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Exhibit 10.12
TECHNOLOGY LICENSE AGREEMENT
THIS TECHNOLOGY LICENSE AGREEMENT ("Agreement"), effective as
defined in Section
10 below ("Effective Date"), is made and entered into by and
between Visa
International Service Association, a Delaware corporation with
principal offices
located at 900 Metro Center Boulevard, Foster City, California
U. S. A. 94404
("Visa") and Net1 Holdings S.A.R.L., a Luxembourg corporation,
and Net1
Investment Holdings (Pty) Ltd., a South African corporation, and
which may be
contacted through general counsel at #3-21965 49th Avenue,
Langley, British
Columbia, Canada, V3A 8J7 (individually and collectively called
"Net1").
RECITALS
WHEREAS, Net1 is the owner of certain "Technology Rights" (as
later defined
herein), and has the right to grant licenses thereunder; and
WHEREAS, Visa desires to use the Technology Rights in commercial
applications;
and
WHEREAS, Net1 is willing to grant, and Visa desires to obtain a
license under
the Technology Rights for commercial applications thereof in
accordance with the
terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the
sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following words and
phrases shall have
the following meanings:
1.1 "COPAC-1" shall mean the first version of the chip
offline
preauthorized credit product developed by Visa and being built
by Net1 on behalf
of Visa.
1.2 "EMV" shall mean the Europay, MasterCard and Visa smart card
standards
established in January, 1995 to insure interoperability at smart
card terminals,
as modified from time to time.
1.3 "Enhancements" shall mean all extensions, updates,
improvements,
modifications, releases, replacements and versions of the
Products.
1.4 "Financial Services Industry" shall mean persons or
companies that are
directly or indirectly (i) making loans; (ii) taking deposits;
(iii) selling,
brokering, or factoring (a) securities, (b) insurance, (c)
mortgages or (d)
receivables; and (iv) providing payment services, such as
issuing charge cards,
credit cards, payment cards, debit cards or any other system
that could compete
with such payment methods.
1.5 "Intellectual Property Rights" shall mean all current
worldwide
patents and other patent rights, utility model copyrights, mask
work rights,
trade secrets and all other intellectual property rights,
including without
limitation all applications and registrations with respect
thereto that exist to
the Effective Date.
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1.6 "Member" shall mean entities that are direct or indirect
members of
the Visa International Service Association in accordance with
Visa's Operating
Regulations.
1.7 "Patents" shall mean all current worldwide patents and
patent rights
of Net1, including Patent No. 5,171,416, including without
limitation,
enhancements, improvements and expansions to all the foregoing
and any foreign
patent applications corresponding to any patent associated with
any Net1 product
or service using Relevant Technology.
1.8 "Payment System" shall mean any product or service offered
by Net1
that utilizes the Technology Rights and replaces cash or other
payment devices.
1.9 "Product" shall mean any product or service the manufacture,
use or
sale of which by an unlicensed third party would constitute an
infringement of
the Technology Rights.
1.10 "Relevant Technology" shall mean any technology that is (i)
related
to financial services; or (ii) can be utilized in the Financial
Services
Industry.
1.11 "Sale" shall mean any sale, transfer, license or other
disposition of
a Product to a third party.
1.12 "Technology Rights" shall mean all current worldwide patent
rights,
copyrights, mask work rights, trade secrets and any other
Intellectual Property
Rights of Net1. This shall include, but is not limited to Net1's
Electronic
Cheque, Electronic Cash - type 1; Electronic Cash - Card to
Card; PC systems for
Personalization and Initialization; Card/Terminal
Specifications; Megalink and
other technology and software, including source code and object
code, developed
by or on behalf of Net1; and in general, other facilities as
described in U. S.
Patent No. 5,171,416 (the "416 Patent") including without
limitation,
enhancements, improvements and expansions to all of the
foregoing. Patent rights
shall include any foreign patent applications corresponding to
any patent
associated with any Net1 product or service using Relevant
Technology.
1.13 "Visa Competitor" shall include MasterCard, Europay,
American
Express, Discover, Diners, Carte Blanche, JCB or their parents,
subsidiaries and
affiliates.
2. GRANT OF RIGHTS
2.1 Grant of License - Subject to the terms and conditions of
this
Agreement, Net1 hereby grants to Visa a perpetual and
irrevocable worldwide
royalty free license to the Technology Rights to make use of and
to sublicense
Products.
2.2 Right to Sublicense in Financial Services Industry - Visa
shall have
the right to sublicense the rights granted in Section 2.1 to (i)
Members and
(ii) any entity in the Financial Services Industry. Visa agrees
not to grant a
sublicense to a Payment System to a non-Member entity in the
Financial Services
Industry if such entity already has a right to use such Payment
System from Net1
without first obtaining the prior written consent from Net1.
2.3 Right to Sublicense Outside Financial Services Industry -
Visa shall
have the right to sublicense the rights granted in Section 2.1
above to any
entity outside of the Financial Services
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Industry for the sole purpose of providing Products to Visa or
Visa's
sublicensees listed above in Section 2.2.
2.4 Exclusivity of License - Subject to the rights reserved
below, Net1
grants Visa exclusivity for the rights granted in Section 2.1,
2.2 and 2.3 above
with regard to Patents for the Financial Services Industry.
Subject to the terms of this Agreement, with regard to all
other
Technology Rights, the license shall be non-exclusive.
2.5 License Back - Subject to the terms of this Agreement, Visa
hereby
grants to Net1 an irrevocable, worldwide, perpetual,
royalty-free license to the
Patents to make, use and sell Payments Systems and Net1
Products.
2.6 Branding - While Net1 shall retain the rights to sell
Payment Systems,
including Universal Electronic Payment Systems, (except as
provided in Section
2.7), Net1 will prohibit any entity from using Payment Systems
or any of Net1's
marks with any card or product that is branded with a mark owned
or licensed by
a Visa Competitor. Net1 will restrict and enforce such
restriction on any
licensees of its Payment Systems.
2.7 Competitors - Notwithstanding anything to the contrary, Net1
shall not
license any Technology Rights to a Visa Competitor for the term
of this
Agreement, plus eighteen (18) months if terminated pursuant to
Section 7 herein.
2.8 Waiver of claims - Net1 hereby waives any and all claims,
whether
known or unknown, that it may have against Visa arising out of
any activity of
Visa prior to the Effective Date.
2.9 Covenant Not to Sue - Net1 hereby grants to Visa and its
Members a
covenant not to sue either Visa, its Members, Visa's or its
Members' third party
vendors or customers for infringement of Technology Rights of
Net1 for their
manufacture, use or sale of any product or service offered by
Visa unless Net1
has the right to terminate this Agreement pursuant to Section
7.2.
2.10 Prior Agreements - Any contractual agreements (inclusive of
licensing
agreements) relating to use of a Payment System entered into by
Net1 prior to
July 20, 1996 shall be retained by Net1.
2.11 Agents - Net1 will not enter into any agency or
sublicensing
agreement (such as the agreement with BGS) which prohibits such
agent from
acting as an agent or licensee of Visa.
3. CONSIDERATION
3.1 License Fee - Visa will pay Net1 a total of One Million U.S.
Dollars,
receipt of which is hereby acknowledged.
3.2 Sublicensing Fees - Visa shall pay Net1 a fee of One
Thousand Dollars
for each Member that is sublicensed by Visa to use Technology
Rights and One
Thousand Dollars for each non-Member entity that is sublicensed
by Visa to use
Technology Rights. This amount shall be paid
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within thirty (30) days of the end of the calendar quarter in
which Visa grants
a Member a license for such use. Along with such payment, Visa
shall submit a
report identifying the number of licenses granted.
4. REPRESENTATIONS AND WARRANTIES
4.1 Visa Warranties - Visa represents and warrants that Visa has
full
power, right and authority to enter into and carry out its
obligations under
this Agreement.
4.2 Net1 Warranties - Net1 represents and warrants that:
A. Net1 has full power, right and authority to enter into and
carry
out its obligations under this Agreement;
B. Net1 owns all of the intellectual property rights necessary
to
grant the license described in Section 2.1 above;
C. Other than the agreements listed in Exhibit 2, Net1 has
not
previously granted any rights in the Net1 Technology to any
third
party that are inconsistent with the rights granted to Visa
herein;
D. To the best of Net1's knowledge, the Net1 Technology does not
and
shall not infringe any copyright, trade secret rights, patent
or
other proprietary rights of any third party;
E. Net1 is not currently involved in or aware of any litigation
or
potential claims involving Net1, Net1 Technology or Net1's
Key
Employees, other than has already been disclosed to Visa
regarding
European patent objection; and
F. Net1 have no conflicting obligations with any third
party.
5. CONFIDENTIALITY
5.1 General - Except as otherwise expressly provided in this
Agreement,
both parties shall hold in strict confidence and not use or
disclose to any
third party (other than employees, consultants and advisors who
are similarly
bound in writing) any product, technical, manufacturing,
process, marketing,
financial, business or other information, ideas or know-how
identified in
writing as confidential ("Confidential Information") of or used
by the other
party; provided, however, that Confidential Information shall
not include:
A. Information which at the time of disclosure was previously
known
to the receiving party as demonstrated by written records;
B. Information which at the time of disclosure is published
or
otherwise generally available to the public; or
C. Information which, after disclosure, is published or
otherwise
becomes generally available to the public through no breach of
this
Agreement by the receiving party.
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5.2 Exceptions - A party may disclose Confidential
Information;
A. In connection with the or
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