EXHIBIT 99.1
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (hereinafter the "Agreement") is entered into this
1st day of March, 2005, by and among EF Marketing, LLC., a Florida limited
liability corporation ("Licensor"), Xxxxxxx Xxxxxxxxxx ("Xxxxxxxxxx"), and
Power2Ship, Inc., a Nevada corporation, and its wholly owned subsidiaries only
based in the United States and its Territories now or hereinafter in existence,
(collectively, "Licensee").
Recitals
Whereas, Licensor is authorized to grant licenses to third parties for
use of the trade name "Xxxxxxxxxx", and the name, image and likeness of
Xxxxxxxxxx ("Licensed Property"), the international celebrity and motorsports
champion;
Whereas, Licensor desires to grant a license for the use of the
Licensed Property in connection with the approved uses to Licensee upon the
terms and conditions set forth in this Agreement;
Whereas, Licensee desires to have Xxxxxxxxxx, a principal of Licensor,
promote Licensee's business as set forth herein; and
Whereas, Licensee desires to grant an exclusive right to Licensor for
the use of certain specialized logistical services developed by Licensee for the
trucking industry in Brazil.
Now, therefore, in exchange of mutual promises and consideration, the
receipt and value of which is mutually acknowledged, incorporating the foregoing
recitals, and intending to be legally bound, the parties agree as follows:
1. Grant of License by Licensor; Description of License.
(a) Licensor hereby grants to Licensee an exclusive license
(the "License") to use the Licensed Property, to market and promote Licensee's
business as limited to freight transportation industry and associated logistical
services (collectively, the "Licensed Uses") in the Territory (as defined in
paragraph 3 below).
(b) In connection with the exploitation of the License,
Licensee may produce and distribute "Licensed Merchandise". "Licensed
Merchandise" shall mean the items described on Exhibit "A" attached hereto and
incorporated herein as well as additional items that may be mutually agreed to
by the parties in writing and added to Exhibit "A" during the term of this
Agreement.
2. Term. Subject to the provisions Section 10 of this Agreement, the
term of this Agreement shall be five (5) years, commencing on the date of this
Agreement and shall expire on the fifth anniversary of this Agreement.
3. Territory. For purposes of this Agreement, the term "Territory"
shall mean the United States and its territories. The Licensee may use the
License created by this Agreement and engage in the Licensed Uses only within
the Territory. Notwithstanding the foregoing, Licensee may use the License
created by this Agreement and engage in the Licensed Uses outside the Territory
when such uses will not transfer to Licensee's business to vendors of Licensee's
service outside the Territory and not for promotion to end users of Licensee's
services.
4. No Assignment or Sub-license.
This Agreement may not be assigned or sub-licensed by Licensee
without the prior written consent of Licensor, which may be denied in Licensor's
sole discretion, and any assignments or sub-licenses without the written
approval of Licensor are void and shall have no force or effect.
5. No Ownership Interest. The License created by this Agreement does
not grant to Licensee any ownership interest in Licensor, or any of its shares,
assets or property, including, but not limited to the Licensed Property, it
merely grants to Licensee a limited and revocable license under the terms and
conditions set forth in this Agreement. Each party to the Agreement shall
indemnify and hold harmless the other parties to this Agreement, and their
respective agents, officers, employees, servants, shareholders, directors, and
representatives (collectively the "Indemnified Party"), from any and all claims,
liabilities, damages and costs, including attorneys' fees and costs at all trial
and appellate levels incurred by the Indemnified Party arising out of the
ownership or title (in the case of Licensor or Xxxxxxxxxx) or improper use (in
the case of the Licensee) of the Licensed Property.
6. Licensor Approval of Particular Uses.
Licensor shall have the right to review in advance the proper
use of the Licensed Property. Such review shall include, but not be limited to,
pre-approval of a proof of any advertisement or promotion or any other intended
use. Licensor will provide written approval or disapproval, in its sole
discretion, within three (3) business days following receipt of the proposed
use. If the item is disapproved, the Licensor shall describe the reason(s) for
the disapproval and the parties shall work together in good faith in order that
Licensor may provide approval therefor.
7. Consideration.
(a) As consideration for
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(i) the grant of the License, Licensee shall issue to Licensor
promptly upon execution of this Agreement two hundred thousand (200,000)
unregistered shares of Licensee's common stock ("Common Stock") and a five-year
warrant granting Licensor with the right to purchase one million (1,000,000)
shares of Licensee's common stock at an exercise price of fifty cents (US $.50)
per share, which warrant shall vest at the rate of 200,000 shares per year on
each annual anniversary of this Agreement commencing one year from the date of
this Agreement. In the event that this Agreement is terminated for any reason,
then any unvested portion of the warrant shall terminate and be of no further
force and effect. Further, in the event that there is a change in control of
Licensee, defined as an investor or group of investors that collectively had
ownership of less than 5% of Licensee increasing their ownership to at least 20%
of Licensee, then any remaining unvested warrants of Licensor shall immediately
become vested. The shares of common stock issued to Licensor and underlying the
warrant (collectively the "Registerable Shares") shall have piggyback
registration rights under the Securities Act of 1933 (the "Securities Act").
Further, with a view to making available to Licensor the benefits of Rule 144
(or its successor rule) and any other rule or regulation of the U.S. Securities
and Exchange Commission that may at any time permit the Licensor to sell the
Common Stock to the public without registration, the Licensee covenants and
agrees to: (A) make and keep public information available, as those terms are
understood and defined in Rule 144, until the earlier of (1) such date as all of
the Common Stock may be resold without volume limitations in accordance with
Rule 144(2) under the Securities Act or (2) such date as all of the Common Stock
shall have been resold and (B) file with the Commission in a timely manner all
reports and other documents required of the Licensee under the Securities Act
and under the Securities Exchange Act of 1934. At all times, the Licensee, at
its expense, shall promptly (within three (3) business days) effectuate any
actions of third parties within the control of the Licensee who are necessary to
enable the Common Stock to become freely tradeable and immediately transferable,
whether pursuant to an effective registration state or Rule 144, including
without limitation, furnishing the Licensee's transfer agent with all necessary
consents and legal opinions within three (3) business days of Licensor
submitting a request for such consents and opinions, together with standard
supporting documents, to Licensee and its legal counsel. Licensee's covenants
are material inducements to Licensor to execute this Agreement. In the event
Licensor has been unable to exercise such piggyback within three (3) years of
the date of this Agreement, Licensee shall undertake, on one occasion to
register the Registerable Shares under the Securities Act for resale and
(ii) the promotion and publicity to be provided by Xxxxxxxxxx
pursuant to paragraph 11 of this Agreement, Licensee shall issue to Xxxxxxxxxx
one hundred thousand (100,000) shares of Licensee's common stock registered
pursuant to the Licensee's Registration Statement on Form S-8 relating to its
2001 Employee Stock Compensation Plan filed on June 4, 2001, as amended (SEC
File No. 333-62240). Xxxxxxxxxx agrees not to resell more than 25,000 of such
shares (either publicly or privately) in any given calendar month.
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(b) In the event that Licensor refers or develops additional
license agreements or other business for Licensee, then Licensor shall be paid
the same percentage of net cash flow generated by such additional license
agreements or other business as defined in Section 4 of the Exclusive Marketing
Agreement with International Logistics Solutions, Inc. dated November 24, 2004.
Licensee shall be under no obligation to enter into any such additional license
agreements or establish any business relationships.
(c) In the event Licensee obtains financing in any form
("Proceeds") from any party originally introduced by Licensor to Licensee,
Licensee agrees to pay Licensor, upon receipt by Licensee of the Proceeds, a
finder's fee ("Fee") equal to five (5) percent of Proceeds as follows: five (5)
percent in cash of any portion of the first one million dollars ($1,000,000.00)
of Proceeds plus four (4) percent in cash and one (1) percent in shares of
unregistered common stock of Licensee of any portion of the second one million
dollars ($1,000,000.00) of Proceeds plus three (3) percent in cash and two (2)
percent in shares of unregistered common stock of Licensee of any portion of the
third one million dollars ($1,000,000.00) of Proceeds plus two (2) percent in
cash and three (3) percent in shares of unregistered common stock of Licensee of
any portion of the fourth one million dollars ($1,000,000.00) of Proceeds plus
one (1) percent in cash and four (4) percent in shares of unregistered common
stock of Licensee of any Proceeds over four million dollars ($4,000,000.00). The
number of shares of unregistered shares of common stock of Licensee to be issued
as part of any such Fee shall be based on the average closing price of the
shares for the five (5) trading days immediately prior to the closing of any
such financing. To the extent any Proceeds are paid on a deferred or installment
basis, Licensor's Fee shall be paid when such Proceeds are actually received by
Licensee. Licensor agrees that the payment of the Fee to Licensor, directly or
through its affiliates or assigns, shall be waived if Licensee's legal counsel
deems it to be a violation of any Federal or state securities or other law or
regulations. In such event, then Licensee shall procure a second opinion of an
outside law firm mutually acceptable to the parties on the issue and shall be
guided by such opinion.
8. Additional Representations, Warranties and Covenants of
Licensee. Licensee represents, warrants and covenants as follows:
(a) Licensee shall refrain from engaging in any activities
that would adversely affect the reputation of the Licensor or cause harm to the
name "Xxxxxxxxxx" or disrepute to Xxxxxxxxxx. Licensee acknowledges that
"Xxxxxxxxxx" is a unique and valuable trade name. Licensee warrants and
represents that it shall always conduct its business affairs in a legal and
ethical manner and in such a way to enhance the stature of the "Xxxxxxxxxx"
trade name and Xxxxxxx Xxxxxxxxxx. Licensee warrants and represents that it
shall not undertake any activity or proposed use of the Licensed Property which
will undermine or damage its commercial value.
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(b) Upon the termination of this Agreement, Licensee shall
immediately cease any and all use of marketing information and materials created
under this Agreement.
(c) Licensee is a corporation duly organized and validly
existing in good standing under the laws of the State of Nevada. Licensee has
the full legal right and authority to enter into this Agreement and to undertake
the actions to be performed under this Agreement.
(d) Licensee is not prevented by any other agreement from
entering this Agreement with Licensor.
(e) Licensee further warrants and represents that it has the
requisite expertise, ability, rights and know-how to fulfill its obligations
under this Agreement.
(f) Licensee shall at all times comply with any and all
applicable laws, statutes, court decisions, administrative rules and
regulations, in the conduct of its business.
(g) Licensee shall name Xxxxxxxxxx, as covered insureds under
all of Licensee's general liability and contingent liability insurance
policy(ies) within ten (10) business days of executing this Agreement. Licensee
shall provide a copy of said insurance policy(ies) and instruct the insurance
companies to provide notice to Licensor of the non-payment or cancellation of
any policy, and proof that Licensor and its parties have been listed on said
policy(ies) as covered insureds.
9. Representations and Warranties of Licensor. Licensor represents and
warrants as follows:
(a) Licensor is a corporation duly organized and validly
existing in good standing under the laws of the State of Florida. Licensor has
the full legal right and authority to enter into this Agreement and to undertake
the actions to be performed under this Agreement.
(b) Licensor has the authority to grant to the Licensee the
License created by this Agreement and that grant of the License to Licensee will
not violate the rights of any third party.
(c) Licensor has good and valid title to the Licensed
Property. The License Property does not infringe upon the rights of any third
parties and no third party has infringed upon the Licensed Property.
(d) Licensor is acquiring common stock and warrants described
in paragraph 7 (a)(i) of this Agreement (the "Securities") hereunder for
investment for its own account, and not with a view to the resale or
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distribution of any part thereof, and that Licensor has no present intention of
selling or otherwise distributing the Securities.
(e) Licensor has such knowledge and experience in financial
and business matters that make it capable of evaluating the merits and risks of
investment in the Company, including the Licensee's reports filed with the U.S.
Securities and Exchange Commission
(f) Licensor understands that the Securities have not been
registered under the Securities Act and applicable state securities laws, and,
if issued in accordance with the provisions of this Agreement, will be issued by
reason of a specific exemption from the registration provisions of the
Securities Act and applicable state securities laws which depends upon, among
other things, the bona fide nature of the investment intent and accuracy of
Licensor's representations as expressed herein.
(g) Licensor understands that the Securities are characterized
as "restricted securities" under the Securities Act inasmuch as this Agreement
contemplates that, if acquired by Licensor pursuant hereto, the Securities would
be acquired in a transaction not involving a public offering. Licensor further
acknowledges that if the Securities are issued in accordance with the provisions
of this Agreement, such Securities may not be resold without registration under
the Securities Act of the existence of a legitimate exemption therefrom. In this
connection, Licensor represents that it is familiar with Rule 144 promulgated
under the Securities Act, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
(h) It is understood that the Securities may bear one or all
of the following or any similar legends:
(1) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(2) Any legend required by the "blue sky" laws of any
state to the extent such laws are applicable to the securities represented by
the certificate so legended.
(i) Licensor represents that it is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
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10. Termination; Remedies.
(a) Each party hereto shall have the right to terminate this
Agreement due to a breach by the other party of any term of this Agreement,
including but not limited to, the representations, warranties and covenants set
forth herein, following written notice of said breach to the breaching party and
failure of the breaching party to cure a breach which is curable within thirty
(30) business days of receipt of the notice. Incurable breaches shall not be
subject to the notice and cure provision and shall entitle Licensor to
immediately terminate the Agreement, and shall include the following: (i) in the
event that Licensee uses the Licensed Property contrary to Licensor's approval,
commits any illegal or illicit act; (ii) Licensee permits the cancellation of
any insurance coverage in which Licensor is a covered insured; (iii) Licensee
takes any action which xxxxx the value of the Licensed Property which is not
capable of being cured by Licensee within thirty (30) business days of being
notified by Licensor; and (iv) if any financial obligation of Licensee to
Licensor is not satisfied within ten (10) business days of notice by Licensor to
Licensee. Licensor may terminate this Agreement at any time by giving written
notice to Licensee if (a) Licensee is involuntarily dissolved, makes an
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy or (b) Licensor becomes aware that Licensee has committed any act or
become involved in any situation or occurrence which, in the reasonable opinion
of Licensor, brings Licensor or the Licensed Property into public disrepute,
scandal or ridicule, or shocks or offends the community, or reflects unfavorably
upon the Licensed Property which is not cured by Licensee within five (5)
business days of being notified by Licensor.
(b) Licensee acknowledges that a breach by it of any of its
obligations set forth herein will cause Licensor irreparable harm or damage, the
monetary amount of which would be difficult, if not impossible, to ascertain.
Licensee therefore agrees that Licensor and its successors and assigns shall
have the right, in addition to seeking monetary damages, to seek and obtain the
remedy of specific performance and/or injunction with respect to any violation
or threatened violation of any provision of this Agreement. Licensee agrees to
waive the requirement that Licensor post a bond in any such proceeding.
11. Promotion and Publicity.
(a) In connection with the License granted hereunder,
Xxxxxxxxxx shall make a minimum of two (2) appearances per year to promote the
business of Licensee. All such promotional activities shall be at Licensee's
cost.
(b) All press releases concerning this Agreement shall be
pre-approved by both parties. In no event shall any information concerning the
payments to be made to Licensor under this Agreement be disclosed in any press
release or be made public in any manner and shall remain strictly confidential
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other than if such disclosure is required to be made pursuant to any securities
or other laws or regulations of the United States. The confidentiality
obligation of Licensee shall be a continuing obligation, and shall survive the
expiration or termination of this Agreement.
(c) When Xxxxxxxxxx makes a public appearance on behalf of
Licensee which requires travel, and such public appearance is agreed to by
Licensor in its sole discretion, then Licensee shall provide at its sole expense
(i) two first class airline tickets and first class hotel accommodations
reasonably approved by Licensor; (ii) car service to and from the location of
the public appearance; and (iii) meals during the stay. Any public appearances
must be approved by Licensor according to Xxxxxxxxxx'x schedule and any total
travel and appearance may not exceed a forty-eight (48) hour period with a
maximum appearance time of five (5) hours per day.
12. Grant of Rights by Licensee to Licensor
For as long as Licensor is not in default of its obligations under this
Agreement, Licensee will grant a non-exclusive right to use and/or market
Licensee's "ASP" software and any upgrades, modifications or revisions thereto
for the Licensed Uses exclusively in Brazil for a period of five (5) years.
Licensee acknowledges that there is no assurance that the "ASP" software is
marketable in Brazil or that it would be feasible to commercialize its use.
Licensor agrees to undertake an investigation of the commercial feasibility of
the marketability of the "ASP" software in Brazil, and to attempt to market its
use if Licensor believes that it is commercially feasible. Further, Licensor's
rights pursuant to this paragraph will terminate if Licensor has not negotiated
a definitive marketing agreement with Licensee within six (6) months of the date
of execution of this License Agreement or, after this six (6) months, if certain
mutually agreed upon performance objectives are not met. Licensee solely shall
be responsible for payment of any applicable exchange or custom duties or taxes
imposed by any Brazilian taxing authority. Licensor shall have the sole right of
first refusal to negotiate an extension of the term of the marketing agreement.
13. Miscellaneous Provisions.
(a) Nothing herein contained shall be construed as creating a
joint venture or partnership between the parties. The relationship between the
parties is one of "independent contractor" and neither party to this agreement
is an employee, agent, servant, partner or joint venturer of the other, meaning
that, except as expressly provided for in this agreement, no party to this
agreement has the authority, implied, apparent or expressed, to lawfully bind
the other with respect to any matter.
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(b) Neither Licensor, Xxxxxxxxxx or the Licensee, including
their respective employees, are authorized to release any information regarding
the terms of this Agreement or any other financial or confidential information
without the prior written consent of the other party.
(c) This Agreement contains the entire understanding of the
parties hereto and supersedes any previous written and verbal communications
and/or agreements between the parties or their representatives.
(d) No modifications, alterations, amendments, or waivers of
any provision of this Agreement shall be binding unless such modification,
alteration, amendment, or waiver is in writing and signed by the parties
affected.
(e) This Agreement shall be governed by the laws of the State
of State of Florida.
(f) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors, permitted
assigns, and legal representatives. This provision shall not be construed to
affect the provision elsewhere in this Agreement restricting assignments.
(g) If an action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' and paralegal fees, costs and expenses, including fees
and costs at the appellate level, in addition to any other relief to which it
may be entitled. The parties agree to submit to the personal and subject matter
jurisdiction of the courts of the State of Florida, Palm Beach County. The
parties waive trial by jury.
(h) Notices:
Any notice, request, or other communication to be given by any
party hereto shall be in writing and sent by fax or electronic mail, with a
confirmation being sent by overnight delivery next day prepaid and addressed to
the respective parties as follows:
To Licensor or Xxxxxxxxxx:
EF Marketing, LLC
0000 Xxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Yanowitch Law Center
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
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To Licensee:
Power2Ship, Inc.
000 Xxxxx Xxxxx Xx.
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxx (000) 000-0000
With a copy to:
Xxxxxxxxx Xxxxxxxxxx and Beilly LLP
0000 Xxxxxxxxx Xxxx., X.X., Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq. (000) 000-0000
(i) Neither party is deemed the sole author of this Agreement
for purposes of interpretation.
(j) Neither party shall disparage the other in any public
statement at any time during or after the expiration or termination of this
Agreement with the exception of making any statement privileged as such in any
litigation proceeding.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LICENSOR LICENSEE
EF Marketing, L.L.C. Power2Ship, Inc.
By:/s/ Xxxxxxx Xxxxxxxxxx By: /s/ Xxxxxxx Xxxxx
------------------------- -----------------
Authorized Representative Xxxxxxx Xxxxx
Chief Executive Officer
XXXXXXXXXX
/s/ Xxxxxxx Xxxxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxxxx
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Exhibit A
Licensed Merchandise
--------------------
Licensed Merchandise means any item that is a complimentary giveaway by
Power2Ship to its current or prospective customers including, but not limited
to, brochures, advertisements, billboards, pens, clothing, buttons, bumper
stickers, that include the Licensed Property.
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AMENDMENT NO. 1 TO LICENSE AGREEMENT
BY AND AMONG EF MARKETING, LLC, XXXXXXX XXXXXXXXXX
AND POWER2SHIP, INC. DATED MARCH 1, 2005.
EF Marketing, LLC, a Florida limited liability corporation
("Licensor"), Xxxxxxx Xxxxxxxxxx ("Xxxxxxxxxx"), and Power2Ship, Inc., a Nevada
corporation, and its wholly owned subsidiaries only in the United States and its
Territories now and in the future, entered this Amendment No. 1 to License
Agreement among the parties dated March 1, 2005, and state as follows:
Whereas, the parties entered a License Agreement dated March 1, 2005
("License Agreement");
Whereas, the parties desire to amend the terms of the License Agreement
as provided herein and ratify and re-affirm all other provisions of the License
Agreement which are not amended;
The parties in exchange for good and valuable consideration, and
incorporating the aforesaid recitals, and intending to be legally bound, agree
as follows:
1. The License Agreement is hereby amended:
a. Page 1, introductory paragraph: The date of the License
Agreement is amended such that the date of execution of this Amendment Agreement
is now considered the date of the License Agreement.
b. Page 1 introductory paragraph: the fourth and fifth lines
"only based in the United States and its Territories... "are hereby deleted."
c. The fourth recital paragraph is deleted.
d. Section 1. (a), the phrase "in the Territory (as defined in
paragraph 3 below" is deleted and replaced by the word "globally".
e. A new section Section 1. (c) is added as follows:
"Licensee shall have the exclusive right during the term of
this Agreement to a non-exclusive license to the name
"Xxxxxxxxxx", for the limited and sole purpose of re-naming
itself or its subsidiaries with the names "Xxxxxxxxxx
Worldwide Logistics", "Xxxxxxxxxx International", "Xxxxxxxxxx
Global Logistics". The use of the "Xxxxxxxxxx" name shall
cease at the expiration or termination of this Agreement. Any
use of the "Xxxxxxxxxx" name may only be made with the prior
written approval of Licensor, which approval may be withheld
in its sole discretion. Upon any change of control of
Licensee, the limited license shall be terminated. Licensee
shall not be permitted to sub-license the name "Xxxxxxxxxx",
or grant any other rights to the name "Xxxxxxxxxx" or use the
name "Xxxxxxxxxx" for any other purpose. Licensor otherwise
waives and releases any claim, right, title or interest in the
name "Xxxxxxxxxx" and acknowledges that the rights to such
name solely belongs to Licensor, and Licensee hereby
indemnifies and holds Licensor harmless from any claims of
ownership or interest in the name "Xxxxxxxxxx", and Licensee
shall advance any legal fees to Licensor to defend against any
such claims." Licensor shall have the right to terminate the
limited license if in its sole belief any of the actions of
Licensee is causing harm to the good name of "Xxxxxxxxxx".
Licensee shall not have any rights to the image and likeness
of Xxxxxxx Xxxxxxxxxx. Licensee agrees that it and its
affiliates will include release and hold harmless language in
any purchase agreement with their customers, by which said
customers will release Xxxxxxx Xxxxxxxxxx, and his heirs,
successors and assigns from any and all claims relating to the
use of the products. Licensee will provide a draft of such
release and hold harmless language to Licensor for its
approval. Licensee shall provide Licensor current copies of
any customer contracts to enable Licensor to monitor the
inclusion of such release and hold harmless language by
Licensee and its affiliates.
f. On page 2 of the License Agreement, in Section 2. entitled
"Term", in the second line replace the phrase "five (5) years" with the word
"perpetual".
g. In the third line delete "and shall expire on the fifth
anniversary of this Agreement."
h. Section 3. Territory is deleted in its entirety.
i. Pages 3 and 4 add a new Section 7 (iii) as follows"
Licensor shall be entitled to receive:
(a) participation interest ("Participation Interest")
equal to a percentage of the net cash from operating
activities and net cash from investing activities
("Net Operating Cash") from any business activities
undertaken by the Company or any of its subsidiaries
during the period from the effective date of this
Amendment through June 30, 2007 and, thereafter, for
each fiscal year ending June 30 as follows:
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(1) fifty percent (50%) of the Net Operating
Cash generated by the Company or any of its
subsidiaries operating in Brazil for the
period for;
(2) twenty-five percent (25%) of the Net
Operating Cash generated by the Company of
any of its subsidiaries operating anywhere
in the world other than in Brazil, the
United States and its territories, and
Canada; and
(3) ten percent (10%) of the Net Operating
Cash generated by the Company's operations
in the United States and its territories and
Canada.
Net Operating Cash shall be determined separately for
each of the three geographic territories in sections
7. iii. (a) (1), (2). and (3). above by the Company's
regularly appointed independent registered public
accounting firm according to generally accepted
accounting standards. The accounting firm shall be
instructed to provide the parties with three
calculations of Net Operating Cash for each of the
three geographic territories and shall not combine
the revenues and expenses of each of the territories
when computing Net Operating Cash. In the event that
one or more of the geographic territories in sections
7. iii. (a) (1), (2), and (3) above has negative Net
Operating Cash during a given fiscal year, then
Licensor's Participation Interest in such territory
shall be zero during that period. This Participation
Interest shall be paid to Licensor within thirty (30)
days of completing the annual audit of the financial
statements of the Company; and
(b) a five-year warrant to purchase eight million
(8,000,000) shares of Licensee's common stock at an
exercise price of two and one-half cents (US $.025)
per share. This warrant shall be fully vested
simultaneously upon execution of this Amendment
Agreement. In the event that this Agreement is
terminated for any reason, then any unvested portion
of the warrant shall terminate and be of no further
force and effect. The shares of common stock issued
to Licensor and underlying the warrant (collectively
the "Registerable Shares") shall have piggyback
registration rights under the Securities Act of 1933
(the "Securities Act"). Further, with a view to
making available to Licensor the benefits of Rule 144
(or its successor rule) and any other rule or
regulation of the U.S. Securities and Exchange
Commission that may at any time permit the Licensor
to sell the Common Stock to the public without
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registration, the Licensee covenants and agrees to:
(i) make and keep public information available, as
those terms are understood and defined in Rule 144,
until the earlier of (a) such date as all of the
Common Stock may be resold without volume limitations
in accordance with Rule 144(2) under the Securities
Act or (b) such date as all of the Common Stock shall
have been resold and (ii) file with the Commission in
a timely manner all reports and other documents
required of the Licensee under the Securities Act and
under the Securities Exchange Act of 1934. At all
times, the Licensee, at its expense, shall promptly
(within three (3) business days) effectuate any
actions of third parties within the control of the
Licensee who are necessary to enable the Common Stock
to become freely tradeable and immediately
transferable, whether pursuant to an effective
registration state or Rule 144, including without
limitation, furnishing the Licensee's transfer agent
with all necessary consents and legal opinions within
three (3) business days of Licensor submitting a
request for such consents and opinions, together with
standard supporting documents, to Licensee and its
legal counsel. Licensee's covenants are material
inducements to Licensor to execute this Agreement. In
the event Licensor has been unable to exercise such
piggyback within three (3) years of the date of this
Agreement, Licensee shall undertake, on one occasion
to register the Registerable Shares under the
Securities Act for resale and
(c) the right to designate and replace at his
discretion, one member to the board of directors of
the Company.
j. Page 8, Section 12 entitled "Grant of Rights by Licensee to
Licensor" is hereby deleted in its entirety.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LICENSOR LICENSEE
EF Marketing, L.L.C.
By:/s/ Xxxxxxx Xxxxxxxxxx By:/s/ Xxxxxxx Xxxxx
------------------------------------- ----------------------------
Authorized Representative Xxxxxxx Xxxxx
Chief Executive Officer
XXXXXXXXXX
By: /s/ Xxxxxxx Xxxxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxxxx
4
