EXHIBIT 4.5
Agreement Between Softlink, Inc.
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and MagiTech Studios
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This Agreement is made on August 17, 1998, between Softlink, Inc., a Nevada
Corporation, and ("Company"), with principal place of business at 0000 Xxxxxxx
Xxxxxxx Xxxx., Xxx. 000, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and MagiTech Studios,
("MagiTech"), with place of business at 000 Xxxxxxxx Xxx., Xxxxx 000, Xxxxxxx
Xxxx, Xxxxxxxxxx 00000.
Recital
Company and MagiTech desire to enter a business relationship to explore
opportunities in software, children's product and internet markets.
1.0 Terms and Conditions
This agreement shall become effective from August 17, 1998, and will continue in
effect for three years with an option to renew for three years unless terminated
earlier.
l.1 Duties of MagiTech
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MagiTech will serve Company faithfully in sales, marketing and product
development in the software, children's product and internet markets or in a
capacity with greater responsibility or authority to the best of MagiTech's
ability under the direction of the Chief Executive Officer and / or the Board of
Directors of Company.
1.2 Company Receives from MagiTech
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a. MagiTech's right on the FIP line and the ability to book the sales
revenue from the sales of the FIP products in the U.S. without the
liabilities of inventory and returns on the FIP products. (Note: the
agreement MagiTech has with FIP/LLMP is through the end of 1998, a
joint venture is to be discussed prior to January 1999, to determine
how the product line will be handled going forward). MagiTech's will
still retain a 9% override on sales and will cover a rep commission
out of this override. The estimated gross margin to Company excluding
the 9% override is approximately 10%.
b. All rights to jointly develop the children's internet products by
MagiTech (excluding products already optioned out). The intent is to
integrate Softlink's technology into those products (where applicable)
and to then license to third parties or market those products through
a new joint venture "spin-off'" company, or a newly junder
"XxxXxxx.xxx." First right of refusal to license these items will be
given to either XxxXxxx.xxx or a new Company/MagiTech spin-off. Either
company must prove sufficient sales and marketing capabilities, which
includes funds for sales expenses and marketing dollars for
advertising and in-store
displays. The estimated funding needed by either XxxXxxx.xxx or the
new Company/MagiTech spin-off is $4.0M.
c. Xxxxxxx Xxxxxx of MagiTech will give sufficient time as necessary to
continue the development of the children's internet products and to
develop Company's planned children's internet business and/or search
engine over the term of the Agreement. Xxxxxxx will be responsible for
the creative development as well as putting together the team to build
the site and/or products over the terms of the Agreement. Her time is
estimated for the first 5 months at 60%.
d. Xxxxx Xxxx will give sufficient time as necessary to continue selling
FIP products, Company's current products as well as work with Xxxxx
Xxxx on strategies for developing and launching new products and
assisting the Company on operational issues. Company will pay MagiTech
a 7.5% commission on net sales of Company's products (excluding
Japan). MagiTech will be responsible for the sales rep commissions.
Company will pay all pre-approved travel and marketing expenses.
Jerry's time is estimated at 60%.
1.3 MagiTech receives from Company
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a. $40,000 per month from August 1998 through December 1998. $15,000 per
month for the next 31 months starting January 1999. Company will also
provides an office in Santa Xxxxx for Xxxxx and Xxxxxxx to work out of
as needed as well as computers, phones etc. If Xxxxx and Xxxxxxx works
out of the Santa Xxxxx office, Company will pay to Xxxxx and Xxxxxxx
jointly $1,000 per month additional as car allowance for the increase
in commute. (Note: On January 1, 1999 if MagiTech is spending an
excessive amount of time on the Children's Internet Business, The
Internet Toy Development and Company Salels the fee structure will be
revised).
b. If a children's internet product is licensed to a third party, the
licensing fees and royalties received from such third party, shall be
distributed 60% to Company and 40% to MagiTech. If a third party owns
an interest to any of the existing concepts, or is ask to partner for
development or technology, then this distribution occurs after the
third party is compensated.
c. If Company markets and sells the children's internet products under
Company, MagiTech shall received a royalty of 5% based on Company's
net sales. (Company must be able to prove sufficient sales and
marketing capabilities and have received at least $4.0M of equity
funding ). If XxxXxxx.xxx sells the children's internet products,
Company; and MagiTech will split a 5% royalty 50%-50% and Company
will receive an agreed upon equity position in XxxXxxx.xxx based on
the XxxXxxx.xxx valuation at the time and amount of dollars Company
has funded in R&D for these products. If neither Company or
XxxXxxx.xxx has the ability to market the products, and MagiTech and
Company decide to set up a joint venture company, the "New Co." will
be set up with a 50-50 equity position prior to funding.
d. MagiTech shall receive stock options of 150,000 shares of Company's
common shares. The shares are vested monthly beginning August 1, 1998
in equal increments over a 36-month period. The exercise price is
$1.20 per share and may be exercised anytime within 5 years from the
date when the shares are vested.
e. If Company spins off the Children's Internet Business and/or Search
Engine as a separate company, then MagiTech shall receive stock
options of the new company equal to (10% if Xxxxx Xxx joins, 20% if
Xxxxx Xxx does not join Company and MagiTech takes the lead in
managing the business) of the share issued at the time when the new
company is organized. The exercise price is the fair market price at
the time when the new company is organized and the exercise period is
5 years. Vesting is retroactive to August 1, 1998 at equal monthly
increment over 36-month period.
2.0 Failure to Pay Employee
The failure of Company to pay MagiTech as provided above may be deemed a breach
of this agreement, and unless such breach is cured within 15 days after written
notice to Company, the breach of contract issue shall be subject to binding
arbitration under terms of the American Arbitration Association.
3.0 Reimbursement of Expenses
Company shall reimburse MagiTech for reasonable out-of-pocket pre-approved
expenses that MagiTech shall incur in connection with MagiTech's services for
Company, on presentation by MagiTech of appropriate vouchers to Company within
10 days.
4.0 Termination And Renewal of Agreement
An agreement to exercise the three-year option will be made mutually by both
parties in writing six months prior to the end of the term of the agreement. If
the option is not exercised, the parties are on notice that the agreement will
terminate on July 31, 2001. Company may terminate this agreement without cause
at any time after the first five months with 30-day notice. If the Company
terminates MagiTech without cause prior to August 31, 2001, than 100% of the any
option to purchase common shares granted MagiTech by Company should immediately
vest.
5.0 Confidential Information
It is understood between the parties that, during the term of the Agreement,
MagiTech will deal with confidential information that is Company property used
in the course of its business or other business confidential information.
MagiTech shall treat as confidential any information obtained by MagiTech
concerning business, products, techniques, methods, systems, prices, plans or
policies of the Company or Company's customers.
Furthermore, Company will deal with confidential information that is MagiTech
property used in the course of its business or other business confidential
information. Company shall treat as confidential any information obtained by
Company concerning business, products, techniques, methods, systems, prices,
plans or policies of MagiTech or MagiTech customers.
6.0 General
This Agreement constitutes the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersedes all prior oral or
written agreements, arrangements., and understandings with respect thereto. This
Agreement is made under and shall be construed pursuant to the laws of the State
of California, in the County of Santa Xxxxx, as if the agreement was made and
entered into by both parties within the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
as of the date first set forth above
MagiTech: Company:
MagiTech Studios Softlink, Inc.
/s/ XXXXXXX XXXXXX /s/ XXXXXXX X. XXX
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Xxxxxxx Xxxxxx, President Xxxxxxx X. Xxx, President
