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EXHIBIT 10.10
MERCFUEL, INC.
0000 XXXXXXXXX XXXXXX
XXX XXXXXXX, XXXXXXXXXX 00000
TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
DRAFT
August 30, 2001
PERSONAL & CONFIDENTIAL
Mr. Xxxx Xxxxxx
Management & Report Technologies, Inc.
0000 Xxxxxx Xxxxxx
Xx. Xxxxx, FL 33901
Dear Xx. Xxxxxx:
MercFuel, Inc. ("MercFuel") wishes to acquire a perpetual, exclusive
worldwide license in all intellectual property (including computer hardware and
software) owned or utilized by Management & Report Technologies, Inc. ("XXXXX")
as it may be applied to the delivering of aviation fuel. This letter contains
all of the essential terms and conditions under which we agree to acquire the
license of intellectual property interests in XXXXX to be used only and
exclusively in the aviation fuel delivery business, and shall be deemed a
binding agreement between the parties. This letter may be followed by an
additional agreement containing these and other terms and conditions, which
other terms and conditions are agreed not to be essential nor necessary to
create a binding agreement.
1. Acquisition of License; Closing Date. On the terms and conditions
set forth below, MercFuel agrees to acquire, and XXXXX shall xxxxx to MercFuel,
on the Closing Date, an exclusive, perpetual, worldwide, license to use, copy or
reproduce, within limitations of existing agreements with other software
vendors, in MercFuel's business defined as the delivery of aviation fuel,
whether for manufacture or otherwise, the hardware, devices, (excluding software
source code and electronic engineering drawings which will be escrowed for the
benefit of MercFuel) and documentation developed by XXXXX as of the Closing
Date, and all other intellectual property in connection therewith, including
know-how and processes, for use in the collection of aviation fuel delivery data
and the reconciliation of aviation fuel deliveries. Further, XXXXX shall xxxxx
to MercFuel on the Closing Date the exclusive right to sublicense to third
parties in the aviation fuel business, as reasonably determined to be in such
business by XxxxXxxx and XXXXX, the software and documentation developed by
XXXXX for use in the collection of aviation fuel delivery data and the
reconciliation of aviation fuel deliveries, and shall have submitted to
MercFuel, prior to the Closing Date, an assessment of the applicability of
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Mr. Xxxx Xxxxxx
August 30, 2001
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the hardware and software for use in the collection of aviation fuel delivery
data and the reconciliation of aviation fuel deliveries. XXXXX also grants to
MercFuel the right to claim proprietary licensed interests in all technology
licensed hereunder and to license or sublicense the technology under the name
MercFuel, Inc., or under any other name, at the discretion of MercFuel, Inc.,
without any obligation to attribute the technology to XXXXX or any other entity
except for purposes required to protect copyright and patent rights and
interests. All rights and licenses granted under or pursuant to this Agreement
are and shall otherwise be deemed to be, for purposes of Section 365(n) of the
U.S. Bankruptcy Code ("Bankruptcy Code"), licenses of rights to "intellectual
property" as defined under Section 101 of the Bankruptcy Code. MercFuel, as
licensee of the applicable rights under this Agreement granted by XXXXX, shall
retain and may fully exercise all of its rights and elections under the
Bankruptcy Code. In the event of commencement of a bankruptcy proceeding by or
against either party under the Bankruptcy Code, MercFuel shall be entitled to
complete access to any such intellectual property or embodiments thereof. For
purposes of this Agreement, the "Closing Date" means the effective date of the
Offering (as defined below), provided that all conditions precedent have been
satisfied prior thereto. If all conditions precedent have not been satisfied
prior to the Offering, or if the Offering does not occur prior to December 31,
2001, this agreement shall terminate, without any liability or obligation of
either party hereto. For purposes of this Agreement, the "Offering" constitutes
a public offering of common stock of MercFuel, Inc., with respect to which
MercFuel has previously filed a registration statement on Form S-1 with the
Securities and Exchange Commission, and the term "Distribution" means a
distribution of the common stock of MercFuel, Inc. to the shareholders of
Mercury Air Group, Inc. ("MAG"), the parent corporation of MercFuel, which is
currently planned to occur approximately six months following the date of the
Offering. XXXXX hereby acknowledges its understanding that neither the Offering
nor the Distribution may occur due to reasons within or outside the control of
MercFuel and MAG, and that neither MercFuel nor MAG shall have liability to
XXXXX or its affiliates on account thereof.
2. Consideration. The consideration for the acquisition of the license
herein shall consist of (i) cash in the amount of $25,000 (the "Cash
Downpayment") payable by October 1, 2001 and (ii) a $750,000 non-interest
bearing subordinated convertible note (the "Note") payable on the Closing Date,
which Note shall be converted into 125,000 shares of common stock of MercFuel,
upon written notice given by MercFuel following the date of the Distribution.
The Note, if not previously converted, shall be due and payable in twenty-four
equal monthly installments with the first installment due and payable one year
from the date of this letter subject to approvals or restrictions, if any,
imposed by XxxxXxxx's lenders. Subject to approval by the underwriters of the
Offering (as defined below), and subject to acceptance by such underwriters and
by XXXXX of a mutually agreeable lock-up period, the common shares underlying
the Note (the "Underlying Shares") shall be registered in the Offering. If the
Underlying Shares are not so registered, and if the Note has not been paid in
whole or in part, then MercFuel shall use its best efforts to register the
Underlying Shares on a Form S-3 as soon as MercFuel becomes eligible to use such
form. If the Cash Downpayment is not made by October 1, 2001, this Agreement
shall be terminated, without any further obligations of the parties hereto.
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Mr. Xxxx Xxxxxx
August 30, 2001
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3. Conditions Precedent. Our obligation to purchase, as more
fully described above, is conditioned upon the following, any of which may be
waived at our sole discretion:
a. Our completion of such due diligence as we may choose to do,
including but not limited to a competitive assessment and
quality testing of the hardware and software developed by
XXXXX, and our satisfaction in our sole discretion with the
results of such due diligence. We agree to complete our due
diligence investigation by the later of 14 days from the date
of your acceptance of this letter. A satisfaction or rejection
notice will be sent no later than five (5) days after the
expiration of the due diligence period.
b. Approval of this transaction by our Board of Directors, which
approval may be granted or withheld in the sole discretion of
the Board of Directors within 10 days of the completion of our
due diligence. An approval or rejection notice will be sent no
later than (5) days after the expiration of the approval
period.
c. Approval of this transaction and the issuance and terms of the
Note by all lenders and proposed lenders of MercFuel
(including Foothill Financial) and by all lenders and proposed
lenders of MAG, or those lenders whose approval is required in
order to consummate this transaction. Approval required in
this paragraph shall be obtained and noticed to XXXXX on the
earliest practicable date. XxxxXxxx and/or MAG agree to use
their best effort to obtain an approval of this transaction by
the lender(s).
d. Approval of this transaction by tax counsel to XxxxXxxx. A
satisfaction or rejection notice will be sent no later than
five (5) days after the expiration of the due diligence period
set forth in paragraph (a) above.
4. Representations and Warranties. Pursuant to the Agreement,
both parties will make all representations and warranties customary in
transactions of this nature. Seller's representations and warranties shall
address, in a mutually acceptable manner, the following topics: Representations,
Covenants and Warranties of Seller; Organization, Power, and Standing; Power and
Capacity; Claims Against the Company by Stockholders; Freedom to Contract and
Consent; Binding Obligation; No Undisclosed Liabilities Affecting the License;
Rights to Use Patents, Trademarks, and Copyrights, including, without
limitation, the following: (i) a representation concerning XXXXX'x holding title
to valid patents as described in patents 5,902,938 and 6,047,250 on hardware,
devices, and software and documentation to be licensed or transferred to
MercFuel pursuant to the terms hereof; and (ii) a representation by XXXXX that
it is their belief that Xxxxxxx and Xxxxxx is in violation of certain portions
of such patents held by XXXXX including an explanation of how XXXXX arrived at
its beliefs; Protection of Trade Secrets; Compliance with Law; Condition of
Business; Actions Prior to Closing; Title to Assets; Notice of Claims; Material
Defaults; and Suitability of Software for Utilization in the Fueling Business.
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Mr. Xxxx Xxxxxx
August 30, 2001
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5. Assignment. We may (i) assign any or all of our rights and interests
hereunder to one or more of our affiliates, joint venturers or partners and (ii)
designate one or more of our affiliates, joint venturers or partners to perform
our obligations hereunder (in any or all of which cases we shall nonetheless
remain responsible for the performance of all of our obligations hereunder).
6. Disclosure. The parties agree that they will make no public
disclosures or publicity release pertaining to the existence of this letter
agreement or of the subject matter contained herein without the consent of the
other parties; provided, however, that notwithstanding the foregoing, each party
shall be permitted to make such disclosures to the public or to maintain
compliance with and to prevent violation of application federal or state laws.
The parties further agree that this letter agreement and the terms thereof
shall, except as set forth in the preceding sentence of this section, be kept
confidential and not disclosed to any other party; provided, however, that any
disclosure of information may be made to which we consent in writing and the
party to whom such information is disclosed executes a confidentiality agreement
with respect to such information.
7. Expenses. Each party shall pay its own legal, accounting and other
expenses in connection with the negotiation, execution and performance of this
agreement and the transactions contemplated hereby.
8. Amendment. This agreement may be amended or modified only in writing
and signed by all of the parties.
9. Governing Law. This agreement shall be governed by the internal laws
of the State of California.
If the foregoing is in accordance with your understanding, please
signify your approval by signing a copy of this letter at the place provided
below.
Very truly yours,
MERCFUEL, INC.
By: __________________
Its:
MANAGEMENT & REPORT
TECHNOLOGIES, INC.
By: ____________________
Its:
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Mr. Xxxx Xxxxxx
August 30, 2001
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Its: ___________________
___________________
Xxxx Xxxxxx
