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EXHIBIT 10.6
LICENSE & DEVELOPMENT AGREEMENT
THIS LICENSE & DEVELOPMENT AGREEMENT (the "Agreement") is entered into
effective as of the 28th day of March, 2001 (the "Effective Date") by and
between xxxxxx.xxx, Inc., a Texas corporation, ("Licensee") with principal
offices at 0000 X. Xxxxxxxx Xx., Xxxxxx, Xxxxx 00000 and MAX Internet
Communications, Inc., a Nevada corporation ("MAX"), with principal offices at
0000 Xxxxxxx Xxxx, Xxxxxx Xxxxx Xxxx, Xxxxxx, Xxxxx 00000. This Agreement
formalizes the terms and conditions in the Letter of Intent, executed February
1, 2001 and last amended March 20th, 2001 entered into by MAXIC and Licensee
(the "LOI").
RECITALS
WHEREAS, MAX is in the business of developing, licensing and selling
its proprietary Internet communications technology that specializes in media
processing via a computer add-on card and software marketed as the i.c. Live
card (the "x.x.Xxxx Technology"as defined in Exhibit "O"), and any other product
or device using the x.x.Xxxx Technology, and Licensee is in the business of
video production, encoding, distribution and hosting of Internet deliverable
content. Through this Agreement, Licensee seeks MAX as a development partner who
will i) provide development of a New Software Components (the "New Software
Components") formulated solely for use in Licensee's existing services and as
further described in Exhibit "B" (the "Developed Technology") that will be owned
by Licensee and ii) who will grant Licensee certain exclusive rights, including
certain non-competition covenants, to MAX's technology that will allow Licensee
to market, sell and use the Developed Technology in the Industry (as defined in
Exhibit "A").
WHEREAS, Licensee desires to license from MAX components of the
x.x.Xxxx Technology necessary to develop with MAX the Developed Technology and
MAX desires to license to Licensee such components.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree to the following terms and conditions, which set forth
the rights, duties, and obligations of the parties.
1. LICENSE GRANTS, OWNERSHIP RIGHTS AND INDUSTRY EXCLUSIVITY.
1.1 Nonexclusive License. Subject to the terms and conditions of this
Agreement, MAX grants to Licensee an irrevocable except as provided herein,
non-exclusive, worldwide, royalty-free transferable, license to use, distribute
and sublicense components of the x.x.Xxxx Technology as necessary to
commercially exploit the Developed Technology.
1.2 Ownership. Licensee shall own all right, title and interest in and
to the Developed Technology, including any and all intellectual property rights
and Derivative Works thereto. For the purposes of this Agreement, "Derivative
Work" shall mean a work that is based
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upon one or more pre-existing works, such as a revision, modification,
translation, abridgement, condensation, expansion, or any other form in which
such pre-existing works may be recast, transformed, or adapted, and that, if
prepared without authorization of the owner of the copyright in such
pre-existing works, would constitute copyright infringement. For purposes
hereof, a Derivative Work shall also include a compilation that incorporates
such a pre-existing work.
1.3 Subsequent Assignment. MAX agrees to assign and upon creation
thereof agrees to automatically assign, without further consideration, any and
all of its rights and interests, and those of its employees, in any and all of
the intellectual property rights in and to the Developed Technology and any and
all Derivative Works thereto, including without limitation the conception,
planning, development, creation and writing of the Developed Technology and
materials and information directly related to the Developed Technology and any
and all enhancements of performance and functionality to the Developed
Technology (collectively "Licensee's Technology Rights") but not including the
x.x.Xxxx Technology and/or any pre-existing intellectual property rights of MAX
and any works other than the Licensee's Technology Rights derived therefrom
subsequent to the Effective Date.
1.4 Patent. Licensee shall have the right to seek patent, copyright,
and trademark protection and other intellectual property rights protection in
and to the Developed Technology, but not as to the i.c.LiveTechnology and/or any
pre-existing intellectual property rights of MAX. At any time during or after
the term of this Agreement, MAX shall assist Licensee, at Licensee's expense, in
establishing, perfecting and enforcing its intellectual property rights,
including vesting all right, title and interest in Licensee in patents,
copyrights, and trademarks, in and to the Developed Technology by, as reasonably
requested by Licensee, executing documents, and having its employee/consultants
executing documents and otherwise doing all other things reasonably necessary to
obtain letters patent, to vest Licensee with full and extensive titles to any
patents or intellectual property rights, and to protect such patents and rights
against infringement by others and otherwise fully exploit Licensee's rights in
any and all intellectual property rights in and to the Developed Technology and
all Derivative Works thereof; provided, however, that MAX provides no warranty
as to the patentability of the Developed Technology and that such assistance
shall not require any development or design efforts by MAX beyond that agreed to
by the parties pursuant to Sections 2 and 3.1 of this Agreement.
1.5 Limited License. Licensee grants to MAX a non-exclusive,
irrevocable, worldwide royalty-free, assignable, transferable license to use and
sub-license the Developed Technology to the development partners of MAX not in
the Industry or not in competition with Licensee upon the written consent of
Licensee.
1.6 Exclusivity. Subject to the terms and conditions of this Agreement,
and in consideration for payments as provided pursuant to Section 4 herein, MAX
hereby agrees not to, directly or indirectly, (a) create, engage any party to
create, solicit, or initiate any discussions with any other party, or (b) take
any action to develop any technology or create any intellectual property rights,
that allow MAX or others to compete with Licensee in the Industry. In addition
to terms in Section 1.1, MAX grants Licensee a revocable, fully-paid up,
transferable, assignable exclusive license to use, distribute and sublicense the
x.x.Xxxx Technology solely in conjunction with the Developed Technology in the
Industry.
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2. DEVELOPMENT OF THE PRODUCT
2.1 Joint Management. The development objectives, timeline, schedule,
and initial plan shall be mutually agreed upon by the parties (the "Project
Plan"). MAX shall undertake its reasonable efforts and devote such resources and
personnel reasonably necessary to complete the Developed Technology in
accordance with the Project Plan (the "Development Efforts"). The Development
Efforts shall proceed with a target of completing each stage of such development
by the date set forth in the Project Plan. The Development Efforts shall occur
at MAX's facilities in Dallas, Texas. Subject to the terms of Section 2.3
hereof, MAX shall have primary responsibility for development of the Developed
Technology. Licensee shall have with reasonable prior notice, full right of
entry to the Development Area in which Development Efforts for Licensee are
underway during MAX's normal business hours. The duration of such development
schedule may be modified only by mutual written agreement of the parties.
2.2 Funding. Licensee shall pay to MAX, the total amount of $350,000.00
(the "Development Fee") in an initial payment of $50,000, two payments of
$25,000, and one payment of $50,000, each at seven (7) day intervals, followed
by eight (8) payments of $25,000.00 each at seven (7) day intervals (the
"Remaining Development Payments"), commencing on the Effective Date. Upon
Acceptance as defined in Section 2.9, Licensee shall pay an incentive bonus of
$2,500.00 in immediately available U.S. funds for each seven (7) day reduction
by MAX of the time of delivery for acceptance of the Developed Technology from
the twelve (12) week delivery schedule.
2.3 Management; Advisory Committee. Management responsibility for the
Development Efforts shall be joint among Licensee and MAX through a development
advisory committee (the "Advisory Committee") consisting of four (4) members,
two (2) appointed by MAX and two (2) appointed by Licensee. The governance of
the Advisory Committee shall be in accordance with the bylaws of MAX. The
Advisory Committee shall seek to reach consensus on all important decisions
pertaining to the development and implementation of the Developed Technology.
The Advisory Committee shall meet weekly by telephone or videoconference to
review the status of the Development Efforts and make recommendations concerning
the Development Efforts to the manager of the Development Efforts (the "Project
Manager").
2.4 Selection of Employees. MAX shall designate the employee(s) who
shall engage in the Development Efforts. In the event that Licensee, at any time
and in its sole discretion, deems any employee designated by MAX unsuitable for
the performance of Development Efforts, Licensee shall by written notice advise
MAX of such determination, and MAX shall use its best efforts to provide a
replacement employee acceptable to Licensee to perform such Development Efforts
as soon as is reasonably possible, all factors considered, including
availability of additional qualified employees and pre-existing commitments.
However, selection of employees shall be performed at MAX's sole discretion.
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2.5 Hiring. In the absence of MAX's written consent, during the term of
the Agreement and for a period of twelve (12) months after expiration or
termination of this Agreement, Licensee shall not hire any person who, during
the twelve (12) months immediately preceding such hiring, has been a MAX
employee.
2.6 Documentation; Audit. On or before the tenth (10th) and twentieth
(20th) business day of each month, MAX shall provide a progress report to
Licensee, substantially in a form to be mutually agreed upon by the parties and
as provided Exhibit "D" (the "Documentation"). Licensee shall have the right to
reasonably request and examine (the "Audit") original primary sources (the
"Primary Sources") supporting the Documentation. The Audit shall be performed in
a reasonable manner and shall relate to a reasonable subject matter. MAX shall
provide the Primary Sources to Licensee within seven (7) days of Licensee's
reasonable request for Primary Sources for use in an Audit.
2.7 Purchase of Technology. Licensee will have the right to purchase
x.x.Xxxx hardware under the same terms and conditions offered by MAXIC directly
to the general public. Such purchase shall automatically include a grant to
Licensee of an irrevocable except as provided herein, non-exclusive, worldwide,
royalty-free transferable, license to use, distribute and sublicense the
purchased x.x.Xxxx hardware and such x.x.Xxxx Technology necessary to use such
hardware as necessary to commercially exploit the Developed Technology.
2.8 Compatibility. MAX represents that the Developed Technology will
perform with compatibility to Microsoft Windows 98SE to the same extent that
x.x.Xxxx Technology performs with compatibility to Microsoft Windows 98SE and
third party software included with MAX's x.x.Xxxx Technology.
2.9 Acceptance. The parties have developed an Acceptance Test Plan as
set forth on Exhibit "B" (the "ATP") including the acceptance criteria
identified in the Project Plan and subject to the provisions of this Section
upon execution of this Agreement. "Acceptance" shall mean (i) performance of the
Developed Technology that meets or exceeds the specifications of the ATP or (ii)
if the Developed Technology is not tested for acceptance by Licensee within (30)
days of delivery by MAX, the Developed Technology shall be deemed to be accepted
and all obligations of Licensee to make payments to MAX hereunder shall be in
full force and effect.
2.10 Non-Performance. If the Developed Technology fails to meet the
specifications contained in the ATP, within five (5) business days of the
unsuccessful test, Licensee shall give written notice to MAX of such failure,
describing with reasonable specificity the nature of such failure. MAX, at MAX's
sole cost and expense, shall have thirty (30) calendar days of its receipt of
such written notice to modify, correct or enhance the Developed Technology (the
"Notice to Modify"). If on the last day of such thirty-day period, MAX has not
so modified, corrected or enhanced the Developed Technology, Licensee shall have
an option at its sole discretion to (i) (a) take delivery, and retain ownership,
of the Developed Technology to the extent it has been created and (b) negotiate
and execute an agreement with MAX that modifies certain provisions of this
Agreement (the "Savings Agreement"), and whereby MAX agrees to exercise its
commercially reasonable efforts to negotiate and enter into such Savings
Agreement in good faith; provided that this Agreement shall automatically
terminate if such Savings Agreement is
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not executed within thirty (60) days of the receipt of the Notice to Modify (the
"Savings Election"); or (ii) demand and receive from MAX within forty-five (45)
days and in immediately available U.S. funds, all of the Development Fee that
{have been paid to MAX} has been paid to MAX, and upon which event this
Agreement shall automatically terminate. Licensee shall be deemed to have chosen
the option for the Saving Election when it delivers to MAX a written notice of
its option for the Saving Election (the "Notice of Savings Election").
2.11 Source Code. Upon written acknowledgment that the Developed
Technology meets the specifications of the ATP and receipt of final settlement
and payment of Development Fees and incentive bonus payments as provided in
Section 2.2, if any, from Licensee, MAX will deliver the source code version of
the Developed Technology save and except the source code processor native
software objects and except for the software licensed to MAX by ATI
Technologies, Inc. or its successors. MAX will also deliver processor native
software objects in compiled executable form.
2.12 Support for Technology. Upon Acceptance, at a rate of $25,000 per
quarter for a period of one (1) year from Acceptance, MAX shall provide on-going
industry standard technical support and training for the Developed Technology as
provided for in Exhibit P.
2.13 Key Personnel. Each party will designate three (3) key personnel
who are critical to the success of the Developed Technology's development and
will use their reasonable best efforts to insure that such personnel remain
employed and available at least until all development activities are complete
and Acceptance of the Developed Technology. The Project Manager shall be
designated by MAX, subject to the approval of Licensee, which approval shall not
be unreasonably withheld. The three (3) key personnel designated by MAX and the
Project Manager shall be referred to as the "Key Personnel."
2.14 Work Continuance. MAX and Licensee hereby adopt by mutual consent
a work continuance plan (the "Work Continuance Plan"), which is attached as
Exhibit "L" hereto, in the event that MAX is unable to otherwise perform under
this Agreement.
2.15 Expenses. Licensee shall not require MAX travel or otherwise
participate in any activity that will increase MAX's expense to perform under
this Agreement beyond what are, in MAX's sole discretion, the activities
required to provide the Developed Technology.
3. FUTURE CONSIDERATIONS
3.1 On-going Development. XXX xxx perform ongoing development of the
Developed Technology (the "On-going Development"), which is described in Exhibit
"F" attached hereto. Further enhancements may include, but will not be limited
to, better quality of processed media elements, more efficient use of data
transmission bandwidth and improved functionality of Development Technology.
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3.2 Exclusivity License Payments. This license and right granted under
Section 1.6 shall be immediately revoked if Licensee fails to pay any
Exclusivity Payment(s) in accordance with Sections 4.3 or 4.4 of this Agreement.
3.3 Restrictions and Requirements.
3.3.1 Source Code Restrictions. Licensee shall not de-compile, reverse
engineer, disassemble, or otherwise determine or attempt to derive source code
for the x.x.Xxxx Technology or to market or use directly or indirectly any
derivative works based upon the x.x.Xxxx Technology and agrees not to permit or
authorize anyone else to do so, except as granted under the license terms of
this Agreement and only with prior written consent by MAX which will not
unreasonably be withheld. Such restriction shall not apply to the Developed
Technology, any Derivative Works thereof, or to any applications created
pursuant thereto , save and except that Licensee shall not de-compile, reverse
engineer, disassemble, or otherwise determine or attempt to derive source code
for the media processor native software objects.
3.3.2 Third Party Terms. Licensee understands that some of the x.x.Xxxx
Technology has been licensed by MAX from third party licensors. As such,
Licensee agrees to comply with all terms and conditions listed in the licenses
attached as Exhibit "G" that relate to the use of third party licensors'
technology or trademarks (the "Third Party Licenses"). Licensee acknowledges
that MAX is in negotiations with the parties set forth at Exhibit H (the
"Potential Partners") and XXX xxx license the x.x.Xxxx Technology to the
Potential Partners, subject to the provisions of Sections 1 and this Section
3.3.2.
3.3.3 Should any portion of the technology necessary to use, sell, or
otherwise commercially exploit the Developed Technology become the subject of
any claim of infringement, Licensee may at its option (a) require MAX to procure
for Licensee, at the expense of MAX, the right to continue exercising its rights
hereunder with respect to the technology necessary to use or otherwise
commercially exploit the Developed Technology, or (b) terminate this Agreement.
4. PAYMENTS
4.1 Timely Payments. Licensee shall pay to MAX in a timely manner each
of the payments described in this Section 4.
4.2 Development Fee. Licensee shall pay MAX the Development Fee as set
forth in Section 2.2. Under no circumstances shall the Development Fee be
withheld, including without limitation, an election by Licensee to Audit in
accordance with Section 2.6.
4.3 Exclusivity Payments. In addition to the Development Fee and
subject to Section 4.4, Licensee shall pay MAX the following, provided that and
as a precondition to such payment, MAX has provided to Licensee evidence
confirming that MAX owns, or has the valid right, title and interest to exploit,
transfer, license and use, all of the i.c.LiveTechnology, and has taken all
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actions reasonably necessary to protect the i.c.LiveTechnology, as provided in
section 5.4 (collectively, the "Exclusivity Payments"):
(1) Prior to the execution of this Agreement, Licensee
has paid to MAX the sum of $115,000 (the "Preliminary
Exclusivity Payment");
(2) Commencing on the first day of the month next
succeeding the month in which the Developed
Technology is accepted, as provided in Sections 2.9
and 2.10 and so long as Licensee has not delivered a
Notice of Savings Election (as such term is defined
in Section 2.10 of this Agreement) to MAX, and
continuing on the first day of each of the five (5)
months thereafter, (the "Initial Exclusivity Payment
Period"), Licensee shall pay to MAX the greater of
(i) $0, or (ii) fifteen percent (15%) of Licensee's
Gross Profit (as defined below) for the immediately
preceding month.
(3) License. Following the Initial Exclusivity Payment
Period, Licensee shall, on the first day of the first
month following each three (3) month period and
continuing for a thirty-six (36) month period (twelve
payments), so long as Licensee or successor has
accepted, pursuant to Section 2.9, the Developed
Technology and so long as Licensee has not delivered
a Notice of Savings Election (as such term is defined
in Section 2.10 of this Agreement) to MAX, pay MAX
the greater of:
(i) during the 1st 12-month period $ 500,000.00;
during the 2nd 12-month period $1,000,000.00;
during the 3rd 12-month period $1,500,000.00;
OR,
(ii) Fifteen percent (15%) of Licensee's
Gross Profits, as defined below.
Ninety days after such thirty-six (36) month period as provided in this
Section 4.3(3), and on the first day of the first month following each three (3)
month period, so long as Licensee or successor has accepted the Developed
Technology and so long as Licensee has not delivered a Notice of Savings
Election (as such term is defined in Section 2.10 of this Agreement) to MAX,
Licensee shall be liable for, and shall pay MAX, an amount limited to fifteen
percent (15%) of Licensee's Gross Profits as defined below.
For the purposes of this Section 4.3, "Gross Profit" shall mean
revenues of goods and services that use the Developed Technology recognized for
the reporting period as reduced by the cost of goods services sold relating to
those revenues, in accordance with GAAP. Accordingly, revenue shall not be
reduced by selling, general and administrative expenses. Licensee shall furnish
to MAX on or before the 15th day of the month immediately following the
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end of each calendar quarter of each calendar year, statements of Licensee's
Gross Profits. So long as this Agreement remains in effect or Licensee derives
revenues from the Developed Technology or any derivative thereof, MAX shall have
the right to inspect and audit the books and records of Licensee that relate to
such Gross Profits revenues and costs to determine the accuracy of the
statements furnished to MAX at any reasonable time during Licensee's normal
business hours; provided, however, that no more than 2 such audits will be
allowed in any calendar year.
4.4 Acquisition.
a. Definitions. The following definitions shall apply to this
Section 4.4:
1. "Acquisition" Acquisition shall mean any one (1) or
more of the following:
(x) the sale and/or assignment of Maxpop Stock to any
person or entity (an Acquiror") by any present or
future shareholder of Maxpop and/or the successors
and/or assigns of the Maxpop Shareholder (a "Maxpop
Shareholder"), that results in a Change of Control,
or
(y) the issuance by Licensee of Maxpop Stock or debt of
Licensee convertible into Maxpop Stock that results
in a Change of Control, or
(z) the sale and/or assignment of Total Assets of
Licensee such that Total Assets valued at a monetary
amount exceeding fifty percent (50%) or more of
Licensee's Total Assets Valuation is sold and/or
assigned to an Acquiror.
2. "Assumption of Liabilities Consideration" Assumption
of Liabilities Consideration shall mean the transfer
or assignment of liabilities of Licensee to Acquiror,
as consideration for an Acquisition.
3. "Cash Consideration" Cash Consideration shall mean
all currency of any country, or checks or other
orders drawn upon banks or bankers and payable upon
demand received by Licensee and/or any one (1) or
more Maxpop Shareholders, or which Licensee and/or
any one (1) or more Maxpop Shareholders have a right
to receive, as consideration for an Acquisition.
4. "Change of Control" means and occurs on the date (i)
any person or entity becomes for the first time the
direct or indirect owner of more than fifty percent
(50%) of the total number of issued and outstanding
shares of any class or series of Maxpop Stock or debt
convertible into more than fifty percent (50%) of the
total number of issued and outstanding shares of any
class or series of Maxpop Stock.
5. "Debt Consideration" Shall mean a sum of money due
under the terms of a note, contract, agreement, or
other instrument that is neither convertible into
common or preferred stock nor or listed for trading
on a national of any country or regional stock
exchange within the United States or quoted on the
Nasdaq
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National or Nasdaq Small Cap over-the-counter
markets, received by Licensee and/or any one (1) or
more Maxpop Shareholders, or to which Licensee and/or
any one (1) or more Maxpop Shareholders have a right
to receive, as consideration for an Acquisition.
6. "Derivative Securities Consideration" Derivative
Securities Consideration shall mean all warrants,
options, convertible debt, convertible preferred
stock, contracts, agreements, or other instruments
that:
(x) Provide, in whole or in part, on a firm or
contingent basis, for the purchase or sale of, or is
based on the value of, or any interest in, one or
more commodities, securities, currencies, interest or
other rates, indices, quantitative measures, or other
financial or economic interests or property of any
kind; or
(y) Involve any payment or delivery that is dependent
on the occurrence or nonoccurrence of any event
associated with a potential financial, economic, or
commercial consequence; or
(z) Involve any combination or permutation of any
contract, agreement, or transaction or underlying
interest, property, or event described in this
Section 4.4(a)(6)(x) and 4.4(a)(6)(y),
and is received by Licensee and/or any one (1) or more Maxpop
Shareholders, or which Licensee and/or any one (1) or more Maxpop
Shareholders have a right to receive, as consideration for an
Acquisition.
7. "Maxpop Stock" Maxpop Stock shall mean all types,
classes and series of capital stock of Maxpop
including all classes and series of common stock,
whether voting or non-voting, and all classes or
series of preferred stock, whether voting or
non-voting and whether convertible into common stock
or debt of Maxpop or not so convertible.
8. "Other Consideration" Other Consideration shall mean
any and all consideration received by Licensee and/or
any one (1) or more Maxpop Shareholders, or to which
Licensee and/or any one (1) or more Maxpop
Shareholders have a right to receive, as
consideration for an Acquisition that is not Cash
Consideration, Securities Consideration, Derivative
Securities Consideration, Assumption of Liabilities
Consideration or Debt Consideration, and, in the case
or Maxpop Shareholders, does not relate to personal
services or obligations by such Maxpop Shareholder,
so long as the compensation for such personal
services or obligations is reasonable.
9. "Register," "Registered," and "Registration" refer to
a registration effected by preparing and filing one
or more Registration Statement or Statements in
compliance with the Securities Act including one or
more Registration Statement
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or Statements pursuant to Rule 415 under the
Securities Act or any successor rule providing for
offering securities on a continuous basis, and the
declaration or ordering of effectiveness of such
Registration Statement by the Commission.
10. "Registration Rights Agreement" Registration Rights
Agreement shall mean an agreement between Licensee or
one (1) or more Maxpop Shareholders and an Acquiror
by which Licensee and such Maxpop Shareholder(s) have
certain rights to have certain securities making up
part of the Securities Consideration and certain
securities underlying Derivative Securities
Consideration, making up part of the Derivative
Securities Consideration, and debt or equity into
which Derivative Securities Consideration is
convertible into included on a Registration
Statement.
11. "Registrable Securities" Registrable Securities shall
mean means collectively, the securities and the
shares underlying the derivative securities, and any
other shares of common stock that the Acquiror
desires to, or is under an obligation to, file a
Registration Statement covering.
12. "Registration Statement" means a registration
statement of an Acquiror under the Securities Act
that covers any of the Registrable Securities.
13. "Securities Consideration" Securities Consideration
shall mean all common stock, preferred stock not
convertible into the common stock of the issuer,
bonds and debentures, issued by a corporation,
partnership, trust, governmental unit or political
subdivisions of same, listed for trading on a
national of any country or regional stock exchange
with in the United States or quoted on the Nasdaq
National or Nasdaq Small Cap over-the-counter
markets, partnership interests, limited partnership
interests, voting-trust certificates,
collateral-trust certificates, certificates of
interest in property (tangible or intangible), and
investment contracts received by Licensee and/or any
one (1) or more Maxpop Shareholders, or which
Licensee and/or any one (1) or more Maxpop
Shareholders have a right to receive, as
consideration for an Acquisition.
14. "Total Assets" Total Assets shall mean the gross
physical assets of (i) the Licensee, or (ii) Licensee
and any and all subsidiaries of Licensee on a
consolidated basis, whichever is higher, reflected on
Licensee's balance sheet in accordance with GAAP and
pursuant to the pertinent provisions of Regulation
S-X of the Rules and Regulations of the Securities
Act of 1933, whether Licensee is subject to same or
not.
15. "Total Assets Valuation" Shall mean the value of the
Total Assets carried on Licensee's balance sheet in
accordance with GAAP determined as of the date of
Acquisition, and computed in accordance with the
pertinent provisions of
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Regulation S-X of the Rules and Regulations of the
Securities Act of 1933}.
16. "Total Consideration Valuation" Total Consideration
Valuation shall mean the greater of (x) the sum of
the valuations of Cash Consideration, Securities
Consideration, Derivative Securities Consideration,
Debt Consideration, Assumption of Liabilities
Consideration and Other Consideration or (y) the
consideration for the Acquisition expressed in the
documents effectuating same, calculated in accordance
with GAAP.
b. Notice of Potential Acquisition. In the event that Acquiror
and Licensee and/or one (1) or more Maxpop Shareholders
negotiate and sign a term sheet, letter of intent, or heads of
agreement (collectively, a "Term Sheet") with any person or
entity in which the terms set forth in such Term Sheet would,
if consummated in final, signed written agreements, constitute
an Acquisition as defined in this Section 4.4(a)(1), then
Licensee shall, before the expiration of seventy-two (72)
hours from the time of the execution of the Term Sheet, give
written notice to MAX to the effect that Licensee or any
Maxpop Shareholder has executed a Term Sheet relative to a
potential Acquisition and shall summarize the total dollar
value of the proposed Total Consideration Valuation, the basis
for the calculation of the Total Consideration Valuation, the
amounts of the Total Consideration Valuation that constitute
Cash Consideration, Debt Consideration, Securities
Consideration, Derivative Securities Consideration, Assumption
of Liabilities Consideration and Other Consideration, and
whether or not a Registration Rights Agreement is contemplated
and, if so, the material proposed terms of same (e.g. demand
rights versus piggyback rights; all or part of the Securities
Consideration or Derivative Securities Consideration; blackout
allowances; availability of Form S-3, etc.).
c. Negotiation of Potential Acquisition. In negotiating a
potential Acquisition, Maxpop and/or such Maxpop
Shareholder(s) shall use commercially reasonable efforts to
accomplish the following terms of the Acquisition:
1. Sufficient Cash Consideration such that the
Acquisition Payment, as defined in this Section 4.4,
made by Licensee and/or one (1) or more Maxpop
Shareholder(s), to MAX would constitute no less than
seventy-five percent (75%) cash and no more than
twenty-five percent (25%) securities, derivative
securities, debt, or other consideration.
2. Total Consideration given by Acquiror to Licensee or
one (1) or more Maxpop Shareholder(s) in forms in the
following order of preference:
(a) Cash Consideration;
(b) Securities Consideration;
(c) Derivative Securities Consideration;
(d) Debt Consideration;
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(e) Assumption of Liabilities Consideration; and
(f) Other Consideration.
3. Registration rights pursuant to a Registration Rights
Agreement that:
(a) defines Registrable Securities to include
all Securities Consideration and all
securities underlying Derivative Securities
Consideration;
(b) provides for rights to demand or, at a
minimum, rights to piggyback Registration
with an effective date no later than ninety
(90) days from the date of filing of a
Registration Statement, as to all Securities
Consideration and securities underlying
Derivative Securities Consideration;
(c) provides for registration on Form S-3, if
available, or Form SB-2, if Form S-3 is not
available; and
(d) does not allow the Acquiror to issue
"blackout" notices to the effect that
Licensee or such Maxpop Shareholder(s)'
prospectuses are no longer current.
d. "Acquisition Payment" In the event Licensee has not delivered
a Notice of Savings Election (as such term is defined in
Section 2.10 of this Agreement) to MAX at least ninety (90)
days prior to the closing date of the proposed Acquisition,
Licensee, or in the event of an Acquisition defined in
Sections 4.4(a)(1)(x) or (y) hereof and relative to their
ownership interest in License, the Maxpop Shareholders, will,
at the sole discretion of MAX, and as directed in writing by
MAX, either (i) pay to MAX, an amount equal to the greater of
$12,000,000.00 or 15% of the Total Consideration Valuation
paid by such Acquiror to Licensee and/or one (1) or more
Maxpop Shareholder(s) (the "Acquisition Payment"), or (ii)
notify Acquiror of MAX's election to continue the Exclusivity
License Payments; provided, however that if such Acquisition
Payment would exceed $22.5 million, MAX shall have no such
selection and Licensee or Maxpop Shareholders, as applicable,
shall pay MAX solely the Acquisition Payment. In the event
that option (i) in the prior sentence is elected by MAX, then
all rights of MAX to receive Exclusivity License Payments will
immediately cease and no longer be enforceable. The
Acquisition Payment shall be made to MAX first out of Cash
Consideration received by Licensee or one (1) or more Maxpop
Shareholder(s), with the remainder to be paid out of the
elements of Total Consideration in the order set forth in
Section 4.4(a)(7)(c)(2). The Acquisition Payment shall be paid
upon closing of the transaction with such Acquiror. Should the
Acquisition Payment include securities or derivative
securities, then Maxpop shall cause such securities or
derivative securities to be assigned or transferred to MAX,
subject to the availability of valid federal and state
securities exemptions for such transfer. Neither Licensee nor
any Maxpop
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Shareholder shall have any responsibility or obligation to MAX
pursuant to this Section 4.4(d) in the event that a Notice of
Non-Usage is delivered MAX at least ninety (90) days prior the
to closing date of the proposed Acquisition.
e. Assignment of Registration Rights. Licensee and/or one (1) or
Maxpop Shareholder(s), as applicable, shall use its
commercially reasonable efforts to assign to MAX, all rights
to have securities representing Securities Consideration and
securities underlying Derivative Securities Consideration to
be Registered on a Registration Statement to the extent that
such securities representing Securities Consideration and
securities underlying Derivative Securities Consideration are
included as all or part of the Acquisition Payment.
f. Restrictive Legend. Licensee shall cause, and Maxpop
Shareholder(s) shall acquiesce in, the placement of a
Restrictive Legend on all Maxpop Stock that puts all holders
on notice that such Maxpop Stock is subject to the terms and
conditions of this Agreement. Maxpop shall not issue Maxpop
Stock to any present or future holders of Maxpop Stock without
placing such restrictive legend on such Maxpop Stock.
g. Covenant as to Future Subscriptions. As a condition precedent
to accepting any future subscriptions of Maxpop Stock by
investors, Maxpop shall cause such investors to sign an
acknowledgement and acceptance of this Agreement.
h. Covenant as to Assignation of Developed Technology. Licensee
shall not sell, transfer, or assign the Developed Technology
unless the sale, transfer, or assignment of the Developed
Technology is part of an Acquisition.
i. Holders of Capital Stock; Instruments Convertible into Capital
Stock. Licensee warrants and represents that, within ten (10)
business days of the Effective Date, all current Maxpop
Shareholders and holders of instruments convertible into the
capital stock of Maxpop Shareholders (i) will be made parties
to this Section 4.4; (ii) will have executed this Agreement;
and (iii) will have provided signatures of authorized agents
of any entities signing as Maxpop Shareholders.
5. REPRESENTATIONS AND WARRANTIES
5.1 Disclaimer. Licensee acknowledges that the services to be provided
could be of such complexity that it is impossible to ensure against all bugs or
defects, including bugs or defects which do not manifest themselves during MAX's
performance of the Services or Licensee's testing of the systems.
Notwithstanding anything in this Agreement or otherwise to the contrary, MAX's
obligation pursuant to this Agreement is to provide the level of Services
requested by Licensee from time to time as understood and agreed that the work
will be fully functional or will meet all of the project specifications after
performance of the requested level of Services. In the event bugs or defects are
detected MAX warrants and agrees to correct the
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bugs or defects within a reasonable period of time as mutually agreed based on
the criticality of the bugs or defects. MAX MAKES NO WARRANTY WITH REGARD TO
SERVICES, INCLUDING WARRANTY OF MERCHANTABILITY. IN NO EVENT SHALL MAX BE LIABLE
FOR INDIRECT, INCIDENTAL DAMAGES, LOSS OF PROFITS, LOSS OF USE OR DATA, OR
INTERRUPTION OF BUSINESS SUFFERED OR INCURRED BY THE LICENSEE OR ANY OTHER
PARTY, WHETHER SUCH DAMAGES ARE LABELED IN TORT, CONTRACT, OR INDEMNITY, EXCEPT
AS OTHERWISE PROVIDED IN THIS AGREEMENT. EXCEPT AS OTHERWISE PROVIDED FOR IN
THIS AGREEMENT, MAX SHALL NOT BE LIABLE OR OBLIGATED TO LICENSEE IN CONTRACT,
TORT OR OTHERWISE OR ANY AMOUNT IN EXCESS OF THE AMOUNT OF ACTUAL PAYMENTS MADE
BY LICENSEE TO MAX UNDER THIS AGREEMENT. MAX'S MAXIMUM LIABILITY HEREUNDER BEING
HEREBY LIMITED TO SUCH AMOUNT.
5.2 Disclaimer as to Third Party Hardware. MAX has not made, and does
not make, any warranty whatsoever with respect to third-party hardware, software
and/or equipment which is integrated or installed as part of the Services, and
Licensee agrees to look solely to the manufacturers and/or vendors of such
hardware, software and/or equipment with regard to any and all defects, bugs or
similar items and does hereby hold MAX harmless therefrom. Notwithstanding the
foregoing, MAX represents and warrants to Licensee that nothing contained in the
Third Party Licenses, or in any agreement to which MAX is a party, (i) impairs
the ability or right of MAX to enter into and perform this Agreement or (ii)
imposes any affirmative obligations on Licensee, or (iii) grants to any person
any right or license in the Developed Technology or the Products.
5.3 No Obligation or Restriction. MAX represents and warrants that it
is under no obligation or restriction, nor will it assume any such obligation or
restriction that does or would in any way interfere or conflict with, or that
does or would present a conflict of interest concerning, the work to be
performed under this Agreement.
5.4 Right to Exploit. MAX represents and warrants that it owns, or has
the valid right, title and interest to exploit, transfer, license and use, all
of the i.c.LiveTechnology, and has taken all actions reasonably necessary to
protect the i.c.LiveTechnology. MAX has not received a notice that it is
infringing upon or otherwise acting adversely to the right or claimed right of
any third party under or with respect to any of the foregoing, and to the
knowledge of MAX there is no basis for any such claim. MAX is not aware of any
violation by a third party of any intellectual property rights in and to the
i.c.LiveTechnology. MAX is not aware that any of its employees is obligated
under any contract (including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to MAX or that
would conflict with the obligations of MAX under this Agreement.
5.5 Workmanlike Manner; Willful Conduct Indemnity. Notwithstanding any
other provision in this Agreement, MAX represents and warrants (i) that the
Developed Technology shall be prepared in a workmanlike manner and with
professional diligence and skill; (ii) that the Developed Technology, where
applicable, will function on the machines and with operating
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systems for which they are designed; (iii) that the Developed Technology will
conform to the specifications as provided in Section 2 and Exhibits related
thereto; (iv) that MAX will perform all work required to create the Developed
Technology hereunder in compliance with all applicable laws and regulations; and
(v) that the Developed Technology shall be free of any willfully introduced
computer virus or any other similar harmful, or malicious code or data, and MAX
shall indemnify and hold harmless Licensee from (A) any costs or damages awarded
against Licensee in connection with any such willfully introduced virus, code or
data, and (B) the cost of debugging any such virus and cost of alternative
processing while debugging is under way.
5.6 Indemnity. MAX shall indemnify Licensee and hold Licensee harmless
from and against any loss, liability or claim, including attorneys' fees
resulting from any breach of any representation or warranty, or covenants or
agreements within this Agreement by MAX. Licensee shall indemnify MAX and hold
MAX harmless from and against any loss, liability or claim, including attorneys
fees resulting from any breach of any representation or warranty, or covenants
or agreements within this Agreement by Licensee; provided, however, that
Licensee shall not indemnify MAX, nor hold MAX harmless from, any loss,
liability or claim brought by, through or under MAX shareholders against
management or MAX's board of directors save and except those resulting from any
breach of any representation or warranty, or covenants or agreements within this
Agreement by Licensee.
5.7 Licensee's Current Level of Business. Licensee represents and
warrants that Licensee is neither now insolvent nor will Licensee be rendered
insolvent by the consummation of this Agreement. Furthermore, Licensee will be
able to pay its current liabilities as they become due, and (ii) will not have
unreasonably small capital and will not have insufficient capital with which to
conduct its present or proposed business. As used in this subsection, (A) the
term "insolvent" means the inability of a corporation to pay its debts as they
become due in the usual course of business, and (B) the term "debts" includes
any legal liability, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent, disputed or undisputed, or secured or unsecured.
6. CONFIDENTIALITY
6.1 Protection of Confidential Information. The parties recognize that,
in connection with the performance of this Agreement, each of them may disclose
to the other its confidential Information. The party receiving any confidential
information agrees to maintain the confidential status of such Confidential
information and not to use any such confidential information for any purpose
other than the purpose for which it was originally disclosed to the receiving
party, and not to disclose any of such confidential information to any third
party.
6.2 Permitted Disclosure. The parties acknowledge and agree that each
may disclose confidential information: (i) as required by law, provided that
each party will use commercially reasonable efforts to obtain confidential
treatment of any confidential information so disclosed; (ii) to their respective
directors, officers, employees, attorneys, accountants and other advisors, who
are under an obligation of confidentiality, on a "need-to-know" basis; (iii) to
investors who
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are under an obligation of confidentiality, on a "need-to-know" basis; or (iv)
in connection with disputes or litigation between the parties involving such
confidential information; and each Party will use commercially reasonable
efforts to limit disclosure to that purpose and to ensure maximum application of
all appropriate judicial safeguards (such as placing documents under seal).
6.3 Applicability. The foregoing obligations of confidentiality shall
apply to directors, officers, employees and representatives of the parties and
any other person to whom the Parties have delivered copies of, or permitted
access to, such confidential information in connection with the performance of
this Agreement, and each party shall advise each of the above of the obligations
set forth in this Section 6.
6.4 Third party Confidential Information. Any confidential information
of a third party disclosed to either party shall be treated by such party in
accordance with the terms under which such third party confidential information
was disclosed; provided, that the party disclosing such third party confidential
information shall first notify the other party that such information constitutes
third party confidential information and the terms applicable to such third
party confidential information; and provided further, that either party may
decline, in its sole discretion, to accept all or any portion of such third
party confidential information.
6.5 Return of Confidential Information. Upon expiration or termination
of this Agreement, each party shall promptly return to the other all
confidential information of the other party, including all of the physical
embodiments thereof in its possession, including all copies thereof, and shall
case using the same, except to the extent their use is licensed or otherwise
permitted under this Agreement. Each party shall certify to the other party in
writing its compliance with this Section upon return of such materials.
6.6 Non-Disclosure Agreement. The confidentiality provisions contained
in this Section 6 supersede any prior Non-Disclosure agreement between the
parties; provided, that no party shall be relieved of liability for any breach
of such Non-Disclosure Agreement prior to the Effective Date.
7. INTELLECTUAL PROPERTY RIGHTS
Both parties acknowledge that MAX has valuable and exclusive rights to
patents, trade secrets, know how, books, records, data, plans, manuals,
trademarks, trade names and copyrights relative to MAX's products. No rights to
any pre-existing MAX technology are being conveyed by this Agreement other than
as explicitly stated herein. The parties agree that Licensee may propose and use
one or more trade names for the software application (like "Broadcast Fuel
Injector"), a component of which will be the Developed Technology, developed
under this Agreement for Licensee.
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8. FORCE MAJEURE
In no event shall the parties be liable to each other for failure or
delay in the performance of any non-monetary obligations contained in this
Agreement or in any purchase order or Agreement accepted hereunder by MAX or
Licensee arising, directly or indirectly, from acts of God, unforeseeable
circumstances, acts (including delay or failure to act) of any governmental
authority (de jure or de facto), war (declared or undeclared), riot, revolution,
priorities, fires, floods, weather, strikes, labor disputes, sabotage,
epidemics, factory shutdowns or altercations, embargoes, delays or shortages in
transportation, delay or inability beyond the reasonable control of the hindered
party to obtain or procure labor, manufacturing facilities or materials, or
causes of any other kind beyond the reasonable control of the hindered party.
9. RELATIONSHIPS
9.1 Licensee as Independent Contractor. Licensee is acting solely as an
independent contractor and is not the legal representative, partner or agent of
MAX for any purpose.
9.2 MAX as Independent Contractor. MAX is acting solely as an
independent contractor and is not the legal representative, partner or agent of
Licensee for any purpose.
9.3 Purchased Product. The terms upon which a party will purchase a
product from the other party shall be upon mutually agreed terms which terms
shall include payment within thirty (30) days. The price at which such product
is resold by the purchasing party shall be determined solely by the purchasing
party.
10. DURATION AND TERMINATION
10.1 Default. The term "default" and/or "breach", "Default" and/or
"Event of Default", "Breach" and/or "Event of Breach", wherever used in this
Agreement, shall mean any one or more of the following events, after expiration
of any grace period or notice and cure period provided or referenced below with
respect to any such events:
(a) if any sum payable by Licensee hereunder, is not paid
according to the provisions of Section 4 when due;
(b) if any representation or warranty of Licensee or MAX
herein shall prove false or misleading in any material respect or shall have
omitted any substantial contingent or unliquidated liability or claim;
(c) if the Developed Technology fails to be accepted by
Licensee after MAX has had an opportunity to cure for non performance as
provided in Section 2;
(d) if Licensee shall continue to be in default under any of
the other terms, covenants or conditions of this Agreement (which do not involve
the payment of money) for thirty (30) days after notice from MAX; or
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(e) if MAX shall continue to be in default under any of the
other terms, covenants or conditions of this Agreement (which do not involve the
payment of money) for thirty (30) days after notice from Licensee.
10.2 Effective Date; Termination. This Agreement shall commence as of
the Effective Date and shall remain in effect unless terminated by either party
in accordance with this Section 10.2. Either party may terminate this Agreement
after breach of this Agreement by the other party by giving written notice of
such breach and the other party's failure to cure such breach within thirty (30)
business days of its receipt of such notice. The license and right granted under
Sections 1.1 and 2.7 shall be immediately revoked upon termination.
10.3 ARBITRATION. Any issue or dispute between the parties arising out
of or related to this Agreement or its alleged breach that is not resolved
between the parties may be referred to arbitration in accordance with the
provisions of this Section. Any such unresolved issue, dispute or claim shall be
resolved exclusively by final and binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Demand for
arbitration must be made within one year after the discovery of the claim on
which the demand is based. If the claiming party fails to demand arbitration
within one year of the discovery of the claim, the claim shall be deemed to be
waived and shall be barred from either arbitration or litigation. This Section
may be enforced pursuant to the Federal Arbitration Act, and the Texas
Arbitration Act shall also apply to this Section and proceedings conducted
Pursuant to this Section. Either Party may invoke arbitration of an issue by
serving on the other party a written notice of arbitration, which shall specify
with reasonable detail (1) the issue in dispute, (2) the claims asserted, and
(3) the remedy sought by the party invoking arbitration. Each party shall
appoint one arbitrator to arbitrate the subject issue. The arbitrators shall be
appointed within fifteen (15) days of the date of the foregoing described
notice. If one party fails or refuses to appoint an arbitrator, then the first
arbitrator appointed shall appoint a second arbitrator. Within thirty (30) days
of the last of those appointments, the two arbitrators shall appoint a third
arbitrator. Each party appointing an arbitrator or for whom an arbitrator is
appointed shall bear all costs and expenses associated with that arbitrator, and
the cost and expenses associated with the third arbitrator shall be shared
equally by the parties. If a party makes demand for arbitration as provided
herein, then the arbitration hearing shall be held at a location designated by
the other party within Dallas County, Texas. Within ten (10) days after the
conclusion of the arbitration proceeding, the arbitrators shall render a written
decision of the arbitration and state the reasons for the award and decision.
The arbitrator may award costs, including attorney's fees, to the prevailing
party. The decision of the arbitrators is binding upon the parties, and after
the completion of the arbitration, a party to the arbitration may not institute
litigation to reverse the decision of the arbitrators. It may, however,
institute litigation in any court of competent jurisdiction to enforce the claim
or issue determined by the arbitration proceeding. Once a claim or issue is
submitted to arbitration, neither party may institute litigation regarding the
claim or issue submitted, except to enforce that arbitration decision.
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11. AMENDMENTS
This Agreement (and the referenced Exhibits) sets forth the entire
Agreement between the parties. All previous oral and written agreements between
the parties are hereby terminated and neither party shall have any continuing
obligation of any kind thereunder. This Agreement may be changed, altered, or
amended only by an Agreement in writing signed by both parties. Subject to the
foregoing provisions, all covenants and other agreements contained in this
Agreement by or on behalf of any of the parties hereto shall be binding upon and
inure to the benefit of the successors, assigns and legal representatives of the
parties hereto, whether or not so expressed.
12. NOTICES
Except as otherwise provided in this Agreement, all writings, notices,
payments and reports required hereunder shall be sent by certified or registered
mail to the parties at their address specified in the preamble, or to such other
address of the party specified to the other by such notice. Any writing, notice,
payment or report sent by other means shall be considered properly sent under
this Agreement when and if received by the other party. Either party may change
its address at any time during the term of this Agreement by sending notice of
such change to the other party.
13. MISCELLANEOUS
13.1 Expenses. Each party to this Agreement shall bear its own legal
and accounting expenses in connection with the transactions provided for herein,
including without limitation taxes and accountants' and attorneys' fees and
expenses of its representatives. Each of the parties hereto agrees to hold the
other harmless from and against any liability for broker's or finder's fees, if
any, incurred by such party.
13.2 Waivers. No delay or omission by either party hereto to exercise
any right or power occurring upon any noncompliance or default by the other
party with respect to any of the terms of this Agreement shall impair any such
right or power or be construed to be a waiver thereof. A waiver by either of the
parties hereto of any of the covenants, conditions, or agreements to be
performed by the other shall not be construed to be a waiver of any succeeding
breach thereof or of any covenant, condition, or agreement herein contained.
13.3 Governing Law and Venue. THIS AGREEMENT SHALL BE GOVERNED BY,
INTERPRETED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. VENUE SHALL BE PROPER IN
STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS.
13.4 No Benefit to Others. Except as provided in Section 6, the
representations, warranties, covenants, and agreements contained in this
Agreement are for the sole benefit of the parties hereto and their respective
successors, permitted assigns, heirs, executors, administrators, and legal
representatives, and shall not be construed as conferring and are not intended
to confer any rights on any other persons.
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13.5 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable. This Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance here from. Furthermore,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a party of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
13.6 Indemnity by Licensee. Licensee will indemnify and hold harmless
MAX from any and all claims relating to breach of Licensee's warranty covering
Broadcast Fuel Injector and strict liability or breach of warranty related to
products liability law of any jurisdiction in which the goods may land in the
stream of commerce.
13.7 Limitation of Liability. SUBJECT TO THE PROVISIONS IN SECTION
13.8, IN NO EVENT SHALL MAX OR LICENSEE BE LIABLE FOR ANY LOSS OF PROFITS, LOSS
OF BUSINESS, LOSS OF USE OR DATA, INTERRUPTION OF BUSINESS, OR FOR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF THEY HAVE BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES (AND NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY), OR FOR ANY CLAIM AGAINST THEM BY ANY
THIRD PARTY. IN NO EVENT WILL MAX, LICENSEE, OR THEIR RESPECTIVE SUPPLIERS, BE
LIABLE FOR (A) ANY REPRESENTATION OR WARRANTY MADE TO ANY THIRD PARTY BY
LICENSEE OR MAX, RESPECTIVELY OR BY ANY REPRESENTATIVE AGENT, TO PERFORM AS
SPECIFIED HEREIN EXCEPT AS, AND TO THE EXTENT, OTHERWISE EXPRESSLY PROVIDED
HEREIN; OR (B) ANY USE OF THE PRODUCT OR THE DOCUMENTATION OR THE RESULTS OR
INFORMATION OBTAINED OR DECISIONS MADE BY END USERS OF THE PRODUCT. THE REMEDIES
PROVIDED HEREIN ARE SOLE AND EXCLUSIVE REMEDIES.
13.8 Indemnity for Infringement. MAX shall indemnify and hold harmless
Licensee against any and all liability, suits, claims, losses, damages and
judgments, and shall pay all costs (including reasonable attorneys' fees) and
damages to the extent that such liability, costs or damages arise from a claim
that the Developed Technology, any services related to the Developed Technology
or any materials furnished by MAX hereunder infringe any third party's patent,
copyright, trade secret, proprietary information, trademark or other legally
enforceable proprietary right. MAX, at its option, may defend or settle any such
action or any part thereof brought against Licensee arising from a claim that
such infringement as described herein has occurred. MAX's obligations under this
Section 13.8 are conditioned upon its being given (i) prompt notice of each such
claim received in writing by Licensee and (ii) the right to control and direct
the investigation, defense and settlement of each such claim. The provisions of
this Section 13.8 shall survive any termination of this Agreement.
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13.9 No Partnership. Nothing contained in this Agreement shall
constitute or be deemed to constitute a partnership between the parties.
13.10 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not be deemed to be a part
of this Agreement or to affect the construction or interpretation of this
Agreement.
13.11 Construction. Any alleged uncertainty or ambiguity in this
Agreement shall not be construed for or against a party based on attribution of
drafting to such party.
13.12 General Conduct. Both parties agree (i) to conduct business in a
manner that reflects favorably at all times on the Developed Technology and the
Product and the good name, goodwill and reputation of the other; (ii) to avoid
deception, misleading or unethical practices that are or might be detrimental to
the other or the public, including, but not limited to, disparagement of the
other or its products, and acceptance or payment of bribes, kickbacks or secret
profits; (iii) to make no representations, warranties or guarantees to end users
or to the trade with respect to the specifications, features or capabilities of
the Products other than those agreed to by the parties or those made by such
party for which such party intends to bear the liability; and (iv) not to
publish or use (or cooperate in the publication or use of) any misleading or
deceptive advertising material.
13.13 Compliance with Laws; Approvals. Both parties shall comply with
all applicable laws in performing its duties hereunder and in any dealings with
the Products, including, but not limited to, laws relating to antitrust and fair
business practices. Both parties are encouraged in good faith, but not required,
to advise the other of any laws or other regulatory requirements in force in the
territories in which the other sells the Products that relate to the Products,
including, but not limited to, laws relating to labeling, health or safety and
other issues related to localization of the Products. Each party shall be
responsible for obtaining any governmental approvals or registrations necessary
for the effectiveness of this Agreement and the arrangements contemplated herein
required of it, and shall use its best efforts to obtain such approvals
promptly.
13.14 Approvals and Consents. Except as provided in Section 13.15, all
approvals and other consents, or otherwise, deemed necessary or appropriate to
permit the consummation of the transactions contained herein shall have been
received, including any approvals from the parties boards of directors, which
shall not be unreasonably delayed or withheld. Both parties agree that they have
had an opportunity to consult with an attorney regarding the terms of this
Agreement.
13.15 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument.
13.16 Survivability. In the event of any termination of this Agreement,
Sections 1, 5, 6, 10, 13.6, 13.8 shall survive and continue in effect and shall
inure to the benefit of Licensee's and MAX's respective legal representatives,
executors, administrators, successors and assigns.
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13.17 Publication of Agreement. The parties shall mutually agree upon
the time, form and content of any press release, public announcement or
disclosure to any other third party regarding this Agreement, the Developed
Technology, or any matters related thereto, and no such press release, public
announcement or disclosure may be made prior to such agreement.
13.18. Assignability. This Agreement may not be assigned to any third
party by either party without the prior written consent of the non-assigning
party's express written consent not to be unreasonably withheld; except in the
event of a sale or transfer of all or substantially all of the assigning party's
assets to such third party except as provided in Section 4.4.
13.19. Remedies. Unless stated otherwise, all remedies provided for in
this Agreement shall be cumulative and in addition to and not in lieu of any
other remedies available to either party at law, in equity, or otherwise.
[signatures on the following page]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed, or through their duly authorized officers, have duly
executed this Agreement, effective as of the date first above written.
Max Internet Communications, Inc.
By: /s/ XXXXXX X. XXXXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxxxx,
Chairman of the Board and
Chief Executive Officer
By: /s/ XXXXX XXXXX
--------------------------------------
Xxxxx Xxxxx
President - xxxxxx.xxx
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EXHIBIT A
Definition of "Industry"
Except as excluded below, the "Industry" shall mean delivering repurposed
multimedia program content that is produced for transmission broadcast via
television, cable, satellite, Internet and/or radio broadcast directly and/or
indirectly to consumers and shall include any company that originates and by
electronic means transmits radio or television programming through a licensed
local television broadcast station(s), licensed local radio broadcast
station(s), cable television channel(s) or network(s), or satellite broadcasting
channel(s) or network(s).
Excluded from the meaning of "Industry" are applications, hardware or equipment
whose function does not affect the (i) visual or audio quality or (ii) the speed
of delivery of repurposed content (i) the following, including but not limited
to:
Companies in the following or similar hardware or equipment businesses
with a majority of sales derived from manufacturing, sale or support of
hardware, equipment or products:
A. Electronic News Gathering Equipment
B. Satellite News Gathering Equipment
C. Network Transmission Equipment including but not limited to:
Routers
Switches
Customer Premises Equipment
Electronic Messaging Systems
D. Interactive Television hardware equipment and software, which a user of
the interactive television hardware interacts with, that allows the
user to receive content
E. Consumer Electronics or Client Service Platforms
2. Companies in the following or similar service businesses:
A. Distributed Delivery Insertion of Advertising
B. Private, Corporate or Institutional Media Services including but not
limited to:
Hospitals
Government Agencies software applications, which a user of
hardware or equipment interacts with, that allows the
user to receive content
Charities
Religious Organizations
Educational Institutions
C. Private or Corporate Institutions with internal Media Services.
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EXHIBIT B
"Developed Technology" shall mean New Software Components formulated solely for
the first and successive versions of Licensee's products and/or services
contemplated as of the Effective Date to be known as the "Broadcast Fuel
Injector."
"New Software Components" shall mean computer software including application
programs, support programs and support files including but not limited to files
with names ending with the extensions .dll and .vxd, whether in compiled form or
in source code form that are not Derivative Work(s), and media processor native
software objects.
"Broadcast Fuel Injector" shall mean a proprietary software application program
which Licensee will own and use to encode, compress or otherwise re-purpose
audio/video content, that benefits from media processing acceleration by the
i.cLive Media Processor in conjunction with the Developed Technology.
Properties of the Developed Technology.
1. The Developed Technology shall comply with the following guidelines:
A. It will be new computer application program utilizing
Developed Technology, that will be installed after normal
installation of MAX's standard Mediaware, version 2093 or
2094.
B. It will utilize a cosmetic design to Licensee's specifications
to be provided by Licensee within thirty (30) days of
commencement of this Agreement.
C. It will provide video capture modes of: 176x144, 320x240,
352x240, 352x288
2. The Developed Technology shall also include the features defined below:
A. Developed Technology shall only operate upon x.x.Xxxx hardware
owned by Licensee and identified by a unique serial number.
B. The output of the Developed Technology shall be compatible
with Windows Media Player version 6.2.
Performance Requirements. The Developed Technology shall provide improved
quality of video compression, when compared to Microsoft Windows Media Encoder
version 4.1.00.3917 using its standard compressor/decompressor components. The
improved quality of video compression provided by the Developed Technology shall
equal or exceed an amount greater than fifty percent (50%) in any cumulative
combination of the Improved Quality Parameters defined below. Video compression
quality improvements will be present when a video streaming file is: i) viewed
at a rate of twenty-four (24) frames per second; ii) in an aspect ratio of 176
pixels by 144 pixels (horizontal by vertical; a.k.a Quarter Common Intermediate
Format or QCIF); iii) at a video data stream transmission rate averaging thirty
(30) kilo-bits per second (+/- 20%) viewed using Windows Media Player version
6.2.
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Acceptance Test. Performance of this Agreement shall be completed and the
Developed Technology shall be deemed acceptable upon i) Licensee's written
notice of acceptance or, ii) successful completion of the an Acceptance Test
performed in accordance with the Acceptance Test Procedure (ATP) described
below.
The Acceptance Test shall compare a "Reference" file and a "Subject" file in
order to demonstrate and measure the improved quality of video compression
performed by the Developed Technology.
The Acceptance Test shall be performed upon a mutually acceptable test platform
provided to MAX by Licensee within thirty (30) days of commencement of this
agreement.
Reference Video Tape. A VHS video-tape containing three (3) recorded analog
audio/visual sequences (sequences A, B and C) of thirty (30) seconds in length
each provided by Licensee.
Reference Files. The encoded data files (Reference Files A, B and C) produced by
utilizing Microsoft (standard) Windows Media Encoder to capture and process the
Reference Video Tape, at a setting that yield data files for data streaming at
an approximate average rate of 30 Kbps (+/- 20%) including audio.
Subject Files. The encoded data files (Subject Files A, B and C) produced by
utilizing the Developed Technology (with or without Microsoft standard Windows
Media Encoder) to capture and process the "Reference Video Tape," at a setting
that yield data files for data streaming at an approximate average rate of 30
Kbps (+/- 20%) including audio.
Improved Quality Parameters. MAX and Licensee agree that the following
parameters when reduced, minimized, and/or eliminated, constitute improved video
quality.
1. motion artifact or random pixel count,
2. appearance and/or persistence of macro-blocks,
3. poor object edge definition,
4. scene change artifact count,
5. scene change recovery delay
For the purpose of the Acceptance Test, audio quality shall be equivalent to
Windows Media Encoder set at a 12kbps mono aural audio bandwidth setting.
Other improved quality parameters that can be measured on a frame-by-frame or
sequential frame average basis may be added to the Acceptance Test by mutual
written consent of the parties prior to the Acceptance Test.
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Acceptance Test Procedure (ATP). The ATP shall be performed at a location to be
determined by mutual consent, and be witnessed by the parties. Tests shall be
judge by a panel of three anonymous broadcast industry specialists (the Judges)
as determined by mutual consent of the parties respective legal counsel. All
expense for the ATP shall be born by Licensee including but not limited to
facility rental, test equipment and other incidental expenses.
There shall be three tests that may be applied in order to determine compliance
of the Developed Technology. The Judges will make all comparisons on the
following scale of improved video quality rating:
No Improvement shall be equated as: zero percent (0%) improvement
Some " " " " " thirty-three " (33%) "
Significant " " " " " sixty-six " (66%) "
Great " " " " " one hundred " (100%) "
Test Number One: The Judges will view each pair of Reference and Subject Files
(of the three pairs) in full motion and rate the difference in playback quality
of the Subject File over its corresponding Reference File according to the
rating scale above.
Example: test rating form for Test # 1
Full Motion Test Amount of Comparative Improvement
Reference A versus Subject A None, Some, Significant or Great
Reference B versus Subject B
Reference C versus Subject C
Test Number Two: The Judges will view each pair of Reference and Subject Files
simultaneously, in a magnified or enlarged form, on a frame-by-frame basis. Each
Reference File still (or stopped motion) video frame will be compared to its
corresponding Subject File still video frame and rated according to the rating
scale above.
Example: test rating form for Test # 2
Stop Frame Overall Improvement Amount of Improvement per Frame
Reference A versus Subject A None Some Significant Great
Frame 1
Frame 2
Frame 3
Frame 4 through the final frame
A similar form must be used for comparison of each pair of Reference/Subject
Test Files
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Test Number Three: The Judges will view each pair of Reference and Subject Files
simultaneously, in a magnified or enlarged form, on a frame by frame basis. Each
Reference File still image (or stopped motion video frame) will be compared to
its corresponding Subject File still video frame and rated with respect to each
of the Improved Quality Parameters according to the rating scale above.
Example: test rating form for Test # 3, Reference A versus Subject A
Stop Frame Improve Quality Parameters: Pixel Macro Object Scene Overall
0 = No Improvement Error Block Edge Change Scene
1 = Some Improvement Improvement Improvement Definition Pixel or Change
2 = Significant Improvement Macro Delay
3 = Great Improvement Blocks Improvem't
Frame 1
Frame 2
Frame 3
Frame 4 through the final frame
A similar form must be used for comparison of each pair of Reference/Subject
Test Files
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EXHIBIT C
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EXHIBIT D
Form of Documentation
One weekly "Project Status Report" from each Technical Development, Contractor
or Other Staff member assigned to perform a substantial role in performance
under this Agreement.
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EXHIBIT E
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EXHIBIT F
On-going Development
Upon acceptance of the Developed Technology, under MAX's standard Professional
Services Agreement to add further enhancements of performance or functionality
to the Developed Technology.
Such On-going Development will be performed under the continuing Joint
Management guidelines of Section 2.1 of this Agreement.
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EXHIBIT G
License
MAX will provide standard Mediaware of current supported version, (1) per
x.x.Xxxx Media Processor with each x.x.Xxxx product used by Licensee.
"Standard Mediaware" shall mean the installable finished application provided to
purchasers of, and necessary to operate, products sold as i.c.Live3600R.
Standard Mediaware may include third party software titles under authorized
distribution agreements with the respective parties. As with all MAX's x.x.Xxxx
customers, the duty of acceptance and compliance with third party software
licenses shall be incumbent upon Licensee.
Microsoft DirectX
Windows Media Format SDK
Windows Media Encoder SDK
Internet Explorer - Content Developer License
NetMeeting
Media Player
Adobe Acrobat Reader
Intel / Ligos Indeo Encoder/Decoder drivers
White Pines CUSeeMe - Special MAX Edition
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EXHIBIT H
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EXHIBIT I
Form of Invoice
MAX's standard trade invoice form attached hereto
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EXHIBIT J
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EXHIBIT K
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EXHIBIT L
Work Continuance Plan
To ensure that the development will be able to proceed in the event
that MAX is forced to cease operations, the Key Personnel will be granted access
to a mutually agreeable off-site 'controlled access room' within which the
development will be allowed to continue.
The 'controlled access room' will be such that the access to the room
will be controlled by Licensee, and within the room, access to the source code
to the x.x.Xxxx Technology will be controlled by the XXX Xxx Personnel.
Licensee may use any reasonable means to control access to the room,
including door locks and electronic security measures, the keys to which
Licensee may choose to solely possess and control. The cost for any delays
associated with failure to allow XXX Xxx Personnel access to development tools
shall be fully born by Licensee. Upon notice by XXX Xxx Personnel of such
delays, a new plan for continuance shall be developed by the parties within (5)
working days or this Agreement shall become null and void.
The XXX Xxx Personnel will not be allowed access to the room without
the knowledge or approval of Licensee personnel designated in writing by
Licensee.
XXX xxx use any reasonable means to control access to the source code
to the x.x.Xxxx Technology, including a locking safe, electronic security
measures, and encryption techniques, the keys to which only XXX Xxx personnel
will possess.
In no case will Licensee personnel be allowed access to the source code
to the x.x.Xxxx Technology without the presence of the XXX Xxx Personnel. The
source code to the x.x.Xxxx Technology will be removed from the 'controlled
access room' only by XXX Xxx Personnel on conclusion of and payment for the
development.
The computers on which the source code to the x.x.Xxxx Technology will
be used will not be connected by any means to any network outside of the
controlled access room, including LAN, wan, wireless network technology, the
Internet or phone lines or removable media storage devices. Licensee agrees upon
risk of irreparable harm to MAX to prevent any unauthorized access to MAX's
development tools, computers, source codes and all associated intellectual
property under this Continuance Plan.
Salaries for the XXX Xxx Personnel will be paid out of the Development
Payments the remainder of which will be paid to MAX normally. All expenses for
work-space, utilities, and sundry operations costs will be borne by Licensee.
Upon acceptance of the Developed Technology, removal of all MAX's
intellectual property from the offsite controlled access room and full payment
of all Development Fees, it will be delivered to Licensee upon compact disk
storage media.
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EXHIBIT M
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EXHIBIT N
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EXHIBIT O
MAX's x.x.Xxxx Technology. All x.x.Xxxx components of existing software (all
versions) whether in finished form, source code or object code. All versions of
x.x.Xxxx and Chromatic Research hardware designs, products and prototypes.
Third Party Software. Any software not authored by MAX or Chromatic Research
that may be used with x.x.Xxxx Technology and/or may be distributed upon product
issues of Mediaware under license but is third party software, are not in any
way x.x.Xxxx Technology.
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EXHIBIT P
Support
Annual Maintenance Fees for the Developed Technology Cover:
Ongoing support - Application Support
- Training
Compatibility Advancement - Future Mediaware Versions
- Future Operating Systems
Planning of Future Enhancements of the Developed Technology
Preferred Alpha and Beta Test Support
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