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Exhibit 10.1
Form 10-KSB
Virtualmoney, Inc.
File No. 000-31009
Exclusive License Agreement for the
Real Monetary SoftwareTM
May 9, 2001
CONFIDENTIAL
RECITALS:
WHEREAS Real Monetary Systems, Inc., a Minnesota corporation
formerly known as RMC2, Inc. d/b/a the Real Mortgage Corporation
(the "Licensor"), has engaged in an extensive research and
development effort concerning the introduction of Real
MortgagesTM that are self-adjusting for inflation and deflation;
WHEREAS the introduction of real financial instruments, such
as the Real MortgagesTM, inherently initiates the creation of a
real monetary system, which must then be integrated with our
current nominal monetary system;
WHEREAS the research and development effort for the Real
MortgagesTM has led to the creation of certain technology (the
"Trade Secrets"), which will resolve many of the problems
associated with the introduction of real financial instruments
into the current nominal monetary system by means of integrating
the two monetary systems;
WHEREAS the Trade Secrets include, but are not limited to, a
number of proprietary processes that the Licensor collectively
refers to as the Real MonetizationTM process;
WHEREAS the Licensor has legal and valid assignment for an
1,891-page patent application, which was filed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with the United States Office of Patents and Trade Marks on
October 6, 1999 for the Real MonetizationTM process (the "Pending
Patent") entitled: SOFTWARE SYSTEM FOR REAL MONETARY INSTRUMENTS;
WHEREAS the original patent application included a spread
sheet model, representing the first generation of Real Monetary
SoftwareTM (the "Software"); which is designed to carry out the
Real MonetizationTM process(es);
WHEREAS the Licensor has granted Virtualmoney, Inc. (or
"VMC"), and Government Indexed-Bond Systems, Inc. ("GIBS") the
right to use the first generation of the Software (such that they
may develop a second generation of the Software pursuant to the
terms of their respective licenses, until such time as a third
generation of the Software may be created and properly tested for
actual use;
WHEREAS the Licensor desires to license certain specified
rights, but to retain the remaining rights, pertaining to the
Trade Secrets as represented by the Pending Patent;
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WHEREAS Real Monetary Software, Inc. (the "Licensee"), a
Minnesota corporation, is interested in obtaining the exclusive
rights to the use of the Trade Secrets, and subsequently for the
Patent Rights, if granted; for the purposes of developing the
third and subsequent generations of the Software, that are
scalable and can be operated without the benefit of a third party
spread sheet program;
WHEREAS the Parties to this agreement (the "Agreement")
hereby recognize and differentiate between:
(A) the granting of any one or more exclusive right(s) by
the Licensor to sponsor a specified market or service
for the issuance and securitization of any form of
fixed income instrument that is defined in real terms,
which may include but need not be limited to
(i) bonds, mortgages, auto loans, credit card
receivables, personal loans and/or any other form
of indebtedness,
(ii) any asset-backed real monetary equivalent or
currency; or to
(iii) any software development application not
specified herein as being the subject matter of
this Exclusive Licensing Agreement ;
any of which the Licensor may grant on an exclusive or
limited basis with respect to anyone
it may wish to specify, which may include but not be
limited to a specific nation, region or
defined by a any existing or newly created currency;
all of the foregoing of which the Licensor is not
granting to the Licensee by means of this Agreement;
versus
(B) the granting of the exclusive right to develop and
maintain the third and subsequent generations of the
Software, which will be designed to carry out the Real
MonetizationTM process for any and/or all real
financial instruments; that are defined directly in
terms of the nominal United States Dollar (1.00 USD);
all of which the Licensee may then:
(i) sub-license to third parties and/or
(ii) may license third party software developers for
applications that may plug into the Software,
all of the foregoing in this Paragraph (B) to be
subject to the terms and conditions of this Exclusive
License Agreement, as amended, which the Licensor is
proposing to grant to the Licensee by means of this
Agreement.
Now, therefore, the undersigned Parties hereby agree to the
following terms and conditions:
1. The License:
The Licensor hereby grants to the Licensee, and the Licensee
hereby accepts, the exclusive worldwide license (the "License"),
without limitations unless specified herein to use the Licensed
Product as
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defined herein. It being agreed and understood that
the term of this License shall be perpetual, or until such time
as this Agreement has been properly terminated for any reason
under the terms and conditions stated herein.
2. The Licensed Product:
It is agreed and understood that the product being licensed
(the "Licensed Product") by this Agreement, refers to the use of
the Trade Secrets, and subsequently to the Patent Rights -- if
and when granted, for the sole purpose of developing and
maintaining the third and subsequent generations of the Software,
which will be designed to carry out the Real MonetizationTM
process for any and all financial instruments that are defined
directly in terms of the nominal United States Dollar (1.00 USD):
all of which the Licensee may then:
(i) sub-license the Software to third parties and/or
(ii) may license third party software developers for
applications that may plug into the Software,
all of the foregoing to be subject to the terms and conditions of
this Exclusive License Agreement, as amended. It being agreed
and understood that the Licensee, as sponsor, shall then have the
right to sub-license any and all participants; who may desire to
use the third and subsequent generations of the Software being
created. Except that, each and every such participant, as well
as the Licensee, shall also be required to obtain a license from
the properly licensed sponsor ("Sponsor") of the liquid market
for real financial instruments that is to be accessed via the
Software. Nor will the Sponsor offering a license, or sub-
license, be allowed by the Licensor to supply the Software to
anyone, who is not also licensed by the Licensee for using said
Software. It being further agreed and understood that the
granting of such licenses to properly qualified parties shall not
be unreasonably denied.
3. The Pending Patent:
The Licensor makes no warranty as to the validity of any
Patent rights or claims, but does warrant that the patent
application as identified herein is on file in the United States
Patent and Trade ▇▇▇▇ Office and has not been abandoned. The
Parties to this Agreement are fully aware and cognizant that no
patent exists at this time, nor is there any certainty that any
such patent will ever be granted. Furthermore, it is understood
that the patent filing involves very complex matters; such that
the nature of any patent finally granted, may change materially
from the patent claims that are being made. Nonetheless, the
Licensor represents and warrants that it will use its best
efforts to complete the Pending Patent application. In the event
a patent is ultimately granted, the Licensor shall promptly
notify the Licensee.
4. Disclosing the Real MonetizationTM Process(es):
It is agreed and understood, that the Licensor has been
advised by its patent attorneys not to disclose the patent claims
to anyone; until such time as the patent has been granted and
published by the United States Patent and Trade ▇▇▇▇ Office. As
such, the Parties to this Agreement hereby recognize and agree;
that the Licensor is only required by the terms of this Agreement
to reveal those parts of the patent filing, and/or correspondence
with the U.S. Patent and Trade ▇▇▇▇ Office, that do not include
or otherwise discuss the specified patent claims. Nonetheless,
the Licensor hereby represents and warrants: that this limited
disclosure would still provide the Licensee with a full and
complete description of the Real MonetizationTM process(es);
which would be sufficient to complete the development of the
Software required for the
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initiation of a more liquid market for
the specified real financial instruments. (See "The Real Monetary
Software").
5. Confidentiality, Trade Secrets and the Pending Patent:
It is agreed and understood that any and all details of the
Real MonetizationTM process shall be considered to be Trade
Secrets, which the Licensee hereby agrees to be held in strict
confidentiality. Except that, the Licensee is permitted to
disclose the Trade Secrets to properly qualified Sub-Licensees,
pursuant to the rules and procedures established by the Licensor.
In the event that a patent is granted, then any portion of the
trade Secrets that are included in the published account of the
patent by the U.S. patent and Trade ▇▇▇▇ Office will then be
considered suitable for public disclosure. Beyond that, the
final determination of the U.S. Patent and Trade ▇▇▇▇ Office to
grant, or not to grant, the Pending Patent; shall have no bearing
or effect on this Agreement. Except that, by mutual consent
upon the granting of a patent, the Parties may then elect to
perfect a patent license; provided that such license does not
alter or amend the terms and conditions of this Agreement, other
than to recognize the licensing of the Patent as opposed to the
licensing of the Trade Secrets, without the expressed written
consent of both Parties. In such an event, each of the Parties
shall be responsible for any and all expenses that they
individually incur in such an effort.
6. The Real Monetary Software:
This Agreement hereby grants to the Licensee the exclusive
right to use the Real MonetizationTM process for the purpose of
developing the third and subsequent generations of the Real
Monetary SoftwareTM, which is designed to carry out the Real
MonetizationTM process.
Furthermore, the Licensee is hereby informed that the first
generation of the Software is a spread sheet model that was
designed for the creation of a liquid market for Real Mortgage-
Backed SecuritiesTM. Two parties, including Virtualmoney, Inc.
("VMC") and Government Indexed-Bond Systems, Inc. ("GIBS") have
been authorized to use the first generation, and to generate a
second generation of the Software for the purposes set forth in
their exclusive licenses with the Licensor, until such time as
the third generation of the Software has been prepared for use by
the Licensee hereunder. It being Agreed and understood that the
granting of this license is subject to the Licensee hereunder
licensing said third and subsequent generations of the software
only to those persons or entities (or "Third Parties") that have
been licensed (or sub-licensed) by Real Monetary Systems, Inc.
with respect to the issuance of a particular type of real
financial instrument that is indexed to the U.S. Dollar. It
being further understood that the Licensee hereunder may not
unreasonably deny a license to said Third Parties for the third
and subsequent generations, provided only that they are willing
to pay the fair market rate for the software. Nor does this
Agreement limit (a) the right of the Licensee to distribute the
first generation of the Software to other Third Party licensees,
or (b) the right of said Third Parties to generate a second
generation of the Software on spread sheets; until such time as
the Licensee has completed the third generation of the Software
for distribution. Nonetheless, the Licensor will retain the
rights and title to any and all modifications by said Third
Parties to the first generation of the software, which is hereby
made a part of this Exclusive License extended to the Licensee.
Upon the written request of the Licensee, the Licensor shall
furnish the Licensee on a timely basis with a complete
description of any and all such modifications and/or improvements
made by VMC and/or GIBS, which shall include a complete working
copy of the Software so altered or amended.
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7. Assignment of the Trade ▇▇▇▇:
As additional consideration for the Licensee entering into
this Agreement, the Licensor hereby agrees to assign its interest
in the trade ▇▇▇▇ known as the Millennium DollarTM to the
Licensee; except that, the Licensor will first complete the trade
▇▇▇▇ application, or otherwise assist the Licensee in its
completion; as may be advised by the Licensor's intellectual
property rights attorney. The Licensor hereby agrees to sign any
and all documents, which may be required and necessary to
complete this transfer. Nonetheless, it is agreed and understood
that in the event that this Agreement is terminated for any
reason, then the Millennium DollarTM trade ▇▇▇▇ will revert back
to the Licensor; unless it has been sold, assigned or otherwise
transferred to a third party. However, in no event will the
Licensee assign, sell or otherwise transfer or encumber the Real
Monetary SoftwareTM trade ▇▇▇▇ without the expressed written
consent of the Board of Directors of the Licensor.
The Licensee agrees to provide the Licensor with samples of
all uses of the Licensed Trade ▇▇▇▇ (Real Monetary SoftwareTM)
for approval by the Licensor, which should not unreasonably be
withheld; to assure the Licensee's use of the licensed ▇▇▇▇ is of
high quality and inures to the good will of the Licensor in the
licensed trade ▇▇▇▇.
8. The Consideration:
In consideration, for the Licensor granting the exclusive
license and rights as set forth herein, the Licensee hereby
agrees to:
(a) issue to the Licensor one million (1,000,000) shares of
unregistered common stock in Real Monetary Software,
Inc., which shall be issued upon the consummation of
this Agreement; and
(b) to pay a royalty (Royalty) of five percent (5.0%) per
annum on the gross income of the Licensee.
It being agreed and understood that the Royalty payments
will be made monthly. The Royalty payments will be made by the
Licensee in cash, corporate check or certified funds for the full
amount of the Royalty fee.
9. Audits:
It is agreed and understood that the Licensee shall engage
at its own expense a qualified independent Certified Public
Accounting (CPA) firm to perform an annual audit of its
operations, the results of which shall be forwarded to the
Licensor on a timely basis. Nonetheless, the Licensor shall have
the additional right to select an alternative CPA firm for the
sole purpose of examining the books and records of the Licensee
to verify the accuracy of the Royalty payments made hereunder.
It being agreed and understood that the results of any such
additional audit(s) are to be considered proprietary information,
which can only be shared with the management and Boards of
Directors of the respective parties. The Licensor must serve a
formal notice in writing to the Licensee of its intent to perform
such an audit. This notice must be made in writing, and
delivered via registered mail of the United States Post Office to
the Licensee at its primary office; not sooner than seven (7)
calendar days prior to the commencement of the audit. Such
examination shall be made during regular business hours, and
shall be at the sole expense of the Licensor; and no more than
one such additional audit shall be made within any twelve month
period. Nor shall any new audit be commenced, when an existing
audit is in progress.
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10. Sub-Licensing:
In no event shall the Licensee assign the License created
herein to a third party without the expressed written permission
and approval of the Board of Directors then representing the
Licensor. Nonetheless, the Licensee shall have the right to sub-
license others under this Agreement, subject to the expressed
written approval of each and every proposed sub-licensee.
Nonetheless, the Licensor will work with the Licensee to draft a
mutually acceptable legal contract for the purpose of sub-
licensing. Provided only that the Licensee properly uses the
agreed upon sub-licensing agreement, the Licensor shall not
unreasonable deny the approval of any sub-licensee. At the
option of either Party, a new or amended sub-licensing agreement
may be proposed for consideration by the other Party; but any and
all such alternations must be mutually agreed upon. In no event
will any of the terms and conditions of any such sub-licensing
agreement be stated or interpreted in such a way that would
violate the terms and conditions of this Exclusive License
Agreement.
Upon the granting of any one or more sub-licenses, the
Licensee agrees to accept the responsibility for the collection
of the Royalty, as defined herein, from the sub-licensees; which
shall then be paid over in a timely fashion to the Licensor. In
the event that the sub-licensee refuses, or is otherwise unable
to pay the Royalty; then the Licensee shall be liable to make any
and all such Royalty payments to the Licensor on a timely basis.
In no event shall the Licensor be liable to the sub-licensees for
any misrepresentation or for any lack of performance by the
Licensee to its sub-licensees. Finally, the Licensee will agree
to terminate any and all sub-licensees, which violate the terms,
conditions and intent of this Agreement. Any failure of the
Licensee in this regard shall constitute a default by the
Licensee under the terms and conditions of this Agreement.
11. Arbitration:
Except as to issues relating to validity, construction or
effect of the Trade Secrets (or subsequently the Patent) being
licensed hereunder, all claims or disputes between the Parties
arising in connection with this agreement, which have not been
resolved by good faith negotiations between the Parties, shall be
resolved by arbitration in the City of Plymouth and State of
Minnesota under the rules of the American Arbitration Association
then in effect. The arbitrators shall have no power to modify any
of the terms of this Agreement. Any award rendered in such
arbitration my be enforced by either Party in either the courts
of Minnesota or in the United Sates District Court of the same
state, to whose jurisdiction each Party irrevocably agrees to
submit.
12. Infringement:
If during the term of this Agreement, any license, sub-
license or patent, if any, hereunder shall appear to be infringed
by a third party, then the Party hereto first becoming aware of
such infringement shall promptly notify the other. The Licensee
shall have the right, but not the obligation, to notify the
infringer and to initiate and control litigation or legal
proceedings to ▇▇▇▇▇ the infringement, without the prior consent
of the Licensor. The licensor may elect to join in any such legal
proceedings against alleged infringer, and if not electing,
agrees to be joined as a involuntary party plaintiff. If the
Licensee has not initiated such legal proceedings within one (1)
year after becoming aware of the infringement, then the Licensor
may initiate legal proceedings on its own behalf, and the
Licensee may elect to join in those proceedings.
If either Party elects to join in legal proceedings
commenced by the other Party, then the control of such
proceedings shall remain in the hands of the initiating Party and
all fees and costs incurred by the initiating Party, along with
all damage and awards recovered thereby, shall be shared equally
between the
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Parties. If one Party elects not to join in legal
proceedings initiated by the other Party, then such other Party
shall be responsible for all fees and costs incurred therein, and
shall receive all damages and awards recovered thereby. In the
event that a court decision is rendered that is not acceptable to
either one of the Parties; then said Party may elect to appeal
the decision with or without the participation of the other
Party, who may elect to defer from such an appeal.
13. Warranty:
The Licensor warrants that it has the sole right to enter
into this Agreement, that it is the sole owner of the Licensed
Product, and that it has not entered into and will not enter into
any other agreement in conflict with this Agreement. Except
that, the Licensor reserves the right to offer licenses to third
parties for the sponsorship of liquid markets for real financial
instruments, provided that such license will require that the
holder obtain a Software license from the Licensee for the use of
third and subsequent generations of the Software.
14. Addresses:
Any notice given hereunder shall be made in writing, and
shall be effective on the date mailed by certified mail, return
receipt requested to the other Party at its respective address:
If to:
Real Monetary Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to:
Real Monetary Software, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
15. Other Matters:
(a) It is agreed and understood that the Parties to this
Agreement shall maintain the strict confidentiality of
the terms and conditions of this Agreement, as well as
any and all business and scientific/technical
discussions by and between the parties relating to the
business of the real monetary system.
(b) This Agreement constitutes the entire agreement between
the parties and supercedes all prior negotiations and
agreements between the Parties concerning its subject
matter. Except that, the Parties hereto may amend,
alter or terminate this Agreement in writing, provided
that such action has been properly approved by the
Board of Directors of each respective Party.
(c) Each Party shall comply with all applicable federal,
state and local laws and regulations in connection with
its activities pursuant to this Agreement.
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(d) This Agreement shall be construed and enforced in
accordance with the laws of the United States of
America, and the State of Minnesota shall be the
jurisdiction of any legal proceedings arising out of or
related to this Agreement.
(e) Failure of any party to enforce a right under this
Agreement shall not act as a waiver of that right or
the ability to assert that right relative to the
particular situation involved.
(f) If any provision of this Agreement shall be found by a
court to be void, invalid or unenforceable, the same
shall be reformed to comply with applicable law or
stricken if not so conformable, so as not to effect the
validity or enforceability of the remainder of this
Agreement.
(g) Except as otherwise expressly provided in this
Agreement, this Agreement shall be binding upon, inures
to the benefit of, and is enforceable by the parties
and their heirs, respective legal representatives,
successors and assigns.
(h) The obligations of the Licensor and Licensee under this
Agreement shall be several and not joint.
(i) This Agreement will automatically terminate if the
Licensee voluntarily files for bankruptcy, or is
involuntary forced into bankruptcy. If the licensee
fails to make the Royalty payments as agreed upon
herein, or is otherwise in default of this Agreement;
then the Licensor shall have the right to terminate
this Agreement. In order to initiate the termination,
the Licensor must serve the Licensee with a written
notice to be delivered by registered mail via the U.S.
Post Office. Said notice must properly define the
nature of the default, as well as the expense the
Licensor has incurred in serving the default notice;
whereupon the Licensee shall then have ninety (90) days
in which to cure. Upon properly correcting the default
within the ninety (90) day period, and reimbursing the
Licensor for its reasonable expenses in preparing and
serving the default notice; the notice of default
served upon the Licensee shall be deemed to have been
terminated and to have no further or lasting effect
upon the Parties.
16. Other Definitions:
"Application" means the application for United States patent
with respect to the Invention that has been filed by
Licensor.
"Improvements" means any and all improvements, corrections
and modifications to and variations and enhancements of
the Invention.
"nominal" refers financial terms, instruments or monetary
systems that are not self-adjusting
for inflation and deflation.
"Pending Patent" refers to any prospective patent which may,
or may not, be granted pursuant to the patent
application as filed, and/or amended, by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ with the U.S. Patent and Trade ▇▇▇▇ Office, on
October 6, 1999 entitled: SOFTWARE SYSTEM FOR REAL
MONETARY INSTRUMENTS. (The rights, to any patent
granted pursuant to said patent application, have been
assigned by ▇▇▇▇▇ to Real Monetary Systems, Inc.)
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"Patent Rights" means the rights that may be conferred as
the result of the subsequent granting of the Pending
Patent as defined herein, including all related: (i)
applications for patents filed in the future; (ii)
continuations: (iii) continuations-in-part; (iv)
divisions; (v) reissue patents; (vi) and all patents
issuing therefrom; except that the use of said Patent
Rights by the Licensee shall be limited to the
exclusive sponsorship of the Market as defined herein.
"person" means a natural person, corporation, business
trust, estate, trust, partnership, association, joint
venture, government, governmental subdivision, or
agency, or any other legal or commercial entity or any
other for-profit or not-for-profit legal entity.
"real" refers to financial terms, fixed-income instruments
or monetary systems that are defined in real terms,
thereby making them self-adjusting for inflation and
deflation.
"real financial instruments" refers to fixed income
instruments that are defined in real (or constant)
dollars and real rates of interest. Examples of real
financial instruments would include the Real
MortgagesTM originally proposed by the Licensor and
Treasury Inflation Protection Securities (TIPS) as
issued by the United States Treasury.
"Real MortgagesTM" refers to mortgages that are defined and
amortized in real dollars and real rates of interest to
compute a real dollar payment amount, which may then be
converted to nominal dollars by using an inflationary
adjustment factor.
"sub-license" refers to the right of the Licensee to sub-
license the participation of third parties in the
Market as defined herein; provided that the Sub-
License, (i) does not diminish the role of the Licensee
as the sponsor of the Market, and (ii) does not violate
the terms, conditions and intent of the License being
granted by means of this Agreement.
"Trade Secret(s)" means information, including but not
limited to, technical or non-technical data, a formula,
pattern, compilation, program device, system, method,
technique or process and/or financial data that is
sufficiently secret to derive economic value, actual or
potential, from not being generally known and not being
readily ascertainable by proper means, to other persons
who can obtain economic value from its disclosure or
use, and is the subject of efforts that are reasonable
under the circumstances to maintain it's secrecy.
The undersigned Parties hereby agree to the terms and
conditions of this Exclusive License Agreement.
Date: 5-9-2001 Date: 5-9-2001
Real Monetary Systems, Inc. Real Monetary Software, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CEO By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CFO
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