LETTER AGREEMENT
(Version R5]
This binding letter agreement ("Agreement") is made and entered into on this
1st day of June, 2000 between PenOp, Limited, also known as PenOp, Ltd.,
(hereinafter "PenOp"), a company incorporated in the United Kingdom and having
an address of Vallis House, 57 Vallis Road, Frome, Xxxxxxxx XX00 0XX, Xxxxxx
Xxxxxxx, and XML-Global Technologies, Inc. (hereinafter "XML Global"), a
Colorado corporation having an address of 0000 Xxxx Xxxxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000 XXX. This Agreement sets forth the terms to be incorporated
into a master agreement ("Master Agreement"), covering all other terms and
conditions that the parties agree to, under which PenOp discloses and licenses
to XML Global existing and future versions of PenOp's Ceremony e-signature
technology, including all software, technical documentation, copyrights,
patent rights and know-how pertaining to Ceremony (collectively, the
"Technology"). PenOp's Ceremony technology is briefly summarized in the
documents and Web pages referred to on Schedule "A" which is attached and
incorporated hereto.
IN CONSIDERATION of the mutual promises and covenants set forth below, and
other good and valuable consideration, the sufficiency of which is hereby
acknowledged by each party, the parties agree as follows:
1. PenOp hereby grants to XML Global and it's subsidiaries a worldwide,
nonexclusive, indivisible (other than as set out in this paragraph 1),
perpetual (subject only to the right to termination set out in paragraph 3.1)
and nontransferable (other than as set out in paragraph 11) license to (a)
develop, test and demonstrate internally, and to have developed, tested and
demonstrated for XML Global, XML Global specific runtime versions of the
Ceremony technology using any of the Technology ("Runtime Versions") and to
integrate or incorporate, and have integrated or incorporated, the Runtime
Versions into XML Global's software products, and to (b) market, distribute,
use, and support the Runtime Versions and sublicense the marketing,
distribution, use and support of the Runtime Versions, but only as integrated
or incorporated into XML Global's software products. XML Global will provide
PenOp with a list of such software products into which the Runtime Versions
may be incorporated as soon as is reasonably possible. This list may be
extended from time to time by XML Global as XML Global develops or acquires
new products. XML Global software products which integrate the Technology may
be embedded or integrated into third party software products or systems but
will remain subject to the royalty structure of paragraph 2 and the other
terms and conditions of this Agreement or the Master Agreement, as the case
may be. Within ten (10) business days of the date of this Agreement, PenOp
will provide and make available to XML Global copies of the specifications,
technical documentation, software (including object codes and the software
development kit(s) for PenOp's digital signature software), data, and drawings
of PenOp and its affiliates and subsidiaries relating to the Technology, to
enable XML Global to use the rights granted above, and PenOp will provide XML
Global with updates to the foregoing in a timely manner
should and as such updates arise.
No other rights or licenses are required from PenOp or its affiliates or
subsidiaries, including, without limitation, from PenOp's wholly owned
subsidiaries PenOp, Inc., a Delaware corporation also dba SignatureOne, in
connection with Ceremony or PenOp's digital signature software, in order for
XML Global to enjoy, use, maintain and commercialize the rights granted in
this paragraph 1.
2. PenOp and XML Global agree to the following royalty payment structure to
be paid on a quarterly basis:
a) XML Global will pay a royalty of 5% of the gross sale price (less
taxes and refunds) paid by end-users for the XML Global products that
include the Runtime Versions of Ceremony technology; and
b) XML Global will pay 15% of any transaction payments (less taxes and
refunds) made to XML Global by end-users in connection with any use of
the Runtime Versions of Ceremony.
3. Within four (4) business days of execution of this Agreement, XML Global
will pay PenOp $250,000 via wire transfer to the account of PenOp's subsidiary
PenOp, Inc. set out below. Of that amount, $50,000 shall constitute an advance
against royalties that arise under paragraph 2. XML Global will wire transfer
the $250,000 amount to the following account:
Account name: PenOp, Inc.
Bank name and address: Chase Manhattan Bank
000 Xxxxxxxx
Xxx Xxxx, XX 00000
XXX
ABA #: 000000000
Account #: 000-0000000-00
3.1 The license and rights granted to XML Global in paragraph 1 may be
terminated by PenOp only in the event XML Global is in breach of its royalty
payment obligations in paragraph 2 and fails to cure the breach within thirty
(30) days of receiving written notice to cure the breach. Upon termination of
the license and rights in paragraph 1 by PenOp or XML Global, all outstanding
royalties shall be immediately due and payable.
4. Upon 10 business day's notice by XML Global to PenOp in writing, PenOp
will, at no additional charge, provide XML Global a two-day training session
to educate XML Global personnel, consultants and business partners about the
Technology. XML Global will reimburse PenOp for reasonable travel and living
expenses incurred by PenOp personnel or consultants to attend the session.
Upon any further such 10 business days notice, PenOp will provide additional
training sessions to XML Global at the preferred rate (including reasonable
travel and living expenses) typically charged by PenOp to strategic customers
or partners.
5. The parties will issue a joint press release, to be approved by both
parties in advance, discussing the nature of the Agreement. XML Global will
accommodate up to 3 reference visits to its facilities per quarter and as many
as 20 phone references per quarter. XML Global will cooperate with PenOp in
PenOp's writing and publishing of a case study about XML Global's use of the
Technology, and XML Global consents to PenOp identifying XML Global as a
customer on PenOp's web site and in other marketing materials and
presentations, whether written or not written.
6. The Mutual Non-Disclosure Agreement executed between the parties dated
February 16, 2000 remains in place and shall apply to any XML Global
personnel, consultants or business partners participating in the training
sessions contemplated in paragraph 4 above and the Technology disclosed
hereunder, and to any PenOp personnel or consultants who receive or have
access to any XML Global software, developments or know-how. The business
purpose contemplated by said Non-Disclosure Agreement is expanded to include
the purpose of this Agreement. In the event of any inconsistency or conflict
between this Agreement and said Non-Disclosure Agreement, the terms of this
Agreement are paramount and shall control and prevail.
7. The parties will cooperate in good faith to determine and provide for
appropriate copyright, trademark and patent markings, and certifications on
the Runtime Versions. XML Global will submit the Runtime Versions to PenOp for
review under PenOp's "Ready to Sign" quality control and certification process
(the "Certification Process"). Such review is to be conducted promptly and
certification that the Runtime Versions comply with the Certification Process
will not be unreasonably withheld. Upon a particular Runtime Version complying
with the Certification Process, XML Global and its subsidiaries will have the
right to use the "CEREMONY", "PenOp" and "SignatureOne" trademarks and such
other trademarks owned by or licensed to PenOp as the parties agree to in
writing (collectively, the "Marks") in association with the use and sale of
XML Global software products which incorporate the particular Runtime Version.
PenOp will exercise control over the quality and character of the Marks. XML
Global agrees to use the Marks in association with the use and sale of XML
Global software products which incorporate such particular Runtime Versions
and in accordance with any reasonable standards furnished by PenOp to XML
Global. PenOp represents and warrants to XML Global that PenOp either owns the
Marks or has the right to license use of the Marks to XML Global and its
subsidiaries, and that the Marks may be used by XML Global in accordance with
the terms of this paragraph 7. Failure to comply with this paragraph 7 will in
no way result in the termination of the rights granted by PenOp under
paragraph 1.
8. PenOp will make reasonable efforts to ensure that PenOp digital signature
technology is able to properly interface with Ceremony via an Internet network
connection in an automated fashion with minimum end user intervention.
Specifically, digital signature events recorded by PenOp technology should be
able to upload this information using the XML schema format supported by
Ceremony. Such schema format will allow Ceremony to accurately store and
index such events. XML Global will jointly develop such XML schema formats
with PenOp and both parties agree to each support the co-development of these
interchange and connectivity features. Each party will have 60 days in which
to conform and support new features introduced by the other party that require
software compatibly modifications.
9. XML Global's rights in the Technology are limited to those expressly
granted in this Agreement. PenOp reserves all rights and licenses in and to
the Technology not expressly granted to XML Global under this Agreement.
9.1 XML Global will notify PenOp of any new patent application, before
it is first filed in a patent office, that claims improvements made by XML
Global specifically to the Ceremony e-signature technology provided by PenOp,
excluding any claims to improvements to any of XML Global's software products
(collectively, the "Improvement Patents"). XML Global agrees to grant PenOp a
co-ownership interest in the Improvement Patents on the terms of this
paragraph 9.1.
PenOp will fully maintain the confidentiality of those Improvement Patents
which have not become the subject of a published patent or an officially
published patent application.
PenOp shall pay XML Global half of all costs that XML Global incurs from time
to time with respect to drafting, filing, prosecuting, issuing to grant, and
maintaining such Improvement Patents.
XML Global shall have the exclusive right, but not the obligation, to control
all prosecution of the Improvement Patents. PenOp shall, at its own expense,
provide XML Global with all reasonable cooperation in obtaining and securing
such Improvement Patents.
XML Global shall have the exclusive right, but not the obligation, to take
such action (including without limitation the institution and prosecution of
litigation and/or a negotiated settlement) as XML Global in its sole
discretion deems necessary against any alleged or actual infringement of the
Improvement Patents. PenOp will, at XML Global's expense, provide XML Global
with all reasonable cooperation in connection with the prosecution, resolution
or settlement of such alleged or actual infringement.
Other than for the terms set out in this paragraph 9.1, once XML Global grants
PenOp a co-ownership interest in the Improvement Patents, PenOp shall have the
right to use and license its rights in the Improvement Patents, provided that
PenOp does not breach its payment obligations in this paragraph 9.1 to XML
Global. PenOp shall have no obligation to account to XML Global or share in
any profits with XML Global in connection with any exploitation of the
Improvement Patents, provided that PenOp does not breach the terms of this
paragraph 9.1, other than to pay XML Global royalties as set out below.
PenOp and XML Global agree to the following royalty payment structure to be
paid on a quarterly basis:
a) PenOp will pay XML Global a royalty of 5% of the gross
sale price (less taxes and refunds) paid by end-users for
PenOp products that make use of any inventions described
and claimed in any Improvement Patents; and
b) PenOp will pay XML Global a royalty of 15% of any
transaction payments (less taxes and refunds) made to
PenOp by end-users in connection with any use of any
inventions described and claimed in any Improvement
Patents.
XML Global's right to use and license the Improvement Patents will remain
unaffected and XML Global shall have no obligation to account to PenOp or
share in any profits with PenOp in connection with any exploitation of the
Improvement Patents, subject only to the royalty structure in paragraph 2.
9.2 Nothing in this Agreement is meant to provide PenOp with any right,
title, license or interest in or to any of XML Global's existing or future
software products, source codes or software tools. Except for the Technology
and license granted in paragraph 1, nothing in this Agreement is meant to
provide XML Global with any right, title, license or interest in or to any of
PenOp's existing or future software products, source codes or software tools.
10. XML Global will maintain adequate records to allow an auditor to confirm
the proper calculation and payment of royalties to PenOp. The parties will
agree and set forth in The Master Agreement as to the specific policies for
the maintenance of records by XML Global and PenOp's periodic right to review
those records. PenOp will maintain adequate records to allow an auditor to
confirm the proper calculation and payment of royalties to XML Global for the
purposes of paragraph 9.1. The parties will agree and set forth in The Master
Agreement as to the specific policies for the maintenance of records by PenOp
and XML Global's periodic right to review those records.
11. This Agreement will bind and inure to the benefit of each party's
permitted successors and assigns. Except as expressly provided in this
Agreement, XML Global and its subsidiaries may not assign or transfer any of
its rights or obligations hereunder either in whole or in part, without the
prior written consent of PenOp, which consent shall not be unreasonably
withheld. Any attempt to assign this Agreement without such consent will be
null and void. Except as expressly provided in this Agreement, PenOp may not
assign or transfer any of its rights or obligations hereunder either in whole
or in part, without the prior written consent of XML Global, which consent
shall not be unreasonably withheld. Any attempt to assign this Agreement
without such consent will be null and void. Notwithstanding the foregoing,
assignment of this Agreement by either party is allowed without consent in the
case of any merger, acquisition, restructuring or sale by either party of all
or substantially all of its assets.
12. This Agreement will be governed by and construed in accordance with the
laws of the State of New York except that body of law concerning conflicts of
law.
13. The parties agree to complete the Master Agreement as soon as reasonably
possible. The Master Agreement shall contain standard and customary provisions
for license agreements of this type, including; without limitation, mutual
representations and warranties, indemnification provisions, ownership
provisions, insurance provisions and limitations on liability. This Agreement
shall terminate, and all rights granted to XML Global hereunder shall expire
on the effective date of the Master Agreement.
14. In the event of any termination of this Agreement for any reason,
paragraphs 1, 2, 3.1, 6, 9.1, 9.2 and 14 together with all provisions herein
necessary for the interpretation and enforcement of this Agreement shall
survive such termination. The parties agree that this paragraph 14 will be
superseded by the terms of the Master Agreement.
15. XML Global represents, warrants and covenants that it has full corporate
power, authority and legal right to enter into this Agreement and that this
Agreement has been duly executed and delivered by XML Global to PenOp and is a
legal, valid and binding obligation of XML Global, enforceable against
XMLGlobal in accordance with its terms.
16. PenOp represents, warrants and covenants that it has full corporate power,
authority and legal right to enter into this Agreement and that this Agreement
has been duly executed and delivered by PenOp to XML Global and is a legal,
valid and binding obligation of PenOp, enforceable against PenOp in accordance
with its terms.
17. The parties agree that this Agreement may be entered into by a party by
means of facsimile transmission and, in such an event, the same shall
constitute a legal and binding obligation in the same manner as if an
originally executed version hereof had been delivered by such party to the
other party. Such a facsimile transmission may be sent by one party to the
other party at the applicable receiving fax number set out in paragraph 19
below. The parties agree to nevertheless, at XML Global's request, to deliver
by courier or mail an executed hardcopy of this Agreement.
18. The parties may sign this Agreement in any number of counterparts and may
deliver this Agreement by facsimile, all of which, when taken together, will
be deemed to be one and the same document.
19. Any notice required or permitted to be given under this Agreement shall be
made in writing and shall be deemed to have been given if it is in writing and
is delivered in person, sent by courier, registered mailed or transmitted by
confirmed facsimile, addressed to the party at its address or facsimile number
set forth below, or at such other address or facsimile number as such party
may subsequently furnish to the other party by notice hereunder. Notices will
be deemed effective on the date of delivery in the case of personal delivery
and courier, on the date of transmission in the case of facsimile that is
electronically confirmed, or on the fifth day after it was mailed in the case
of registered mail.
To PenOp: PenOp, Limited
1212 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, XX 00000-0000
XXX
Fax: (000) 000-0000
To XML Global on or before June 14, 2000:
XML-Global Technologies, Inc.
0000 Xxxxx Xx.
Xxxxxxxxx, X.X. X0X 0X0
Xxxxxx
Fax: (000) 000-0000
To XML Global after June 14, 2000:
XML-Global Technologies, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 0
Xxxxxxxxx, X.X. X0X 0X0
Xxxxxx
Fax: (000) 000-0000
20. This Agreement sets forth the entire agreement and understanding between
the parties relating to the subject matter contained and neither party shall
be bound by any definition, condition, warranty or representation other than
as expressly stated in this agreement or as subsequently set forth in writing
and executed by a duly authorized officer of the party to be bound thereby.
IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed.
PenOp, Limited
(also known as PenOp, Ltd.)
By:_______________________
Name: Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Chief Executive Officer
-------------------------
XML-Global Technologies, Inc.
By: ________________________
Name:_____________________
Title:______________________
Date:______________________
SCHEDULE "A"
CEREMONY TECHNOLOGY
PenOp's Ceremony Technology is further set out and described in the following:
1. The following PenOp documentation provided to XML Global:
* The PenOp Ceremony Project Plan (Version 0.4 Draft dated 2000-01-
12);
* The Ceremony Product Plan (Draft 0.4 XML/XHTML dated January12,
2000); and
* The FUNCTIONAL OVERVIEW document for the Ceremony Application
Component Suite,
which are incorporated herein by reference.
2. The existing web pages at the following URLs for Ceremony which are
incorporated into and form part of this Schedule "A":
xxxx://xxx.xxxxx.xxx/xxxxx/xxxxx.xxx/xxxxxxxxx/xxxxx_xxxxxxxx.xxxx
xxxx://xxx.xxxxx.xxx/xxxxx/xxxxx.xxx/xxxxxxxxx/Xxxxx_000000.xxxx
xxxx://xxx.xxxxx.xxx/xxxxx/xxxxx.xxx/xxxxxxxxx/xxx_xxxxx_xxxxx.xxxx
