SOFTWARE ASSIGNMENT AND
GRANT BACK LIMITED LICENSE AGREEMENT
BETWEEN NETGATEWAY
AND
SHOPPING PLANET
THIS AGREEMENT (the "AGREEMENT") is made and entered into as of this 16th
day of November, 1998 ("EFFECTIVE DATE") by and between NETGATEWAY, a Nevada
corporation, with a principal place of business located at ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("NETGATEWAY"), and PINAMAR CORPORATION and
UNINET IMAGING, INC., both California corporations (jointly referred to
hereinafter as "SHOPPING PLANET"), with a principal place of business located
at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇
▇▇▇▇▇▇▇ POLOVO at c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ at c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ALEXIS ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at c/o ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (jointly referred to
hereafter as the "PRINCIPALS").
1. DEFINITIONS.
1.1 "BLOCKING PATENT" shall mean all patents and patent rights in all
countries of the world, issued or issuing on patent applications which apply to
improvements of or to the Technology and with respect to which, without a
license, the Technology would infringe a claim.
1.2 "TECHNOLOGY" shall mean that certain small business operating
system software, which includes inventory management, purchasing management,
order fulfillment, order status, a commission calculator, Web-based order
procuring, and payment processing, as well as all code and related underlying
documentation and programmers notes ("DOCUMENTATION").
2. CONVEYANCE OF TECHNOLOGY.
2.1 CONVEYANCE. For good consideration as set forth in Paragraph 3
hereof, SHOPPING PLANET and the Principals hereby jointly and severally
irrevocably convey to NETGATEWAY all their right, title and interest in and to
the Technology, as those rights may lay, including but not limited to the rights
of copyright and the following rights:
2.1.1 "USE RIGHTS," meaning the ability to make full use of the
presently existing Technology, free from the assertion of legal or equitable
claims by others;
2.1.2 "USE CAPABILITY," meaning irrevocable custody and
possession of the information that is needed as a practical matter to exercise
the User Rights;
2.1.3 "ADAPTATION RIGHTS," meaning the right and ability to adapt
and modify the Technology for use in different environments or for different
purposes free of claims by others;
2.1.4 "ADAPTATION CAPABILITY," meaning irrevocable custody and
possession of the information that is needed as a practical matter to exercise
the User Rights;
2.1.5 "COPYING AND DISTRIBUTION RIGHTS," meaning the legal right
to make and distribute copies of the Technology, free of claims by others; and
2.1.6 "EXCLUSIONARY RIGHTS," meaning the right and ability to
invoke governmental authority to exclude others from exercising any of the
foregoing rights and capabilities.
2.2 LICENSE BACK. For good consideration as set forth in Article 3
hereof, and on the terms and conditions set forth herein, NETGATEWAY hereby
grants to SHOPPING PLANET a nonexclusive, nontransferable license of the
Technology for internal business use only by SHOPPING PLANET. SHOPPING PLANET
shall not have the right to sublicense this grant to others, and shall not have
the right to use the Technology as a basis for developing any other software for
license to third parties. The parties hereto specifically acknowledge and
understand that this grant back is made to SHOPPING PLANET only and not to any
of the Principals. SHOPPING PLANET shall hold the Technology in confidence in a
reasonable manner, but in no less protective a manner than it holds its own
technology and software.
2.3 RESERVATION OF RIGHTS. Except for the rights expressly granted
herein, each party retains all right, title and interest in and to its own other
technology, whether preexisting or developed hereafter.
3. CONSIDERATION.
3.1 CONSIDERATION FOR CONVEYANCE OF TECHNOLOGY. In exchange for the
conveyance of the Technology set forth in Section 2.1 above, at Closing (as
defined below) SHOPPING PLANET shall receive thirty-five thousand (35,000)
shares of 144 restricted common stock of Netgateway, Inc., the parent company of
NETGATEWAY (the "Shares").
3.2 ADJUSTMENT. In the event that on the date nine (9) months after
the Closing (the "ADJUSTMENT DATE"), the Shares do not have a total market value
of Two Hundred Fifty Thousand Dollars ($250,000.00), without regard to the 144
restrictions and based on the trading average of Netgateway, Inc. stock over the
immediately preceding thirty (30) trading days, then NETGATEWAY will issue
additional shares of stock as follows:
3.2.1 On the day after the Adjustment Date, NETGATEWAY shall
determine the average daily sales price (the "ADP") of NETGATEWAY common stock
over the sixty (60) days immediately preceding the Adjustment Date. In
determining the ADP, the actual closing sales price of NETGATEWAY stock (as
quoted on the exchange or other market on which NETGATEWAY stock is normally
traded) shall be used. Days on which no sales shall have been consummated shall
be disregarded. By way of example, if during the Adjustment Period there are 40
trading days and NETGATEWAY stock was traded on 30 of those days, the sum of the
sales prices on the 30 days on which a sales transaction actually occurred shall
be divided by 30.
3.2.2 Next, the ADP shall be multiplied by thirty-five thousand
(35,000) and the resulting number shall be subtracted from Two Hundred Fifty
Thousand Dollars ($250,000) to determine the deficit (the "DEFICIT").
3.2.3 The Deficit shall then be divided by the ADP and the
resulting number, rounded to the nearest whole number, shall represent the
number of additional shares that shall be issued to SHOPPING PLANET.
2
3.2.4 By way of example only, if it were assumed that the ADP is
Six Dollars ($6.00), then the market value of the Stock would be Two Hundred Ten
Thousand Dollars $210,000.00) (35,000 * 6) and the Deficit would be Forty
Thousand Dollars ($40,000.00) (250,000 - 210,000). Under this example, an
additional 6,667 shares would be issued to SHOPPING PLANET (40,000/6).
3.2.5 This Adjustment shall only apply in the event that SHOPPING
PLANET continues to hold and has continuously held all of the Shares throughout
the period commencing on the date of Closing and continuing through the
Adjustment Date.
In addition to the adjustment set forth in this Section 3.2 at the end of nine
(9) months, in the event that the Shares have not become tradable on the market
in which the NETGATEWAY stock is commonly traded within twenty-one (21) months
from the date of the Closing, then the mechanism for adjustment set forth in
this Section 3.2 shall be applied to determine if another adjustment should be
made. For purposes of this second adjustment, all of the Shares, including any
additional shares issued pursuant to the first Adjustment, shall be counted to
determine whether the market value is at least Two Hundred Fifty Thousand
Dollars ($250,000.00).
3.3 COMMISSION. At the Closing, NETGATEWAY shall pay to Geneva, as the
complete commission due under or relating to this transaction, the sum of Twenty
Thousand Dollars ($20,000.00).
3.4 CONSIDERATION FOR THE LICENSE BACK. In exchange for the
nonexclusive limited license of the Technology set forth in Section 2.2 above,
SHOPPING PLANET shall pay to NETGATEWAY at the Closing a license fee of One
Dollar ($1.00) per year, payable five (5) years in advance, and shall
prominently display on all Web sites using the Technology a "Powered by
Netgateway" byline along with the NETGATEWAY logo. Such display shall be subject
to the prior and continuing approval of NETGATEWAY and shall be deemed a
material part of the consideration for the license back.
4. IMPROVEMENTS.
4.1 DEVELOPMENT OF IMPROVEMENTS. NETGATEWAY and SHOPPING PLANET shall
be free to develop improvements in the Technology, and shall own all right,
title and interest in such improvements, subject to the restriction on usage by
SHOPPING PLANET set forth in Paragraph 2.2 hereof. Furthermore, SHOPPING PLANET
and the Principals each acknowledge and agree that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall not
directly or indirectly make or assist in any improvements of the Technology
owned or used by SHOPPING PLANET, provided, however, that SHOPPING PLANET shall
be entitled, as part of its license back, to receive any enhancements made by
NETGATEWAY to the Technology in the platform in which the Technology is
currently used.
4.2 BLOCKING PATENTS. To the extent that they presently or hereafter
hold any rights in Blocking Patents that have not been conveyed hereunder as
part of the Technology, SHOPPING PLANET and the Principals hereby grant to
NETGATEWAY, a royalty-free, worldwide, non-exclusive, license under any Blocking
Patents to use, copy, modify, distribute and make, have made, use, sell and
otherwise transfer any product or process using, incorporating or derived from
the Technology.
3
5. CONDITIONS PRECEDENT. The following are conditions precedent to the
terms of Section 3.1 of this Agreement being binding upon NETGATEWAY and to the
Closing by NETGATEWAY:
5.1 Execution by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of a three year employment agreement
in form satisfactory to NETGATEWAY; and
5.2 Successful transfer of the H-1 Visa of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to
NETGATEWAY.
6. TRANSFER OF CONSIDERATION, ESCROW AND CLOSING.
6.1 Upon the execution hereof, SHOPPING PLANET will deliver to
NETGATEWAY a copy of the source code and a working copy of the Technology along
with the Documentation and programmers notes, for installation onto a computer.
A representative of NETGATEWAY, in the presence of a representative of SHOPPING
PLANET will attempt a compilation of the installed source code into executable
code on the NETGATEWAY computer to confirm that such software operates in
substantial conformance with its intended use. Should any failures occur, then
SHOPPING PLANET will use its best efforts to determine and correct the errors
thereby causing the source code to be fully operational. If NETGATEWAY
determines that the Escrowed Materials are not sufficient, NETGATEWAY may
terminate this Agreement without liability to SHOPPING PLANET by providing
written notice to SHOPPING PLANET and the Shares shall be returned to
NETGATEWAY.
6.2 Upon the execution hereof, NETGATEWAY will retain the services of
a mutually agreeable independent third party escrow agent ("ESCROW AGENT") and
within five (5) days of the execution hereof, NETGATEWAY shall deposit with the
Escrow agent the Shares set forth in Section 3.1. The Shares will be held by the
Escrow Agent until the Conditions Precedent have been satisfied and then shall
deliver such shares to SHOPPING PLANET. Such Escrow shall terminate upon the
delivery of the Shares to SHOPPING PLANET or six (6) months after it is
established, whichever comes first. In the event that the Conditions Precedent
are not satisfied within said six (6) month period, then the Shares shall be
returned to the issuer for cancellation and the Technology with all its
derivatives shall be returned to SHOPPING PLANET.
6.3 The Closing will occur three (3) days after all of the Conditions
Precedent have been satisfied. At the Closing, the Escrow Agent will be
instructed to deliver the Shares to SHOPPING PLANET and NETGATEWAY will pay to
Geneva the Commission.
7. REPRESENTATIONS. SHOPPING PLANET hereby represents and warrants that
either Pinamar Corporation or UniNet Imaging, Inc. owns the Technology free and
clear of any liens, encumbrances or claims and that it has not in any way
previously transferred, assigned, licensed, sublicensed, pledged or in any way
transferred any of its interest and ownership in the Technology.
8. CONFIDENTIAL INFORMATION.
8.1 DEFINITION. Each party agrees that any and all knowledge, know-how
and technology which it received from the other party and which is marked as
confidential, proprietary, or with similar designation, or it disclosed orally,
is confirmed at the time of disclosure as confidential, or that is reduced to
written summary within fifteen (15) days after initial disclosure, is
confidential information and shall be maintained by the receiving party in
confidence ("Confidential
4
Information"). Whether marked or not, the Technology shall be deemed
Confidential Information of NETGATEWAY.
8.2 STANDARD OF CARE. The receiving party agrees to take all
reasonable precautions to safeguard the confidential nature of the other party's
confidential information, using at least as great a degree of care as such
receiving party uses to safeguard its own confidential information but not less
than a reasonable degree of care. Each party agrees not to use or disclose such
confidential information except as expressly authorized.
8.3 LIMITATION ON ACCESS. SHOPPING PLANET agrees to permit access to
the Technology by only those employees with a need to have access and will cause
such employees and/or consultants who are permitted access to sign a
confidentiality agreement in a form which includes the degree of care that
NETGATEWAY utilizes to protect its own confidential information of similar
nature which shall be no less than a reasonable degree of care.
8.4 Neither party shall be liable for disclosure and/or use of any
Confidential Information insofar as such is:
8.4.1 in, or becomes part of, the public domain other than
through a breach of the Agreement by such party;
8.4.2 already known to such party at or before the time it
receives the same from the other party or is disclosed to such party by a third
party as a matter of right,
8.4.3 independently developed by such other party without the
benefit of such information received from the other party;
8.4.4 disclosed and/or used by such party with the prior written
consent of the other party; or
8.4.5 required to be disclosed by any judicial order or decree or
by any governmental statute, regulation.
8.5 IRREPARABLE HARM. Each party agrees that the disclosure of any
confidential information of the other party may immediately give rise to
continuing irreparable injury to the nondisclosing party inadequately
compensable at law. Without prejudice to any other remedy available to the
non-disclosing party, should such continuing irreparable injury arise, the
nondisclosing party shall be entitled to obtain injunctive relief against the
disclosing party on such terms as a court of competent jurisdiction shall find
just, in addition to any other legal or equitable remedies that may be
available.
9. WARRANTIES.
9.1 WARRANTIES BY SHOPPING PLANET AND THE PRINCIPALS. SHOPPING PLANET
and each of the Principals, jointly and severally, represent and warrant to
NETGATEWAY the following:
9.1.1 that the Technology in all material respects is proprietary
solely to SHOPPING PLANET, and that SHOPPING PLANET has not licensed or
otherwise granted rights in
5
or to the Technology, or any portion thereof to any third party inconsistent
with the rights granted herein;
9.1.2 that all third parties and employees of SHOPPING PLANET
that have participated in the creation of the Technology have, for valid
consideration already paid, irrevocably assigned and/or agreed in writing that
their contribution(s) is/are exclusively owned by SHOPPING PLANET;
9.1.3 that SHOPPING PLANET and the Principals each have the full
right, power and authority to enter into this Agreement on the terms set forth
herein;
9.1.4 that the Technology was independently developed by SHOPPING
PLANET and that neither the Technology nor the rights conveyed and granted
hereunder to NETGATEWAY infringe any patent, copyright, or other proprietary
right of any other person or entity;
9.1.5 that other than payments due in the ordinary course of
business, no third party has any claim to any portion of the Stock other than
SHOPPING PLANET and/or the Principals;
9.1.6 that the Documentation contains a complete description of
the architecture of the version of the Technology software in sufficient detail
for a reasonably skilled programmer to operate and modify the software.
9.2 WARRANTIES BY NETGATEWAY. NETGATEWAY represents and warrants to
SHOPPING PLANET that NETGATEWAY has the full right, power, and authority to
enter into this Agreement.
9.3 SHOPPING PLANET and the Principals agree to jointly and severally
defend, or at their option, settle any claims brought by a third party against
NETGATEWAY and pay any Judgments, damages, costs or expenses incurred by
NETGATEWAY including reasonable attorneys fees, resulting from any claim that,
if proved, would constitute a breach of the representations and warranties of
SHOPPING PLANET and/or any of the Principals.
9.4 NETGATEWAY agrees to defend, or at their option, settle any claims
brought by a third party against SHOPPING PLANET and pay any Judgments, damages,
costs or expenses incurred by SHOPPING PLANET including reasonable attorneys
fees, resulting from any claim that, if proved, would constitute a breach of the
representations and warranties of NETGATEWAY.
10. TERM AND TERMINATION FOR PURPOSES OF LICENSE BACK.
10.1 TERM. The Agreement, for purposes of the License Back, shall
commence on the Effective Date and shall remain in effect until terminated.
10.2 TERMINATION FOR BREACH. In the event of a material breach of the
License Back provisions of this Agreement, the nonbreaching party shall be
entitled to terminate the Agreement by written notice to the breaching party if
such breach is not cured within thirty (30) days after written notice is given
to the breaching party, identifying the breach.
6
11. GENERAL.
11.1 GOVERNING LAW. The Agreement shall be governed and construed in
accordance with the laws of the state of California, without reference to
conflicts of law principles. The parties expressly consent to the exclusive
jurisdiction of the Courts within the State of California, County of Los
Angeles.
11.2 ASSIGNABILITY. SHOPPING PLANET may not assign any of the rights
it has acquired under this Agreement without the prior knowing written consent
of NETGATEWAY, which NETGATEWAY may grant or withhold in its sole and exclusive
discretion.
11.3 SEVERABILITY. In the event that any provision of the Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, the Agreement shall continue in full force and effect
without said provision.
11.4 FURTHER COOPERATION. From time to time on and after the date of
this Agreement, each party shall at the reasonable request of the other party
deliver such records, data or other documents consistent with the provisions of
this Agreement and take or cause to be taken such other actions, as may be
reasonably necessary or desirable in order for the requesting party to obtain
the benefit of the provisions of this Agreement and the transactions
contemplated hereby.
11.5 ATTORNEYS FEES. In the event that there is any dispute by or
between the parties under the Agreement, the prevailing party shall be entitled
to recover in addition to its provable damages, attorneys fees, and allowable
costs as an additional element of cost or damages.
11.6 NOTICES. Any notice required or permitted to be given shall be
effective if delivered in person or if mailed by first-class certified mail or
overnight delivery service (such as Federal Express) to the other party at the
address designated in writing by a party. Notices may also be sent by facsimile
if confirming notice is sent as described above.
11.7 COUNTERPARTS. The Agreement may be executed in counterparts. All
headings are inserted for convenience and reference only.
11.8 NO WAIVER. No waiver of any term or condition of the Agreement
shall be valid or binding on either party unless agreed in writing by the party
to be charged. The failure of either party to enforce at any time any of the
provisions of the Agreement, or the future to require at any time performance by
the other party of any of the provisions of the Agreement, shall in no way be
construed to be a present or future waiver of such provisions, nor in any way
affect the validity of either party to enforce each and every such provision
thereafter.
11.9 ENTIRE AGREEMENT. The Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other communications or negotiations relating thereto between the parties. No
amendment to the Agreement shall be effective unless in writing and signed by
authorized representatives of the parties.
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
NETGATEWAY,
a Nevada corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
PINAMAR CORPORATION,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
UNINET IMAGING, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
[ILLEGIBLE]
---------------------
▇▇▇▇ ▇▇▇▇▇▇▇ POLOVO
[ILLEGIBLE]
---------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
[ILLEGIBLE]
---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
ALEXIS ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
8