EXHIBIT 10.13
LICENSE AGREEMENT
This Agreement is entered into this 4th day of October 1996, by and
between SSNN, Inc. ("Licensor"), a Nevada corporation, with offices at 000 Xxxxx
Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxx 00000, and Digital Data Networks, Inc.
("Licensee"), a Washington corporation, with offices at 0000 Xxxxx Xxxxxx, Xxxxx
000, Xxxxxx, Xxxxx 00000.
RECITALS
Licensor is the developer and owner of a Service to provide
comprehensive financial news and other information about small capitalization
companies to persons who subscribe to the service on the Internet.
Licensee desires to acquire the rights from Licensor to use, market and
sell the Service to subscribers in the Territory, and Licensor has agreed to
grant to Licensee an exclusive license to use the Service, and to improve upon,
use, market and sell the Service within the Territory.
1.0 Definitions.
The following terms shall have the meanings set forth herein except to
the extent the context otherwise requires:
(a) "Gross Revenues" means the dollar amount of all
revenues received by Licensee from customers in
Canada and the United States which result from the
sale, use and marketing of the Service, expressed in
U.S. Dollars. Gross Revenues would also include any
and all advertising, promotional fees, Web page
design fees and Web page referral fees received by
Licensee in connection with the Service;
(b) "Initial Term" means the term specified in Section
3.1;
(c) "Internet" means the global network of computers;
(d) "License" means the License granted to Licensee by
Licensor pursuant to this License Agreement;
(e) "License Year" means a period of 12 months commencing
on the date of this Agreement or each consecutive
anniversary of that date;
(f) "Licensee's Improvements" means all improvements to
the whole or any part of the Service (whether
patentable, trademarked or not), including technical
information relating to, being supplied with,
producing, using, marketing or selling the Service
developed or acquired by the Licensee or a
sub-Licensee during the Term of the License;
(g) "Licensor's Improvements" means all improvements to
the whole or any part of the Service (whether
patentable or not), including technical information
relating to, being supplied with, producing, using,
marketing or selling the Service developed by
Licensor during the Term of the License;
(h) "Persons" and words signifying persons include
individuals, firms, partnerships, corporations,
associations and governments and governmental,
quasi-governmental and local authorities and
agencies;
(i) "Service" means the service developed by Licensor to
provide financial and other corporate information
about small capitalization companies to subscribers;
(j) "Small Cap Companies" means companies with a market
capitalization of less than $300 million;
(k) "Term of the License" means the Initial Term,
together with any further terms, until either party
gives notice pursuant to Section 3.2 hereunder;
(l) "Territory" means the Dominion of Canada;
(m) "Trade Marks" means any trademarks existing or in the
future attributed to the Service, and applications
filed in any jurisdiction within the Territory or in
the United States.
2.0 Grant of License.
2.1 For the Term of the License, the Licensor hereby
grants to the Licensee, who accepts, subject to the terms and
conditions of this License Agreement, an exclusive license within the
Territory to use, market, sell and develop the Service under the Trade
Marks.
2.2 Licensor shall not, for the Term of this License
Agreement and for six months after the termination hereof, use, market
or sell the Service to customers who purchased the Service from the
Licensee within the Territory.
3.0 Term of the License.
3.1 The License shall commence on the date of this
License Agreement and continue for an Initial Term of one (1) year, and
shall be automatically renewable thereafter for consecutive one-year
terms, provided that Licensee meets or exceeds the following minimum
requirements:
(a) During the Initial Term, Licensee shall contract
with a minimum of twenty-five (25) paying
customers who shall subscribe to the Service at a
fee of no less than $2,000 Canadian;
(b) During subsequent one-year terms, Licensee shall
contract with a minimum of twenty (20) new paying
customers who shall subscribe to the Service at a
fee of no less than $2,000 Canadian;
(c) Once Licensee reaches a cumulative five hundred
(500) paying customers, then Licensee shall have
the right to license the Service in perpetuity.
3.2 The Licensee may give written notice to the Licensor
at any time prior to 90 days before the anniversary date of any License
Year of its intention to terminate this License Agreement and it shall
terminate at the expiration of said License Year.
4.0 Payments to the Licensor.
4.1 In consideration for the grant of the License
hereunder and the use of the License during the Term hereof, Licensee
shall pay to Licensor the following:
(a) Upon execution of this License Agreement, Licensee
shall cause its Transfer Agent to issue to Licensor
25,000 shares of Licensee's Common Stock, no par
value. Licensor hereby agrees to take such shares for
investment and not with a view to distribution. The
certificates representing such shares shall be
stamped with a restrictive legend prohibiting
transfer of such shares in the absence of an
effective registration statement or an opinion of
counsel satisfactory to Licensee that registration is
not necessary;
(b) Within 30 days after the end of each three month
period of the first License Year, 20% of Gross
Revenues received by Licensee during such License
Year resulting from the sale, use and marketing of
the Service within the Territory shall be paid by
Licensee to Licensor;
(c) Within 30 days after the end of each three month
period of the second License Year, 10% of Gross
Revenues received by Licensee during such License
Year resulting from the sale, use and marketing of
the Service within the Territory shall be paid by
Licensee to Licensor;
(d) Within 30 days after the end of each three month
period of the third License Year, 5% of the Gross
Revenues received by Licensee during such License
Year resulting from the sale, use and marketing of
the Service within the Territory shall be paid by
Licensee to Licensor;
(e) Except as set forth below, no additional payments
shall be made by Licensee after the third License
Year;
(f) If Gross Revenues received by Licensee from the sale,
use and marketing of the Service within the Territory
exceed $1 million in any License Year, Licensee shall
cause to be issued to Licensor 50,000 Common Stock
Purchase Warrants, which shall have a strike price
which is the median price between the closing Bid and
Ask on the last day of the License Year in which
Licensee exceeds the $1 million in Gross Revenues.
These Common Stock Purchase Warrants shall expire
five (5) years from the date of exercise of these
Warrants;
(g) If Gross Revenues received by Licensee from the sale,
use and marketing of the Service within the Territory
exceed $5 million in total, beginning with the
commencement of this License Agreement, Licensee
shall cause to be issued to Licensor 100,000 Common
Stock Purchase Warrants, which shall have a strike
price which is the median price between the closing
Bid and Ask on the last day of the License Year in
which Licensee exceeds the $5 million in Gross
Revenues. These Common Stock Purchase Warrants shall
expire five (5) years from the date of exercise of
these Warrants;
(h) If Gross Revenues received by Licensee from the sale,
use and marketing of the Service within the Territory
exceed $10 million in total, beginning with the
commencement of this License Agreement, Licensee
shall cause to be issued to Licensor 250,000 Common
Stock Purchase Warrants, which shall have a strike
price which is the median price between the closing
Bid and Ask on the last day of the License Year in
which Licensee exceeds the $10 million in Gross
Revenues. These Common Stock Purchase Warrants shall
expire five (5) years from the date of exercise of
these Warrants;
(i ) Any Warrants reserved for issuance pursuant to
Sections 4.1(f), (g) and (h) above that have not been
issued at the end of five (5) years from the date of
this License Agreement shall be terminated.
5.0 Reports, Records and Inspection
5.1 At the time of making the payments set forth in
Sections 4.1(b), (c) and (d) above, Licensee shall provide Licensor a
written report of Gross Revenues from the sale, use and marketing of
the Service for the period covered by the applicable payment. Similar
reports shall be delivered to Licensor within 90 days after the end of
Licensee's License Year, with respect to any Common Stock Purchase
Warrants to be issued to Licensor pursuant to Sections 4.1(f), (g) and
(h).
5.2 Licensee shall cause to be kept, at its principal
office, true and detailed records of its revenues from the sale, use
and marketing of the Service. Licensor and its authorized
representatives shall have the right to inspect such records at any
time during normal business hours after giving Licensee seven (7)
business days prior written notice of its intention to do so.
6.0 Representations and Warranties of Licensor.
6.1. Licensor represents and warrants to Licensee as
follows:
(a) Licensor is a corporation, duly organized, validly
existing and in good standing and has the requisite
corporate power and authority to carry on its
business as it is now conducted;
(b) Licensor has the requisite corporate power to enter
into this License Agreement, such Agreement has been
duly authorized, executed and delivered by Licensor,
and no other corporate proceedings on the part of
Licensor are necessary for the execution and delivery
of this License Agreement and the grant of the
License hereunder.
(c) No consent, approval authorization or order of any
person or governmental authority is required to be
obtained by the Licensor in connection with the grant
of the License hereunder.
(d) There is no pending or threatened litigation, action
suit, or proceeding involving the Invention, Trade
Marks or License granted hereunder.
(e) The Licensor has filed all applications and has
obtained all approvals, licenses and authorizations
necessary to own the Service. Licensee has the right
to grant the License hereunder.
7.0 Property Rights
7.1 Licensee acknowledges that:
(a) This License Agreement does not transfer to Licensee
any proprietary rights in any part of the Service;
(b) All existing goodwill in the Service is vested and
all future goodwill in the Service arising out of the
sale, use and marketing of the Service will vest in
Licensor and remain the property of Licensor.
8.0 Infringement of Service.
8.1 Licensee agrees to notify Licensor immediately each
time Licensee becomes aware of any actual or apparent infringement or
unauthorized use of the Service.
8.2 Licensee shall, if required by Licensor, lend its
name and shall otherwise do all reasonable acts, matters and things and
execute all documents which Licensor may reasonably require for the
purpose of any claim or proceedings against any person for actual or
apparent infringement of the Service.
9.0 Default by Licensee.
9.1 Licensee shall be in default under this License
Agreement if:
(a) Licensee fails to make any payments of cash, stock or
warrants required pursuant to Section 4 hereof within
fourteen (14) days of written demand for payment has
been made by Licensor following the due date of
payment;
(b) Licensee fails to remedy any breach of its
obligations under this License Agreement within
fourteen (14) days after written demand for remedy
has been made by Licensor;
(c) Licensee becomes insolvent or makes an assignment for
the benefit of creditors, or there shall be convened
a meeting of creditors of Licensee or a committee of
creditors is appointed for Licensee;
(d) Any case or proceeding shall be commenced by or
against Licensee under any bankruptcy or insolvency
law of the United States or any state thereof, or any
petition for relief under any such law shall be filed
by or against Licensee and not dismissed with 60 days
thereof;
(e) Any petition or application to any court or tribunal,
at law or in equity, shall be filed by or against
Licensee for the appointment of a receiver, trustee,
liquidator, custodian or conservator for it or any of
its property and not dismissed within 60 days
thereof.
9.2. Upon the occurrence of an event of default as set
forth above, Licensor may exercise one or more of the following
remedies:
(a) Proceed to collect all payments owing Licensor
pursuant to Section 4 hereof; or
(b) Terminate this License Agreement; or
(c) Pursue its rights either by suit in equity, at law or
by other appropriate proceedings.
10.0 Assignment and Sub-Licensing.
Licensee shall have the right to assign in whole or in part
this License Agreement or the License granted hereunder or any benefits
of this License Agreement or the License granted hereunder without the
prior consent in writing of Licensor; provided however, Licensee shall
require any sub-licensee to acknowledge and agree to the terms of this
License Agreement.
11.0 Costs.
Each party shall bear its own costs and expenses in connection
with the preparation and execution of this License Agreement.
12.0 Entire Agreement.
This License Agreement constitutes the entire agreement
between the parties as to its subject matter and supersedes and cancels
all prior agreements, arrangements, understandings and negotiations
with respect thereto. This Agreementmay be altered, amended or changed
only by written agreement executed by both parties.
13.0 Governing Law.
This License Agreement shall be governed by and interpreted in
accordance with the laws of the State of Texas without reference to
conflict of laws or principles thereunder. All disputes relating to
this License Agreement shall be tried before a court of Dallas County
to the exclusion of all other courts that might have jurisdiction.
14.0 Notices.
All communications hereunder shall be in writing and effective
only on receipt, and shall be mailed, delivered, or sent by facsimile
transmission confirmed,
To Licensor at:
SSNN, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx Xxxx XX 00000
Facsimile No. (000)000-0000
To Licensee at:
Digital Data Networks, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No. (000) 000-0000
15.0 Successors.
This License Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and
assigns.
16.0 Counterparts.
This License Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect
as if the signature thereon and hereon were on the same instrument.
IN WITNESS WHEREOF, the parties have caused this License Agreement to
be executed by their duly authorized officers this 4th day of October 1996.
SSNN, Inc.
By: /s/ Xxxxxxx Xxxx Xxxxx
------------------------
Xxxxxxx Xxxx Xxxxx, Chief Executive Officer
Digital Data Networks, Inc.
By: /s/ Xxxxxx X. Xxxxx
---------------------
Xxxxxx X. Xxxxx, Chairman and CEO
