IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
SPC, INC., d/b/a FIRST OF OMAHA ) CIVIL NO. _____________
MERCHANT PROCESSING, )
vs. ) COMPLAINT
NEURALTECH, INC., )
COMES NOW SPC, Inc., and for its Complaint against the defendant, NeuralTech, Inc., states:
1. Plaintiff, SPC, Inc. ("SPC") is a Nebraska corporation with its principal place of business located in Omaha, Nebraska.
2. Defendant, NeuralTech, Inc. ("NeuralTech") is a Virginia corporation with its principal place of business located in Fairfax, Virginia.
3. This Court has jurisdiction of this action under Section 1332 of Title 28 by virtue of diversity of citizenship of the parties and the matter in controversy exceeds the requisite jurisdictional amount of $75,000, exclusive of interest and costs.
4. On or about May 16, 1997 the parties entered into a written Agreement whereby NeuralTech granted SPC a license to use and operate its software system known as CADRE Merchant and to perform implementation, enhancement, maintenance and support services with respect to the entire system in consideration of certain specified payments to be made by SPC. A true copy of the Agreement is attached hereto, marked Exhibit "A", and by this reference made a part hereof.
5. SPC, operating under the trade name First of Omaha Merchant Processing, is one of the nation's largest credit card processors and employs the CADRE Merchant system in conjunction with customer retrievals and chargeback disputes to provide timely case processing, accurate case resolution, consistent case processing and compliance for all disputed cases, as well as complete auditability with associated documentation and reporting capabilities. In this regard, the successful implementation, enhancement, maintenance and support of the CADRE Merchant system is a vital and integral part of the plaintiff's processing of hundreds of millions of credit card transactions annually for its customers and must be in Y2K compliance for plaintiff's business to continue to operate.
6. From the time of its installation and implementation and continuing to this date, the plaintiff has encountered a number of significant functional problems with the Retrievals process, the Chargeback portion and other modules of the CADRE Merchant system, of which due and timely notice has been given to the defendant.
7. On October 16, 1998, the plaintiff served written notice of default upon NeuralTech in the following particulars:
(a) NeuralTech is in default under Section 9(a)(i)(a) of the Agreement in that the representation and warranty regarding the capability of the Software (as defined in Schedule 1 to the Agreement) to function properly with date fields including the year 2000 and beyond, was false and misleading when made.
(b) NeuralTech is in default under Section 9(a)(i)(b) of the Agreement in that NeuralTech has failed to correct failures of the Software to meet the Software Specification within thirty (30) days following notice. Such notices were provided to NeuralTech on March 24, 1998, through the electronic problem reporting procedures utilized by NeuralTech and through weekly conference calls and written documentation.
(c) NeuralTech in its letter dated October 9, 1998 refuses to deliver to the plaintiff updates to its Software and New Release 4.0 which constitutes an anticipatory repudiation of the Agreement.
8. Although the plaintiff has withheld payment of a portion of the license fee pending final acceptance of the CADRE Merchant system and has acknowledged its potential indebtedness for additional user fees which sums the plaintiff offers to place in escrow, it has duly performed all of the terms and conditions of the Agreement and has made payment to NeuralTech of the fees due thereunder. Nevertheless, NeuralTech threatens to discontinue its maintenance and support of the system and refuses to provide New Release 4.0 or to provide updates to the system to the plaintiff.
9. Paragraph 10(a) of the Agreement provides as follows:
(a) Specific Performance. Each of the parties hereto separately acknowledges and agrees that irreparable damage would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. The parties hereto accordingly agree that each such party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state thereof having jurisdiction.
10. In the event that NeuralTech should discontinue its implementation, maintenance and support of its CADRE Merchant system or fail to provide updates to the software or to provide its New Release 4.0 scheduled on October 31, 1998 or fail to deposit its source code and updates in escrow, the plaintiff will suffer irreparable harm and damage by disruption to its operations for which it has no adequate remedy at law, including loss of customer patronage and violation of Federal Banking Regulations.
WHEREFORE, plaintiff demands relief and judgment against the defendant as follows:
A. A temporary restraining order and a preliminary and permanent mandatory injunction enjoining the defendant from ceasing to provide maintenance and support of its CADRE Merchant system and from failing to provide updates to its software or to provide its New Release 4.0 (CADRE Merchant 4.0) on or before October 31, 1998.
B. Judgment be entered against the defendant for specific performance and general and special damages.
C. For such further relief as may be just and equitable.
SPC, INC., d/b/a FIRST OF OMAHA
MERCHANT PROCESSING, Plaintiff
By:_________________________________ Frederick S. Cassman, #10636
Terrence P. Maher, #17749
Of Abrahams, Kaslow & Cassman
8712 West Dodge Road, Suite 300
Omaha, NE 68114
Telephone: (402) 392-1250
Attorneys for Plaintiff
REQUEST FOR PLACE OF TRIAL
Plaintiff requests trial of the above case be held at Omaha, Nebraska.
STATE OF NEBRASKA )
COUNTY OF DOUGLAS )
Nicholas W. Baxter, being first duly sworn, states that he is the Senior Vice President of SPC, Inc., d/b/a First of Omaha Merchant Processing; that he has read the foregoing Complaint and the facts stated therein are true.
Nicholas W. Baxter
Subscribed and sworn to before me this _____ day of October, 1998.
My Commission Expires: