Exhibit 10.23
JOINT VENTURE AGREEMENT
This Agreement dated as of March 24, 2000 (the "Agreement"), by and
between Seafont Pty. Ltd., a corporation incorporated under the laws of
Australia with a principal address at Xxxxx 0, 00 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxx
("Seafont") and xXxxx.xxx, Inc., a corporation incorporated under the laws of
the State of Delaware, having its principal office at 000 Xxxxx Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxx 00000, XXX ("eNote").
W I T N E S S E T H:
WHEREAS, eNote has designed, developed and is marketing in the United
States an Internet appliance including a wireless keyboard and set-top box (the
"Client") to permit users to access via a telephone line and view via television
e-mail and selected Internet web pages ("TVemail(TM)").
WHEREAS, eNote has designed, engineered and developed a system of
software and hardware to implement TVemail(TM). This system is comprised of the
TVemail(TM) appliances, including the wireless keyboard and set-toP box, eNote's
proprietary software (including, but not limited to, all Object Code and Source
Code in whatever form), eNote's proprietary client/server architecture and
database (the "Backbone"), together with all new versions, upgrades,
alterations, localizations and other modifications and improvements to the
TVemail(TM) and Backbone and any component thereof, and instructions and
documentation provided as a unit therewith (collectively, the "TVemail(TM)
System").
WHEREAS, Seafont and its Affiliates, including, but not limited to
Xxxxxx Group Holdings Pty. Ltd., control a large number of distribution channels
and retail locations within the Territory (as defined herein).
WHEREAS, eNote and Seafont (collectively, the "Parties" and each a
"Party") desire to enter into a relationship and this Agreement to create an
Australian corporation ("xXxxx.xxx Australia") to distribute, market and sell a
localized version of TVemail(TM) in the Territory.
WHEREAS, neither Seafont nor xXxxx.xxx Australia will engage in any
business involving TVemail(TM) or an analogous product outside the Territory.
WHEREAS, xXxxx.xxx Australia shall initially be owned equally by
Seafont and eNote.
WHEREAS, eNote shall at all times control 52% of the voting power of
the shareholders of xXxxx.xxx Australia in a manner sufficient for eNote to
satisfy certain conditions contained in its directors and officers liability
insurance policy and its product liability insurance policy as well as
consolidate xXxxx.xxx Australia with eNote for financial reporting purposes
under U.S. generally accepted accounting principals.
WHEREAS, eNote shall provide to the xXxxx.xxx Australia a version of
the TVemail(TM) System, localized to operate in the Territory.
WHEREAS, eNote shall perform all work associated with the TVemail(TM)
System and any localized version thereof and no alterations or modifications
shall be made to the TVemail(TM) System or any component thereof, including, but
not limited to any changes regarding power supply, modem approval or telephony
interface, except at the direction of eNote.
WHEREAS, Seafont shall contribute to eNote Australia its, expertise,
knowledge and experience in the electronics retail market within the Territory
and shall provide access to its distribution channels and retail locations to
market, distribute and sell TVemail(TM) throughout the Territory.
WHEREAS, eNote shall enter into a License, Technical Assistance, Supply
and Distribution Agreement with eNote Australia to effectuate the objectives of
this Agreement.
WHEREAS, each Party shall contribute an equal amount of capital to
eNote Xxxxxxxxx.xxx.
NOW, THEREFORE, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall, for the purposes of this Agreement, have
the following meanings, except as otherwise expressly provided herein (terms
defined in the singular or the plural include the plural or the singular, as the
case may be):
1.1 "Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, controls, is under common control with, or is controlled
by, that Person. For purposes of this definition, "control" (including, with its
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or by contract or otherwise.
1.2 "Agreement" shall mean this Agreement and any Schedules, Exhibits
and Certificates attached to this Agreement.
1.3 "Appraised Value" shall have the meaning given to that term in
Section 9.5.
1.4 "Appraisal Report" shall have the meaning given to that term in
Section 9.5
1.5 "Backbone" shall the meaning set forth in the whereas clauses to
this Agreement.
1.6 "Breakeven" shall mean positive cash flow from operating
activities, less: (i) the sum of cash used in investing activities; and (ii)
payments under capital lease obligations, as such items are reflected on a
statement of cash flows prepared in accordance with U.S. generally
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accepted accounting principles (such terms having the meanings given in U.S.
generally accepted accounting principles) xXxxx.xxx Australia shall be deemed to
have reached Breakeven on the last day of the fourth fiscal quarter if the
foregoing definition is satisfied for each of four (4) full consecutive fiscal
quarters succeeding such day (whether or not such period constitutes a calendar
or fiscal year).
1.7 "Australian Board" shall mean the Board of Directors (or its
equivalent) of xXxxx.xxx Australia.
1.8 "Business" shall have the meaning given to that term in Section
2.1(a).
1.9 "Business Day" shall mean any day on which commercial banks are not
authorized or required to close in New York, New York, U.S.A. or Sydney,
Australia.
1.10 "Business Plan" shall mean: (i) the business plan agreed upon
by the Parties prior to the Closing Date, covering the period commencing on
the Closing Date and ending on a date agreed to by the Parties, for the
Business and xXxxx.xxx Australia, and (ii) after such period and in all other
cases, an annual capital, revenue and expense plan, including a profit and
loss statement and a statement of cash flows for xXxxx.xxx Australia,
together with a quarterly cash funding plan with dates of funding, plus
marketing, operational and other business strategies, reflecting the
financial objectives and requirements of xXxxx.xxx Australia.
1.11 "Call Option" shall mean eNote's option to acquire the equity
interests of Seafont in xXxxx.xxx Australia as further set forth in Section 9.3
hereof.
1.12 "Closing" shall have the meaning set forth in Section 11.1 hereof.
1.13 "Closing Date" shall mean that date identified in Section 11.1
hereof.
1.14 "Competitor" shall mean an entity which is engaged in the
development, design, or distribution of an Internet appliance offering e-mail
and web browsing capabilities using the television as the display device for
such activities.
1.15 "Deadlock Notice" shall mean a notice given by a Party to the
other Party that the following conditions have been satisfied and that the Party
giving Notice is invoking the Deadlock Provisions contained in Section 9.3: (i)
the parties cannot come to an agreement as to an activity to be engaged in by
xXxxx.xxx Australia that requires the consent of both the Parties hereto; (ii)
the parties have negotiated in good faith to come to an agreement regarding the
disputed activity for at least thirty (30) days; and (iii) the disputed activity
could reasonably be anticipated to have a material effect on the Business or
xXxxx.xxx Australia.
1.16 "Determination Date" shall mean the first date on which either a
Financing Event occurs or Breakeven is reached.
1.17 "Distributable Cash" shall mean, with respect to any relevant
period, "positive cash flow" (determined by deducting from cash flow from
operating activities the sum of cash
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used in investing activities and payments under capital lease obligations, as
reflected on a statement of cash flows prepared in accordance with U.S.
generally accepted accounting principles) but excluding funds from capital
contributions or loans and further excluding a reserve, in an amount reasonably
determined by the Australian Board in its business judgment to be necessary or
appropriate for cash disbursements (other than for repayment of principal under
the Loan Facility) including, but not limited to, provision for the payment of
all outstanding and unpaid current obligations of xXxxx.xxx Australia as of such
time.
1.18 "Effective Date" shall have the meaning given to that term in
Section 8.1.
1.19 "xXxxx.xxx Australia" shall mean that entity which is to be formed
prior to Closing, which shall be a corporation organized under the laws of
Australia, which shall conduct the Business and which shall be owned and
operated, directly or indirectly, by the Parties in accordance with this
Agreement.
1.20 "eNote's Proprietary Technology" shall mean and include the eNote
brand, the TVemail(TM) System, any component thereof or any of the technology,
software, trade secrets, trademarks, trademark applications, patents, patent
applications, instruction manuals, installation manuals or other intellectual
property licensed pursuant to the License Agreement, or any hardware or software
provided by eNote to xXxxx.xxx Australia or any other intellectual property
otherwise owned by or assigned to eNote, including any intellectual property
covered by Section 7.4 hereof.
1.21 "Financing Event" shall mean an infusion of capital paid to eNote
Australia, by a Person or Persons other than the Parties and their Affiliates,
either in exchange for equity or debt of eNote Australia in an amount not less
than Two Million U.S. Dollars $2,000,000.
1.22 "Governmental Body" shall mean any domestic or foreign national,
state or municipal or other local government or multi-national body (including,
but not limited to, the European Union), any subdivision, agency, commission or
authority thereof, or any quasi-governmental or private body exercising any
regulatory authority thereunder.
1.23 "IPO" shall have the meaning set forth in Section 9.7.
1.24 "IPO Put Right" shall have the meaning given to that term in
Section 4.2.
1.25 "IPO Target Date" shall have the meaning given to that term in
Section 4.2.
1.26 "License Agreement" shall have the meaning given to that term in
Section 7.1.
1.27 "Localization Costs" shall mean the fully burdened costs of eNote
to localize the TVemail(TM) System to operate in the Territory, network properly
with eNote's Backbone and make other technical changes to the TVemail(TM) System
as approved by the Australian Board and in accordance with this Agreement.
1.28 "Managing Director" shall the meaning set forth in Section 3.3
hereof.
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1.29 "Marks" shall have the meaning set forth in Section 7.7 hereof.
1.30 "Object Code" shall mean: (i) machine executable programming
instructions, substantially in binary form, which are intended to be directly
executable by an operating system after suitable processing and linking, but
without the intervening steps of compilation or assembly; or (ii) other
executable code (e.g., programming instructions written in procedural or
interpretive languages).
1.31 "Person" shall mean an individual, sole proprietorship,
corporation, partnership, limited partnership, limited liability company, joint
venture, trust, unincorporated organization, mutual company, joint stock
company, estate, union, employee organization, bank, trust company, land trust,
business trust or other organization, or a Governmental Body, or their
equivalent under the applicable legal system.
1.32 "Put Option" shall mean eNote's option to sell its equity
interests in xXxxx.xxx Australia to Seafont as further set forth in Section 9.3
hereof
1.33 "Source Code" shall mean the human readable form of Object Code
and related system documentation, including comments, procedural language and
material useful for understanding, implementing and maintaining such
instructions (for example, logic manuals, flow charts and principles of
operation).
1.34 "Territory" shall mean all of the countries listed on Exhibit A.
1.35 "Transfer" shall mean the direct or indirect sale, transfer,
pledge, assignment or other disposition of or mortgage, hypothecation, or other
encumbrance or permitting or suffering of any encumbrance of all or any part of
the equity interests in xXxxx.xxx Australia; provided, however, that the term
"Transfer" shall not include the pledge of all or any part of the equity
interest in xXxxx.xxx Australia held by a Party to secure indebtedness of such
Party owing to a lender so long as such lender agrees and acknowledges in
writing, as part of such pledge, that the interests of such lender are, and
shall at all times be, subject to the terms and conditions of this Agreement,
and that such pledge (and the rights of the lender) is at all times subordinate
to the rights of the other Party pursuant to this Agreement. No lender may
foreclose on a pledge without complying with the provisions of Section 9.4.
1.36 "TVemail(TM)" shall have the meaning set forth in the whereas
clauses to this Agreement.
1.37 "TVemail(TM) System" shall have the meaning set forth in the
whereas clauses to this Agreement.
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ARTICLE II
PURPOSE AND SCOPE OF AGREEMENT
2.1 PURPOSE.
(a) Seafont and eNote jointly undertake to: market and distribute, only
within the Territory, an internet appliance product similar to the TVemail(TM)
product which is being offered by eNote to consumers in the United States and to
support the infrastructure necessary to provide e-mail and selected Internet
service to consumers within the Territory via such appliances (the "Business").
(b) The joint business relationship between Seafont and eNote will
permit the parties to leverage the concept and technical innovations of the
TVemail(TM) System and Seafont's expertise and experience with marketing,
distribution and management within the Territory.
(c) Except as explicitly set forth in this Agreement or in the License
Agreement, neither Seafont nor eNote (or their respective Affiliates) shall have
any obligation to the other to conduct business exclusively with the other
Party, to offer business opportunities to the other party or to refrain from
competition in any manner whatsoever regardless whether the Parties are jointly
engaged in (or may also engage in) a particular activity at a particular time.
2.2 NO PARTNERSHIP.
Nothing in this Agreement shall be construed as creating between the
Parties a partnership, fiduciary or other similar relationship or a joint
venture except as expressly provided for herein. Nothing in this Agreement shall
create or imply any exclusive relationship or any obligation to inform the other
Party, offer to the other Party (or xXxxx.xxx Australia) or to include the other
Party in any opportunity which may be available to one of the Parties in the
future, regardless of the relationship between such opportunity and the
Business.
2.3 OVERALL CONDUCT OF BUSINESS.
(a) The Business shall be conducted through joint participation by the
Parties in an independent corporate entity, xXxxx.xxx Australia.
(b) Each Party shall hold its interest in xXxxx.xxx Australia either
directly or through one or more Affiliates in accordance with Section 9.2. eNote
shall initially own fifty percent (50%) of the issued and outstanding common
stock of xXxxx.xxx Australia and Seafont shall initially own the other fifty
percent (50%) of the issued and outstanding common stock of xXxxx.xxx Australia,
provided, however, that Seafont shall grant eNote an irrevocable proxy to vote
that number of Seafont's shares such that eNote shall control fifty-two percent
(52%) of the voting power of the shareholders of xXxxx.xxx Australia as more
fully set forth in Section 5.6 hereof.
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(c) No Party shall have the right to represent the other Party in
negotiations with third parties. Subject to the prior explicit approval of the
represented Party, no Party shall have the right to enter into an agreement with
a third party for the account of the other Party or for their joint account,
except as expressly provided herein. The Party entering such unauthorized
agreement or causing such liability shall hold the other Party harmless for any
claims raised by a third party.
(d) The Business shall not under any circumstances be conducted in any
way outside the geographical limits of the Territory unless otherwise agreed to
explicitly by the Parties in writing.
ARTICLE 3
ENTITY FORMATION
3.1 FORMATION AND ORGANIZATIONAL DOCUMENTS:
(a) Prior to the Closing Date, Seafont shall cause xXxxx.xxx
Australia to be legally and validly formed under the laws of the Commonwealth
of Australia as a company limited by shares.
(b) xXxxx.xxx Australia, to the extent legally available, shall have
the name "xXxxx.xxx Australia" with such suffixes as are required under the laws
of its formation, or such other name as shall be mutually agreed upon by the
Parties.
(c) The certificate of incorporation, articles of association, or
memorandum (or other similar constituent documents as are specified by the laws
of its formation) which are to be filed with the appropriate governmental
authority to create xXxxx.xxx Australia shall be delivered by Seafont to eNote
prior to such filing and shall be subject to eNote's approval. No change or
amendment shall be made to such constituent documents without the consent of
both Parties.
(d) Prior to the Closing, Seafont and eNote shall agree on the Bylaws
which shall be adopted by the Parties. No change or amendment shall be made to
such Bylaws without the unanimous consent of both Parties.
3.2 BOARD OF DIRECTORS: The Parties, as shareholders of xXxxx.xxx
Australia, shall cause xXxxx.xxx Australia to have five (5) directors who shall
compose the Australian Board. Each of the Parties shall have the right to
nominate two (2) nominees to the Australian Board. The Parties agree to vote
their shares of xXxxx.xxx Australia to elect such nominees. In addition to each
of the Party's Nominees, each of the Parties shall cause the Managing Director
to be elected to the Australian Board. The Parties agree that the initial
Directors shall be those persons set forth on Exhibit B hereto.
3.3 MANAGING DIRECTOR: As soon as possible after the execution and
delivery of this Agreement, the Parties shall appoint an officer (the "Managing
Director"), who shall be the Managing Director of xXxxx.xxx Australia and shall:
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(a) prepare reports and recommendations for presentation to the
Australian Board, including, without limitation, in respect of decisions which
require the approval of the Australian Board and/or the Parties as shareholders
of xXxxx.xxx Australia;
(b) prepare a Business Plan in cooperation with eNote's Chief Financial
Officer for xXxxx.xxx Australia which shall be presented to the Australian Board
for approval as well as overall strategic, marketing, advertising and other
general plans for xXxxx.xxx Australia;
(c) implement the resolutions of the Australian Board;
(d) advise, supervise and coordinate the business, operations and
management of xXxxx.xxx Australia and oversee all day to day operating aspects
of the Business.
3.4 DESIGNATION OF MANAGING DIRECTOR/TERMS OF EMPLOYMENT.
Notwithstanding anything to the contrary contained in this Agreement,
Seafont shall have the exclusive right to designate an individual (in accordance
with the procedures described below) to be employed as the Managing Director.
eNote shall have the right to reject such nominee for good and sufficient cause.
Unless rejected by eNote consistent with the foregoing, the nominee shall be
designated as the Managing Director of xXxxx.xxx Australia. The Managing
Director shall be an employee of xXxxx.xxx Australia and his or her salary and
benefits shall be paid by and through xXxxx.xxx Australia. The Managing Director
shall enter into an employment agreement with xXxxx.xxx Australia, satisfactory
to each of the Parties and approved by the Australian Board, consistent with the
principles of this Agreement.
3.5 ISSUANCE OF SHARES. On the Closing Date, and upon each of the
Parties satisfying their respective initial capital contribution obligations as
provided for in this Agreement and the Business Plan, eNote and Seafont shall
each be entitled to receive fully paid and nonassessable shares of common stock
representing 50% percent of the issued and outstanding equity interests of
xXxxx.xxx Australia.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 CAPITAL CONTRIBUTIONS BY THE PARTIES. On the Closing Date each
Party shall contribute Two Hundred Fifty Thousand U.S. Dollars ($250,000) in
immediately available funds to the account of xXxxx.xxx Australia as specified
by the Managing Director of xXxxx.xxx Australia in consideration for the Common
Stock to be issued to each of the Parties pursuant to Section 3.5. The
contributed capital shall be used only for the payment of approved expenditures
contained in the Business Plan.
4.2 NON-IPO PUT RIGHT. If an IPO has not been consummated by xXxxx.xxx
Australia on or before the one and a half year anniversary of the Closing Date
(the "IPO Target Date"), then Seafont shall have a put right (the "IPO Put
Right") to require eNote to purchase Seafont's entire equity interest in
xXxxx.xxx Australia for an aggregate purchase price equal to two times the
amount of capital contributed to xXxxx.xxx Australia by Seafont. Provided that
an
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IPO has not occurred, Seafont shall provide written notice to eNote thirty (30)
days prior to the IPO Target Date giving notice that it is exercising its IPO
Put Right. In the event that an IPO is not consummated on or before the IPO
Target Date following such notice, ten (10) days after the IPO Target Date
Seafont shall transfer all of its shares in xXxxx.xxx Australia to eNote in
consideration for that number of shares of eNote Common Stock, par value $.01
per share, equal to the quotient of (a) two times the aggregate amount of
capital contributed by Seafont to xXxxx.xxx Australia in U.S. Dollars, divided
by (b) the Fair Market Value of a share of eNote Common Stock. For purposes of
this section, the Fair Market Value of a share of eNote Common Stock shall equal
the (i) the closing sales price on the preceding business day, of a share of
Common Stock as reported on the principal securities exchange on which shares of
Common Stock are then listed or admitted to trading or (ii) if not so reported,
the average of the closing bid and asked prices for a share of Common Stock on
the preceding business day as quoted on the National Association of Securities
Dealers Automated Quotation System ("Nasdaq") or (iii) if not quoted on the
Nasdaq, the average of the closing bid and asked prices for a share of Common
Stock as quoted by the National Quotation Bureau's "Pink Sheets" or the National
Association of Securities Dealers' OTC Bulletin Board System over on the
preceding business day. If the price of a share of Common Stock shall not be so
reported, the Fair Market Value of a share of Common Stock shall be determined
by reference to the last known sale of Common Stock to an unaffiliated third
party in an arms length transaction.
ARTICLE V
MANAGEMENT OF THE xXXXX.XXX AUSTRALIA
5.1 MATTERS REQUIRING JOINT ACTION AS SHAREHOLDERS. Subject to
applicable law, eNote and Seafont agree that any activities by xXxxx.xxx
Australia in respect of the following matters shall require the consent and
approval of each of eNote and Seafont as shareholders thereof, or, if such a
requirement is not possible, that the Parties adopt a joint position in respect
of any such decision that the Australian Board shall consider in connection with
approving any action regarding such activity:
(a) approval of any strategic plan;
(b) the adoption, amendment or repeal of any provisions of the charter
documents of xXxxx.xxx Australia;
(c) the issuance, redemption, repurchase or retirement of any
securities of xXxxx.xxx Australia (including any option, warrant or other right
to purchase an interest in xXxxx.xxx Australia, or any securities convertible or
exchangeable into the same);
(d) the sale, transfer or disposal of assets of xXxxx.xxx Australia in
excess of One Hundred Thousand U.S. Dollars ($100,000) per fiscal year
(excluding inventory sold in the ordinary course of business);
(e) any merger or consolidation of xXxxx.xxx Australia with or into
another entity;
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(f) the organization of, or the acquisition or disposition of, any
interest in another entity by xXxxx.xxx Australia other than for purposes of
cash management on a short term basis with a recognized money market
institution;
(g) the borrowing of funds in excess of Two Hundred Thousand Dollars
($200,000) in U.S. Dollars per fiscal year by xXxxx.xxx Australia;
(h) the sale, sublicense, encumbrance or other transfer of any
intellectual property rights by xXxxx.xxx Australia in a manner inconsistent
with this Agreement or the License Agreement;
(i) the filing by xXxxx.xxx Australia of a petition for liquidation,
dissolution or seeking protection from creditors of xXxxx.xxx Australia;
(j) approval of the annual operating budget and Business Plan of
xXxxx.xxx Australia;
(k) any decision involving a declaration of dividends xXxxx.xxx
Australia;
(l) any decision involving the approval of a material agreement between
one of Seafont, eNote or their respective Affiliates and xXxxx.xxx Australia
including but not limited to any guarantee given by Seafont or eNote or their
respective Affiliates on behalf of xXxxx.xxx Australia;
(m) any action outside the scope of the Business;
(n) any action by eNote Australia outside the Territory;
(o) any early repayment of indebtedness by xXxxx.xxx Australia;
(p) adoption of the initial marketing strategy and approval of any
substantial change in the marketing strategy of xXxxx.xxx Australia including
the pricing of products and decisions regarding distribution and licensing;
(q) knowingly entering into a transaction or arrangement with a
Competitor;
(r) entering into any contract potentially requiring an aggregate of
payments by xXxxx.xxx Australia in excess of five hundred thousand dollars
($500,000) in U.S. Dollars during any fiscal year; and
(s) the termination of the Managing Director
provided that, to the extent that any action requiring the approval of
the Board of Directors is specifically set forth on a line item basis in any
Business Plan of xXxxx.xxx Australia, such action shall be deemed to have been
approved except as to subparagraphs (n) and (q) above.
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5.2 FINANCIAL POLICIES, ACCOUNTING, FISCAL YEAR.
(a) All financial statements prepared with respect to xXxxx.xxx
Australia shall be prepared in Australian currency and in accordance with the
generally accepted accounting principles in existence in Australia, consistently
applied, provided that xXxxx.xxx Australia shall provide such financial
information to the Parties together with such other information as each Party
reasonably requests; all such information shall be provided in a format
reasonably requested by the Parties such that each Party may, at the expense of
xXxxx.xxx Australia, prepare financial statements for xXxxx.xxx Australia in
accordance with generally accepted accounting principles in existence in the
United States. Such information and financial statements shall be provided in a
time frame allowing the requesting Party to fulfill all of its financial
reporting obligations.
(b) The Australian Board shall select as xXxxx.xxx Australia's
independent accountants to provide accounting and auditing services to xXxxx.xxx
Australia the same independent accounting firm selected by eNote to provide
eNote with accounting and auditing services. xXxxx.xxx Australia shall be
subject to an annual audit by such accountants.
(c) xXxxx.xxx Australia shall adopt __________ as the end of its
fiscal year.
(d) xXxxx.xxx Australia shall furnish, on a regular basis and as may
be reasonably requested by a Party, such accounting and other information which
a Party reasonably requires to fulfill its reporting and financial planning
objectives and the annual audit report shall be furnished by xXxxx.xxx Australia
to the Parties within forty-five (45) days after the end of its fiscal year and
an unaudited statement within thirty (30) days after the end of each fiscal
quarter.
5.3 DIVIDEND POLICY. xXxxx.xxx Australia shall distribute dividends or
make other distributions out of Distributable Cash subject to Section 5.1 and
the unanimous approval of the Australian Board.
5.4 SPENDING. Funds available to xXxxx.xxx Australia shall only be used
by xXxxx.xxx Australia in accordance with the Business Plan, as the same may be
modified from time to time subject to Section 5.1 and the unanimous approval of
the Board of Directors.
5.5 CONSTITUENT DOCUMENTS OF xXXXX.XXX AUSTRALIA. The articles of
association, articles of incorporation, by-laws, or constituent documents of
xXxxx.xxx Australia shall reflect the provisions set forth in this Article V
with such changes as shall be jointly agreed by the Parties and each of the
Parties shall review and approve such constituent documents prior to the Closing
Date.
5.6 GRANT OF PROXY BY SEAFONT TO eNOTE. The Parties acknowledge that it
is essential for eNote to maintain control of eNote Australia for purposes of
insurance and financial reporting. Accordingly, Seafont agrees to execute an
irrevocable proxy (the "Proxy"), or series of proxies as is necessary from time
to time, reasonably satisfactory to eNote and eNote's counsel, in favor of
eNote, which shall grant eNote the right to vote that number of Seafont's
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shares of common stock of eNote Australia such that, when aggregated with
eNote's shares of common stock of eNote Australia, eNote shall have the power to
vote 52% of eNote Australia's issued and outstanding shares of Common Stock on
any matter requiring the vote of eNote Australia's shareholders. In the event
that Seafont and eNote collectively own less than 52% of the issued and
outstanding shares of Common Stock of eNote Australia, then such proxy shall
grant eNote the right to vote that number of Seafont's shares of common stock of
eNote Australia such that when aggregated with eNote's shares of common stock of
eNote Australia, eNote shall have the power to vote all of the shares of eNote
Australia owned by eNote and Seafont. Seafont, from time to time for the term of
this Agreement, shall at the request of eNote and without further consideration,
execute and deliver further instruments and take such other action as eNote may
reasonably require to more effectively carry out the intent of this Section 5.6.
ARTICLE VI
JOINT PARTICIPATION IN OPPORTUNITIES
6.1 EXCLUSIVITY.
(a) Commencing on the date of this Agreement and continuing for so long
as this Agreement is in effect and Seafont and eNote shall each have an equity
interest in xXxxx.xxx Australia, eNote shall not license any of eNote's
Proprietary Technology to a Competitor for use in the Territory.
(b) Commencing on the date of this Agreement and continuing for so long
as this Agreement is in effect, Seafont and its Affiliates shall not, without
the express written consent of eNote, , engage anywhere in the world in any
activity which is, or participate or invest in, or provide or facilitate the
provision of financing to, or assist (whether as owner, part-owner, shareholder,
member, partner, director, officer, trustee, employee, agent or consultant, or
in any other capacity), any Person other than xXxxx.xxx Australia, or eNote (or
any subsidiary or affiliate of eNote), whose business, activities, products or
services are, competitive with the TVemail(TM) System. Without implied
limitation, the forgoing covenant shall include hiring or engaging or attempting
to hire or engage for or on behalf of itself or any such competitor any officer
or employee of eNote or xXxxx.xxx Australia or any of its direct and/or indirect
subsidiaries and affiliates, or any former employee of eNote or xXxxx.xxx
Australia. Notwithstanding anything herein to the contrary, the Seller may make
passive investments in any enterprise the shares of which are publicly traded if
such investment constitutes less than one percent (1%) of the equity of such
enterprise.
6.2 OTHER ACTIVITIES OF THE PARTIES. Notwithstanding anything to the
contrary contained herein, Seafont acknowledges and agrees that, nothing in this
Agreement shall limit or restrain eNote's activities anywhere outside of the
Territory.
6.3 SEVERABILITY. In the event that the restrictions and obligations
set forth in Section 6.1 are invalid for any reason under applicable law,
Section 6.1 shall be reformed to the give effect to the Parties intent therein
to the fullest extent permitted by applicable law. The invalidity or reformation
of Section 6.1 shall not affect the remainder of this Agreement.
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ARTICLE VII
TECHNOLOGY/SOFTWARE/KNOW-HOW/PATENTS/COPYRIGHTS/TRADEMARKS
7.1 eNOTE LICENSE AGREEMENT.
(a) Annexed hereto as Exhibit C is a draft of a License, Technical
Assistance, Supply and Distribution Agreement (the "License Agreement") by which
eNote, in consideration of the performance by Seafont of the obligations and
agreements of Seafont under this Agreement and the obligations of xXxxx.xxx
Australia under that License Agreement, shall, or shall cause a direct or
indirect subsidiary of eNote to, extend to xXxxx.xxx Australia the rights,
benefits, privileges and obligations set forth therein. The License Agreement
shall be modified to the extent necessary to protect the rights of eNote in its
property under local laws in the country or countries in which xXxxx.xxx
Australia provides services, as determined by eNote in its reasonable
discretion. The Parties hereto agree to negotiate the terms of the License
Agreement and settle upon an executable copy within thirty (30) days of the date
hereof. The License Agreement shall be executed on the Closing Date.
(b) In the event that eNote causes a direct or indirect subsidiary to
enter into the License Agreement, eNote shall execute and deliver its guarantee
to xXxxx.xxx Australia with respect to the License Agreement.
7.2 eNOTE'S INITIAL TECHNOLOGY DEVELOPMENT.
(a) eNote shall use its best efforts to provide the same software and
hardware functionality under the License Agreement as its TVemail(TM) System in
the United States, subject to localization.
(b) All payments by eNote Australia due to eNote for Localization Costs
shall be deferred until the Determination Date. Thereafter xXxxx.xxx Australia
shall pay eNote an amount equal to eNote's fully burdened costs incurred in
connection with the Localization Costs, as invoiced by eNote monthly or pursuant
to an agreed upon payment schedule. eNote shall use its best efforts in
accordance with this Agreement and the License Agreement to complete all
localization requirements in a diligent manner. Notwithstanding the foregoing,
the Localization Costs incurred by eNote prior to the Determination Date shall
not exceed Two Hundred Fifty Thousand U.S. Dollars Seafont consents in writing
to additional expenditures.
7.3 eNOTE ONGOING DEVELOPMENT.
(a) eNote acknowledges the importance to the Business of access by
xXxxx.xxx Australia to ongoing development activities. Accordingly, eNote
agrees, at Seafont's oral or written request, to provide the Managing Director
regular access to the following:
(i) plans for all current and future products used in the
eNote TVemail(TM) product and support of such product provided by eNote, on an
annual basis.
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(ii) functional descriptions, development plans, schedules and
periodic status for products and enhancements thereto under development, as soon
as such materials exist.
(iii) data for products regarding design changes, problem
tracking, correction of errors or bugs and proposals for new products.
(b) eNote agrees to make all reasonable efforts to assure the technical
continuity and compatibility of the TVemail(TM) System and the Business in the
Territory whenever reasonably feasible.
(c) All proposed changes and improvements by eNote shall constitute
confidential information of eNote. Seafont acknowledges that eNote shall have
the right to make public announcements relating to current and future products
and all development plans.
(d) For purposes of technology development and assistance, eNote shall
dedicate such time and priority to the requests of xXxxx.xxx Australia as is
proportional to the business traffic generated by xXxxx.xxx Australia in
relation to the overall business of eNote and its subsidiaries and affiliates.
(e) xXxxx.xxx Australia will be entitled to have a designee attend
material product development meetings held by eNote and participate therein
provided xXxxx.xxx Australia covers all costs associated with such attendance.
(f) In accordance with the License Agreement, xXxxx.xxx Australia shall
pay eNote for all technological work done for the benefit of xXxxx.xxx
Australia, including all Localization Costs.
7.4 TECHNOLOGY DEVELOPMENT BY xXXXX.XXX AUSTRALIA. Seafont agrees that
any modification or technological advance, discovery or invention in connection
with the eNote's Proprietary Technology or the TVemail(TM) System shall, whether
authorized or unauthorized by eNote, to the full extent permitted by law, be
owned in full by eNote and in any event eNote shall have the full and exclusive
exploitation rights to such modification or technological advance, discovery or
invention, subject to the terms of the License Agreement. Seafont shall cause
xXxxx.xxx Australia to execute such documents of assignment as may be required
to give effect to this section. Nothing in this section shall limit or restrict
the provisions contained in Section 7.6(b) which prohibits any Person or Persons
other than eNote and eNote's duly authorized agents from performing any
technical work or any kind on the TVemail(TM) System or any component thereof.
7.5 TERRITORIAL LIMITATION. The term "Territory" as used herein and
with respect to the License Agreement, shall refer to and shall constitute a
limitation on the geographical area where the Business is physically situated
and the geographical area where the services of xXxxx.xxx Australia conducting
the Business are permitted to be offered as determined on the basis of
solicitation, advertising, the location of operations, and the location of
TVemail(TM) subscribers. Seafont and eNote agree that each will cause xXxxx.xxx
Australia to refrain from
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the conduct of the Business or the provision of any material service outside of
the Territory at any time.
7.6 DISTRIBUTION AND MARKETING CONTRIBUTIONS TO BE PROVIDED BY SEAFONT;
TECHNICAL ASSISTANCE BY eNOTE.
(a) Seafont will endeavor to define and establish ways and means to
assist xXxxx.xxx Australia with marketing, sales and distribution in such manner
as will be negotiated, in good faith, during the term of this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Seafont agrees and acknowledges that any technical changes,
localization, modifications, alterations, enhancements, repairs or servicing of
the TVemail(TM) System, or any component thereof, shall only be made by eNote or
eNote's duly authorized agents, and neither eNote Australia, Seafont or its
Affiliates, nor any other Person shall have the right to make or cause to made
any such changes, modifications, alterations, enhancements, repairs or servicing
without the prior written consent of eNote.
7.7 TRADEMARKS.
(a) eNote presently owns the trademarks and trade names set forth on
Exhibit D (the "Marks"). The Marks will be licensed to xXxxx.xxx Australia in
accordance with the terms of the License Agreement to market the Business in the
Territory.
(b) eNote shall have control over the defense of any trademark claim,
including appeals, negotiations and the right to effect a settlement or
compromise thereof, provided that: (i) eNote may not partially settle any
trademark claim without the written consent of Seafont unless such settlement
releases Seafont fully; and (ii) eNote shall promptly provide Seafont with
copies of all pleadings or similar document relating to any trademark claim.
ARTICLE VIII
TERM; TERMINATION
8.1 TERM.
The term of this Agreement shall commence on the date of execution and
delivery of this Agreement (the "Effective Date"), subject only to any approvals
required by the administrative authorities in the Territory. The Agreement shall
expire upon the earlier of: (i) when terminated by mutual agreement of the
Parties; (ii) when terminated by either Party in writing pursuant to Section 8.2
hereof; (iii) when one of the Parties, and its Affiliates, no longer hold any
shares of common stock of xXxxx.xxx Australia or (v) the Closing failing to
occur prior to June 15, 2000.
8.2 TERMINATION.
The Party which is not in breach of this Agreement shall have the
right to terminate this Agreement upon the occurrence of the events set forth
below:
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(a) The other Party is in material breach of any material term,
condition or covenant of this Agreement and the breaching Party fails to cure
such breach within thirty (30) calendar days after the receipt of written notice
of such breach; or
(b) An event of bankruptcy occurs with respect to the other Party. For
purposes of the foregoing, an event of bankruptcy with respect to a Party means
any of the following circumstances (or the substantial equivalent under
applicable law in any other country): (a) the commencement by the Party of a
voluntary case under the United States Bankruptcy Code or an equivalent law as
applicable to such Party in Australia, (b) the commencement against the Party of
an involuntary case under the United States Bankruptcy Code or an equivalent law
as applicable to such Party in Australia if the case is not vacated with a
ninety calendar days, (c) the entry of a final order by a court of competent
jurisdiction finding the Party to be bankrupt or insolvent, ordering or
approving its liquidation, reorganization or any modification or alteration of
the rights of its general creditors or assuming custody of or appointing a
receiver or other custodian for all or a substantial part of its property and
such order shall not be vacated or stayed upon appeal or otherwise stayed within
ninety calendar days or (d) the Party making an assignment for the benefit of,
or entering into a composition with, its creditors, or appointing or consenting
to the appointment of a receiver or other custodian for all or a substantial
part of its property.
(c) Termination under subsection (a) shall be effective upon delivery
of notice of the expiration of the cure period and termination under subsection
(b) will become effective immediately upon written notice of termination at any
time after the occurrence of the event of bankruptcy.
8.3 EFFECT OF TERMINATION. If, upon termination pursuant to notice
provided under Section 8.2 hereof, the Parties continue to hold joint interests
in xXxxx.xxx Australia, the provisions of Section 9.3 of this Agreement shall
apply as if Deadlock Notice had been given, and the provisions of this Agreement
shall remain in force until xXxxx.xxx Australia ceases to be jointly owned. As
soon as the Parties cease to hold joint interests in xXxxx.xxx Australia, this
Agreement, with the exception of Sections 2.2, 7.3(c), 7.4, 7.6(b) and 12.1,
shall be terminated.
8.4 GOVERNMENTAL APPROVAL. Promptly upon the execution hereof, the
Parties shall inform such administrative authorities in the Territory as may be
required under national anti-trust laws, and notify this Agreement under the
applicable provisions of national laws and shall make such notification as
promptly as practicable following the Effective Date.
8.5 LICENSE AGREEMENT TERMINATION. eNote shall have the unqualified
right to terminate the License Agreement, immediately, at any time if this
Agreement is terminated by eNote pursuant to Section 8.2(a).
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ARTICLE IX
TRANSFERS
9.1 LIMITATION ON TRANSFER. Except as expressly permitted in this
Article IX, neither eNote nor Seafont shall, without the prior written approval
of the other Party (which may be withheld in the sole discretion of such Party),
Transfer its interest in xXxxx.xxx Australia or assign its rights or obligations
under this Agreement in any manner whatsoever and any purported Transfer or
assignment in contravention of this Section 9.1 shall be void.
9.2 PERMITTED TRANSFERS AND ASSIGNMENTS.
(a) Notwithstanding Section 9.1, either Party may, at any time upon
compliance with Section 9.2(b), Transfer all or part of its interest in
xXxxx.xxx Australia to an Affiliate of such Party or assign its rights and
obligations under this Agreement to an Affiliate, without the prior written
approval of the other Party. Notwithstanding anything to the contrary contained
in this Agreement, the interests of Seafont and its Affiliates in xXxxx.xxx
Australia shall be held within an entity which is not an Affiliate with any
Competitor.
(b) Any Transfer by a Party of an interest in xXxxx.xxx Australia or
assignment of the rights and obligations as permitted by Section 9.2(a) shall be
effective only upon the execution and delivery by the transferor of an
appropriate irrevocable and unconditional guarantee to continue to be bound by
the provisions of this Agreement and the constituent documents of xXxxx.xxx
Australia together with instruments of assumption under which the Affiliate
agrees to be bound by this Agreement and the constituent documents of xXxxx.xxx
Australia. An assignment or Transfer shall not release the transferor of any of
its obligations hereunder or under any constituent document relating to
xXxxx.xxx Australia.
(c) Notwithstanding anything to the contrary contained in the
Agreement, eNote may Transfer this Agreement and all of its rights and
obligations hereunder to or all of its equity interests in xXxxx.xxx Australia
to any Person acquiring all or substantially all of the business of eNote
whether by merger, sale of assets or otherwise, provided, however, that any such
Person agrees in writing to be bound by the terms and conditions of this
Agreement. Upon any such transfer, eNote shall be released from any further
obligation under this Agreement.
9.3 DEADLOCK. Within thirty (30) days after the Deadlock Notice,
xXxxx.xxx Australia shall have determined the Appraised Value of xXxxx.xxx
Australia as set forth in Section 9.5 (the "Deadlock Valuation"). Within ten
(10) days after the valuation results have been distributed to each of the
Parties, Seafont shall deliver to eNote in writing its determination of a fair
purchase price for 50% of the equity interest in eNote (the "Deadlock Price")
and eNote shall have (i) a put option (the "Put Option") to sell its entire
equity interest in xXxxx.xxx Australia to Seafont for the Deadlock Price and
(ii) a call option (the "Call Option") to acquire Seafont's entire equity
interest in xXxxx.xxx Australia for the Deadlock Price. eNote shall have fifteen
(15) Business Days from receipt of the Deadlock Price in which to exercise
either the Put Option or the Call Option at its sole discretion. On the
execution date of either the Call Option or the Put Option, the acquiring Party
shall pay to the selling Party 25% of the Deadlock Price and shall deliver a
three-year promissory note for a principal amount equal to 75% of the
17
Deadlock Price with interest accruing annually at a rate of Prime plus 1.5%,
with interest payable monthly (the payee shall be entitled to prepay such note
at any time without penalty). Timely performance of such note shall be secured
by a pledge of all the shares of xXxxx.xxx Australia held by the acquiring Party
after the acquisition. The acquiring party agrees to execute and deliver such
note, pledge agreement to the selling party and take all other actions and
execute other instruments reasonably necessary to validly effect the provisions
on and intent of this Section 9.3(a). At any time prior to the exercise of the
Call Option or Put Option the parties may agree that they are no longer in
deadlocked and subject to this provision
9.4 RIGHT OF FIRST REFUSAL.
(a) At any time after which a governmental restraint on sale is no
longer enforceable, either Party (the "Seller") intends to sell, assign or
transfer all, but not less than all, of such Party's equity ownership interest
in xXxxx.xxx Australia for cash, the Seller shall, prior to any such transfer,
give written notice (the "Seller's Notice") of such intention to the other Party
(the "Offeree"). The Seller's Notice shall include the name of the proposed
transferee, the proposed purchase price for its equity ownership interest in
xXxxx.xxx Australia (the "Offered Interest"), the terms of payment of such
purchase price and all other matters relating to such sale and shall be
accompanied by a copy of a binding written agreement of the proposed transferee
to purchase the Offered Interest from the Seller. The Seller's Notice shall
constitute a binding offer by the Seller to sell to the Offeree, or to any
Affiliate of the Offeree designated by the Offeree, the Offered Interest at the
monetary price designated in the Seller's Notice and as payable as provided in
Section 9.4(b). Not later than sixty (60) days after receipt of the Seller's
Notice, the Offeree may elect to purchase the Offered Interest by written notice
stating that the Offeree has accepted the offer contained in the Seller's
Notice, which notice shall fix a time, location and date for the closing of such
purchase, which date shall be not less than fifteen (15) nor more than sixty
(60) days after the delivery of such written, or on such other date as may be
mutually agreed by the Parties.
(b) The place for the closing of any purchase and sale described in
Section 9.5(a) shall be the principal office of xXxxx.xxx Australia or at such
other place as the Seller and the Offeree shall agree. At the closing, the
Seller shall accept payment on the terms offered by the proposed transferee
named in the Seller's Notice, provided that the Offeree shall not be required to
meet any non-monetary terms of the proposed transfer, including, without
limitation, delivery of other securities in exchange for the Offered Interest
proposed to be sold. At the closing, the Seller shall execute and deliver to the
Offeree such documents, records, and other instruments of transfer, in form and
substance reasonably satisfactory to the Offeree and its counsel, necessary: (i)
to evidence the Seller's ownership of the Offered Interest in such xXxxx.xxx
Australia; and (ii) effectively to transfer the Offered Interests to the
Offeree, free and clear of any liens, charges or other encumbrances, and the
Offeree shall deliver the purchase price for each such Offered Interest, in
immediately available funds. At the closing, the Offeree shall cause the Seller
to be released from all guarantees given in respect of xXxxx.xxx Australia (or
if such release is not possible, the Offeree shall execute and deliver an
indemnity agreement to the Seller in customary form with respect to such
guarantees) and xXxxx.xxx Australia shall pay and discharge all indebtedness to
the Seller. The Seller shall deliver or execute at the closing any documents,
18
records or other instruments of transfer reasonably requested by the Offeree and
necessary to evidence the Offered Interest or effectively to transfer an Offered
Interest.
(c) If the Offeree fails to accept the offer contained in the Seller's
Notice, then the Seller shall be free to sell all, but not less than all, of the
Offered Interest to the designated transferee at a price and on terms no less
favorable to the Seller than described in the Seller's Notice, provided that
such sale is consummated within ninety (90) days after the giving of the
Seller's Notice to the Offeree. As a condition precedent to the effectiveness of
a transfer pursuant to this Section 9.4(c), the proposed transferee(s) shall
agree in writing prior to such transfer to become a party to and bound by the
provisions of this Agreement, and shall thereafter be permitted to transfer such
Ownership Interest only in accordance with this Agreement.
(d) Notwithstanding anything to the contrary contained in this Section
9.4, in no event shall Seafont or its Affiliates be permitted to transfer its
interest in xXxxx.xxx Australia to any Competitor.
9.5 APPRAISED VALUE.
(a) For purposes of this Agreement, the term "Appraised Value" for
xXxxx.xxx Australia shall mean the fair market value established by an
independent appraiser pursuant to the following procedures:
(i) during the thirty (30) days following the delivery of a
notice requiring valuation, the Parties shall attempt to select an independent
appraiser to determine the fair market value of xXxxx.xxx Australia in existence
on the date of such notice. In the event that the Parties are unable to agree on
the selection of an independent appraiser, they shall give notice to xXxxx.xxx
Australia's independent accounts, and request the appointment of an independent
appraiser;
(ii) the independent appraiser appointed pursuant to this
Section 9.5 shall, within sixty (60) days after its appointment, deliver to both
Parties a written appraisal report (the "Appraisal Report") which sets forth the
fair market value of xXxxx.xxx Australia;
(iii) the determination of the independent appraiser as set
forth in the Appraisal Report shall be final and shall not be subject to appeal
or redetermination;
(iv) for purposes of this Agreement, an independent appraiser
shall mean an international investment banking firm which is not at that time
rendering services to one of the Parties or any Affiliate of either Party and
which has not rendered services to one of the Parties for the preceding two (2)
years and which does not have a commitment to render services in the future to
one of such Parties or any such Affiliates;
(v) the fees and expenses incurred by the independent
appraiser, if any, shall be paid equally by the Parties; and
19
(vi) the Parties will cooperate with the independent appraiser
and provide all information reasonably requested in order to allow such
appraiser to prepare the Appraisal Report.
(b) Except as otherwise set forth in this Agreement, each Party shall
remain liable for its existing obligations with respect to xXxxx.xxx Australia
(including, without limitation, any obligations to make funding contributions)
until the closing of any such sale.
9.7 INITIAL PUBLIC OFFERING.
(a) Subject to the consent of both Parties, xXxxx.xxx Australia shall
be permitted to register its securities with those governmental authorities
deemed appropriate by the Australian Board and the Australian Board may issue
that number of securities of xXxxx.xxx Australia to the public in an
underwritten public offering (an "IPO") pursuant to any such registration and
cause such securities to be listed on those exchanges that the Australian Board
deems appropriate.
(b.) Upon the consummation of an IPO, the transfer restrictions on each
Party's interest in xXxxx.xxx Australia contained in this Section 9 shall
terminate and the Parties shall be permitted transfer their interests in
xXxxx.xxx Australia, subject to compliance with all applicable securities laws.
9.8 PRIVATE PLACEMENT.
(a) Subject to the consent of both Parties, xXxxx.xxx Australia shall
be permitted to develop a private placement memorandum and issue equity
securities to third parties deemed appropriate by the Australian Board provided
that any such equity issuance shall be in accordance with any applicable
securities laws.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1 CERTAIN REPRESENTATIONS AND WARRANTIES OF SEAFONT. Seafont makes
the following representations and warranties for the benefit of eNote and
xXxxx.xxx Australia, each of which shall survive the execution and delivery of
this Agreement:
(a) Organization and Standing. Seafont is a duly organized and validly
existing corporation in good standing under the laws of Australia.
(b) Corporate Action. Seafont has all necessary corporate power and
has taken all corporate action required to authorize the execution and delivery
of this Agreement and does not require the consent of any third party which has
not been obtained.
10.2 CERTAIN REPRESENTATIONS AND WARRANTIES OF eNOTE. eNote makes the
following representations and warranties for the benefit of Seafont and
xXxxx.xxx Australia, each of which shall survive the execution and delivery of
this Agreement:
20
(a) Organization and Standing. eNote is a duly organized and validly
existing corporation in good standing under the laws of Delaware.
(b) Corporate Action. eNote has all necessary corporate power and has
taken all corporate action required to authorize the execution and delivery of
this Agreement and does not require the consent of any third party which has not
been obtained.
ARTICLE XI
CLOSING
11.1 CLOSING. Provided that the closing conditions set forth in Section
11.3 have been satisfied, on ___________, or on such other date as agreed upon
by the Parties (the "Closing Date"), the commencement of the Business shall
begin (the "Closing").
11.2 CLOSING DELIVERIES. On the Closing Date and at the Closing:
(a) eNote and xXxxx.xxx Australia shall execute and deliver the
executed License Agreement.
(b) eNote and Seafont shall each contribute $250,000 to xXxxx.xxx
Australia in accordance with Section 4.1.
(c) xXxxx.xxx Australia shall issue certificates to each of Seafont and
eNote representing 50% of the issued and outstanding of Common Stock of
xXxxx.xxx Australia.
(d) Seafont shall execute and deliver the executed Proxy to eNote.
(e) Seafont shall deliver an opinion of counsel to eNote which opines
to the enforceability of the Proxy under Australian law.
11.3 CLOSING CONDITIONS. Prior to the Closing Date the following
conditions shall be satisfied:
(a) xXxxx.xxx Australia shall be a validly formed corporation under the
laws of Australia in accordance with the terms of this Agreement.
(b) The Business Plan shall be prepared and approved by each of the
Parties.
11.4 SURVIVAL. Except as explicitly set forth in this Agreement, the
Closing shall not terminate any provision of this a Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 CONFIDENTIAL INFORMATION.
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(a) At all times following the date hereof, each Party shall keep
strictly confidential and not disclose, use, divulge, publish or otherwise
reveal, directly or through another Person, (A) any confidential, non-public
information of the other Party or its Affiliates which was disclosed pursuant to
the License Agreement, or (B) any confidential, non-public information: (i)
relating to the business of the other Party and its Affiliates and obtained as a
result of the preparation and negotiation of this Agreement, the performance by
the Parties of their obligations hereunder, or the joint conduct by the Parties
of activities pursuant to this Agreement; or (ii) relating to the business of
xXxxx.xxx Australia, including, but not limited to, documents and/or information
regarding customers, costs, profits, markets, sales, products, product
development, key personnel, pricing policies, operational methods, technology,
know-how, technical processes, formulae, or plans for future development of or
concerning xXxxx.xxx Australia (collectively, "Confidential Information"),
except as may be necessary for the directors, employees or agents of its and its
Affiliates to perform their respective obligations under this Agreement or in
connection with filings with Governmental Bodies under Section 8.4 hereof or as
otherwise required under applicable law, including, in the case of eNote, the
rules and regulations promulgated under the Securities Exchange Act of 1934
provided that neither Party shall make any disclosure required under applicable
law before providing the other Party with a reasonable opportunity to seek a
protective order. Each Party shall cause any Persons receiving information in
accordance with the terms hereof to retain it in confidence. Upon termination of
this Agreement, each Party shall either destroy or return to the other all
memoranda, notes, records, reports and other documents (including all copies
thereof) relating to the Confidential Information of the other Party and
xXxxx.xxx Australia which such Party may then possess or have under its control
(except information owned by xXxxx.xxx Australia which such Party continues to
own after such termination). Notwithstanding the foregoing, the following shall
not constitute Confidential Information: (w) information which was already
otherwise known to the recipient at the time of its receipt in connection with
this Agreement, (x) information which is or becomes freely and generally
available to the public through no wrongful act of the recipient, (y)
information which is rightfully received by the recipient from a third party
legally entitled to disclose such information without breach by the recipient of
this Agreement or (z) in connection with legal action initiated by a Party to
enforce rights under this Agreement, provided that adequate safeguards (such as
protective orders) are maintained.
12.2 GOVERNING LAW/ARBITRATION.
(a) This Agreement, and the rights and liabilities of the Parties
hereunder, shall be governed by the substantive laws of Australia
(b) The Parties shall attempt to resolve any dispute hereunder through
an alternative dispute mechanism such as arbitration of mediation before
commencing litigation.
12.3 PRESS RELEASE. Except as may be required by law, the execution and
content of this Agreement shall be kept in confidence by the Parties until and
subject to the publication of a press release relating thereto, the content and
timing of which shall be jointly agreed upon.
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12.4 ENTIRE AGREEMENT. Except for the agreements specifically referred
to in this Agreement, this Agreement constitutes the entire agreement among the
Parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties. No amendment, supplement, modification,
waiver or termination of this Agreement shall be implied or be binding unless
executed in writing by the Party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall waiver constitute a
continuing waiver unless otherwise expressly therein provided.
12.5 ASSIGNMENT. All of the terms and provisions of this Agreement by
or for the benefit of the Parties shall be binding upon and inure to the benefit
of their successors, and permitted assigns. The rights and obligations provided
by this Agreement may not be assigned, except in accordance with Sections 9.2
and 9.4. Except as expressly provided herein, nothing herein is intended to
confer upon any Person, other than the Parties and their permitted successors,
heirs and permitted assigns as provided herein, any rights or remedies under or
by reason of this Agreement. For purposes of this Section 12.5, Assignment shall
be deemed to include any change of control of Seafont as a result of a merger or
a stock sale which results in the shareholders of Seafont immediately prior to
such merger or stock sale, holding less than 50% of the issued and capital stock
of Seafont immediately after such merger or stock sale.
12.6 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given
(except as may otherwise be specifically provided herein to the contrary): (i)
if delivered by hand to the Party to whom said notice or other communication
shall have been directed, upon such receipt; (ii) if mailed by certified or
registered mail with postage prepaid, return receipt requested, on the third
business day after mailing; (iii) if transmitted by facsimile, on the date of
transmission, with such transmittal followed by delivery of a confirmation copy
via one of the other methods set out herein or (iv) if mailed via
internationally know overnight courier such as Federal Express on the second
business day after mailing. All notices shall be addressed as set forth below or
to any other address such Party shall notify to the other Party in accordance
with this Section:
(a) If to Seafont to: Xxxxx 0, 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx
with a copy to: Xxxxx Xxxxxxxxxxx
Xxxxxxx Associates
Sydney, Australia
(b) If to eNote to: 000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: President
Facsimile: 000 000 0000
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with a copy to: H. Xxxxxxx Xxxxxxx, Xx., Esq.
Xxxxxxx & Xxxxxxx
00 Xxxx Xxxxxx, Xxxxx 000
P.O. Box 5839
Xxxxxxxxxx, XX 00000
12.7 COUNTERPARTS. This Agreement may be executed and delivered in one
or more counterparts, each of which shall be deemed to be an original, and all
of which when taken together shall constitute one and the same instrument and
shall become effective when copies hereof, bearing the signatures of each of the
Parties, shall have been received by Seafont and eNote.
12.8 EXPENSES. The Parties agree that, except as otherwise set forth in
this Agreement, xXxxx.xxx Australia shall pay all of the legal and other fees
and expenses relating to its formation, including, without limitation, the
filing of certificates and registration fees. Each Party shall pay all of its
own legal and other fees and expenses incurred in connection with this
Agreement, the transactions contemplated hereby, and the negotiations leading to
the same.
12.9 FURTHER ASSURANCES. Each Party shall perform all other acts and
execute and deliver all other documents as may be necessary or appropriate to
carry out the purposes and intent of this Agreement, as reasonably requested by
the other Party.
12.10 SEVERABILITY. If any provision of this Agreement shall be held to
be incomplete, illegal, invalid or unenforceable, or if it becomes necessary to
amend the Agreement in order to comply with an administrative or governmental
order, the remaining provisions of the Agreement shall stay in force and the
unenforceable, void or incomplete provision shall be replaced by a valid
provision or amendment reflecting the economic and business objectives of the
original Agreement as best as possible, provided however, that if any
replacement provision or amendment would lead to a change in the fundamental
economic and business terms of this Agreement, each Party shall have the right
to terminate this Agreement in accordance with Section 8.1 of this Agreement.
24
IN WITNESS WHEREOF, the Parties have executed this Joint Venture
Agreement as of the date and year first above written.
SEAFONT GROUP HOLDINGS PTY. LTD.
By: \s\ XXXXXX XXXXX
--------------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Executive Officer
XXXXX.XXX, INC.
By: \s\ XXXX XXXXXXXX
--------------------------------------
Name: Xxxx Xxxxxxxx
Title: President and Chief Executive Officer
25
EXHIBIT A
TERRITORY
1. Australia
2. New Zealand
26
EXHIBIT B
INITIAL DIRECTORS OF XXXXX.XXX AUSTRALIA
XXXX XXXXXXXX
XXXX XXXXXXX
XXXXXX XXXXX
[OTHER NOMINEE OF SEAFONT]
OTHER INDEPENDENT DIRECTOR]
27
EXHIBIT C
FORM OF LICENSE AGREEMENT
LICENSE, TECHNICAL ASSISTANCE, SUPPLY AND DISTRIBUTION
AGREEMENT
This Agreement dated as of _____ ___, 2000 (the "Agreement"),
by and between xXxxx.xxx Australia, a corporation incorporated under the laws of
Australia with a principal address at ____________________________________ (the
"Licensee"), xXxxx.xxx Inc., a corporation incorporated under the laws of the
State of Delaware, having its principal office at 000 Xxxxx Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxx 00000, XXX ("eNote") and, solely as to Articles 2, 4, 5, 6
and 7, Seafont Pty. Ltd., a corporation incorporated under the laws of Australia
with a principal address at Xxxxx 0, 00 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxx
("Seafont").
W I T N E S S E T H:
WHEREAS, eNote has designed, developed and is marketing in the
United States an Internet appliance including a wireless keyboard and set-top
box (the "Client") to permit retail end-users to access via a telephone line and
view via a television e-mail and select Internet web pages ("TVemail(TM)").
WHEREAS, Seafont and eNote are parties to Joint Venture Agreement
dated as of ______ __,2000, providing for the formation of Licensee and the
commercialization of TVemail(TM) in the Territory (the "Joint Venture
Agreement").
WHEREAS, Licensee and its Affiliates (as such term is defined
in the Joint Venture Agreement), including, but not limited to Xxxxxx Group
Holdings Pty. Ltd., control a large number of distribution channels and retail
locations selling electronic equipment within the Territory as defined on
Exhibit A.
WHEREAS, eNote has designed, engineered and developed a system
of software and hardware to implement TVemail(TM). This system is comprised of
the TVemail(TM) appliances, including the wireless keyboard and set-top box,
eNote's proprietary software (including, but not limited to, all Object Code and
Source Code as defined in the Joint Venture Agreement in whatever form), eNote's
proprietary client/server architecture and database (the "Backbone"), together
with all new versions, upgrades, alterations, localizations and other
modifications and improvements to the TVemail(TM) and Backbone and any component
thereof, and instructions and documentation provided as a unit therewith
(collectively, the "TVemail System").
WHEREAS, eNote is the owner of rights to registered and
unregistered service marks and trademarks (the "Marks") as depicted on Exhibit
B.
WHEREAS, eNote is willing, in accordance with the terms and
conditions of this Agreement, to permit Licensee to use and display the Marks in
connection with the marketing and sale of TVemail(TM) to retail end-users in the
Territory.
WHEREAS, eNote and Licensee desire to enter into a relationship and
this Agreement to provide certain technological assistance from eNote to
Licensee.
WHEREAS, eNote and Licensee desire to provide for the
exclusive distribution, marketing and sale by Licensee of a localized version of
TVemail(TM) and access to the Backbone and the TVemail System to retaIl
end-users in the Territory .
NOW THEREFORE, the parties agree as follows:
ARTICLE 1
1.1 GRANT OF LICENSE
28
(a) eNote hereby grants to Licensee, subject to the terms and
conditions of this Agreement, the exclusive, non-transferable license and right
to use the Marks (i) solely within the Territory and (ii) solely on and in
connection with the marketing, sale and distribution of TVemail(TM) products,
including any modifications and upgrades thereto, and in connection with the
marketing, sale and distribution of the services provided in association
therewith, and the documentation sold as a unit therewith. Nothing in this
Agreement shall be construed to limit the right of eNote to grant other
exclusive or non-exclusive licenses to third parties outside of the Territory.
Nothing in this Agreement shall be construed to prohibit eNote from licensing
third parties to manufacture or repair TVemail(TM) productS, PROVIDED that such
license shall prohibit the licenseE from sales of TVemail(TM) products and
services (apart from manufacturing and repair services) in the Territory.
(b) Licensee shall not use the Marks in connection with sales or offers
to sell Products or Services outside the Territory without the prior written
consent of eNote in each instance, which consent may be withheld by eNote in its
sole discretion. The Parties acknowledge that the web site(s) operated by
Licensee are distributed worldwide, and use of the Marks on or in connection
therewith shall not operate as a violation of this Agreement so long as such
sites reflect that eNote's Products and Services may be sold and distributed by
Licensee only in the Territory.
(c) Licensee shall not effect registration or recordation of any Xxxx
in the Territory in its own name. eNote shall use best efforts to effect
registration of the Marks in the Territory in its own name and at its own
expense. Licensee shall co-operate with e-Note to make such recordations as may
be necessary or proper to effect recordation of Licensee as an authorized user
and licensee of the Marks in the Territory. Any such recordation shall be
effected at Licensee's expense.
(d) Upon the expiration or termination of this Agreement for any
reason, Licensee's rights in and to use of the Marks shall immediately cease.
Licensee and eNote agree that any recordation shall be cancelled. Licensee shall
at any time during or after termination of this Agreement, at no further
compensation but no expense to Licensee, execute any document as eNote may
request from time to time to ensure that all right, title and interest in the
Marks resides and vests exclusively in eNote its successors and assigns. This
provision shall survive any expiration or termination of this Agreement for any
reason.
(e) eNote shall retain any and all rights in and to the Marks,
including the goodwill represented thereby, not expressly granted by this
Agreement. This provision shall survive any expiration or termination of this
Agreement for any reason.
(f) Licensee acknowledges eNote's right, title and interest in and to
the Marks and eNote's exclusive right to use and license the use of the Marks,
and agrees not to claim title to any of the Marks or any right to use of any
Xxxx except as specifically provided in this Agreement. Licensee shall not
contest or deny the validity or enforceability of any Xxxx or oppose or seek to
cancel any registration or recordation of any Xxxx by eNote or any licensee of
eNote in any jurisdiction within or without the Territory, nor aid nor abet any
third party in doing so, either during or after the term of this Agreement.
Licensee shall not use any xxxx which in the reasonable judgment of eNote is
confusingly similar to, deceptive or misleading with respect to, or dilutes, or
in any way damages the Marks, and shall, at eNote's request, cancel and abandon
use of any such marks. However, during the term of this Agreement, use by
Licensee of the corporate name "xXxxx.xxx Australia" shall not be a breach of
this Agreement. This provision shall survive any expiration or termination of
this Agreement for any reason.
(g) Any and all goodwill in the Marks arising from Licensee's use of
the Marks shall inure to the exclusive benefit of eNote, and Licensee shall not
during the term of this Agreement or thereafter assert any claim to such
goodwill. Licensee shall not take any action detrimental to such goodwill. This
provision shall survive any expiration or termination of this Agreement for any
reason.
1.2 QUALITY CONTROL
(a) Licensee shall not, without the prior written consent of eNote,
alter or modify, nor permit any third party to alter or modify, the Marks as
same may appear on any TVemail(TM) product, packaging or the documentation
29
provided in connection therewith, or in electronic form in association with the
services provided in association with TVemail(TM).
(b) Licensee shall use the Marks and conduct the merchandising and sale
of TVemail(TM) in a commercially appropriate manner, consistent with and
enhancing the goodwill of eNote, and in conformity with local cultural norms and
regulatory requirements. Licensee shall inform eNote of any changes to eNote
documentation or merchandising materials necessary to conform to local cultural
or legal requirements. Licensee shall comply at all times at its sole expense
with all applicable laws and regulations pertaining to the promotion,
merchandising, distribution and sale of TVemail(TM) products and services. The
Marks shall be used with notices or legends with respect to eNote's interest in
the Marks as may be applicable under local trademark laws or as reasonably
requested by eNote.
(c) Licensee shall not use the Marks, nor permit any third party to use
the Marks, in association with any other name or xxxx without the prior written
consent of eNote in each instance.
(d) Licensee may use the Marks on or in connection with any marketing
or merchandising materials in any media developed by Licensee only with the
prior written consent of eNote in each instance, provided that such consent
shall not be withheld unreasonably. All such materials shall be consistent with
the then-current quality standards and corporate positioning of TVemail(TM) as
same shall be communicated to Licensee from time to time. Specimens shall be
provided to such eNote employees as eNote may designate from time to time. eNote
shall review any such materials in a timely basis, and, in the event of
rejection of such materials, provide instructions to Licensee as to how the
materials may be modified to comply with then-current standards. Any materials
not rejected within ten (10) business days of submission shall be deemed
accepted. Licensee shall use the Marks in connection with such materials only in
the form and media as approved by eNote.
(e) If at any time eNote determines that any use of any Xxxx does not
confirm to standards as provided in this Agreement, eNote shall inform Licensee
of such nonconformity. Provided Licensee is not then in default of any other
provision of this Agreement or any other Agreement between the parties, Licensee
may use the materials in the non-conforming form, but shall make any changes
mandated by eNote in any subsequent materials run, PROVIDED HOWEVER, that
non-conforming uses in any electronic media shall be corrected as soon as
reasonably practicable.
1.3 BEST EFFORTS
Licensee shall use best efforts to promote, distribute and sell
TVemail(TM) in the Territory so as to maintain and enhance the goodwill of the
Marks.
1.4 INFRINGEMENT
(a) eNote warrants that it is the owner of the Marks listed on Exhibit
B or licenses same from others and is authorized to license such Marks as
provided in this Agreement. eNote may from time to time adopt and use other
marks which shall be added to Exhibit B.
(b) eNote shall have the sole right, at its expense, to defend,
compromise and settle any claim or action brought against eNote or Licensee
alleging that any Xxxx infringes on the intellectual property rights of any
third party, PROVIDED that eNote shall indemnify and hold harmless Licensee from
and against any monetary damage resulting to Licensee arising out of or in
connection with such claim or action provided that Licensee shall give eNote
immediate notice of any such claim or action, and is given reasonable assistance
and sole authority to settle any such claims or actions. In the defense or
settlement of such claims, eNote shall in its sole discretion either: obtain for
the Licensee the right to use any trademark or replace or modify the trademark
so that it is non-infringing and obtain registrations and/or recordations of the
new xxxx(s) as otherwise provided in this Agreement. Licensee shall immediately
upon request of eNote cease and desist from use of any Xxxx alleged to infringe
rights of any third party. Licensee shall give eNote prompt notice of any
infringement of the Marks in the Territory, and reasonable assistance in
resolution of any dispute with regard thereto.
1.5 SPECIFIC PERFORMANCE
30
In addition to any other remedies available to eNote with respect to a
breach by Licensee of its obligations pursuant to this Article 1, eNote shall
have the right to specific performance of any Licensee obligation hereunder, and
injunctive relief to prevent any breach or threatened breach of Licensee's
obligations hereunder without proof of irreparable harm or the posting of a
bond. This provision shall survive expiration or termination of this Agreement.
ARTICLE 2
TECHNICAL ASSISTANCE
2.1 TECHNICAL MODIFICATIONS
(a) The parties recognize that technical modifications may be required
to exploit the TVemail(TM) System in the Territory. eNote agrees to provide such
technical assistance in accordance with the terms and requirements of the Joint
Venture Agreement until the Determination Date as defined therein. eNote shall
perform all work associated with modifications, upgrades, and adaptations to the
TVemail(TM) System and any localized version thereof and Licensee shall have no
right or authority to alter or modify the TVemail(TM) System or any component
thereof, including, but not limited to, any changes or modifications
necessitated by power supply, modem approval or telephony interface.
(b) eNote agrees to use best efforts to assist Licensee and provide
reasonable consulting services to Licensee with respect to engineering and
exploitation of the Technology in the Territory at the expense of Licensee on a
time and materials basis and such other terms and conditions as eNote may
provide, and Licensee shall approve, from time to time, provided that such
assistance shall be compatible with eNote's development schedules as may be in
effect from time to time, all parties recognizing the technological limitations
potentially inherent in localization. eNote shall at all times during the term
of this Agreement consider in good faith Licensee's suggestions and requests
with regard to exploitation of the Technology in the Territory.
2.2 NEW VERSIONS OF THE TVeMAIL(TM) SYSTEM
eNote shall use best efforts to provide Licensee with any corrected,
modified or updated hardware and software associated with the TVemail(TM) System
in a locally compatible version upon release and modification to meet local
requirements, subject to regulatory approvals and inherent localization
limitations, as further provided by the parties in accordance with a development
schedule negotiated in good faith by eNote and Licensee from time to time, which
schedule shall at a minimum include payment to eNote for reasonable development
costs associated with local modifications, the time frame for implementation and
testing of the hardware and software, be compatible with eNote's development
schedules, and such other terms and conditions to which eNote and Licensee may
agree.
2.3 OWNERSHIP OF TECHNOLOGY
(a) All TVemail(TM), Tvemail(TM) System and Backbone hardware and
software, including source code and object code in any form, and including any
and all improvements, alterations, modifications, adaptations and enhancements
and any documentation provided therewith (the "Technology") shall be the sole
and exclusive property of eNote, and no patent or copyright license or ownership
interest therein shall be deemed granted by this Agreement. Licensee agrees that
it will not copy, reproduce, alter, modify, reverse engineer, adapt, enhance or
make improvements to the Technology. This provision shall survive expiration or
termination of this Agreement.
(b) Licensee agrees that it will not challenge the ownership interest
of eNote in any patent, copyright or other proprietary interest, existing or
later issued, registered or unregistered, in the Technology during the term of
this Agreement or thereafter. Nothing contained in this Agreement shall be
construed as conferring by implication, estoppel or otherwise any license or
right in any Technology patent or copyright whether or not the exercise of any
right granted by this Agreement necessarily employs an invention or any existing
or later issued patent or copyright interest. This provision shall survive
expiration or termination of this Agreement.
31
(c) Licensee agrees during the term of this Agreement and thereafter to
execute any document on request of eNote, at no further compensation but no
expense to Seafont or Licensee, to vest exclusive ownership rights in the
Technology in eNote, its successors and assigns. This provision shall survive
expiration or termination of this Agreement.
(d) In addition to any other remedies available to eNote with respect to
a breach by Licensee of its obligations pursuant to this Section 2.3, eNote
shall have the right to specific performance of any Licensee and/or Seafont
obligation hereunder, and injunctive relief to prevent any breach or threatened
breach of Licensee's and/or Seafont obligations hereunder without proof of
irreparable harm or the posting of a bond. This provision shall survive
expiration or termination of this Agreement.
ARTICLE 3
SUPPLY AND DISTRIBUTION
3.1 GRANT OF DISTRIBUTION RIGHTS IN THE TERRITORY.
(a) Subject to the terms and conditions of this Agreement, eNote
appoints Licensee as its exclusive distributor in the Territory of TVemail(TM)
products, including any modifications and upgrades as the parties may agree in
accordance with Article 2 above (the "Products"), and the services provided in
association therewith, which shall include electronic access and connection to
the TVemail (TM) System through standardized procedures established by eNote to
the Backbone as designated by eNote (the "Services").
(b) Licensee shall conduct its business in the purchase and resale of
Products and Services as a principal for its own account solely at its own risk
and expense.
(c) Licensee shall sell Products and Services only in accordance with
the specifications and installation guidelines as established by eNote and
communicated to Licensee from time to time.
(d) The benefits and obligations of this Agreement are personal to
Licensee. Licensee shall not sell, transfer or assign its rights and obligations
pursuant to the grant of rights provided in this Section 3, by operation of law
or otherwise, nor appoint sub-Licensees, without the prior written consent of
eNote in each instance, which consent may be withheld in by eNote in its sole
discretion.
(e) Except as otherwise expressly agreed by eNote in advance, this
Agreement shall control all aspects of the dealings between eNote and Licensee
with respect to the sale and distribution in the Territory of the Products and
Services and any additional or different terms in any Licensee order are hereby
rejected.
3.2 SUPPLY OBLIGATIONS
(a) eNote will sell and ship Products, as available, to Licensee to
such location or locations in the Territory as the Licensee may designate in a
commercially reasonable manner for resale by Licensee.
(b) All orders are subject to acceptance.
(c) eNote will employ commercially reasonable efforts to fill
Licensee's orders promptly upon acceptance, but reserves the right to allocate
available Product inventories among distributors at its discretion.
(d) eNote shall co-operate and work with Licensee to enable prompt and
efficient installation of Product and Service availability. eNote shall provide
to retail end-users, in accordance with the terms of this Agreement, access to
the Backbone and TVemail(TM) System.
(e) eNote shall pack properly all items for shipment. Shipping dates
are estimates, and eNote shall not be liable for loss or damage due to delay
resulting from
32
any cause beyond its reasonable control. The shipper will be
selected by eNote unless Licensee requests a reasonable alternative.
3.3 PRICES, COSTS, PAYMENTS
(a) All sales of Products to Licensee shall be made pursuant to this
Agreement at such then current landed wholesale Product prices as may be
communicated to Licensee from time to time, plus five (5%) percent. In addition,
Licensee shall pay to eNote royalties on various Services offered through the
TVemail(TM) system, depending on which Services are offered by Licensee and
selected by the consumer. Base wholesale Product prices, fees and royalties
shall be on terms no less favorable than those offered to other Licensees and
resellers of similar Product volumes in other Territories. Product payments
shall be net thirty (30) days from date of invoice therefore. Royalty fees shall
accrue on sales of Services by Licensee, and shall be payable monthly commencing
with the month following commencement of the Service to each customer.
(b) From time to time eNote may upgrade and add or offer additional
features to Products and Services. eNote will use commercially reasonable
efforts to give advance notice to Licensee of price changes and Product
upgrades, fees and royalties therefore, provided that eNote shall not be
required to offer any particular Product or Service except as otherwise provided
in this Agreement.
(c) Product prices shall be FOB eNote's manufacturing facility or point
of shipment. Risk of loss shall pass to and be borne by Licensee on delivery by
eNote to the common carrier. Licensee shall pay all shipping, freight and
handling costs, insurance, demurrage, duties, sales excise and other taxes or
charges as may be levied on eNote on the sale or use of the Product and Services
in the Territory (other than taxes imposed on eNote's income therefrom)
applicable or attributable to the Products.
(d) Licensee shall be invoiced in, and all payments shall be made in,
currency of the United States.
(e) Payments shall be made to eNotes's address as specified to Licensee
from time to time. Any unpaid amount due eNote under this Agreement shall bear
interest at a rate of 1 1/2 % per month until paid in full. Licensee shall be
responsible for eNote's reasonable costs of collection including reasonable
attorneys' fees.
3.4 MARKETING POLICIES
(a) Licensee will at all times maintain adequate inventories of eNote
Products will promote vigorously and effectively the sale of eNote Products and
Services in the Territory in conformity with eNote's established marketing
policies and programs. Licensee will use its best efforts to sell eNote Products
and Services, representing the eNote brand with diligence and integrity.
(b) Licensee represents that it is familiar with the Products and
Services of eNote and with relevant laws and requirements applicable to sale,
installation, use and operation of the Products and Services in the Territory.
Licensee will at all times operate in conformity with such laws and regulations.
(c) Licensee will cooperate with eNote in providing for continuous and
effective advertising and promotion of Products and Services throughout the
Territory, and agrees to participate in, actively promote and faithfully comply
with the terms and conditions of such cooperative advertising and merchandising
programs as eNote may establish and offer from time to time, providing such
programs are consistent with local customs, laws and regulations, and further
provided that expenses in association therewith shall be subject to further by
agreement of Licensee and eNote. Nothing herein shall prevent Licensee from
independently advertising and marketing the Products and Services within the
Territory subject to Article 1.
3.5 WARRANTY [WARRANTY PROCEDURES][WARRANTY LIMITATIONS][THIRD PARTY
WARRANTIES]
33
(a) Licensee shall make no warranty, oral or written, with regard to
the Products or Services other than eNote's limited warranty, if
any, contained in such written materials as eNote shall supply to
Licensee for distribution to purchasers from time to time and in
electronic form via the TVemail(TM) System.
(b) eNote warrants to the consumer that the TVemail(TM)equipment
shall be free of material defects and in manufacture and
workmanship and the TVemail(TM)system shall operate in a manner
consistent with the specifications contained in instruction
manuals and specifications as provided to the consumer, provided
that this warranty shall not extend to defects or damage caused
by misuse or negligence by the consumer or other third party.
eNote shall at its option repair or replace any non-conforming
hardware or software for the period as prescribed in such
instruction manuals and specifications. THIS WARRANTY IS IN LIEU
OF ALL OTHER PRODUCT AND SERVICE WARRANTIES EXPRESS OR IMPLIED,
INCLUDING WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
MERCHANTABILITY. REPAIR OR PREPLACEMENT OF HARDWARE AND/OR
SOFTWARE SHALL BE THE SOLE AND EXCLUSIVE REMEDY IN THE EVENT OF A
DEFECTIVE OR NON-CONFORMING PRODUCT. IN NO EVENT SHALL ENOTE BE
LIABLE FOR ANY OTHER OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR
IN CONNECTION WITH ANY DEFECTIVE OR NON-CONFORMING PRODUCT, EVEN
IF IT HAS BEEN MADE AWARE OF THE POSSIBLITY OF SUCH DAMAGES.
3.6 [MAINTENANCE AND REPAIR OF PRODUCT UNITS]
3.7 [SOFTWARE SUPPORT OBLIGATIONS] [SYSTEM SUPPORT OBLIGATIONS]
3.8 [INDEMNIFICATION - SUBJECT TO WARRANTY]
3.9 [SALES VOLUME REQUIREMENTS]
3.10 [SECURITY INTEREST]
3.11 [NON-COMPETE - EXTENT OF NON-COMPETITION]
ARTICLE 4
TERM AND TERMINATION
4.1 This Agreement shall commence immediately and terminate and be of no further
force or effect upon the occurrence of the following [SPECIFIC INITIAL TERM?]:
(a) Termination, cancellation or expiration of the Joint Venture
Agreement prior to the Determination Date.
(b) A party may terminate this Agreement immediately upon default in the
performance of the terms and conditions of this Agreement by any other party,
which default shall continue and remain uncured for a period of sixty (60) days
following notice specifying such default, which notice shall give reasonable
particulars of the default and of the intention of the party serving such notice
of intent to terminate.
(c) By mutual agreement of the parties.
(d) Immediately upon notice upon the occurrence of any event of
bankruptcy by any party. For purposes of this Agreement, an event of bankruptcy
with respect to a party means any of the following circumstances (or the
substantial equivalent under applicable law in any other country): (a) the
commencement by the party of a voluntary case under the United States Bankruptcy
Code or an equivalent law as applicable to such party in any jurisdiction in the
Territory, (b) the commencement against the party of an involuntary case under
the United States Bankruptcy Code or an equivalent law as applicable to such
party in any jurisdiction in the Territory if the case is not vacated with a
ninety calendar days, (c) the entry of a final order by a court of competent
jurisdiction finding the party to be bankrupt or insolvent, ordering or
approving its liquidation, reorganization or any modification or alteration of
the rights of its general creditors or assuming custody of or appointing a
receiver or other custodian for all or a substantial part of its property and
such order shall not be vacated or stayed upon appeal or otherwise stayed within
ninety calendar days or (d) the party makes an assignment for the benefit of, or
enters into a composition with its creditors, or appoints or consents to the
appointment of a receiver or other custodian for all or a substantial part of
its property.
34
ARTICLE 5
OBLIGATIONS ON TERMINATION
5.1 OBLIGATIONS ON TERMINATION. On termination of this Agreement for any reason,
Licensee shall cease to be an authorized Licensee or distributor of eNote and
all rights granted to Licensee and Seafont pursuant to this Agreement shall
revert back to eNote.
(a) Licensee will immediately cease and desist from further use of the
Marks. Licensee will not at any time after such termination use or permit any
such Xxxx to be used in any manner in connection with any business conducted by
it or in which it may have an interest, or otherwise as descriptive of or
referring to anything other than Products or Services of eNote. Regardless of
the cause of termination, Licensee will immediately take all appropriate steps
to remove and cancel its listings in telephone books and other directories,
public records or elsewhere that contain the eNote's name or Marks, and change
its name to remove any reference to "eNote." or "xXxxx.xxx." If Licensee fails
to obtain such removals or cancellations promptly, eNote may make application
for such removals or cancellations on behalf of Licensee and in Licensee's name
and in such event Licensee will render every assistance.
(b) All amounts owing by Licensee to eNote shall, not withstanding prior
terms of sale, become immediately due and payable.
(c) All unshipped Product orders shall be canceled without liability of
either party to the other.
(d) Licensee, at the option of eNote, will resell and deliver to eNote
on demand, free and clear of liens and encumbrances, Products and materials
bearing the Marks as eNote shall elect to repurchase at the original price of
the Product and materials, provided that eNote shall not be obligated to pay
Licensee for any item originally provided free of charge.
5.2 Neither party shall be liable to the other because of such termination for
compensation, reimbursement or damages on account of the loss of prospective
profits or anticipated sales, or on account of expenditures, investments, lease
or commitments in connection with the business or goodwill of eNote or Licensee.
5.3 Nothing in this Agreement shall be construed to constitute Licensee as a
partner or joint venturer of eNote. Licensee shall be solely responsible for any
commitments incurred or assumed by it during the term of this Agreement, and
eNote shall not be responsible in any manner unless eNote has assumed
responsibility for such expense in each instance in writing.
5.4 In addition to any other remedies available to eNote with respect to a
breach by Licensee or Seafont of its obligations pursuant to this Article 5,
eNote shall have the right to specific performance of any Licensee obligation
hereunder, and injunctive relief to prevent any breach or threatened breach of
Licensee's obligations hereunder without proof of irreparable harm or the
posting of a bond. This Article 5 shall survive termination of this Agreement
ARTICLE 6
CONFIDENTIALITY
6.1 OBLIGATIONS OF CONFIDENTIALITY. At all times following the date of this
Agreement, each of Seafont and Licensee shall keep strictly confidential and not
disclose, use, divulge, publish or otherwise reveal, directly or through any
third party or person except in furtherance of the purposes of this Agreement
and the Joint Venture Agreement. Any confidential, non-public information
relating to the Technology and the business of eNote and its Affiliates obtained
as a result of the preparation and negotiation of this Agreement, or the
performance by the parties of their obligations hereunder, or the joint conduct
of any the party of activities pursuant to the Joint Venture Agreement
(collectively, "Confidential Information") Except as may be necessary for the
directors, employees or agents of such party and its Affiliates to perform their
respective obligations under this Agreement or in connection with filings with
governmental bodies or as otherwise required under applicable law, PROVIDED that
neither Seafont
35
nor Licensee shall make any disclosure required under applicable law before
providing eNote with a reasonable opportunity to seek a protective order.
6.2 Seafont and Licensee shall cause any person or entity receiving Confidential
Information in accordance with the terms hereof to retain it in confidence.
6.3 Upon termination of this Agreement, Seafont and Licensee shall either
destroy or return to eNote all memoranda, notes, records, reports and other
documents (including all copies thereof) relating to the Confidential
Information, which it may then possess or have under its control.
6.4 Notwithstanding the foregoing, the following shall not constitute
Confidential Information: (a) information which was already otherwise known to
the recipient at the time of its receipt in connection with this Agreement, (b)
information which is or becomes freely and generally available to the public
through no wrongful act of the recipient, (c) information which is rightfully
received by the recipient from a third party legally entitled to disclose such
information without breach by the recipient of this Agreement or (d) in
connection with legal action initiated by a party to enforce rights under this
Agreement or the Joint Venture Agreement, provided that adequate safeguards
(such as protective orders) are maintained.
6.5 In addition to any other remedies available to eNote with respect to a
breach by Licensee of its obligations pursuant to this Article 6, eNote shall
have the right to specific performance of any Licensee or Seafont obligation
hereunder, and injunctive relief to prevent any breach or threatened breach of
Licensee's or Seafont's obligations hereunder without proof of irreparable harm
or the posting of a bond. The obligations of Seafont and Licensee pursuant to
this Article 6 shall survive termination of this Agreement.
ARTICLE 7
MISCELLANEOUS
7.1 ENTIRE AGREEMENT. Except for the agreements specifically referred to in this
Agreement, this Agreement constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No amendment, supplement, modification,
waiver or termination of this Agreement shall be implied or be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall waiver constitute a
continuing waiver unless otherwise expressly therein provided.
7.2 ASSIGNMENT. All of the terms and provisions of this Agreement are personal
to Licensee and Seafont, and may not be assigned nor transferred, by operation
of law or otherwise, except as regards Seafont, as provided in the Joint Venture
Agreement. This Agreement, and the rights and obligations of eNote hereunder,
shall be binding and inure to the benefit of eNote, its successors and assigns.
7.3 NOTICES. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given (except as may
otherwise be specifically provided herein to the contrary): (i) if delivered by
hand to the party to whom said notice or other communication shall have been
directed, upon such receipt; (ii) if mailed by certified or registered mail with
postage prepaid, return receipt requested, on the third business day after
mailing; (iii) if transmitted by facsimile, on the date of transmission, with
such transmittal followed by delivery of a confirmation copy via one of the
other methods set out herein or (iv) if mailed via internationally known
overnight courier such as Federal Express on the second business day after
mailing. All notices shall be addressed as set forth below or to any other
address such party shall notify to the other Party in accordance with this
Section:
(a) If to Seafont to: Xxxxx 0, 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx
with a copy to:
36
(b) If to eNote to: 000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000 XXX
Attn: President
Facsimile: (000) 000 0000
with a copy to: H. Xxxxxxx Xxxxxxx, Xx., Esq.
Xxxxxxx & Xxxxxxx
00 Xxxx Xxxxxx, Xxxxx 000
Box 5839
Xxxxxxxxxx, XX 00000 XXX
(c) If to Licensee to: xXxxx.xxx Australia
with a copy to:
7.4 COUNTERPARTS. This Agreement may be executed and delivered in one or more
counterparts, each of which shall be deemed to be an original, and all of which
when taken together shall constitute one and the same instrument and shall
become effective when copies hereof, bearing the signatures of each of the
Parties, shall have been received by Seafont, Licensee and eNote.
7.5 SEVERABILITY. If any provision of this Agreement shall be held to be
incomplete, illegal, invalid or unenforceable, or if it becomes necessary to
amend the Agreement in order to comply with an administrative or governmental
order, the remaining provisions of the Agreement shall stay in force and the
unenforceable, void or incomplete provision shall be replaced by a valid
provision or amendment reflecting the economic and business objectives of the
original Agreement.
7.6 GOVERNING LAW. This Agreement is made in and shall be governed in accordance
with the federal laws of the United States of America and laws of the State of
Vermont, USA, without regard to conflict of laws principles. The parties agree
that any claim or action arising out of or in connection with this Agreement
shall be resolved by a federal or state court located in Burlington, Vermont,
USA and Seafont and Licensee expressly consent to the exclusive jurisdiction of
such courts. The parties shall not raise in connection therewith, and hereby
waive, the inconvenience of the forum, the lack of personal jurisdiction, the
sufficiency of service of process so long as same is effected in accordance with
the laws and regulations governing foreign service, and any right to trial by
jury.
7.7 ACKNOWLEDGMENTS. Each party acknowledges that no representation or
statement, and no understanding or agreement except for the Joint Venture
Agreement, has been made, or exists, and that in entering into this Agreement
each party has not relied on anything done or said or on any presumption in fact
or in law (a) with respect to this Agreement, or to the duration, termination or
renewal of this Agreement, or with respect to the relationship between the
parties, other than as expressly set forth in this Agreement; or (b) that in any
way tends to change or modify the terms, or any of them, of this Agreement or to
prevent this Agreement becoming effective; or (c) that in any way affects or
relates to the subject matter hereof. Licensee and Seafont also acknowledge that
the terms and conditions of the license granted pursuant to this Agreement, and
the distribution rights, and each of them, are reasonable and fair and
equitable.
7.8 HEADINGS. Headings used in this Agreement are provided for convenience only
and shall not be used to construe meaning or intent.
7.9 FORCE MAJEURE. No party shall be liable for any loss or damage or be deemed
to be in breach of the Agreement to the extent that performance of such party's
obligations or attempts to cure any breach under this Agreement are delayed or
prevented as a result of any event or circumstance beyond its reasonable
control, including without limitation, war, hostilities, civil war or rebellion
(whether war be declared or not), strike, lockout or other industrial dispute,
or act of God.
37
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date and year first above written.
SEAFONT GROUP HOLDINGS PTY. LTD.
By:__________________________________
Name: Xxxxxx Xxxxxx
Title: President
xXXXX.XXX, INC.
By:__________________________________
Name: Xxxx X. Xxxxxxxx, President
Title:
xXXXX.XXX AUSTRALIA
By:__________________________________
Name:
Title:
38
EXHIBIT A
TERRITORY
3. Xxxxxxxxx
0. Xxx Xxxxxxx
39
EXHIBIT B
MARKS
Marks appearing below, together with such marks as eNote may in future adopt and
use.
TRADEMARKS/SERVICE MARKS
1. xXxxx.xxx(TM)
2. TVemail(TM)
3. PCemail(TM)
4. WebATM(TM)
5. Twirp(TM)
6. AIRMOUSE(R)
7. Browserless Internet(TM)
8. TVewriter(TM)
9. EZ Color(TM)
10. BuyMail(TM)
11. TVemail.. The Answering Machine for the Internet(TM)
12. Get connected ... Simply(TM)
13. Simply Communicate(TM)
40
EXHIBIT D
eNOTE'S TRADEMARKS AND TRADE NAMES
TRADEMARKS/SERVICE MARKS
14. xXxxx.xxx(TM)
15. TVemail(TM)
16. PCemail(TM)
17. WebATM(TM)
18. Twirp(TM)
19. AIRMOUSE(R)
20. Browserless Internet(TM)
21. TVewriter(TM)
22. EZ Color(TM)
23. BuyMail(TM)
24. TVemail.. The Answering Machine for the Internet(TM)
25. Get connected ... Simply(TM)
26. Simply Communicate(TM)
41
