SOFTWARE LICENSE AGREEMENT
Exhibit 2.8
EXECUTION VERSION
This
SOFTWARE LICENSE AGREEMENT (the “Agreement”) made
and entered into this 30th day
of September, 2008 (“Effective Date”) by and between Hanover Capital Mortgage Holdings,
Inc., a corporation duly organized and existing under the laws of the State of Maryland and having
principal offices at 000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxx Xxxxxx 00000 (“Hanover”),
and JWH Holding Company, LLC, a limited liability company duly organized and existing under the
laws of the State of Delaware and having principal offices at 0000 X. Xxx Xxxxx Xxxxxxxxx, Xxxxx,
Xxxxxxx 00000 (“JWH”, and together with Hanover, the “Parties” and each a
“Party”).
WHEREAS, Hanover or its affiliates own or has licensed intellectual property rights to certain
computer software, systems and related items; and
WHEREAS, Hanover wishes to grant to JWH, and JWH wishes to obtain from Hanover, a perpetual
license to use such software, systems and related items;
NOW THEREFORE, in consideration of the premises and the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:
SECTION 1 — GRANT OF LICENSE
1.1. License. Hanover, on behalf of itself and its affiliates, grants to JWH and its
affiliates (together with permitted assignees pursuant to Section 7.4, the “Licensees”) a
perpetual, non-exclusive, non-transferable (except as permitted in Section 7.4) license under all
of its applicable intellectual property rights to (i) use, copy, distribute, perform, display,
digitally display and (except for the current system administration module in Asset Onsite) create
derivative works, upgrades, updates, modifications, enhancements, new releases or improvements
(“Modifications”) to the software, systems and related items described on Exhibit
A, including the Source Materials (subject to the conditions on their release to JWH in the
Escrow Agreement defined in Section 1.3) and all related documentation in existence (collectively,
the “Software”). Licensees may sublicense the above license to third-party contractors and
consultants solely in connection with installing, testing, hosting, maintaining, supporting and
creating Modifications to the Software and/or assisting Licensees’ own exercise of their licensed
rights, but in no event for other use by (or the independent benefit of) such non-affiliated
entities.
1.2. Fees.
(a) If the merger contemplated in the Agreement and Plan of Merger dated as of the Effective
Date (“Merger Agreement”) among Xxxxxx Industries, Inc., JWH and Hanover is not consummated
on or prior to December 31, 2008, and the Merger Agreement has not been terminated on or prior to
such date, JWH shall pay to Hanover a fee of $1 million (one million dollars) for the license in
Section 1.1 within 10 business days thereafter, and upon such payment the license in Section 1.1
shall be deemed fully paid-up as of December 31, 2008.
(b) If the Merger Agreement terminates prior to December 31, 2008 and either the Hanover
Termination Fee or the Xxxxxx Termination Fee referred to in the Merger Agreement has been paid,
the license in Section 1.1 shall be deemed fully paid-up as of such date of termination.
1.3. Source Code. Within 30 days after the Effective Date, Hanover shall deposit with a
reputable, mutually-agreed escrow agent, pursuant to that agent’s standard escrow agreement (the
“Escrow Agreement”), which shall contain standard release conditions and other conditions
or terms agreed upon by the parties and the escrow agent, a complete and current copy of the source
code and all designs, instructions and related materials sufficient to allow a reasonably skilled
programmer to maintain, support and update the Software (“Source Materials”). The Escrow
Agreement shall be considered “an agreement supplementary to” this Agreement (and the license in
Section 1.1) for purposes of 11 U.S.C. § 365(n)(1)(B). Any fees payable to the escrow agent
associated with the Escrow Agreement shall be paid by JWH. The Escrow Agreement shall provide,
among other things, that the Licensees shall be granted access to the Source Materials on the
earliest date of the following: (i) the date on which the merger contemplated in the Merger
Agreement is consummated, (ii) December 31, 2008, or (iii) the date the Merger Agreement is
terminated and either the Hanover Termination Fee or Xxxxxx Termination Fee referred to in the
Merger Agreement has been paid.
SECTION 2 — OWNERSHIP
2.1. Ownership. JWH agrees that, as between Hanover and Licensees, Hanover is the sole and
exclusive owner of all rights and intellectual property rights in the Software. Hanover agrees
that, as between Hanover and Licensees, the Licensees are the sole and exclusive owner of all
rights and intellectual property rights in those Modifications which are made by a Licensee and/or
its agents. Each Party shall, upon the reasonable request and expense of the other Party, take
further actions and execute additional documents to establish and perfect the requesting Party’s
above rights.
2.2. No Contest. Each Party agrees not to directly or indirectly question or contest the
other Party’s intellectual property rights relating to the Software or Modifications, except in an
Action, as that term is later defined, between the Parties. Neither Party shall contest the
enforceability of this Agreement, including without limitation in any claim action, suit or
proceeding (“Action”).
SECTION 3 — PARTIES’ OBLIGATIONS
3.1. Delivery. Hanover shall deliver to JWH, who shall, at its own cost (and with the
assistance of third-party contractors, at its discretion), install and test the Software on
Exhibit A.
3.2. Legends. JWH shall not remove any copyright or other notice or legend contained or
included in the Software.
3.3. Limitations. Hanover is not responsible for providing JWH with any training,
maintenance, support or help-desk assistance with respect to the Software, other than providing (i)
the documentation already in existence and included within the Software or Source Materials
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and (ii) reasonable cooperation to JWH and JWH’s third-party contractors in connection with
their own efforts in installing, testing, maintaining and supporting the Software (provided that
Hanover is not required to incur any out-of-pocket expenses in this regard and that Hanover is
entitled to reasonable hourly compensation if such cooperation requires a significant time
commitment). JWH must procure, at its own expense, all hardware, third-party software licenses or
other third-party items necessary to operate the Software, at its own expense.
SECTION 4 — WARRANTIES AND INDEMNITY
4.1. By Each Party. Each Party represents and warrants to the other Party that (i) the
warranting Party has the requisite corporate or company power and authority to enter into this
Agreement; (ii) the warranting Party’s execution, delivery and performance of this Agreement has
been duly authorized by all requisite corporate or company action on its part; (iii) this Agreement
has been duly executed and delivered by the warranting Party and, assuming due authorization,
execution and delivery, constitutes a legal, valid and binding agreement, enforceable against the
warranting Party in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting creditors’ rights and
to general equity principles; and (iv) neither the execution and delivery by the warranting Party
of this Agreement or compliance and performance with any of the provisions hereof results in a
default (or an event that, with notice or lapse of time or both, would become a default) or gives
rise to any right of termination by any third Party, cancellation, amendment or acceleration of any
obligation or the loss of any benefit under, any contract binding the warranting Party.
4.2. Ownership/Infringement. Hanover represents and warrants to JWH that (i) it or its
affiliates own or has licensed rights to intellectual property rights in the Software sufficient to
grant the license in Section 1.1; (ii) the Software as provided is fully operational, performs in
material compliance with its documentation and, to Hanover’s knowledge, is free of all bugs,
errors, defects, viruses and other corruptants; and (iii) the use and enjoyment of the Software (as
provided) by Licensees after the Effective Date in a manner consistent with past practice, to
Hanover’s knowledge, will not infringe or violate the rights of any person or entity.
4.3. Indemnity. Each Party shall defend at its expense, hold harmless and indemnify the other
Party and its affiliates and their respective directors, officers, shareholders, agents and
employees against any third-party claims, losses, awards, judgments, settlements, costs, fees,
expenses, liabilities and damages (including reasonable attorneys’ fees and costs of suit) to the
extent arising out of or relating to the indemnifying Party’s breach of any representations,
warranties, covenants or agreements herein.
4.4. Procedure. The indemnified Party shall give prompt written notice to the indemnifying
Party of any potential indemnifiable claim. The indemnifying Party shall have sole control of the
defense or settlement of the claim, provided that it may not settle any claim that adversely
affects the indemnified party without its prior written consent.
4.5. Hanover’s Options. Without limiting Hanover’s obligations in Section 4.3, in the event
of a potential third-party infringement claim against Licensees, Hanover shall have the option, at
its expense, to (i) modify or replace all or the infringing part of the Software, provided
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that the Software’s functionality is not materially impaired; (ii) procure for Licensees the
right to continue using the infringing part of the Software; or if (i) and/or (ii) is not
reasonably feasible, remove all or the infringing part of the Software, and provide reasonable
compensation to JWH therefor.
SECTION 5 — CONFIDENTIALITY
5.1. Obligations. Each Party (a “Receiving Party”) agrees to treat any confidential
or proprietary information that is furnished to it or its representatives by the other Party or its
representatives (a “Disclosing Party”) pursuant to this Agreement, regardless of the media
or form in which such information is provided, created or stored (the “Confidential
Information”) in confidence. “Confidential Information” shall include any information
identified as such by the Disclosing Party or which by its nature the Receiving Party should
reasonably recognize to be confidential or proprietary in nature. The Receiving Party shall protect
the Confidential Information in the same manner in which it protects its own Confidential
Information of a similar nature or value and in no event with anything less than reasonable
measures. The Receiving Party shall not (i) use Confidential Information for any purpose other than
in connection with this Agreement or (ii) disclose, publish, share or make available any
Confidential Information to any other person or entities, other than its employees and accountants,
attorneys or other professionals or providers of services (with respect to whom, other than
employees or attorneys who are otherwise bound by confidentiality agreements or other obligations
of confidentiality, the foregoing are made pursuant to written non-disclosure agreements which
impose obligations as rigorous as those set forth herein) who “need to know” it for the Receiving
Party to perform under or enjoy the benefits of this Agreement or for the operations of the
Receiving Party’s business.
5.2. Exceptions. “Confidential Information” does not include information which (i) is already
in the Receiving Party’s possession, provided that such information is not known by the Receiving
Party to be subject to another confidentiality agreement with or other obligation of secrecy to the
Disclosing Party or another party; or (ii) becomes generally available to the public or industry
other than as a result of a disclosure by the Receiving Party; (iii) becomes available to the
Receiving Party on a non-confidential basis from a source other than the Disclosing Party, provided
that such source is not known by the Receiving Party to be bound by a confidentiality agreement
with or other obligation of secrecy to the Disclosing Party or another party; or (iv) is required
to be disclosed pursuant to applicable statute, law, rule, regulation, subpoena, court order or
legal process, provided that the Receiving Party shall promptly inform the Disclosing Party of any
such requirement and cooperate with all attempts by the Disclosing Party to obtain a court order or
similar treatment.
SECTION 6 — TERM
The term of this Agreement commences as of the Effective Date and lasts in perpetuity.
Without limiting either Party’s right under Section 7.11, each Party agrees that termination shall
not be an available remedy for any dispute arising out of this Agreement.
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SECTION 7 — MISCELLANEOUS
7.1. Notice.
All notices hereunder shall be in writing and shall be deemed given upon (a)
confirmed receipt of a facsimile transmission, (b) confirmed delivery of a standard overnight
courier or when delivered by hand or (c) five business days after the date mailed by certified or
registered mail (return receipt requested), postage prepaid, to the Parties at the following
addresses (or at such other addresses for a Party as shall be specified by like notice):
If to Hanover:
Hanover Capital Mortgage Holdings, Inc.
000 Xxxxxxxxx Xxxxx Xxxxx 000 Xxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
000 Xxxxxxxxx Xxxxx Xxxxx 000 Xxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute effective notice) to:
Xxxxxxx Xxxxxxxx & Xxxx LLP
Two World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Two World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
If to JWH:
JWH Holding Company, LLC
0000 X. Xxx Xxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000
0000 X. Xxx Xxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute effective notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq. and Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq. and Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
7.2. Certain Construction Rules. The article and section headings in this Agreement are for
reference purposes only and shall not affect the interpretation of this Agreement.
7.3. Severability. If any provision of this Agreement or the application of any such
provision to any person or entity or circumstance, shall be declared judicially to be invalid,
unenforceable or void, such decision shall not have the effect of invalidating or voiding the
remainder of this Agreement, it being the Parties’ intent and agreement that this Agreement shall
be deemed amended by modifying such provision to the extent necessary to render it valid, legal
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and enforceable while preserving its intent or by substituting another provision that is legal
and enforceable and that achieves the same objective.
7.4. Assignment; Binding Effect. Neither this Agreement nor any of the rights, benefits or
obligations hereunder may be assigned by a Party (whether by operation of law or otherwise) without
the prior written consent of the other Party, except (i) to an affiliate or (ii) in connection with
a merger, reorganization (including in bankruptcy), change of control or sale of all or
substantially all of the assets or business to which this Agreement relates. In the event of a
permitted assignment hereunder, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and permitted assigns.
7.5. No Third Party Beneficiaries. No person or entity (other than as specified in this
Agreement) shall be deemed a third party beneficiary under or by reason of this Agreement.
7.6. Entire Agreement. This Agreement constitutes the entire agreement of the Parties and
supersedes all prior and contemporaneous agreements and understandings, both written and oral,
between the Parties with respect to the subject matter hereof. Exhibit A is expressly made
a part of, and incorporated by reference into this Agreement.
7.7. Governing Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to contracts made and to be performed therein.
7.8. Jurisdiction. Each Party irrevocably submits to the jurisdiction of the state or federal
courts in New York, New York for the purposes of any Action arising out of this Agreement. Each
party unconditionally waives any right to a trial by jury in respect of any such action.
7.9. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute one agreement.
7.10. Specific Performance. The Parties agree that irreparable damage would occur in the
event that the terms of this Agreement were materially breached. Therefore, each Party shall be
entitled to seek an injunction to enjoin such breach in the courts set forth in Section 7.8.
7.11. Bankruptcy. The Parties intend and agree that the license in Section 1.1 shall be
deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, 11 U.S.C. § 365(n), to
the fullest extent permitted by law, a license to rights in “intellectual property” as that term is
defined in Section 101 of the U.S. Bankruptcy Code. The Parties intend and agree that the
Licensees shall retain and may fully exercise all of their rights and election under Section 365(n)
of the Bankruptcy Code, if Hanover enters into bankruptcy and rejects this Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the Effective
Date.
| HANOVER CAPITAL MORTGAGE HOLDINGS, INC. (on behalf of itself and its affiliates) | ||||||
| By: | /s/ Xxxx X. Xxxxxxxx |
|||||
| Name: | Xxxx X. Xxxxxxxx | |||||
| Title: | President and Chief Executive Officer | |||||
| JWH HOLDING COMPANY, LLC | ||||||
| By: | /s/ Xxxx X. X’Xxxxx |
|||||
| Name: | Xxxx X. X’Xxxxx | |||||
| Title: | President and Chief Executive Officer | |||||
[Software License Agreement Signature Page]
EXHIBIT A
Asset Manager
Asset Manager, a companion “tape-cracker” product to Asset OnSite, permits field-to-field mapping
of asset and pool data from disparate sources (e.g., Excel, MS Access, DBF, ASCII, Fixed Width and
EBCDIC formats). The user interface is intuitive, mapping data elements side-by-side. The product
also automates mapping of codes and other non-standard source data to standardized table values as
well as arithmetic manipulation of values as it converts. Provisions for saving and re-use of
mapping schemes are also provided. System architecture is Visual C++ connected to Microsoft SQL
server database
Asset OnSite
Asset OnSite is a web-based portfolio management tool that can be accessed anywhere an internet
connection is available. Users can quickly analyze and stratify loan and servicing pools. Standard
reports relevant to the asset type are available to analyze every aspect of a pool utilizing the
populated data fields. Users can also easily create their own customized reports using multiple
cross-tabs, which can be saved for later use or used only once. Custom filters can be applied to
create sub-pools, which can be named and stored separately. Customized extracts allow for export to
other databases. Images of loan documents can be loaded and stored adjacent to loan level data.
System architecture is Microsoft XXX.XXX connected to Microsoft SQL server database. The license
in Section 1.1 includes both the current version of Asset OnSite and the prior version, subject to
the limitation in Section 1.1 for the current version.
Xxxxx Analytics
Xxxxx Analytics is a sophisticated servicing analysis tool that can be used to evaluate pools of
serviced loans and generate pricing and reporting information. System architecture is Microsoft
ASP and XXX.XXX connected to Microsoft SQL server database
Auction Platform
Hanover owns an auction platform, programmed by ISI (Intraprise Solutions, Inc.) that is used to
control and support the sale of assets. It provides a real-time bid-ladder that enables bidders
and sellers to see the bids as they are entered. The system is configured so that the seller can
see the bidder’s names, but the bidders can only see the bid amount. A version of this platform is
currently being used by The Debt Exchange for the FDIC. System architecture is Microsoft ASP,
XXX.XXX and Adobe Flash connected to Microsoft SQL server database
Loan Performance Risk Surveillance System (LP RSS)
Hanover has created a loan surveillance system to manage the loans in our bond portfolios as well
as track delinquent loans. In addition to the main reporting modules, which create our monthly
risk books, there are several other modules such as Delinquency tracking, Static Pool Analysis,
Delinquency Trend Analysis, Disaster Monitoring and Housing Shock Analysis. The delinquency
tracking modules track the delinquent loans in our securities. The application maintains a
database of all delinquent loans, BPOs and comments and calculates expected losses based on state
specific parameters. The static pool analysis allows a user to see historical information on a
filtered set of loans. Disaster monitoring allows a user to create a disaster area and create a
collateral profile report based on the disaster area. You can also shock the portfolio and see
what effect a decline/increase in value may have on our losses. Access to the system is
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granted via a user name and password that is authenticated to a database. Each user has access to
specific modules team depending upon their user roles. System architecture is Microsoft Access/VBA
Data Project and Microsoft XXX.XXX connected to Microsoft SQL server database. Reports are
Microsoft Access.
Hanover Collateral Reporting System
Reporting system for creating over-concentration reports and acts as an additional report generator
for running summary stratification reports. This system also contains the filter builder which is
used throughout the Reporting system and the Surveillance System (LP RSS). The system also has the
ability to configure different counties for the addition of new criteria in the over-concentration
reports. The system can run any of the modules off of the main LP database or the LP Bidding
database. There is also a method to combine the two databases together to see what the effect
would be on the current portfolio if you purchased a new bond. Access to the system is granted via
a user name and password that is authenticated to the STARS database. The system also utilizes
forms authentication to prevent unauthorized access. System architecture is Microsoft XXX.XXX /
XX.XXX connected to Microsoft SQL server database. Reporting tool is Crystal Reports for .NET.
STARS
STARS (Securities Tracking and Reporting System) is a trade ticket based securities tracking and
reporting application that serves as the sub-ledger to the company’s general ledger (MS Dynamics
Xxxxxxx XX). The application maintains our B Bond and Agency inventory and provides numerous
reporting capabilities. It runs complex accounting calculations such as repo financing, discount
accretion, impairments and level yield. STARS has the ability to create transaction ledgers for
batch input into our accounting system. STARS runs a roles-based security module for access to
screens along with an approval system for all trades. A trade cannot become part of our inventory
unless it has past all stages of approval: Trader, Management and Accounting. Access to the system
is granted via a user name and password that is authenticated to a database. The system also
utilizes forms authentication to prevent unauthorized access. Passwords conform to Hanover’s
approved password policy. System architecture is Microsoft XXX.XXX / XX.XXX connected to Microsoft
SQL server database. Reporting tool is Crystal Reports for .NET and Microsoft Excel.
Hanover LP / Intex Vector Converter
Used as a communication tool with our internal trading vendor systems. Creates Intex ramp files
from Loan Performance Risk Model excel loss vectors. Converts AFT formatted loss arrays to Intex
ramp files. Converts Loan Performance output formats to Intex ramp files. Also used to convert
Intex cashflow text files to import into excel or into STARS for calculating level yield. Newest
version will have an internal loss model for generating loss adjusted cash flows, similar to Intex.
Access to the system is granted via a user name and password that is authenticated to the STARS
database. System architecture is Microsoft XX.XXX connected to Microsoft SQL server database.
HDMF Pricing Module
The HDMF pricing module is a sophisticated cash flow generator that is used to price distressed
loan pools by taking into account projected losses and servicer advances based on state specific
A-2
legal guidelines. System architecture is Microsoft XXX.XXX connected to Microsoft SQL server
database.
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