0000 Xxxxxxxx Xxx, Xxxxxxxx, XX 00000
000-000-0000 - 000-000-0000 (fax)
xxx.XxxxxxxxXxxxxxxxxxx.xxx
May 18, 2001
To: Xxx Xxxxxx, CEO, World Internetworks, Inc.
From: Xxxxx Xxxxx, President, Mountain Engineering II, Inc.
Starlite licensing option agreement
1. Option and License
a. License Option Right. Upon delivery of the funding described in
Section 4 below, MEII will grant GTData Corporation and/or its parent
corporation World Internetworks, Inc. (collectively "GTData") an
exclusive, non-restrictive, perpetual, sublicensable worldwide license
to manufacture, brand and sell the Starlite tape drive, an IBM 3590
compatible tape drive; this license extends to a 3590E compatible tape
drive, and further includes all tape drives that use the IBM 3590
cartridge as specified in ANSI NCITS 315-xxx (collectively, the
"Starlite"). The license will include a license to use any intellectual
property or patents of MEII or third parties that are utilized in the
Starlite drives. MEII will authorize GTData to purchase the MEII
proprietary ASICs (3) used in Starlite from the supplier.
Upon the delivery of the initial funding described in section 4 below,
the parties will enter into a definitive licensing agreement containing
mutually acceptable terms and conditions which are consistent with this
agreement.
b. License Option Grant. GTData's option to acquire the Starlite
license from MEII in Section 1.a. above is granted in consideration of
a warrant to acquire 300,000 shares of Common Stock of World
Internetworks, Inc. (the "Warrrant"). GTData's right to acquire the
Starlite license referenced in 1.a above will continue until October
31, 2001. In order to exercise this option, GTData is required to
deliver the funding describe in section 4 below.
2. Transition to Manufacturing
MEII will complete the development and assist GTData - or any
organization authorized by GTData - with the transition of the product
to manufacturing. Attached is a 7 month development schedule. MEII
expects that at least one manufacturer's representative will work with
MEII at the location of MEII starting no later than 2 months after the
start of the project.
1
3. Engineering and pre-production cost
GTData's $600,000 development payment as described in 4 below is a
non-recoverable expense (NRE). This includes the cost to procure the
components and build 15 prototypes to be used for testing, shows and
demonstrations, etc. Not included are the costs to build additional
units and manufacturing costs, such as tooling charges and agency
approval ("Tooling Costs"). Any additional but required development
costs for the initial 3590 Starlite beyond the initial $600,00 and
Tooling Costs will act as a credit against future royalties in section
6 below.
4. Funding
In order to secure the license for all Starlite drives, GTData
will fund MEII for the initial 3590 development and manufacturing
effort in accordance with the following:
a. An initial payment of $300,000 is due on or before October 31,
2001. MEII will start the development under this agreement once
this payment is received.
b. GTDATA will make two additional payments of $150,000 each no
later than 60 and 120 days after the delivery of the actual
payment set forth in 4.a. above.
c. In the event that GTData makes the initial payment in section
4.a. above but does not subsequently make the payments described
in 4.b., GTData's license to the Starlite drives will continue on
a non-exclusive basis. Both parties acknowledge that in such
event, further funding will be necessary to complete development.
The parties may terminate this agreement at any time by mutual
written consent.
Additional development costs for the IBM 3590E compatible drive
are estimated to approximate $300,000. MEII will develop this
drive at GTData's election and upon delivery of development
funding for same. The 3590E funding will occur as an NRE. Both
companies will negotiate in good faith about the funding and
development of an IBM 3590E compatible tape drive, once more
information about this development is known.
5. Start of the agreement:
This agreement shall be effective on the date that this agreement is
executed and the Warrant is delivered.
2
6. Royalty
GTData will pay a royalty to MEII for all sales of the Starlite drives
which are sold by GTData or its agents according to the following.
Units sold Royalty
1-999 $950/each
1000-1999 $750/each
2000-9999 $500/each
10000 and above $250/each
7. Ownership; Non-solicitation
a. Ownership. Both parties acknowledge that MEII owns all intellectual
property necessary to develop, deliver and sell the Starlite under this
Agreement and the contemplated license, except for certain intellectual
property relating to the 3590 technology owned by IBM. MEII has a
licensing agreement with IBM in place for the IBM 3590 intellectual
property, although IBM may require an additional license for
manufacturing, if the manufacturer is not MEII. The cost of this
license is additional to the NRE payment in section 4. The licensing
agreement between IBM and MEII is covered by a NDA.
b. Non-solicitation. From the date of this Agreement and until
terminated, MEII will not solicit or engage in any negotiation, or
enter into any relationship that could impair MEII's ability to perform
this agreement and grant GTDATA an exclusive license to the Starlite.
c. Authorization; Noncontravention. MEII represents and warrants to
GTData that MEII has full power and authority to execute, deliver, and
perform this Agreement, and in executing and performing this Agreement
MEII will not violate the terms of any other agreement with any third
party. MEII further represents and warrants that subject to 7.a above,
it owns all right, title and interest in and to the Starlite.
8. Sale of Starlite
With this license GTData may sell Starlite without any restrictions.
GTData agrees to sell Starlite to MPTapes at conditions not less
favorable than GTData grants others, independent of the quantities
purchased by MPTapes.
3
This Agreement may be signed in counterparts, each of which shall
be deemed an original and all of which shall constitute one
instrument.
World Internetworks, Inc. Mountain Engineering II, Inc.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxx Xxxxx
--------------------- -------------------
Xxxxxx Xxxxxx Xxxxx Xxxxx
Its: CEO Its: President
4
