[*] Seeking Confidential Treatment
________________________________________
PRISM NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT (this "Agreement") made this nineteenth day of
September 1996, by and between Xxxxxx, Inc., a Delaware
corporation, having a place of business at Xxx Xxxxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000 ("Xxxxxx"), and Applied Communications,
Inc., a Nebraska corporation, having a place of business at 000
Xxxxx 000 Xxxxxx, Xxxxx, XX 00000, ("Licensee" and together with
Xxxxxx, the "Parties" and each singularly a "Party").
WHEREAS Licensee wishes to acquire a world-wide, non-
exclusive, limited license to use copies (the "Master Copies") of
three versions of a software product developed by Xxxxxx called
PRISMT (the "Xxxxxx Software"), which copies and software are
more fully described in the Schedule to this Agreement (the
"Schedule"), in connection with the integration of the Xxxxxx
Software by Licensee into the products ("Subject Products")
described in the Schedule and with the marketing by Licensee of
such Subject Products and of services related thereto, and to
copy, use and sublicense copies of the Xxxxxx Software as part of
such integration and marketing activity,
NOW THEREFORE, the Parties agree as follows:
X. Xxxxx of License.
A. Subject to the provisions of this Agreement, Xxxxxx
hereby grants to Licensee, and Licensee accepts, a personal,
nontransferable and non-exclusive, world-wide license (the
"License"), but only:
1. to use, internally to Licensee, those portions of
the Xxxxxx Software which are identified in the
Schedule as source code for the purpose of making
Subject Products, such use shall consist solely of (i)
creating interfaces between the Xxxxxx Software and the
portions of the Subject Products owned or licensed by
Licensee, which interfaces shall be compiled into
object-code form prior to delivery to any third party,
including without limitation any subsidiary,
distributor or sublicensee of Licensee, (ii)
translating into foreign languages English language
expressions that form part of the graphical user
interface of the PRISM Analysis/Review System (as
defined in the Schedule) and (iii) modifying the PRISM
Analysis/Review System; provided that, in the case of
this clause (iii), (a) Licensee shall have first
requested that Xxxxxx make such modification and Xxxxxx
shall have declined to do so, (b) such modification
shall not been released by Licensee to any third party
without Nestor's prior written approval, which approval
shall not be unreasonably withheld, and (c) such
modification shall become a part of the Xxxxxx Software
and shall be owned by Xxxxxx and licensed to Licensee
under this Agreement, except that Nestor's obligations
pursuant to paragraphs IV A and V B shall not apply to
any such modification made by Licensee.
2. to use, internally to Licensee, those portions of
the Xxxxxx Software which are identified in the
Schedule as object code for the purpose of delivering
Subject Products, such use to consist solely of
including or incorporating such object code in a
Subject Product;
3. to make copies of the compiled object code
referred to in subparagraph 1, above, and of the object-
code copy referred to in subparagraph 2, above, (a
"Sublicense Copy" and, together with the Master Copy -
as that term is defined in the Schedule, whether in
source or object code - the "Copies" and each
singularly a "Copy"), and (b) to sublicense, directly
or acting through any Intermediary (as hereinafter
defined), within the field-of-use (the "Field-of-Use")
defined in the Schedule, in object-code form only and
subject to the provisions of paragraph II of this
Agreement, such Sublicense Copies for use as part of
Subject Products (provided that Licensee reproduces and
includes on all such copies any copyright and other
proprietary notice of Xxxxxx);
4. to reproduce, modify, and adapt the User
Documentation of the Xxxxxx Software, provided that (i)
any such modification that may affect Nestor's
intellectual-property rights shall be subject to
Nestor's prior written approval, and (ii) Licensee
shall indemnify, defend, and hold Xxxxxx harmless from
any and all expenses, damages, costs (including
reasonable attorneys' fees) or losses resulting from
any such modification or adaptation, unless approved in
writing by Xxxxxx;
5. to make and use copies of the Xxxxxx Software
within the premises of Licensee and Related
Intermediaries (as hereinafter defined) solely for
demonstration purposes;
6. to distribute Sublicensed Copies, as part of its
distribution of Subject Products, directly or through
Intermediaries (as hereinafter defined), which
Intermediaries shall have the right to execute
Sublicenses (as hereinafter defined), provided that (i)
Licensee shall not deliver to any Intermediary any part
of the Xxxxxx Software in source code, (ii) Licensee
shall prohibit each Intermediary from modifying,
creating derivative works from and, to the extent
permitted by law, disassembling, decompiling, or
"reverse engineering" any part of a Sublicensed Copy,
and Licensee shall take all lawful steps necessary to
enforce such prohibitions,(iii) no Unrelated
Intermediary (as hereinafter defined) shall take
physical possession of any Copy, and (iv) Licensee
shall have entered into an agreement with each
Intermediary containing such terms and conditions as
are necessary to effectuate the provisions and/or
limitations on use of paragraphs I B and V C, D, E and
F of this Agreement. Licensee shall take all lawful
steps necessary to enforce the performance by all
Intermediaries of each and every obligation enumerated
in the paragraph and will indemnify, defend and hold
Xxxxxx harmless from any and all expenses, damages and
costs (including reasonable attorneys' fees) or losses
resulting from (i)any unlawful act or omission of any
Intermediary, (ii) from any act or omission by any
Intermediary that would breach the provisions of this
Agreement enumerated in the preceding sentence, and
(iii) any act or omission of an Intermediary that, if
committed by Licensee, would constitute a breach of
this Agreement; and.
7. to sublicense its rights under this paragraph A
to its affiliate known as U. S. Software, Inc. (a
Nebraska corporation, hereinafter "USSI" ) solely for
the purpose of permitting USSI to develop a Trans24
Neural Network Interface (as defined in the
Schedule)and to market and support a Trans24 version of
the Xxxxxx Software, but only so long as USSI shall
remain under common control with Licensee; provided
that USSI shall have agreed, in a writing to be
delivered to Xxxxxx, to be bound by the provisions of
paragraphs I, II, IV , V, VI, VII, VIII and X of this
Agreement, and further provided that Licensee shall
indemnify, defend, and hold Xxxxxx harmless from any
and all expenses, damages, costs (including reasonable
attorneys' fees) or losses resulting from (i)any
unlawful act or omission of USSI, (ii) from any act or
omission by USSI that would breach the provisions of
this Agreement enumerated in the preceding sentence,
and (iii) any act or omission of USSI that, if
committed by Licensee, would constitute a breach of
this Agreement.
As used in this Agreement, (i) "Related Intermediary" of
Licensee shall mean any subsidiary or affiliate of Licensee, but
only so long as such subsidiary or affiliate shall be controlled
by or under common control with Licensee, and (ii) "Unrelated
Intermediaries" shall mean any entity that is neither controlled
by or under common control with Licensee or any Related
Intermediary, and with which Licensee has entered into a
distribution agreement that complies with the provisions of this
Agreement, and (iii) "Intermediaries" shall mean Related
Intermediaries and Unrelated Intermediaries and "Intermediary"
shall mean any one of them.
B. Except as expressly permitted in paragraph I A of this
Agreement, Licensee shall not have any right to use, sublicense,
copy, create derivative works from, rent, lease, assign or
transfer any Copy. Specifically, without limitation, Licensee is
expressly prohibited from sublicensing, delivering, or in any way
disclosing to any third party any part of the Xxxxxx Software in
source-code form.
To the maximum extent permitted by law, Licensee is
prohibited from modifying (except as expressly permitted in
paragraph I A 1) the Xxxxxx Software delivered to Licensee in
object-code form or disassembling, decompiling, or "reverse
engineering" in any way any part of the Xxxxxx Software delivered
to Licensee in object-code form.
C. "Source code" is a computer program or any part thereof
in human-readable form; "object code" is a computer program
restricted in its entirety to machine-executable instructions.
D. All rights not expressly granted to Licensee are reserved
by Xxxxxx.
II. Right to Sublicense.
A. A Sublicense Copy may be sublicensed only for use in
and as part of a Subject Product. A sublicense of a Sublicense
Copy (a "Sublicense") may not:
(1) entail or contemplate a transfer of any right,
title or interest in the Xxxxxx Software (other then the right to
use the Sublicense Copy as part of the Subject Product),
(2) be granted except in connection with the use by a
sublicensee of a Subject Product which contains the Sublicense
Copy (including all Xxxxxx proprietary property notices),
(3) be granted except for the internal use of the
Xxxxxx Software by the sublicensee or
(4) allow any sublicensee to re-sublicense.
B. Each Sublicense shall also:
(1) contain any terms and conditions contained in this
Agreement that specifically apply to the Sublicense;
(2) contain such terms and conditions as are necessary
to effectuate the provisions and/or limitations on use of
paragraphs I B and V C, D, E and F;
(3) provide that any third-party supplier of software
incorporated into a Subject Product at its election shall have
the right to enforce the provisions of the Sublicense relating to
the use of its Software; and
(4) shall be entered into directly between Licensee or
an Intermediary, as sublicensor, and an end-user of a Subject
Product as sublicensee.
A sublicensee may be permitted to transfer its Sublicense
and Copy only as part of a transfer of the Subject Product
containing such Copy and only provided that (i) such transfer is
on a permanent basis, (ii) the sublicensee transfers the
Sublicense, the Copy and all accompanying written materials, and
retains no copy in any form of the foregoing, and (iii) the
transferee agrees to be bound by the terms of the Sublicense.
C. Prior to Licensee's first use of any Sublicense
agreement relating to the Xxxxxx Software, Licensee shall deliver
to Xxxxxx, for Xxxxxx'x approval, a copy of those provisions of
such Sublicense that pertain to the Xxxxxx Software. Xxxxxx
shall indicate on such approved copy those provisions that may
not be modified by Licensee or any Intermediary without Nestor's
prior written approval. Licensee also shall deliver to Xxxxxx
prior to its first commercial release or dissemination one copy
of (i) all documentation relating to each version of the Xxxxxx
Software contained in any Subject Product, including but not
limited to all packaging and related materials of any kind
referring to Xxxxxx, the Xxxxxx Software or using any trademark
of Xxxxxx, and (ii) all Licensee advertising or other marketing
material of any kind referring to Xxxxxx, the Xxxxxx Software or
any Subject Product containing the Xxxxxx Software.
III. Royalty Rate, Payment and Related Matters.
A. Licensee shall pay to Xxxxxx during the term of this
Agreement royalties as set forth in the Schedule. Earned
Royalties shall be due and payable as set forth in the Schedule.
Annual Quotas (as defined in the Schedule) shall be payable
within thirty (30) days after the end of each Year of this
Agreement.
The term "Year of this Agreement" shall mean any twelve-
month period commencing with the first day of the month following
the date of execution of this Agreement. Any other amount due
under this Agreement shall be paid when specified in this
Agreement, or, if not so specified, within thirty (30) days after
the date of any invoice therefor. Except as provided in paragraph
IV of this Agreement, no payment shall be subject to a refund;
however, Earned Royalties shall be credits against Annual Quotas.
All payments due to Xxxxxx from Licensee shall be made in U. S.
Dollars. If the Royalty Base underlying the calculation of any
part of Earned Royalties shall be received by Licensee in
currency other than U. S. Dollars, such Royalty Base shall be
converted to U. S. Dollars at the exchange rate published in the
Wall Street Journal for the last day of the month immediately
preceding the date of payment of such Earned Royalty. Any amount
not paid when due shall bear interest at the lower of one and one
half (1 1/2%) percent per month or the maximum rate allowed by
law. In the event Xxxxxx is required to institute an action to
collect any such amount and shall prevail in whole or in part,
Xxxxxx shall be entitled to reimbursement by Licensee of its
reasonable expenses so incurred (including attorneys' fees).
X. Xxxxxx shall deliver to Licensee, at Licensee's place
of business first set forth above, the Base24 Master Copy within
fifteen (15) days after receipt by Xxxxxx of written acceptance
of similar software by Bank One, and such acceptance by Bank One
shall constitute acceptance by Licensee of such Base24 Master
Copy as the marketable version of the Xxxxxx Software,
notwithstanding any future change in the Base24 Master Copy that
may be agreed to by the Parties. If such acceptance by Bank One
shall not occur within sixty (60) days after the execution of
this Agreement, the Annual Quota for the first Year of this
Agreement shall be pro-rated as set forth in the Schedule.
Delivery by Xxxxxx to Licensee of the Trans24 Master Copy and the
Trans24 Fault-tolerant Master Copy, and acceptance of such Master
Copies by Licensee, shall be as subsequently agreed to by the
Parties.
C. Licensee shall be liable and responsible for payment of
all taxes and duties (except income taxes accrued against Xxxxxx)
arising from this Agreement and shall indemnify and hold Xxxxxx
harmless from any failure of Licensee to do so.
D. Within thirty (30) days after the end of each quarter
during the term of this Agreement, Licensee shall deliver to
Xxxxxx a certificate of a duly authorized officer of Licensee
setting forth the number of Sublicense Copies made and/or
sublicensed during such quarter, together with an accounting of
all amounts constituting a part of the Royalty Base collected by
Licensee or any Related Intermediary and of the calculation of
Earned Royalties. Licensee will keep such records as will enable
the royalties payable hereunder to be accurately determined by
Xxxxxx. Such records will be retained by Licensee and made
available, not more frequently than once during each Year of this
Agreement, to an independent certified public accountant selected
by Xxxxxx for examination at the request and at the expense of
Xxxxxx during reasonable business hours at the offices of
Licensee set forth in the preamble to this Agreement for a period
of at least five (5) years after the date of the transactions to
which the records relate.
If any such audit determines that any certificate of Licensee has
understated an amount owed to Xxxxxx by Licensee, Licensee shall
promptly pay to Xxxxxx the amount of such understatement. If any
audit determines that any such certificate is understated by more
than two percent (2%), Licensee shall additionally reimburse
Xxxxxx for the costs of that audit.
IV. Third-party Claims and Actions; Infringement and
Unauthorized Use
A. Provided Licensee has promptly upon learning of a claim
or action (but in any event with sufficient notice not to cause
Nestor's loss of its right to defend) notified Xxxxxx in writing
of any claim or action in which it is alleged that the Xxxxxx
Software infringes (i) a United States issued patent, trade
secret, or copyright or (ii) a corresponding foreign patent, or
copyright (iii) any other patent or copyright if Xxxxxx, in it
sole discretion, shall have elected to take control of the
defense or settlement thereof and Licensee, at no cost to Xxxxxx
(except for reasonable out-of-pocket expenses), fully cooperates
with Xxxxxx in such settlement or defense, Xxxxxx shall take sole
control of the settlement of such claim and the defense of any
litigation resulting solely therefrom and shall be responsible
for the costs of such defense and will indemnify and hold
Licensee harmless from the cost of any settlement or judgment
resulting solely therefrom. If Xxxxxx elects not to take control
of the defense and settlement of any claim described in (iii) of
this paragraph, then any amount paid by Licensee in settlement or
judgment of such claim shall be credited in a fair and equitable
pro-ration by Xxxxxx against royalties payable by Licensee to
Xxxxxx up to a maximum credit equal to the aggregate royalties
previously paid by Licensee to Xxxxxx as Earned Royalties on
Sublicenses in the jurisdiction in which such intellectual-
property rights are claimed to have been infringed.
If, in connection with any such claim (whether or not Xxxxxx
assumes control of the defense and settlement thereof), Xxxxxx
xxxxx it advisable to replace parts of the Xxxxxx Software,
Licensee shall accept such replacement provided that it has
substantially the same functions and features as the part
replaced and is replaced at no cost to Licensee. If, as a final
result of a claim described in the first sentence of this
paragraph, the use by Licensee of the Xxxxxx Software is
enjoined, Xxxxxx shall, at its sole option either (i) replace
such parts of the Xxxxxx Software as have been enjoined (provided
that it has substantially the same functions and features as the
part replaced and is replaced at no cost to Licensee), or (ii)
procure a license for Licensee to use same at no additional cost
to Licensee, or (iii) reimburse to Licensee such part of the
royalty therefor previously paid pursuant to this Agreement for
the affected Sublicense as may be fair and equitable under the
circumstances; provided, however, that if Xxxxxx elects not to
assume control of the defense and settlement of a claim of
infringement of a patent or copyright referred to in clause
(iii)of the preceding subparagraph of this paragraph IV A, its
maximum liability to Licensee shall be the maximum liability set
forth in the final sentence of the preceding subparagraph of this
paragraph IV A. Notwithstanding the foregoing, the limitation to
be applied to all such payments by Xxxxxx to Licensee shall be
applied cumulatively.
Notwithstanding the foregoing and subject to paragraph V E
of this Agreement, Xxxxxx assumes no obligation or liability for,
and Licensee will indemnify, defend and hold Xxxxxx harmless from
any and all expenses, damages, costs (including reasonable
attorneys' fees) or losses resulting from any claim or action
arising from or relating to (i) the breach by Licensee of any of
its agreements, warranties or duties contained in this Agreement,
(ii) injury to person, business or property or other claim of
product liability resulting or arising from the Subject Products
if the use of the Xxxxxx Software alone would not have given rise
to such claim, (iii) the use of the Xxxxxx Software in
combination with any other product, if the use of the Xxxxxx
Software alone would not have given rise to such claim, (iv)
Nestor's compliance with Licensee's design, specifications, or
instructions, (v) any actions or claims of trademark infringement
involving any marking or branding not applied or approved in
advance by Xxxxxx, (vi) in whole or in part arising out of or
relating to any modification of the Xxxxxx Software not made by
Xxxxxx (whether or not approved by Xxxxxx) or (vii) any claim of
direct or contributory infringement of any process patent arising
from the use of any Subject Product if the use of the Xxxxxx
Software alone would not have given rise to such claim. The term
"Xxxxxx Software" shall not include any software licensed by
Xxxxxx from third parties. Xxxxxx assumes no obligation or
liability for any claim or action arising from or relating to
such software. This paragraph IV A states the entire liability
and obligation of Xxxxxx and Licensee and the exclusive remedy of
Licensee and its sublicensees with respect to any actions or
claims (i) of alleged infringement relating to or arising out of
the subject matter of this Agreement or (ii) otherwise described
in this paragraph IV A.
B. Licensee shall immediately notify Xxxxxx (with full
particulars) of any possible infringers or unauthorized users of
the Xxxxxx Software of which Licensee obtains knowledge. Xxxxxx,
in its sole discretion, shall determine what steps, if any, are
to be taken with respect to any infringement or unauthorized use
of the Xxxxxx Software and any damages recovered shall be payable
solely to Xxxxxx. Licensee agrees to fully cooperate with Xxxxxx,
at no cost to Xxxxxx (except for reasonable out-of-pocket
expenses), in all stages of any such action. In no event shall
Xxxxxx be obligated hereunder to commence legal proceedings.
Licensee shall not undertake any legal action or other steps of
any kind to prevent or restrain any such infringement or
unauthorized use or collect damages resulting therefrom without
Nestor's advance written permission.
V. Warranties and Covenants.
A. Each Party does hereby warrant that this Agreement has
been duly and validly authorized and executed by it and is its
valid and binding obligation and that it has the legal right and
authority to execute this Agreement.
X. Xxxxxx warrants that no claim has been made by any
third party that the Xxxxxx Software infringes any United States
issued patent, trade secret, or copyright of such third party.
Xxxxxx warrants that it knows of no claim by any third party that
the Xxxxxx Software infringes any foreign patent, copyright or
trade secret of such third party. Xxxxxx warrants that, for a
period of ninety (90) days after each installation, PRISM, as
defined in the Schedule, shall contain substantially the features
and functions listed in the document titled, Prism Functional
Description, which is annexed hereto solely for the purpose of
listing such functions; provided, however, that such warranty
shall be voided in its entirety if Licensee shall have made any
functional modification to the Xxxxxx software or shall have
installed the Xxxxxx software in a manner not in accordance with
an installation guide to be mutually agreed upon by the Parties.
C. EXCEPT AS PROVIDED IN SUBPARAGRAPHS B AND E OF THIS
PARAGRAPH V, THE XXXXXX SOFTWARE IS LICENSED AS-IS. XXXXXX DOES
NOT WARRANT THAT THE XXXXXX SOFTWARE AND THE TECHNOLOGY EMBODIED
THEREIN ARE CAPABLE OF INDUSTRIAL REALIZATION OR COMMERCIAL
EXPLOITATION, THE RISKS OF WHICH ARE BEING ASSUMED SOLELY BY
LICENSEE, AND XXXXXX SHALL HAVE NO RESPONSIBILITY FOR THE
CONSEQUENCES OF ANY SUCH FAILURE OF INDUSTRIAL REALIZATION OR
COMMERCIAL EXPLOITATION. IT IS UNDERSTOOD THAT XXXXXX IS NOT
MAKING AND EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES
THAT THE MANUFACTURE, USE, SUBLICENSING OR SALE OF THE SUBJECT
PRODUCTS WILL NOT INFRINGE THE PATENTS, COPYRIGHTS, TRADEMARKS OR
OTHER PROPRIETARY PROPERTY RIGHTS OF ANY THIRD PARTY.
D. EXCEPT AS PROVIDED IN SUBPARAGRAPHS B AND E OF THIS
PARAGRAPH V, XXXXXX EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OR
GUARANTEES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
E. REGARDLESS OF WHETHER ANY REMEDY HEREIN FAILS OF ITS
ESSENTIAL PURPOSE, IN NO EVENT WILL XXXXXX BE LIABLE FOR ANY
INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT OR
CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATING IN ANY WAY TO
THIS AGREEMENT, THE XXXXXX SOFTWARE OR THE USE OF THE SAME
(INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST INFORMATION,
LOST SAVINGS, LOST PROFITS OR BUSINESS INTERRUPTION), EVEN IF
XXXXXX HAS BEEN INFORMED, IS AWARE, OR SHOULD BE OR SHOULD HAVE
BEEN AWARE, OF THE POSSIBILITY OF SUCH DAMAGES. THE SOLE REMEDY
FOR ANY DISK OR OTHER MACHINE READABLE MATERIAL SUPPLIED BY
XXXXXX WHICH IS PHYSICALLY DEFECTIVE SHALL BE, AT NESTOR'S
OPTION, REPLACEMENT OF SUCH DISK OR MATERIAL OR REFUND OF THE
ROYALTY PAID TO XXXXXX RELATING TO SUCH DISK OR MATERIAL. EXCEPT
FOR INDEMNIFICATION OF LICENSEE BY XXXXXX PURSUANT TO PARAGRAPH
IV A, IN NO EVENT WILL XXXXXX BE LIABLE IN DAMAGES OR OTHERWISE
IN EXCESS OF THE ROYALTIES RECEIVED BY XXXXXX FROM LICENSEE
HEREUNDER. EXCEPT FOR BREACHES OF THIS AGREEMENT AFFECTING
NESTOR'S INTELLECTUAL-PROPERTY RIGHTS (INCLUDING BUT NOT LIMITED
TO BREACHES OF PARAGRAPHS I, II, V. F. (1),(2) AND (5), AND VII
OF THIS AGREEMENT) AND REGARDLESS OF WHETHER ANY REMEDY HEREIN
FAILS OF ITS ESSENTIAL PURPOSE, IN NO EVENT WILL LICENSEE BE
LIABLE FOR ANY INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT
OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATING IN ANY WAY TO
THIS AGREEMENT, THE XXXXXX SOFTWARE OR THE USE OF THE SAME
(INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST INFORMATION,
LOST SAVINGS, LOST PROFITS OR BUSINESS INTERRUPTION), EVEN IF
LICENSEE HAS BEEN INFORMED, IS AWARE, OR SHOULD BE OR SHOULD HAVE
BEEN AWARE, OF THE POSSIBILITY OF SUCH DAMAGES.
F. Licensee further understands, agrees and/or warrants
that:
(1) it does not intend to and will not use, market,
sublicense, deliver or transfer in any way the Xxxxxx Software in
violation of any applicable law, rule or regulation of the United
States, or any State of the United States or any foreign country
of applicable jurisdiction (including without limitation any
United States law, rule or regulation relating to technology
export or transfer) and it will obtain at its own cost any
required export licenses;
(2) it will not accept any purchase order or contract
(including without limitation any United States or foreign
government contract) that by its terms or by the operation of law
will abridge or otherwise diminish Nestor's intellectual-property
rights in and/or to the Xxxxxx Software (and that all such orders
or contracts with any government or governmental agency will
include "restricted" or "limited" rights provisions, or their
equivalents, or be on no less favorable terms to Xxxxxx);
(3) it has all legal right and authority to conduct its
activities as contemplated by this Agreement, including but not
limited to the production and license of the Subject Products,
which contain, in addition to the Xxxxxx Software, substantial
valuable technology belonging or licensed to Licensee;
(4) this Agreement is a license agreement only, not an
agreement for the sale of any Copy of the Xxxxxx Software, and
neither Licensee nor any sublicensee obtains any right in or to
the Xxxxxx Software other than the limited right to use it as
provided in this Agreement, and in the case of Licensee, the
limited rights expressly granted by the License, and no other
right to create derivative works from, rent, lease, assign or
otherwise use, sublicense, copy or transfer any Copy is granted,
either expressly, by implication or otherwise;
(5) Licensee will not infringe the copyright or other
proprietary rights in the Xxxxxx Software nor permit others
within Licensee's control (including without limitation any
Intermediary) to do so, and it and its sublicensees are, to the
maximum extent permitted by law, prohibited from modifying,
disassembling, decompiling, or "reverse engineering" any part of
the Xxxxxx Software;
(6) it will be solely responsible and liable for all
necessary or desirable steps to market, and (subject to Nestor's
providing the engineering and consulting support set forth in
paragraph VIII A of this Agreement), to adequately support and
maintain, the Subject Products;
(7) Licensee assumes all responsibility and liability
for the selection of the Xxxxxx Software to achieve the results
intended and for the installation of, use of and results obtained
from the Xxxxxx Software or any Subject Product;
(8) it is solely responsible for warranting the Subject
Products and liable for any warranty claims therefor (either
express, implied or otherwise); and
(9) it is solely responsible for all expenses incurred
by it in its performance of this Agreement.
VI. Expiration or Termination.
A. If Licensee shall have paid to Xxxxxx, when due,
the Annual Quotas and all other sums due to Xxxxxx under this
Agreement and shall have been in continuous compliance with the
terms of this Agreement, (except for breaches which have been
fully and timely cured) this Agreement and the License shall
continue for a term of five (5) years from the date hereof;
provided, however, that Licensee may at its option, extend the
term of this Agreement for successive one-year terms ("Extension
Terms") up to a maximum of twenty Extension Terms if Licensee
shall have paid to Xxxxxx during the Year of this Agreement
immediately preceding such extension aggregate royalties
(including but not limited to Earned Royalties) of not less than
[*]. Such extension shall be effective only if Licensee shall
have given to Xxxxxx written notice at least 90 days prior to the
beginning of any such Extension term of its intention to extend,
accompanied by payment of the difference between the aggregate
royalties paid during such Year of this Agreement and [*] . Such
payment shall be applied as a credit against any royalty that
becomes due and payable prior to the end of the Year of this
Agreement in which such notice has been given. The original five-
year term, together with all such extensions, shall constitute
the term of this Agreement.
Notwithstanding the foregoing, this Agreement shall
immediately terminate if Licensee liquidates, dissolves, shall be
adjudicated insolvent, files or has filed against it a petition
in bankruptcy or for reorganization which, if filed against
Licensee, has not been discharged within one hundred and eighty
(180) days of filing, takes advantage of any insolvency act or
proceeding, including an assignment for the benefit of creditors,
or commits any other act of bankruptcy; provided, however, that
Xxxxxx shall only have the right to suspend the License and
Nestor's performance of its obligations under this Agreement
during the pendency of any undischarged involuntary bankruptcy or
reorganization.
B. Either Party may terminate this Agreement and the
License by written notice to the other Party, if such other Party
shall breach any of provision of this Agreement and such breach
continues for at least thirty (30) days after notice thereof.
Licensee may terminate this Agreement and the License by
delivering to Xxxxxx one hundred eighty (180) days advance
written notice thereof.
C. Notwithstanding any termination or expiration of this
Agreement, the License and any Sublicenses shall continue in
effect with respect to any Sublicense Copies sublicensed by
Licensee prior to termination or expiration; and, except in the
event of termination this Agreement by Licensee for breach,
Licensee shall remain liable to Xxxxxx for royalties accruing
with respect to such Copies. In the event of termination of this
Agreement for breach, all future payments by sublicensees that
constitute part of the Earned Royalty Base shall inure to the
benefit, and be payable to the account of, the non-breaching
Party. In the event of termination of this Agreement by Licensee
for breach, Licensee shall pay to Xxxxxx during the remaining
term of this Agreement, for each Sublicense then in effect, the
greater of (i) the maintenance fee provided for in such
Sublicense or (ii) an annual amount equal to fifteen per cent
(15%) of the Initial License Fee set forth in such Sublicense. In
addition thereto, Licensee shall pay to Xxxxxx any out-of-pocket
costs of Xxxxxx in connection with maintenance-related travel to
sublicensee sites. Such fees shall be adjusted, as mutually
agreed between the Parties, as fair compensation to Licensee for
damages arising from such breach by Xxxxxx. In consideration of
such fees and reimbursed costs, Xxxxxx will provide to
sublicencees during the remaining term of this Agreement the
maintenance support set forth in paragraph VIII A of this
Agreement. Termination or expiration of this Agreement and the
License shall not release Licensee from any of its obligations or
liabilities accrued or incurred under this Agreement, or rescind
or give rise to any right to rescind any payment made or other
consideration given hereunder. Upon termination or expiration of
this Agreement and the License, Licensee shall cease all
marketing and other activities under the License and shall, at
Nestor's election, immediately deliver to Xxxxxx or
(i) irretrievably destroy, or cause to be delivered or destroyed,
any and all Copies of the Xxxxxx Software in whatever form and
any written or other materials relating to the Xxxxxx Software in
Licensee's possession, custody or control, and (ii) within thirty
(30) days, deliver to Xxxxxx a certification thereof.
VII. Confidentiality.
A. Licensee agrees, acknowledges and covenants that (i)
the data and information relating to the functioning of the
Xxxxxx Software, and (ii) any other information that is marked
"Confidential" (in either case, whether oral, written or in
machine-readable form) disclosed to Licensee by Xxxxxx pursuant
to the provisions of this Agreement (collectively, the "Xxxxxx
Technology") contain valuable trade secrets and other proprietary
information of Xxxxxx, that unauthorized use or disclosure of
such Xxxxxx Technology would irreparably injure Xxxxxx, which
injury cannot be remedied solely by the payment of money damages,
and that Licensee shall hold in strict confidence and not
disclose, reproduce or use the Xxxxxx Technology with the
exception of information which: (i) is already in the public
domain at the time of disclosure; or (ii) after disclosure
becomes a part of the public domain by publication other than by
Licensee in violation of this Agreement or of any other
confidentiality agreement between Licensee and Xxxxxx (a
"Confidentiality Agreement"); or (iii) is received by Licensee
from a third party who did not require such information to be
held in confidence and who did not acquire, directly or
indirectly through one or more intermediaries, such information
from Xxxxxx under any obligation of confidence; or (iv) is agreed
to by Xxxxxx in writing in advance of such publication or
reproduction. Licensee may disclose the Xxxxxx Technology only to
its employees and to Related Intermediaries and their respective
employees. provided the entity to whom a disclosure is made (i)
needs to know same in order to effectuate the purposes of this
Agreement, and (ii) has entered into a confidentiality agreement
substantially equivalent to the foregoing provisions of this
paragraph VII A, which confidentiality agreement can be enforced
directly or indirectly by Licensee. Licensee guarantees to Xxxxxx
the performance by all Related Intermediaries of each and every
obligation under those agreements and this paragraph, and will
indemnify, defend and hold Xxxxxx harmless from any and all
expenses, damages and costs (including reasonable attorneys'
fees) or losses resulting from any breach of such agreements or
this paragraph.
Licensee agrees to cooperate fully with Xxxxxx, at no cost
to Xxxxxx (except for reasonable out-of-pocket expenses approved
in advance in writing by Xxxxxx), in any action or proceeding
whereby Xxxxxx seeks to prevent or restrain any unauthorized use
of the Xxxxxx Technology or to seek damages therefor. The
provisions of this Agreement shall not limit any rights which
Xxxxxx may have under any Confidentiality Agreement, whether in
force before or after this Agreement.
B. Licensee shall not disclose to Xxxxxx any information
that Licensee considers to be confidential without first have
received Nestor's written consent to receive such disclosure.
Any confidential information accepted by Xxxxxx pursuant to such
a written consent shall be held in confidence under the same
terms and conditions as those applicable to Licensee as set forth
in subparagraph A. of this paragraph VII. Xxxxxx acknowledges
that the certificates to be delivered to it pursuant to paragraph
III D of this Agreement shall be deemed to be confidential and
shall be treated in accordance with the provisions of the
preceding sentence of this subparagraph VII B, and their contents
shall not be disclosed by Xxxxxx except that their contents may
be disclosed by Xxxxxx as required by law or as necessary to
enforce Nestor's rights and Licensee's obligations under this
Agreement.
C. All of the provisions of this paragraph VII shall
survive any termination or expiration of this Agreement or
License.
VIII. Consulting, Training And Other Services; Enhancements and
Upgrades
A. During the term of this Agreement, and provided that
Licensee is then and always has been in full compliance with all
of the terms and conditions of this Agreement (except for
breaches which have been fully and timely cured), Xxxxxx shall
provide to Licensee such services related to the use and
installation of the Xxxxxx Software as are described in the
Xxxxxx document titled PRISM Software and Client Support
(excluding the Installation Program described therein), a
specimen of which is attached to this Agreement, up to a maximum
of ninety-six (96) hours of such maintenance support for each
Sublicense during the first year after the execution of such
Sublicense, and a maximum of forty-eight (48) hours of such
maintenance support during the second year and subsequent years
after the execution of such Sublicense. Xxxxxx will use
reasonable commercial efforts to furnish additional maintenance
support at the request and expense of Licensee at Nestor's then
effective rates for engineering services. If Licensee deems the
aforementioned level of support, or Nestor's support staffing, to
be inadequate, Licensee may request that Xxxxxx secure and
maintain additional support staff, all at Licensee's expense, and
Xxxxxx will use its best efforts to do so. Such request by
Licensee shall entail a commitment by Licensee to reimburse
Xxxxxx for all costs and expenses related to securing and
maintain such additional staff for a period of not less than two
years. Such commitment, if made, shall survive any termination
or expiration of this Agreement for the balance of the
commitment.
The maintenance support described in this paragraph A shall
not include any installation, consulting or customization of
the Xxxxxx Software, or modeling, or other services not
specifically referred to in this paragraph.
B. Such other services shall be done by Xxxxxx only upon
Nestor's acceptance, in its sole discretion, of a written request
from Licensee, which request shall be accompanied by a work order
setting forth the work being requested, the identity and location
of the relevant sublicensee, and the requested installation or
delivery date. Upon acceptance of any such work order, Xxxxxx
shall furnish a quotation, which may be on a fixed-price or time-
and-materials basis for the work to be performed, and such
quotation shall remain in effect for ninety (90) days from its
date. The Parties expressly acknowledge and agree that Licensee
shall be permitted to discount Nestor's quotation up to a maximum
discount of ten per cent (10%) without the prior written consent
of Xxxxxx. Except as provided in the Schedule, fees attributable
to installation, consulting, and/or customization services shall
be retained by the Party performing such services and shall not
be subject to any Earned Royalty. The rates for engineering
services set forth in the Schedule shall remain in effect for one
year following the date of execution of this Agreement and
thereafter shall be adjusted as set forth in the Schedule and may
be further adjusted annually by Xxxxxx upon sixty (60) days prior
written notice Licensee.
C. In consideration of such services, Licensee shall pay to
Xxxxxx for all services rendered pursuant to this paragraph VIII
B engineering fees at the rates set forth in the Schedule.
Licensee shall also reimburse to Xxxxxx Xxxxxx'x reasonable
travel expenses incurred in providing any services under this
paragraph VIII. All services provided by Xxxxxx pursuant to
paragraph VIII shall be provided to Licensee, not to Licensee's
customers; and, notwithstanding the delivery of any such
consulting services, Licensee shall be and remain fully
responsible and liable to its customers for any Subject Product.
D. At a mutually agreeable time or times during the first
Year of this Agreement, Xxxxxx will provide to Licensee and
Licensee's staff an aggregate of four weeks of training on the
use and installation of the Xxxxxx Software and two days of sales
training. Such training shall take place at Licensee's place of
business. Licensee shall reimburse to Xxxxxx Xxxxxx'x reasonable
travel and other expenses incurred in connection with the
activities contemplated by this paragraph VIII D.
E. During the first year of the term of this Agreement,
Xxxxxx shall provide to Licensee a maximum of two person weeks of
such marketing and sales support to Licensee as the Parties may
agree. Licensee shall reimburse to Xxxxxx Xxxxxx'x reasonable
travel and entertainment expenses incurred in providing such
marketing and sales support.
X. Xxxxxx shall deliver to Licensee any and all
enhancements and upgrades to the Xxxxxx Software that it makes
generally commercially available at no charge to other licensees
of PRISM. Xxxxxx shall give Licensee notice of the scheduling
releases no later than such notice is given generally to other
licensee of PRISM. Such enhancements and upgrades shall become
part of the respective Master Copy to which they pertain, and
shall be subject to all of the terms and conditions of this
Agreement. Such enhancements and upgrades shall not include any
software marketed by Xxxxxx under any xxxx other than PRISM, nor
any software that Xxxxxx is legally prohibited from delivering to
Licensee.
G. All payments due under this paragraph VIII shall be due
thirty (30) days after the end of the month in which the services
or expenses to which they relate were rendered or incurred.
Payments for partial staff weeks or staff months shall be
prorated. All activities described in this paragraph VIII shall
be subject to all of the terms and conditions of this Agreement
(including, without limitation, those of paragraph VII). If and
to the extent Xxxxxx delivers to Licensee any software as part of
such activities, such software shall be deemed delivered under
and subject to all of the terms and conditions of the License and
this Agreement.
IX. Source-Code Escrow
Within 90days after delivery by Xxxxxx to Licensee of the
first Master Copy or of any update to the Xxxxxx Software, Xxxxxx
shall deliver to an escrow agent mutually agreeable to the
Parties a copy of the source code of the Xxxxxx Software, subject
to an escrow agreement that is mutually agreeable to the Parties.
Such escrow agreement shall provide that the source code shall be
delivered out of escrow to Licensee only if Xxxxxx (i) files for
a liquidating bankruptcy or (ii) is otherwise liquidated and is,
or its successor in interest is, and will continue to be, unable
to furnish to Licensee the technical support contemplated by this
Agreement. Any source code delivered out of escrow to Licensee
shall be used by Licensee solely to maintain Subject Products
delivered to sublicensees prior to such release, and shall be
subject to the provisions of paragraph VII of this Agreement. All
expenses relating to such escrow arrangement shall be borne by
Licensee. If Licensee shall fail to make timely payments of all
amounts due to the escrow agent, Nestor's may terminate the
escrow and demand return of the Xxxxxx Software, after which
Xxxxxx shall have no further obligation under this paragraph.
X. Miscellaneous
A. Licensee will cause any and all Subject Products (which
include the Xxxxxx Software) and all advertising or other
marketing material of any kind, documentation and packaging
therefor to be marked and labeled with and/or reference Nestor's
patent rights, copyrights, and/or trade names in the form and
style furnished by Xxxxxx to Licensee. Licensee shall permit
Xxxxxx to make reasonable inspections of the Subject Products,
but Xxxxxx shall not be liable to Licensee, sublicensees, or
others for its failure to do so or for any defects which it
discovers or would or could have discovered by so doing. Licensee
shall not otherwise use or make reference to such rights, marks
or names of Xxxxxx without the advance written permission of
Xxxxxx. Xxxxxx may, at any time and from time to time, in its
sole discretion, alter or revoke its instructions pursuant
hereto; provided, however, that Licensee shall be permitted to
use then existing stocks of documentation and advertising
materials unless, in the opinion of counsel to Xxxxxx, such use
would be legally inadvisable.
B. Neither this Agreement, the License or other interest
hereunder shall be assignable by Licensee. Subject to the
foregoing, this Agreement shall inure to the benefit of, and be
binding upon, the Parties' successors.
C. The headings and captions used in this Agreement are
for convenience only and are not to be used in the interpretation
of this Agreement.
D. The failure of either Party to require performance of
any provision of this Agreement shall not affect the right to
subsequently require the performance of such or any other
provision of this Agreement. The waiver of either Party of a
breach of any provision shall not be taken or held to be a waiver
of any subsequent breach of that provision or any subsequent
breach of any other provision of this Agreement.
E. The Parties are independent contractors and engage in
the operation of their own respective businesses. Neither Party
is the agent or employee of the other Party for any purpose
whatsoever. Nothing in this Agreement shall be construed to
establish a relationship of co-partners or joint venturers
between the two Parties. Neither Party has the authority to enter
into any contract or assume any obligation for the other Party or
to make any warranty or representation on behalf of the other
Party.
F. If any provision of this Agreement is, or is determined
to be, invalid, illegal or unenforceable, all remaining
provisions of this Agreement shall nevertheless remain in full
force and effect, and no provision of this Agreement shall be
deemed to be dependent upon any provision so determined to be
invalid, illegal or unenforceable unless otherwise expressly
provided for herein. Should any provision of this Agreement be
found or held to be invalid, illegal or unenforceable, in whole
or in part, such provision shall be deemed amended to render it
enforceable in accordance with the spirit and intent of this
Agreement.
G. This Agreement has been entered into, delivered and is
to be governed by, construed, interpreted and enforced in
accordance with the laws of the State of New York (without giving
reference to choice-of-law provisions) from time to time in
effect. The Parties agree that the United Nations Convention on
Contracts for the International Sale of Goods shall not apply to
any of the transactions which are contemplated by this Agreement.
H. If a dispute arises out of or relates to this
Agreement, the License, a breach thereof or Licensee's use of
the Xxxxxx Software, and if said dispute cannot be settled
through direct discussions, the Parties agree to first endeavor
to settle the dispute in an amicable manner by mediation in New
York, New York administered by the American Arbitration
Association under its Commercial Mediation Rules. Thereafter, any
unresolved controversy or claim arising out of or relating to
this Agreement, the License, a breach thereof or Licensee's use
of the Xxxxxx Software, shall be settled by arbitration before
three neutral arbitrators (selected from a panel of persons
having experience with and knowledge of computers and the
computer business, at least one of whom shall be an attorney) in
administered by the American Arbitration Association in
accordance with its Commercial Arbitration Rules. Such
arbitration shall be located in New York, New York if commenced
by Licensee, and in Chicago, Illinois if commenced by Xxxxxx.
Any provisional or equitable remedy which would be available from
a court of law shall be available from the arbitrators to the
Parties. In any such proceeding limited civil discovery shall be
permitted for the production of documents, which shall be
governed by the Federal Rules of Civil Procedure (without
reference to any local rules of a particular court). All issues
regarding discovery requests shall be decided by the arbitrators.
Judgment upon the award of the arbitrators may be enforced in any
court having jurisdiction thereof. The Parties hereby consent to
the non-exclusive jurisdiction of the courts of the State of New
York or to any Federal Court located within the State of New York
for any action (i) to compel arbitration, (ii) to enforce the
award of the arbitrators or (iii) at any time prior to the
qualification and appointment of the arbitrators, for temporary,
interim or provisional equitable remedies and to service of
process in any such action by registered mail, return receipt
requested, or by any other means provided by law.
I. This Agreement contains the entire and exclusive
agreement of the Parties with respect to its subject matter.
Except as otherwise provided, this Agreement supersedes any
agreements and understandings, whether written or oral, entered
into by the Parties prior to its effective date and relating to
its subject matter. No modification or amendment of this
Agreement shall be effective unless it is stated in writing,
specifically refers hereto and is executed on behalf of each
Party. The written consent of Xxxxxx required by any provision of
this Agreement shall be deemed to be valid and binding upon
Xxxxxx only if executed by its President.
J. Except as otherwise specified, all notices, payments,
certificates and reports hereunder shall be deemed given and in
effect as of the date of mailing, when sent by express mail (or
other overnight delivery service), postage prepaid, addressed to
the Parties as set forth in the preamble to this Agreement
directed in each case to the President of the Party receiving the
notice (and if to Licensee, with copy to General Counsel of
Licensee) or to such other addresses as the Parties may from
time to time give written notice. Each Party shall use its best
efforts to respond expeditiously to requests of the other Party
made pursuant to this Agreement.
K. Except for failure to make any payment when due,
neither Party hereto shall be liable to the other for failure or
delay in meeting any obligations hereunder as the result of
strikes, lockouts, war, Acts of God, fire, flood or acts of
government, if beyond the control of such Party.
IN WITNESS WHEREOF, the Parties hereto have set their
hands and seals by their duly authorized representatives as of
the day and year first above written.
APPLIED COMMUNICATIONS, INC. XXXXXX, INC.
By:____________________________ By:____________________________
Name: Xxxxxx X. Xxxxxxx Name: Xxxxx Xxx
Title: Senior Vice President, Title: President
Americas
SCHEDULE
Xxxxxx Software:
"Xxxxxx Software" shall mean Master Copies of PRISM(TM),
adapted to function in conjunction with those products marketed
by Licensee and known as Base24 and Trans24. PRISM consists of a
credit-card fraud-scoring model ("PRISM Scoring System") and an
analytical workflow model ("PRISM Analysis/Review System"). The
Prism Scoring System runs in batch mode on Tandem NSK computers
and under the UNIX and MVS operating systems, and will accept
standardized inputs defined by a document titled Base24 PRISM
Data Interface dated as of August 15, 1996. The PRISM
Analysis/Review System runs on personal computers under Windows
NT. As used in this Agreement, the Master Copy adapted to
function in conjunction with Base24 on a Tandem computer is
sometimes referred to as the "Base24 Master Copy"; the Master
Copy adapted to function with Trans24 under UNIX or MVS is
sometimes referred to as the "Trans24 Master Copy"; and the
Master Copy adapted to function in a fault-tolerant mode with
Trans24 under UNIX is sometimes referred to as the "Trans24 Fault-
tolerant Master Copy". The Trans24 Fault-tolerant Master Copy
contains calls to object-code modules of a database management
system known as "Kala", which modules Licensee will obtain
directly from their owner and will deliver to those sublicensees
requiring fault-tolerant Subject Products.
It is understood that Xxxxxx will use reasonable commercial
efforts, at Licensee's expense, to extend the scope of the Xxxxxx
Software to include any or all of (i) a debit-card fraud-scoring
model, (ii) a retail-merchant and private-label fraud-scoring
model, (iii) a third-party-processor fraud-detection model, and
(iv) a "Trans24 Interface", which will be an interface between
the PRISM Scoring System and Licensee's Trans24 product running
under the UNIX or MVS operating systems. The Trans24 Interface
will be developed by Xxxxxx in accordance with specifications to
be mutually agreed between the Parties, and will accept
authorization data and master-file data from a "Neural Network
Interface" to be developed by Licensee, which Neural Network
Interface will convert authorization data generated by a Trans24
system to a format acceptable by PRISM. The Trans24 Interface and
the Neural Network Interface, when developed, shall, together
with their counterparts in the interface between PRISM and
Licensee's Base24 product, be deemed to be included within the
meaning of the term "Xxxxxx Software" for the purpose of
determining the Royalty Base. Neither party may deliver any such
interface product in its entirety except for use in conjunction
with PRISM and Base24 or Trans24. If Licensee delivers the
interface to a customer to whom it has or will sublicense the
Xxxxxx Software, all amounts received for such interface will be
deemed part of the Earned Royalty Base. If Xxxxxx delivers the
interface to a customer on the list of Licensee's customers
annexed to this Agreement (subject to the applicable exceptions),
all amounts received by Xxxxxx for such interface and PRISM will
be credited against the Cumulative Royalty Base as hereinafter
set forth in this Schedule. Subject to the foregoing, neither
Party will owe the other Party any amount or be entitled to any
credit, for authorized deliveries of such interface products.
Notwithstanding the foregoing, either Party may use for any
purpose the portion of the interface that such party developed
without any obligation to account to the other Party, provided
that such use does not result in any use or disclosure of the
other Party's confidential information or other intellectual
property. All other extensions of the Xxxxxx Software, including
without limitation the extensions described in (i), (ii) and
(iii) of this paragraph, shall be and remain the property of
Xxxxxx.
Prior to the first commercial use of any version of the Neural
Network Interface, Licensee shall deliver to Xxxxxx a source-code
copy of such version, together with all related documentation.
The portion of the Xxxxxx Software which is to be delivered
in source code is the (i) Application Program Interface and
Visual Basic code needed to integrate PRISM within Base24, and
(ii) the PRISM Analysis Review System. All of the remainder of
the Xxxxxx Software is to be delivered in object code.
Licensee or each sublicensee shall be required to obtain
licensed copies of third-party software specified in the System
Requirements document annexed to this Agreement including,
without thereby limiting, Windows NT, Atlas GIS and, for UNIX-
based systems, Kala database-management software for use with
Trans24 Fault-tolerant Subject Products.
Subject Products:
"Subject Products" shall mean computer software and hardware
consisting of the products marketed by Licensee known as Base24
(Tandem NSK operating system) and Trans24 (UNIX or MVS) systems
(either as currently existing or as hereafter revised or
modified, if in the latter case only with substantially and
materially the same functionality as those currently
existing),(i) with which Licensee shall have integrated, at the
time of installation, the object-code portions of the Xxxxxx
Software or (ii) if previously installed, to which the object-
code portions of the Xxxxxx Software are added pursuant to this
Agreement.
Field-of-Use:
The term "Field-of-Use" shall mean integration of the Xxxxxx
Software into the Subject Products for the purpose of delivering
such Subject Products for credit- and debit-card fraud detection
by commercial banks, retail merchant organizations, and only
those entities identified as "Approved Processing Entities" that
provide such services to retail merchants or commercial banks.
Approved Processing Entities:
Licensee has furnished to Xxxxxx a copy of its customer list,
which is attached to this Agreement, on which Xxxxxx has
indicated processors who are not approved. All other customers
of Licensee on such list who may be processors are Approved
Processing Entities and are included in the Field-of-Use. The
name of any customer or prospective customer of Licensee who is a
processor and is not so approved must be submitted to Xxxxxx for
such approval and inclusion, at Nestor's sole discretion, in the
Field-of-Use.
Royalties:
Earned Royalties:
Licensee shall pay to Xxxxxx the greater of (i) the Minimum
Earned Royalties or (ii) the product of the applicable Royalty
Rate times the Royalty Base, all of which are set forth below in
this Schedule.
Earned Royalty Base:
The following revenues received from sublicenses, whether by
Licensee or Related Intermediaries, in connection with the
installation, delivery and use of Subject Products shall
constitute the Royalty Base: all fees of any nature whatsoever
arising from a Sublicense of the Xxxxxx Software, including
without limitation (i) initial license fees (including license
fees charged by Licensee for PRISM and for software that
interfaces PRISM with the remainder of any Subject Product, and
installation fees to the extent that such fees exceed Licensee's
normal charges for engineering services), (ii) maintenance fees,
and (iii) use fees. If any portion of such revenue is withheld
for income-tax purposes, the Earned Royalty Base will be include
the gross amount of revenues without regard to such withholding.
Any amount paid to Xxxxxx by Licensee or any sublicensee for
engineering or consulting services, including without thereby
limiting amounts paid to Xxxxxx for installation, modeling, or
modification of the Xxxxxx Software, shall be excluded from the
Royalty Base.
Earned Royalty Rate:
During the first two years of the term of this Agreement, the
Royalty Rate to be applied in the calculation of any Earned
Royalty shall depend upon the cumulative aggregate royalties paid
by Licensee to Xxxxxx from the commencement of the term of this
Agreement up to the date of such calculation, as set forth below:
Earned Cumulative Royalty
Cumulative Royalty Base Royalty Prior to Calculation
Rate
Up to [*] [*] [*] to [*]
[*] to [*] [*] [*] to [*]
[*] to [*] [*] [*] to [*]
[*] to [*] [*] [*] to [*]
More than [*] [*] More than [*]
During each subsequent Year of this Agreement, the Royalty Rate
to be applied to the Royalty Base shall be the Royalty Rate in
effect as at the end of the second Year of this Agreement.
The above Cumulative Royalty Base and Cumulative Royalties Prior
to Calculation shall relate only to Earned Royalties paid on the
Royalty Base and shall specifically exclude any other payment
made by License to Xxxxxx for engineering or other services.
For the purposes of this section, the Cumulative Royalty Base
shall be deemed to include the Earned Royalty that would have
been payable to Xxxxxx on any PRISM license entered into between
Xxxxxx and any entity on the list of Licensee's customers annexed
to this Agreement, had Licensee entered into a Sublicense with
such entity; provided, however, that transactions with the
following entities shall not be so included, whether or not such
entities appear on the annexed customer list of [*].
Minimum Earned Royalties:
In no event shall Earned Royalties payable by Licensee to Xxxxxx
with respect to any Sublicense be less than the following:
Minimum Earned
Royalty Base Royalty
Initial license fee for sublicensee having
fewer than [*] total accounts [*]
Initial license fee for sublicensee having
more than [*] and up to [*] total accounts
[*]
Initial license fee for sublicensee having
more than [*] total accounts [*]
Use fees while Royalty Rate is greater than [*] per active
[*] account per month
Use fees while Royalty Rate is [*] [*] per active
account per month
Use fees while Royalty Rate is [*] [*] per active
account per month
For the purposes of calculating Minimum Earned Royalties, the
term "active account" shall mean any cardholder account of
sublicensee (or, in the case of a sublicensed processor, that is
processed by sublicensee) that had a positive balance or at least
one transaction (whether a charge or a payment) or posting or
authorization during the twelve (12) months preceding (i) the
execution of the relevant Sublicense in the case of initial
license fees, and (ii) each anniversary of the term of the
Sublicense in the case of use fees.
Quota
Notwithstanding the foregoing, Licensee shall pay to Xxxxxx
during each Year of this Agreement aggregate royalties of not
less than [*]. If Earned Royalties payable during any Year of
this Agreement shall aggregate less than [*], Licensee may elect
to pay the difference between such Earned Royalties and [*]. If
Licensee elects not to pay such difference to Xxxxxx when due,
Xxxxxx may at its option terminate the License and this Agreement
forthwith.
If the Base24 Xxxxxx Software shall not have been accepted
by [*] within 60 days after the date of execution of this
Agreement, the Annual Quota for the first Year of this Agreement
shall be reduced by [*] for each month that [*] has not accepted
the Base24 Xxxxxx Software, commencing on the sixty-first day
after the date of execution of this Agreement.
Credits
Earned Royalties paid by Licensee to Xxxxxx during any Year
of this Agreement shall be credited toward the Quota for such
Year of this Agreement.
Exceptions to Earned Royalty Rates:
A. With respect to each of the three prospective
sublicensees known respectively as [*] and [*] if such
prospective sublicensees (i) accepts a currently outstanding
proposal, (ii)enters into a Sublicense on or before [*] and (iii)
is invoiced on or before [*], the Earned Royalties applicable to
the revenues of Licensee constituting the Royalty Base of such
sublicensee shall be [*] of the initial license fee and [*] of
subsequent use fees. If such Sublicense is entered into after
[*], the Earned Royalties (including Minimum Earned Royalties)
set forth above shall be applied to such Sublicense.
X. Xxxxxx understands that Licensee may elect to discount
initial license fees from Licensee's published list prices, and
nothing in this Agreement is intend to or shall restrict the
price that Licensee may charge for all or any part of any Subject
Product. With respect to Sublicenses entered into by Licensee
pursuant to any written proposal that is (i) made by Licensee to
a prospective sublicensee during the first [*] after the
execution of this Agreement, and (ii) consummated within [*]after
the date of such written proposal, the Earned Royalty Rate set
forth above shall be applied to actual initial license fee
charged by Licensee; provided, however, that the Minimum Earned
Royalty applicable to the initial license fee charged for any
such Sublicense shall not under any circumstance be less than
[*]of the applicable Minimum Earned Royalty set forth above. Such
reduction in Minimum Earned Royalty shall not be applicable to
any discount granted to a subsidiary or affiliate of Licensee.
Licensee shall xxxxxxx Xxxxxx with a copy of any such proposal
within ten (10) days after its submission to a prospective
sublicensee. For the purposes of this paragraph, the term
"consummated" shall mean that (i) the relevant Sublicense shall
have been executed by Licensee and the sublicensee, and (ii) the
sublicensee shall have been invoiced by Licensee for the initial
license fee.
C. Any copy of the Xxxxxx Software that is (i) installed at an
office of Licensee or any of its subsidiaries solely for the
purpose of demonstrating the Xxxxxx Software, (ii) not used as a
production system, and (iii) does not entail any charge to third
parties for its use, shall not be subject to the Minimum Earned
Royalty set forth above.
Engineering and Modeling Fees:
Licensee shall pay to Xxxxxx fees for model development and
other engineering in accordance with the following fee schedule:
for model development, [*] per person-day; and
for other engineering or consulting, [*] per person-day.
If Licensee requests that Xxxxxx develop any new model, the
foregoing modeling fees shall apply:
Fee
Model
Bank credit-card fraud model for use by
sublicensee with fewer than [*] total accounts [*]
Bank credit-card fraud model for use by
sublicensee with more than [*] and fewer than [*]
total accounts [*]
Bank credit-card fraud model for use by to be
sublicensee with more than [*] total accounts negotiated
Bank debit-card fraud model or retail-merchant
fraud model [*]
for sublicensee with fewer than [*] total accounts
Bank debit-card fraud model or retail-merchant to be
fraud model for sublicensee [*] or more total negotiated
accounts
Payment Terms:
Earned Royalties related to Initial License Fees and installation
of the Xxxxxx Software shall be paid no later than the earliest
of (i) (30) days of receipt of the related Earned Royalty Base by
Licensee or any Intermediary, (ii) sixty (60) days from
acceptance by the relevant sublicensee of the Subject Product, or
(iii) 120 days from the date of execution of the relevant
Sublicense, except for the first two Sublicenses entered into by
Licensee, for which the applicable period in this clause (iii)
shall be 150 days. Earned Royalties relating to Use Fees shall
be payable the earliest of (i) thirty (30) days from receipt by
Licensee or any Intermediary, (ii) thirty (30) days from the date
on which payment of such use fee by the relevant sublicensee
shall be due, or (iii) sixty (60) days after the commencement of
the period to which such use fees apply.
Cost-of-Living Adjustments:
All royalties, engineering and modeling fees, any other
amount payable by Licensee to Xxxxxx, and any other amount
expressed in this Agreement as a dollar rate or absolute dollar
amount shall be adjusted during each Year of this Agreement
beginning with the first anniversary date of the execution of
this Agreement in proportion to increases in the Consumer Price
Index from year to year during the term of this Agreement. For
any Year of this Agreement in which the Consumer Price Index has
increased over the preceding Year of this Agreement, such
increase shall be calculated by multiplying each such dollar rate
or absolute amount then in effect by the most recently published
Consumer Price Index as at such anniversary date and dividing the
resulting product by the Consumer Price Index as at the preceding
anniversary date of execution of this Agreement or, in the case
of the first anniversary of the execution of this Agreement,
dividing the resulting product by the Consumer Price Index as at
the date of execution of this Agreement.
_______________________________
[*] Seeking Confidential Treatment
