LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made as of the 5th day of December, 2005
between KINO COMMUNICATIONS, L.L.C., a limited liability company organized and
existing under the laws of the State of Arizona ("Licensor"), and KINO
INTERACTIVE GROUP, LLC, a limited liability company organized and existing under
the laws of the State of Arizona ("Licensee"). Licensor and Licensee are
sometimes referred to collectively as "Parties" and individually as "Party".
The Effective Date is December 1, 2005
In consideration of the premises and of the promises and mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
SECTION 1. PURPOSE AND SCOPE
A. Licensor owns the Licensed Programs and Licensed Technical
Information (each as defined below) and copyrights and other proprietary rights
relating thereto.
B. Subject to the terms, conditions and provisions hereinafter set
forth, Licensee desires to obtain from Licensor, and Licensor desires to grant
to Licensee an exclusive, fully paid-up license to (i) use the Licensed Programs
and Licensed Technical Information on a worldwide basis and (ii) use and modify
source code of the Licensed Programs.
SECTION 2. CERTAIN DEFINITIONS.
The following terms, as used herein, shall have the following meanings:
(i) Affiliate" means, when used with references to Licensee,
any Person directly or indirectly controlling, controlled by or under
common control with Licensee.
(ii) "Agreed Percentage" means thirty-five percent (35%) for
the period from March 2006 through February 2007, forty-five percent
(45%) for the period from March 2007 through February 2008 and fifty
percent (50%) for the period from March 2008 through February 2009.
(iii) "Confidential Information" means and includes (i) the
source code and object code of the Licensed Programs and the related
Documentation, (ii) the Licensed Technical Information; and (iii) any
other written or oral information from which the furnishing party
derives economic value, actual or potential, from such information not
being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its
disclosure or use, and which is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
(iv) "Copyright" means the copyrights related to the Licensed
Work, including the copyright applications and registration(s), if any,
listed on Exhibit A attached hereto and made part hereof, authorized
under Title 17 of the United States Code or under the laws of any other
jurisdiction.
(v) "Customer" means any Person who has executed a valid
sublicense or any other form of agreement relating to the License.
(vi) "Distributable Cash" means the Agreed Percentage of all
cash receipts received from Licensee's operations in a calendar month,
minus:
(a) The sum of (1) All expenditures incurred incident
to the normal operation of Licensee's business, including,
without limitation, general and administrative expenses,
current payroll and payroll taxes, commissions, consulting
fees, cost of goods and services sold, accounts payable under
sixty (60) days old, debt service, equipment lease payments,
rent, and (2) Fifteen percent (15%) of Legacy Liabilities;
(b) Reserves; and
(c) Negative Cash Flow.
(vii) "Documentation" means the explanatory and instructive
materials in hardcopy, including manuals and other printed or visually
perceptible materials that describe the use, function or operation of a
computer software program.
(viii) "End User Agreement" means an agreement between
Licensee and a Person granting the right to use or benefit from any of
the rights granted hereinunder.
(ix) "Legacy Liabilities" means all accounts payable in excess
of sixty (60) days old and delinquent payroll taxes and other tax
liabilities.
(x) "License" means a fully paid up, perpetual, worldwide,
exclusive license, with a right to sublicense to (i) host and use the
Licensed Work; (ii) make copies of, and make derivative works of, the
Licensed Work for the use of Licensee in accordance with the terms of
this Agreement; (iii) distribute, market and Sell the Licensed Work;
(iv) use and make Modifications to the source code of the Licensed
Programs; and (v) exploit by implication the Licensed Work by any other
means.
(xi) "License Fee(s)" means the payments made by Licensee to
Licensor hereunder.
(xii) "Licensed Program(s)" means the StreamSafe,
StreamSyndicate and Webcast software program(s) in source code, object
code, or any other form having specifications and functionality
described in Exhibits X-0, X-0 and A-3 hereto, together with (i)
Modifications thereto, (ii) all Documentation, and (iii) all derivative
works based on the foregoing.
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(xiii) "Licensed Technical Information" means data furnished
by Licensor that is used to (i) populate the database components of the
Licensed Programs or (ii) describe the use, function or operation of
the Programs.
(xiv) "Licensed Work" means the Licensed Programs, the
Licensed Technical Information and any derivative works, as well as all
United States and foreign Copyrights.
(xv) "Modification(s)" means any and all changes including
improvements, enhancements, corrections, revisions to the work or any
portion thereof, and any derivative of or work substantially similar to
any of the foregoing, made by Licensee.
(xvi) "Negative Cash Flow" means the occurrence when all cash
receipts received from Licensee's operations in a calendar month is
less than the following:
(a) The sum of (1) All expenditures incurred incident
to the normal operation of Licensee's business, including,
without limitation, general and administrative expenses,
current payroll and payroll taxes, commissions, consulting
fees, cost of goods and services sold, accounts payable under
sixty (60) days old, debt service, equipment lease payments,
rent, and (2) Fifteen percent (15%) of Legacy Liabilities,
plus
(b) Reserves.
(xvii) "Person(s)" means any corporation, partnership, joint
venture or natural person.
(xviii) "Protected Information" has the meaning ascribed in
Section 7.
(xix) "Reserves" means, with respect to any calendar month or
other fiscal period, funds set aside or amounts allocated during such
period to reserves which shall be maintained in amounts deemed
sufficient by the Managers for working capital, capital expenditures,
and to pay taxes, insurance, or other costs or expenses incident to the
proper operation of Licensee's business, plus a minimum monthly balance
in Licensee's operating accounts of not less than seventy-five thousand
dollars ($75,000).
(xx) "Sell" or "Sale" as applied to the Licensed Work means a
genuine bona fide transaction for which consideration is received or
expected for the use, lease, transfer or any other disposition of the
Licensed Work. A Sale of the Licensed Work shall be deemed completed at
the time Licensee or its sublicensee receives payment for such Licensed
Work.
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SECTION 3. GRANT OF LICENSE
A. Subject to the terms and conditions contained in this Agreement,
Licensor hereby grants to Licensee for the term of this Agreement the License.
Licensor reserves no further rights to make copies of, to make derivative works
of and to use the Licensed Work for commercial purposes and to license the
Licensed Work to third parties subject to the terms of this Agreement.
B. Licensee shall have the right to make Modifications of the Licensed
Work, which Modifications, and all patents, copyrights and trademarks relating
thereto, shall become the property of Licensee from the moment of their
creation, subject to the Licensor's license rights hereunder.
C. Licensee will assume all responsibility for hosting and supporting
the Licensed Work. Licensor is under no obligation to correct defects and
provide Licensee with fixes to the Licensed Work or to support the Licensed Work
to assure that it remains commercially viable.
D. Licensee shall be responsible for and shall control the preparation,
prosecution and maintenance of all copyrights and patent rights pertaining to
the Licensed Programs.
SECTION 4. LICENSE FEES
A. In consideration for the License, Licensee shall pay Licensor a
License Fee, not to exceed an aggregate of one million dollars ($1,000,000)
during the term of the License, as follows:
(i) A lump sum payment of one hundred twenty-five thousand
dollars ($125,000) payable on March 15, 2006;
(ii) Distributable Cash for each calendar month thereafter
commencing April 2006, payable in arrears on the 15th day of the next
calendar month and each calendar month thereafter with respect to the
prior calendar month.
B. Licensee will deliver to Licensor within forty-five (45) days after
the end of each calendar quarter a report, certified by the chief financial
officer of Licensee, setting forth in reasonable detail the calculation of the
earned License Fees payable to Licensor for such calendar quarter.
C. All payments of Licensee Fees and other amounts to Licensor under
this Agreement will be made in United States dollars by check payable to
Licensor and sent to such address as Licensor designates. Amounts that are not
paid when due will accrue interest from the due date until paid, at a rate equal
to the prime rate as announced from time to time by the Bank of America plus two
percent (2%) with a maximum cap of eighteen percent (18%). Licensor may treat
unpaid payments as a breach of this Agreement notwithstanding the payment of
interest.
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D. Licensee will maintain complete and accurate books and records that
enable the License Fees payable hereunder to be verified. The records for each
calendar quarter will be maintained for five years after the submission of each
report. Upon reasonable prior notice to Licensee, Licensor and its accountant
will have access to the relevant books and records of Licensee necessary to
conduct a review or audit thereof. Such limited access will be available not
more than twice each calendar year, during normal business hours, and for three
years after the expiration or termination of this Agreement. If Licensor
determines that Licensee has underpaid License Fees by ten percent (10%) or
more, Licensee will immediately pay to Licensor such amount plus interest as set
forth above in addition to the documented costs and expenses of Licensor's
accountant in connection with its review or audit. If an overpayment is
determined to exist, Licensor will refund any monies overpaid by Licensee back
to Licensee.
E. All payments other amounts to Licensor under this Agreement shall be
made in United States dollars in immediately available funds to the location
specified by Licensor from time to time pursuant to the notice provisions
hereunder.
SECTION 5. WARRANTIES
A. Each of the Parties warrants and represents to the other that (i) it
is duly organized, validly existing and in good standing under the laws of its
state of formation; (ii) it has the full power to enter into this Agreement and
to grant the rights set forth herein; (iii) this Agreement, when executed and
delivered by such Party, will be the legal, valid and binding obligation of such
Party enforceable against it in accordance with its terms without the consent of
third parties; and (iv) the execution, delivery and performance of this
Agreement by such Party does not conflict with, or constitute a breach or
default under, any provision of any agreement, contract, commitment or
instrument to which it is a party.
B. Licensor warrants that it owns or possesses, or will own and
possess, all necessary rights to the Licensed Work. Such rights are
unencumbered, unpledged, unattached, do not infringe upon the proprietary rights
of any third party, and neither agreements nor unilateral claims exist which
might affect a control over such rights licensed and granted to Licensee under
this Agreement. Licensor has not received any written notice that the Licensed
Work infringes the proprietary rights of any third party.
C. Licensor further warrants that (i) the Licensed Programs are
reasonably free from defects in workmanship and material; (ii) the Licensed
Programs have all of the qualities and features, and are capable of performing
all of the functions delineated in writing by Licensor; and (iii) the Licensed
Programs are of merchantable quality, fit for the ordinary purposes for which
such goods are used, and pass without objection in the trade.
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SECTION 6. EXCLUSION OF WARRANTIES; LIMITATION OF LIABILITY
A. TO THE FULLEST EXTENT PERMITTED BY LAW, AND EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS,
LOST DATA, OR LOSS OF USE) OF THE OTHER ARISING OUT OF ANY DELIVERABLE OR
SERVICE PROVIDED UNDER THIS AGREEMENT, ANY PERFORMANCE OF, OR FAILURE TO
PERFORM, THIS AGREEMENT OR ANY CONDUCT IN FURTHERANCE OF THE PROVISIONS OR
OBJECTIVES OF THIS AGREEMENT, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED ON
TORT, WARRANTY, CONTRACT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
B. Notwithstanding the above, this limitation will not in any way
exclude a party's liability for: (i) bodily injury or death; (ii) any awards or
settlements required pursuant to an indemnification obligation hereunder; (iii)
damages resulting from fraud, gross negligence, recklessness, or intentional or
willful misconduct; or (iv) costs of cover (including costs of implementing
work-arounds, costs to restore lost data, costs to procure replacement products
or services from an alternate source, overtime, straight time, and related
expenses and allocated overhead) incurred by a party on account of any liability
of the other party that may not be excluded as listed above.
SECTION 7. CONFIDENTIALITY
A. In connection with this Agreement, each Party may reveal to the
other Party certain proprietary information from which the disclosing Party
derives economic value, actual or potential, from such information not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and
which is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy. This proprietary information, including the Licensed Work,
is hereinafter referred to collectively as the "Protected Information." As a
condition to the Parties sharing with each other, whether in writing or orally,
any Protected Information, each Party hereby acknowledges and agrees with the
other Party as follows:
(i) The Protected Information, whether now or hereafter
furnished to the receiving Party in whole or in part, is confidential.
(ii) The disclosing Party's business and prospects could be
damaged if its Protected Information is disclosed to third parties
without the disclosing Party's consent.
(iii) The receiving Party will keep confidential and refrain
from disclosing or divulging to any person the disclosing Party's
Protected Information without the disclosing Party's prior written
consent (other than disclosures to the receiving Party's agents or
employees who will be bound by the terms of this Agreement and advised
that the disclosing Party's Protected Information must be treated as
confidential).
(iv) The receiving Party will not use the disclosing Party's
Protected Information (nor permit the use thereof) in a manner or for a
purpose detrimental to the disclosing Party's business.
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B. The receiving Party's obligation of confidentiality with respect to
Protected Information which constitutes trade secrets under the Uniform Trade
Secrets Act (or other similar applicable law) will run for as long as such
information remains a trade secret. The receiving Party's obligation of
confidentiality with respect to Protected Information that is not covered under
the Uniform Trade Secrets Act (or other similar applicable law), will run for
three (3) years from the date this Agreement terminates. The foregoing
obligation shall not apply to: (i) information that is known to the receiving
Party or independently developed by the receiving Party prior to the time of
disclosure; (ii) information disclosed to the receiving Party by a third party
that has a right to make such disclosure; (iii) information that becomes
patented, published or otherwise part of the public domain as a result of acts
by the disclosing Party or by a third person who has the right to make such
disclosure; or (iv) information that is required to be disclosed by order of any
governmental authority or a court of competent jurisdiction; provided that the
receiving Party shall notify the disclosing Party if it believes such disclosure
is required and shall use its best efforts to obtain confidential treatment of
such information by the agency or court.
SECTION 8. INFRINGEMENT CLAIMS
A. Each Party will promptly notify the other party of any infringement
or possible infringement of rights relating to the Licensed Work by a
third-party. Licensee shall have the right, but not the obligation, to prosecute
such infringement at its own expense. In such event, Licensor shall cooperate
with Licensee, at Licensee's expense. Licensee shall not settle or compromise
any such suit in a manner that imposes any obligations or restrictions on
Licensor or grants any rights to the Licensed Work, without Licensor's written
consent.
B. If Licensee fails to prosecute such infringement within ninety (90)
days after receiving notice thereof, Licensor shall have the right, but not the
obligation, to prosecute such infringement at its own expense. In such event,
Licensee shall cooperate with Licensor, at Licensor's expense.
C. Any recovery obtained by the prosecuting party as a result of such
proceeding, by settlement or otherwise, shall be applied first to the
prosecuting party, in an amount equal to its costs and expenses of the
litigation, with the remainder to be paid to the Licensee, subject to the cap on
the payment of License Fees due to Licensor under Section 4.
SECTION 9. INDEMNITY
A. Licensor will indemnify, defend and hold harmless Licensee, its
affiliates, officers, directors, employees, consultants and agents from any and
all third, party claims, liability, damages and/or costs (including but not
limited to, attorneys fees) arising from: (i) Licensor's breach of any warranty,
representation or covenant made by it in this Agreement; or (ii) any claim that
the Licensed Work infringes or violates any third party's copyright, patent,
trade secret, trademark or other intellectual property right. Licensee will
promptly notify Licensor of any and all such claims and will reasonably
cooperate with Licensor with the defense and/or settlement thereof, which
defense and/or settlement will be controlled by Licensor, provided that, if any
settlement requires an affirmative obligation of, results in any ongoing
liability to or prejudices or detrimentally impacts Licensee in any way and such
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obligation, liability, prejudice or impact can reasonably be expected to be
material, then such settlement will require Licensee's written consent (not to
be unreasonably withheld or delayed) and Licensee at its expense may have its
own counsel in attendance at all proceedings and substantive negotiations
relating to such claim.
B. Licensee will indemnify, defend and hold harmless Licensor, its
affiliates, officers, directors, employees, consultants and agents from any and
all third party claims, liability, damages and/or costs (including, but not
limited to, reasonable attorneys fees) arising from: Licensee's breach of any
warranty, representation or covenant made by it under this Agreement. Licensor
will promptly notify Licensee of any and all such claims and will reasonably
cooperate with Licensee with the defense and/or settlement thereof, which
defense and/or settlement will be controlled by Licensee, provided that, if any
settlement requires an affirmative obligation of, results in any ongoing
liability to or prejudices or detrimentally impacts Licensor in any way and such
obligation, liability, prejudice or impact can reasonably be expected to be
material, then such settlement will require Licensor's written consent (not to
be unreasonably withheld or delayed) and Licensor may at its expense have its
own counsel in attendance at all proceedings and substantive negotiations
relating to such claim.
SECTION 10. TERMINATION
A. In addition to any other rights and/or remedies that a Party may
have under the circumstances, all of which are expressly reserved, either Party
may suspend performance and/or terminate this Agreement immediately upon written
notice at any time if the other Party is in breach of a material warranty or
covenant under this Agreement, and fails to cure that breach within thirty (30)
days after written notice thereof (except for failure to pay in which case such
breach must be cured within ten (10) days), provided that if such Party, using
its best efforts, cannot cure such breach within the first thirty (30) days, the
cure period shall be extended by an additional thirty (30) days, the total cure
period not to exceed sixty (60) days.
B. In addition to any other rights and/or remedies that Licensor may
have under the circumstances, all of which are expressly reserved, Licensor may
suspend performance and/or terminate this Agreement immediately upon written
notice at any time if Licensee (i) Makes an assignment for the benefit of its
creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudicated
as bankrupt or insolvent, (iv) files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation or similar
relief under any statute, law or rule, which petition is not dismissed within
sixty (60) days of such filing ,(v) files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against it in
a bankruptcy, insolvency, reorganization or similar proceeding, which petition
is not dismissed within sixty (60) days of such filing, or (vi) seeks, consents
to or acquiesces in the appointment of a trustee, receiver or liquidator of the
member or of all or any substantial part of its property.
C. Within thirty (30) days after termination of this Agreement, each
Party shall return to the other party any Confidential Information of the other
Party. Licensee also shall return all copies of the Licensed Work in its
possession that are embodied in physical form to Licensor promptly upon the
termination of this Agreement.
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D. Any sublicenses granted by Licensee under this Agreement shall
survive termination of this Agreement in accordance with the terms of such
sublicense.
E. Licensee's obligation to make payments accrued but unpaid prior to
termination of this Agreement shall survive such termination. In addition, any
other provisions required to interpret the rights and obligations of the parties
arising prior to the termination date shall survive expiration or termination of
this Agreement.
F. In the event of termination or expiration of this Agreement for any
reason, any provision required to interpret the rights and obligations of the
Parties arising prior to termination of this Agreement shall survive
termination.
SECTION 11. INDEPENDENT CONTRACTOR STATUS
Nothing contained herein is to be construed as establishing a partnership, joint
venture, employment or other business relationship between the Parties other
than that of independent contractors.
SECTION 12. NOTICES
Notices provided under this Agreement must be in writing and deemed to have been
effectively given when delivered personally, sent by private express mail
service (such as Federal Express), or sent by registered or certified mail
(return receipt requested) to such address as a Party has furnished in writing
to the other Party in accordance with this Section.
SECTION 13. ASSIGNMENT
Neither Party may assign or transfer this Agreement, without the other Party's
prior written consent, and any attempted assignment, transfer or delegation
without such prior written consent will be voidable at the sole option of such
other Party. Notwithstanding the foregoing, each Party (or its successive
assignees or transferees hereunder) may, without such consent, assign this
Agreement to an entity that succeeds to all or substantially all of the business
or assets of such Party as long as such entity agrees to accept all of the terms
set forth herein. Without limiting the foregoing, this Agreement will be binding
upon and inure to the benefit of the Parties and their permitted successors and
assigns.
SECTION 14. FORCE MAJEURE
The Parties will not be liable for any failure to perform or delayed performance
of any obligation under the Agreement if such performance is prevented, hindered
or delayed by reason of any cause beyond the reasonable control of the Parties,
including, without limitation, act of God, flood, shortage of materials from
various manufacturers, earthquakes, hurricanes, casualty, war, act of public
enemy, riot, insurrection, embargo law, blockage, action, restriction and
regulation or order of any government, government agency or subdivision thereof.
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SECTION 15. GOVERNING LAW; INJUNCTIVE RELIEF
This Agreement will be governed and construed as to both substantive and
procedural matters in accordance with the laws of the State of Arizona. Because
damages at law will be an inadequate remedy for breach of any of the covenants,
promises and agreements contained in Section 7, the aggrieved Party will be
entitled to injunctive relief in any court of competent jurisdiction, including
specific performance or an order enjoining the breaching Party from any
threatened or actual breach of such covenants, promises or agreements, and
relieved of the requirement of posting any bond in connection with temporary or
interlocutory injunctive relief, to the extent permitted by law. The rights set
forth in this Section will be in addition to any other rights which the
aggrieved Party may have at law or in equity.
SECTION 16. GENERAL
This Agreement, together with the exhibits hereto, contains the entire agreement
of the Parties relating to the subject matter hereof and supersedes all prior
agreements and understandings, whether written or oral, with respect to such
subject matter, and the Parties have made no agreements, representations or
warranties relating to the subject matter of this Agreement which are not set
forth herein. This Agreement may be amended only by a written instrument
executed and delivered by a duly authorized officer of each of the Parties. No
failure or delay by the Parties in exercising any right, power or privilege
hereunder will operate as a waiver thereof nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege. If any provision of this Agreement is adjudged
by any court of competent jurisdiction to be unenforceable or invalid, that
provision will be limited or eliminated to the minimum extent necessary so that
this Agreement will otherwise remain in full force and effect and enforceable.
The Parties shall sign such other instruments, cause such meetings to be held
and resolutions passed, exercise their vote and influence, do and perform and
cause to be done and performed such further and other acts as things as may be
reasonably necessary or desirable to give full effect to the intent and purposes
of this Agreement. Any headings and captions used in this Agreement are for
convenience of reference only and shall not affect its construction or
interpretation. This Agreement may be executed in two or more counterparts, all
of which together will be considered a single instrument.
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IN WITNESS WHEREOF, the Parties have entered into this Agreement as of
the date first set forth above.
KINO COMMUNICATIONS, LLC
By: ______________________________
Its: ______________________________
KINO INTERACTIVE, LLC
By: ______________________________
Its: ______________________________
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SCHEDULE "X-0"
XXXXXXXXXX SPECIFICATIONS
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XXXXXXXX "X-0"
XXXXXXXXXXXXXXX SPECIFICATIONS
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SCHEDULE "A-3"
WEBCAST WIZARD SPECIFICATIONS
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