OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Agreement"), is made as of the 6th day of
April, 1998, by and between XXXXXXXX, INC., a Minnesota corporation whose
address is 00000 Xxxx Xxxxx, Xxxxxxxxxx, XX 00000 ("Xxxxxxxx") and EARTHWATCH
COMMUNICATIONS, INC., a Minnesota corporation whose address is Woodland Office
Building, 00000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000
("EarthWatch").
WHEREAS, EarthWatch has developed and is the owner of certain software
which and Xxxxxxxx desires to obtain the option to license such software from
EarthWatch, under the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Option to Acquire License. EarthWatch hereby grants to Xxxxxxxx the
exclusive right and option ("Option"), to be exercised on or before the end of
the Option Term (as set forth in Section 2 hereof), to acquire an exclusive,
twenty (20) year, royalty-free license under the Licensed Rights (as hereinafter
defined) to make, have made, use, market, license, sublicense, distribute,
reproduce, copy, sell and incorporate into derivative works the Licensed
Products (as defined hereinafter), the territory of such license to be the
United States and Canada. As used herein, the term "Licensed Rights" means:
(1) U.S. Patent No. 5,379,215, "Method for Creating a 3D Image of
Terrain and Associated Weather," any patent resulting from a
continuation application, continuation-in-part application,
divisional application, re-examination application, re-issue
application or foreign application related to the subject matter
of U.S. Patent No. 5,379,215, "Method for Creating a 3D Image of
Terrain and Associated Weather;"
(2) all other patents covering the manufacture, use or sale of the
Licensed Products;
(3) all copyrights related to the Licensed Products;
(4) all mask work registrations related to the Licensed Products;
(5) all trade secrets, know-how and show-how related to the Licensed
products;
(6) all shop rights related to the Licensed Products; and
(7) any and all other rights now owned or hereafter acquired by
EarthWatch related to the Licensed Products.
As used herein, the term "Licensed Products" means:
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(1) EarthWatch's Reality 3d Realtime Software (including, without
limitation, Reality 3D textured skylines and the product referred
to internally by EarthWatch as "virtual set");
(2) EarthWatch's SchoolWatch Software (or all work-in-progress thereon
to the extent incomplete);
(3) EarthWatch's StormWatch Software (provided that the license to
this software product, only, shall be non-exclusive);
(4) EarthWatch's Xxxxxxxxx Software;
(5) all enhancements, other software, modules and components used to
produce real time three-dimensional and fly-through effects used
in television broadcast, including those necessary to create a
fully functional on-air news and weather graphics system
(excluding EarthVision, also known as WorldScape);
(6) all manuals or other documentation pertaining to any of the
foregoing; and
(7) all derivative works or other products developed by or for
Xxxxxxxx which relate in any way to any of the foregoing.
EarthWatch hereby acknowledges the receipt of the sum of One Million
Five Hundred Thousand and no/100 Dollars ($1,500,000) in consideration for the
option granted herein and for a current license under the Licensed Rights of the
Licensed Products throughout the world except for the United States and Canada
pursuant to a separate agreement. The parties have agreed that Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00) of the foregoing payment has been
escrowed pursuant to a escrow agreement of even date herewith.
2. Option Term. The term of the Option (the "Option Term") shall
commence as of the date hereof and shall terminate at midnight on June 20, 1998.
3. Exercise of Option. The Option shall be deemed fully exercised if
written notice of election to exercise is given by Xxxxxxxx to EarthWatch and
the License Fee (as defined hereinafter) is paid at any time prior to expiration
of the Option Term. Notice shall be given as provided in Section 8 of this
Agreement. The date on which Xxxxxxxx exercises the Option shall be referred to
as the "Exercise Date". If Xxxxxxxx exercises the Option, EarthWatch and
Xxxxxxxx agree to enter into the License Agreement (as defined hereinafter)
according to the terms and conditions hereafter described.
4. One-Time License Fee. If the Option is exercised, Xxxxxxxx shall pay
to EarthWatch as a one-time license fee the sum of One Million Five Hundred
Thousand and No/100 Dollars ($1,500,000.00) (the "License Fee").
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5. License Agreement. Upon notice from Xxxxxxxx that it intends to
exercise the Option, the parties shall schedule a closing, to occur prior to
expiration of the Option Term, at which time Xxxxxxxx shall pay the License Fee
and EarthWatch and Xxxxxxxx shall enter into a license agreement in the form
attached hereto as Exhibit A, provided only that the "Territory" under such
license agreement shall be the United States and Canada (the "License
Agreement").
6. EarthWatch's Representations and Warranties. EarthWatch makes the
following representations and warranties to Xxxxxxxx that, as of the date
hereof:
(a) The individuals executing this Agreement on behalf of EarthWatch
have the requisite authority to execute this Agreement and such other documents
as are contemplated or to be delivered by EarthWatch herein, and to bind
EarthWatch thereto; and EarthWatch has the full and complete authority to
perform its obligations hereunder and under the License Agreement, when
executed;
(b) EarthWatch is the sole and exclusive owner, free from any liens,
security interests or other encumbrances or claims of third parties, of the
Licensed Products, including all copyright and other proprietary rights therein,
and of the ideas, procedures, processes, systems, methods of operation and
concepts which are embodied therein. EarthWatch has been granted such rights
under U.S. Patent No. 5,379,215, "Method for Creating a 3D Image of Terrain and
Associated Weather," and the license of the Licensed Products, the option to
acquire which is granted herein or the use of the Licensed Products for the
purposes permitted under such license, if acquired, will not constitute an
infringement of any third party's intellectual property rights or constitute a
breach of any agreement between EarthWatch and any third party, including,
without limitation, that certain Reseller License Agreement by and between
EarthWatch and WSI Corporation, as amended, that certain Software License
Agreement by and between EarthWatch and Weather Central, Inc. and that certain
Exclusive Distributor Agreement for EarthWatch Products in the Government Market
by and between EarthWatch and Sterling Software (U.S.), Inc.;
(c) The Licensed Products, and all portions thereof, are free from
material defects in material and workmanship and will, without modification or
supplementation, permit the user thereof to create real-time 3D images of
terrain and associated weather from data supplied by or to the user, provided
that Xxxxxxxx acknowledges that the current version of the Licensed Products
will not permit the user thereof to create real-time 3D images of terrain and
associated weather from data supplied by or to the user using Xxxxxxxx data and
that Xxxxxxxx and EarthWatch are in the process, pursuant to a Consulting
Agreement, of creating the data interface to permit such functionality;
(d) There are no licenses, contracts, purchase agreements, options or
other agreements relating to the Licensed Property other than as listed on the
attached Exhibit B;
(e) EarthWatch has entered into no agreements which would conflict
with, prohibit or limit the license to be granted upon exercise of the Option;
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(f) EarthWatch has provided notice to WSI Corporation of the
non-renewal of that certain Reseller License Agreement by and between EarthWatch
and WSI Corporation dated as of June 7, 1994, as amended, and accordingly after
June 7, 1998 WSI Corporation will have no further rights under such agreement;
and
(g) EarthWatch is not in default in the performance of any of
EarthWatch's obligations to any third parties, including under any easement
agreement, covenant, condition, restriction or other instrument relating to the
Licensed Products.
7. Activities Prior to Expiration of Option Term. From and after the
date hereof until the exercise of the Option or the expiration of the Option
Term, EarthWatch shall not enter into any agreement, amend or extend any
agreement, or take or fail to take any other action which would impair, limit or
restrict the rights to be granted to Xxxxxxxx under the License Agreement or
prohibit EarthWatch from fully and timely performing its obligations hereunder.
8. Notices. All notices provided for in this Agreement shall be in
writing. The notice shall be effective when personally delivered at the address
set forth in the first paragraph hereof. If a party delivers a notice provided
for in this Agreement in a different manner than described in the preceding
sentence, notice shall be effective as of the date the other party actually
receives the notice.
9. Governing Law. This Agreement has been made under the laws of the
State of Minnesota and such laws shall control its interpretation.
10. Assignment. Neither party may assign its interest under this
Agreement without the prior written consent of the other, provided, however,
that Xxxxxxxx may assign its interest to an affiliate of Xxxxxxxx or a
corporation, partnership or other entity which acquires all or substantially all
of the assets of Xxxxxxxx. The parties hereto acknowledge and agree that the
benefits, but not the burdens, of the interests of Xxxxxxxx in this Agreement
have been assigned to DTN Market Communications Group, Inc. ("DTN") pursuant to
that certain Agreement Regarding Purchase of Contract and Contract Rights
("Assignment") dated March 30, 1998, among Xxxxxxxx, DTN and Data Transmission
Network Corporation, subject to such beneficial interests and rights reverting
back to Xxxxxxxx as provided in the Assignment; and that DTN shall have no
liabilities or obligations under this Agreement except the obligation to
Xxxxxxxx to pay the EarthWatch Payments as defined in and provided for in the
Assignment. While this Assignment remains in effect, EarthWatch shall send
copies of all notices given to Xxxxxxxx hereunder to Data Transmission Network
Corporation, 0000 Xxxx Xxxxx Xxxx, Xxxxx 000, Xxxxx, XX 00000, Attention Xxxx X.
Xxxxx, President.
11. Counterparts. This Agreement and any amendments to this Agreement
may be executed in counterparts, each of which shall be fully effective and all
of which together shall constitute one and the same instrument.
12. No Joint Venture, Partnership. EarthWatch and Xxxxxxxx, by entering
into this Agreement and consummating the transactions contemplated hereby, shall
not be considered joint venturers or partners.
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13. Severability. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
14. Business Days. In the event that any deadline or performance date
set forth in this Agreement falls on a Saturday, Sunday or date that Norwest
Bank Minnesota is closed for a banking holiday, such deadline or performance
date shall be deemed to be postponed to the next business day thereafter.
15. Setoff. The parties agree that, if and to the extent that claims of
third parties against EarthWatch or the Licensed Products jeopardize the ability
of EarthWatch to perform or prevent EarthWatch from performing its obligations
under the License Agreement to be entered into pursuant to this Option
Agreement, Xxxxxxxx may (after exhausting the amounts placed in escrow for such
purpose pursuant to an escrow agreement by and between EarthWatch and Xxxxxxxx
of even date herewith) pay and settle such claims and setoff any such amounts so
paid against the amounts payable to EarthWatch under paragraph 4 hereof.
EXECUTED by the parties hereto effective the day and year first above
written.
XXXXXXXX, INC.
By:/s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx, Chief Operating Officer
EARTHWATCH COMMUNICATIONS, INC.
By:/s/ Xxxxx Xxxxxxxx
---------------------------------
Xxxxx Xxxxxxxx, President
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