACTIONS (Cont.)
|
b. |
In January 2012, the Company entered a consulting agreement ("Consulting Agreement") with a consultant which is also the spouse of one of the Company's controlling shareholders and the Company's former Chairman of the Board of Directors. Based on the key terms of the Consulting Agreement, the consultant provided advisory services to the management with respect to business operations for a monthly amount which equaled the average monthly salary of employees in Israel, plus Israeli Value Added Tax. The Consulting Agreement expired in January 2013 but was extended through September 10, 2015. During the years ended December 31, 2015 and 2014, the Company recorded expenses incurred under this Consulting Agreement in the amount of $24 and $39, respectively. No expenses have been recorded during the year ended December 31, 2016
(see also Note 11c).
|
c. |
On December 30, 2015, the Company's shareholders approved the replacement of the Company's Chairman of the Board of Directors with one of the Company's directors which is also the spouse of the former Chairman and controlling shareholder to assume the position of Active Chairwoman as of September 10, 2015, for a fixed monthly salary. During the year ended December 31, 2016 and the period since September 10, 2015 until December 31, 2015, the Company recorded salary expenses for acting as an Active Chairwoman in the amount of $180 and $30, respectively.
|
d. |
In 2015 and 2016, the Company entered several agreements with Amdocs, to sell its solution, pursuant to which the Company recorded revenues in the amount of $18,322 during the year ended December 31, 2016, out of which, amount of $18,310 related to the AT&T Engagement and its related agreements (See also Note 1c). The Company’s controlling shareholder and director, serves as a director in Amdocs.
|
e . |
As described in Note 9b, on May 25, 2016, the Company closed its follow-on public offering at a price of $11.00 per share, where pursuant to which an aggregate net amount of $21,279 have been raised. The Company’s controlling shareholder and director invested $2,200 for the issuance of 200,000 Ordinary Shares.
|
NOTE 11: - |
RELATED PARTY BALANCES AND TRANSACTIONS (Cont.)
|
f. |
Balances with related parties:
|
December 31,
|
||||||||
2016
|
2015
|
|||||||
Assets:
|
||||||||
Trade receivables, net
|
$
|
952
|
$
|
2
|
||||
Other accounts receivable and prepaid expenses
|
$
|
588
|
$
|
-
|
||||
Liabilities:
|
||||||||
Trade payables
|
$
|
169
|
$
|
184
|
||||
Other accounts payables and accrued expenses
|
$
|
92
|
$
|
16
|
||||
Advances from customers
|
$
|
1,880
|
$
|
-
|
g. |
Transactions with related parties:
|
Year ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Revenues
|
$
|
18,461
|
$
|
169
|
$
|
72
|
||||||
Expenses:
|
||||||||||||
Cost of revenues
|
$
|
210
|
$
|
42
|
$
|
56
|
||||||
Operating expenses:
|
||||||||||||
Research and development, net
|
$
|
224
|
$
|
244
|
$
|
249
|
||||||
Sales and marketing, net
|
$
|
142
|
$
|
118
|
$
|
125
|
||||||
General and administrative
|
$
|
250
|
$
|
93
|
$
|
60
|
||||||
Capital expenses
|
$
|
21
|
$
|
-
|
$
|
-
|
||||||
7. |
Consolidation, Subdivision, Cancellation and Reduction of Share Capital
|
(a) |
In case of a share registered in the names of two or more holders, the Company may recognize the survivor(s) as the sole owner(s) thereof unless and until the provisions of Article
|
1.
|
DEFINITIONS
|
3
|
2.
|
THE PRIME CONTRACT AND ORDERS
|
8
|
3.
|
SCOPE OF WORK
|
8
|
4.
|
REPORTS AND RECORDS
|
9
|
5.
|
LOCATION OF SERVICES; ACCESS TO AT&T FACILITIES
|
9
|
7.
|
SUBCONTRACTOR PERSONNEL
|
11
|
8.
|
TESTING AND ACCEPTANCE TEST PROCEDURES
|
12
|
9.
|
RECORDS AND AUDIT RIGHTS
|
12
|
10.
|
WARRANTIES
|
14
|
11.
|
FEES, RATES AND EXPENSES
|
20
|
12.
|
SERVICE LEVELS AND LIQUIDATED DAMAGES
|
20
|
13.
|
CHANGE MANAGEMENT
|
21
|
14.
|
OWNERSHIP OF MATERIALS
|
21
|
15.
|
AT&T DATA AND OTHER PROPRIETARY INFORMATION
|
23
|
16.
|
INDEPENDENT CONTRACTOR
|
26
|
17.
|
ASSIGNMENT
|
26
|
18.
|
INSURANCE
|
26
|
19.
|
INDEMNITY
|
27
|
20.
|
LIMITATION OF LIABILITY
|
29
|
21.
|
TERM
|
30
|
22.
|
TERMINATION
|
30
|
23.
|
GOVERNING LAW AND DISPUTE RESOLUTION
|
32
|
24.
|
FORCE MAJEURE
|
33
|
25.
|
GENERAL TERMS AND CONDITIONS
|
34
|
1.1 |
“Accept” and “Acceptance” means the determination, in Amdocs’s and AT&T’s reasonable discretion, following implementation, installation, and Testing (which may include testing in a production environment), that Deliverable(s) and Services are in Compliance.
|
1.2 |
“Acceptance Date” means the date on which Amdocs Accepts the Deliverables and/or Services.
|
1.3 |
“Acceptance Test Period” means the length of time specified in an Order during which the Acceptance Tests are performed.
|
1.4 |
“Acceptance Tests” means the system and user acceptance tests (and/or such other performance and reliability demonstrations and tests) that may be carried out in respect of Deliverables and Services to satisfy Amdocs that there are no inconsistencies with the Specifications or Errors during the Acceptance Test Period.
|
1.5 |
“Affiliate” means, generally, with respect to any Entity, any other Entity Controlling, Controlled by or under common Control with such Entity.
|
1.6 |
“Antivirus Software” means software programs and programming (and modifications, replacements, upgrades, enhancements, documentation, materials and media related thereto) that are used to monitor for, filter and detect the presence of Malicious Code and repair or remediate the effects of Malicious Code. Antivirus Software also shall include all such programs or programming selected by or for AT&T on or after the Effective Date.
|
1.7 |
“Application Software” means software application programs (and all modifications, replacements, upgrades, enhancements, documentation, materials and media related thereto) used to support day-to-day business operations and accomplish specific business objectives.
|
1.8 |
“Application” means a cohesive collection of automated procedures and data supporting a business objective. It consists of one or more components, modules, or subsystems.
|
1.9 |
“AT&T Data” means any data or information (i) of AT&T or its customers, that is disclosed or provided to Subcontractor by, or otherwise obtained by Subcontractor from, AT&T or its customers, including Customer Information and customer proprietary network information (as that term is defined in Section 222 of the Communications Act of 1934, as amended, 47 U.S.C. §222), as well as data and information with respect to the businesses, customers, operations, networks, systems, facilities, products, rates, regulatory compliance, competitors, consumer markets, assets, expenditures, mergers, acquisitions, divestitures, billings, collections, revenues and finances of AT&T; and (ii) not supplied by AT&T or its customers, but created, generated, collected or harvested by Subcontractor either (a) in furtherance of this Agreement or an Order hereunder (b) as a result of Subcontractor having access to AT&T infrastructure, systems, data, hardware, software or processes (for example, through data processing input and output, service level measurements, or ascertainment of network and system information). Notwithstanding the foregoing, the Parties agree that “AT&T Data” shall (1) not be deemed to include material or software (A)(I) created or owned by Amdocs prior to execution of the Prime Contract (II) provided under license from third parties by Amdocs prior to execution of the Amdocs (III) created by Amdocs or third parties after execution of the Prime Contract for a client other than AT&T or (B) that Amdocs owns in accordance with the Prime Contractor as agreed by Amdocs and AT&T in a Work Order, and (2) be deemed to include material or software that is derived from the performance and operation of AT&T Data or AT&T Proprietary Information.
|
1.10 |
“AT&T Derived Data” means any data or information that is a result of or modification of, adaption, revision, translation, abridgement, condensation, compilation, evaluation, expansion, or any other recasting or processing of the AT&T Data, for example, as a result of Subcontractor’s observation, analysis, or visualization of AT&T Data arising out of the performance of Subcontractor’s obligations. Notwithstanding the foregoing, the Parties agree that “AT&T Derived Data” shall not be deemed to include Subcontractor’s material or software that does not constitute AT&T Data as set forth in Subsection 1.9 above.
|
1.11 |
1.12 |
“Business Day
”
means Monday through Friday excluding national holidays and official AT&T holidays.
|
1.1 |
“Compliance” and “Comply” mean, with respect to Software, Equipment, Systems or other contract deliverables to be implemented, designed, developed, delivered, integrated, installed and/or tested by AT&T or Amdocs, compliance in all respects with the applicable Specifications.
|
1.14 |
“Control” and its derivatives mean: (a) the legal, beneficial, or equitable ownership, directly or indirectly, of (i) at least 50% of the aggregate of all voting equity interests in an Entity or (ii) equity interests having the right to at least 50% of the profits of an Entity or, in the event of dissolution, to at least 50% of the assets of an Entity; (b) the right to appoint, directly or indirectly, a majority of the board of directors; (c) the right to control, directly or indirectly, the management or direction of the Entity by contract or corporate governance document; or (d) in the case of a partnership, the holding by an Entity (or one of its Affiliates) of the position of sole general partner.
|
1.15 |
“CPI” means customer proprietary information.
|
1.16 |
“CPNI” means “customer proprietary network information” as defined under the Communications Act of 1934, as amended, including by the Telecommunications Act of 1996, and applicable Federal Communications Commission orders and regulations; (ii) any of the following information of any customer of AT&T, or any customer of any such customer, whether individual or aggregate, whether or not including identifying information: names, addresses, phone numbers, calling patterns, quantity, nature, technical configurations, locations, types, destinations or amount of use of telecommunications services received or calls received or made; (iii) information contained on the telephone bills of AT&T’s customers (including the customers of such customers) pertaining to telephone exchange service or telephone toll service received by a customer of AT&T or of any customer; (iv) unlisted customer numbers; (v) aggregate customer data with individual identifying information deleted; or (vi) information available to AT&T by virtue of AT&T’s relationship with its customers as a provider of telecommunications service, or by virtue of their customers’ relationships with their own customers as a provider(s) of telecommunications services
|
1.17 |
“Customer Information” means that portion of the AT&T Data consisting of information of or about a customer of AT&T, including customer name, address, e-mail address, and/or phone number (listed or unlisted); personal information such as birth date, social security number, driver’s license, credit card information, bank account, account number or personal identification numbers; information concerning calling patterns, call details, records of incoming or outgoing calls, or minutes of use or other use of AT&T’s services; information related to payments, credit status, and transactions with AT&T; demographic information; or aggregate customer data including aggregate data with individual identifying information deleted and CPNI.
|
1.18 |
“Custom Software” means the unique or specialized programs, routines or subroutines, which are listed as Custom Software in, and developed by Subcontractor under, a specific Order. Unless otherwise stated in the Order, Custom Software also includes source code in both machine and human readable form and all associated Program Material.
|
1.19 |
“Data” means numbers, characters, images, or other information recorded in a form that can be input into a CPU/processor, stored and processed there, or transmitted on some digital or analog channel.
|
1.20 |
“Deliverables” means any Materials, Software, Custom Software, Program Materials or Documentation (including third party Material) purchased hereunder by Amdocs from Subcontractor pursuant to an Order.
|
1.21 |
“Delivery” means delivery of the Deliverables via (i) electronic transfer; (ii) hand delivery of the media in which the Software is contained; (iii) carrier selected by Subcontractor; or (iv) the manner described in the applicable Order.
|
1.22 |
“Delivery Date” means the date on which the Parties agree Subcontractor is scheduled in this Agreement or an Order to complete its Delivery of the applicable Deliverables or Services.
|
1.23 |
“Developed Materials”
means any Materials (including Software), or any modifications, enhancements or derivative works thereof, developed by or on behalf of Subcontractor for Amdocs and/or AT&T in connection with or as part of the Services.
|
1.24 |
“Disabling Code” means computer instructions, features or functions that may permit Amdocs or a third party to, or may automatically: (a) alter, destroy or inhibit Software and/or a processing environment; (b) erase, destroy, corrupt or modify any data, programs, materials or information used by AT&T or store any data, programs, materials or information on AT&T’s computers without the consent of AT&T; (c) discontinue AT&T’s effective use of the Software; or (d) bypass any internal or external software security measure to obtain access to any hardware or software of AT&T without the consent or knowledge of AT&T, including, but not limited to, other programs’ data storage and computer libraries. Disabling Code includes programs that self-replicate without manual intervention, instructions programmed to activate at a predetermined time or upon a specified event, and/or programs purporting to do a meaningful function but designed for a different function.
|
1.25 |
“Entity” means a corporation, partnership, joint venture, trust, limited liability company, association or other organization.
|
1.26 |
“Equipment” means all computing, networking and communications equipment or Hardware procured, provided, operated, supported, or used by Subcontractor in connection with the Services, including (i) mainframe, midrange, server and distributed computing equipment and associated attachments, features, accessories, peripheral devices, and cabling, (ii) personal computers, laptop computers and workstations and associated attachments, features, accessories, peripheral devices, and cabling, and (iii) voice/video telecommunications and network equipment and associated attachments, features, accessories, peripheral devices, and cabling.
|
1.27 |
“Extension” shall have the meaning set forth in Section 21.1.
|
1.28 |
“FCPA” means the Foreign Corrupt Practices Act.
|
1.29 |
“Hardware” or “Hardware Assets” means the computers and related equipment used in connection with the provision of the Services, including central processing units and other processors, controllers, modems, communications and telecommunications equipment (voice, data and video), cables, storage devices, printers, terminals, other peripherals and input and output devices, and other tangible mechanical and electronic equipment intended for the processing, input, output, storage, manipulation, communication, transmission and retrieval of information and data.
|
1.30 |
“Information” means all ideas, discoveries, concepts, know-how, trade secrets, techniques, designs, Specifications, drawings, sketches, models, manuals, samples, tools, computer programs, technical information, and other confidential business, customer or personnel information or data, whether provided orally, in writing, or through electronic or other means.
|
1.31 |
“Initial Term” shall have the meaning set forth in Section 21.1.
|
1.32 |
“Laws” means all applicable national, federal, intergovernmental, regional, common, state and local laws, statutes, regulations, rules, executive orders, supervisory requirements, directives, circulars, opinions, orders, interpretive letters and other official releases of or by any government or quasi‑governmental authority, or any authority, department or agency thereof, or any self‑regulatory organization, anywhere in the world, including Privacy Laws.
|
1.33 |
“Liability” means all legal or contractual responsibility for losses, damages, expenses, costs, penalties, fines, Liquidated Damages and fees, including reasonable attorneys’ fees, arising from a claim or cause of action related to performance or omission of acts under this Agreement or any Order, including, but not limited to, claims or causes of actions brought by third parties.
|
1.34 |
“Losses” means all liabilities, damages, fines, penalties and claims (including taxes), and all related costs and expenses (including reasonable legal fees and disbursements and costs of investigation, litigation, settlement, judgment, interest and penalties).
|
1.35 |
“Liquidated Damages” means pre-defined damages as referred to in this Agreement and in any Order.
|
1.36 |
“Malicious Code” means (i) any code, program, or sub-program whose knowing or intended purpose is to damage or interfere with the operation of the computer system containing the code, program or sub-program, or to halt, disable or interfere with the operation of the Software, code, program, or sub-program, itself, or (ii) any device, method, or token that permits any person to circumvent the normal security of the Software or the system containing the code.
|
1.37 |
“Materials” means, collectively, Software, literary works, other works of authorship, specifications, design documents and analyses, processes, methodologies, programs, program listings, documentation, reports, drawings, databases and similar work product.
|
1.38 |
“Noncompliance” means noncompliance in any material respect with the applicable Specifications.
|
1.39 |
“Order”. “Statement of Work” or “SOW” means such orders as may be delivered to Subcontractor for the purpose of ordering Deliverables and Services pursuant to Section 2.2 hereunder.
|
1.40 |
“Privacy Laws” means Laws relating to data privacy, trans-border data flow or data protection such as the implementing legislation and regulations of the European Union member states under the European Union Directive 95/46/EC.
|
1.41 |
“Program Material” or “Documentation” for purposes of this Agreement and Orders hereunder always includes in relation to Custom Software the source code for the software (including programs, routines, subroutines, and error correction) and programmers’ comments (in all such software). The Program Material or Documentation required in relation to Custom Software shall be as described in the applicable Order, but may include Detailed Functional Specifications, flow charts, logic diagrams, programming manuals, modification manuals, maintenance tools (including test programs, test cases, and the printed output from same), data file listings, and input and output formats, descriptions and locations of programs related to, but not provided with, the Software, and any design session deliverables, user instructions and system manuals, user manuals, and training materials in machine readable or printed form associated with Software.
|
1.42 |
“Project” shall have the meaning set out in Recital B above.
|
1.43 |
“Project Manager” means each party’s manager responsible for a Project and as may be identified on an Order.
|
1.44 |
“Root Cause Analysis” means the formal process conducted by Subcontractor, to be used by Subcontractor to determine the primary or “root” cause of problems and to diagnose problems at the lowest reasonable level so that corrective action can be taken that will eliminate repeat failures.
|
1.45 |
“Service(s)” means any and all labor or service provided by Subcontractor in connection with an Order, including, but not limited to, consultation, engineering, installation, removal, maintenance, training, technical support, repair, programming, IT professional services, and Software maintenance.
|
1.46 |
“Software” means computer programs, together with input and output formats, the applicable source or object codes, programming tools, data models, flow charts, outlines, narrative descriptions, operating instructions, software manufacturing instructions and scripts, test specifications and test scripts and supporting documentation, and shall include the tangible media upon which such programs and documentation are recorded, including all authorized reproductions, corrections, updates, new releases, and new versions of such Software and shall further include all enhancements, translations, modifications, updates, upgrades, new releases, substitutions, replacements, and other changes to such computer programs.
|
1.47 |
“Specifications” means (i) Subcontractor’s applicable specifications and descriptions and (ii) Amdocs’s requirements, specifications or descriptions; each as they may relate to the Services or Deliverables and as specified or referenced in, or attached to, this Agreement or an applicable Order.
|
1.48 |
“Subcontractor Personnel” or “Personnel” means each employee, officer or temporary worker of (i) Subcontractor, (ii) any permitted subcontractor of Subcontractor, (iii) Subcontractor’s Affiliates and (iv) any agent or other representative of Subcontractor that may be engaged in the provision of Services in connection with this Agreement.
|
1.49 |
“System” means one or more of the following items, as identified in an Order: the operating environment for Software and includes the hardware on which the Software resides, and the operating software, Application Software, databases which interact with such Software, and the software and hardware interfaces among such hardware and software.
|
1.50 |
“Term” shall have the meaning set forth in Section 21.1.
|
1.51 |
“Testing” with respect to the Subcontractor’s Deliverables (and any associated Software, Equipment, or Systems) means the performance of the applicable tests and procedures set forth in the applicable Order, as well as any other tests and procedures which the Parties may agree upon in determining whether such Deliverables are in Compliance.
|
1.52 |
“Use” or “use” means any lawful operation or use of the Deliverables permitted or reasonably contemplated in this Agreement or an applicable Order, including compilation, copying, modifying, linking, licensing, sublicensing, displaying, permitting access to, and executing all or part of the Software.
|
2.1. |
The Prime Contract contains the terms and conditions under which Amdocs is required to provide products and services to AT&T. If agreed between the Parties in an Order, Subcontractor shall act as a subcontractor to Amdocs to perform certain obligations of Amdocs arising under the Prime Contract and specified in an Order. This Agreement includes provisions based on the Prime Contract. In the event that Amdocs wishes to subject Subcontractor to additional provisions of the Prime Contract, such provisions will be detailed in an Order or in an amendment to this Agreement and will require the consent of each of the Parties hereto. Such additional provisions may, without limitation, include service level agreements and provisions for payment of Liquidated Damages.
|
2.2. |
The procurement by Amdocs of Deliverables and Services from Subcontractor will be made by placement of Orders by Amdocs to Subcontractor hereunder. Each Order will reference this Agreement and incorporate this Agreement’s terms and conditions. Following their execution by both Parties this Agreement and each Order will constitute the entire agreement between the Parties relating to that particular Order. However, in case of any inconsistency or contradiction between the provisions of this Agreement and the provisions of an Order, the provisions of the Order will prevail, but only as to the subject matter of such inconsistency.
|
2.3. |
The Parties acknowledge and agree that this Agreement does not obligate either Party to enter into any specific types or amounts of Orders, or to procure or provide specific types or amounts of Services. Each Order will be binding only when signed by both Parties.
|
3.1. |
The scope of the Deliverables and Services to be provided in connection with a Project shall be set forth in the applicable Order(s). Subcontractor will perform all Services in such manner to ensure that it meets the applicable timetable and milestones for performance provided under the Order. Any changes to the Order will be subject to the change control procedures set out in this Agreement or an applicable Order.
|
3.2. |
Save as may be otherwise expressly stated in an Order, the prices set forth in an Order shall include (i) the provision by Subcontractor of all activities and assistance requested by Amdocs relating to the performance of the Services, and (ii) Subcontractor’s compliance with any applicable Service Levels and diligent correction of any Noncompliance or other deficiencies, as notified by Amdocs to Subcontractor.
|
3.3. |
Amdocs and Subcontractor agree to coordinate and to work with each other, to help confirm an appropriate interaction between the work of Subcontractor and Amdocs. Amdocs’s and Subcontractor’s respective Project Managers shall be named in the applicable Order. Subcontractor shall report to and work under the direction of Amdocs’s Project Manager (the “Amdocs Project Manager”), unless otherwise set forth in the Order.
|
3.4. |
Amdocs acknowledges and agrees that Subcontractor will discuss all issues, recommendations and decisions related to this Agreement and the Services, (including without limitation the performance, status, or any major issue affecting the Services) with the Amdocs Project Manager.
|
3.5. |
If any services, functions or responsibilities not specifically described in this Agreement or the applicable Order are an inherent part of the Services and are required for proper performance or provision of the Services in accordance with this Agreement and such Order, they shall be deemed to be included within the scope of the Services to be delivered, as if such services, functions or responsibilities were specifically described in this Agreement.
|
4.1. |
At all times during the performance of the Services, Amdocs shall have the right but not the obligation to inspect the work performed by Subcontractor upon reasonable advance verbal, email or written notice to Subcontractor.
|
4.2. |
As part of the Services, Subcontractor shall provide Amdocs and AT&T with such documentation and other information available to Subcontractor as may be reasonably requested by Amdocs or AT&T from time to time in order to verify the accuracy of the reports provided by Subcontractor.
|
4.3. |
As part of the Services and at [**], and upon reasonable notice from Amdocs, Subcontractor shall promptly correct any errors or inaccuracies in or with respect to the reports, or the information or data contained in such reports, caused by Subcontractor or its agents, or its third party product or service providers.
|
4.4. |
Subcontractor shall provide reasonable supporting documentation to Amdocs concerning any disputed invoice within [**] calendar days after receipt of written notification of such dispute.
|
5.1. |
The Services shall be provided at the locations specified in the applicable Order (“Approved Location”).
|
a. |
Subcontractor shall not perform any Services under this Agreement, at a location other than the Approved Location
|
b. |
Amdocs shall have the right to withdraw its consent to the performance of work at an Approved Location at any time in Amdocs’ sole discretion for any reason, in which event the Parties shall assess cost impacts, timing, methodology and amend the applicable Order to reflect any changes reasonably required to permit Subcontractor to continue to perform such work at a different location and the Parties shall amend the Order accordingly.
|
c. |
If Subcontractor without intending to circumvent the requirements of this Section, provides any Services under this Agreement in a location that is not an Approved Location, without Amdocs and AT&T’s prior written consent and fails to cease providing such Services within [**] days after written notice from Amdocs and/or AT&T such inadvertent provisioning and failure to timely cure within said [**] days shall be a material breach of this Agreement and, in addition to any other legal rights or remedies available to Amdocs or AT&T in law or in equity, Amdocs may immediately Cancel and/or Terminate this Agreement without cost, liability or penalty to Amdocs. Notwithstanding the foregoing, Amdocs agrees that Subcontractor’s provision of the Services in non Approved Location without Amdocs’ prior written consent on a transient basis (e.g., a Subcontractor’s employee’s provision of Services from an airport while in travel status) shall be permitted and shall not be deemed to be a material breach of this Agreement.
|
d. |
When Amdocs has granted consent for Services to be performed in an Approved Location,, Subcontractor shall remain fully responsible for compliance with any foreign, federal, state or local law applicable to the Subcontractor’s provision of such Services regardless of whether the Service is being performed by Subcontractor or a Subcontractor. Nothing contained within this Agreement is intended to extend, nor does it extend, any rights or benefits to any Subcontractor, and no third party beneficiary right is intended or granted to any third party hereby
.
|
5.2. |
Access to AT&T Facilities
|
5.2.1. |
Subcontractor will not have access to AT&T’s premises and facilities without Amdocs’ prior written approval.
|
5.2.2. |
Subcontractor shall ensure that its Personnel while on or off AT&T’s or Amdocs’ premises (i) will perform work in a manner which protects AT&T’s and Amdocs’ material, buildings and structures, (ii) do not interfere with AT&T’s and Amdocs’ business operations, and (iii) perform such Services with care and due regard for the safety, convenience and protection of AT&T, Amdocs, their employees, and property and in full conformance with the policies specified in the AT&T Code of Conduct specified in
Exhibit B
, which prohibits the possession of a weapon or an implement which can be used as a weapon.
|
5.2.3. |
Subcontractor shall ensure that all Personnel furnished by Subcontractor work harmoniously with all others when on AT&T’s or Amdocs’ premises.
|
5.3. |
Online Access
|
5.4. |
Software and Hardware provided by Amdocs to Subcontractor Personnel
|
6. |
SECURITY
|
6.1. |
Without prejudice to any other terms contained herein or in an Order, Subcontractor Personnel will comply with all of Amdocs’ and AT&T’s applicable security and conduct regulations provided to Subcontractor in writing or otherwise made available by Amdocs or AT&T to Subcontractor, including any procedure which Amdocs’ and/or AT&T’s employees are asked to follow. Unless otherwise agreed to by the Parties, Subcontractor Personnel shall observe the working hours, working rules, holiday schedules and policies of Amdocs and/or AT&T while working on Amdocs’ or AT&T’s premises, as applicable. Subcontractor agrees to cooperate fully and to provide any assistance necessary to Amdocs and AT&T in lawful investigation of any security breaches which may involve Subcontractor or Subcontractor Personnel.
|
6.2. |
Without limitation to the generality of the foregoing, Subcontractor shall comply with:
|
6.2.1. |
AT&T’s requirements as to background checks/
drug screening
for
Subcontractor Personnel, as set out in
Exhibit A
.
|
6.2.2. |
In performing the Services and using the AT&T sites, Subcontractor shall observe and comply with all AT&T policies, rules and regulations applicable to the AT&T sites or the provision of the Services, including those set forth on
Exhibit B
Supplier Information Security Requirements (SISR) and Limited Offshore Remote Access (LORA), to the extent applicable to any Services and Materials to be provided by Subcontractor
,
and those applicable to specific AT&T sites, all as have been or may be provided to Subcontractor in writing (collectively, “AT&T Rules”).
|
7.1. |
In addition to any other remedies that Amdocs may have in the event of substandard performance by Subcontractor, in the event that any Subcontractor Personnel is found to be unacceptable to Amdocs, Amdocs shall notify Subcontractor of such fact and Subcontractor shall immediately remove said Personnel and, if requested by Amdocs, replace such Personnel with a person acceptable to Amdocs of suitable education, qualifications and experience within [**] days of said notice.
|
7.2. |
Subcontractor agrees to use reasonable efforts to ensure the continuity of Subcontractor Personnel assigned to perform its obligations.
|
7.3. |
If at any time AT&T or Amdocs requires removal of Subcontractor Personnel, and AT&T or Amdocs so inform Subcontractor, then Subcontractor shall promptly remove such individual from the applicable Project and from AT&T’s and Amdocs’ respective premises.
|
7.4. |
All Subcontractor Personnel shall clearly identify themselves as Subcontractor Personnel and not as employees of Amdocs or AT&T. This shall include any and all communications, whether oral, written or electronic.
|
7.5. |
Amdocs is committed to complying with all applicable immigration laws of the United States, including the Immigration Reform and Control Act of 1986, as amended. This law requires that all employees hired since 1986 provide proof of identity and employment eligibility before they can work in the United States. It is the policy of Amdocs to comply fully with this requirement, and to require compliance by all suppliers and subcontractors performing services in the United States at Amdocs’ or its clients’ worksites. Subcontractor shall not place Subcontractor Personnel at a Amdocs or AT&T worksite in the United States, nor shall Subcontractor permit any Personnel to perform any work in the United States on behalf of or for the benefit of Amdocs, without first verifying and ensuring said Personnel’s authorization to lawfully work in the United States. To that end, Subcontractor represents that: (a) Subcontractor maintains and follows an established policy to verify the employment authorization of Personnel, and to ensure continued compliance for the duration of employment, (b) Subcontractor has verified the identity and employment eligibility of all Personnel, in compliance with applicable law, and (c) Subcontractor is without knowledge of any fact that would render any Subcontractor Personnel ineligible to work legally in the United States.
|
8.1. |
Testing and acceptance test procedures with respect to Subcontractor’s Deliverables will be specified in the applicable Order.
|
9.1. |
Subcontractor shall maintain complete and accurate records of and supporting documentation for all charges, all AT&T Data and all transactions, authorizations, changes, implementations, soft document access, reports, analyses, data or information created, generated, collected, processed or stored by Subcontractor in the performance of its obligations under this Agreement (“Contract Records”). Subcontractor shall maintain such Contract Records in accordance with generally accepted accounting principles applied on a consistent basis and generally accepted auditing standards. Subcontractor shall retain Contract Records in accordance with AT&T’s record retention policy as it may be modified from time to time and provided to Subcontractor in writing.
|
9.2. |
Subcontractor shall, and shall cause its Subcontractors to, provide to AT&T and Amdocs (and internal and external auditors, inspectors, regulators and other external representatives that AT&T may designate from time to time), subject to receipt of customary confidentiality undertakings towards Subcontractor, reasonable access at reasonable hours to Subcontractor Personnel and to the facilities at or from which Services are then being provided, and to Subcontractor records and other pertinent information, all solely to the extent relevant to the Services and Subcontractor’s obligations under this Agreement, subject to customary confidentiality undertakings to be received by Subcontractor. Subcontractor shall provide any assistance reasonably requested by AT&T or Amdocs or its designee in conducting any such audit. If an audit reveals a material breach of this Agreement, Subcontractor shall promptly reimburse Amdocs for the actual cost of such audit and any damages, fees, fines, expenses, or penalties assessed against or incurred by Amdocs or AT&T to remedy deficiencies caused by Subcontractor or Subcontractor Personnel discovered during such audits.
|
9.3. |
Financial Audits
|
9.3.1. |
During the term of this Agreement [**] or expiration of this Agreement, Subcontractor shall provide to Amdocs and AT&T (and internal and external auditors, inspectors, regulators and other representatives that AT&T or Amdocs may designate from time to time), subject to receipt of customary confidentiality undertakings towards Subcontractor, reasonable access at reasonable hours to Subcontractor Personnel and to Contract Records and other pertinent information, all solely to the extent relevant to the performance of Subcontractor’s obligations under this Agreement.
|
9.3.2. |
Such reasonable access shall be provided for the purpose of performing audits
|
9.3.3. |
Subcontractor shall provide any assistance reasonably requested by AT&T or Amdocs or its designee in conducting any audit under this Section and shall make requested personnel, records and information available. If any audit reveals an overcharge by Subcontractor, and Subcontractor does not successfully dispute the amount questioned by the audit, Subcontractor shall promptly pay to Amdocs the amount of such overcharge, together with interest from the date of Subcontractor’s receipt of such overcharge at the then current “Prime Rate” set forth in the “Money Rates” table in The Wall Street Journal (“Prime Rate”). In addition, if any audit
reveals an overcharge of more than five percent (5%) of the audited charges in any charges category, Subcontractor shall promptly reimburse Amdocs for the reasonable cost of such audit and shall issue to Amdocs a credit for any charges due from Amdocs to Subcontractor.
|
9.4. |
AT&T and Amdocs may be subject to regulation by governmental bodies and other regulatory authorities under applicable laws, rules, regulations and contract provisions. If a governmental body or regulatory authority exercises its right to examine or audit AT&T’s or Amdocs’ books, records, documents or accounting practices and procedures pursuant to such laws, rules, regulations or contract provisions, Subcontractor shall provide all reasonable assistance requested by AT&T or Amdocs in responding to such audits or government requests for information to the extent such requests are related to this Agreement.
|
9.5. |
AT&T and Amdocs shall provide Subcontractor with advanced notice at least [**] days prior to any operational or financial audit by AT&T or Amdocs or its authorized agents or representatives. AT&T and Amdocs shall be given adequate private workspace in which to perform an audit, plus reasonable access to photocopiers, telephones, facsimile machines, computer hook-ups, and any other facilities or equipment needed for the performance of the audit. AT&T and Amdocs will not undertake audits more than [**] in any contract year, unless AT&T or Amdocs has reasonable grounds to believe that Subcontractor is not in compliance with this Agreement, including improper invoicing of Amdocs, or Amdocs or AT&T is otherwise required to undertake such audit.
|
9.6. |
If Subcontractor determines as a result of its own internal audit that it has overcharged Amdocs, then Subcontractor shall promptly pay to Amdocs the amount of such overcharge, together with interest from the date of Subcontractor’s receipt of such overcharge at the Prime Rate.
|
9.7. |
Subcontractor and Amdocs shall meet to review each audit report promptly after the issuance thereof. The Parties will respond to each audit report in writing within [**] days from receipt of such report, unless a shorter response time is specified in such report. Subcontractor and Amdocs shall develop and agree upon an action plan to promptly address and resolve any deficiencies, concerns and/or recommendations in such audit report and Amdocs and Subcontractor, each at its own expense, shall undertake remedial action in accordance with such action plan and the dates specified therein.
|
9.8. |
If an audit by a governmental body or regulatory authority having jurisdiction over AT&T, Amdocs or Subcontractor results in a finding that Subcontractor is not in compliance with any generally accepted accounting principle or other audit requirement or any rule, regulation or law relating to the performance of its obligations under this Agreement, Subcontractor shall, at its own expense and within the time period specified by such auditor, address and resolve the deficiency(ies) identified by such governmental body or regulatory authority.
|
9.9. |
Subcontractor and its suppliers shall provide the Services described in this Section 9 at no additional charge.
|
9.10. |
SAS 70
|
9.10.1. |
At Subcontractor’s sole cost and expense, Subcontractor shall cooperate with AT&T and Amdocs on SAS 70 Type II audits and on other Sarbanes-Oxley related documentation, testing, and auditing related activities.
|
9.11. |
Security Audit
|
10.2.2. |
10.2.4. |
In the event that the Subcontractor Owned Software or Developed Materials do not Comply with the Specifications and criteria set forth in this Agreement, and/or materially and adversely affect the Services provided hereunder, Subcontractor shall repair or replace such Software or Material with conforming Software or Material.
|
10.3.1. |
Performance of Responsibilities
: Except as otherwise provided in this Agreement, each Party represents and warrants that it shall perform its responsibilities under this Agreement in a manner that does not infringe, or constitute an infringement or misappropriation of, any patent, copyright, trademark, trade secret or other proprietary or privacy rights of any third party; provided, however, that the performing Party shall not have any obligation or liability to the extent any infringement or misappropriation is caused by (i) modifications made by the other Party or its contractors or subcontractors, without the knowledge or approval of the performing Party, (ii) the other Party’s combination of the performing Party’s work product or Materials with items not furnished, specified or reasonably anticipated by the performing Party or contemplated by this Agreement, (iii) a breach of this Agreement by the other Party, or (iv) the failure of the other Party to use corrections or modifications provided by the performing Party offering equivalent features and functionality. Each Party further represents and warrants that it will not use or create materials in connection with the Services which are or are alleged to be libelous, defamatory or obscene.
|
10.3.2. |
Actions in Case of Infringement
: In the event that (1) any Materials, Developed Materials, Equipment or Software provided by Subcontractor or its Affiliates or permitted subcontractors pursuant to this Agreement or used by them in the performance of the Services are found or, based upon a third party claim or threatened claim of infringement, are likely to be found, to infringe upon the patent, copyright, trademark, trade secret, or other intellectual property or proprietary rights of any third party in any country in which Services are to be performed or received under this Agreement or (2) the continued use of such Materials, Developed Materials, Equipment or Software is enjoined, Subcontractor shall, in addition to defending, indemnifying and holding harmless Amdocs and AT&T as provided in this Agreement, promptly and at its own cost and expense and in such a manner as to minimize the disturbance to Amdocs’ and AT&T’s business activities do one of the following:
|
(a) |
Obtain for AT&T and Amdocs the right to continue using such Materials, Developed Materials, Equipment or Software.
|
(b) |
Modify the item(s) in question so that it is no longer infringing (provided that such modification does not degrade the performance or quality of the Services or adversely affect AT&T’s and Amdocs’ intended use as contemplated by this Agreement).
|
(c) |
Replace such item(s) with a non-infringing functional equivalent acceptable to AT&T and Amdocs.
|
10.4.1. |
It is a corporation duly incorporated, validly existing and in good standing under the laws of its State of incorporation;
|
10.4.2. |
It has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement;
|
10.4.3. |
It has obtained all licenses, authorizations, approvals, consents or permits required to perform its obligations under this Agreement under all applicable Laws and under all applicable rules and regulations of all authorities having jurisdiction over the Services, except to the extent the failure to obtain any such license, authorizations, approvals, consents or permits is, in the aggregate, immaterial;
|
10.4.4. |
The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by the requisite corporate action on the part of such Party; and
|
10.4.5. |
The execution, delivery, and performance of this Agreement shall not constitute a violation of any judgment, order, or decree; a material default under any material contract by which it or any of its material assets are bound; or an event that would, with notice or lapse of time, or both, constitute such a default.
|
10.8.1. |
Subcontractor represents and warrants that, with respect to the provision of the Services and the performance of its other legal and contractual obligations hereunder, it is and shall be in compliance with all applicable Laws (including but not limited to those requiring the acquisition of applicable permits, certificates, manifests, approvals and inspections, applicable to the Equipment, Software, Systems and Services for which Subcontractor is operationally responsible), and shall remain in compliance with such Laws for the entire term of this Agreement. If a charge or a claim of non-compliance by Subcontractor with such Laws is made or asserted against Subcontractor, Subcontractor shall promptly notify Amdocs of such charge or claim.
|
10.8.2. |
At no additional charge, upon Amdocs’ request, Subcontractor shall provide Amdocs with data and reports in Subcontractor’s possession necessary for AT&T and Amdocs to comply with, all Laws applicable to the Services.
|
10.8.3. |
Subcontractor covenants that the Software, Equipment, Systems and Materials owned, provided or used by Subcontractor in providing the Services are in compliance with all applicable Laws on the Effective Date and shall remain in compliance with such Laws for the entire term of this Agreement.
|
10.8.4. |
Subcontractor shall notify Amdocs of any Laws and changes in Laws of which Subcontractor is aware applicable to the provision of the Services and shall, to the extent such Laws or changes in Laws require a change in the performance, receipt, or use of the Services, identify the impact of such Laws and changes in Laws on Subcontractor’s performance and AT&T’s receipt and use of such Services. Subcontractor also shall maintain familiarity with the legal and regulatory requirements applicable specifically to the provision of telecommunications services by AT&T which are similar to the Services to be provided hereunder and shall bring additional or changed requirements to Amdocs’ attention. Subject to its non-disclosure obligation under other customer contracts, Subcontractor shall make commercially reasonable efforts to obtain information regarding such requirements from other customer engagements and to communicate such information to Amdocs in a timely manner. With respect to those Laws applicable to AT&T as providers of telecommunication services, AT&T shall retain the right, in its sole discretion, to interpret and determine the impact of such Laws on the Services to be provided by Subcontractor. At Amdocs’ request, Subcontractor Personnel shall participate in AT&T provided regulatory compliance training programs.
|
10.8.5. |
Cost of Compliance With Changes in Laws
: Subcontractor shall comply with all Laws and changes in Laws applicable to the Services (including Laws specifically applicable to AT&T as providers of telecommunication services to the extent Subcontractor receives notice of such Laws from Amdocs) and shall implement upon Amdocs’ approval any necessary modifications to the Services prior to the deadline imposed by the regulatory or governmental body having jurisdiction for such requirement or change.
|
10.8.7. |
Compliance with Export Control Laws
: To the extent applicable to the Services and Materials to be provided by Subcontractor, the following shall apply:
|
(a) |
The Parties shall comply with all export control, import and foreign trade sanctions laws, rules and regulations, in their performance of this Agreement.
|
(b) |
No Party shall use, sell, export, re-export, distribute, transfer, dispose or otherwise deal with any such Material or any direct product thereof or undertake any transaction or Service without first obtaining all necessary consents, permits and authorizations and completing such formalities as may be required by any such laws or regulations.
|
(c) |
Subcontractor shall be solely responsible for arranging export clearance, including applying for and obtaining any permits, licenses or other authorizations and complying with export clearance formalities, for all exports of Materials used to provide Services and all Services made by Subcontractor hereunder, including exports thereof by Subcontractor to its Affiliates or subcontractors and exports thereof from such Affiliates or subcontractors to Subcontractor or to Amdocs in the United States.
|
(d) |
Each Party represents and warrants for the benefit of the other that it shall not export/re-export or otherwise transfer any Applications or Materials used to provide Services or any Services to any country that is subject to US trade sanctions imposed from time to time (currently, Cuba, Iran, North Korea, Sudan and Syria), to any persons or entities located in or organized under the laws of such country, or who are owned or controlled by or acting on behalf of the governments of such countries, as well as to citizens of such countries, or to persons identified from time to time on applicable US government restricted party lists (e.g., the US Department of Commerce’s Denied Party List, Entity List, Unverified List; the US Department of the Treasury’s List of Specially Designated Nationals and Other Blocked Persons; the US Department of State’s various non-proliferation lists).
|
(e) |
Neither Party shall do anything which would cause the other Party to be in breach of applicable export control or foreign trade control laws, rules and regulations.
|
10.8.8. |
Foreign Corrupt Practices Act (FCPA) Compliance
|
(a) |
Without limiting any other provision of this Agreement, in all activities associated with the performance of the Services, Subcontractor shall perform in a manner consistent with the requirements of the FCPA. Amdocs may, from time to time, in its sole discretion, require that Subcontractor sign a certification statement providing that, in performing the Services, (i) Subcontractor has complied with and will continue to comply with the FCPA; (ii) Subcontractor has not made or caused to be made any offer or payment, directly or indirectly, to any government official or political party or candidate; (iii) Subcontractor has otherwise engaged in no activity which would result in a violation by AT&T of the FCPA; and (iv) such other representation to Amdocs as AT&T or Amdocs deems necessary to ensure compliance with the FCPA.
|
(b) |
Subcontractor agrees that no part of Subcontractor’s compensation will be used for any purpose that could constitute a violation of the FCPA. Subcontractor agrees that it will not hire or in any other way retain a foreign official, a foreign political party or official thereof, or a candidate for foreign political office for any purpose relating to or in connection with the Services.
|
10.8.9. |
Subcontractor’s obligation to comply with all Laws includes the procurement of permits, certificates, approvals, inspections and licenses, when needed, in the performance of this Agreement.
|
10.8.10. |
Subcontractor shall be responsible for any fines or penalties imposed on Subcontractor, Amdocs or AT&T resulting from Subcontractor’s performance hereunder and any failure of Subcontractor or its Subcontractors to comply with applicable Laws or respond in a timely manner to changes in such Laws.
|
10.8.11. |
Offshore Transfer or Processing of AT&T Data
|
(c) |
Subcontractor represents and warrants that, to the extent that Offshore Services are performed and to the extent that AT&T Data is transferred to, processed or stored outside, or accessed from outside of the United States and in addition to its other obligations under this Agreement, Subcontractor shall store and process AT&T Data and store and operate all Application Software in a secure environment designed, monitored and administered to prevent the violation of Laws or this Agreement. In addition, Subcontractor shall establish, and require all Subcontractor Personnel to comply with, stringent policies and rules regarding the removal of AT&T Data or Application Software from Subcontractor facilities and otherwise requiring Subcontractor Personnel to act in accordance with this Agreement and Laws, and Subcontractor shall establish physical and logical measures to ensure that such policies and rules are followed. Under no circumstances shall AT&T Data or Application Software used in Offshore Services be removed from Subcontractor facilities.
|
11.1. |
In consideration for the Services and Deliverables to be provided by Subcontractor hereunder, Amdocs will pay Subcontractor the fees and expenses set forth in the applicable Order, inclusive of all applicable taxes (including, but not limited to, sales tax if applicable to Subcontractor). Subcontractor’s fees will be based on (i) a fixed price for the Services and Deliverables as set out in the Order; or (ii) Subcontractor’s time and materials rates as specified in the Order.
|
11.2. |
In the event of Services provided on a time and materials basis, Subcontractor shall provide to Amdocs an estimate for the cost of the Services, based upon the amount of time that Subcontractor Personnel will be engaged in the provision of the Services. Amdocs shall not pay for any work performed which exceeds the estimate and which is not allowed for in the Order.
|
11.3. |
Save as may otherwise be agreed in an Order, payments to Subcontractor under an Order will be made within [**] days of the last to occur of Amdocs’ receipt of Subcontractor’s invoice and Amdocs’ receipt of the corresponding payment from AT&T. Amdocs will be entitled to withhold payment of any portion of an invoice that it disputes in good faith until such dispute is resolved. All payments will be made in U.S. Dollars unless otherwise mutually agreed to by the Parties. Subcontractor agrees that if Amdocs is required to return amounts to AT&T associated with the Deliverables or Services due to the fault of Subcontractor, then within [**] days of receipt of notice from Amdocs of such requirement, Subcontractor shall reimburse Amdocs such amount.
|
11.4. |
Amdocs shall not be responsible for any travel, meal or other business related expense incurred by Subcontractor whether or not incurred in its performance of its obligations under this Agreement, unless reimbursement of expenses is expressly authorized in an Order pursuant to this Agreement. If reimbursement of expenses is so authorized, in order to be reimbursable, each and every such expense must comply with the requirements of AT&T’s Vendor Expense Policy (the “Expense Policy”), a copy of which will be provided to Subcontractor.
|
11.5. |
Additionally, the Parties agree as follows:
|
(a) |
Travel and living expenses will not be paid for resources working at their primary work location or in the same metropolitan area as their primary work location.
|
(b) |
Certain travel and living expenses may be subject to caps imposed by AT&T and/or Amdocs.
|
11.6. |
Except as provided herein, it is understood that any and all costs and expenses incurred by either Party in connection with this Agreement shall be borne by that Party.
|
11.7. |
With respect to any amount to be paid or reimbursed by Amdocs hereunder, Amdocs may set off against such amount any amount that Subcontractor is obligated to pay Amdocs hereunder.
|
12.1. |
Subcontractor shall perform the Services at the levels of accuracy, quality, completeness, timeliness, responsiveness and productivity that meet high standards of the software and software service industries.
|
12.2. |
Subcontractor acknowledges that Amdocs may be required to pay liquidated damages to AT&T under the Prime Contract if delivery of the Deliverables or Services is delayed. Accordingly, if requested by Amdocs in the applicable Order, Subcontractor agrees to pay to Amdocs such liquidated damages in certain circumstances, to the extent that delivery of the Deliverables or Services is delayed beyond the timetable set forth in the applicable Order by Subcontractor. The delivery of the Deliverables and Services shall be deemed to occur only upon delivery of the Deliverables and Services in a manner that conforms to the requirements and specifications set forth in the applicable Order.
|
12.3. |
Subcontractor acknowledges that AT&T or Amdocs may require that certain service levels be met with regard to certain Deliverables or Services to be provided in connection with this Agreement (“Service Levels”). The Parties agree that a service level agreement, which shall set out the applicable severity levels, response and fix times and the Liquidated Damages applicable in the event of failure to comply with such Service Levels, may be attached to an applicable Order.
|
12.5. |
If Subcontractor becomes aware of any failure by Amdocs to comply with its obligations under this Agreement or any other situation (i) that has impacted or reasonably could impact the maintenance of AT&T’s financial integrity or internal controls, the accuracy of AT&T’s financial, accounting or human resources records and reports or compliance with AT&T’s strategic decisions, or (ii) that has had or reasonably could have any other material adverse impact on the Services in question or the impacted business operations of AT&T, then Subcontractor shall immediately inform Amdocs in writing of such situation and the impact or expected impact and Subcontractor and Amdocs shall meet to formulate an action plan to minimize or eliminate the impact of such situation.
|
13.1. |
The Parties agree that all changes to this Agreement, or any changes to an Order which materially alter the terms and conditions of this Agreement, must be set forth in a written amendment to such Order (such amendment, a “Change Order”), and signed by the Parties.
|
13.2. |
The rights and obligations of both Parties in connection with this Agreement, including any Order, shall not be changed, until a proposed Change Order is agreed to and mutually executed. Until such Change Order has been executed by both Parties, each Party shall continue to perform its obligations in accordance with the Agreement and the applicable Orders.
|
14.3.2. |
Embedded Materials
: To the extent that Subcontractor desires to embed any Subcontractor-Owned Materials into any Software or Developed Materials, Subcontractor will clearly identify such proposal and obtain AT&T’s permission before such embedding. To the extent that Subcontractor-Owned Materials are embedded in any Developed Materials, Subcontractor shall not be deemed to have assigned its intellectual property rights in such Subcontractor Owned Materials to AT&T, but, except as the Parties may otherwise provide in a written amendment, Subcontractor hereby grants to AT&T and Amdocs a license to use such Subcontractor-Owned Materials together with the Developed Materials.
|
14.5.1. |
14.5.2. |
Nothing in this Agreement shall restrict any employee or representative of a Party from using general ideas, concepts, practices, learning or know-how relating to information technology, network and data processing products and services that are retained solely in the unaided memory of such employee or representative after performing the obligations of such Party under this Agreement, except to the extent that such use infringes upon any patent, copyright or other intellectual property right of a Party or its Affiliates; provided, however, that this Section shall not be deemed to limit either Party’s obligations under this Agreement with respect to the disclosure or use of Proprietary Information. An individual’s memory is unaided if the individual has not intentionally memorized the Proprietary Information for the purpose of retaining and subsequently using or disclosing it and does not identify the information as Proprietary Information upon recollection.
|
14.5.3. |
Should either Party incorporate into Developed Materials any intellectual property subject to third party patent, copyright or license rights, any ownership or license rights granted herein with respect to such Materials shall be limited by and subject to any such patents, copyrights or license rights; provided that, prior to incorporating any such intellectual property in any Materials, the Party incorporating such intellectual property in the Materials has disclosed this fact and obtained the prior approval of the other Party.
|
15.1.1. |
AT&T Data is the property of AT&T. To the extent needed to perfect AT&T’s ownership in AT&T Data, Subcontractor hereby assigns all right, title and interest in AT&T Data to AT&T. No transfer of title in AT&T Data is implied or shall occur under this Agreement. Subcontractor shall promptly return AT&T Data, at no cost to AT&T, and in the format and on the media prescribed by AT&T (i) at any time at AT&T’s or Amdocs’ request, regardless of the expiration or termination of this Agreement, (ii) at the expiration or termination of this Agreement, or (iii) with respect to particular AT&T Data, whenever such data is no longer needed by Subcontractor to perform its obligations under this Agreement. AT&T Data shall not be (a) utilized by Subcontractor for any purpose other than as required to fulfill its obligations under this Agreement, (b) sold, assigned, leased, commercially exploited or otherwise provided to or accessed by third parties, whether by or on behalf of Subcontractor, (c) withheld from Amdocs or AT&T by Subcontractor, or (d) used by Subcontractor to assert any lien or other right against or to it. Subcontractor shall promptly notify Amdocs if Subcontractor believes that any use of AT&T Data by Subcontractor contemplated under this Agreement or to be undertaken as part of the performance of this Agreement is inconsistent with the preceding sentence.
|
15.1.2. |
AT&T shall own all right, title and interest to the AT&T Derived Data. To the extent needed to perfect AT&T’s ownership in AT&T Derived Data, Subcontractor hereby assigns all right, title and interest in AT&T Derived Data to AT&T. Subcontractor shall deliver AT&T Derived Data in the format, on the media and in the timing prescribed by Amdocs. Such delivery shall be at no cost to Amdocs unless the format, media, or timing prescribed by Amdocs for delivery would cause Subcontractor to incur substantial additional costs, in which case Subcontractor shall so notify Amdocs and the Parties shall negotiate in good faith to determine whether the format, media, or timing can be changed to avoid Subcontractor’s incurring such costs or to determine whether Amdocs is willing to reimburse Subcontractor for such costs. For the avoidance of doubt, Subcontractor shall not create or develop AT&T Derived Data after the expiration or termination of this Agreement.
|
15.2.2. |
As part of the Services, Subcontractor shall be responsible for developing and maintaining procedures for the reconstruction of lost AT&T Data which are no less rigorous than those maintained by Subcontractor for its own information of a similar nature.
|
15.2.3. |
Subcontractor shall at all times adhere to the procedures and safeguards specified in Sections 15.2.1 and 15.2.2, and shall correct, at no charge to Amdocs, any destruction, loss or alteration of any AT&T Data attributable to the failure of Subcontractor or Subcontractor Personnel to comply with Subcontractor’s obligations under this Agreement.
|
15.3. |
Confidentiality
|
15.3.1. |
Amdocs and Subcontractor have entered into a Non-Disclosure and Confidentiality Agreement dated as of _______________________ (the “NDA”). The Parties acknowledge and agree that the NDA shall apply to the rendering of the Services hereunder and shall survive any termination or expiration of this Agreement or any Order. Subcontractor shall protect the confidentiality of any AT&T confidential and proprietary information in accordance with the NDA.
|
15.3.2. |
At Amdocs’s request, Subcontractor will sign a non-disclosure agreement with AT&T.
|
15.3.3. |
Subcontractor Personnel will sign the Confidentiality and Invention Agreement attached as
Exhibit D
.
|
15.4. |
Information -- Customer
|
15.4.2. |
Subcontractor acknowledges that Customer Information received may be subject to certain privacy laws and regulations and requirements, including requirements of AT&T. Subcontractor shall consider Customer Information to be private, sensitive and confidential. Accordingly, with respect to Customer Information, Subcontractor shall comply with all applicable privacy laws and regulations and requirements, including, but not limited to, the CPNI restrictions contained in Section 222, and, for AT&T’s customers residing in California, the Constitution of California (Article I, § 1), the California Public Utilities Code (§§ 2891 – 2894), and General Order 107-B of the California Public Utilities Commission. Accordingly, Subcontractor shall:
|
(d) |
comply with AT&T’s privacy policies (which are available at http://att.sbc.com/gen/privacy-policy?pid=2506 or its successors made known to Subcontractor); [Internal policies]
|
(e) |
not use any CPNI to market or otherwise sell products to AT&T’s customers, except to the extent necessary for the performance of Services for AT&T or as otherwise approved or authorized by AT&T in this Agreement or in writing;
|
(f) |
make no disclosure of Customer Information to any party other than AT&T or Amdocs, except to the extent necessary for the performance of Services for AT&T or except such disclosure required under force of law; provided that Subcontractor shall provide AT&T and Amdocs with notice immediately upon receipt of any legal request or demand by a judicial, regulatory or other authority or third party to disclose or produce Customer Information; Subcontractor shall furnish only that portion of the Customer Information that is legally required to furnish and shall provide reasonable cooperation to AT&T and Amdocs should AT&T or Amdocs exercise efforts to obtain a protective order;
|
(g) |
not incorporate any Customer Information into any database other than in a database maintained exclusively for the storage of AT&T’s Customer Information;
|
(h) |
not incorporate any data from any of Subcontractor’s other customers, including Affiliates of AT&T, into AT&T’s customer database;
|
(i) |
make no use whatsoever of any Customer Information for any purpose except to comply with the terms of this Agreement;
|
(j) |
make no sale, license or lease of Customer Information to any other party;
|
(k) |
restrict access to Customer Information to only those employees of Subcontractor that require access in order to perform Services under this Agreement;
|
(l) |
implement and comply with a data security plan, approved in advance in writing by Amdocs , and other procedures as may be agreed by the Parties relative to the security of Customer Information at all times in performing Services hereunder;
|
(m) |
prohibit and restrict access or use of Customer Information by any of Subcontractor’s other customers, Subcontractor’s Affiliates, or third parties except as may be agreed otherwise by the Parties ;
|
(n) |
promptly return all Customer Information to Amdocs upon expiration, termination or cancellation of this Agreement or applicable schedule or Order, unless expressly agreed or instructed otherwise by the Parties ; and
|
(o) |
immediately notify Amdocs upon Subcontractor’s awareness of (A) any breach of the above-referenced provisions, (B) any disclosure (inadvertent or otherwise) of Customer Information to any third party not expressly permitted herein to receive or have access to such Customer Information, or (C) a breach of, or other security incident involving, Subcontractor’s systems or network that could cause or permit access to Customer Information inconsistent with the above-referenced provisions, and such notice shall include the details of the breach, disclosure or security incident. Subcontractor shall fully cooperate with AT&T and Amdocs in determining, as may be necessary or appropriate, actions that need to be taken including, but not limited to, the full scope of the breach, disclosure or security incident, corrective steps to be taken by Subcontractor, the nature and content of any customer notifications, law enforcement involvement, or news/press/media contact etc., and Subcontractor shall not communicate directly with any AT&T customer without AT&T’s and Amdocs’s consent, which such consent shall not be unreasonably withheld.
|
16.1. |
It is hereby understood and agreed that Subcontractor will perform its Services hereunder as an independent contractor. Nothing in this Agreement is intended to or shall be deemed to create a partnership or joint venture of any kind or for any purpose. There is no employer/employee relationship between Amdocs and Subcontractor or Subcontractor Personnel, and Amdocs will not have any liability toward Subcontractor or its Personnel based on or arising from such relationship (including, but not limited to, liability for payments to individual employees of Subcontractor for work performed pursuant to a particular Order). The partners, employees, officers and agents of one Party, in the performance of this Agreement, shall act only in the capacity of representatives of that Party and not as employees, officers or agents of the other party and will not be deemed for any purpose to be employees of the other. Amdocs is not, nor shall Amdocs be deemed to be, a joint employer with, or an agent of, Subcontractor. Subcontractor Personnel are not, and will not be, entitled to make any representations or commitments on behalf of Amdocs, and/or represent Amdocs.
|
16.2. |
During the term of this Agreement, Subcontractor, and not Amdocs, shall be solely responsible for: (a) paying all wages and other compensation to Subcontractor Personnel, (b) withholding and payment of all income taxes and any other taxes and applicable amounts with respect to payments made to Subcontractor Personnel, (c) providing all insurance and other employment related benefits to Subcontractor Personnel, and (d) making any overtime payments to Subcontractor Personnel if required by the applicable laws or regulations.
|
16.3. |
Subcontractor Personnel shall not, as a result of providing Services, be entitled to any additional benefits that may accrue or be paid to employees of Amdocs under any employee retirement or insurance program or any other type of employee program of any nature, including, without limitation, sick leave or pay, vacation leave or pay, or health or accident insurance coverage.
|
16.4. |
Subcontractor acknowledges that it will be treated as an independent contractor for all tax purposes, including but not limited to employment taxes. Consequently, Subcontractor hereby accepts exclusive liability for, and agrees to hold Amdocs harmless for and indemnify Amdocs against, the payment by Amdocs of any taxes, contributions or other amounts pursuant to any applicable federal, state or local laws based upon the salaries or payroll of “employees,” as that term is defined for such purposes, and related to Subcontractor’s rendition of the Services pursuant to this Agreement.
|
16.5. |
Subcontractor shall comply with all federal and state laws, including, but not limited to, the requirements to (i) make estimated tax payments and to report all items of gross receipts as income from the operation of its business and (ii) pay all self-employment taxes.
|
19.1.1. |
General Indemnification.
Subject to the provisions of Section 19.4, Subcontractor agrees to indemnify, defend and hold harmless Amdocs and AT&T and their respective officers, directors, employees, agents, representatives, successors, and assigns from any and all Losses and threatened Losses relating to third party claims arising from or in connection with any of the following:
|
(a) |
Subcontractor’s breach of any of the representations, warranties and covenants set forth in Sections 10.4 and 10.8;
|
(c) |
Infringement or misappropriation or alleged infringement or misappropriation of a patent, trade secret, copyright or other proprietary rights in contravention of Subcontractor’s representations, warranties and covenants in Section 10.3;
|
(d) |
Taxes, together with related interest and penalties, that are the responsibility of Subcontractor;
|
(e) |
Any claim, other than an indemnification claim under this Agreement, initiated by Subcontractor’s subcontractor asserting rights under this Agreement;
|
(f) |
[**];
|
(g) |
Any claim by Subcontractor Personnel for death or bodily injury suffered on a AT&T or Amdocs site, except to the extent caused by AT&T’s or Amdocs’s gross negligence or willful misconduct;
|
(h) |
Any claim relating to any: (i) violation by Subcontractor, Subcontractor Affiliates or subcontractors, or their respective officers, directors, employees, representatives or agents, of Federal, state, provincial, local, international or other Laws or regulations or any common law protecting persons or members of protected classes or categories, including laws or regulations prohibiting discrimination or harassment on the basis of a protected characteristic; (ii) liability arising or resulting from the employment of Subcontractor Personnel by Subcontractor, Subcontractor Affiliates or Subcontractors; (iii) payment or failure to pay any salary, wages or other cash compensation due and owing to any Subcontractor Personnel; (iv) employee pension, benefit plan, bonus program, vacation benefit, sick leave benefit, tuition assistance, severance program, medical benefit, stock benefit, stock option benefit or other benefits of any Subcontractor Personnel; (v) other aspects of the employment relationship of Subcontractor Personnel with Subcontractor, Subcontractor Affiliates or subcontractors or the termination of such relationship, including claims for wrongful discharge, claims for breach of express or implied employment contract and claims of joint employment or co-employment;
|
(i) |
Pledging Damages
: Claims by third parties in connection with payment right transfers by Subcontractor associated with this Agreement.
|
19.2.1. |
Subject to the provisions of Section 19.4, Amdocs agrees to indemnify, defend and hold harmless Subcontractor and its officers, directors, employees, agents, representatives, successors, and assigns, from any Losses and threatened losses relating to third party claims arising from or in connection with any of the following:
|
(a) |
Amdocs’s breach of any of the representations, warranties and covenants set forth in Sections 10.4 and 10.8;
|
(b) |
Amdocs breach of its obligations with respect to Subcontractor’s Proprietary Information;
|
(c) |
Any claim by Amdocs employees for death or bodily injury suffered on a Subcontractor facility under this Agreement, except to the extent caused by Subcontractor’s gross negligence or willful misconduct; and
|
(d) |
Infringement or misappropriation or alleged infringement or misappropriation of a patent, trade secret, copyright or other proprietary rights in contravention of Amdocs’s representations, warranties and covenants in Section 10.3.
|
19.4.1. |
Promptly after the entity entitled to indemnification (under Section 19.1 through Section 19.3 or any other provisions of this Agreement) has notice of the commencement or threatened commencement of any civil, criminal, administrative, or investigative action or proceeding involving a claim in respect of which the indemnitee will seek indemnification pursuant to any such Section, the indemnitee shall notify the indemnitor of such claim. No delay or failure to so notify an indemnitor shall relieve it of its obligations under this Agreement except to the extent that such indemnitor has suffered actual prejudice by such delay or failure. Within fifteen (15) days following receipt of notice from the indemnitee relating to any claim, but no later than five (5) days before the date on which any response to a complaint or summons is due, the indemnitor shall notify the indemnitee that the indemnitor elects to assume control of the defense and settlement of that claim (a “Notice of Election”).
|
19.4.2. |
If the indemnitor delivers a Notice of Election within the required notice period, the indemnitor shall assume sole control over the defense and settlement of the claim; provided, however, that (i) the indemnitor shall keep the indemnitee fully apprised at all times as to the status of the defense, and (ii) the indemnitor shall obtain the prior written approval of the indemnitee before entering into any settlement of such claim asserting any liability against the indemnitee or imposing any obligations or restrictions on the indemnitee or ceasing to defend against such claim. The indemnitor shall not be liable for any legal fees or expenses incurred by the indemnitee following the delivery of a Notice of Election; provided, however, that (i) the indemnitee shall be entitled to employ counsel at its own expense to participate in the handling of the claim, and (ii) the indemnitor shall pay the fees and expenses associated with such counsel if, in the reasonable judgment of the indemnitee, based on an opinion of counsel, there is a conflict of interest with respect to such claim or if the indemnitor has requested the assistance of the indemnitee in the defense of the claim or the indemnitor has failed to defend the claim diligently. The indemnitor shall not be obligated to indemnify the indemnitee for any amount paid or payable by such indemnitee in the settlement of any claim if (x) the indemnitor has delivered a timely Notice of Election and such amount was agreed to without the written consent of the indemnitor, (y) the indemnitee has not provided the indemnitor with notice of such claim and a reasonable opportunity to respond thereto, or (z) the time period within which to deliver a Notice of Election has not yet expired.
|
19.4.3. |
If the indemnitor does not deliver a Notice of Election relating to any claim within the required notice period, the indemnitee shall have the right to defend the claim in such manner, as it may deem appropriate. The indemnitor shall promptly reimburse the indemnitee for all such costs and expenses incurred by the indemnitee, including attorneys’ fees.
|
20.2. |
The limitations of liability set forth in Section 20.1 shall not apply with respect to:
|
20.2.1. |
Losses occasioned by the fraud or willful misconduct of a Party;
|
20.2.2. |
Amounts paid with respect to third party claims that are the subject of indemnification under this Agreement;
|
20.2.3. |
Losses occasioned by the wrongful termination of this Agreement by Subcontractor;
|
20.2.4. |
Losses occasioned by any breach of a Party’s obligations under Article 15; or
|
20.4. |
Waiver of Liability Cap
: If, at any time, the total aggregate liability of one Party for claims asserted by the other Party under or in connection with this Agreement equals or exceeds
[**]
of either of the liability caps specified in Section 20.1 and, upon the request of the other Party, the Party incurring such liability refuses to waive such cap and/or increase the available cap to a mutually agreeable amount, then the other Party may terminate this Agreement.
|
20.5. |
Acknowledged Direct Damages
: The following shall be considered direct damages and neither Party shall assert otherwise to the extent they result directly from either Party’s failure to perform in accordance with this Agreement:
|
20.5.1. |
Costs and expenses of recreating or reloading any lost, stolen or damaged AT&T Data;
|
20.5.2. |
Costs and expenses of implementing a work-around in respect of a failure to provide the Services or any part thereof;
|
20.5.3. |
Costs and expenses of replacing lost, stolen or damaged Equipment, Software and Materials;
|
20.5.4. |
Cover damages, including the costs and expenses incurred to procure the Services or corrected Services from an alternate source, to the extent in excess of Subcontractor’s fees under this Agreement;
|
20.5.5. |
Straight time, overtime or related expenses incurred by AT&T or Amdocs, including overhead allocations for employees, wages and salaries of additional employees, travel expenses, overtime expenses, telecommunication charges and similar charges for cover, due to failure of Subcontractor to provide all or a portion of the Services incurred in connection with clauses (i) through (iv) above or otherwise perform in accordance with this Agreement;
|
20.5.6. |
Straight time, overtime or related expenses incurred by Subcontractor in accordance with this Agreement, including overhead allocations for employees, wages and salaries of additional employees, travel expenses, overtime expenses, telecommunication charges and similar charges for cover, due to Amdocs’s failure to perform an obligation under this Agreement;
|
20.5.7. |
Costs and expenses incurred to bring the Services in-house or to contract to obtain the Services from an alternate source, including the costs and expenses associated with the retention of external consultants and legal counsel to assist with any re-sourcing;
|
20.5.8. |
Payments, fines, penalties, sanctions, or interest imposed by a governmental body or regulatory agency for failure to comply with requirements or deadlines; and
|
20.5.9. |
Service level credits or other credits or liquidated damages assessed against Subcontractor.
|
21.1. |
This Agreement shall be in full force and effect for a period of five (5) years commencing on the Effective Date, unless sooner terminated pursuant to the terms hereof (the “Initial Term”). Thereafter the term of the Agreement may be extended for one or more years (each, an “Extension”) upon the parties’ written agreement. The Initial Term and any Extension(s) shall together be referred to as the “Term.”
|
21.2. |
Notwithstanding the foregoing any Order(s) in effect at the time of expiration or Termination of the Agreement will remain in effect and subject to the terms of this Agreement until such Order(s) expire or are terminated in accordance with their terms.
|
22.1.1. |
By Amdocs
. If Subcontractor:
|
(a) |
commits a material breach of this Agreement, which breach is not cured within
[**]
days after notice of the breach from Amdocs;
|
(b) |
commits a material breach of this Agreement which is not capable of being cured within
[**]
days;
|
(c) |
commits numerous breaches of its duties or obligations which collectively constitute a material breach of this Agreement;
|
22.1.2. |
By Subcontractor
: Subcontractor may only terminate in accordance with the following:
|
22.2. |
Critical Services
|
22.3. |
Termination for Convenience
|
22.3.1. |
Amdocs may terminate an Order for convenience upon the provision of [**]written notice to Subcontractor, however, if AT&T determines in good faith that an order Between Amdocs and AT&T regarding specific Project requires immediate Termination due to budget restrictions and terminates such order immediately, Amdocs shall be entitled to terminate the Order regarding such Project immediately by written notice to Subcontractor.
|
22.3.2. |
In the event of Termination for Convenience by Amdocs, Subcontractor shall be entitled to compensation in respect of Services performed and Deliverables Accepted prior to the effective date of such Termination for Convenience. Upon receipt of Amdocs’s payment, Subcontractor shall deliver to Amdocs all drafts and versions of the Deliverables which have been prepared pursuant to such terminated Order.
|
22.4. |
Insolvency
|
22.5. |
Upon receipt of any termination notice from Amdocs, Subcontractor shall, if so requested by Amdocs, immediately cease performing work and incurring costs in connection with the applicable Order. All notices of intention to terminate this Agreement or any Order shall be provided in writing by the terminating Party to the other Party and shall set forth the effective date of Termination. In the event of termination, the provisions of this Agreement that by their nature are intended to survive this Agreement shall survive.
|
23.1. |
The validity, performance, construction and effect of this Agreement shall be governed by the laws of Texas, without giving effect to its choice-of-law rules. In any litigation arising out of this Agreement, and to the fullest extent permitted by Law, the Parties hereby irrevocably agree, submit and waive objection to jurisdiction and venue in, the United States District Court for the Southern District of New York, provided that in any litigation arising out of this Agreement in which AT&T is a party, and to the fullest extent permitted by Law, the Parties hereby irrevocably agree, submit and waive objection to jurisdiction and venue in, the United States District Court for the Central District of Texas and the District Courts of the State of Texas, Bexar County.
|
23.2. |
The Parties will use their best efforts to resolve any controversy or claim arising out of or relating to this Agreement or an Order through good faith negotiations during a period not to exceed [**] days.
|
23.3. |
Arbitration
|
23.3.1. |
Except for claims arising out of the breach of a Party’s obligations under Article 15, any controversy or claim arising out of or relating to this Agreement, or any breach thereof, which cannot be resolved using the procedures set forth above in Section 23.2, shall be finally resolved under the Commercial Arbitration Rules of the American Arbitration Association then in effect; provided, however, that without limiting any rights or remedies under this Agreement, at law, or in equity a Party may have because of an improper termination of this Agreement by the other Party, nothing contained in this Agreement shall limit either Party’s right to terminate this Agreement pursuant to Article 22. Subject to the foregoing, the Parties shall escalate arbitration proceedings so that any dispute relating to Section 22.1 is resolved within any applicable cure period specified in Section 22.1.
|
23.3.2. |
The Arbitration shall take place in New York City, New York and shall apply the law of the State of Texas without regard to its choice of law provisions. The decision of the arbitrator shall be final and binding and judgment on the award may be entered in any court of competent jurisdiction. The arbitrator shall be instructed to state the reasons for its decisions in writing, including findings of fact and law. The arbitrator shall be bound by the warranties, limitations of liability and other provisions of this Agreement. Except with respect to the provisions of this Agreement that provide for injunctive relief rights, such arbitration shall be a precondition to any application by either Party to any court of competent jurisdiction.
|
23.3.3. |
Within
[**]
days after delivery of written notice (“Notice of Dispute”) by one Party to the other in accordance with this Section, the Parties each shall use good faith efforts to mutually agree upon one (1) arbitrator. If the Parties are not able to agree upon one (1) arbitrator within such period of time, then an arbitrator will be chosen in accordance of the Commercial Arbitration Rules of the American Arbitration Association who has at no time ever represented or acted on behalf of either of the Parties, and is not otherwise affiliated with or interested in either of the Parties.
|
23.3.4. |
The arbitrator selected pursuant to this Section shall be a practicing attorney with at least five (5) years’ experience in technology law applicable to the Services. Any such appointment shall be binding upon the Parties. The Parties shall use best efforts to set the arbitration within
[**]
days after selection of the arbitrator, but in no event shall the arbitration be set more than
[**]
days after selection of the arbitrator. Discovery as permitted by the Federal Rules of Civil Procedure then in effect will be allowed in connection with arbitration to the extent consistent with the purpose of the arbitration and as allowed by the arbitrator. The decision or award of the arbitrator shall be rendered within
[**]
days after the conclusion of the hearing, shall be in writing, shall set forth the basis therefor, and shall be final, binding and nonappealable upon the Parties and may be enforced and executed upon in any court having jurisdiction over the Party against whom the enforcement of such decision or award is sought. Each Party shall bear its own arbitration costs and expenses and all other costs and expenses of the arbitration shall be divided equally between the Parties; provided, however, the arbitrator may modify the allocation of fees, costs and expenses in the award in those cases where fairness dictates other than such allocation between the Parties.
|
23.4. |
Continued Performance
|
23.4.1. |
General
: Each Party agrees that it shall, unless otherwise directed by the other Party, continue performing its obligations under this Agreement while any dispute is being resolved; provided that this provision shall not operate or be construed as extending the term of this Agreement. For purposes of clarification, AT&T Data may not be withheld by Subcontractor pending the resolution of any dispute.
|
23.4.2. |
Non-Interruption of Service
: Subcontractor acknowledges and agrees that any interruption to the Service will cause irreparable harm to AT&T, in which case an adequate remedy at law would not be available. Subcontractor expressly acknowledges and agrees that, pending resolution of any dispute or controversy, it will not deny, withdraw, or restrict Subcontractor’s provision of the Services to AT&T under this Agreement, except as specifically and expressly agreed in writing by AT&T and Subcontractor. Subcontractor further agrees as follows:
|
(a) |
In the event of any material breach by Subcontractor (or attempt or threat of breach) of any of the terms of this Agreement that could reasonably be expected to cause an interruption to the Services or compromise of rights of AT&T under this Agreement (including provision of access to computers or other files containing AT&T Data in accordance with this Agreement), Amdocs may proceed directly to court without going through any otherwise applicable procedures or waiting periods set forth in Article 23. If a court of competent jurisdiction should find that Subcontractor has breached (or attempted or threatened to breach) any such obligations, Subcontractor agrees that without any additional findings of irreparable injury or other conditions to injunctive relief, it shall not oppose the entry of an appropriate order compelling performance by Subcontractor and restraining it from any further breaches (or attempted or threatened breaches).
|
(b) |
Subcontractor shall not intentionally interrupt the Services or provide reduced levels of Service quality or support.
|
(c) |
To the extent that Subcontractor suspends the availability of the Services or any portion of the Services because it is required to do so by a governmental authority of competent jurisdiction (“Government Requirement”), Subcontractor shall promptly use all reasonable efforts to comply with any such Government Requirement to the extent necessary to fully restore the Services.
|
24.1. |
A Party is excused from performing its obligations under this Agreement or any Order if, to the extent that, and for so long as:
|
i. |
such Party’s performance is prevented or delayed by an act or event (other than economic hardship, changes in market conditions or insufficiency of funds) that is beyond its reasonable control and could not have been prevented or avoided by its exercise of due diligence; and
|
ii. |
such Party gives written notice to the other Party, as soon as practicable under the circumstances, of the act or event that so prevents such Party from performing its obligations.
|
i. |
Terminate, in whole or in part, the affected Orders, without any liability to Subcontractor, or
|
ii. |
Suspend the affected Orders or any part thereof for the duration of the delay; and (at Amdocs’ option) obtain Material and Services elsewhere and deduct from any commitment under such Order the quantity of the Material and Services obtained elsewhere or for which commitments have been made elsewhere; and resume performance under this Agreement or such Order when Subcontractor resumes its performance; and extend any affected Delivery Date or performance date up to the length of time Subcontractor’s performance was delayed or prevented.
|
24.3. |
If Subcontractor fails to provide Services in accordance with this Agreement due to the occurrence of a force majeure event, all amounts payable to Subcontractor hereunder shall be equitably adjusted in a manner such that Amdocs is not required to pay any amounts for Services that it is not receiving from Subcontractor.
|
24.4. |
Without limiting Subcontractor’s obligations under this Agreement, whenever a force majeure event or disaster causes Subcontractor to allocate limited resources between or among Subcontractor’s customers and Affiliates, Amdocs shall receive at least the same treatment as comparable Subcontractor customers.
|
25.1. |
Subcontractor will not induce or attempt to induce AT&T, either directly or indirectly, to cease doing business with Amdocs. In addition, Subcontractor agrees that during the term of this Agreement, Subcontractor will not, directly or indirectly, provide services to AT&T that would involve Amdocs’s software or applications.
|
25.2. |
Any Amdocs Affiliates shall be entitled to place Orders with Subcontractor pursuant to this Agreement; provided, however, Amdocs shall remain primarily liable for any Orders placed on behalf of one or more Amdocs Affiliates. In such event, the references in this Agreement to Amdocs shall be deemed to be references to the applicable Amdocs Affiliate.
|
25.3. |
Any notice, demand or communication which under the terms of this Agreement or otherwise must or may be given or made by either Party shall be in writing and shall be given or made by certified or registered air mail, return receipt requested, facsimile (electronic confirmation required) or any delivery services requiring signature of receipt, addressed to the respective Parties as set forth on the first page of this Agreement or other addresses of which a Party may notify the other Party in writing. Subcontractor shall concurrently transmit to Amdocs, in the same manner transmitted to or received from AT&T, any request, permission, approval, claim, or other notice which is transmitted between Subcontractor and AT&T and made in connection to this Agreement.
|
25.4. |
Subcontractor’s failure to perform its responsibilities under this Agreement or to meet the Service Levels shall be excused if and to the extent such Subcontractor non-performance is caused by the act or omission of Amdocs (each a “Savings Event”), but only if (i) Subcontractor provides prompt and reasonable notification (including by e-mail) to Amdocs of such act or omission and Subcontractor’s inability to perform under such circumstances, (ii) Subcontractor provides Amdocs with a reasonable opportunity to correct such act or omission and thereby avoid such Subcontractor non-performance, and (iii) Subcontractor uses commercially reasonable efforts to perform notwithstanding such act or omission. Without limiting the foregoing, to the extent Amdocs reasonably believes that a Savings Event has occurred it shall use commercially reasonable efforts to correct such Savings Event and avoid such Subcontractor non-performance.
|
25.5. |
This Agreement, including the NDA and all Orders and Exhibits hereto, is the complete and exclusive statement regarding the subject matter hereof and supersedes any prior or contemporaneous oral or written agreement, understanding, communication or representation with regard to the subject matter hereof. This Agreement and any Order may only be modified by a written instrument signed by the authorized representatives of the Parties.
|
25.6. |
If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate or render unenforceable the entire Agreement, but rather the entire Agreement shall be construed as if not containing the particular invalid or unenforceable provision and the rights and obligations of the Parties shall be construed and enforced accordingly. In addition, the parties hereby agree to cooperate to replace the invalid or unenforceable provision(s) with valid and enforceable provision(s) which will achieve the same result (to the maximum legal extent) as the provision(s) determined to be invalid or unenforceable.
|
25.7. |
No waiver of rights arising under this Agreement or Orders shall be effective unless in writing and signed by the party against whom such waiver is sought to be enforced. No failure or delay by either party in exercising any right, power or remedy under this Agreement shall operate as a waiver of any such right, power or remedy and/or prejudice any rights of such party.
|
25.8. |
Headings used in this Agreement are for convenience only and shall not be used for interpretation purposes.
|
25.9. |
Obligations under this Agreement, which by their nature would continue beyond the expiration or ending in any other way of this Agreement shall survive the expiration or termination of this Agreement.
|
25.10. |
Neither Party shall disclose or publicly refer to the other party or the existence of this Agreement in any advertising or promotional materials, business plans, investment memoranda, or announcements without the other party’s specific, written consent, except that disclosure to AT&T shall be permitted.
|
AMDOCS INC.
|
RADCOM Inc,
|
By:
/s/ Thomas C. Druey
Name:
Thomas C. Drury
Title:
President
Date:
March 26, 2015
|
By:
/s/ David Ripstein
Name:
David Ripstein
Title:
CEO
Date:
March 23, 2015
|
|
|
EXHIBIT A –[**]
|
3
|
EXHIBIT B -- [**]
|
4 |
EXHIBIT C – [**]
|
28
|
EXHIBIT D -- [**]
|
29
|
EXHIBIT E -- [**]
|
31
|
EXHIBIT F -- [**]
|
33
|
1. |
Scope of the Agreement
|
a. |
As a reseller Amdocs has the right to offer and resell the Products and related services (maintenance and support, professional services and training) to End Users by reselling Product licenses.
|
b. |
Orders for Products shall be made under this Agreement, and orders for related services (such as professional services and maintenance and support) shall be made under an applicable service agreement, if needed, and as will be entered between the parties on a case by case basis.
|
c. |
Amdocs or any of Amdocs's Affiliate (as this term is defined herein) shall be entitled to place orders with the Company or any of the Company’s Affiliates under this Agreement and/or the applicable service agreement, as will be mutually agreed on a case by case basis. In such event, the references in this Agreement and/or the applicable service agreement, to Company and/or Amdocs shall be deemed to be references to the applicable Company's and/or Amdocs Affiliate.
|
d. |
The Products shall be licensed to End Users pursuant to a written license or subscription agreement to be entered into between Company and the End Users directly. Company will handle any claim related to that license/subscription agreement. Amdocs shall not be a party to the license/ subscription agreement, nor bound by any of its provisions.
|
e. |
Company and its suppliers/lawful licensors own all right, title and interest in the Products and related documentation, including all intellectual property rights therein and all, updates and upgrades. With respect to modification, customizations and derivative works, only the above will apply unless otherwise agreed in writing. The rights granted to Amdocs under this Agreement confer no title to, or ownership interest in, the Products and documentation and they are not deemed as a sale of any copies or rights in the Products or the documentation. There are no implied licenses in this Agreement, and all rights not expressly granted to Amdocs herein are reserved solely to Company and/or its suppliers/lawful licensors.
|
3. |
Revenue Sharing
|
a. |
End User Licenses (reselling)
:
|
1. |
The fee payable by Amdocs to Company for hardware and third party software (other than software of Radcom or its affiliates) related to the RADCOM’s Products and provided by Radcom shall be [**] of the Proceeds (Amdocs) paid by the End User to Amdocs which are attributed to the RADCOM’s Products sold by Amdocs to the End User in the applicable transaction
(“third party hardware and software license fees”)
.
|
2. |
The fee payable by Amdocs to Company for RADCOM software licenses Products shall be [**] of the Proceeds (Amdocs) paid by the End User to Amdocs which are attributed to licenses of the Products sold by Amdocs to the End User in the applicable transaction. ("
License Fees
").
|
a. |
Company will extend maintenance and support to End Users, as mutually agreed in accordance with the following support options:
|
ii. |
Support Option B
- Company will provide End Users Support Level One, Two and Three and maintenance, provided the End User enters into a maintenance and support contract directly with Company.
|
iii. |
Support Option C
- Company will provide Support Level One, Two and Three to End Users who have purchased support and maintenance services from Amdocs.
|
iv. |
Company will provide maintenance and support in accordance with its standard maintenance and support agreement. Company is fully aware and confirms that the maintenance and support terms will be agreed directly between the End User and the Company.
|
i. |
Support Option A - The fee paid by Amdocs to Company for Support Option A shall be [**] of the Proceeds (Amdocs) for such services.
|
ii. |
Support Option B - The fee paid by Company to Amdocs for Support Option B shall be [**] of the Proceeds received by Company for such services.
|
iii. |
Support Option C - The fee paid by Amdocs to Company for Support Option C shall be [**] of the Proceeds (Amdocs) for such services.
|
a. |
Company shall train free of charge [**] employees of Amdocs (and its Affiliates) in reselling and marketing the Company Software.
|
b. |
To improve the use of the Company Software in connection with Amdocs Software, Company will assist Amdocs’ technical team to educate itself on the features and uses of the Company Software.
|
a. |
All undisputed amounts owed by Amdocs to Company shall be due hereunder within [**] days following the later of receipt of the applicable invoice or actual payment from the End User. All undisputed fees owed by Company to Amdocs shall be payable within [**] days following the later of Company's receipt of an invoice from Amdocs or receipt of payment from the End User. Company will not issue the invoice before the Products sold to the End User have been delivered to the End User and in case of software licenses, not before the Products were made available to the End-User. Invoicing for applicable services shall be in accordance with the relevant service agreement between the Parties or as otherwise agreed in an applicable service order.
|
b. |
Each party will notify the other party in writing within [**] business days following receipt of payment from End-User which trigger the payment obligations under this Agreement and the amount which the other party is entitled to receive.
|
c. |
All fees payable by Amdocs to Company or by Company to Amdocs are on an inclusive basis and include all current and future applicable taxes and duties, including, but not limited to, Value Added Tax, sales tax and withholding tax, if applicable to such payments. In the event that any of the amounts payable to a Party (or its Affiliates) are subject to withholding taxes, the other Party (or its Affiliates) shall withhold and pay over the required amounts to the appropriate tax authorities within the time provided by law and shall furnish to the other within [**] days thereof, or as soon as practicable thereafter, the official receipts of the relevant tax authorities for the taxes involved.
|
a. |
This Agreement shall commence on the Effective Date and shall be valid for a period of [**] months (“
Original Term
”). This Agreement will be automatically renewed for an additional t [**] month period each time (“
Additional Period
”), unless either party notifies the other of its intent to terminate this Agreement at least [**] days prior to the end of the Original Term or the applicable Additional Period. The Original Term and the Additional Period, if any, shall be collectively referred to herein as the “Term” of this Agreement.
|
b. |
Notwithstanding the foregoing, (i) Either party may terminate this Agreement upon [**] days written notice to the other party; (ii) This Agreement may be terminated upon any breach of this Agreement, which remains uncured for [**] days after written notice to the breaching party. In such case, the terminating party may notify the breaching party that this Agreement will terminate following such [**] days cure period.
|
c. |
Notwithstanding termination of this Agreement: (i) the terms and conditions of this Agreement will continue to apply to any purchase orders issued by Amdocs and accepted by Company, prior to the termination date (ii) the terms and conditions of this Agreement will continue to apply to any outstanding quotes issued by Amdocs prior to the termination date for a period of [**] days.
|
b. |
Confidentiality.
For purposes of this Agreement, the parties agree that exchange and treatment of confidential information shall be treated in accordance with the Non Disclosure & Confidentiality Agreement between Company and Amdocs which is attached hereto as
Schedule C
.
|
c. |
Independent Contractors
. The parties to this Agreement are and shall remain independent contractors, and nothing herein shall be construed to create a partnership, agency or joint venture between Company and Amdocs. No fiduciary relations exist.
|
d. |
Responsibility for Expenses.
During the term of this Agreement, each party will be responsible for its own expenses associated with its sales activities and the negotiation of any reselling agreement signed by the parties.
|
e. |
Warranty.
Company represents and warrants that (i) it has the right and authority to enter into this Agreement and to grant Amdocs (and its Affiliates) the rights set out in this Agreement, and the rights and licenses hereunder with respect to the Products; (ii) the media, if any, on which the Products are provided shall be free of material defects in material and workmanship and free of any viruses that can be detected by commercially available anti-virus software (iii) any services provided by Company or its Affiliates under this Agreement shall be provided in a workmanlike manner in accordance with generally accepted standards of professional care and skill applicable to the type of work performed.
It is agreed that additional warranty clauses would be agreed directly between the End-User and the Company in the applicable license agreement.
|
g. |
Liability.
Except for liability relating to (i) the parties’ confidentiality obligations hereunder and (ii) indemnification obligations under section 12 (h) [excluding 12 (h)(2)] hereunder (Non Infringement and indemnity), and (iii) willful misconduct, (1) neither party will be liable to the other party for any incidental, special, indirect or consequential damages of any kind or nature, whether alleged to be attributed to a breach of this Agreement, tort or otherwise, including, without limitation, lost profits resulting from an alleged breach of this Agreement even if, under applicable law, such lost profits would not be considered consequential or special damages; and (2) the total liability of each party to the other under this Agreement shall not exceed the amounts payable under all orders for Products and services.
|
h. |
Non-Infringement and Indemnity.
Company represents and warrants that it has the right and authority to enter into this Agreement and to grant Amdocs (and its Affiliates) the rights set out in this Agreement, and the rights and licenses hereunder with respect to the Products/services. Company represents and warrants that the Products and services do not violate or infringe any patent, copyright, trade secret or other proprietary right of any third party and that it is not aware of any facts upon which such a claim for infringement could be based. Company shall at its own expense indemnify, defend and hold harmless Amdocs, its affiliates, their respective customers, officers, directors, employees, agents and End Users (“Amdocs’ indemnitee”) from any and all claims (including third party ones), allegations, demands, suit, cause of action, liabilities, losses, damages, awards, judgments or settlements including all reasonable costs and expenses related thereto including reasonable attorneys’ fees (“Claims”) that will be awarded against Amdocs’ indemnitee by a court of competent jurisdiction or arbitration panel directly arising from or in connection with any Claims that (i) the provision of the Products/services or related services by Company infringes any copyright, trademark, patent, trade secret or other intellectual property right or (ii) Amdocs is in breach of a End User Agreement due to failure on the part of Company to provide the Products/services or related services in accordance with the terms of this Agreement or (iii) Company’s violation of confidentiality or (iv) Claim by or on behalf of Company’s employees, alleging that a relationship of employer-employee exists between them and Amdocs; provided that Amdocs (i) notifies Company promptly in writing of such claim provided that Amdocs’s failure to provide such notice or to provide it promptly will relieve the Company of its indemnification obligations only if and to the extent that such failure prejudices the Company’s ability to defend the Claims; (ii) grants Company sole control over the defense and settlement thereof; and (iii) reasonably cooperates in response to Company’s request for assistance, at the Company’s sole expense.
|
i. |
Independent Evaluation
. Amdocs acknowledges that its investment in performing pursuant to this Agreement is the result of its own independent evaluation of the Products and the business opportunities related to the distribution of the Products.
|
j. |
Non-Solicitation
. In accordance with the applicable law, during the term of this Agreement and for a period of one year after its termination, neither party will solicit, interview, hire, or discuss employment prospects with any officer or employee of the other party; nor will the parties during said restriction period solicit, interview, hire or discuss employment prospects with any former officer or employee of the other party who voluntarily terminated his or her employment for a period of six (6) months after such termination.
|
k. |
Assignment
. Neither party may assign or transfer any of the rights or responsibilities set forth herein (including by merger or acquisition) without the express written consent of the other. Notwithstanding the above, Amdocs has the right to assign this Agreement to any of its Affiliates.
|
l. |
Press Releases.
Neither party shall issue a press release regarding this Agreement, nor disclose its existence without the express prior written consent of the other party.
|
m. |
Law and Jurisdiction.
The validity, performance, construction and effect of this Agreement shall be governed by the laws of the State of New York, U.S.A., excluding its choice of law rules.
|
n. |
Escalation Process
. The Parties shall promptly attempt to resolve through good faith negotiation any dispute or disagreement between them relating to this Agreement. Each of the Parties may escalate the dispute or disagreement, first to VP Partner Sales (for Amdocs) and VP Products and Marketing (for Company); if VP Partner Sales and VP Products and Marketing fail to reach a consensus within 7 days, the matter shall be escalated to their managers (“
Lead Executives
”).
|
o. |
Dispute Resolution
. Subject to the escalation process set forth in section 12(m) above, any dispute under this Agreement shall be referred to and resolved in accordance with following provisions:
|
i. |
Notwithstanding sections 12(m) and 12(n)(iii), intellectual property indemnification claims for court proceedings initiated by a third party against Amdocs (or its Affiliate) may be brought in the court in which Amdocs (or its Affiliate) is being sued.
|
q. |
Force Majeure.
Neither party shall be liable hereunder by reason of any failure or delay in the performance of its obligations under this Agreement (other than the obligation to make payments when due) that is caused by force majeure events, such as fire, war, shortage, embargo, riot, insurrection, sabotage, explosion, earthquake, governmental action (rendering provision of the Services unlawful), and/or any other cause, which is beyond the control of such party PROVIDED that such party (i) gives prompt notice of the event causing the failure or delay and (ii) makes all reasonable efforts to perform its obligations as soon as possible. In the event that either party is unable to perform its obligations for a period of twenty-one (21) days or more the other party may give notice of termination of this Agreement.
|
r. |
Statute of limitation
- in no event will any cause of action be brought against either Party (or any of its Affiliates) more than three years from the date when either party knew, or should have known after reasonable investigation, of the facts giving rise to the claim(s). The foregoing does not apply to any claim brought against either partyin relation to infringement of any copyright, trademark, patent, trade secret or other intellectual property right .
|
Radcom Limited
(“Company”)
|
Amdocs Software Systems Limited
(“Amdocs”)
|
|
By:
/s/ David Ripstein
Name:
David Ripstein
Title:
President & CEO
Date:
December 30, 2015
|
By:
/s/ Philip Butler
Name:
Philip Butler
Title:
Director and Assistant Secretary
Date:
December 30, 2015
|
|
|
|
|
NON-DISCLOSURE AND CONFIDENTIALITY AGREEMENT
THIS NON-DISCLOSURE AND CONFIDENTIALITY AGREEMENT (“Agreement”) is made as of the _25_ day of _August_ 2008
BY AND BETWEEN:
Radcom _Ltd., a corporation organized and existing under the laws of Israel, having its principal offices at 24 Raoul Wallenberg St. Tel-Aviv, 69719, Israel (hereinafter referred to as “COMPANY”)
AND
Amdocs Software Systems Ltd., a corporation organized and existing under the laws of Ireland, having its principal offices at First Floor, Block S, Eastpoint Business Park, Clontarf, Dublin 3, Ireland (hereinafter referred to as “AMDOCS”).
WHEREAS COMPANY is the owner and/or author of and/or has the rights to license certain valuable proprietary routines, computer programs, documentation, trade-secrets, systems, methodology, know-how, marketing and other commercial knowledge, techniques, specifications, plans and other proprietary information associated with and forming part of its software systems, all of which are referred to in this Agreement as the “COMPANY Proprietary Information”; and
WHEREAS AMDOCS (or any of its affiliated companies) is the owner and/or author of and/or has the rights to license certain valuable proprietary routines, computer programs, documentation, trade-secrets, systems, methodology, know-how, marketing and other commercial knowledge, techniques, specifications, plans and other proprietary information, including but not limited to material associated with and forming part of the proprietary software systems of AMDOCS, all of which are referred to in this Agreement as the “AMDOCS Proprietary Information”; and
WHEREAS COMPANY and AMDOCS wish to evaluate the possibility of cooperating in providing joint solution to telecommunication services providers, and thereafter the parties may, if agreed between them, enter into an agreement relating to such cooperation (the evaluation process and performance of such agreement, if any, are hereinafter referred to as the “Project’’’); and
WHEREAS each party may, in connection with the Project, disclose to the other party information which is part of its Proprietary Information and, therefore, the parties wish to set forth the manner in which the COMPANY Proprietary Information and the AMDOCS Proprietary Information will be treated during the Project;
NOW THEREFORE, in consideration of the mutual agreements contained herein, the parties agree as follows:
1. | The term “Proprietary Information”, whenever relating to COMPANY’S information, shall mean the COMPANY Proprietary Information and whenever relating to AMDOCS’ information, shall mean the AMDOCS Proprietary Information, |
2. | The receiving party agrees to hold in confidence the disclosing party’s Proprietary Information, and to refrain from copying, distributing, disseminating or otherwise disclosing such Proprietary Information to anyone, other than to those of its employees who have a need to know such Proprietary Information for purposes of the Project. AMDOCS’ employees are deemed to include employees of its affiliates in the Amdocs group of companies who will be involved in the Project. |
3. | The receiving party undertakes not to use the Proprietary Information of the disclosing party for any purposes other than the Project, and not to sell, grant, make available to, or otherwise allow the use of the disclosing party’s Proprietary Information by any third party, directly or indirectly, except as expressly permitted herein. |
4. | In addition, except as otherwise agreed by the parties in writing for purposes of the Project, each party undertakes not to use, directly or indirectly, the Proprietary Information of the other party or any derivatives thereof in any form (e.g., reports and analyses) for purposes of: | |
(a) | the sale or licensing of any software systems, or the provision of any services, to any third parties; and | |
(b) | the development of any software systems, for itself or any third parties. | |
5. | Upon the termination and/or expiration of this Agreement for any reason and/or upon the conclusion of the Project and/or at the request of the disclosing party, the receiving party shall: | |
(a) | return to the disclosing party any document or other material in tangible form in its possession being part of the Proprietary information of the disclosing party, unless otherwise agreed upon in writing between the parties; and/or | |
(b) | destroy any document or other material in tangible form that contains Proprietary Information of the disclosing party and the receiving party; and | |
(c) | confirm such return or destruction in writing to the disclosing party. | |
6. | Disclosure of the disclosing party’s Proprietary Information to the receiving party may only be made in writing or other tangible or electronic form that is marked as proprietary and/or confidential information of the disclosing party, or occur by demonstration of any product within the AMDOCS products. | |
7. | Disclosure of the disclosing party’s Proprietary Information to the receiving party shall in no way serve to create, on the part of the receiving party, a license to use, or any proprietary right in, the disclosing party’s Proprietary Information or in any other proprietary product, trademark, copyright or other right of the disclosing party. | |
8. | The confidentiality obligations of the receiving party regarding the disclosing party’s Proprietary Information shall not apply to such Proprietary Information which: | |
(a) | becomes public domain without fault on the part of the receiving party; | |
(b) | is lawfully obtained from a source other than the disclosing party, free of any obligation to keep it confidential; | |
(c) | is previously known to the receiving party without an obligation to keep it confidential, as can be substantiated by written records; | |
(d) | is expressly released in writing from such obligations by the party that owns or has the rights to such Proprietary Information; or | |
(e) | is required to be disclosed pursuant to law, regulation, judicial or administrative order, or request by a governmental or other entity authorized by law to make such request; provided, however, that the receiving party so required to disclose shall first notify the disclosing party to enable it to seek relief from such requirement, and render reasonable assistance requested by the disclosing party (at the disclosing party’s expense) in connection therewith. |
9. | Any use by the receiving party of the disclosing party’s Proprietary Information permitted under this Agreement is conditioned upon the receiving party first taking the safeguards and measures required to secure the confidentiality of such Proprietary Information. Without limiting the generality of the foregoing, each party shall draw to the attention of its employees, including those employees of the affiliates referred to in Section 2 above, who shall have access to the Proprietary Information of the other party, all the obligations concerning such Proprietary Information contained in this Agreement |
10. | This Agreement shall be in full force and effect for a period of seven (7) years commencing on the date first stated above. However, the provisions of Sections 3, 4 and 7 above shall survive the termination and/or expiration of this Agreement for any reason. |
11. | Each party acknowledges that its breach of this Agreement may cause the other party extensive and irreparable harm and damage, and agrees that the other party shall be entitled to injunctive relief to prevent use or disclosure of its Proprietary Information not authorized by this Agreement, in addition to any other remedy available to the other party under applicable law. |
12. | This Agreement constitutes the entire agreement between the parties and supersedes any prior or contemporaneous oral or written representation with regard to the subject matter hereof. This Agreement may not be modified except by a written instrument signed by both parties. |
13. | If, however, any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate or render unenforceable the entire Agreement, but rather the entire Agreement shall be construed as if not containing the particular invalid or unenforceable provision or provisions, and the rights and obligations of the parties shall be construed and enforced accordingly. In addition, the parties agree to cooperate to replace the invalid or unenforceable provision(s) with valid and enforceable provision(s) which will achieve the same result (to the maximum legal extent) as the provision(s) determined to be invalid or unenforceable. |
14. | Neither this Agreement, nor the disclosure of Proprietary Information under this Agreement, nor the ongoing discussions and correspondence between the parties, shall constitute or imply a commitment or binding obligation between the parties to enter into any business arrangement. If, in the future, the parties elect to enter into a binding commitment regarding a business arrangement, such commitment will be explicitly stated in a separate written agreement executed by both parties, and the parties hereby affirm that they do not intend their discussions, correspondence, and other activities to be construed as forming a contract relating thereto or any other transaction between them without execution of such separate written agreement. |
15. | This Agreement shall be governed by and construed under the laws of England, without giving effect to such laws’ provisions regarding conflicts of law. |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first stated above. |
RADCOM | Amdocs Software Systems Ltd. | |||
(“COMPANY”) | (“AMDOCS”) | |||
By: | /s/ Udi Kohav | By: | /s/ Alan Weldsect | |
Name: | Udi Kohav | Name: | Alan Weldsect | |
Title: | VP Business Dev. | Title: | Deputy General Manager | |
Date: | 25/8/08 | Date: | 9 th September 08 |
e . |
RADCOM warrants and represents that all RADCOM Software shall function in all material respects in accordance with the Documentation for a period defined as the Warranty Period in the Supplement Agreement (“Warranty Period”). RADCOM warrants that during the Warranty Period, the RADCOM Software will be free from defects in material and workmanship under conditions of normal use, and will operate substantially in accordance with the applicable Documentation.
|
h. |
Indemnity
|
(1) |
making, repair, receipt, use, importing, sale or disposal (and offers to do any of the foregoing) of Provided Elements (or having others do any of the foregoing, in whole or in part, on behalf of or at the direction of the Indemnified Parties), provided that the above acts were provided or performed by RADCOM, or performed by Amdocs as permitted by this Agreement, the Supplement Agreement, the General Agreements, and the Subordinate Support and Maintenance Agreement. or
|
(2) |
use of Provided Elements in combination with products, hardware, software, interfaces, systems, content, services, processes, methods, documents, materials, data or information not furnished by RADCOM, including, for example, use in the form of the making, having made or using of an apparatus or system, or the making or practicing of a process or method unless the function performed by the Provided Elements in such combination is of a type that is neither normal nor reasonably anticipated for such Provided Elements (a “Combination Claim”); With respect to a Combination Claim notwithstanding the above and/or anything to the contrary herein, the use of Provided Elements by Amdocs in combination with products, hardware, software, interfaces, systems, content, services, processes, methods, documents, materials, data or information furnished by Amdocs, its Affiliates and/or anyone acting on their behalf, differently than and/or in addition to and/or independently of from those provided by RADCOM to Amdocs for AT&T (the “Independent Materials”), shall not be considered for the sake of this Agreement, as a “Combination Claim”.
|
RADCOM Ltd. (“Company”)
|
Amdocs Software Systems Limited (“Amdocs”)
|
By:
/s/ David Ripstein
Name: David Ripstein
Title: President and CEO
Date: December 30, 2015
|
By: /s/ Philip Butler
Name:
Philip Butler
Title: Director & Assistant Secretary
Date: December 30, 2015
|
|
|
a. |
This Agreement shall only apply to Amdocs’ resale to AT&T of the Software and provision of Services described herein and in Appendix A for the Virtual Probe Solution (vprobe), subject to the terms and conditions of this Agreement and the EULA and pursuant to and in conformance with Statements Of Work (each an “Order”) submitted by Amdocs or its Affiliates. The applicable fee for the Material and Services is specified in Appendix B. Amdocs Affiliates may issue Orders under this Agreement. Radcom shall not reject any Order for Material or Services described in Appendix A unless the Order includes:
|
1. |
Delivery Dates to which Radcom has not agreed, prior to the placement of the Order, and which Radcom is unable to meet; or
|
2. |
Terms and conditions to which Radcom has not agreed, prior to placement of the Order, and which are objectionable to Radcom; or
|
3. |
Prices contrary to those established under this Agreement.
|
b. |
If Radcom rejects an Order, Radcom, shall give Amdocs written notice stating Radcom’s reasons for rejecting the Order and the modifications, if any, that would make the Order acceptable to Radcom. Radcom shall furnish Materials that materially conform to the Specifications established under this Agreement or as otherwise set forth in an Order. If Radcom is unable to tender conforming Material, Radcom shall not tender non-conforming Material; the Parties agree non-conforming tenders are not an accommodation to Amdocs. All Delivery Dates are firm, and time is of the essence.
|
a. |
requires as a condition of use, that such Viral Open Source Software or other software combined with such Viral Open Source Software be:
|
b. |
as a condition of use by AT&T, affect or purport to affect any AT&T intellectual property right not originating exclusively in such Viral Open Source Software; or
|
c. |
impede or restrict AT&T’s ability to use the corresponding Materials as contemplated in the Specifications and Documentation.
|
a. |
Each Party giving or making any notice, consent, request, demand, or other communication (each, a “Notice”) pursuant to this Agreement must give the Notice in writing and use one of the following methods, each of which for purposes of this Agreement is a writing: in person; first class mail with postage prepaid; Express Mail, Registered Mail, or Certified Mail (in each case, return receipt requested and postage prepaid); internationally recognized overnight courier (with all fees prepaid); facsimile transmission; or email. If Notice is given by facsimile transmission or e-mail, it must be confirmed by a copy sent by any one of the other methods. Each Party giving Notice shall address the Notice to the appropriate person (the “Addressee”) at the receiving Party at the address listed below:
|
b. |
A Notice is effective only if the Party giving notice has complied with the foregoing requirements of this Section and the Addressee has received the Notice. A Notice is deemed to have been received as follows:
|
1. |
If a Notice is delivered by first class mail, five (5) days after deposit in the mail;
|
2. |
If a Notice is furnished in person, or sent by Express Mail, Registered Mail, or Certified Mail, or internationally recognized overnight courier, upon receipt as indicated by the date on the signed receipt;
|
3. |
If a Notice is sent by e-mail or facsimile transmission, upon successful transmission to the receiving machine, if such Notice is sent in time to allow it to be accessible by the Addressee before the time allowed for giving such notice expires, and a confirmation copy is sent by one of the other methods.
|
c. |
The addresses and telephone numbers to which notices or communications may be given to the Addressees of either Party may be changed by written notice given by such Party to the other pursuant to this Section.
|
a. |
This Agreement is effective on upon final signature (the “Effective Date”) and, unless terminated as provided in this Agreement, shall remain in effect for a term ending [**]
years
from the Effective Date (the “Initial Term”).
|
b. | After the Initial Term, Amdocs shall have the option to extend the term for an additional period of [**] months by giving Radcom written notice at least [**] days prior to the expiration of the Initial Term. The termination or expiration of this Agreement shall not affect the obligations of either Party to the other Party pursuant to any Order previously executed hereunder, and the terms and conditions of this Agreement shall continue to apply to such Order as if this Agreement were still in effect. Likewise, termination, or expiration of the General Agreements shall not affect the obligations of either Party to the other Party pursuant to this Agreement, and the terms and conditions of the General Agreements shall continue to apply to this Agreement as if the General Agreements were still in effect. |
a. |
Radcom has tested and certified to Amdocs that Radcom has identified no Critical faults.
|
b. |
AT&T has received from Amdocs of all software, complete media, and documentation from Radcom.
|
c. |
All emergency patches must be officially released by Radcom.
|
d. |
The content of delivered software must be compatible with previous releases and remain consistent through the life of the core software.
|
e. |
Radcom shall comply with the following
policy regarding OS patch testing related to ongoing releases: Radcom will notify Amdocs of the patch releases Radcom plans to test prior to test execution. Amdocs will confirm within
[**]
working days
whether releases have been accepted by AT&T (ITO/CSO). If AT&T have rejected a patch release, Amdocs will advise and Radcom will verify against the previous accepted version. Radcom will test one OS and one database patch version for each release.
|
f. |
Included in the GA release is the associated final Documentation associated with each of the applicable target released components planned for deployment, provided that further updates to the Documentation may be made and provided to
AT&T later on
.
|
g. |
Release notes have been provided by Radcom to Amdocs identifying major features expected in the release and any known issues (minor faults) that may be encountered during testing.
|
h. |
Associated training materials compiled by Radcom technical subject matter experts are complete and available for use by AT&T. AT&T pre-requisites are identified, documented, and met. This includes any additional software that must be obtained to satisfy requirements for the target release by Radcom.
|
i. |
Any GA requirement may be waived (in writing in AT&T sole discretion) if there is a specific documented requirement for a non-GA release by AT&T.
|
a. |
If installation services are provided for the Software for or during the FFA, it shall be considered complete and ready for AT&T’s consideration only after testing by Radcom in material compliance with both AT&T and Radcom installation Specifications and procedures. Upon completion of the initial Installation, Radcom will submit to Amdocs (who shall then submit promptly to AT&T) a “Notice of Completion”. If found by AT&T to be materially in compliance with such installation Specifications and procedures, upon notice by AT&T, Amdocs will advise Radcom and the Software will be granted General Acceptance by Amdocs and, if not in compliance, then additional rounds of tests will be conducted until compliance is achieved. The Software shall be deemed Accepted upon the earliest occurrence of the following events: (i) a “Notice of Completion” was issued by Radcom, and Amdocs did not raise any material deviations from the installation Specifications and procedures, by the lapse of the period set for said tests as agreed by the Parties as part of the Project Plan; and/or (ii) if completion of Installation is delayed for an extended period of time due to an act and/or omission of AT&T, Amdocs and Radcom agree to achieve a mutually agreed resolution; and/or (iii) the Radcom Software is no longer deployed in a limited capacity; and/or (iv) there are no Critical and no more than [**] Major Errors. There will be an Evaluation Period after First Field Application to evaluate performance of the Software.
|
b. |
If the Software meets the requirements as set forth in Appendix A for General Acceptance, Amdocs shall be deemed as Accepting the relevant Software component.
|
c. |
Radcom, at its expense, shall correct defects or other issues impeding such General Acceptance within
[**] working days,
or as may be otherwise agreed to by the Parties, from receipt of Amdocs’ receipt of AT&T’s notification and shall notify Amdocs that such corrections have been made. Amdocs shall require that AT&T repeat the appropriate acceptance tests, and the above procedure shall continue until General Acceptance is achieved. General Acceptance shall be deemed to occur upon the earlier occurrence of the following events: (i) there are no Critical Errors and no more than
[**]
Major Errors; and/or (ii) Amdocs was notified on the remedy of the corrections, and failed to raise any feedback within [**]
working days
of said notification.
|
4.3.1 |
Lab and FFA Process
|
(a) |
FFA Project Plan with relevant milestones and resource allocation.
|
(b) |
An Acceptance Test Plan (ATP), which highlights the relevant Test Objects to be validated. These Test Objects will cover the various functionalities of the Supplier solutions.
|
(c) |
The lab test environment to be set up for the validation.
|
(d) |
Establish a regular lab meeting schedule and method of documenting validation status and progress.
|
(e) |
The scope of testing may include but is not limited to feature/functionality verification, negative tests, monitoring of other network elements, load/capacity tests, interoperability/interworking tests for D1 and other platforms, end-to-end performance evaluation, application tests, and user interface testing.
|
(f) |
, If so requested by AT&T from Amdocs, Amdocs may mandate that a release be tested on an entire market/region before GA can be granted, and the Parties will agree as part of the FFA project plan on a per release basis.
|
4.3.2 |
AT&T Product Acceptance Milestones
|
· |
Amdocs and Radcom have agreed to jointly-developed Acceptance Test Plans (ATPs) with AT&T input accepted.
|
· |
All known “Critical” issues (found during Radcom testing period) have been resolved or have an agreed upon resolution plan.
|
· |
Amdocs and Radcom have had an Entry RFA meeting and, upon AT&T’s agreement, agree to proceed to RFA.
|
· |
Radcom has provided all required product documentation, including but not limited to
|
o |
System load and product verification test plans and results, as needed to determine that RFA entry criteria are met.
|
o |
Release notes and system impact document where all impacts and changes to Software, backend, and interfaces are identified.
|
o |
Key documents where changes with impacts to AT&T 3
rd
party applications (ex. IT systems) and D1 Interworking (other suppliers’ nodes and systems) are identified.
|
· |
Radcom will hold a knowledge transfer workshop that will provide AT&T lab personnel with sufficient details regarding product architecture, operation, and implementation. Where possible, the information should include simulation results or knowledge gained from testing in Radcom’s lab. Knowledge transfers sessions’ topics shall include, but are not limited to, feature implementation, feature testing/simulation, delta training, etc. This may be in a customized format specifically addressing the current project, or Radcom may make use of existing training courses, so long as project timeline constraints are met, at no cost and with no minimum attendance requirements. Workshops will be scheduled for a mutually agreed timeframe to the AT&T lab and Radcom as lab entry criteria, and to provide knowledge transfer to meet project requirements. Every effort will be made to schedule workshops on-site while appropriate Radcom personnel are present.
|
· |
All tests specified in the ATPs have been completed, with any exceptions noted.
|
· |
All known priority “Critical” issues remaining after the RFA phase have been resolved and all priority “Major” issues have an agreed upon resolution plan. Priority “Critical” issues have an acceptable and approved work around.
|
· |
Amdocs, AT&T and Radcom have had an Exit RFA meeting and agreed to proceed on to the RFS stage.
|
· |
All tests specified in the ATPs have been completed, with any exceptions noted.
|
· |
All known “Critical” issues remaining after the RFA phase have been resolved and all “Major” priority issues have an agreed upon resolution plan.
|
· |
AT&T, Amdocs and Radcom have had an Entry RFS meeting and agree to proceed.
|
· |
Engineering support from AT&T, Amdocs or Radcom are available to monitor performance and issues related to the overall solution to be tested
.
|
· |
AT&T, Amdocs and Radcom have had a kick off meeting with AT&T Operations, ATS and other relevant teams.
|
· |
Required Operational Training for the FFA has been held prior to proceeding to the field.
Content of the training shall be agreed between Amdocs and Radcom.
|
· |
The exit criteria to be met for RFS are:
|
o |
All tests specified in the ATPs have been completed, with any exceptions noted.
|
o |
All new “Critical” priority issues found during the RFS phase have been resolved. All “Major” issues have a resolution plan acceptable to Amdocs.
|
o |
All major feature functionality has been proven to work satisfactorily
|
o |
Software is benchmarked and the result is compared to performance with the prior software version and there is no degradation in features, functionality or capacity, unless any such degradation is agreed with Amdocs prior to FFA and is noted in Radcom’s documentation.
|
o |
System is declared stable for a mutually agreed soak period and with normal usage. The soak period starts after the last changes are implemented and lasts for a minimum of
[**] weeks.
All FFA documentation is completed and released, including FFA result document.
|
o |
Updated MOP, Test Plans, and other FFA related documents that have been updated during the FFA should be provided to Amdocs.
|
o |
A complete list of all cases failed during the FFA periods has been provided to Amdocs. This should be a detailed list which explains the nature of the problem for which the case was failed, and the nature of the fix.
|
o |
A complete list of all patches applied during the FFA, and which cases those fixed, if applicable.
|
4.3.5 |
FFA Support
|
4.3.6 |
Software Efficiency and Capacity Requirements
|
1. |
Critical:
Critical system functionality is not operational or not capable of producing critical deliverables (which have been pre-defined in Appendix A as critical) and there are no workarounds available. The problem/defect has one or more of the following characteristics:
|
a. |
Data corruption such that physical or logical data is unavailable or incorrect.
|
b. |
System hangs. The system becomes non responsive indefinitely or there is severe performance degradation, causing unreasonable wait time for resources or response, as if the system is hanging.
|
c. |
System crashes repeatedly. Database process or background processes fail and continue to fail after restart attempts.
|
d. |
Critical functionality (which has been pre-defined in Appendix A or otherwise by the Parties in writing as critical) is not available. The application cannot continue because a vital feature is inoperable.
|
e. |
Resource limitation (e.g., disk space) prevents a user from doing work without an agreed-upon workaround.
|
f. |
Security vulnerability beyond AT&T control that results in unauthorized access to systems, crashing of systems or data corruption, and which cannot be avoided by AT&T.
|
2. |
Major:
Major system functions are unavailable or unusable. An agreed-upon workaround is available, and operations can continue in a restricted fashion. The problem/defect has one or more of the following characteristics:
|
a. |
Reoccurring Errors causing the system to fail, but restart or recovery is possible.
|
b. |
Severely degraded performance.
|
c. |
Limited access to data to perform the job.
|
d. |
Missing a message capture per requirements (no error message at all) when a major error occurs.
|
e. |
Incorrect response to a command for a major system function.
|
f. |
Security vulnerability with a workaround that mitigates such vulnerability.
|
g. |
Some important functionality is unavailable, yet the system can continue to operate in a restricted fashion.
|
3. |
Minor:
A defect/problem that does not rise to the level of either Critical or Major.
|
a. |
Radcom shall furnish, [**], Documentation for the Software and other Material delivered hereunder, including any and all succeeding changes, updates and upgrades.
|
b. |
Documentation shall include user instructions, engineering guidelines, installation information, system manuals and training material in electronic form, Radcom’s customer facing written specifications, all written material defined in the table below associated with Software and other information that is normally delivered by Radcom regarding the Software and/or Material. Engineering/capacity management guidelines shall include sufficient information and insight from Radcom to enable Amdocs to assist AT&T in capacity management of the Software under this Agreement.
Capacity management guidelines shall enable AT&T to determine the engineered capacity for the system and identify the key capacity indicators that should be monitored and trended to recognize when the system resources are nearing exhaust. Radcom will provide the following to Amdocs, in order to enable AT&T to capacity manage the monitoring system:
|
· |
Capacity limits of the v-probe solution
|
· |
Call model factors that were used to produce the stated capacity
|
· |
A list of KCIs that should be used to monitor the stated capacity triggers
|
· |
A mechanism to obtain the KCI data
|
· |
MOP for installation and any making any changes to the Software. This MOP shall provide guidelines to install Software, Upgrades and Updates.
|
a. |
Ownership and Use of Rights and Items.
|
b. |
License Grant to Excluded Materials.
|
c. |
Further Acts and Obligations.
|
d. |
Reservation of Rights and Limited License.
|
e. |
Notwithstanding anything in the General Agreement to the contrary, the Section of the General Agreement entitled “Title to Work” shall not apply to this Agreement.
|
a. |
Radcom and Amdocs shall make available a minimum
[**]
user training sessions, and
[**]
admin training sessions, in multi-person classes, up to
[**]
each, at an AT&T-designated site, at a date, time and location to be proposed by Amdocs and AT&T and reasonably agreed to by Radcom and Amdocs. This will be provided at no cost.
|
b. |
User training materials and admin training materials will be reasonably agreed upon by the Parties and be provided to the identified participants at least
[**]
week
prior to the scheduled training, at no additional cost.
|
c. |
Radcom will make available to AT&T, at the detailed below published Radcom rates (less any applicable discount to which AT&T is entitled), additional training material and courses to include instruction on functions, features and usability tailored to the specific group receiving the training. Radcom has a professionally-developed in house training curriculum for Radcom products that offer student guides that are designed to work in conjunction with the instructor’s presentation. Each student enrolled in the class will receive a current copy of the student guide.
|
Training Course
|
Cost
|
Description
|
Training-Basic
|
US$
[**]
|
[**]
|
[**]
|
||
Training-Adv
|
US$
[**]
|
[**]
|
[**]
|
||
Administrator/Operations Training
|
US$ [**]
|
[**]
·
[**]
.
|
a. |
Upon discovery of anything indicating a reasonable certainty that Software and/or Services will not be Delivered by the scheduled Delivery Date, Radcom shall notify Amdocs and provide the estimated length of delay. The Parties shall work jointly toward resolving the delayed Delivery and to agree on a revised Delivery Date. Amdocs will use reasonable efforts to obtain agreement from AT&T on an extended Delivery Date and if such an extended date is agreed, will align the Radcom Delivery Date to the date agreed with AT&T. If the Parties reach agreement on an extended Delivery Date and Radcom fails to meet the extended Delivery Date, then Amdocs may (i) exercise its right to recover Liquidated Damages specified hereunder, to the extent AT&T has exercised its right to recover Liquidated Damages from Amdocs (ii) further extend the Delivery Date, and/or (iii) if such delay amounts to a material breach, terminate the applicable Order, but only after the cap of the Liquidated Damages mentioned below has been reached and only in the event AT&T has terminated the Applicable order with Amdocs, under this section. Notwithstanding any terms to the contrary in this Agreement or the General Agreements, the effective date of termination of the Amdocs Order with Radcom shall be the same as the effective date of termination of the corresponding scope of the AT&T order with Amdocs. No payments, progress or otherwise, made by Amdocs to Radcom after any scheduled Delivery Date shall constitute a waiver of Liquidated Damages. Delivery Dates shall be extended as and to the extent Radcom is unable to meet the original Delivery Date due to causes outside of Radcom’s control. Such extension shall be proportionate to the delay caused by factors outside Radcom’s and/or Amdocs’ control, and in such events, the Liquidated Damages shall not apply.
|
b. |
Notwithstanding the above paragraph, in the event of Radcom’s failure to meet a Delivery Date, Amdocs shall be entitled to recover amounts as liquidated damages, and not as a penalty. For the first
[**]
days
of delay, no liquidated damages will apply. Thereafter, liquidated damages of
[**]
% percent of the price of delayed Software and/or Services shall apply for each week up to
[**]
% of the delayed Software or Services price.
|
a. |
Amdocs shall require in its agreement with AT&T that AT&T shall not provide or otherwise make available the Software in any form to any unaffiliated third party, except as provided in this Agreement, ,, the EULA or in an Order accepted by Radcom.
|
b. |
Amdocs shall require in its agreement with AT&T that AT&T shall take appropriate action, by instruction, agreement or otherwise with the persons permitted access to the Software and Documentation, to satisfy the obligations pursuant to its agreement with Amdocs with respect to use, protection and security of the Software and Documentation.
|
c. |
Amdocs shall provide in its agreement with AT&T that AT&T’s rights of disclosure under its agreement with Amdocs shall include the right to provide the Software and related Documentation to AT&T’s agents and contractors anywhere in the world who have a reasonable need for it in connection with for the performance of services for AT&T under its agreement with Amdocs , provided that the Software and related Documentation may not be provided to a third party for the purpose of allowing that third party to develop or participate in the development of a product or service that competes with Radcom’s products.
|
a. |
Radcom will use commercially reasonable efforts to notify Amdocs and AT&T in writing (which may be via email) of all Updates for Software licensed hereunder to which Amdocs will be entitled for the purpose of providing them to AT&T, at least
[**]
prior to the availability of that Update.
|
b. |
each new Update of Software (provided under a Support and Maintenance agreement) will be subject to AT&T policies but for that particular Update only.
|
c. |
The Parties will seek to identify future Software Updates through the Radcom/Amdocs/AT&T roadmap planning sessions and/or on-going communication exchanges. The Parties will seek to jointly identify and document an annual (calendar year) inventory of future Software Updates to be included as part of that year’s Software releases to be made available as part of Support and Maintenance (the “Annual Software Feature List”).
|
a. |
With respect to any Updates provided to Amdocs for AT&T hereunder, RADCOM acknowledges and agrees that as per Amdocs agreement with AT&T, AT&T will have the right to remove same and replace it with the previous version if such new version will degrade or impair AT&T’s network. If Amdocs wishes to resell licenses for any new features or functionality of Software that are not licensed to AT&T as part of an Update and are licensed separately, then Amdocs and Supplier will negotiate in good faith on a license fee or payment for such feature or functionality.
|
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date the last Party signs.
|
|||
Amdocs Software Systems Limited
|
Radcom Ltd.
|
||
By:
/s/ Philip Butler
|
By:
/s/ David Ripstein
|
||
Printed Name: Philip Butler
|
Printed Name: David Ripstein
|
||
Title: Director and Assistant Secretary
|
Title: President & CEO
|
||
Date: December 30, 2015
|
Date: December 30, 2015
|
||
1. |
License
|
2. |
In the event that based on a material breach by RADCOM of this Supplement Agreement or the General Agreements, which was not cured by RADCOM within [**]
days
of receipt of notice from Amdocs, Amdocs is in a material breach of its applicable agreement with AT&T and as a result, Amdocs is contractually obligated to pay AT&T any amounts attributable to licenses, Radcom will promptly indemnify Amdocs up to [**] for any amounts paid to AT&T.
|
3. |
Additional Features
|
· |
Provide a timely response to open issues and action items as raised by Radcom
|
· |
Provide physical access into AT&T premises to Radcom employees, including outside of standard business hours.
|
· |
Provide physical office environment for Radcom engineers on site (Desk, chairs, power, internet connection)
|
· |
24x7 Remote access to all servers and clients running Radcom Software (Windows applications as well as command line interfaces). At least 15 concurrent remote connections. Open the Remote access to multiple TCP/UDP ports (list of ports will be provided by Amdocs)
|
· |
Ensure that Software will receive required traffic 24x7 from AT&T, including simulated and live traffic
|
· |
Responsible to provide the required hardware
|
· |
Provide full description of network elements
|
· |
Provide full description of traffic (shape, type, protocols, scenarios, correlation etc.)
|
· |
Provide full details of network sizing and expected growth
|
· |
Provide Network Time Protocol (NTP) servers
|
· |
Provide access to DNS servers
|
· |
Provide access to DHCP servers
|
· |
Provide access to SMTP servers
|
· |
Provide SNMP access
|
· |
Provide network inventory Enrichment data – IP addresses, types and names for all network elements, sites, markets, sub-markets, APNs, Charging codes, Realms, MCC/MNC codes, Cell Global Identifier (CGI) values and names, Type Approval Code (TAC) – UE manufacturer / Model mapping.
|
· |
Assign the required HW resources to the virtual machines (compute, network, storage) according to Supplier's sizing
|
· |
Assign the require HW performance according to product requirements provided by Supplier
|
· |
Assign IP addresses to the virtual machines.
|
· |
Provide IP/VLAN connectivity between all Software components, within sites and between sites as well as between Software and test PCs as well as AT&T client PCs.
|
· |
Open all ports between Software components in Firewall
|
· |
Allocate qualified personnel who shall work with Supplier
|
· |
Provide technical focal point from AT&T for support.
|
· |
Provide at least three (3) Windows client PCs/VMs per site for running MaveriQ OAM applications, with internet access
|
· |
Provide at least three (3) User Equipment units for testing purposes, with the ability to perform test calls for scenarios required in the project scope, including phones, SIM cards, etc
|
· |
Provide detailed documentation, KPI samples, XDR samples, XML samples for [**]
and on-going updates in advance of any changes in the interface of the production environment.
|
· |
Provide detailed documentation, samples, application access and testing environment to APIs for [**] data and on-going updates in advance of any changes in the interface of the production environment
|
· |
Provide detailed documentation, KPI samples, XDR samples, XML samples for [**] and on-going updates in advance of any changes in the interface of the production environment
|
· |
Provide detailed documentation samples, application access and testing environment to APIs for [**] and on-going updates in advance of any changes in the interface of the production environment
|
· |
Provide detailed documentation, samples, application access and testing environment for AT&T APIs that Supplier is required to integrate with (e.g. AT&T’s User Authentication platform) and on-going updates in advance of any changes in the interface of the production environment
|
· |
Provide detailed definitions and calculation methodology descriptions for new KPIs required by AT&T
|
· |
Provide test plan & test case documents for required testing procedures, at least 4 weeks before the start date of the test session
|
· |
Provide sample pcap trace files and key files from AT&T network for protocols and interfaces required in the project, for testing & validation, including on-going updates in advance of any changes in the interfaces/protocols in the production environment
|
· |
Provide timely information & answers to Supplier, including Supplier’s technical questions with regards to AT&T network, network elements, interfaces, protocols, call flows, platforms and 3rd party solutions that interact with Supplier’s solution.
|
Country(ies) where services are authorized by AT&T to be performed (physical location address is also required if the Services involve Information Technology-related work or if a “virtual” or “work-from-home” address is authorized)
|
City(ies)
where services will be performed for AT&T
|
Services
to be performed at approved Physical Location
|
Name of Supplier / Supplier Affiliate, and/or Subcontractor performing the services
|
|
Israel
|
24 Raoul Wallenberg Street,
Tel-Aviv 69719 |
Tel Aviv
|
Research & Development (R&D), PS, M&S
|
Radcom
|
Brazil
|
Al. Mamoré, 503 – 13º andar sala
Alphaville – Barueri/SP |
Alphaville
|
PS, M&S
|
Radcom
|
India
|
Level 4, Rectangle 1,
Commercial Complex D-4, Saket, New Delhi - 110017 |
New Delhi
|
PS, M&S
|
Radcom
|
A. |
If Amdocs is the Party submitting the request, Amdocs shall complete Form A and describe in reasonable detail the change it is proposing, and any effects on other Specifications or on the delivery schedule of which it is aware. Radcom shall strive to respond to such request as soon as reasonably practical, but no later than ten (10) working days. Radcom’s response shall be using Form B. Subsequent communication shall use Form A and Form B, respectively, until the Parties either agree upon the terms pursuant to which the proposed change will be made, or agree that the proposed change will not be made and agree to close the proposed Change Order. An agreement to proceed with the proposed change must be documented by using Form E.
|
B. |
If Radcom is the Party submitting the request, Radcom shall complete Form C and describe in reasonable detail the change it is proposing, and the effects, if any, on other Specifications, schedule, and cost. AT&T shall strive to respond to such request as soon as reasonably practical, but no later than ten (10) working days. AT&T’s response shall be using Form D. Subsequent communication shall use Form C and Form D, respectively, until the Parties either agree upon the terms pursuant to which the proposed change will be made, or agree that the proposed change will not be made and agree to close the proposed Change Order. An agreement to proceed with the proposed change must be documented by using Form E.
|
C. |
The rights and obligations of both Parties in connection with this Agreement, including any Order, shall not be changed, until a proposed Change Order is agreed to by executing Form E. Until both Parties have executed Form E, each Party shall continue to perform its obligations in accordance with the Agreement and the Order(s) placed under the Agreement.
|
D. |
In the event Form E contains terms that are different than those set forth in the Agreement or the Order(s), the terms contained in Form E shall apply.
|
E. |
The Change Control Log, included as Form F, shall be used by the Parties to track and monitor all proposed changes.
|
1. |
Proposed Specification Changes
- [Identify the Specification(s), including where the Specification(s) is described in the Order, and summarize in reasonable detail the proposed changes to such Specification(s).]
|
3. |
Summarize Expected Or Possible Impact On Other Specifications Or Schedule
|
4. |
Specify Any Key Assumptions, Additional Terms, Or Other Important Information
|
1. |
Proposed Specification Changes
[Reiterate and summarize Supplier’s understanding of the proposed changes to the Specification(s)]
|
2. |
Effective Date For Proposed Change
[Indicate the date the change can be implemented.]
|
Date: |
|
3. |
Summarize Expected Or Possible Impact On Other Specifications Or Schedule
[Indicate the impact on other Specifications, schedule of delivery, and cost/budget, if any.]
|
4. |
Specify Any Key Assumptions, Additional Terms, Or Other Important Information
|
1. |
Proposed Specification Changes
- [Identify the proposed Specification(s) and describe in reasonable detail the proposed changes.]
|
2. |
Effective Date For Proposed Change:
|
Date: |
|
3. |
Summarize Expected Or Possible Impact On Other Specifications Or Schedule
[Indicate the impact on other Specifications, schedule of delivery, and cost/budget, if any.]
|
4. |
Specify Any Key Assumptions, Additional Terms, Or Other Important Information
|
1. |
Proposed Specification Changes
[Reiterate and summarize Amdocs’ understanding of the proposed changes to the Specification(s)]
|
2. |
Effective Date For Proposed Change
[Indicate the proposed effective date of the change.]
|
3. |
Summarize Expected Or Possible Impact On Other Specifications Or Schedule
[Indicate the impact on other Specifications, schedule of delivery, and cost/budget, if any Amdocs expects may occur as a result of Radcom’s proposed change.]
|
4. |
Specify Any Key Assumptions, Additional Terms, Or Other Important Information
[Indicate on what basis Amdocs would be willing to agree to Radcom’s proposed change order.]
|
1. |
Agreed Upon Change To Specification(s):
[Identify Specification that will be changed.]
|
2. |
Date Scope Change Effective:
[State the date the change will be effective.]
|
3. |
Describe Scope Change, including any Specifications:
[Describe the agreed upon change in full detail.]
|
4. |
Revised price, payment schedule, and delivery schedule, if any, of the proposed change:
[State any changes to the original delivery schedule, original price, and payment schedule.]
|
5. |
Additional Terms and Conditions:
[State any terms and conditions that apply to the proposed change.]
|
Amdocs Software System Limited
|
Radcom, Ltd.
|
By:
|
By:
|
Printed Name:_________________________
|
Printed Name:__________________________
|
Title:
|
Title:
|
Date:
|
Date:
|
Change Order Number
|
Change Component
|
Priority
(High, Med., Low)
|
Description of Change
|
Level of Effort
|
Comments
|
Status
|
Status Date
|
/s/ Yaron Ravkaie
Yaron Ravkaie
|
|
Chief Executive Officer
|
/s/ Ran Vered
|
|
Ran Vered
|
|
Chief Financial Officer
|
/s/ Yaron Ravkaie
|
|
Yaron Ravkaie
|
|
Chief Executive Officer
|
/s/ Ran Vered
|
|
Ran Vered
|
|
Chief Financial Officer
|
|
Tel Aviv, Israel
|
/s/ KOST, FORER, GABBAY & KASIERER
A Member of EY Global
|