Exhibit 16.1
OPERATING AGREEMENT
THIS OPERATING AGREEMENT (this "Agreement") is made as of July 19, 2006
(the "Effective Date"), by and between NeoMedia Technologies, Inc., a Delaware
corporation ("NeoMedia" or "Party"), and Beijing Sino-US Jinche Yingang,
("Jinche" or "Party") a corporation domiciled in the Peoples Republic of China
("PRC").
RECITALS:
WHEREAS, NeoMedia is in the business of developing proprietary
technologies that link physical information and objects to the Internet and has
particular expertise in mobile marketing in general, and mobile couponing and
mobile customer relationship marketing in particular;
WHEREAS, Jinche conducts its business primarily in Asia and principally
in the PRC and has expertise enabling NeoMedia to conduct business in the Asian
telecommunications marketplace; and
WHEREAS, Jinche is the exclusive agent for Qode(R) in Asia in the areas
of mobile content, applications and services for mobile networks.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, NeoMedia and Jinche agree as follows:
AGREEMENT:
ARTICLE 1
ESTABLISHMENT OF AN OPERATING AGREEMENT
1.1 Formation. In accordance with the laws and regulations of the
United States and any applicable state laws, as well as the laws of the PRC,
both parties agree to work towards the promotion and establishment of Qode(R)
within Asia (the "Field of Business").
1.2 Purpose.
(1) The purpose of the Agreement is to pool the activities of
both parties in the Field of Business in order to realize available synergies,
increase the operating profit and market valuation of each party, better meet
the requirements of the customers of the parties, develop new products and
market opportunities and facilitate interoperability.
(2) Both parties agree to work together only in Asia. For the
purpose of this agreement, Asia is defined as the PRC, Taiwan, Macau, and Hong
Kong. Except as otherwise expressly provided in this Agreement, Jinche shall not
engage in any other related telecommunications activity or business, other than
defined herein, and shall have no authority to hold itself out as a general
agent of NeoMedia, other than in Asia and as defined herein.
1.3 Place of Business. The principal executive offices for Jinche shall
be the 27th Floor, Tower A, Cyber Tower, No.2 South Ave Xxxxx Xxxx Cun, Beijing.
The principal place of business for NeoMedia shall be 0000 Xxxxxx Xxxxxx, Xxxxx
000 Xxxx Xxxxx, Xxxxxxx 00000.
1.4 Term. The term of the Joint Venture shall commence on the Effective
Date and shall continue for a one year period. Therein, the Operating Agreement
will automatically renew yearly as long as the minimum financial portions of
this agreement are met. Both parties agree to draft and sign an agreement
setting forth the minimum revenue required by NeoMedia and Jinche, as a result
of this Operating Agreement, prior to July 15, 2007.
1.5 Statutory Compliance. The Company shall be governed by, and this
Agreement shall be construed in accordance with, the applicable laws of the
State of Florida. NeoMedia shall make all filings and disclosures required by,
and shall otherwise comply with, all such laws. This will include press releases
which, at the sole discretion of NeoMedia, it has the right to release to its
shareholders detailing the terms and conditions of any company in Asia in which
it is involved as a result of its Operating Agreement with Jinche.
1.6 Title to Property. Other than Intellectual Property, to which
NeoMedia has the sole right, both NeoMedia and Jinche shall maintain the right
to its own property.
1.7 Payments of Individual Obligations. Each party shall be responsible
for its own debts or other financial obligations Neither party has the right to
encumber the other party without that party's prior written consent.
1.8 Role of the Parties. NeoMedia's primary role will be as the main
interface to mobile operators. NeoMedia will be primarily responsible for
providing mobile content and applications for demonstrating environments as well
as developing demonstration products for mobile systems, service network
environment enablers, and mobile application solutions and services. NeoMedia
will also be responsible for the day to day maintenance of the portal content
including, but not limited to, the uploading of new content, the updating of
portal pages with new content, and producing required text and graphics.
Jinche's primary role will be to provide an interface with various Asian
governments as well as to identify and help negotiate with potential users of
Qode(R) within Asia. Both NeoMedia and Jinche can have expanded roles as agreed
to by both parties.
ARTICLE 2
PROFITS, LOSSES AND DISTRIBUTIONS
2.1 Distributions. Both parties agree that revenue obtained as a result
of the mutual cooperation of both Jinche and NeoMedia shall be disbursed as
follows.
(1) NeoMedia will be the contractual partner and the recipient
of all funds that result from relationships facilitated by Jinche. Upon receipt
of such funds NeoMedia will, within 60 days of receipt, disburse to Jinche, with
payment in kind, 35% of such funds.
(2) Both NeoMedia and Jinche will be responsible for its own
losses.
ARTICLE 3
INTELLECTUAL PROPERTY
3.1 Intellectual Property. Any algorithms, apparatus, charts, customer
lists, databases, data collections, diagrams, formulae, graphs, inventions
(whether or not patentable), know-how, methods, manufacturing and production or
business processes, proprietary information, protocols, schematics,
specifications, techniques, user interfaces, trade secrets, discoveries,
concepts, ideas, research and development, compositions, designs, drawings,
specifications, software, software code (in any form, including source,
executable, or object code), URLs, web sites, web site end user information, and
business and marketing plans and proposals, works of authorship and other forms
of technology (whether or not embodied in any tangible form and including all
tangible embodiments of the foregoing, such as instruction manuals, laboratory
notebooks, prototypes, samples, studies and summaries), and any Intellectual
Property Rights (other than Prior Works): (i) conceived, developed, created or
reduced to practice by an employee (leased, loaned or otherwise) of NeoMedia or
an employee of a Jinche performing work for NeoMedia or an outside person who is
employed by Jinche, or is leased or loaned to Jinche, or performs work for
Jinche or NeoMedia in relation to this Operating Agreement; (ii) resulting from
such employment, lease, loan or work, or (iii) otherwise provided to NeoMedia by
a Jinche Employee shall be the sole and exclusive property of NeoMedia. Such
ownership shall inure to the benefit of NeoMedia from the date of the
conception, development, creation, reduction to practice, fixation or delivery.
All copyright aspects of any Intellectual Property are considered a
"work-made-for-hire" within the meaning of the Copyright Act and owned by
NeoMedia. If and to the extent any Intellectual Property is not a
"work-made-for-hire" within the meaning of the Copyright Act, the applicable
Employee and if leased or loaned, such lessor or hereby expressly assigns to
NeoMedia all right, title and interest in and to such Intellectual Property
without further consideration. Each Lessor shall assist NeoMedia in obtaining
and enforcing all rights and other legal protections for the Intellectual
Property and to execute any and all documents that NeoMedia may reasonably
request in connection therewith, including, any assignment document(s). In the
event that a Lessor owns Prior Works that it wants to provide to NeoMedia
through an Employee on a basis other than the above, NeoMedia and such Lessor
shall, in good faith, negotiate the terms and conditions upon which Prior Works
will be provided to NeoMedia (which shall be on terms and conditions, including
pricing, that are equal to or better than the terms offered to any other third
party) and any such terms shall be agreed to in writing prior to delivery of
such Prior Work; provided, however, that NeoMedia is not under any obligation to
reach agreement on the terms of such arrangement.
3.2 Ownership of Intellectual Property Developed by Nonparty. In
negotiating agreements with third party consultants and developers, NeoMedia
shall use reasonable efforts to secure maximum Intellectual Property Rights for
itself in the inventions and other work product resulting from such agreements.
3.3 Patent and Copyright Applications. The Company shall be responsible
for taking those actions as it may reasonably deem appropriate to protect and
obtain the benefits of any Intellectual Property in which it has a proprietary
interest pursuant to this Operating Agreement or any other transaction document,
including, but not being limited to, obtaining appropriate U.S.
or foreign patent and copyright coverage for inventions and creations to which
it has title. Each of the Parties shall take all actions in support of NeoMedia
obtaining protection for Intellectual Property Rights as may be reasonably
requested by NeoMedia, including, but not being limited to, executing and
causing its employees to execute and assist in the preparation, filing and
prosecution of patent applications, assignments and other documents required for
those purposes. NeoMedia shall reimburse the Party for reasonable costs incurred
by the Party in providing such support. NeoMedia shall inform each of the
Parties of any Intellectual Property developed and shall give each Party the
opportunity to review any patent and copyright applications prior to filing
them.
ARTICLE 4
INDEMNIFICATION
4.1 Indemnification. Each Party shall indemnify, defend and hold
harmless the other Party from all losses, costs, expenses, taxes, interest,
penalties, damages, claims and liabilities (including, without limitation,
reasonable attorneys' fees and expenses) to which the other Party shall be
subject, or for which they shall be liable, except as arising from (i) any gross
negligence, fraud, willful or wanton misconduct by the other Party, (ii) breach
by such Party of its obligations under this Agreement; (iii) breach by such
Party of its representations or warranties under this Agreement or (iv) any and
all claims of infringement of any Intellectual Property Rights relating to or
arising from the use, receipt or other exploitation of Prior Works, Intellectual
Property or other materials, software or items provided by such Party or any
employee of such Party (loaned, leased or otherwise provided to Company).
4.2 Indemnity Procedure. Each Party shall give prompt written notice to
the other Party of any liability which might give rise to a claim for
indemnification pursuant hereto; provided, however, that any failure to give
such notice will not waive any rights, except to the extent the rights are
prejudiced. Each Party shall provide such cooperation and such access to its
books, records and properties as shall be reasonably requested; and the Party
hereto agree to cooperate with each other.
4.3 Survival. Each and every one of the representations, warranties,
agreements and indemnities of the parties hereto contained in this Agreement
shall survive the termination of this Agreement or the withdrawal of a Party for
a period of three (3) years.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties. Each Party hereby represents and
warrants that:
(1) Due Formation; Authorization of Agreement. It is duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its formation and has the corporate power and authority to own
its property and carry on its business as owned and carried on at the date
hereof and as contemplated hereby. Each party has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery, and performance of this Agreement has been
duly authorized by all necessary corporate action. This Agreement constitutes
the legal, valid, and binding obligation of each party, except to the extent
enforceability is limited by general principles of equity.
(2) Governmental Authorizations. Any registration, declaration
or filing with, or consent, approval, license, permit or other authorization or
order by, any governmental or regulatory authority, domestic or foreign, that is
required in connection with the valid execution, delivery, acceptance and
performance by such party of its respective responsibilities under this
Agreement or the consummation by such party of any transaction contemplated
hereby has been completed, made or obtained on or before the date of this
Agreement.
(3) Litigation. There are no actions, suits, proceedings, or
investigations pending, or to the knowledge of such party threatened, against or
affecting such party in any court or before or by any governmental department,
board, agency, or instrumentality, domestic or foreign, or any arbitrator which
could, if adversely determined, reasonably be expected to materially impair such
Party's ability to perform its obligations under this Agreement or to have a
material adverse effect on the financial condition of such Party, except as
disclosed by NeoMedia in its public filings with the United States Securities
and Exchange Commission.
(4) Compliance with Laws. The business of both NeoMedia and
Jinche has at all times been conducted in compliance with all applicable Laws,
the violation of which would have a material adverse effect on its business or
the business of the Company. Neither NeoMedia nor Jinche have received any
notice, advice, claim or complaint that its business is not being conducted in
all material respects in accordance with all applicable Laws. Both NeoMedia and
Jinche, their officers, directors, partners, agents and employees have complied
in all material respects with all requirements of Law relating to the business
conducted by both parties now or in the past relating to the properties and
assets owned or used in the business by both parties now or in the past.
ARTICLE 6
TAXES, FINANCE AND AUDIT
6.1 Taxes.
(1) Both parties shall pay taxes in accordance with the
provisions of the laws of the United States, the PRC and other countries as
applicable. Any liability arising on account of non-compliance of tax
withholding by any party shall be the sole responsible of that party.
6.2 Records. Each party shall maintain and keep at its legal address
all books of account and records as required by law or necessary, useful or
appropriate for carrying on the business affairs of this Operating Agreement.
Each party shall have the right to inspect the party's books of account and
records at any point in time upon advance written request to the President of
the Company.
ARTICLE 7
TRANSFERS
7.1 Transfers. This agreement, in whole or in part, is
non-transferable nor assignable without the advance written permission of the
other party.
ARTICLE 8
EVENT OF DEFAULT
8.1 Breach. If any party fails to perform its duties specified in this
Agreement or materially breaches the provisions of the Agreement, directly or
indirectly, shall be deemed an "Event Default" by the party who breaches the
Agreement. The non-breaching party is entitled to reclaim from the breaching
party monies due prior to the default, and shall have the right to terminate the
Agreement. A written notice of such breach will be presented to the breaching
party within 30 days of discovery of such breach. The breaching party will then
have 30 days to "cure" the breach. Failure to "cure" the breach within this time
period will result in the automatic termination of the Operating Agreement.
8.2 Force Majeure. Should any Party be prevented from performing the
Agreement by force majeure, such as earthquake, typhoon, flood, fire, war or
other unforeseen events, and their occurrence and consequences are unpreventable
and unavoidable, the prevented party shall notify the other party by facsimile
without any delay, and within fifteen (15) days thereafter provide detailed
information of the events and explaining the reason of its inability to perform.
Both parties shall, through consultations, decide whether to terminate the
Operating Agreement or to exempt part of the obligations for implementation of
the Agreement or wither to delay the performance of this Agreement according to
the effects of the events on the performance of this Agreement.
ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated before its
expiration upon the occurrence of any of the following events:
(1) upon the request of a party if another party has caused a
material Event of Default as set forth above, and such Event of Default shall
continue for a period of thirty (30) days from the receipt of a written notice
of the event of default from the first party; provided, however that if the
breaching party has initiated actions within such thirty (30) days which would
reasonably be expected to result in the cure of the Event of Default, such
breaching party shall be granted an additional thirty (30) days to fully cure
such Default before a non-breaching party may terminate this Operating Agreement
with respect to such breaching party;
(2) upon the request of a party, and upon agreement by the
other party, to wind-up or to liquidate the Operating Agreement;
(3) upon the request of a party, if a receiver or
receiver-manager is appointed in respect to the whole or a substantial part of
the affairs or assets of another party or if another party is adjudged bankrupt
or insolvent, or files a proposal in bankruptcy, then this Operating Agreement
shall terminate with respect to such party;
(4) upon the request of any party, if the party suffers
material losses during any Fiscal Year due to an event of force majeure as
defined above;
(5) upon the request of any party, if that party becomes
bankrupt or insolvent; or
(6) if the parties unanimously agree that the termination of
this Agreement is in the best interests of both parties.
ARTICLE 10
CONFIDENTIALITY
10.1 Confidential Information.
(1) During the term of this Agreement and for a period of two
(2) years thereafter, each party shall hold in confidence, not disclose and not
use for the benefit of any party, except the disclosing Party, any and all
confidential information obtained in connection with the Field of Business
contemplated herein (the "Confidential Information"), without the prior written
consent of the other Party, however both parties shall not be prevented from
disclosing information which:
(a) at, prior or subsequent to the term of such
disclosure is independently known to the receiving party without
obligation of secrecy or non-use to a third Party;
(b) at, prior or subsequent to the time of
disclosure, becomes part of the public knowledge through no breach
hereof by the receiving Party;
(c) subsequent to the time of such disclosure is the
subject of another agreement between the Parties hereto which
explicitly permits use or disclosure; or
(d) is required by law or judicial process to be
disclosed.
Specific information received by any party hereunder shall not be deemed to fall
within any of the foregoing exceptions merely because it is embraced by general
information within any such exceptions. In addition, any combination of features
received as Confidential Information by any Party, hereunder shall not be deemed
to fall within any of the foregoing exceptions merely because individual
features are separately within any such exception, but only if the combination
itself, and its principles of operation, are within such exception.
(2) In the event that any Party shall be legally compelled or
required by a court of competent jurisdiction to disclose all or any part of the
Confidential Information of the other (or its Affiliates), it shall provide
prompt notice to the other so that such other Party(s) (or Affiliates) may
determine whether or not to seek a protective order or any other appropriate
remedy. If a protective order or other appropriate remedy is not obtained before
such disclosure
is required, the Party required to make disclosure will disclose only those
portions of the Confidential Information in question which it is advised by
written opinion of counsel) which opinion shall be addressed to such Party and
to the other Party(s)), it is legally required to disclose and will exercise its
best efforts to obtain reliable assurances that confidential treatment will be
accorded such Confidential Information.
(3) Without limiting the generality of the foregoing, each
Party shall limit disclosure of the Confidential Information to its employees
who need to receive the confidential information in order to further the
activities contemplated in this Agreement. Each Party shall take sufficient
precautions to safeguard the Confidential Information, including obtaining
appropriate commitments and enforceable confidentiality agreements. Each Party
understands and agrees that the wrongful disclosure of Confidential Information
will result in serious and irreparable damage to the other Party(s), that the
remedy at law for any breach of this covenant may be inadequate, and that the
party seeking redress hereunder shall be entitled to injunctive relief, without
prejudice to any other rights and remedies to which such party may be entitled.
(4) It is acknowledged that confidential information may be
disclosed not only in writing or other tangible form, but also through
discussions between each Party's respective representatives, demonstrations,
observations and other intangible methods.
(5) The above notwithstanding, each Party shall have the
right, with the exercise of discretion, and insofar as practical under written
confidentiality agreements having provisions no less stringent than those
contained herein, to make disclosures of such portions of confidential
information to third party consultants, attorneys, contractors, advisors and
Affiliates where in the recipient's reasonable judgment such disclosure is
essential to the Field of Business of the Company pursuant to this Agreement.
(6) Except as otherwise set forth in this Agreement, upon
termination of this Agreement and at the written request of the disclosing
Party, the receiving Party(s) shall return all the confidential information of
the disclosing Party (including all copies thereof) or destroy such confidential
information at the option of the disclosing Party.
ARTICLE 11
DISPUTE RESOLUTION
11.1 Dispute Resolution. Any dispute related to this Agreement or
related documents will be governed by the laws in the State of Florida.
ARTICLE 12
MISCELLANEOUS
12.1 Notices. Any notice, payment, demand, or communication required or
permitted to be given by any provision of this Agreement shall be in writing and
sent by overnight courier, charges prepaid, or by facsimile, if such facsimile
is electronically confirmed as received, addressed as set forth below:
(i) If to NeoMedia: NeoMedia Technologies, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx #000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx 0000, Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) If to Jinche: Beijing Sino-US Jinche Yingang
27th Floor, Tower A, Cyber Tower,
No.2 South Ave Xxxxx Xxxx Cun, Beijing
Attn: Pang Guisan
Facsimile: 011-86-10-516-27706
12.2 Binding Effect. Except as otherwise provided in this Agreement,
every term and provision of this Agreement shall be binding upon and inure to
the benefit of the Parties and their respective heirs, legatees, legal
representatives, successors, permitted transferees, and assigns. A Party shall
not assign or transfer any of its rights or obligations hereunder except with
the advance written permission of the other Party.
12.3 Construction. Every term and provision of this Agreement shall be
construed simply according to its fair meaning and not strictly for or against
any Party. The terms of this Agreement are intended to embody the economic
relationship among the Parties and shall not be subject to modification by, or
be conformed with, any actions by any tax authority or other governmental
authority except as this Agreement may explicitly relate to such matters.
12.4 Headings. Section and other headings contained in this Agreement
are for reference purposes only and are not intended to describe, interpret,
define, or limit the scope, extent, or intent of this Agreement or any provision
hereof.
12.5 Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity or
legality of the remainder of this Agreement.
12.6 Incorporation by Reference. Every recital, exhibit, schedule and
other appendix attached to this Agreement and referred to herein is hereby
incorporated into this Agreement.
12.7 Further Action. Each Party agrees to perform all further acts and
execute, acknowledge, and deliver any documents which may be reasonably
necessary, appropriate, or desirable to carry out the provisions of this
Agreement.
12.8 Variation of Pronouns. All pronouns and any variations thereof
shall be deemed to refer to masculine, feminine, or neuter, singular or plural,
as the identity of the person or persons may require.
12.9 Governing Law. The laws of the State of Florida shall govern the
validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the Parties.
12.10 Counterpart Execution. This Agreement may be executed in any
number of counterparts with the same effect as if all of the Parties had signed
the same document. All counterparts shall be construed together and shall
constitute one agreement.
12.11 Statutory Clearances. This Agreement is subject to the applicable
statutory clearances in the concerned countries.
[Signature Page to Follow]
IN WITNESS WHEREOF, the parties have entered into this Joint Venture
Agreement as of the day first set forth above.
NEOMEDIA TECHNOLOGIES, INC.
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Chief Executive Officer
Xxxxx Xxxx Xxx Xx Technology Development Limited Company
By: /s/ Pang Guisan
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Name: Pang Guisan
Title: Chairman
