Software Assignment and Grant Back Limited License Agreement - Netgateway, Pinamar Corp. and UniNet Imaging Inc. and Shopping Planet
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 300 Oceangate,
Fifth Floor, Long Beach CA 90802 ("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
11134 Washington Boulevard, Culver City, California 90232, and LUIS MARCELO
POLOVO at c/o 11134 Washington Boulevard, Culver City, California 90232, OSVALDO
FEDERICO POVOLO at c/o 11134 Washington Boulevard, Culver City, California
90232, NESTOR SAPORITI at c/o 11134 Washington Boulevard, Culver City,
California 90232, and ALEXIS FAVIAN QUINTANA at c/o 11134 Washington Boulevard,
Culver City, California 90232 (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 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 or 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
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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 the 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
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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 subtrancted 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.
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 x 6) and the Deficit would be Forty
Thousnad 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 continously held all of the Shares
throught out 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 tradeable 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 Geveva, 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 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
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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 Marcelo
Povolo 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.
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 Marcelo Povolo of a three year employment agreement
in form satisfactory to NETGATEWAY; and
5.2 Successful transfer of the H-1 Visa of Marcelo Povolo 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 the 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 Condidtions Precedent have been satisfied and then
shall deliver such shares to SHOPPING PLANET. Such
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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 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
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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 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
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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.
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 sold and exclusive
discretion.
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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 mid
signed by authorized representatives of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
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NETGATEWAY,
a Nevada corporation
By /s/ Donald M. Colins, Jr.
-------------------------------
Name: Donald M. Colins, Jr.
Title: President
PINAMAR CORPORATION,
a California corporation
By /s/ Alexis Quintana
-------------------------------
Name: Alexis Quintana
Title: President
[Signatures continued on next page]
[Signatures continued from prior page]
UniNet IMAGING, INC.,
By /s/ Nestor Saforiti
-------------------------------
Name: Nestor Saforiti
Title:
/s/ Luis Marcelo Polovo
_______________________________
LUIS MARCELO POLOVO
/s/ Osvaldo Federico Povolo
_______________________________
OSVALDO FEDERICO POVOLO
/s/ Nestor Saporiti
_______________________________
NESTOR SAPORITI
/s/ Alexis Favian Quintana
_______________________________
ALEXIS FAVIAN QUINTANA