Application Development Agreement

Application Development Agreement & Limitation of Liability

eSmith IT Consulting Inc. | Authorized IT & Managed Services Provider

This Application Development Agreement (“Agreement”) is entered into between eSmith IT Consulting Inc. (“Developer” or “Provider”) and the undersigned Client (“Client”). This Agreement governs the design, development, testing, deployment, and support of custom software applications, web applications, mobile applications, APIs, integrations, and related deliverables (collectively, “Deliverables”) and sets forth the complete rights and obligations of the parties with respect to those services.

1. Scope of Work & Project Authorization

The specific features, functionality, technology stack, milestones, and delivery schedule for each engagement shall be defined in a mutually executed Statement of Work (“SOW”), project proposal, or written work order (“Work Order”), which is incorporated herein by reference. The Developer shall use commercially reasonable efforts to deliver the Deliverables substantially in accordance with the agreed specifications. The Client acknowledges that:

• Software development is an iterative process and that the final Deliverables may reasonably differ from early-stage mockups, wireframes, prototypes, or verbal descriptions;
• Estimated timelines are good-faith projections and not guarantees; delays may arise from factors including but not limited to Client feedback cycles, third-party API dependencies, hosting provider issues, and scope changes;
• Any feature, functionality, or integration not expressly documented in the applicable SOW or Work Order shall be considered out of scope and subject to a separate change order and additional fees.

2. Change Orders & Scope Modifications

Any request by the Client to add, remove, or materially alter features, functionality, design elements, or technical specifications after the commencement of a project constitutes a scope change. The Developer shall not be obligated to proceed with any scope change until a written change order has been executed by both parties specifying the additional work, cost, and revised timeline. Verbal approvals, email approvals, or informal acknowledgments shall not constitute a binding change order unless subsequently confirmed in a signed written instrument. The Developer reserves the right to adjust project timelines proportionally to account for any approved scope changes.

3. Client Responsibilities

The successful delivery of Deliverables is materially dependent upon the Client’s timely cooperation and participation. The Client agrees to:

• Provide Timely Input. Respond to Developer requests for feedback, approvals, content, credentials, and decisions within five (5) business days unless otherwise agreed in writing. Developer shall not be responsible for project delays attributable to Client non-responsiveness;
• Provide Accurate Requirements. Furnish complete, accurate, and unambiguous requirements, business rules, content, data, and any third-party credentials or API keys necessary for development. The Developer is not responsible for defects, errors, or failures arising from incomplete or inaccurate requirements provided by the Client;
• Designate an Authorized Representative. Identify a single point of contact authorized to provide approvals, feedback, and decisions binding on the Client throughout the project lifecycle;
• Provide Necessary Access. Grant the Developer timely access to all systems, platforms, hosting environments, domain registrars, databases, and third-party services required to complete the Deliverables;
• Review & Acceptance Testing. Participate in user acceptance testing (“UAT”) upon the Developer’s request. Deliverables not formally rejected in writing within ten (10) business days of delivery shall be deemed accepted by the Client.

4. Intellectual Property & Ownership

Upon receipt of full and final payment for all invoices related to the applicable Deliverables, the Developer hereby assigns to the Client all right, title, and interest in the custom-developed code, designs, and content comprising the final Deliverables, to the extent such materials were created solely and originally for the Client under this Agreement. The following shall expressly remain the sole property of the Developer and are hereby licensed, not transferred, to the Client on a non-exclusive, non-transferable, royalty-free basis solely for the Client’s internal use of the Deliverables:

• Pre-existing proprietary frameworks, libraries, tools, templates, utilities, and methodologies developed by the Developer prior to or independently of the Client engagement (“Developer IP”);
• Any open-source components, third-party libraries, or licensed software incorporated into the Deliverables, which remain subject to their respective open-source or commercial licenses;
• Any general know-how, processes, or technical expertise developed or refined by the Developer in the course of performing services.

The Client represents and warrants that any content, data, trademarks, logos, or other materials furnished by the Client for incorporation into the Deliverables are owned by the Client or that the Client has all rights necessary to authorize the Developer to use such materials. The Client shall indemnify the Developer against any third-party claim arising from the Client’s unauthorized use of intellectual property.

5. Payment Terms & Suspension of Work

Unless otherwise specified in a written SOW or Work Order, the following payment terms shall apply: a non-refundable deposit equal to fifty percent (50%) of the total project fee is due prior to commencement of work; the remaining balance is due upon final delivery and Client acceptance of the Deliverables. The Developer reserves the right to suspend all work, withhold delivery of Deliverables, and retain all work product as a security interest in the event that any invoice becomes more than fifteen (15) days past due. Suspended projects may be subject to a re-mobilization fee upon resumption. The Client acknowledges that all deposits are non-refundable and compensate the Developer for opportunity cost and resource allocation.

6. Limitation of Liability

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE DEVELOPER’S TOTAL AGGREGATE LIABILITY TO THE CLIENT FOR ANY AND ALL CLAIMS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE DELIVERABLES, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER LEGAL THEORY, SHALL NOT EXCEED THE TOTAL FEES ACTUALLY PAID BY THE CLIENT TO THE DEVELOPER FOR THE SPECIFIC DELIVERABLE OR PROJECT GIVING RISE TO THE CLAIM DURING THE SIX (6) CALENDAR MONTHS IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO SUCH CLAIM. THE CLIENT AGREES THAT THIS LIMITATION OF LIABILITY IS AN ESSENTIAL ELEMENT OF THE BASIS OF THE BARGAIN BETWEEN THE PARTIES AND THAT THE DEVELOPER WOULD NOT HAVE ENTERED INTO THIS AGREEMENT WITHOUT SUCH LIMITATION.

7. Exclusion of Consequential Damages

IN NO EVENT SHALL THE DEVELOPER BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES WHATSOEVER, INCLUDING BUT NOT LIMITED TO: LOSS OF REVENUE, LOSS OF PROFITS, LOSS OF BUSINESS, LOSS OF ANTICIPATED SAVINGS, LOSS OF GOODWILL, LOSS OF DATA, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, BUSINESS INTERRUPTION, OR ANY OTHER COMMERCIAL OR ECONOMIC LOSS — EVEN IF THE DEVELOPER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF WHETHER SUCH DAMAGES ARISE IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, OR ANY OTHER LEGAL OR EQUITABLE THEORY. THE FOREGOING EXCLUSION SHALL APPLY TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW.

8. Disclaimer of Warranties

EXCEPT AS EXPRESSLY SET FORTH IN A WRITTEN SOW OR WORK ORDER, THE DELIVERABLES AND ALL RELATED SERVICES ARE PROVIDED ON AN “AS-IS” AND “AS-AVAILABLE” BASIS. THE DEVELOPER EXPRESSLY DISCLAIMS ALL WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, OR STATUTORY, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, AND ANY WARRANTIES ARISING OUT OF COURSE OF DEALING OR USAGE OF TRADE. THE DEVELOPER DOES NOT WARRANT THAT THE DELIVERABLES WILL BE ERROR-FREE, BUG-FREE, UNINTERRUPTED, SECURE, OR COMPATIBLE WITH ALL THIRD-PARTY SYSTEMS, BROWSERS, DEVICES, OR OPERATING ENVIRONMENTS. ALL SOFTWARE CONTAINS DEFECTS AND THE DEVELOPER DOES NOT WARRANT THAT ALL DEFECTS WILL BE IDENTIFIED OR REMEDIATED.

9. Third-Party Services, APIs & Integrations

The Deliverables may incorporate, depend upon, or integrate with third-party services, platforms, APIs, payment processors, cloud infrastructure providers, or software-as-a-service tools (“Third-Party Services”). The Developer makes no representations or warranties regarding the reliability, availability, security, pricing, terms of service, or continuity of any Third-Party Services. The Developer shall not be liable for any failure, outage, deprecation, pricing change, or terms change by any Third-Party Service provider that adversely affects the functionality, performance, or availability of the Deliverables. The Client is solely responsible for securing and maintaining all required licenses, subscriptions, and accounts for any Third-Party Services incorporated into the Deliverables.

10. Post-Delivery Support & Maintenance

Unless a separate maintenance or support agreement is executed in writing between the parties, the Developer’s obligations under this Agreement terminate upon delivery and Client acceptance of the Deliverables. Post-delivery bug fixes, feature requests, platform updates, security patches, hosting management, and ongoing support are outside the scope of this Agreement and shall be subject to the Developer’s then-current hourly rates or a separate support retainer. The Developer is not responsible for any degradation, failure, or security vulnerability in the Deliverables arising after the date of delivery, including but not limited to changes in third-party APIs, operating system updates, browser compatibility changes, or hosting environment modifications made by the Client or its agents.

11. Confidentiality

Each party agrees to hold in strict confidence all non-public, proprietary, or otherwise confidential information disclosed by the other party in connection with this Agreement (“Confidential Information”), and not to disclose such Confidential Information to any third party without the prior written consent of the disclosing party, except as required by law or as necessary to perform obligations under this Agreement. The Developer may disclose the existence of the Client relationship and a general description of the Deliverables for portfolio and marketing purposes unless the Client provides written notice restricting such disclosure. This confidentiality obligation shall survive the termination or expiration of this Agreement for a period of three (3) years.

12. Client Indemnification

The Client agrees to indemnify, defend, and hold harmless the Developer and its officers, directors, employees, shareholders, and contractors (collectively, “Indemnified Parties”) from and against any and all third-party claims, demands, suits, proceedings, losses, liabilities, damages, and expenses (including reasonable attorneys’ fees) arising out of or related to:

• Any content, data, materials, or intellectual property furnished by the Client that infringes or misappropriates the rights of any third party;
• The Client’s use, misuse, or operation of the Deliverables in a manner not contemplated by this Agreement or the applicable SOW;
• The Client’s violation of any applicable law or regulation in connection with the Deliverables or the Client’s business operations;
• Any claim by a third party arising from the Client’s product, service, or business conducted using or through the Deliverables; or
• Any unauthorized modification, alteration, or tampering with the Deliverables by the Client or any third party acting on the Client’s behalf.

13. Non-Solicitation of Personnel

During the term of this Agreement and for a period of twelve (12) months following its termination or expiration, the Client agrees not to directly or indirectly solicit, recruit, or hire any current employee, contractor, or subcontractor of the Developer who performed services under this Agreement, without the Developer’s prior written consent. In the event of a confirmed breach of this clause, the Client agrees to pay the Developer a placement fee equal to fifty percent (50%) of the solicited individual’s new annual compensation, due within thirty (30) days of written notice.

14. Force Majeure

Neither party shall be liable for any failure or delay in performance of its obligations under this Agreement to the extent caused by circumstances beyond its reasonable control, including but not limited to acts of God, natural disasters, pandemics, war, terrorism, government actions, widespread internet or infrastructure failures, utility outages, or third-party service provider outages. The affected party shall notify the other party promptly and shall use commercially reasonable efforts to resume performance as soon as practicable. If a force majeure event continues for more than sixty (60) days, either party may terminate the applicable SOW upon written notice without liability, provided the Client shall remain obligated to pay for all work completed and expenses incurred prior to the effective date of termination.

15. Termination

Either party may terminate this Agreement or any SOW upon thirty (30) days’ written notice to the other party. The Developer may terminate immediately upon the Client’s material breach of any payment obligation or upon Client conduct that is abusive, threatening, or harassing toward Developer personnel. Upon termination for any reason, the Client shall pay the Developer for all work completed, time expended, and expenses incurred through the effective date of termination at the Developer’s then-current hourly rate or the pro-rated SOW fee, whichever is greater. The Developer shall have no obligation to deliver any incomplete Deliverables upon early termination unless all outstanding amounts have been paid in full.

16. Governing Law & Dispute Resolution

This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina, without regard to its conflict of law principles. In the event of any dispute arising out of or relating to this Agreement, the parties agree to first attempt to resolve such dispute through good-faith negotiation. If the dispute is not resolved within thirty (30) days of written notice, the parties agree to submit the dispute to binding arbitration administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules, with the arbitration seated in Charlotte, North Carolina. Notwithstanding the foregoing, the Developer reserves the right to seek injunctive or other equitable relief in a court of competent jurisdiction to prevent the unauthorized use of its intellectual property.

17. Precedence & Relationship to Other Agreements

In the event of any conflict or inconsistency between the terms of this Application Development Agreement and any active Master Services Agreement (MSA) currently in effect between the Developer and the Client, the terms of the MSA shall take precedence. This Agreement is intended to supplement, and not supersede, the broader managed services relationship defined by any applicable MSA. The parties agree that electronic signatures and submissions via the Developer’s official Client Service Forms hub constitute valid “writing” and “signing” for the purposes of this Agreement and any associated amendments, as permitted under the Electronic Signatures in Global and National Commerce Act (ESIGN Act).