EXHIBIT 10.49
EXHIBIT H
INTERIM AGREEMENT
This agreement is entered into between Portland General Electric
Company, an Oregon corporation with offices at One World Trade Center 1300, 000
XX Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000 ("PGE"), and Group Long Distance, Inc.,
a Florida corporation with offices at 0000 Xxxxxx Xxx, Xxxxxx, Xxxxxxxxxx 00000
("GLDI").
RECITALS
Concurrent with execution of this agreement, the parties are entering
into a pilot program agreement (the "Pilot Agreement"), under which PGE will
test a limited deployment of GLDI's HomeAccess microweb network (the "Program")
(which PGE will market under the name "HomeAccess" or some other name selected
by it), with the idea of deciding whether to do a full rollout of the Program in
the territory covered by this agreement.
The purpose of this agreement is to lock in certain business terms the
parties have agreed upon, should PGE elect to proceed with the Program following
the Pilot Agreement, and also to cover certain development activities that will
be undertaken by the parties, both jointly and independently, to add to the
Program certain features desired by PGE, including meter reading, messaging and
certain other features, all as described in this agreement.
NOW, THEREFORE, the parties agree as follows:
1. LICENSE. Subject to PGE satisfying its obligations to pay the
consideration set forth in Section 4 of this agreement (including the minimum
license fee of $150,000 per month), GLDI grants to PGE a 15-year paid-up,
exclusive license to operate the Program in the state of Oregon. The Program
will contain the minimum elements and features described in the Pilot Agreement
and as additionally summarized in the attached Exhibit A, and GLDI will add
additional elements and features in accordance with the schedule set forth in
Exhibit A. During the period that PGE has this exclusive license, GLDI will not
license or operate a similar or competing Program in Oregon (or in Washington or
Nevada if PGE extends its territory to those states as provided in Section 6
below). Upon 90 days prior written notice, PGE may at any time discontinue
payment of the $150,000 per month minimum license fee for Oregon or the $150,000
per month minimum license fees for Washington or Nevada should PGE extend its
territory to either of those states, in which event PGE's license rights will
become nonexclusive in such states.
2. STOCK. Upon payment by PGE to GLDI of the Initial License Fees (as
defined in Section 4.1.1 below) and Development Fees (as defined in Section 4.2
below), and execution and delivery to GLDI of an investment letter and such
other documents as may be necessary to ensure compliance with applicable federal
and state securities laws, GLDI will issue to PGE 310,000 shares of GLDI common
stock, and PGE will execute the form of Shareholder Agreement attached as
Exhibit B. With respect to this stock, PGE agrees to grant voting rights to
Xxxxxxx Xxxxxx during the term of the Interim Agreement, to vote the shares on
its behalf. The rights and obligations of the parties under this section 2 will
be subject to the warrant terms and conditions set forth in the attached Exhibit
C, excluding provisions regarding the purchase price and payment of the purchase
price.
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3. WARRANT. Upon execution of a Long Term Agreement and execution and
delivery to GLDI of an investment letter and such other documents as may be
necessary to ensure compliance with applicable federal and state securities
laws, GLDI will issue to PGE warrants to purchase 1,240,000 shares of common
stock of GLDI for an aggregate purchase price of $4,000,000. The number of
shares to be issued in conjunction with such warrants may be reduced by the
shares issued to PGE as described in Section 4.4 below. The terms of the
warrants are set forth in the attached Exhibit C. PGE may exercise these
warrants anytime prior to 12 (twelve) months from the execution date of the Long
Term Agreement. In no event will the combination of shares or warrants issued
exceed 1,550,000 (as may be adjusted for dilution under section 7 of Exhibit C)
aggregate shares of GLDI common stock.
4. CONSIDERATION TO GLDI.
4.1 LICENSE FEES.
4.1.1 INITIAL LICENSE FEES. Upon execution of this
agreement, PGE will pay to GLDI the sum of $300,000 followed by five equal
monthly payments of $150,000, beginning August 15, 2001 through December 15,
2001, making a total of $1,050,000. These payments (the "Initial License Fees")
constitute the fees for participation in the pilot program (as provided in the
Pilot Agreement), and for the option to extend the Program to other states as
provided in Section 6 below. PGE will give notice of its election to proceed
with full rollout no later than 90 days from the end of the Pilot Agreement,
including any extension of the Pilot Agreement agreed to by the parties. Payment
of the Initial License Fees is conditioned upon GLDI satisfying its obligation
to add features to the Program and meeting the development schedule set forth in
Exhibit A.
4.1.2 LONG-TERM LICENSE FEES. Should PGE elect to
proceed with full rollout of the Program in the State of Oregon, PGE will pay to
GLDI a monthly license fee of $150,000 per month (the "Long-Term License Fees"),
commencing upon a full rollout of the Program. Payment of the Long-Term License
Fees is conditioned upon GLDI satisfying its obligation to add features to the
Program and meeting the development schedule set forth in Exhibit A.
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4.2 DEVELOPMENT FEES. On July 6, 2001, PGE paid to GLDI the
sum of $300,000 as the first payment of development fees. Beginning August 15,
2001 through December 15, 2001, PGE will pay to GLDI five equal monthly payments
of $150,000, making the total development fees paid by PGE equal to $1,050,000.
These payments (the "Development Fees") constitute fees for the development work
referred to in Section 5 below and are conditioned upon GLDI satisfying its
obligation to add features to the Program and meeting the development schedule
set forth in Exhibit A. If PGE desires to have additional development work done
beyond that called for in Exhibit A, expenses for such work will be charged to
PGE on a time and materials basis.
4.3 REVENUE SPLIT. The parties will split revenues derived by
PGE from operation of the Program, both during the pilot program and thereafter,
80% to PGE and 20% to GLDI, as set forth in the attached Exhibit D. GLDI's share
of revenues will be paid to it monthly within 30 days of the end of each
calendar month.
4.4 RECOUPMENT OF LICENSE FEES AND DEVELOPMENT FEES. PGE will
receive a credit against payment of GLDI's share of the revenue split (as
provided in Section 4.3 above) in the amount of the License Fees (both Initial
and Long-Term) paid by PGE to GLDI, as provided in Sections 4.1.1 and 4.1.2
above, and such amounts will be recouped by PGE against payment of GLDI's share
of the revenue split to the extent that GLDI's share exceeds the $150,000 per
month minimum payments owed by PGE for each state for which it exercises license
rights under this agreement. Stated alternatively, GLDI's share of the revenue
split will not be paid to it, other than the $150,000 per month minimum license
fees per state, until those amounts that otherwise would be payable to GLDI
exceed the cumulative total of License Fees paid by PGE to GLDI. Thus, following
recoupment by PGE of the $1,050,000 paid by it to GLDI as Initial License Fees,
the Long-Term License Fees of $150,000 per month per state will constitute a
minimum royalty, creditable against GLDI's portion of the long-term revenue
split. PGE may at any time convert its credit into purchase of shares of common
stock of GLDI at the price set forth in Section 3 above, and any exercise of
this right to convert the credit into stock will reduce the total number of
shares available for the issuance of warrants as set forth in Section 3 above.
4.5 GOOD-FAITH DISPUTES. If there is a good-faith dispute as
to whether any fee is payable, the parties will make a good faith effort to
resolve such dispute through negotiation, and if those efforts are not
successful, the matter will be submitted to mediation as provided in Section
18.9 of the Pilot Agreement, and if not resolved through mediation, will be
decided by an arbitrator agreed to by the parties or, absent such agreement, by
judicial proceedings as provided in Section 18.8 of the Pilot Agreement. If it
is determined that there are amounts payable by PGE, PGE will be given an
opportunity to cure such default by paying the amounts owing, plus interest at
12% per annum from when they were due. Neither party may terminate this
agreement while such a good-faith dispute is pending or during the cure period.
5. DEVELOPMENT WORK. PGE desires to offer, in connection with the
Program, meter reading and messaging services and other features, as described
more particularly in the attached Exhibit A and as otherwise may be discussed
and agreed upon by the parties. Implementing these features will require both
GLDI and PGE to engage in some development work, both jointly and independently,
to develop certain devices/software/technology. Each party will own any
intellectual property previously owned by such party or developed by such party
in connection with development activities. Jointly developed intellectual
property will be owned by PGE; provided however GLDI will own any modifications
or additions to its software; and PGE will own modifications or additions to the
PGE intellectual property set forth in Exhibit E and any utility related
applications, such as meter reading/messaging. The results of GLDI's development
work, including appropriate rights as may be acquired from third parties, will
be licensed to PGE as part of the license referred to in Section 1 above,
without any additional license fees paid to GLDI, other than the compensation
set forth in Section 4 of this agreement. In addition, third party costs (for
instance CPS and MTC) will be paid by PGE; provided, however, that such costs
are subject to prior written approval by PGE, which approval will not
unreasonably be withheld.
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6. ADDITIONAL STATES. PGE will have the option to extend the Program,
subject to the terms of this agreement, to cover the states of Washington and
Nevada, or either of them, subject to the same 80%/20% revenue split referred to
in Section 4.3 above and subject to PGE paying to GLDI, for each state, as
applicable, $150,000 per month as minimum royalties. Any minimum royalty fees
paid for the above states may be recouped by PGE based on the terms described in
Section 4.4 above, based on revenues exceeding the minimum royalty fee of each
state with such excess revenues to be credited against amounts owed to GLDI
based on a 80%/20% revenue split. The license period for each additional state
will be 15 years from PGE's notice to GLDI of its election to extend the Program
to such state or states, and PGE's rights will be exclusive in such state(s).
Such notice will be given by PGE no later than 6 (six) months following the end
of the Pilot Agreement, and the first monthly minimum royalty payment for such
state or states will be paid concurrent with such notice.
7. FEATURES/SERVICES/MATERIALS. In connection with the Pilot Agreement
or otherwise, PGE has developed or will develop certain features, services and
materials that GLDI may desire to include in any version of the Program offered
by it or its other licensees outside of the territory licensed by GLDI
exclusively to PGE under this agreement. PGE's features, services and materials
are described generally in the attached Exhibit E. GLDI will have the right to
license any of these features, services or materials pursuant to a license
agreement entered into between the parties containing customary protections for
PGE's intellectual property. As compensation to PGE for such license, GLDI will
pay to PGE 80% of the revenues received by GLDI in connection with license of
these features, services or materials to other licensees. Such licenses will be
subject to approval by PGE, which approval will not unreasonably be withheld.
8. LONG-TERM AGREEMENT. If, following or in connection with the Pilot
Agreement, PGE decides to proceed with full rollout of the Program, the parties
will enter into a separate agreement covering the details of the long-term
arrangement between the parties, it being recognized that the Program is
evolving and that it is difficult for the parties now to set forth all of the
elements of the Program on a long-term basis. The parties will negotiate such
provisions in good faith; however, the essential business terms of such
long-term arrangement are set forth in this agreement and are binding on the
parties. If the parties are unable, after a reasonable period of good faith
negotiations, to agree on any provisions of such long-term agreement, the matter
will be submitted to mediation as provided in Section 18.9 of the Pilot
Agreement, and if not resolved through such mediation, will be decided by an
arbitrator agreed to by the parties or, absent such agreement, by judicial
proceeding, as provided in Section 18.8 of the Pilot Agreement.
9. PILOT AGREEMENT PROVISIONS. Except as altered by this agreement or
as otherwise agreed to by the parties, the following provisions of the Pilot
Agreement will apply to this agreement: Section 6, Trademarks; the obligations
of PGE and GLDI, respectively, set forth in Sections 7 and 8 of the agreement,
as modified to accommodate full deployment of the Program; Section 10, Expenses;
Section 11, Warranty/Indemnity; Section 12, Disclaimer; Section 13,
Confidentiality; Section 14, Intellectual Property Ownership; Section 15, Access
to Data; Xxxxxxx 00, Xxxxxxxxxxx; Section 17, Source Code Escrow; and Section
18, Miscellaneous.
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10. CROSS DEFAULT. Any breach of the Pilot Agreement will constitute a
breach of this agreement, and vice versa.
11. CONFIDENTIALITY. The parties will implement customary standards and
procedures to protect confidential information relating to the Program,
including confidential business information of each party. Such standards and
procedures will encompass at least the standards and procedures used by such a
party to protect its own confidential business information.
12. TRADEMARKS. PGE may, but is not obligated to, use the HomeAccess
trademark in connection with marketing the Program, and it may market the
Program under a trademark selected and owned by it.
13. BEST EFFORTS. In addition to its specific obligations under this
agreement, GLDI will make reasonable best efforts to add features and national
content to the Program, so as to maximize its attractiveness to its
participants, and PGE will make reasonable best efforts to market the Program
and to deploy the microweb enabled telephones in the territory covered by this
agreement.
14. INTELLECTUAL PROPERTY REPRESENTATION. GLDI represents that it owns
or has the right to license any intellectual property licensed by it to PGE
under this agreement, that entering into this agreement is not inconsistent with
any agreement previously entered into by it, and that exercise by PGE of rights
licensed to it under this agreement will not otherwise violate the intellectual
property rights of any third party.
15. EFFECTIVE DATE. This agreement will be effective when signed by
both parties.
GROUP LONG DISTANCE, INC. PORTLAND GENERAL ELECTRIC COMPANY
By: By:
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Its: Its:
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Date: Date:
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