EXHIBIT 10.2
EXECUTION COPY
LICENSE AGREEMENT
This License Agreement (the "Agreement") is entered into as of
September ___, 2004 (the "Effective Date") by and between NEOS Liquidating, LLC,
a California limited liability company ("Trust") and International Card
Establishment, Inc., a Delaware corporation ("ICE").
A. NEOS has developed and markets software that provides gift loyalty
and stored value applications ("Software" which for purposes of this Agreement
includes both object and source code forms).
B. Pursuant to that certain Agreement and Plan of Merger between NEOS
Merchant Solutions, Inc. ("NEOS"), ICE and ICE SUB INC., a Nevada corporation
and wholly-owned subsidiary of ICE ("Merger Agreement") to which this Agreement
is attached as its EXHIBIT F, NEOS is merging into ICE SUB and accordingly ICE
SUB succeeds to all right, title and interest in and to the Software.
B. ICE is engaged in the business of providing products and services to
the ICE Exclusive Field (as defined below).
C. Trust and ICE desire that Trust obtain a license to the Software for
use, marketing, licensing and distribution in fields other than the ICE
Exclusive Field, on the terms and conditions set forth in this Agreement.
The parties agree as follows:
1. DEFINITIONS.
1.1 BUNDLED PRODUCT means a product containing the object code version of
the Software or a Derivative thereof that is packaged and marketed, whether by
Trust or any Distributor, with Trust's, Distributor's and/or any third party's
software or hardware products as a single commercial product.
1.2 CONFIDENTIAL INFORMATION means any and all technical and non-technical
information owned by or licensed to a party and disclosed or supplied in
confidence to the other party. Confidential Information shall also include trade
secrets, proprietary information, business information, algorithms,
architectures, designs, devices, and techniques related to the past, current,
future, or proposed products, services, business activities or business plans of
a party and includes, without limitation, a party's information concerning
research and development, engineering, financial information, purchasing,
procurement requirements, customer and supplier lists, business forecasts, sales
and merchandising, marketing plans and information, and the terms and conditions
of this Agreement.
1.3 DERIVATIVE means any improvement, alteration, enhancement, new version,
translation, adaptation, correction, or other modification to or derivative work
of the Software or Documentation, whether made by or for Trust pursuant to the
license granted herein ("Trust Derivatives") or made by or for ICE ("ICE
Derivatives").
1.4 DISTRIBUTOR means a third party authorized by Trust to market, sell and
distribute the Software (whether as a Stand-Alone Product or as a Bundled
Product), including without limitation OEMs, VARs, and third party software
and/or hardware manufacturers who will include the Software with such third
party's hardware or software products.
1.5 DOCUMENTATION means all technical documentation, specifications, user
manuals, reference manuals, installation and training manuals, and other
materials that describe the operation, use or functionality of the Software.
1.6 END USER means any third party individual, business, or other entity
which obtains the Software for personal or internal business use and not for
resale or redistribution.
1.7 ICE EXCLUSIVE FIELD means the use of magnetic strip cards and smart
chips for any gift, loyalty or stored value applications utilized now or in the
future in the business of ICE.
1.8 STAND-ALONE PRODUCT means a product consisting of the object code
version of the Software or a Derivative thereof that is packaged and marketed,
whether by Trust or any Distributor, as a commercial product.
1.9 TRUST EXCLUSIVE FIELD means all fields and uses, and for all purposes,
whether now known or contemplated or hereafter developed, of any kind outside
the ICE Exclusive Field, provided that such use or application is not
competitive with the business of ICE.
1.10 UPDATES shall mean any and all updates, upgrades, modifications or
enhancements to the Software or ICE Derivatives, generally made available by ICE
to its licensees, whether such upgrades, modifications or enhancements are made
available without fee or with a fee, in ICE's sole discretion.
2. LICENSES AND RESTRICTIONS.
2.1 LICENSE GRANTS FOR SOFTWARE. ICE hereby grants to Trust a worldwide,
exclusive (as further described in Section 2.3 below), perpetual, irrevocable
license (i) to use, reproduce, modify and create Derivatives of the Software for
the purposes of creating Stand-Alone Products and Bundled Products, for internal
testing and for providing maintenance to and support of Distributors and End
Users of the Software; and (ii) directly, and indirectly through Distributors,
to reproduce, market, promote, resell, license and distribute the Software (in
object code form) to End Users whether as a Stand-Alone Product or as a Bundled
Product in Trust Exclusive Field. The foregoing license includes the rights to
display and perform (publicly or otherwise), and distribute the Software in the
course of such permitted use, marketing, distribution, and resale. In addition,
Trust may permit its contractors to exercise any of these rights in the course
of providing services to Trust.
2.2 LICENSE GRANT FOR DOCUMENTATION. ICE hereby grants to Trust a
non-transferable, exclusive, perpetual, irrevocable license to (i) create
Derivatives of the Documentation for the purpose of using as, or incorporating
into, documentation for Stand-Alone Products and Bundled Products, and (ii) copy
and distribute the Documentation, and Derivatives thereof, as documentation for
the Software as a Stand-Alone Product or as part of a Bundled Product.
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2.3 EXCLUSIVE LICENSE. The parties agree that the licenses granted to Trust
in this Section 2 are exclusives license within the Trust Exclusive Field, so
that ICE may not itself, nor may it license or otherwise permit any third party
in any manner to, market, distribute, sell, license, sublicense or otherwise use
the Software or Documentation, or any Derivatives of either, within the Trust
Exclusive Field.
2.4 SUBLICENSES.
2.4.1 APPOINTMENT OF DISTRIBUTORS. Trust may appoint Distributors and
grant sublicenses to such Distributors permitting them to exercise the
rights granted under Sections 2.2 and 2.3. Such Distributors shall agree in
writing to be subject to terms and conditions substantially as protective
of ICE's rights as Sections 2.1, 2.2., 2.4 and 5 of this Agreement.
2.4.2 END USER LICENSE AGREEMENTS. Trust shall distribute, and shall
require each Distributor to distribute, each Bundled Product with an end
user license agreement with terms no less restrictive or protective of
ICE's rights than the applicable terms of this Agreement. For
clarification, Trust may in its sole discretion grant exclusive sublicenses
to certain Distributors and/or certain End Users, with respect to all or
portions of the Trust Exclusive Field but in any event not including the
ICE Exclusive Field.
2.5 UPDATES. ICE shall make Updates available to Trust, as and when ICE
makes such Updates to the Software generally available to its licensees. Trust
agrees that from and after the date Trust accepts any Update, such Update shall
be subject to the terms set forth in this Agreement.
3. ROYALTY PAYMENT AND RELATED TERMS.
3.1 PER UNIT ROYALTY; FULLY PAID-UP LICENSE. Subject to the terms and
conditions of this Agreement, Trust agrees to pay to ICE on a quarterly basis a
per unit royalty for each Stand-Alone Product and each Bundled Product licensed
by Trust to End Users or Distributors in the applicable calendar quarter,
calculated as set forth in EXHIBIT B. Trust shall pay to ICE the applicable
royalties within thirty (30) days of the end of the quarter during the term of
this Agreement. Royalties shall be deemed earned when a Stand-Alone Product or
Bundled Product is shipped to an End User whether by Trust or a Distributor.
Trust shall be entitled to deduct from any royalty payment, royalties previously
paid by Trust to ICE for Bundled Products which are returned or destroyed and
for which Trust provides a refund. All payments under this Agreement shall be
made in U.S. Dollars.
3.2 EXCLUSIONS. Notwithstanding Section 3.1, no royalties shall be paid on
units of the Software, whether as Stand-Alone Products or as Bundled Products,
provided at no charge to Distributors or End Users that are (i) demonstration
versions, (ii) replacements for destroyed, damaged or defective copies; (iii)
copies provided on an evaluation basis for a period of no longer than sixty (60)
days; (iv) major or minor updates or upgrades to a previously purchased copy of
the Software; and (v) copies provided to affiliates of Trust and other entities
with which Trust has marketing relationships, or to entities with which Trust
has direct or indirect distributor relationships, so long as such copies are
provided at no charge and are provided and used only for marketing and
promotional purposes or for purposes of testing compatibility with other
software and hardware.
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3.3 REPORTS. Along with each payment, Trust shall provide to ICE a written
summary of Trust's distribution of the Software to End Users and Distributors
during such calendar quarter.
3.4 TAXES. Should Trust be required by the laws or regulations of a foreign
government to deduct or withhold any income taxes payable by ICE from any
royalties or other payments due to ICE, Trust shall be entitled to withhold and
pay such taxes on ICE's behalf from the royalties or payments due to ICE
hereunder. In the event that Trust deducts or withholds any such taxes from
Trust payments to ICE, Trust shall furnish ICE with a tax certificate as
evidence of such tax payments on ICE's behalf, in order to support ICE's claim
for any United States income tax credits with respect to any such taxes so
withheld and paid to a government by Trust on ICE's behalf.
4. OWNERSHIP OF THE SOFTWARE AND DERIVATIVES. Trust acknowledges that,
subject to the licenses and rights granted herein, ICE and its suppliers are the
owners, pursuant to the Merger Agreement, of all rights, title, and interest,
including, but not limited to, intellectual property rights in and to or arising
out of the Software, Documentation and any ICE Derivatives of the Software and
Documentation as well as ICE Confidential Information. ICE acknowledges that
Trust is and will remain the owner of all rights, title, and interest,
including, but not limited to, intellectual property rights in and to or arising
out of the any and all Trust Derivatives to the Software and Documentation, as
well as Trust Confidential Information.
5. CONFIDENTIAL INFORMATION.
5.1 NONDISCLOSURE OBLIGATIONS. Except as expressly provided in this
Agreement, each party ("Receiving Party") agrees that it will not make use of,
disseminate, or in any way disclose any Confidential Information of the other
party ("Disclosing Party") to any person, firm or business, except to authorized
employees, accountants or counsel having a need to know such Confidential
Information. The Receiving Party agrees that it shall treat all Confidential
Information with the same degree of care as it accords to its own Confidential
Information and represents that it exercises reasonable care to protect its own
Confidential Information. The Receiving Party agrees that it shall disclose
Confidential Information only to those of its employees, contractors, agents,
accountants and attorneys who need to know such information and certifies that
such persons and entities have previously agreed to be, or otherwise are, bound
by confidential terms no less restrictive than this Section. The Receiving Party
will promptly give notice to the Disclosing Party of any unauthorized use or
disclosure of Confidential Information of the Disclosing Party of which the
Receiving Party becomes aware and agrees to assist the Disclosing Party in
remedying any such unauthorized use or disclosure of Confidential Information.
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5.2 EXCLUSIONS FROM NONDISCLOSURE OBLIGATIONS. The Receiving Party's
obligations under Section 5.1 ("Nondisclosure Obligations") with respect to any
portion of Confidential Information shall no apply with respect to information
that: (i) was in the public domain, through no fault of the Receiving Party, at
or subsequent to the time such information was communicated to the Receiving
Party by the Disclosing Party; (ii) is independently developed by the Receiving
Party; (iii) Receiving Party already rightfully possesses at the time of the
disclosure by Disclosing Party or rightfully receives from a third party; or
(iv) the Disclosing Party has provided to any third party without similar
restrictions. A disclosure of Confidential Information (a) in response to a
valid order by a court or other governmental body, (b) otherwise required by
law, or (c) necessary to establish the rights of either party under this
Agreement, shall not be considered to be a breach of this Agreement or a waiver
of confidentiality for other purposes.
5.3 DURATION OF OBLIGATIONS. Receiving Party's obligations under this
Section with respect to any particular item of Confidential Information received
hereunder shall extend for five (5) years from the date of receipt of such item
and shall survive any termination or expiration of this Agreement.
6. SUPPORT. Trust shall be responsible for providing End Users and
Distributors with first and second tier support and training for Stand-Alone
Products and Bundled Products. Trust may request ICE to provide support,
training, and related assistance to Trust from time to time. ICE shall use
commercially reasonable efforts to provide such support, training, and
assistance to Trust for fees as mutually agreed.
7. TERM AND TERMINATION.
7.1 TERM. This Agreement shall commence on the Effective Date and continue
in effect in perpetuity.
7.2 CERTAIN REMEDIES. For any material breach by Trust of this Agreement,
it is agreed that ICE shall not be entitled to rescind, revoke or terminate any
of the rights or licenses granted to Trust pursuant to this Agreement, or to
enjoin, restrain, or otherwise impair Trust's use of the Software or
Documentation in any way. However, ICE shall be entitled to seek monetary
damages for any such breach, if available.
8. GENERAL PROVISIONS.
8.1 GOVERNING LAW. This Agreement will be governed by the laws of the State
of California without reference to its conflict of laws principles. The United
Nations Convention on Contracts for the International Sale of Goods is
specifically excluded from application to this Agreement.
8.2 RELATIONSHIP OF PARTIES. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between the
parties. Except as expressly set forth herein, no party is by virtue of this
Agreement authorized as an agent, employee, or legal representative of the other
party, and the relationship of the parties is, and at all times shall continue
to be, that of independent contractors.
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8.3 SEVERABILITY. In the event that any provision of this Agreement shall
be unenforceable or invalid under any applicable law or be so held by applicable
court decision, such unenforceability or invalidity shall not render this
Agreement unenforceable or invalid as a whole, and, in such event, such
provision shall be changed and interpreted so as to best accomplish the
objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court decisions.
8.4 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which will be considered an original, but all of
which together will constitute one and the same instrument.
8.5 ASSIGNMENT. Neither party may assign or transfer this Agreement without
the other party's prior written consent, except that either party may assign and
transfer this Agreement as part of a sale or transfer of all or substantially
all of its assets or more than fifty percent (50%) of the party's voting stock,
to any third party, whether as part of a merger, acquisition, reorganization, or
otherwise. Any attempt to assign or transfer this Agreement without required
consent will be void. This Agreement will bind and inure to the benefit of the
parties and their respective successors and permitted assigns.
8.6 HEADINGS. The paragraph headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit, construe,
or describe the scope or extent of such paragraph or in any way affect this
Agreement.
8.7 NOTICE. Any notices required by this Agreement shall be in writing,
shall specifically refer to this Agreement and shall be sent by personal
delivery, or by national overnight courier (with confirmation of receipt), or by
registered or certified airmail, postage prepaid, or by facsimile (with
confirmation of receipt), to the respective addresses set forth below unless
subsequently changed by written notice to the other party given in accordance
with this Section 9.7 ("Notice"). Notice shall be deemed delivered upon the
earlier of (i) when received, (ii) three (3) days after deposit into the mail,
or (iii) the date notice is sent via facsimile.
To ICE:
Fax #:________________________________________
Phone #:______________________________________
Attn:_________________________________________
To Trust:
Fax #:________________________________________
Phone #:______________________________________
Attn:_________________________________________
8.8 WAIVER. No failure or delay on the part of either party to require
performance by the other party of any provision hereof shall affect the full
right to require such performance at any time thereafter; nor shall the waiver
by a party of a breach of any provision hereof be taken or held to be a waiver
of the provision itself.
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8.9 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement completely and
exclusively states the agreement of the parties regarding its subject matter. It
supersedes, and its terms govern, all prior proposals, agreements, or other
communications between the parties, oral or written, regarding such subject
matter. This Agreement shall not be modified except by a subsequently dated
written amendment signed on behalf of Trust and ICE and by their duly authorized
representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ICE: Trust:
By:_________________________________ By:_________________________________
Title:______________________________ Title:______________________________
Date:_______________________________ Date:_______________________________
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EXHIBIT A
END USER LICENSE AGREEMENT - MINIMUM TERMS AND CONDITIONS
Each End User license agreement shall, at a minimum, include the following
minimum terms and conditions to protect the Software.
1. The End User is granted a license to use the Software for the End
User's personal or internal business use on one computer at a time. The End User
shall not have the right to modify, make derivative works of, or lease, rent,
sell or otherwise distribute the Software.
2. All right, title and interest in and to the Software and all
intellectual property rights in the Software shall belong to Trust or its
licensors, as applicable. The End User shall have no rights with respect to the
Software except as granted in the End User license agreement. The End User may
not assign the End User license agreement or the licenses granted in the End
User license agreement without Trust's prior written consent except in the case
of sale or transfer of all or substantially all of End User's assets, or of
greater than 50% of the End User's voting stock, or at an affiliate of End User,
so long as such assignee agrees to be bound by the end user license agreement.
3. The End User may not reverse engineer, decompile, disassemble or
otherwise discover the source code for the Software.
4. TRUST AND ITS LICENSORS DISCLAIM ANY AND ALL WARRANTIES WITH RESPECT
TO THE SOFTWARE, WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
5. IN NO EVENT SHALL TRUST OR ITS LICENSORS BE RESPONSIBLE OR LIABLE
FOR ANY CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES (INCLUDING, BUT NOT LIMITED
TO, LOSS OF DATA OR LOST PROFITS) WHICH MAY ARISE OUT OF OR IN CONNECTION WITH
THIS END USER LICENSE AGREEMENT WHETHER IN CONTRACT, TORT OR ANOTHER LEGAL
THEORY EVEN IF TRUST OR ITS LICENSORS HAVE BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.
EXHIBIT B
ROYALTIES
BASIC ROYALTY FORMULA
Royalty = 15% x Attributable Amount
ATTRIBUTABLE AMOUNT
A. Software sold as a Stand-Alone Product
The "Attributable Amount" for the Software when it is sold as a Stand-Alone
Product shall be the amounts received by Trust from the End-Users and
Distributors for units of the Software as a Stand-Alone Product, excluding
freight charges, insurance and other costs of shipping and handling, taxes,
duties and the like.
B. Software sold as part of a Bundled Product
The Attributable Amount for units of the Software sold as part of a Bundled
Product shall be the portion of the amounts received by Trust from the End-Users
and Distributors (excluding freight charges, insurance and other costs of
shipping and handling, taxes, duties and the like) for the Bundled Product, that
represents either (i) the average price of the Software when sold as a
Stand-Alone Product, or (ii) if the Software is not sold separately as a
Stand-Alone Product, then the part of such sale reasonably allocable to the
Software. In making such allocation, primary consideration will be given to (a)
the value of the other parts of the Bundled Product if sold separately, and (b)
the added value provided by the Software as compared to the value of the Bundled
Product if sold without it.
