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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 16, 1999 (May 20, 1999)
TIER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
California 000-23195 94-3145844
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
1350 Treat Boulevard, Suite 250 94596
Walnut Creek, California (Zip Code)
(Address of principal executive offices)
(925) 937-3950
(Registrant's telephone number, including area code)
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Item 5. Other Events
Acquisition of Project Management System and Intellectual Property Rights
On May 20, 1999, Tier Technologies, Inc. (the "Company") acquired from Humana
Inc. ("Humana") the ownership rights to a project management system that was
jointly developed by the Company and Humana. The cost of the rights to the
project management system was $2 million. In a related end user license
agreement executed by the Company and Humana, Humana acquired from the Company
an exclusive, non-transferable, perpetual and irrevocable license to use the
project management system in its own business. The Company will use the project
management system as a comprehensive tool in its global project management
office.
On May 27, 1999, the Company acquired from Humana an exclusive, transferable,
perpetual and irrevocable license to components of a proprietary billing system
software developed by the Company for Humana. The license permits the Company to
use such components of the software for the Company's internal development
purposes as well as to use and market commercially on a worldwide basis, except
in the health care business where Humana must give its prior consent. The
licensed software was not a completed system and was not executable on the
closing date and was delivered on an "as is" basis. The license includes, at no
additional charge, all additions, enhancements, and improvements to the software
to the extent that the Company is employed by Humana to make such additions,
enhancements or improvements. The cost of the license was $4 million. Humana
retains a license to use the software in its business.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
Exhibit No. Description
- ----------- -----------
10.1 Asset Purchase Agreement dated as of May 17, 1999 by and
between the Company and Humana Inc.
10.2 End User License Agreement dated as of May 17, 1999 between
the Company and Humana Inc.
10.3 End User License Agreement dated as of May 19, 1999 between
the Company and Humana Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TIER TECHNOLOGIES, INC.
By: /s/ George K. Ross
-----------------------------
George K. Ross
Executive Vice President and
Chief Financial Officer
Date: June 16, 1999
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.1 Asset Purchase Agreement dated as of May 17, 1999 by and
between the Company and Humana Inc.
10.2 End User License Agreement dated as of May 17, 1999 between
the Company and Humana Inc.
10.3 End User License Agreement dated as of May 19, 1999 between
the Company and Humana Inc.
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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
------------------------
THIS AGREEMENT FOR THE PURCHASE OF ASSETS ("Agreement") is entered into as
of the 17th day of May, 1999, by and between TIER TECHNOLOGIES, INC., a
California corporation ("Purchaser"), and HUMANA INC., a Delaware corporation
("Seller").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of providing health care
through a national network of health maintenance organizations;
WHEREAS, Purchaser is an IT solutions company that was engaged by Seller to
integrate various computer systems and develop proprietary software for Seller;
WHEREAS, Seller, in conjunction with Purchaser, has developed an assortment
of tools, processes, policies, procedures, manuals, guidebooks, etc. which
collectively have become known as the Project Management System (PMS); and
WHEREAS, Seller desires to sell and transfer to Purchaser, and Purchaser
desires to acquire from Seller, all of the right, title and interest of Seller,
as such may be, in the assets that comprise the PMS, upon the terms and
conditions contained herein; and
NOW, THEREFORE, for and in consideration of the promises and the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS.
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1.1 Purchase and Sale. Subject to the terms and conditions contained
-----------------
herein, Seller agrees to sell, transfer, convey and assign to Purchaser, and
Purchaser agrees to purchase and acquire from Seller for Purchaser's internal
business use on client engagements, on the Closing Date (as hereinafter
defined), all of Seller's right, title and interest in and to all of the assets
and properties of Seller which comprise the PMS as the same may exist on the
Closing Date (the "Transferred Assets"), including the following:
(a) The Project Management Database (a.k.a.: Secure Billing
Requirements Database) which includes the following: all
necessary tables to support requirements, design specifications,
testing, problem reports, issues tracking, action item tracking,
lessons learned (a.k.a.: Lessons Learned Database), change
control (a.k.a.: Change Management Database, and the production
of metrics.
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(b) Document Deliverable Templates and examples which include: the
System Segment Specifications (SSS), Software Requirements
Specifications (SRS), Interface Requirements Specifications
(IRS), Software Design Document (SDD), Interface Design Document
(IDD), Software Test Plan (STP), Software Test Description (STD),
Software Test Report, Software Training Plan (TP), Implementation
Plan (IP), Conversion Management Plan (CMP), Data Base Design
Document (DBDD), Project Management Plan (PMP), Facilities
Management Document (FM), Financial Analysis Document, Risk
Assessment Report, Project Metrics, and Lessons Learned Document
(LLD).
(c) Methodologies: Project Life Cycle Methodology
(d) Guidebooks including but not limited to: Software Process
Improvement Guidebook, Software Project Planning and Management
Guidebook, Peer Review Guidebook, Request for Proposal Guidebook,
and the Software Configuration Guidebook.
(e) Procedures/Practices including, but not limited to: Process
Improvement Process, Project Management Plan (PMP) Practices,
Project Prioritization Practice, Project Profiling Practice,
Project Request Practice, and Project Scheduling Practice.
(f) Processes related to Business Rules Extraction, SpecPac
Development, and Testing Processes as documented in the PMP.
(g) Policies: including, but not limited to: Software Requirements
Management Policy, Software Project Planning Policy, Software
Project Tracking and Oversight Policy, Software Subcontract
Management Policy, Software Quality Assurance Policy, Software
Configuration Management Policy, Organization Process Focus
Policy, Organization Process Definition Policy, Training Program
Policy, Integrated Software Management Policy, Software Product
Engineering Policy, Intergroup Coordination Policy, Peer Review
Policy, Issues Management Policy, Project Prioritization Policy,
Software Quality Management Policy, Defect Prevention Policy,
Technology Change Management Policy, and Process Change
Management Policy.
(h) Presentation briefings related to above stated databases,
documents, templates, Guidebooks, Methodologies,
Procedure/Practices, and Policies.
(i) All of Seller's proprietary and confidential information
contained in the PMS and its components as set forth in (a)-(h)
above, including, without limitation (i) trade secrets, technical
information, know-how, ideas, designs, processes, procedures,
algorithms, discoveries, patents, patent applications, and
copyrights, and all improvements thereof, and (ii) all of
Seller's intangible property rights relating to the operation of
the PMS or otherwise used or useable with respect to the PMS;
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(j) All of Seller's trademarks, service marks, and trade names used
or useable with respect to the PMS including, without limitation,
all registrations and pending applications therefor, and all
goodwill associated therewith.
Purchaser may use the Transferred Assets only for its internal business
purposes and, with the exception of the End User License Agreement of even date
herewith to Seller, may not sell, license, rent, loan, or otherwise transfer the
Transferred Assets to any third party.
1.2 Purchase Price. The purchase price for Seller's interest in the
--------------
Transferred Assets (the "Purchase Price") shall be $2,000,000.00, payable at
Closing by wire transfer.
1.3 Obligations Not Assumed by Purchaser. Purchaser shall not assume any
------------------------------------
obligation or liability of Seller of any kind, and Seller shall pay, satisfy and
perform all of its obligations, whether fixed, contingent, known or unknown and
whether existing as of the Closing or arising thereafter, which may affect in
any way the Seller's interest in the Transferred Assets. Without limiting the
generality of the foregoing, under no circumstances shall Purchaser be deemed to
assume any liability or obligation of Seller arising out of or relating to (a)
any actual or alleged tortious conduct of Seller or any of its employees or
agents, (b) any product liability claim, (c) any claim for infringement or
breach of warranty or contract by Seller, (d) any claim predicated on strict
liability or any similar legal theory, (e) the violation of any law, ordinance
or regulation in effect prior to the Closing, (f) any business or business
activities of Seller, (g) any liability of Seller for any federal, state or
local taxes of any kind or character arising out of Seller's business, or (h)
any liability of Seller under or arising by reason of this Agreement.
Notwithstanding any other provision of this Agreement, the obligations of Seller
pursuant to this Section shall survive the Closing and the transactions
contemplated by this Agreement.
1.4 Closing. The consummation of the transactions contemplated in this
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Agreement (the "Closing") shall take place at the offices of Tier Technologies,
Inc., 1350 Treat Blvd. Suite 250, Walnut Creek, CA 94596 at 10:00 a.m. local
time, on or about May 20, 1999 ("Closing Date").
1.5 Transactions and Documents at Closing.
-------------------------------------
(a) At the Closing:
(i) Seller shall convey to Purchaser by quitclaim bill of sale
(attached hereto as Exhibit 1) all of Seller's right, title and interest in
and to the Transferred Assets. Henceforth seller shall make no use thereof
and shall not disclose any of the contents thereof or any of the
intellectual property rights or trade secrets embodied therein without the
prior written consent of Purchaser; and
(ii) Seller shall transmit the Transferred Assets by "remote
communications" (for example, electronic transmission via modem) from
Seller's place of business to Purchaser's office in Walnut Creek,
California; and
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(iii) upon such transmission by Seller, Purchaser shall pay the
Purchase Price in the amount and in the manner set forth in Section 1.2.
(b) Each party shall, at the request of any other party from time to
time and at any time, whether on or after the Closing Date, and without
further consideration, execute and deliver such deeds, assignments,
transfers, assumptions, conveyances, powers of attorney, receipts,
acknowledgments, acceptances and assurances as may be reasonably necessary
to procure for the party so requesting, and its successors and assigns, or
for aiding and assisting in collecting and reducing to possession, any and
all of the Transferred Assets, or otherwise to satisfy and perform the
obligations of the parties hereunder.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
---------------------------------------------------
To induce Purchaser to enter into this Agreement and to purchase the
Transferred Assets, Seller represents, warrants and covenants to Purchaser as
follows:
2.1 Enforceability of Agreement. Seller has the full corporate power
---------------------------
and authority to enter into and execute this Agreement and to carry out the
transactions contemplated hereby in accordance with its terms. There are no
outstanding contracts, demands, commitments or other agreements or arrangements
under which Seller is or may become obligated to sell, transfer or assign any of
the Transferred Assets. This Agreement and all transactions required hereunder
to be performed by Seller have been duly and validly authorized and approved by
all necessary corporate action. This Agreement constitutes the valid and legally
binding obligation, subject to general equity principles, of Seller, enforceable
in accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally.
2.2 No Inconsistent Obligations. Neither the execution and delivery of
---------------------------
this Agreement, nor the consummation of the transactions contemplated herein
will result in a violation or breach of, or constitute a default under (a) the
articles of incorporation or bylaws of Seller, (b) any term or provision of any
indenture, note, mortgage, bond, security agreement, loan agreement, guaranty,
pledge, or other instrument, contract, agreement or commitment, (c) any writ,
order, judgment, decree, law, rule, regulation, or ordinance, (d) any applicable
ruling or order of any administrative or governmental body, or (e) any other
commitment or restriction, to which Seller is a party or by which any of them or
any of the Transferred Assets is subject or bound; nor will such actions result
in (i) the creation of any claim, lien, charge or encumbrance on any of the
Transferred Assets, (ii) the acceleration or creation of any obligation of
Seller, or (iii) the forfeiture of any material right or privilege of Seller.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
-------------------------------------------
As an inducement to Seller to enter into this Agreement and to sell the
Transferred Assets to Purchaser, Purchaser hereby represents, warrants and
covenants as follows:
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3.1 Authorization; No Inconsistent Agreements. Purchaser has full
-----------------------------------------
corporate power and authority to make, execute and perform this Agreement, and
the transactions contemplated hereby. This Agreement and all transactions
required hereunder to be performed by Purchaser have been duly and validly
authorized and approved by all necessary corporate action on the part of
Purchaser. This Agreement has been duly and validly executed and delivered on
behalf of Purchaser by its duly authorized officers, and this Agreement
constitutes the valid and legally binding obligation of Purchaser enforceable,
subject to general equity principles, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally. Neither the execution
and delivery of this Agreement nor the consummation of the transactions hereby
contemplated will constitute a violation or breach of the certificate of
incorporation or the bylaws of Purchaser or any provision of any contract or
other instrument to which Purchaser is a party or by which any of the assets of
Purchaser may be affected or secured, or any order, writ, injunction, decree,
statute, rule or regulation to which Purchaser is subject, or will result in the
creation of any lien, charge, or encumbrance on any of the assets of Purchaser
or acceleration of any debt.
3.2 Consents. The execution and delivery of this Agreement by Purchaser
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(a) do not require the consent, approval or action of, or any filing with or
notice to, any person, firm or other entity, or any public, governmental or
judicial authority, and (b) do not impose any other term, condition or
restriction on Seller pursuant to any business combination, takeover or other
statute, rule or regulation.
3.3 No Violation. Purchaser is not in default under or in violation of
------------
(a) its certificate of incorporation or bylaws, or (b) any writ, order,
judgment, decree, law, rule, regulation or ordinance, or (c) any applicable
ruling or order of any administrative or governmental body.
3.4 Disclaimer Of Warranties.
------------------------
SELLER MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, REGARDING THE
TRANSFERRED ASSETS, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE, AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
PURCHASER ACKNOWLEDGES THAT IT HAS RELIED ON NO WARRANTIES IN ENTERING INTO THIS
AGREEMENT AND THAT IT ACCEPTS THE TRANSFERRED ASSETS "AS IS."
3.5 Limitation Of Liability.
-----------------------
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT,
EXEMPLARY, SPECIAL OR INCIDENTAL DAMAGES, INCLUDING ANY LOST DATA AND LOST
PROFITS, ARISING FROM OR RELATING TO THIS AGREEMENT.
4. TERMINATION.
-----------
4.1 Termination for Certain Causes. This Agreement may be terminated at
------------------------------
any time prior to or on the Closing Date by Seller or Purchaser upon written
notice to the other party as
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follows, and, upon such termination of this Agreement, no party hereto shall
have any liability to the other:
(a) By Purchaser, if any substantial part of Seller's interest in the
Transferred Assets are lost, destroyed, rendered unusable due to fire or other
casualty.
(b) By Purchaser if the terms, covenants or conditions of this
Agreement to be complied with or performed by Seller at or before the Closing
Date shall not have been complied with or performed and such noncompliance or
nonperformance shall not have been waived by Purchaser.
(c) By Purchaser, if there is any fact or condition with respect to
Seller's interest in the Transferred Assets, or any obligation of Seller, which
materially and adversely affects such Assets.
(d) By Seller, if the terms, covenants or conditions of this Agreement
to be complied with or performed by Purchaser at or before the Closing Date
shall not have been complied with or performed and such noncompliance or
nonperformance shall not have been waived by Seller.
(e) By any party, if any action, suit or proceeding shall have been
instituted against any party to this Agreement by any third party to restrain or
prohibit, or to obtain substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated herein, which, in the good faith
opinion of any party, makes consummation of the transactions herein contemplated
inadvisable.
5. MISCELLANEOUS.
-------------
5.1 Notices.
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(a) All notices, demands or other communications required or permitted
to be given or made hereunder shall be in writing and delivered personally or
sent by pre-paid, first class, certified mail, return receipt requested, or by
facsimile transmission to the intended recipient thereof at its facsimile number
set out below. Any such notice, demand or communication shall be deemed to have
been duly given immediately (if given or made by confirmed facsimile), or three
days after mailing, and in proving same it shall be sufficient to show that the
envelope containing the same was duly addressed, stamped and posted, or that
receipt of a facsimile was confirmed by the recipient. The addresses and
facsimile numbers of the parties for purposes of this Agreement are:
(i) If to Purchaser: TIER TECHNOLOGIES, INC.
1350 Treat Blvd., Suite 250
Walnut Creek, CA 94596
Attn: Legal Dept.
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Fax: (925) 946-0923
(ii) If to Seller: HUMANA INC.
500 West Main St.
Louisville, KY 40202
Attn: George W. Vieth
Fax: (502) 580-3639
(b) Any party may change the address to which notices, requests,
demands or other communications to such parties shall be delivered or mailed by
giving notice thereof to the other parties hereto in the manner provided herein.
5.2 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.
5.3 Entire Agreement. This Agreement supersedes all prior discussions and
----------------
agreements between the parties with respect to the subject matter hereof, and
this Agreement contains the sole and entire agreement among the parties with
respect to the matters covered hereby. This Agreement shall not be altered or
amended except by an instrument in writing signed by or on behalf of the party
entitled to the benefit of the provision against whom enforcement is sought.
5.4 Governing Law. The validity and effect of this Agreement shall be
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governed by and construed and enforced in accordance with the laws of the State
of California, without regard to conflicts rules.
5.5 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and assigns. This Agreement and
the rights and obligations of any party hereunder may not be assigned.
5.6 Partial Invalidity and Severability. All rights and restrictions
-----------------------------------
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part thereof, not essential to
the commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof, or part thereof shall constitute their
agreement with respect to the subject matter hereof and all such remaining
terms, or parts thereof, shall remain in full force and effect. To the extent
legally permissible, any illegal, invalid or unenforceable provision of
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this Agreement shall be replaced by a valid provision which will implement the
commercial purpose of the illegal, invalid or unenforceable provision.
5.7 Waiver. Any term or condition of this Agreement may be waived at any
------
time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part
of any party hereto to exercise, and no delay in exercising any right, power or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. No waiver by any party hereto to any breach of or
default in any term or condition of this Agreement shall constitute a waiver of
or assent to any succeeding breach of or default in the same or any other term
or condition hereof.
5.8 Headings. The headings of particular provisions of this Agreement are
--------
inserted for convenience only and shall not be construed as a part of this
Agreement or serve as a limitation or expansion on the scope of any term or
provision of this Agreement.
5.9 Number and Gender. Where the context requires, the use of the
-----------------
singular form herein shall include the plural, the use of the plural shall
include the singular, and the use of any gender shall include any and all
genders.
5.10 Time of Performance. Time is of the essence.
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5.11 Definition of Knowledge. The words "known", "to the knowledge of,"
-----------------------
"to the best knowledge of," "aware" or words of similar import employed in this
Agreement with reference to any individual or entity shall be conclusively
presumed to mean that the person or entity has made reasonable and diligent
efforts under the circumstances to become knowledgeable; in the case of any
person other than a natural person, the "knowledge" of such person shall be
deemed to be the knowledge of its directors and senior officers.
5.12 Updates or Enhancements. This sale does not include, and Seller has
-----------------------
no obligation to transfer to Purchaser Seller's interest in, any changes,
additions, modifications, enhancements, or improvements, if any, made by Seller
to the Transferred Assets after the Closing Date.
5.13 No Maintenance or Support. Seller is not required to provide any
-------------------------
maintenance or support services with respect to the Transferred Assets under
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PURCHASER:
TIER TECHNOLOGIES, INC.
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By: /s/ William Barton
-----------------------
William Barton
President and CTO
SELLER:
HUMANA INC.
By: /s/ George W. Vieth
-----------------------------------
George W. Vieth, Sr. Vice President
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EXHIBIT 1
---------
Quitclaim Bill of Sale
----------------------
Pursuant to Paragraph 1.5 of the Asset Purchase Agreement, dated May 17, 1999,
by and between Tier Technologies, Inc., a California corporation, as
"Purchaser", and Humana Inc., a Delaware corporation, as "Seller" (the
"Agreement"), Seller hereby sells, conveys and delivers to Purchaser, without
warranty, "as is," all of its rights, title and interest, whatever they be, in
and to all of the assets and properties of Seller in the Project Management
System ("PMS") as described in paragraph 1.1 of said Agreement, which PMS was
jointly developed by Seller and Purchaser.
Dated: ________________, 1999
Humana INC.
By
-------------------------
George W. Vieth Jr.
Sr. Vice President
Market Segment Management
<PAGE>
EXHIBIT 10.2
END USER LICENSE AGREEMENT
This license agreement (this "Agreement") is entered into as of May 17, 1999,
(the "Effective Date") between TIER TECHNOLOGIES, INC., a California corporation
("Licensor"), and HUMANA INC., a Delaware corporation ("Licensee"), for the
purpose of granting Licensee a limited license to use certain intellectual
property rights furnished by Licensor.
RECITALS:
WHEREAS, Licensor purchased in a separate agreement entered into this date
certain Intellectual Property Rights from Licensee comprising what is known
between the parties as the Project Management System (PMS), as defined herein;
WHEREAS, Licensor now desires to license the PMS to Licensee for its
internal use;
NOW, THEREFORE, for and in consideration of the promises and the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows
AGREEMENT:
1. DEFINITIONS. As used in this Agreement:
"Affiliates" means, with respect to a party, any person or entity that controls,
is controlled by, or is under common control with such party, where "control"
means ownership of fifty percent (50%) or more of the outstanding voting
securities (but only as long as such person or entity meets these requirements).
"Intellectual Property Rights" means all copyrights, trademarks, service marks,
trade secrets, patents, patent applications, moral rights, contract rights, and
other proprietary rights.
"Project Management System" ("PMS") means:
(a) The Project Management Database (a.k.a.: Secure Billing
Requirements Database) which includes the following: all
necessary tables to support requirements, design specifications,
testing, problem reports, issues tracking, action item tracking,
lessons learned (a.k.a.: Lessons Learned Database), change
control (a.k.a.: Change Management Database, and the production
of metrics.
(b) Document Deliverable Templates and examples which include: the
System Segment Specifications (SSS), Software Requirements
Specifications (SRS), Interface Requirements Specifications
(IRS), Software Design Document (SDD), Interface Design Document
(IDD), Software Test Plan (STP), Software Test Description (STD),
Software Test Report, Software Training Plan (TP), Implementation
Plan (IP), Conversion Management Plan (CMP), Data Base Design
Document (DBDD), Project Management Plan (PMP), Facilities
Management Document (FM), Financial Analysis Document, Risk
Assessment Report, Project Metrics, and Lessons Learned Document
(LLD).
(c) Methodologies: Project Life Cycle Methodology
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(d) Guidebooks including but not limited to: Software Process
Improvement Guidebook, Software Project Planning and Management
Guidebook, Peer Review Guidebook, Request for Proposal Guidebook,
and the Software Configuration Guidebook.
(e) Procedures/Practices including, but not limited to: Process
Improvement Process, Project Management Plan (PMP) Practices,
Project Prioritization Practice, Project Profiling Practice,
Project Request Practice, and Project Scheduling Practice.
(f) Processes related to Business Rules Extraction, SpecPac
Development, and Testing Processes as documented in the PMP.
(g) Policies: including, but not limited to: Software Requirements
Management Policy, Software Project Planning Policy, Software
Project Tracking and Oversight Policy, Software Subcontract
Management Policy, Software Quality Assurance Policy, Software
Configuration Management Policy, Organization Process Focus
Policy, Organization Process Definition Policy, Training Program
Policy, Integrated Software Management Policy, Software Product
Engineering Policy, Intergroup Coordination Policy, Peer Review
Policy, Issues Management Policy, Project Prioritization Policy,
Software Quality Management Policy, Defect Prevention Policy,
Technology Change Management Policy, and Process Change
Management Policy.
(h) Presentation briefings related to above stated databases,
documents, templates, Guidebooks, Methodologies,
Procedure/Practices, and Policies.
(i) All of Licensor's proprietary and confidential information
contained in the PMS and its components as set forth in (a)-(h)
above, including, without limitation (i) trade secrets, technical
information, know-how, ideas, designs, processes, procedures,
algorithms, discoveries, patents, patent applications, and
copyrights, and all improvements thereof, and (ii) all of
Licensor's intangible property rights relating to the operation
of the PMS or otherwise used or useable with respect to the PMS;
2. LICENSE GRANT. Subject to the terms and conditions of this Agreement, and
contingent upon the closing of the Asset Purchase Agreement conveying the PMS to
Licensor, Licensor grants to Licensee and its Affiliates, an exclusive, non-
transferable, perpetual and irrevocable (unless terminated under Section 8),
fully-paid and royalty-free license to use multiple copies of the PMS solely for
Licensee's internal business purposes and to make an unlimited number of
internal copies of the PMS for backup or archival purposes.
3. TRANSFERABILITY & MODIFICATIONS. Licensee acknowledges that the PMS and its
contents constitute valuable trade secrets of Licensor. Accordingly, Licensee
agrees not to sublicense, lease, rent, loan, disclose or otherwise transfer the
PMS or any of its contents to any third party (other than Licensee's Affiliates)
on any basis, or otherwise use or copy the PMS except as expressly allowed under
Section 2. Both parties are free to modify, alter, or improve the PMS at their
discretion. Ownership of such modifications, alterations or improvements shall
vest exclusively in the party that creates and/or funds such activity.
2.
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4. DELIVERY, INSTALLATION AND ACCEPTANCE. Licensee acknowledges that it is in
possession of the PMS and that it is deemed accepted as of the date of this
Agreement.
5. OBLIGATIONS NOT ASSUMED BY LICENSEE. Licensee shall not assume any
obligation or liability of Licensor of any kind, and Licensor shall pay, satisfy
and perform all of its obligations, whether fixed, contingent, known or unknown
and whether existing as of the date of this Agreement or arising thereafter,
which may affect in any way the PMS. Without limiting the generality of the
foregoing, under no circumstances shall Licensee be deemed to assume any
liability or obligation of Licensor arising out of or relating to (a) any actual
or alleged tortious conduct of Licensor or any of its employees or agents, (b)
any product liability claim, (c) any claim for infringement or breach of
warranty or contract by Licensor, (d) any claim predicated on strict liability
or any similar legal theory, (e) the violation of any law, ordinance or
regulation in effect prior to the date of this Agreement, (f) any business or
business activities of Licensor, (g) any liability of Licensor for any federal,
state or local taxes of any kind or character arising out of Licensor's
business, or (h) any liability of Licensor under or arising by reason of this
Agreement. Notwithstanding any other provision of this Agreement, the
obligations of Licensor pursuant to this Section shall survive beyond the date
of this Agreement.
6. DISCLAIMER OF WARRANTIES
LICENSOR MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, REGARDING THE
PMS, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE, AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS. LICENSEE
ACKNOWLEDGES THAT IT HAS RELIED ON NO WARRANTIES IN ENTERING INTO THIS AGREEMENT
AND THAT THIS LICENSE IS ACCEPTED "AS IS."
7. LIMITATION OF LIABILITY.
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT,
EXEMPLARY, SPECIAL OR INCIDENTAL DAMAGES, INCLUDING ANY LOST DATA AND LOST
PROFITS, ARISING FROM OR RELATING TO THIS AGREEMENT.
8. TERM AND TERMINATION
8.1 Term. The term of this Agreement will begin on the Effective Date and
will continue indefinitely unless terminated pursuant to Section 8.2.
8.2 Termination. Licensee may terminate this Agreement at any time, with
or without cause, upon written notice to Licensor. Licensor may terminate this
Agreement, effective immediately upon written notice to Licensee, if Licensee
breaches any provision of this Agreement and does not cure the breach within
fifteen (15) days after receiving written notice thereof from Licensor.
8.3 Effects of Termination. Upon termination or expiration of this
Agreement for any reason, all licensed rights granted in this Agreement will
immediately cease to exist, and Licensee must promptly discontinue all use of
the PMS, erase all copies of the PMS from Licensee's computers, and return to
Licensor or destroy all copies of the PMS on tangible media in Licensee's
possession or control and certify in writing to Licensor that it has fully
complied with these requirements.
8.4 Survival. Sections 1 ("Definitions"), 2 ("License Grant"), 3
("Transferability & Modifications"), 5 ("Obligations Not Assumed"), 6
("Disclaimer"), 7 ("Limitation of Liability"),
3.
<PAGE>
8.3 ("Effects of Termination"), and 9 ("General") will survive expiration or
termination of this Agreement for any reason.
9. GENERAL
9.1 Proprietary Rights. The PMS, and all worldwide Intellectual Property
Rights therein, are the exclusive property of Licensor. All rights in and to the
PMS not expressly granted to Licensee in this Agreement are reserved by Licensor
and its suppliers.
9.2 No Maintenance or Support. Licensor is not required to provide any
maintenance or support services with respect to the PMS under this Agreement.
9.3 Inspections. Licensee will permit Licensor or its representatives to
review Licensee's relevant records and inspect Licensee's facilities to ensure
compliance with this Agreement. Licensor will give Licensee at least ten (10)
days advance notice of any such inspection and will conduct the same during
normal business hours in a manner that does not unreasonably interfere with
Licensee's normal operations.
9.4 Assignments. Licensee may not assign or transfer, by operation of law
or otherwise, any of its rights under this Agreement (including its licenses
with respect to the PMS) to any third party other than Licensee's Affiliates
without Licensor's prior written consent. Any attempted assignment or transfer
in violation of the foregoing will be void.
9.5 Notices. All notices, consents and approvals under this Agreement
must be delivered in writing by courier, by electronic facsimile (fax), or by
certified or registered mail, (postage prepaid and return receipt requested) to
the other party at the address set forth beneath such party's signature, and
will be effective upon receipt or three (3) business days after being deposited
in the mail as required above, whichever occurs sooner. Either party may change
its address by giving notice of the new address to the other party.
9.6 Governing Law. This Agreement will be governed by the laws of the
State of California without regard to its conflicts of law principles.
9.7 Remedies. Except as provided in Section 7, the parties' rights and
remedies under this Agreement are cumulative. Licensee acknowledges that the
PMS contains valuable trade secrets and proprietary information of Licensor,
that any actual or threatened breach of Sections 2 or 3 will constitute
immediate, irreparable harm to Licensor for which monetary damages would be an
inadequate remedy, and that injunctive relief is an appropriate remedy for such
breach. If any legal action is brought to enforce this Agreement, the
prevailing party will be entitled to receive its attorneys' fees, court costs
and other collection expenses, in addition to any other relief it may receive.
9.8 Waivers. All waivers must be in writing. Any waiver or failure to
enforce any provision of this Agreement on one occasion will not be deemed a
waiver of any other provision or of such provision on any other occasion.
9.9 Severability. If any provision of this Agreement is unenforceable,
such provision will be changed and interpreted to accomplish the objectives of
such provision to the greatest extent possible under applicable law and the
remaining provisions will continue in full force and effect.
9.10 Confidentiality of Agreement. Neither party will disclose any terms
of this Agreement to anyone other than its Affiliates, attorneys, accountants
and other professional advisors except (a) as required by law or (b) pursuant to
a mutually agreeable press release or
4.
<PAGE>
(c) in connection with a contemplated transfer of such party's business and this
Agreement (provided that any third party to whom the terms of this Agreement are
to be disclosed signs a confidentiality agreement reasonably satisfactory to the
other party).
9.11 Construction. The headings of Sections of this Agreement are for
convenience and are not to be used in interpreting this Agreement. As used in
this Agreement, the word "including" means "including but not limited to".
9.12 Counterparts. This Agreement may be executed in counterparts, each
of which will be considered an original, but all of which together will
constitute the same instrument.
9.13 Entire Agreement. This Agreement constitutes the entire agreement
between the parties regarding the subject hereof and supersedes all prior or
contemporaneous agreements, understandings, and communication, whether written
or oral. This Agreement may be amended only by a written document signed by
both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
LICENSOR: LICENSEE:
By: /s/ William Barton By: /s/ George W. Vieth
--------------------------------- -----------------------------------
William Barton, President and CTO George W. Vieth, Sr. Vice President
Address for Notice: Address for Notice:
------------------ ------------------
Tier Technologies, Inc. Humana Inc.
1350 Treat Blvd., Suite 250 500 West Main St.
Walnut Creek, CA 94596 Louisville, KY 40202
Attn: Legal Department Attn: George W. Vieth
Fax: 925-946-0923 Fax: 502-580-3639
5.
<PAGE>
EXHIBIT 10.3
END USER LICENSE AGREEMENT
This license agreement (the "Agreement") is entered into as of May 19, 1999 (the
"Effective Date") between HUMANA INC., a Delaware corporation ("Licensor"), and
TIER TECHNOLOGIES, INC., a California corporation ("Licensee"), for the purpose
of granting Licensee a license to use certain software furnished by Licensor.
RECITALS:
WHEREAS, Licensor engaged Licensee on or about February 16, 1998, to
develop a proprietary software system known between the parties as the New
Billing System;
WHEREAS, Licensor now desires to license the New Billing System software to
Licensee for Licensee to use internally as well as exploit commercially;
NOW, THEREFORE, for and in consideration of the promises and the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows
AGREEMENT:
1. DEFINITION. As used in this Agreement:
"Affiliates" means, with respect to a party, any person or entity that controls,
is controlled by, or is under common control with such party, where "control"
means ownership of fifty percent (50%) or more of the outstanding voting
securities (but only as long as such person or entity meets these requirements.
"Health Care Business" means any health care, health insurance or managed care
(HMO and PPO) business, including but not limited to a physician or physician
groups, hospitals, and other health care providers, and health insurers,
arrangers or payors.
2. LICENSE GRANT.
2.1 Grant. Subject to the terms and conditions of this Agreement,
Licensor grants to Licensee and its Affiliates an exclusive, transferable,
perpetual and irrevocable (unless terminated under Section 8), license to use
the Licensed Software (as defined in Exhibit A) for Licensee's internal
developmental purposes and to exploit and market on a worldwide basis the
Licensed Software commercially without limitation, except in the Health Care
Business, in which case the grant of license is subject to the provisions of
Section 2.2. Further, Licensor hereby reserves for itself a non-exclusive,
perpetual and irrevocable license to use the Licensed Software in its business.
Licensee is further granted the right to make up to three copies of the Licensed
Software solely for backup or archival purposes.
2.2 Use in the Health Care Business. Further subject to the terms and
conditions of this Agreement, Licensor grants to Licensee and its Affiliates a
non-exclusive, perpetual and irrevocable (unless terminated under Section 8)
license to use the Licensed Software in the Health Care Business, provided that,
in the event Licensee desires to use the Licensed Software in the Health Care
Business, Licensor must first give its consent to such transaction in writing,
which consent may be granted or denied in its complete and absolute discretion.
Licensor, upon Licensee's request for consent to use the Licensed Software in
the Health Care Business, must respond within a reasonable time period, which in
no event may be longer than thirty (30) days, whether or not it consents to
Licensee's request. Should Licensee ever enter the Health Care Business, or
should Licensee ever be acquired by any person or entity in the Health Care
Business, this license may not and will not be used in any such Health Care
Business without
<PAGE>
Licensor's express consent, which consent may be granted or denied in its
complete and absolute discretion.
3. MODIFIABILITY AND DERIVATIVE WORKS. Licensor acknowledges that Licensee
may (a) modify, adapt, alter, translate, or create derivative works from the
Licensed Software; (b) merge the Licensed Software with other software; (c)
sublicense (through multiple tiers), lease, rent, loan, or otherwise transfer
the Licensed Software to any third party (subject in each case to the limitation
set forth in Section 2); or (d) otherwise use or copy the Licensed Software
except as expressly disallowed under Section 2.
4. DELIVERY, INSTALLATION AND ACCEPTANCE. Licensor will make available the
Licensed Software, in its current form as set forth on Exhibit A-1, to Licensee
immediately upon execution of this Agreement in accordance with Licensee's
previously given instructions. Licensee shall immediately commence transmission
of the Licensed Software upon execution of the Agreement and shall make multiple
attempts to achieve such transmission, if necessary. The Licensed Software will
be transmitted to Licensee in California electronically (and by other means if
necessary) in accordance with Licensee's reasonable instructions. Licensee will
be responsible for installing the Licensed Software on its computers as
permitted under this Agreement. The Licensed Software will be deemed accepted
after 7 days following the successful transmission of the Software (the
"Acceptance Period") unless Licensee rejects it earlier as nonconforming, upon
which Licensor shall have 10 days to deliver the Licensed Software in accordance
with this Agreement. Any delay by Licensee in commencing transmission of the
Licensed Software shall result in a shortening of the Acceptance Period by the
duration of such delay.
5. LICENSE FEES AND PAYMENT. Licensee will pay License Fees of $4,000,000.00
to Licensor by wire transfer upon acceptance of the Licensed Software.
6. DISCLAIMER OF WARRANTIES
LICENSOR MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, REGARDING THE
LICENSED SOFTWARE, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE, AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS. LICENSEE
ACKNOWLEDGES THAT IT HAS RELIED ON NO WARRANTIES IN ENTERING INTO THIS
AGREEMENT.
7. LIMITATION OF LIABILITY.
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT,
EXEMPLARY, SPECIAL OR INCIDENTAL DAMAGES, INCLUDING ANY LOST DATA AND LOST
PROFITS, ARISING FROM OR RELATING TO THIS AGREEMENT.
8. TERM AND TERMINATION
8.1 Term. The term of this Agreement will begin on the Effective Date and
will continue indefinitely unless terminated pursuant to Section 8.2.
8.2 Termination. Licensee may terminate this Agreement at any time, with
or without cause, upon written notice to Licensor. Licensor may terminate this
Agreement, effective immediately upon written notice to Licensee, if Licensee
breaches any provision of this Agreement and does not cure the breach within
fifteen (15) days after receiving written notice thereof from Licensor.
2.
<PAGE>
8.3 Effects of Termination. Upon termination or expiration of this
Agreement for any reason, all licensed rights granted in this Agreement will
immediately cease to exist, and Licensee must promptly discontinue all use of
the Licensed Software, erase all copies of the Licensed Software from Licensee's
computers, and return to Licensor or destroy all copies of the Licensed Software
on tangible media in Licensee's possession or control and certify in writing to
Licensor that it has fully complied with these requirements.
8.4 Survival. Sections 1 ("Definition"), 2 ("License Grant"), 3
("Modifiability and Derivative Works"), 6 ("Disclaimer"), 7 ("Limitation of
Liability"), 8.3 ("Effects of Termination"), and 9 ("General") will survive
expiration or termination of this Agreement for any reason.
9. GENERAL
9.1 Proprietary Rights. The Licensed Software, and all worldwide
intellectual property rights therein, are the exclusive property of Licensor.
All rights in and to the Licensed Software not expressly granted to Licensee in
this Agreement are reserved by Licensor and its suppliers.
9.2 No Maintenance or Support. Licensor is not required to provide any
maintenance or support services with respect to the Licensed Software under this
Agreement.
9.3 Updates or Enhancements. All changes, additions, modifications,
enhancements, or improvements that occur to the Licensed Software after the
Effective Date of this Agreement are expressly included within the definition of
Licensed Software and are subject to this Agreement and must be delivered to
Licensee by Licensor, at no additional charge, in accordance with Section 4, but
only to the extent that Licensee was employed by Licensor to make such changes,
additions, modifications, enhancements or improvements and Licensee in fact made
such changes, additions, modifications, enhancements or improvements. This
section shall not apply to changes, additions, modifications, enhancements, or
improvements to the Licensed Software that were made by Licensor internally or
by a contractor other than Licensee.
9.4 Inspections. Licensee will permit Licensor or its representatives to
review Licensee's relevant records and inspect Licensee's facilities to ensure
compliance with this Agreement. Licensor will give Licensee at least ten (10)
days advance notice of any such inspection and will conduct the same during
normal business hours in a manner that does not unreasonably interfere with
Licensee's normal operations.
9.5 Assignments. Licensee may not assign or transfer, by operation of law
or otherwise, any of its rights under this Agreement to any third party without
Licensor's prior written consent. Any attempted assignment or transfer in
violation of the foregoing will be void.
9.6 Notices. All notices, consents and approvals under this Agreement
must be delivered in writing by courier, by electronic facsimile (fax), or by
certified or registered mail, (postage prepaid and return receipt requested) to
the other party at the address set forth beneath such party's signature, and
will be effective upon receipt or three (3) business days after being deposited
in the mail as required above, whichever occurs sooner. Either party may change
its address by giving notice of the new address to the other party.
9.7 Governing Law. This Agreement will be governed by the laws of the
State of California without regard to its conflicts of law principles.
3.
<PAGE>
9.8 Remedies. Except as provided in Section 7, the parties' rights and
remedies under this Agreement are cumulative. Licensee acknowledges that the
Licensed Software contains valuable trade secrets and proprietary information of
Licensor, that any actual or threatened breach of Section 2 will constitute
immediate, irreparable harm to Licensor for which monetary damages would be an
inadequate remedy, and that injunctive relief is an appropriate remedy for such
breach. If any legal action is brought to enforce this Agreement, the
prevailing party will be entitled to receive its attorneys' fees, court costs
and other collection expenses, in addition to any other relief it may receive.
9.9 Waivers. All waivers must be in writing. Any waiver or failure to
enforce any provision of this Agreement on one occasion will not be deemed a
waiver of any other provision or of such provision on any other occasion.
9.10 Severability. If any provision of this Agreement is unenforceable,
such provision will be changed and interpreted to accomplish the objectives of
such provision to the greatest extent possible under applicable law and the
remaining provisions will continue in full force and effect.
9.11 Confidentiality of Agreement. Neither party will disclose any terms
of this Agreement to anyone other than its Affiliates, attorneys, accountants
and other professional advisors except (a) as required by law or (b) pursuant to
a mutually agreeable press release or sales materials or Tier shall be entitled
to make oral and written communications consistent with the approved press
release and sales materials without further approval from licensor (c) in
connection with a contemplated transfer of such party's business and this
Agreement (provided that any third party to whom the terms of this Agreement are
to be disclosed signs a confidentiality agreement reasonably satisfactory to the
other party).
9.12 Construction. The headings of Sections of this Agreement are for
convenience and are not to be used in interpreting this Agreement. As used in
this Agreement, the word "including" means "including but not limited to".
9.13 Counterparts. This Agreement may be executed in counterparts, each of
which will be considered an original, but all of which together will constitute
the same instrument.
9.14 Entire Agreement. This Agreement constitutes the entire agreement
between the parties regarding the subject hereof and supersedes all prior or
contemporaneous agreements, understandings, and communication, whether written
or oral. This Agreement may be amended only by a written document signed by both
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
LICENSOR: LICENSEE:
By: /s/ Bruce J. Goodman By: /s/ William Barton
------------------------------------- --------------------------------
Bruce J. Goodman, Sr. Vice President William Barton, President
and CTO
Address for Notice: Address for Notice:
- ------------------ ------------------
Humana Inc. Tier Technologies, Inc.
500 West Main St. 1350 Treat Blvd., Suite 250
Louisville, KY 40202 Walnut Creek, CA 94596
Attn: Bruce J. Goodman Attn: Legal Department
Fax: 502-580-3555 Fax: 925-946-0923
4.
<PAGE>
EXHIBIT A
---------
"Licensed Software" is defined to include all New Billing System (NBS) computer
programs, file definitions, test scenarios documentation (not raw test data),
and system documentation developed by Tier staff and their employed contract
staff under the Master Agreement for Consulting Services as included in the most
current version of the NBS Project Management Plan (PMP), specifically including
as of the execution of this Agreement the Project Documents, the appropriate NBS
Cool:Gen Model Objects and Procedures, and the NBS Cobol and Focus Objects, all
as itemized on Exhibit A-1. To the extent following the execution of this
Agreement it is discovered that Exhibit A-1 does not include all items
comprising the Licensed Software as of the date of this Agreement, regardless of
the cause of such omission, Tier upon reasonable written request to Humana shall
be entitled to receive such omitted components from Humana at no additional
charge. Such omissions will not delay Tier's obligation to pay upon
confirmation of receipt of the items listed on Exhibit A-1. This Agreement does
not entitle Tier to any ownership rights in any CI Parameter related software
products, CI file conversion programs, or any raw test data built or used during
the development and or testing of the NBS. Tier understands that most of the
test data used during the development of the NBS is confidential Humana-owned
proprietary client and member information that is not transferable to Tier under
this Agreement.
In order to facilitate Tier's future use of NBS it is understood that Tier will
need certain file definitions for Humana's Customer Interface (CI) Database.
Humana agrees to provide appropriate file documentation (e.g., DB2 table
----
definitions, table relationship diagrams, etc.) of its CI database structures as
part of this license, which are included in Exhibit A-1. Humana and Tier agree
and understand that no CI system program software, job documentation, system
documentation, or Humana proprietary CI file data have been provided for under
the terms of this Agreement.
Tier understands that the NBS as licensed herein is not an executable system due
to its reliance on other Humana systems which Humana has not agreed to license
to Tier and that the NBS is not a completed system as of the date of this
Agreement and will be delivered "as is" whether completed or not. The
components of the Licensed Software that exist as of the date of this Agreement
and that Licensor will transmit upon execution of this Agreement are the
Increment 1 Development NBS COOL:Gen Model and those items associated with such
model as set forth in Exhibit A-1. This license is intended to provide certain
software components (as described above) that will facilitate Tier's building a
stand-alone executable system.
5.
