LICENSE AGREEMENT
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This License Agreement (the "Agreement") is dated the 14th day of June,
2000 (the "Date of this Agreement"), between Xxxxx X. Xxxxxxx, an adult
individual with an address at 00 Xxxxx Xxxxx, Xxxxxxxxx, XX 00000 ("Licensor"),
and Free dot Xxxxxxx.xxx, Inc. a Nevada corporation, having an office at 00
Xxxxx Xxxx Xxxx, Xxxxxxxxx, XX 00000 (the "Licensee").
WITNESSETH:
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WHEREAS, pursuant to a Merger Agreement by and among VDC
Communications, Inc. ("VDC"), Voice & Data Communications (Latin America), Inc.
(the "Company"), Rare Telephony, Inc., a Nevada corporation (f/k/a Washoe
Technology Corporation) ("Rare Telephony"), and the holders of all of the
outstanding shares of common stock of Rare Telephony (the "Rare Telephony
Shareholders"), dated May 25, 2000, as amended, (the "Merger Agreement"), Rare
Telephony merged with and into the Company (the "Merger");
WHEREAS, in connection with the Merger, VDC, the Company, the Rare
Telephony Shareholders, and Xxxxxxxx Ingersoll Professional Corporation entered
into an Escrow Agreement, dated May 25, 2000 (the "Escrow Agreement");
WHEREAS, the Licensor has filed a provisional patent application
through Xxxx X. Xxxxxxxx for Xxxxx X. Xxxxxxx, Inventor, dated April 7, 2000
(the "Application"), for an email business method described in the Application
(the "Email Technology");
WHEREAS, the parties desire to enter into a License Agreement for the
purpose of granting to Licensee an exclusive, transferable license under certain
terms and conditions;
WHEREAS, the Company and the Licensor have entered into an Independent
Contractor Agreement (the "Contractor Agreement"); and
WHEREAS, the terms of the Merger Agreement provide for the execution of
this Agreement.
NOW, THEREFORE, in consideration of the recitals and mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed as follows:
1. Licensor hereby grants to Licensee an exclusive, transferable
license to use the Email Technology in the U.S. and internationally (the
"License") and Licensee shall have the right to sublicense, in whole or in part,
the rights granted herein, to Licensee's subsidiaries, the Company, the
Company's subsidiaries, VDC, and VDC's subsidiaries; provided, however, that any
sublicense granted or issued without the prior written permission of the Chief
Executive Officer of VDC shall be void ab initio. The License shall cover all
improvements, additions, and changes to the Email Technology. This License shall
continue in full effect whether or not Licensor receives a patent for the Email
Technology. The term of the License shall extend for the greatest time period
permitted by law (and in no event less than ten (10) years), unless sooner
terminated as provided in Section 4.
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2. Licensor warrants that he is the exclusive owner of the Email
Technology and that he has the right to grant the License to Licensee. Licensor
further warrants that other than as provided for in this Agreement, the Licensor
has not granted a license to use the Email Technology, or otherwise assigned or
transferred any of his rights in the Email Technology, to any person or entity.
Licensor shall indemnify, protect, defend and hold harmless the Licensee, and
its officers, directors, employees, agents, representatives, subsidiaries,
affiliates, and controlling entities (collectively, "Indemnified Persons") for,
and will pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage, expense (including, without limitation, attorneys' fees) or the
diminution of value, whether or not involving a third-party claim, directly or
indirectly from or in connection with any inaccuracy of, or associated with, any
representation or warranty made by Licensor in this Agreement. The rights to
indemnification hereunder shall not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement, with
respect to the accuracy or inaccuracy of or compliance with any such
representation, warranty, or obligation.
3. The Licensee shall pay a one time royalty to Licensor of
$100,000 (said payment shall be in cash or cash equivalent only) upon Licensee
or any permitted sublicensee hereunder (collectively, the "Entities") first
obtaining 250,000 active monthly billing customers (with minimum gross usage and
regulatory fee billing of $4,500,000 per month) exclusively through the Licensee
web site (the "Free Site") through the employment of the Email Technology and
the Licensee web site affiliate system (the "System"). For purposes of this
Agreement the term "exclusively through the Licensee web site (the "Free Site")
through the employment of the Email Technology and the Licensee web site
affiliate system (the "System")" means customers obtained through the Free Site
using the Email Technology and the System where no telemarketing, or advertising
has been utilized to attract them other than (a) "click and talk" web site
telemarketing creating inbound calls to and outbound calls from the Licensee
sales/customer service center, (b) referral/viral e-mail marketing from the
Email Technology, (c) bulk e-mail marketing from Cash Back Rebates XX.xxx, Inc.
("Cash Back") self-generated e-mail lists, (d) affiliate web site and web
partnership marketing/sales, and (e) inbound calls to Licensee's call center.
Without limiting the generality of the foregoing, customers obtained in the
following ways shall not be counted towards the 250,000 customers referenced
above: (i) customers referred to, directed to, or made aware of Licensee or the
Free Site by telemarketers, employees, agents, consultants, officers or
directors of or from Cash Back (other than bulk e-mail marketing from Cash Back
self-generated e-mail lists), the Company, VDC or any of their affiliates or
subsidiaries; (ii) customers referred to, directed to, or made aware of Licensee
or the Free Site by or through the marketing, advertising, or publicly available
materials of Cash Back, the Company, VDC or any of their affiliates or
subsidiaries (other than Licensee). The failure to generate 250,000 customers
upon the terms and conditions set forth in this Section 3(a) shall result in no
one time royalty being paid. The Licensor shall bear the burden of proving to
the Licensee's Board of Directors (which shall make the ultimate determination
in its discretion) that the 250,000 active monthly billing customers (with
minimum gross usage and regulatory fee billing of $4,500,000 per month) were
obtained exclusively through the Free Site through the employment of the Email
Technology and the System. In connection with the proof required from the
Licensor in the preceding sentence, the Licensor shall have reasonable access to
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the records of the Licensee and its controlling entities after Licensor has
executed a confidentiality agreement acceptable to Licensee's counsel. The
determination of whether said customers have achieved the minimum gross usage
and regulatory fee billing of $4,500,000 per month shall be made in the sole
discretion of the Licensee's Board of Directors with guidance from VDC's
controller.
4. This License may be terminated on the following terms
and conditions:
(a) Immediately by written consent of all of the parties
hereto;
(b) By the Licensee on five (5) calendar days' written
notice if the Free Site is not operational within one year after $100,000 has
been placed in a bank account or other account for the development of the Free
Site;
(c) By the Licensor on five (5) calendar days' written
notice if $100,000 has not been placed in a bank account or other account for
the development of the Free Site within sixty (60) calendar days of the Date of
this Agreement;
(d) By either the Licensor or the Licensee on fifteen
(15) calendar days' written notice if, after the Free Site becomes operational,
VDC, the Company, or the Licensee has terminated or shut down the Free Site for
more than thirty (30) calendar days;
(e) By Licensor upon fifteen (15) calendar days'
written notice if, after the Free Site becomes operational, the Licensor has not
timely received the royalty payment provided for in Section 3; provided,
however, that Licensor shall have first provided the Licensee with written
notice of such failure and such failure shall not have been cured within fifteen
(15) calendar days' of receipt of such notice from Licensor; or
(f) By either the Licensor or the Licensee on five
(5) calendar days' written notice if Licensee is dissolved under the corporate
code then applicable to Licensee.
Notwithstanding the provisions of this Section 4, Licensor shall not be entitled
to terminate this License pursuant to either Section 4(c) or 4(d) if he has
violated either the Covenant Not to Compete contained in the Contractor
Agreement or the Covenant Not to Compete set forth in Section 5. Upon the
termination of the License as set forth in this Section 4, and upon the payment
of the royalty, if any, owed to Licensor as provided for in Section 3 accrued
through the effective date of termination, the Licensee shall have no further
obligation to Licensor under this Agreement, and Licensor shall have no further
rights under this Agreement. To the extent the payment referenced in the
preceding two sentences are offset as provided for in Section 7(m), said payment
shall be deemed to have been made for purposes of the preceding two sentences.
5. Covenant Not to Compete.
(a) The Licensor recognizes and acknowledges: (i) that the
execution of this Agreement containing the following Covenant Not to Compete was
a condition precedent to the closing of the Merger; and (ii) that the Licensee
is placing its confidence and trust in the Licensor. The Licensor, therefore,
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covenants and agrees that during the Applicable Non-Compete Period (as defined
below), the Licensor shall not, either directly or indirectly, without the prior
written consent of the Board of Directors of the Licensee: (i) engage in or
carry on any business which is similar to or is in competition with the Business
of the Licensee (as such term is used and defined below); (ii) be or become an
employee, agent, consultant, representative, director or officer of any person,
firm, corporation, association or other entity which is engaged in or is
carrying on any business which is similar to or in competition with the Business
of the Licensee; (iii) solicit for employment or employ any person employed by
the Licensee (or its subsidiaries or controlling entities) at any time during
the 12-month period immediately preceding such solicitation or employment; (iv)
develop or provide to persons or entities other than VDC, the Company or their
affiliates or subsidiaries, products, technologies or business methods that
compete with or are similar to the Email Technology; or (v) be or become a
shareholder, joint venturer, owner (in whole or in part), partner, or be or
become associated with or have any proprietary or financial interest in or of
any firm, corporation, association or other entity which is engaged in or is
carrying on any business which is similar to or in competition with the Business
of the Licensee. Notwithstanding the preceding sentence above, the following
shall not be deemed to violate this Section 5:
(i) passive equity investments by Licensor of
$10,000 or less in any entity or affiliated group of any entity which is engaged
in or is carrying on any business which is similar to or in competition with the
Business of the Licensee;
(ii) passive equity investments by Licensor in
excess of $25,000 in any entity or affiliated group of any entity which is
engaged in or is carrying on any business which is similar to or in competition
with the Business of the Licensee, so long as and only to the extent that
Licensor has obtained the prior written consent of the Board to make such
investments; or
(iii) an equity investment by Licensor of up to
0.1% in any publicly traded company which is engaged in or is carrying on any
business which is similar to or in competition with the Business of the
Licensee.
(b) As used in this Agreement, the term "Business of the Licensee"
shall include all material business activities in which the Licensee, the
Company and the Company's subsidiaries are engaged now which includes, but is
not limited to, international and domestic (i.e. in the United States) long
distance telecommunications services.
(c) Licensor hereby recognizes and acknowledges that the existing
Business of the Licensee extends throughout the United States and therefore
agrees that the covenants not to compete contained in this Section 5 shall be
applicable in and throughout the United States, as well as throughout such
additional areas, states or countries in which the Licensee may be (or has
prepared written plans to be) doing business as of the date of termination of
the Licensor's engagement hereunder. Licensor further warrants and represents
that, because of his varied skill and abilities, he does not need to compete
with the Business of the Licensee and that this Agreement will not prevent him
from earning a livelihood and acknowledges that the restrictions contained in
this Section 5 constitute reasonable protections for the Licensee.
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(d) As used in this Section 5, "Applicable Non-Compete Period"
shall mean all periods after the License has been granted and before it has been
terminated in accordance with Section 4 and that period of six (6) months
following the termination of the License.
(e) The parties hereto expressly understand, acknowledge and agree
that the Covenant Not to Compete contained in Section 5 of this Agreement (the
"License Covenant") is in addition to and supplementary to the Covenant Not to
Compete in the Contractor Agreement (the "Contractor Covenant"). The termination
or unenforceability of the License Covenant shall not affect the Contractor
Covenant and the termination or unenforceability of the Contractor Covenant
shall not affect the License Covenant.
(f) In addition to any other remedy available to the Licensee at
law, equity, or otherwise, the Licensee may suspend payment of the royalty
described in Section 3 during all periods during which the Licensor has violated
any term of Section 5.
6. Upon request from the Licensee, the Licensor shall use its best
efforts to promptly file a definitive and final patent application for the Email
Technology. In respect of any such application, Licensor agrees to execute or to
employ its best efforts to have executed any documents, including affidavits and
working declarations necessary or reasonable to facilitate the lawful filing,
prosecution and maintenance thereof. Licensor shall provide Licensee with a copy
of documentation referenced in this Section 6. The full costs (including
government fees, taxes, charges and the like and associate attorney charges for
services) for such application and the issuance and maintenance of any resulting
patent shall be borne by the Licensor. Notwithstanding the foregoing, the
Licensee may, in its sole discretion, but shall have no obligation to, opt to
direct the drafting, preparation and prosecution of the definitive and final
patent application for the Email Technology, including all exhibits, schedules,
and affidavits thereto. In order to exercise the option referenced in the
preceding sentence (the "Option"), the Licensee shall provide Licensor with
written notice of its desire to exercise this option by specific reference to
this Section 6. If and only if the Licensee exercises the Option, then the full
costs (including government fees, taxes, charges and the like and attorney
charges for services) for such application and the issuance and maintenance of
any resulting patent shall be borne by the Licensee. If the Licensee exercises
the Option, then the Licensor shall fully and in good faith cooperate with
Licensee in connection therewith. Provided that Licensor has not violated his
obligations or covenants under this Section 6, the exercise of the Option by
Licensee shall in no way affect the rights or obligations of the parties hereto
as otherwise provided for apart from this Section.
7. Miscellaneous.
(a) Except as otherwise provided in this Agreement or the
Contractor Agreement (or otherwise authorized by the Licensee in writing in
advance), the Licensor is not authorized to act as an agent for, or legal
representative of, the Licensee or its subsidiaries or affiliates and the
Licensor shall not have the authority to assume or create any obligation on
behalf of, in the name of, or binding upon the Licensee or its subsidiaries or
affiliates. This Agreement does not create a joint venture or partnership of any
kind between the parties.
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(b) The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. To be effective, any waiver must be contained in
a written instrument signed by the party waiving compliance by the other party
of the term or covenant as specified. The waiver by either party of the breach
of any term or covenant contained herein, whether by conduct or otherwise, in
any one or more instances, shall not be deemed to be, or construed as, a further
or continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
(c) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors and assigns.
(d) The Licensor shall not assign this Agreement to any other
corporation, firm or person without the express and written prior consent of the
Licensee. The Licensee may assign this Agreement and the License without the
Licensor's consent and the Licensor's execution of this Agreement shall be
deemed a consent to any such assignment; provided, however, that any assignment
of the License or the Agreement by Licensee without the prior written permission
of the Chief Executive Officer of VDC shall be void ab initio.
(e) This Agreement may not be amended except by an instrument
in writing, executed by the parties.
(f) If any term or provision of this Agreement is determined to
be illegal, unenforceable, or invalid in whole or in part for any reason by an
arbitrator or court of competent jurisdiction, such illegal, unenforceable, or
invalid provisions or part(s) thereof shall be stricken from this Agreement and
such provision shall not affect the legality, enforceability, or validity of the
remainder of the affected section or the Agreement, then the stricken provision
shall be replaced, to the extent possible, with a legal, enforceable, and valid
provision that is as similar in tenor to the stricken provision as is legally
possible.
(g) This Agreement may be executed in multiple counterparts each
of which shall be an original but all of which together shall constitute one and
the same instrument. This Agreement may also be executed and delivered by
exchange of facsimile copies showing the signatures of the parties, and those
signatures need not be affixed to the same copy. The facsimile copies showing
the signatures of the parties will constitute originally signed copies of the
Agreement requiring no further execution.
(h) Each right and remedy granted to the Licensee under this
Agreement shall be cumulative and in addition to any other right or remedy
existing in equity, at law, by virtue of statute or otherwise, and may be
exercised by the Licensee from time to time concurrently or independently and as
often and in such order as the Licensee may elect. Any failure or delay on the
part of the Licensee in exercising any such right or remedy shall not operate as
a waiver thereof.
(i) The parties acknowledge that the execution and delivery of
this Agreement was a material inducement to VDC's and the Company's decision to
consummate the Merger.
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(j) The recitals to this Agreement constitute part of this
Agreement.
(k) All notices, requests, instructions, consents and other
communications to be given pursuant to this Agreement shall be in writing and
shall be deemed received (i) on the same day if delivered in person, by same-day
courier or by telegraph, telex or facsimile transmission (receipt confirmed)
(provided that telegraph, telex or facsimile notice shall be deemed received on
the next business day if received after 5:00 p.m. Eastern Standard Time), (ii)
on the next day if delivered by overnight mail or courier, or (iii) on the date
indicated on the return receipt, or if there is no such receipt, on the third
calendar day (excluding Sundays) if delivered by certified or registered mail,
postage prepaid, to the party for whom intended to the following addresses (or
to such other addresses and facsimile numbers as a party may designate by notice
to the other party):
(a) if to the Licensor at:
Xxxxx X. Xxxxxxx
Network Consulting Group, Inc.
000 Xxxxx 00X
Xxxx Xxxxx, XX 00000
Facsimile No: (000) 000-0000
(b) if to the Licensee at:
Xxxxxx X. Xxxxxx
Free dot Xxxxxxx.xxx, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxx, Esq.
Voice & Data Communications (Latin America), Inc.
00 Xxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
(l) This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New Jersey applicable to
contracts executed and to be performed entirely within said State. All
controversies or claims arising out of or relating to this Agreement, or arising
out of or relating to the License or any sublicense contemplated herein, or the
termination thereof, shall be determined by binding arbitration applying the
laws of the State of New Jersey and the rules of the American Arbitration
Association applicable to the Commercial Panel, except that there shall only be
one (1) arbitrator. The arbitration shall be conducted at the Licensee's offices
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in Greenwich, Connecticut, or at such other location designated by the Licensee.
The decision of the arbitrator shall be final and binding upon the parties,
shall include written findings of law and fact, and judgment may be obtained
thereon in any court of competent jurisdiction. Each party shall bear the cost
of preparing and presenting its own case (except as provided for in Section 4 of
the Escrow Agreement). The cost of the arbitration, including the fees and
expenses of the arbitrator, shall be shared equally by the parties thereto
unless the award otherwise provides (except as provided for in Section 4 of the
Escrow Agreement). Nothing herein shall preclude a party from seeking injunctive
relief to restrain any breach or threatened breach of the covenants and
agreements set forth in this Agreement or otherwise to obtain specific
performance of any such covenant or agreement, without the necessity of posting
bond or security in connection therewith.
(m) The Licensee shall be entitled to deduct from any payment due
to Licensor under this Agreement any payments or amounts owed to the Licensee or
any of its controlling entities or affiliates (including, without limitation,
VDC) by the Licensor or Network Consulting Group, Inc.
(n) This Agreement will not be construed more strictly against
one party then against the other by virtue of the fact that drafts may have been
prepared by counsel for one of the parties, it being recognized that this
Agreement is the product of negotiations between the parties and that the
parties have contributed to the final preparation of this Agreement.
(o) Licensor acknowledges that this Agreement is supported by good
and adequate consideration. Licensor hereby waives any defense, claim or other
arguments (in relation to the enforceability of this Agreement including
rescission or cancellation hereof) or any similar theory based upon lack of
consideration.
(p) Each party represents and warrants that (i) it has carefully
read this Agreement, (ii) it has had the assistance of legal counsel of its
choosing (and such other professionals and advisors as it has deemed necessary)
in the review and execution hereof, (iii) the meaning and effect of the various
terms and provision hereof have been fully explained to it by such counsel, (iv)
it has conducted such investigation, review and analysis as it has deemed
necessary to understand the provisions of this Agreement and the transactions
contemplated hereby, and (v) it has executed this Agreement of its own free
will.
(q) Nothing contained in this Agreement shall imply any agreement
by the Licensee to develop or fund the Free Site. The parties acknowledge that
there is or shall be a separate Funding Agreement which shall provide for
limited funding of the Free Site.
(r) The Licensor shall execute such additional documents and to
perform all such other and further acts as may be reasonably necessary or
desirable to carry out the purposes and intents of this Agreement, at the cost
of the Licensee. Without limiting the generality of the foregoing, the Licensor
shall upon request from Licensee, execute a new document satisfactory to
Licensee upon Licensor receiving a patent for the Email Technology.
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(s) This Agreement constitutes the complete and exclusive
agreement between the parties hereto which supersedes all proposals, oral and
written, and all other communications between the parties relating to the
subject matter contained herein. Without limiting the foregoing, the Agreement
supersedes and renders null and void a letter agreement among VDC, Licensor, and
Network Consulting Group, Inc., dated May 17, 2000. Notwithstanding the
foregoing, this Agreement shall not supersede or render null or void the Merger
Agreement or the Schedules or Exhibits thereto, the Escrow Agreement, or the
Contractor Agreement.
(t) TO THE FULLEST EXTENT PERMITTED BY LAW, THE LICENSEE SHALL NOT
BE LIABLE TO LICENSOR OR ANY OTHER PERSON OR ENTITY FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, PUNITIVE OR CONSEQUENTIAL LOSSES OR DAMAGES, INCLUDING WITHOUT
LIMITATION LOSS OF REVENUE, LOSS OF CUSTOMERS OR CLIENTS, LOSS OF GOODWILL OR
LOSS OF PROFITS ARISING IN ANY MANNER FROM THIS AGREEMENT OR THE PERFORMANCE OR
NON-PERFORMANCE OF OBLIGATIONS HEREUNDER, EVEN IF THE LICENSEE HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.
(u) Licensor agrees, within seven (7) calendar days after request
from Licensee, to deliver to Licensee a statement certifying that this Agreement
is in full force and effect (or stating any facts to the contrary). Within ten
(10) calendar days of receipt of a written request from Licensee, the Licensor
shall provide the Licensee with a statement (sworn to by the Licensor before a
Notary Public and signed by said Notary Public and the Licensor) that, as of the
date of said statement, the Licensor has complied with all material terms of
this Agreement. This provision shall expire six (6) months following the
termination of this Agreement.
(v) This Agreement and the License are effective as of the Date of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
ATTEST: LICENSEE:
/s/ Xxxxxx Xxxxxxx Free dot Xxxxxxx.xxx, Inc.
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Signature
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx Xxxxxxx Xxxxxx X. Xxxxxx
--------------------------- President
Print Name
WITNESS: LICENSOR:
/s/ Xxxxx X. Xxxxx
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Signature
/s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxx Xxxxx X. Xxxxxxx
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Print Name
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