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EXHIBIT 10.4
SOFTWARE
LICENSE AGREEMENT
THIS SOFTWARE LICENSE AGREEMENT
("Agreement") is entered into as of the
2nd day of September, 1999 by Taurus TeleSYS Inc., a Virginia corporation
("Licensor"), Global Travel Network LLC, a Delaware limited liability
company
("Licensee") and Etravnet.com, Inc., a Delaware corporation
("Parent").
RECITALS
A. Licensor has developed and is
the sole owner of a proprietary
computer software product called "T-Gate," a description of which is
set forth
on Exhibit A ("Software") that links computers through the Internet,
telephones
and facsimile machines.
B. Licensee is in the travel
industry and is desirous of using the
Software in its business.
NOW, THEREFORE, the parties
hereto agree as follows:
1. License of Software. Subject to the terms and conditions set forth
in this Agreement, Licensor
grants to Licensee,
and Licensee accepts,
a
worldwide, nontransferable, exclusive
license (the "License") to
use the
Software and any derivations thereof,
including any enhancements,
upgrades and
new versions, solely within the Field of Use. Licensee is not granted any
rights
with respect to the Software (or any derivations thereof)
outside of the Field
of Use. "Field of Use" is defined solely as those services normally
performed by
travel agencies as
of the date
of this Agreement,
including obtaining
reservations for the
following: (a) hotel,
motel and other
temporary
accommodation facilities for a period not to exceed thirty (30) days; (b)
rental
of automobiles for a period
not to exceed thirty (30)
days; (c) travel on
aircraft, trains and boats; and (d) vacation packages,
sightseeing and other
travel destinations. Licensor reserves
all rights not expressly granted in this
Section 1.
2. Term and Termination.
(a) Initial Term and Renewal Term.
Initial and renewal terms are
subject to early termination
of this Agreement pursuant
to Section 2. The
initial term of this Agreement
shall be for a period of four years
after the
date of
notification by Licensor
to Licensee that
software is in a form
available for use by Licensee. It is agreed and understood
that although the
initial term will begin when software is available for use,
Licensee will make
an initial deposit of Twenty Five
Thousand Dollars ($25,000)
with signing of
Agreement. Additional payments
due as part of minimum
royalty would be paid
based on the beginning date of the
initial term as based on the software
being
available for use by Licensee. During
the four-year initial term, Licensee will
be required to make minimum royalty
payments and in the event
percentage of
royalty on sales exceeds the minimum payment, then Licensee would be required
to
make these payments as well. The quota
on royalty will not be considered until
the parties enter
the renewal term
which are years
five and six of this
Agreement. During the renewal term, it
is understood that annual royalty income
paid to Licensor from transactions processed through T-Gate Software must
exceed
Fifty Thousand Dollars ($50,000) minimum royalty payment for at least one or
the
two year renewals. The renewal term, which
consists of continuous two-year
automatic renewals requires one of the two years that the
Licensee exceeds the
annual minimum royalty due. For example, if in year five royalty is Fifty Five
Thousand Dollars ($55,000) earned, and in year six Forty Five Thousand Dollars
($45,000) is earned, Licensee will have met his minimum quota and would have
the
right to renew for an additional
two-year term. Licensee is
required to notify
Licensor sixty (60) days prior to the end of each term if he plans to
renew. In
the event
Software License Agreement
July 21, 2005
Page 1
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Licensee does not maintain minimum royalty as described herein, additional
renewals will be at Licensor's discretion.
(b) Early Termination. Licensor or Licensee shall have the right to
terminate this Agreement
for a material breach of
this Agreement after (i)
providing the breaching
party with thirty (30) days' prior
written notice
describing the nature of the material
breach and (ii) the breaching party fails
to cure the described breach
before the expiration of the
thirty (30) day
period.
(c) Failure
to Pay License
Fees, Royalty or
Support Fees.
Notwithstanding any provision in
this Agreement to the contrary,
if Licensee
fails to pay timely any Initial Term License Fee (defined below),
Renewal Term
License Fee (defined below), Royalty
(defined below) or Support Fee
(defined
below) due pursuant
to this Agreement, Licensor
shall have the
right to
terminate this Agreement on five (5) days prior written notice to Licensee,
with
respect to the payment of any Initial
Term License Fee,
Renewal Term License
Fee, Royalty or Support Fee, provided Licensee fails to cure the breach within
a
fifteen (15) day period.
3. License Fees and Royalty.
(a) Initial Term. Licensee
shall pay to Licensor a
non-refundable
license fee ("First Year License Fee") of Fifty Thousand
Dollars ($50,000) as
follows: (i) $25,000 in immediately
available funds on or before the
date of
this Agreement; (ii) $12,500 in immediately available
funds on or before the
date six (6) months after the date Licensee is
notified by Licensor that the
software is available for
Licensee's use ("Availability Date");
and (iii)
$12,500 in immediately
available funds on or before the
date nine (9) months
after the Availability Date.
Licensee shall pay Licensor
a non-refundable
license fee ("Second
Year License Fee") of Seventy Five
Thousand Dollars
($75,000) in immediately available funds, in four installments, on or before
the
tenth (10th) day of each calendar quarter after the end of the first
anniversary
of the Availability Date. Licensee shall
pay Licensor a non-refundable License
Fee ("Third Year License Fee") of Fifty Thousand
Dollars ($50,000), Licensee
shall pay Licensor a non-refundable License Fee ("Fourth Year License
Fee") of
Fifty Thousand Dollars ($50,000). First Year, Second Year, Third Year and
Fourth
Year, Licensee shall be referred to collectively
as initial term License Fee.
The Initial Term License Fee shall be treated as a non-refundable prepaid
credit
against any Royalty (defined below) due as set forth in Section 3(c).
(b) Renewal Terms.
If Licensee elects to renew
this Agreement in
accordance with Section
2(a), Licensee shall
pay Licensor an
annual,
non-refundable license fee
("Renewal Term License
Fee") of Fifty Thousand
Dollars ($50,000), payable in quarterly
installments, in immediately available
funds on or before the tenth (10th) day of each
calendar quarter during any
Renewal Term. The Renewal Term License Fee shall be treated as a non-refundable
prepaid credit against any Royalty due as set forth in Section 3(c).
(c) Royalty.
(1) Calculation
and Payment. During the Initial Term and any
Renewal Terms, Licensee shall pay to Licensor a royalty ("Royalty")
of Three and
75/100 percent (3.75%) of Licensee's Net Sales (defined
below). The Royalty
shall be paid monthly on or before the tenth
(10th) day of each month for the
previous month's Net Sales. The Initial
Term License Fee or the Renewal
Term
License Fee, as the case may be, shall be applied against the applicable
Royalty
Software License Agreement
July 21, 2005
Page 2
<PAGE>
such that no Royalty shall be due until the Royalty amount
exceeds the Initial
Term License Fee or any Renewal Term License Fee, as the case may be.
(2) Audit. At its sole
expense (except as provided in
the last
sentence hereof), Licensor,
or its designee, to verify
calculation of the
Royalty, may inspect
and/or audit all business
records of Licensee no more
frequently than monthly during Licensee's
regular business hours upon seven (7)
days prior written notice. If an audit,
as certified by an independent auditor
reasonably acceptable to Licensee in the exercise of its reasonable discretion,
discloses an understatement by Licensee of any monthly Royalty of one percent
(1%) or more, Licensee shall immediately pay all deficiencies, plus ten percent
(10%) annualized interest. If an audit by Licensor discloses an
understatement
of any monthly Royalty of five percent (5%) or more, Licensee shall immediately
pay, in
addition to the amount of the
understatement and ten percent
(10%)
annualized interest, Licensor's reasonable fees and costs of such audit.
(3) Net Sales Defined.
For purposes of this
Agreement, "Net
Sales" shall mean Licensee's
gross revenues received by Licensee or paid to
Licensee or its designee(s) or
affiliate(s), as a result of
any transaction
processed using the Software or any derivation thereof, including any upgrade
or
enhancement of the Software or
derivation thereof, less only: (a) credit card
processing fees paid by Licensee to third parties as
standard in Licensee's
industry, (b) less any fees paid to
third party providers of travel services or
products made available to the
customer, (c) sales, value added or comparable
taxes collected and
paid by Licensee,
and (d) deductions
for returns,
cancellations, adjustments or
refunds. Net Sales shall be calculated
using
generally accepted accounting principles, consistently applied.
4. Support.
(a)
Generally. Licensor shall
provide Licensee with
technical
development and integration support to enable Licensee to implement the
Licensed
Software ("Development Support"). In no event shall Licensor be obligated to
provide support, technical assistance,
warranty service or maintenance of any
type to any party other than
Licensee. Licensor shall
provide Licensee with
ongoing maintenance and technical support ("Maintenance Support").
(b) Support Fee.
(1) Budget. Licensee will provide Licensor with funding for all
licensor's direct and indirect costs ("Support Fees") of Development
Support and
Maintenance Support in accordance with a budget ("Budget") developed
by Licensor
and submitted to Licensee semi-annually. Each Budget shall include,
without
limitation, cost estimates for hardware, software, subcontractor,
administrative
and overhead expenses
related to the Software and
Development Support and
Maintenance Support to Licensee. Each Budget shall include salaries and
benefits
to be paid to Licensor's employees and
fees to be paid to consultants and other
independent contractors. Each Budget shall be submitted in writing by
Licensor
to Licensee for written
approval. No expenses shall be incurred by Licensor
without prior written approval by
Licensee. Licensee shall approve (or
provide
written exceptions to) each Budget in writing within ten (10)
days of receipt.
Licensee agrees to approve a Budget that in its judgment is reasonably necessary
to maintain the core competency
necessary for Licensor to
run, manage, and
maintain all systems and personnel related to the Software during the Initial
Software License Agreement
July 21, 2005 Page 3
<PAGE>
Term and any Renewal Terms of this Agreement.
The first Budget submitted by
Licensor to Licensee is attached hereto as Exhibit B.
(2) Payment of Support
Fees. Licensee shall reimburse to Licensor
that part of the support fees actually
incurred by Licensor as
reflected on
written invoices submitted to Licensee
on a bi-weekly basis. Payment shall be
made within fourteen (14) days of Licensee's
receipt of the invoices. Licensee
requests in writing for additional work
not covered in the Budget shall be paid
upon submission of invoices and documentation of Licensor' costs.
5. Private Labeling. Subject
to Section 13, Licensee
may use the
Software in accordance with this Agreement
using Licensee's own trademarks
and
other identifying marks ; provided, however, such use shall in no way (a)
effect
a reduction in any Royalty paid by Licensee to Licensor under the terms of this
Agreement or (b) require any increase in the level of Maintenance
Support or
Development Support provided
by Licensor without appropriate
Support Cost
compensation defined in writing under the terms of this Agreement.
6. Finder's
Fee. If Licensor
introduces Licensee to any person
or
entity that purchases a master franchise from Licensee within twelve (12)
months
from the date of introduction anywhere
o






