LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "LICENSE AGREEMENT") is entered into as of
this 23rd day of April 1, 1999 (the "EFFECTIVE DATE"), by and between Softalk,
Inc., an Ontario corporation whose principal offices are located at 000 Xxxxx
Xx., Xxxxx 0000, Xxxxxxx, Xxxxxxx ("SOFTALK"), and Wavetech International, Inc.,
a Nevada corporation whose principal offices are located at 0000 X. Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxx 00000 ("WAVETECH").
WHEREAS, Softalk is the owner of certain unique intellectual property
for use in the transmission of voice, data and fax services using Voice over
Internet Protocol ("V0I") and Voice of Frame ("VOF"); and
WHEREAS, Wavetech possesses the resources to sell, market and conduct
billing, collection and customer services with respect to Softalk's intellectual
property;
NOW THEREFORE, in consideration of the covenants and agreements
contained in this License Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. LICENSE GRANTS.
1.1 Subject to the terms and conditions of this License Agreement,
Softalk hereby grants to Wavetech, for the term of this License Agreement, a
non-exclusive, non-transferable worldwide license, to the software programs
commonly referred to as ICALL, IBILL, CCALL and IFAX (collectively referred to
as the "SOFTALK PRODUCTS") for use by Wavetech solely in connection with the
sale, marketing, and provision of customer support services of the Softalk
Products. For purposes of clarification, the Softalk Products include the
technology covered by Canadian Patent Application No. 2,198,024 and U.S. Patent
Application No. 08/811,099 and the trademarks, tradenames and service marks
associated therewith, copyright in the Softalk Products, ownership of
proprietary Confidential Information (as hereinafter defined) and ownership of
certain trade-marks.
1.2 Any sublicense granted by Wavetech with respect to the Softalk
Property shall be subject to the prior approval of Softalk.
1.3 Wavetech shall have a right to obtain a non-exclusive,
non-transferable license to all modifications and improvements to the Softalk
Products on mutually agreeable terms negotiated in good faith by the parties.
1.4 Wavetech shall have the right to license from Softalk any new
products developed by Softalk on mutually agreeable terms negotiated in good
faith by the parties.
2. TECHNOLOGY TRANSFER.
2.1 Technical Information. Within a reasonable time following execution
of this License Agreement, Softalk will make available to Wavetech all necessary
technical information relating to the Softalk Property then in its possession.
2.2 Technical Assistance. Softalk shall render reasonable technical
training of, and assistance to, Wavetech's engineers or technical personnel, as
requested by Wavetech.
3. FURTHER RESEARCH AND DEVELOPMENT.
3.1 Softalk shall, during the term of this License Agreement, devote
resources to continuing product development and to research and development of
improvements and modifications for the purpose of augmenting exploitation by
Wavetech in all markets for, and all uses of, the Softalk Products
(collectively, referred to as the "IMPROVEMENTS").
3.2 Softalk shall, during the term of this License Agreement, as
appropriate, promptly communicate to Wavetech all Improvements that relate in
any manner to the Softalk Products.
4. TRANSFER OF ACCOUNTS RECEIVABLE;
4.1 In addition to the license granted under this License Agreement,
Softalk shall transfer and convey to Wavetech all accounts receivable resulting
from the sale or other distribution by Softalk of the Softalk Products, in
existence as of the date hereof (the "SOFTALK ACCOUNTS"). Wavetech shall conduct
all billing and collection activities related to the Softalk Accounts. If it is
determined that billing of Softalk Accounts can be better facilitated offshore,
Wavetech will have first right of refusal as offshore billing. Softalk shall
have the right to cause Wavetech to conduct such activities through an offshore
entity.
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4.2 Wavetech shall be entitled to receive and retain 100% of any actual
collections made with respect to the Softalk Accounts.
4.3 Wavetech shall pay to Softalk an amount equal to (i) 100% of
Softalk's actual direct expenses incurred in connection with the sale and
delivery of Softalk Products resulting in the Softalk Accounts plus (ii) five
percent (5%) of the total amount of the Softalk Account relating thereto.
Wavetech shall make payment in accordance with this Section 4.3 in arrears on a
monthly basis commencing with the monthly period ending May 31, 1999, upon
presentation of an invoice for such amounts prepared by Softalk. Softalk shall
deliver such invoice no later than fifteen (15) days after the end of each
monthly period.
4.4 Wavetech and Softalk shall have the right to audit the books and
records of each other for the purpose of determining the correctness of amounts
paid hereunder. Each shall provide the other at least fifteen (15) days prior
written notice of their intent to conduct an audit. Any such audit shall be
conducted no more than twice each calendar year, and shall be conducted in a
manner reasonably intended not to interfere with the regular business operations
of either party. Each shall bear all costs and expenses related to any audits
conducted pursuant to this paragraph.
5. FEES
5.1 In consideration of the license granted in Section 1 hereof,
Wavetech shall pay to Softalk, the amount of Two Hundred Thousand Dollars
(US$200,000). This fee shall be payable in cash upon execution of this License
Agreement (the "LICENSE FEE"). In the event the License Agreement is terminated
pursuant to Section 11 hereof, Softalk shall refund to Wavetech a portion of the
License Agreement equal to (i) $200,000 minus (ii) the aggregate amount of the
Softalk Accounts.
5.2 In addition, Wavetech shall pay to Softalk the sum of Two Hundred
Fifty Thousand Dollars (US$250,000) in cash upon execution of this License
Agreement, as consideration for certain hardware, software, equipment and
technical support and training.
6. STANDARDS, QUALITY CONTROL, PROMOTION.
6.1 Softalk must approve all promotional, advertising and product
literature prepared by Wavetech in connection with the actions to be taken by
Wavetech pursuant to this License Agreement. Neither Softalk nor Wavetech shall
take any action or make any omission that would tend to impair or damage the
goodwill associated with the Softalk Products. Wavetech shall maintain high
standards of quality and service with respect to all Softalk Products made
and/or sold hereunder, and all related advertising and promotional material
including, without limitation, the quality of physical material utilized. All
Softalk Products will be sold, and distributed in accordance with all applicable
federal, state, local and foreign laws and regulations. None of the content of
the Softalk Products-packaging, advertising, and promotional material related
thereto; the exploitation of the Softalk Products; or the manner in which any or
all rights granted to Wavetech hereunder are exercised or exploited, shall
violate or infringe any right of privacy or publicity, copyright, or trademark
or constitute defamatory, obscene, or unlawful matter. Softalk is familiar with
the standards and practices of Wavetech, and acknowledges that Wavetech
presently maintains high standards of quality, style, and appearance with
respect to its products and services.
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6.2 If Softalk reasonably determines that Wavetech has failed to
maintain such quality of service as to the Softalk Products, Softalk shall
promptly notify Wavetech in writing and shall specify with reasonable detail the
nature of the alleged deficiency. Wavetech will have sixty (60) days from the
date of the notice in which to remedy the failure to Softalk's satisfaction.
6.3 Patent Infringement
In the event Wavetech becomes aware of any information indicating that
a third party may be infringing (or may have infringed) any of the Softalk
Products, Wavetech shall give notice of such alleged infringement, identifying
the country or countries in which the alleged infringing product or service is
sold and describing the alleged infringing product or service in sufficient
detail to enable Softalk to determine whether such product or service infringes
any of the Softalk Products. To the extent possible, Softalk shall assert the
Softalk Products against the infringer within three (3) months of such notice,
unless (a) Wavetech and Softalk determine not to assert such claim, or (b)
Softalk has received an opinion from patent counsel acceptable to Wavetech that
the allegedly infringing product does not infringe the Softalk Products.
All reasonable litigation expenses and costs, including reasonable
attorneys' fees, incurred by Wavetech in the course of any litigation pursuant
to the immediately preceding paragraph shall be promptly reimbursed by Softalk.
In such event, all recoveries including, but not limited to, awards of damages,
statutory damages, and awards of attorneys' fees, expenses and/or costs,
obtained by Wavetech in the course of any litigation arising out of any
notification of Softalk by Wavetech pursuant to this Section shall be paid to
Softalk, provided, however, that Wavetech shall be entitled to offset such
payments by amounts previously incurred by Wavetech in connection with the
defense of the Softalk Products pursuant to this section and not previously
reimbursed by Softalk.
7. CONFIDENTIALITY.
7.1 Wavetech acknowledges that Softalk's Confidential Information is
unique and valuable and was developed or otherwise acquired by Softalk at great
expense, and that any unauthorized disclosure or use of Softalk's Confidential
information may cause Softalk irreparable injury or loss for which damages would
be an inadequate remedy. Wavetech agrees to hold such Confidential Information
in strictest confidence, to use all efforts reasonable under the circumstances
to maintain the secrecy thereof, and not to make use thereof other than in
accordance with this License Agreement, and not to release or disclose
Confidential Information to any third party without Softalk's prior written
consent. Softalk hereby acknowledges and consents to the disclosure of Softalk's
Confidential Information to those employees of Wavetech and any permitted
sublicensees, that must have access to such Confidential Information in order to
perform services for Wavetech pursuant to this License Agreement, but only after
each employee of Wavetech and its sublicensees agrees to maintain Softalk's
Confidential Information in strictest confidence, to use all efforts reasonable
under the circumstances to maintain the secrecy thereof, not to make use thereof
other than in accordance with this License Agreement, and not to release or
disclose Confidential Information to any third party without Softalk's prior
written consent.
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7.2 Softalk acknowledges that various information regarding the
business plans and product concepts of Wavetech may comprise Confidential
Information. Softalk agrees to hold Wavetech's Confidential Information in
strictest confidence, not to make use thereof other than in accordance with this
License Agreement, to use all efforts reasonable under the circumstances to
maintain the secrecy thereof, and not to release or disclose Confidential
Information to any third party without Wavetech's prior written consent.
Wavetech hereby acknowledges and consents to Softalk's disclosure of Wavetech's
Confidential Information to Softalk employees and agents, but only after such
employees and agents having access to Wavetech Confidential Information agree,
in writing, to maintain Wavetech's Confidential Information in strictest
confidence, to use all efforts reasonable under the circumstances to maintain
the secrecy thereof, not to make use thereof other than in accordance with this
License Agreement, and not to release or disclose Confidential Information to
any third party without Wavetech's prior written consent.
7.3 The parties acknowledge that any violation of this Section shall
constitute a material breach of this License Agreement resulting in irreparable
injury to the non-breaching party and agree that, in addition to any and all
other rights available to the non-breaching party by law or by this Agreement,
the non-breaching party shall have the right to have an injunction entered
against the breaching party to enjoin any further violations of this Agreement.
7.4 For purposes of this Section 7, "Confidential Information" shall
mean any and all technology, information and/or data which is not readily
ascertainable by proper means and which derives economic value, actual or
potential, from not being generally known, and which has been the subject of
efforts that are reasonable under the circumstances to maintain its secrecy. All
know-how and technical information and/or information relating to the products
or operations of Wavetech or Softalk, as the case may be (in either case the
"DISCLOSING PARTY"), which is provided to the other party (the "RECEIVING
PARTY"), or to which the Receiving Party otherwise obtains access, pursuant to,
or as a result of, this License Agreement shall be considered Confidential
Information; except such information which the Receiving Party can clearly show:
(a) as of the Effective Date of this License Agreement is publicly and openly
known; (b) after the Effective Date of this License Agreement becomes publicly
and openly known through no fault of the Receiving Party; (c) comes into the
Receiving Party's possession and lawfully obtained by the Receiving Party from a
source other than from the Disclosing Party or a source deriving from the
Disclosing Party, and not subject to any obligation of confidentiality or
restrictions on use; or (d) is approved for release by written authorization of
the Disclosing Party.
7.5 Neither Wavetech nor any of its officers directors, employees
agents or representatives shall discuss this License Agreement, the transactions
contemplated hereby or any other matters related to agreements among Softalk and
Wavetech. Neither Softalk nor any of its officers directors, employees agents or
representatives shall discuss this License Agreement, the transactions
contemplated hereby or any other matters related to agreements among Wavetech
and Softalk.
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7.6 Any press release or other public statement by either Softalk or
Wavetech that relates to the other party, this License Agreement or the
transactions contemplated hereby shall be approved by both parties prior to its
release.
8. WARRANTIES.
8.1 Softalk is the owner of all right, title and interest in and to the
Softalk Products, free and clear of any and all liabilities, obligations,
licenses, liens or assignments, whether written, oral or implied in fact or law,
except as follows:
(a) Personal Property Security Act ("PPSA") registration 970805
1749 1531 7439 in favor of the Canadian Imperial Bank of
Commerce; and
(b) PPSA registration 980323 1754 1530 9274 in favor of the
Canadian Imperial Bank of Commerce.
The above-noted registrations are currently in the process of being
discharged.
Softalk makes no representation, promise or warranty whatsoever that
the Softalk Products will ultimately be protected by issued patents or that the
Softalk Products and their use do not or will not infringe the intellectual
property rights of others.
8.2 Softalk has the full right, power and authority to grant the
licenses contemplated by this License Agreement.
8.3 Softalk hereby represents and warrants that the Softalk Products
shall perform in the manner intended without interruption. Notwithstanding the
prior sentence, Wavetech acknowledges and agrees that its sole indemnification
rights with respect to hardware purchased by Softalk from third parties will be
limited to warranties provided by such third parties if any.
9. INDEMNITIES.
9.1 The parties shall each indemnify and hold the other harmless from
and against any and all claims, liabilities, loss, expense (including reasonable
attorneys' fees) or damages arising out of any breach of this License Agreement,
provided that the indemnified party shall, with reasonable promptness, notify
the indemnifying party of any such claim, demand, or suit and shall fully
cooperate in the defense thereof. The indemnifying party shall have the right to
designate counsel to defend against such claims and suits; however, at the
indemnified party's option, the indemnified party shall have the right to
participate in the defense with its own counsel at its own expense. In no event
shall any such claims or suits affecting the rights of a party be settled
without the prior written consent of that party.
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9.2 Wavetech agrees that any liability on the part of Softalk hereunder
for breach of warranties contained herein or any other breach giving rise to
liability, including a breach of a condition or fundamental term or fundamental
breach or breaches or in any other way arising out of or related to this License
Agreement for any cause of action whatsoever and regardless of the form of
action (including breach of contract, strict liability, tort including
negligence or any other legal or equitable theory) shall be limited to
Wavetech's actual, direct, provable damages in an amount not to exceed the
License Fee payable hereunder.
9.3 WAVETECH AGREES THAT IN NO EVENT WILL SOFTALK BE LIABLE FOR DAMAGES
IN RESPECT OF INCIDENTAL, ORDINARY, PUNITIVE, EXEMPLARY, INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES EVEN IF WAVETECH HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES INCLUDING, BUT NOT LIMITED TO, LOST BUSINESS REVENUE, LOST PROFITS,
FAILURE TO REALIZE EXPECTED SAVINGS, LOSS OF DATA, LOSS OF BUSINESS OPPORTUNITY
OR ANY CLAIM AGAINST WAVETECH BY ANY OTHER PARTY.
10. TERM. This License Agreement shall commence on the Effective Date and
shall continue until terminated by either party upon delivery of one hundred
twenty (120) days prior written notice of the other party, unless sooner
terminated pursuant to Section 11 hereof.
11. DEFAULT AND TERMINATION.
11.1 Either party shall have the right to terminate this Agreement upon
thirty (30) days written notice to the other party, if such other party fails to
comply in any material respect with any term or condition of this Agreement and
such failure to comply is not corrected within the foregoing thirty (30) day
notice period.
11.2 Either party shall have the right to terminate this License
Agreement in the event the other party becomes bankrupt or insolvent, suffers a
receiver to be appointed, or makes an assignment for the benefit of its
creditors.
11.3 Softalk shall have the right to terminate this License Agreement
upon sixty (60) days written notice following a change of control of Wavetech.
For purposes of this Section 11.3, a "change of control" shall be deemed to have
occurred:
(a) When, after the date of this Agreement, any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) is or becomes
the beneficial owner (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of Wavetech representing
fifty-one percent (51%) or more of the combined voting power of the
Company's then outstanding securities, other than (i) an employee
benefit plan established or maintained by Wavetech or a subsidiary of
Wavetech, or (ii) any person who presently owns such quantity of
securities as of the date hereof, or
(b) Upon the approval by Wavetech's stockholders of (i) a
merger or consolidation of Wavetech with or into another corporation
(other than a merger or consolidation the definitive agreement for
which provides that at least a majority of the directors of the
surviving or resulting corporation immediately after the transaction
are Continuing Directors (as hereinafter defined), (ii) a sale or
disposition of all or substantially all of Wavetech's assets, or (iii)
a plan of liquidation or dissolution of Wavetech.
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(c) Individuals who, as of the date hereof, constitute the
Board of Directors of Wavetech (the "INCUMBENT BOARD") cease for any
reason to constitute at least 80% of the Board; provided, however, that
any person becoming a member of the Board subsequent to the date hereof
whose election, or nomination for election by Wavetech's stockholders,
was approved by a vote of at least 80% of the members then comprising
the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of
directors of Wavetech, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act or any successor
provision thereto) shall be, for purposes of this License Agreement,
considered as though such person were a member of the Incumbent Board.
11.4 Paragraphs 7, 8, 9 and 13 hereof shall survive termination (for
any reason) of this License Agreement.
11.5 Upon the termination of this License Agreement for any reason
whatsoever, Wavetech shall immediately cease to use the Softalk Products and
shall return all copies of the Softalk Products and the Confidential Information
to Softalk and shall provide Softalk with a certificate of a senior officer of
Wavetech certifying such return and that no copies of the Softalk Products and
the Confidential Information, or any part thereof, in any form, remain in the
possession or control of Wavetech.
12. BOARD REPRESENTATION. During the term of this License Agreement,
Softalk shall have the right to designate one person to serve on the Board of
Directors of Wavetech.
13. ASSIGNMENT. Neither party may assign or otherwise transfer this
Agreement, or any rights under it, without the prior written consent of the
other party, which consent shall not be unreasonably withheld. Any attempted
assignment in violation of this Section 13 shall be null and void.
14. CHOICE OF LAW, ARBITRATION. This Agreement is made under, and shall be
governed by and construed in accordance with the internal laws of Ontario,
Canada, without reference to principles of conflicts of law. Any disputes
arising under this License Agreement shall be settled by binding arbitration
conducted in Toronto in accordance with the Rules of Procedure for the Conduct
of Arbitration and Mediation Antitrust of Ontario Inc.
15. GENERAL.
15.1 This Agreement, constitutes the entire agreement between the
parties and supersedes all prior proposals, representation, negotiations and
communications, oral or written, between the parties with respect to its subject
matter. No variation from these provisions shall be binding unless in writing
and signed by both parties.
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15.2 Each party shall be responsible for, and shall pay, all sales,
value added and similar taxes, if any, which may be imposed on any sales of the
Softalk Products hereunder by such party, as well as any other tax based upon
such party's use, sale, or possession of the Softalk Products.
15.3 All rights and remedies conferred under this Agreement or by any
other instrument or law shall be cumulative, and may be exercised singularly or
concurrently. Either party's failure or forbearance to enforce any right or
claim against the other arising under this Agreement shall not be deemed a
waiver of future enforcement of that or any other provision. In the event that
any portion of this Agreement shall be held to be unenforceable by a court of
competent jurisdiction, the remaining portions of this Agreement shall remain in
full force and effect.
15.4 In the event any provision of this Agreement or the application of
any provision shall be held by a tribunal of competent jurisdiction to be
contrary to law, then the remaining provisions of this Agreement shall be
unimpaired, and the illegal, invalid or unenforceable provision shall be
replaced by a provision, which, being legal, valid and enforceable, comes
closest to the intent of the parties underlying the illegal, invalid or
unenforceable provision.
15.5 If a party commences any action at law or in equity, or for
declaratory relief, or in appellate proceedings, to secure or protect any rights
under, or to enforce any provision of, this License Agreement, then, in addition
to any judgment, order, or other relief obtained in such proceedings, the
prevailing party shall be entitled to recover from the losing party all
reasonable costs, expenses, and attorneys' fees incurred by the party in
connection with such proceedings, including, attorneys' fees incurred for
consultation and other legal services performed prior to the filing of such
proceeding.
15.6 All terms and conditions of this Agreement shall be binding upon
and shall inure to the benefit of the parties to this Agreement and their
respective permitted successors, permitted assigns, and legal representatives.
15.7 All notices required or permitted under this Agreement shall be in
writing and shall be deemed to have been given upon personal delivery or upon
deposit in the U.S. mail, first-class, postage prepaid. The addresses of the
parties (until written notice of change shall have been given) shall be as
follows:
SOFTALK: Softalk, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attn: Xxxxx Xxxx
Facsimile: 000-000-0000
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WITH A COPY TO: Gowling, Strathy & Xxxxxxxxx
Suite 4900 Commerce CT W
Toronto, Ontario M5L lJ3
Attn: Xxxxx Xxxxx and Xxxxx Xxxxxxx
Facsimile: 416-862-7661
WAVETECH: Wavetech International, Inc.
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
WITH A COPY TO: Squire, Xxxxxxx & Xxxxxxx L.L.P.
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
15.8 Nothing in this License Agreement shall constitute, or be deemed
to constitute, either party as an employee, agent, partner or joint venturer of
the other.
15.9 Further Assurances. The parties shall from time to time execute
and deliver all such further documents and do all acts and things as the other
party may reasonably require to effectively carry out or better evidence or
perfect the full intent and meaning of this License Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
SOFTALK, INC. WAVETECH INTERNATIONAL, INC.
By /s/ A. Xxxxx Xxxx By /s/ Xxxxxx X. Xxxxx
------------------------------- -------------------------------
Name A. Xxxxx Xxxx Name Xxxxxx X. Xxxxx
----------------------------- -----------------------------
Title President of Softalk, Inc. Title President & CEO
---------------------------- ----------------------------
Date 23-04-99 Date April 23, 1999
----------------------------- -----------------------------
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ADDITIONS TO LICENSING AGREEMENT
1. Mutual approval of all information released to public.
2. Softalk has the right to terminate the agreement if there is a change
in control of Wavetech International, Inc.
3. In the event of termination, with or without cause, Softalk will refund
license fee minus receivables collected from the "Softalk Accounts" and
any payables owing by Wavetech.
4. Softalk to be offered one seat on the Wavetech Board of Directors.
(ORIGINAL IS INITIALED
BY BOTH PARTIES)
