LICENSE AGREEMENT
THIS AGREEMENT is entered into on November 1, 1997 between Xxxxxx X.
Xxxxxx, (herein called LICENSOR), and FoneCash, Inc , a corporation of Delaware,
having its principal place of business at 000 Xxxx Xxxxxx, Xxxxx 000, Xxxx Xxx,
Xxx Xxxxxx 07024(herein called LICENSEE).
I. Background of Agreement
1.0 LICENSOR, filed patent No. 4,803,719, pertaining to telephone line
powered applications, on June 4,1987 with the United States Patent
Office, and has never assigned patent to any person or entity.
1.2 LICENSEE wishes to acquire an exclusive, worldwide license under
LICENSOR'S patent rights for the primary purpose of utilizing
LICENSOR'S invention through sales of products and services.
II. Definitions
As used herein, the following terms shall have the meanings set forth
below:
2.0 PATENT or PATENTS means the following United States patents and/or
patent applications, patents to be issued thereto, and all divisions,
continuations, reissues, substitutes, and extensions thereof:
Letters Patent
U.S. Patent No 4,803,719 Method for powering telephone
apparatus powered directly from the telephone line
without external power.
2.1 LICENSED TERRITORY means the United States of America, its territories
and possessions, North America, South America, and worldwide.
2.2 LICENSEE IMPROVEMENTS means all developments LICENSEE may make in the
PATENTS prior to the termination of this Agreement, whether or not patentable,
which are invented, developed, discovered or otherwise acquired by LICENSEE.
2.4 GROSS SALES PRICE for the purpose of computing royalties, means LICENSEE'S
invoice price, f.o.b. factory, after deduction of regular trade and quantity
discounts, but before deduction of any other items, including but not limited to
freight
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allowances, cash discounts, and agent's commissions. where products are not
sold, but are otherwise disposed of, the GROSS SALES PRICE of such products for
the purpose of computing royalties shall be the selling price at which products
of similar kind and quality, sold in similar quantities. are currently being
offered for sale by LICENSEE
III. License Grant
3.0 LICENSOR hereby grants to LICENSEEE to the extent of the LICENSED
TERRITORIES an exclusive license for the PATENTS to make, use, and sell products
that utilize said patent.
IV. License Fees and Royalty
4.0 LICENSEE, for and in consideration of, and as a condition of granting
this license, hereby agrees to pay LICENSOR the fees and royalties set forth in
Schedule A, which is attached hereto and made a part hereof by reference.
V. Sub-licensing
5.0 Sub-licensing in the LICENSED TERRITORY shall be the responsibility of
LICENSEE and it is the intent of the Parties that sub-licenses shall be
available to qualified third parties on fair and reasonable terms. Sub-licenses
shall be non-exclusive and non-transferable. LICENSEE shall supply LICENSOR
with: copy of each such sub-license agreement within thirty (30) days of the
execution of the sub-license agreement.
5.1 No sub-license shall become effective until LICENSEE has obtained the
written approval of the LICENSOR.
5.2 If this Agreement is terminated for any reason, LICENSEE shall
immediately assign all of its right, title, and interest to all sub-licenses to
LICENSOR including the right to receive all income from sub-licenses. LICENSEE
shall prior to execution of each sub-license make the sub-licensee aware of this
contingency.
VI. Payments
6.0 Not later than the last day of each January, April, July and October,
LICENSEE shall furnish to LICENSOR a written statement in such detail as
LICENSOR may reasonably require of all amounts due pursuant to Schedule A for
the quarterly periods ended the last day of the preceding December, March, June
and September, respectively. and shall pay to LICENSOR all amounts due to
LICENSOR. If no amount is accrued during any quarterly period, a written
statement to that effect shall be furnished.
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6.1 Payments provided for in this Agreement, when overdue; shall bear
interest at a rate per annum equal to two percent (2%) in excess: of the "Prime
Rate" published by "The Wall Street Journal" at the time such payment is due,
and for the time period until payment is received by LICENSOR.
6.2 If this Agreement is for any reason terminated before all of the
payments herein provided for have been made, LICENSEE shall immediately submit a
terminal report and pay to LICENSOR any remaining unpaid balance even though the
due date as above provided has not been reached.
VII. Representations and Disclaimer of Warranties
7.0 LICENSOR MAKES NO REPRESENTATIONS, EXTEND NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, AND ASSUMES NO RESPONSIBILITIES WHATEVER WITH
RESPECT TO USE, SALE, OR OTHER DISPOSITION BY LICENSEE OR ITS VENDEES OR OTHBR
TRANSFEREES OF PRODUCTS INCORPORATING OR MADE BY USE OF (i) INVENTIONS LICENSED
UNDER. THIS AGREEMENT OR (ii) INFORMATION, IF ANY, FURNISHED UNDER THE
AGREEMENT. LICENSEE WILL INDEMNIFY LICENSOR FOR ALL DAMAGES, COSTS AND EXPENSES,
INCUIDING ATTORNEY'S FEES, ARISING OUT OF USE BY LICENSEE OR ITS TRANSFEREES OF
INVENTION LICENSED OR INFORMATION FURNISHED UNDER THIS AGREEMENT OR (iii) OUT OF
ANY USE, SALE, OR OTHER DISPOSITION BY LICENSEE OR ITS TRANSFEREES OF PRODUCTS
MADE BY USE OF SUCH INVENTIONS OR NFORMATION.
VII. Patenting
8.0 LICENSEE and LICENSOR agrees to disclose all LICENSE IMPROVEMENTS to
each other within three (3) months after the IMPROVEMENT has been invented,
developed, discovered or otherwise acquired by LICENSOR and/or LICENSEE. Such
disclosure to be of sufficient technical detail to enable each party to practice
such LICENSE IMPROVEMENT.
8.1 LICENSEE agrees to prepare, file and prosecute all patent applications
necessary and as applicable to secure PATENTS in the name of the LICENSOR in all
countries wherein the LICENSEE intends to use, sell or sub-license. Such patent
applications shall be filed in accordance with the laws, regulations and
practices of the country tar which a PATENT is desired. All expenses associated
with preparing, filing, prosecuting and maintaining such PATENTS shall be paid
by LICENSEE.
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8.2 Not less than sixty (60) days before the expiration of a response
period for any action required by any Patent Office world wide, LICENSEE shall
notify LICENSOR of any decision not to file or continue prosecution of the
patent application and deliver to LICENSOR executed instruments granting
LICENSOR a power of attorney to prosecute such patent applications.
8.3 Each Party agrees to provide to the other party all relevant
documentation, drawings, diagrams, specifications and electrical diagrams which
may be necessary to build, start-up and maintain the technology. Such
documentation shall be provided to the other party within three (3) weeks of the
Effective Date of this Agreement All documentation is to be returned to LICENSOR
upon termination of Agreement.
IX. Termination
9.0 This Agreement shall terminate upon the expiration of the last to
expire PATENTS included herein, or will be included in the future, or upon the
abandonment of the last to be abandoned patent applications included herein,
whichever is later unless the Agreement is sooner terminated.
9.1 LICENSEE may terminate this Agreement at any time upon sixty (60) days
written notice in advance to LICENSOR.
9.2 If either Party shall be in default of any obligation hereunder, or
shall be adjudged bankrupt, or become insolvent, or make an assignment for the
benefit of creditors, or be placed in the hands of a receiver trustee in
bankruptcy, the other Party may terminate this Agreement by giving sixty (60)
days notice by Registered Mail to the other Party, specifying the basis for
termination. If within sixty (60) days after the receipt at such notice, the
Party receiving notice shall remedy the condition forming the basis for
termination, such notice shall cease to be operative, and this Agreement shall
continue in full force.
9.3 The word "termination" and cognate words, such as "term" and
"terminate" used in this Article IX and elsewhere in this Agreement are to be
read, except where the contrary is specifically indicated, as omitting from
their effect the following rights and obligations, all of which survive any
termination to the degree necessary to permit their complete fulfillment or
discharge;
(a) LICENSEE'S obligation to supply a terminal report as specified in
paragraph 6.2 of this Agreement
(b) LICENSOR'S right to receive or recover and LICENSEE'S obligation to
pay royalties accrued or accruable for payment at the time of any termination's.
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(c) LICENSEE'S obligation to maintain records under paragraph 11.0 of this
Agreement.
(d) Licenses, releases, and agreements of non-assertion running in favor
of customers or transferred by LICENSEE prior to any termination and on which
royalties shall have been paid as provided in Articles IV and V of this
Agreement.
(e) Any cause of action or claim of LICENSOR accrued or to accrue, because
of any breach or default by LICENSEE.
(f) The representation and disclaimer of warranties of paragraph 8.0.
X. Litigation
10.0 Each Party shall notify the other Party in writing of any suspected
infringement(s) of the PATENTS in the LICENSED TERRITORY and shall inform the
other Party of any evidence of such infringement(s).
10.1 LICENSEE shall have the first right to institute suit for
infringement(s) in the LICENSED FIELD and the LICENSED TERRITORY so long as this
Agreement remains exclusive. LICENSOR agrees to join as a party plaintiff in any
such lawsuit initiated by LICENSEE, if requested by LICENSEE, with all costs,
attorney fees, and expenses to be paid by LICENSEE. However, if LICENSEE does
not institute suit for infringement(s) within ninety (90) days of receipt of
written notice from LICENSOR of LICENSOR'S desire to bring suit for infringement
in its own name and on its own behalf, then LICENSOR may, at its own expense,
bring suit or take any other appropriate action.
10.2 If this Agreement is non-exclusive at the time of infringement(s),
the sole right to institute suit far infringement and to recover damages shall
rest with LICENSOR.
10.3 LICENSEE shall be entitled to any recovery of damages resulting from
a lawsuit brought by it pursuant to paragraph 10.1. LICENSOR shall be entitled
to recovery of damages resulting from any lawsuit brought by LICENSOR to enforce
any PATENT, pursuant to paragraph 10.1.
10.4 Neither Party may settle with an infringer without the prior approval
of the other Party if such settlement would affect the rights of the other Party
under the PATENTS.
XI. Records
11.0 LICENSEE shall keep accurate records or all operations affecting
payments hereunder, and shall permit LICENSOR or its duly authorized agent to
inspect all such records and to make copies of or extracts from such records
during
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regular business hours throughout the term of this Agreement and for a
reasonable period of not less than three (3) years thereafter.
XII. Non-assignability
12.0 The Parties agree this Agreement imposes particular, specific,
corporate obligations on LICENSEE. LICENSES shall not assign any rights under
this Agreement not specifically transferable by its terms without the written
consent of LICENSOR.
XIII. Severability
13.0 The Parties agree that if any part, term, or provision of the
Agreement shall be found illegal or in conflict with any valid controlling law,
the validity of the remaining provisions shall not be affected thereby
13.1 In the event the legality or any provision of this Agreement is
brought into question because of a decision by a court of competent jurisdiction
LICENSOR. by written notice to LICENSEE, may revise the provision in question or
may delete it entirely so as to comply with the decision of said court.
XIV. Export Control
14.0 The Parties understand that the export of goods and/or technical data
from the United States may require some form of export control license from the
United States Government and that, failure to obtain such export control
license, may result in criminal or civil liability under the United States laws.
XV. Waiver, Integration, Alteration
15.0 The waiver of a breach hereunder may be effected only by a writing
signed by the waiving Party and shall not constitute a waiver of any other
breach.
15.1 This Agreement represents the entire understanding between the
Parties concerning the patent and the license of the patent, and supersedes all
other agreements about this subject, express or implied, between the Parties
concerning PATENTS.
15.2 A provision of this Agreement may be altered only by a writing
XVI. Marking
16.0 When possible to so xxxx, LICENSE shall place in a conspicuous
location on LICENSED PRODUCTS, a patent notice in accordance with 35 U.S.C.
ss.282. LICENSEE agrees to xxxx any products made using a process covered by any
PATENT with the number of each such patent and, with respect to such
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PATENTS to respond to any request for disclosure under 35 U.S.C ss.217(6)(4)(5)
by only notifying LICENSOR of the request for disclosure.
XVII. Applicable Law
17.0 This Agreement shall be construed in accordance with the substantive
laws of the State of New York. Any and all litigation involving either Party's
rights and duties under this Agreement shall be brought in. Court of competent
jurisdiction in the State of New York.
XVIII. Notices Under the Agreement
18.0 For the purpose of all written communication and notices between the
parties, their addresses shall be:
LICENSEE: LICENSOR
Xxxxxx X. Xxxxxxxxxx Xxxxxx X. Xxxxxx
President and CEO 00 Xxxxxxxxxx Xxxx
FoneCash, Inc Xxxxxxxxxx, XX 00000
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxx, XX 00000
or any other addresses of which either Party shall notify the other Party in
writing.
IN WITNESS WHEREOF the Parties have caused this Agreement to be executed
on duplicate originals by their duly authorized officers on the respective dates
and at the respective places hereinafter set forth.
LICENSOR LICENSEE
Xxxxxx X. Xxxxxx FoneCash, Inc.
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxxxxx
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Schedule A
Business Sensitive Information
I. License Fee and Royalty
In consideration of the License grant of Article IV, LICENSEE agrees to pay
LICENSOR, in United States Currency, the following amounts:
1.0 A license execution fee in the amount of thirty thousand dollars
($30,000.00) which shall be non-refundable to be paid in accordance with the
following Schedule:
AMOUNT DUE
$ 5,000.00 Thirty (30) after signing this
Agreement, or after due
diligence by FoneCash, whichever
is first.
$25,000.00 Upon first funding of the IPO or
any other financing over
$500,000.
1.1 LICENSEE shall pay to LICENSOR a royalty rate of three percent (3%)
of the GROSS SALES PRICE of all LICENSED PRODUCTS sold or otherwise
disposed of under the license granted under article IV of this
Agreement.
1.2 LICENSEE shall, upon funding from the IPO or the first financing
over $500,000, sign a consulting agreement with LICENSOR for
personal engineering services at the rate of $100 an hour with a
minimum of 20 hours a month whether or not these services concern
the patent design or some other product that Licensor has developed.
This agreement for personal service will be signed upon funding of
the company operations, or when $500,000 of financing has been
received. This is additional compensation over and above the
royalties from the exclusive use of the patent.
II. Minimum Annual Royalties
2.0 LICENSEE shall pay to LICENSOR following the first quarterly report
after each new calendar year:
Year Amount Due
1999 $ 10,000.00 January 31,2000
2000 $ 20,000.00 January 31,2001 and each year
thereafter
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2.1 In the event this Agreement is terminated by either Party, the minimum
annual amounts of paragraph 2.0, above, for the year of termination shall be
prorated on the basis of the number of days in the calendar year that this
Agreement was in effect, divided by 365.
III. Performance Requirements
3.0 Notwithstanding any other obligation imposed on LICENSEE under this
Agreement, LICENSEE agrees to comply with the following sales milestones
beginning calendar year 1998;
US Xxx No 4,803,719
Minimum Annual Sales Year
$ 500,000.00 2000
$1,000,000.00 2001
$1,500,000.00 2002
$2,000,000.00 2003 and all following years
3.1 Failure to meet the above milestones will be considered a default of
this Agreement and this Agreement may be terminated by LICENSOR as provided in
Article IX, but only after good faith effort to negotiate a mutually acceptable
modification.
IV. Equity
4.0 For and in consideration of the license grant of Article IV, LICENSEE
further agrees that LICENSOR shall be issued 50,000 shares of common stock in
FoneCash, Inc which is valued at the IPO price and shall be granted a stock
option to purchase another 100,000 shares at the option price of $120 % over the
Initial Public Offering price, in accordance with the Underwriter Agreement and
all relevant rules and regulations of the Securities and Exchange Commission
regarding the granting of options.
V. Payments
5.0 All license fees and royalty payments should be sent to:
Xxxxxx X. Xxxxxx
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
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