EXHIBIT 2.6
RIGHT TO USE AGREEMENT
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THIS RIGHT TO USE AGREEMENT ("Agreement"), effective as of the 1st day of
November, 1999 (the "Effective Date"), is entered into by and among
OrbitNetwork, Inc. ("Network") and Divot Golf Corporation ("Divot").
Recitals
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WHEREAS, Network is substantially engaged in the operation and maintenance
of a networked travel service via the Internet under the name TravelFile, and in
connection therewith, is a party to certain contracts and agreements with its
affiliates, sponsors, suppliers, customers and related third parties, such
contracts and agreements being more particularly described in Exhibit A
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(together with all rights, privileges, duties and obligations thereunder, the
"Contracts"); and
WHEREAS, each of the parties desires that Network license to Divot certain
furniture, equipment and related assets more particularly described in Exhibit B
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(the "Fixed Assets"); and
WHEREAS, Divot desires to license the Contracts from Network, including the
right to receive all revenues attributable therefrom, and, in connection
therewith, receive an exclusive option to purchase the Contracts and the Fixed
Assets from Network; and
WHEREAS, Network desires to license the Contracts to Divot, including the
right to receive all revenues attributable therefrom, and to grant Divot an
exclusive option to purchase the Contracts and the Fixed Assets, upon the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Network and Divot hereby agree as
follows:
ARTICLE I
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Term of Agreement
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The term of this Agreement shall commence on the Effective Date and shall
continue in full force and effect for six months thereafter (the "Term"),
subject to earlier termination as hereinafter provided.
ARTICLE II
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Grant of License
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2.1 License. Subject to the terms and conditions of this Agreement,
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Network hereby grants to Divot, as an independent contractor, an exclusive
license to, during the Term of this Agreement, (a) manage, maintain, operate and
perform the Contracts in accordance with Article VII hereof; (b) receive all
revenues attributable from Divot's management, maintenance, performance and
operation of the Contracts in accordance with Article VIII hereof; and (c) use
the Fixed Assets in a commercially reasonable manner (collectively, the
"License").
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2.2 Assumption. Subject to the terms and conditions of this Agreement,
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Divot hereby accepts the License and assumes the management, maintenance,
operation and performance of the Contracts and the Fixed Assets and the right to
receive all revenues attributable therefrom, as an independent contractor. In
connection therewith, Divot shall be liable for any and all obligations or
liabilities associated with such Contracts and the Fixed Assets as set forth in
Exhibit C (the "Assumed Liabilities"). Except for the Assumed Liabilities,
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Divot shall not assume nor become liable for any obligation or liability of
Network, whether known, unknown, absolute, contingent or otherwise (the
"Retained Liabilities").
2.3 Ownership and Title. If and until the Option (as defined in Section
3.1) is exercised, Network shall at all times own any and all
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rights, title and interest in the Contracts and the Fixed Assets, and all
documentation thereto, including any and intangible or intellectual property
rights therein.
2.4. Transfer. The License shall not be transferred, assigned or
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sublicensed by Divot without the prior written consent of Network.
2.5 Third Party Consents. To the extent that Network's rights under any
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of the Contracts may not be licensed without the consent of another person which
has not been obtained, this Agreement shall not constitute an agreement to
license the same if an attempted license would constitute a breach thereof or
be unlawful, and Network, at its expense, shall use reasonable efforts to obtain
any such required consent(s); provided, however, that nothing contained in the
foregoing sentence shall require Network to make any payments or any other
consideration to such other person other than payments due under the Contracts.
If such consent with respect to any Contract shall not be obtained, and the
Contract in question permits Network to subcontract or assign its rights and
obligations thereunder (or does not prohibit Network from subcontracting or
assigning such rights and obligations), then Network shall subcontract or assign
all (but not less than all) of such rights and obligations to Divot. Divot may,
at its option, accept each such subcontract or assignment.
ARTICLE III
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Option to Purchase
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3.1 Grant of Option. Subject to the terms and conditions set forth in
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this Article, Network hereby grants to Divot an exclusive and non-transferable
option to purchase all, but not less than all, of the rights, title and interest
to the Contracts and the Fixed Assets and all benefits and burdens thereunto
appertaining (the "Option"). Upon exercise of the Option, Divot would assume
the Assumed Liabilities and Network would retain the Retained Liabilities.
3.2 Period of Option. The Option granted hereby shall vest and become
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exercisable by Divot upon the Effective Date and, to the extent not previously
exercised, shall continue for six months thereafter until lapsing on 5:00 p.m.,
Eastern Time, on May 1, 2000 (the "Expiration Date") unless this Agreement is
sooner terminated in whole or in part pursuant to Article X, upon which the
Option shall terminate as of the day of notice of such termination by either
party, but in no event later than the Expiration Date, unless the parties
otherwise agree to extend Expiration Date.
3.3 Exercise of Option. The Option may be exercised by Divot at any
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time prior to the Expiration Date or earlier termination of the Option pursuant
to Section 3.2, by the assumption of $4,373,595 of Network convertible debt,
plus accrued and unpaid interest.
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3.4 Nontransferability. The Option shall not be transferred, assigned or
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sublicensed by Divot without the prior written consent of Network.
ARTICLE IV
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Purchase Price and Closing
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4.1 Purchase Price. In consideration of the License and Option granted to
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Divot by Network pursuant to Articles II and III above, Divot agrees to pay
Network a purchase price in the principal amount of Five Hundred Thousand
Dollars ($500,000.00) (the "Purchase Price"). The Purchase Price shall be paid
to Network at the Closing.
4.2 Closing. The closing of the purchase and sale of the License and
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Option (the "Closing") shall occur contemporaneously with the execution of this
Agreement on the Effective Date at the offices of Divot, or at such other place
as may be mutually agreed upon in writing by Divot and Network.
ARTICLE V
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Representations and Warranties of Network
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5.1 Authorization and Enforceability. Network hereby warrants and
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represents that:
(a) It has all requisite corporate power and authority to enter into,
and fully perform pursuant to, this Agreement, and that no approvals or
consents of any persons are necessary in connection with the execution of
this Agreement by Network and the performance of its obligations hereunder;
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
properly authorized by all requisite corporate action on the part of
Network; and
(c) This Agreement has been duly executed and delivered by Network.
5.2 Books and Records. Network warrants that its books, records and
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accounts maintained with respect to the Contracts accurately and fairly reflect,
in reasonable detail, the material transactions related to the Contracts; and
all information provided by Network in this Agreement or any exhibit attached
hereto, or otherwise furnished by Network to Divot is
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complete and accurate in all material respects and does not fail to state any
material fact necessary to make the information contained therein not
misleading.
5.3 Title to Contracts. Network warrants that it is a party and a
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signatory to all of the Contracts and that it has good and valid title to the
Fixed Assets, free and clear of all liens, claims, charges, security interests
and other encumbrances and defects of title of any kind or nature, and all of
Network's rights under any Contract or Fixed Asset to be licensed to Divot
hereunder may be licensed without the consent of another person.
5.4 Compliance with Law; Authorizations. Network warrants that as of
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the Closing Date, it shall not be in violation of any law, ordinance or
governmental or regulatory rule or regulation, whether federal, state, local or
foreign, to which the Contracts or the Fixed Assets are subject ("Regulations"),
except where such failures to comply which, in the aggregate, would not have a
material adverse effect on the Contracts or the Fixed Assets. As of the
Effective Date, Network shall own, hold, possess or lawfully use all franchises,
licenses, permits, easements, rights, applications, filings, registrations and
other authorizations ("Authorizations") which are necessary for the management
and operation of the Contracts and the Fixed Assets free and clear of all liens,
charges, restrictions and encumbrances and in compliance with all Regulations,
except where such failures to comply in the aggregate would not have a material
adverse effect on the management and operation of the Contracts and the Fixed
Assets.
5.5 Intellectual Property Matters. Network warrants that the License of
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the Contracts does not infringe upon or unlawfully or wrongfully use any rights
under patent law, copyright law, moral rights law, trade secret law, trademark
law, unfair competition law or other similar rights (the "Trade Rights"). No
litigation or claims are pending and, to Network's knowledge, (a) no inquiries
or investigations are pending and (b) no litigation, claims, inquiries or
investigations are threatened, which challenge or threaten to challenge
Network's right, title and interest with respect to the Trade Rights.
5.6 The Contracts. Network warrants that to Network's knowledge, each
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of the Contracts is valid and enforceable in accordance with its terms; Network
is, and all other parties thereto are, in material compliance with the
provisions thereof; Network is not, and to Network's knowledge, no other party
thereto is, in default in the performance, observance or fulfillment of any
material obligation, covenant or condition contained therein; and no event has
occurred which with or without the giving of notice or lapse of time, or both,
would constitute a material default under any Contract. No Contract by its
terms requires the consent of any party to its assignment in connection with the
transaction contemplated hereby.
5.7 Litigation and Claims. To the best of Network's knowledge, there is
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no litigation, arbitration, governmental proceeding or investigation pending or
threatened against Network or related to any of the Contracts licensed to Divot
which could reasonably be expected (a) to have a material adverse effect on
Divot's ability to manage, maintain, operate or perform the Contracts, or (b) to
prevent the consummation of the transactions hereunder.
5.8 Governmental Approval. No consent, authorization, order or approval
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of, or filing or registration with, any governmental commission, board or other
regulatory body is required in connection with the execution and delivery by
Network of the transactions contemplated hereunder, except where the failure to
obtain such consents, authorizations or approvals or to make such filings or
registrations would not prevent the consummation of the transactions
contemplated hereunder.
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ARTICLE VI
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Representations and Warranties of Divot
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6.1 Authorization and Enforceability. Divot hereby warrants and
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represents that:
(a) It has all requisite corporate power and authority to enter into,
and fully perform pursuant to, this Agreement;
(b) The execution, delivery and performance of this Agreement and the
consummation of the transaction contemplated hereby have been duly and
properly authorized by all requisite corporate action on the part of Divot;
and
(c) This Agreement has been duly executed and delivered by Divot.
6.2 Governmental Approvals. No consent, authorization, order or approval
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of, or filing or registration with, any governmental commission, board or other
regulatory body is required in connection with the execution and delivery by
Divot of the transactions contemplated hereunder.
6.3 Litigation and Claims. To the best of Divot's knowledge, there is no
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litigation, arbitration, governmental proceeding or investigation pending or
threatened or prospect against Divot which could reasonably be expected (a) to
have a material adverse on the ability of Divot to manage, maintain, operate or
perform the Contracts on or after the Effective Date or (b) to prevent the
consummation of the transactions contemplated herein.
ARTICLE VII
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Management of the Contracts
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7.1 General Management Duties. During the term of this Agreement, Divot
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shall use due diligence and its best efforts to manage, maintain, operate and
perform any and all responsibilities, duties and obligations, currently in
effect or hereafter arising, with respect to the Contracts; shall provide such
services as are customarily provided by Network under the Contracts; shall
consult with Network and keep Network advised as to all major or extraordinary
matters and decisions affecting the Contracts; and shall refrain from altering,
modifying, amending, or waiving any terms or provisions of the Contracts except
in the reasonable and ordinary course of performing any duties and obligations
with respect to the Contracts. Divot shall, without limiting the foregoing,
perform the following services and duties for Network in a faithful, diligent
and efficient manner:
(a) Maintain businesslike relations with third parties of the
Contracts and all affiliates and customers of Divot subject to performance
of the Contracts, whose service requests shall be received, considered and
recorded in systematic fashion in order to show the action taken with
respect to each;
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(b) Pay all general and specific fees, charges, taxes or assessments
arising as a result the management or performance of the Contracts or any
part thereof;
(c) Pay all sums and deposits becoming due and payable under the
provisions of any Contract or any part thereof, and otherwise perform all
covenants and obligations required to be performed under the provisions of
all such Contracts (to the extent that the performance of such covenants
and obligations are within the control of Divot);
(d) Perform such other acts Divot deems reasonable, necessary and
proper in the discharge of Divot's duties under this Agreement; and
(e) Obtain and maintain all licenses, permits and certificates
required by Federal, state or local authorities for the management,
maintenance and operation of the Contracts.
In exercising the foregoing development duties, Divot shall have the
authority to enter into and maintain in effect such contracts, licenses,
agreements and other undertakings on behalf of Network and in Network's name as
Divot shall from time to time reasonably consider appropriate, subject to
applicable laws, ordinances, regulations and permits and to such limitations as
are set forth herein. Divot also hereby agrees to seek to renew on behalf of
Network any of the Contracts on substantially similar terms (or better from
Network's perspective) that expire during the term of this agreement.
7.2 Divot To Act on Behalf of Network. In the performance of Divot's
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duties hereunder, Divot shall act solely as an independent contractor on behalf
of Network and solely for Network's account and upon Network's credit.
7.3 Costs of Management. All costs incurred by Divot in connection with
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the management, maintenance, operation or performance of the Contracts shall be
borne by Divot.
7.4 Legal Proceedings. Divot shall have the right, in its sole discretion
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and on behalf of Network if necessary, to institute any and all legal and/or
administrative actions or proceedings to collect revenue, assessments, charges
and other income from the Contracts, to cancel or terminate any Contract or part
thereof for the breach thereof or default thereunder by a third party.
7.5 Debts of Network. Except for Assumed Liabilities, all costs,
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expenses, debts and liabilities owed to third persons which were incurred by
Network pursuant to its ownership,
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management, maintenance, operation, and performance of the Contracts, to the
extent paid, satisfied, fulfilled or extinguished by Divot, shall be fully and
promptly reimbursed by Network to Divot.
7.6 Licenses and Permits. Divot shall use its best
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efforts to obtain and maintain all licenses and permits required of Network in
connection with the performance of the Contracts. Network agrees to execute and
deliver any and all applications and other documents and otherwise to cooperate
with Divot in applying for, obtaining and maintaining such licenses and permits.
7.7 Network's Assistance. To the extent Divot may reasonably request from
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time to time, Network shall cooperate with and use its reasonable best efforts
assist Divot with the management, maintenance, operation and performance of the
Contracts. Notwithstanding anything provided herein to the contrary, if Network
is contacted directly by any person or entity regarding the management or
performance of the Contracts, Network shall promptly refer such person or entity
to Divot.
ARTICLE VIII
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Contract Revenues
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8.1 Revenues. All monies and revenues attributable and earned in
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connection with Divot's management, maintenance, operation or performance of the
Contracts shall be, and Network shall take all reasonable and necessary steps to
assure that all such monies and revenues are, paid directly to and received
directly by Divot. To the extent any monies or revenues are received by Network
for or on behalf of Divot in connection with Divot's management, maintenance,
operation and performance of the Contracts, Network shall cause such monies or
revenues be immediately paid to Divot or placed in a depository account
established and designated by Divot. Such monies or revenues shall not be
commingled by Network with any funds belonging to, or held on behalf of, anyone
other than Divot, and shall not be reduced for any holding or transmitting
expenses incurred by Network.
ARTICLE IX
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Indemnification
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9.1 Indemnification of Divot. Subject to the provisions of this Article,
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(a) Network agrees to promptly and diligently defend and hold and
save Divot, its directors, officers, agents, employees, successors and
assigns (an "Indemnified Divot Party") free and harmless from and against
all expenses, claims, liabilities, losses, judgments or damages, including
reasonable attorneys' fees actually incurred, which any Indemnified Divot
Party may suffer or incur, arising out of or in connection with any of the
following:
(i) any misrepresentation, breach of warranty or nonfulfillment
of any agreement or covenant on the part of Network under this
Agreement; and
(ii) any gross negligence or willful misconduct of Network or
its agents, employees or others under the direction or control of
Network.
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(b) In connection with the foregoing, Network agrees to retain legal
counsel as selected by Divot, or to reimburse any Indemnified Divot Party
for any legal costs that it or any of them actually incurs in retaining its
own counsel, at Divot's option and at Network's sole expense.
9.2 Indemnification of Network. Subject to the provisions of this Article,
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(a) Divot agrees to promptly and diligently defend and hold and save
Network, its directors, officers, agents, employees, successors and assigns
(an "Indemnified Network Party") free and harmless from and against all
expenses, claims, liabilities, losses, judgments or damages, including
reasonable attorneys' fees actually incurred, which any Indemnified Network
Party may suffer or incur, arising out of or in connection with any of the
following:
(i) any misrepresentation, breach of warranty or nonfulfillment
of any agreement or covenant on the part of Divot under this
Agreement; and
(ii) any gross negligence or willful misconduct of Network or
its agents, employees or others under the direction or control of
Divot.
(b) In connection with the foregoing, Divot agrees to retain legal
counsel as selected by Network, or to reimburse any Indemnified Network
Party for any legal costs that it or any of them actually incurs in
retaining its own counsel, at Network's option and at Divot's sole expense.
It is expressly understood and agreed that the provisions of Sections 9.1
and 9.2 above shall survive the termination of this Agreement to the extent of
any cause of action arising prior to such termination.
ARTICLE X
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Termination
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10.1 Events of Termination. This Agreement shall immediately terminate,
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without further notice, upon the occurrence of any one or more of the following:
(a) The mutual written consent signed by Network and Divot;
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(b) The Option is Exercised by Divot in accordance with Article IV;
or
(c) Just cause is shown. "Just cause" shall mean Divot's or
Network's failure to perform any one of its obligations under this
Agreement, or to perform its duties within the terms and conditions of this
Agreement, after written notice from the non-breaching party is given of
such failure and the breaching party does not cure such breach within
thirty (30) days of such written notice.
10.2 Effect of Termination. If this Agreement is terminated in accordance
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with its terms, except as set forth herein to the contrary, all obligations of
the parties shall cease as of the date of termination, provided that:
(a) Divot and Network shall each be liable to the other for all of
their respective obligations arising hereunder through the date of termination
and for any obligations expressly stated herein to survive any such termination;
(b) Neither party shall be deemed to have waived any rights or
remedies at law or in equity which may have arisen by reason of a breach or
default by the other party in performance of its obligations hereunder; and
(c) In the event of termination for reasons other than just cause as
set forth in Section 10.1(c) above arising from the actions of omissions of
Divot, Divot shall be entitled to receive all monies and revenues attributable
to the Contracts, if any, as provided in Article VIII. Notwithstanding anything
contained herein to the contrary, upon any termination of this Agreement, Divot
shall make a full and complete accounting to Network with respect to all matters
outstanding as of the date of termination, and shall assign to Network all of
its right, title and interest under the Contracts as Network may designate and
deliver to Network all books, records, documents, and other property, whether
tangible or intangible, relating to the Contracts.
ARTICLE XI
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Miscellaneous Provisions
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11.1 Notices. All notices, demands, requests and other communications
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required or permitted hereunder shall be in writing and shall be deemed to be
properly delivered or made if personally served or sent by United States
certified mail, return receipt requested, postage prepaid, addressed to the
other party at its address set forth below or at such other address as either
party may from time to time designate by notice to the other, and shall be
deemed effective upon actual receipt, Alternatively, either party may use a
nationally-recognized overnight express courier service, and such notice shall
be deemed effective the next business day after deposit with such nationally-
recognized overnight express courier service, or upon actual receipt, whichever
is sooner.
To Divot: Divot Golf Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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To Network: OrbitNetwork, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Any party hereto may, at any time, by ten (10) days' written notice given
to the other party hereto, designate any other address in substitution of the
foregoing address to which such notice or communication shall be given.
11.2 Severability. If any term, covenant or condition of this Agreement or
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the application thereof to any person or circumstance shall, to any extent, be
held to be invalid or unenforceable, then the remainder of this Agreement, or
the application of such term, covenant or condition to persons or circumstances
other than those as to which it is held to be invalid or unenforceable, shall
not be affected thereby, and each term, covenant or condition of this Agreement
shall be valid and shall be enforced to the fullest extent permitted by law.
11.3 Modification. This Agreement may be amended or modified only by a
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written instrument executed by Divot and Network.
11.4 Intentionally omitted.
11.5 Article and Section Headings. Article and Section headings contained
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in this Agreement are for convenience of reference only and shall not be deemed
to have any substantive effect or to limit or define the provisions contained
herein.
11.6 Successors and Assigns. This Agreement shall be binding upon and
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shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns; provided, however, that Divot shall not have the right to
assign this Agreement without the prior written consent of Network, it being the
intent of the parties hereto that the services of Divot hereunder are personal
in nature.
11.7 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New York, without regard to the
conflicts of law provisions thereof.
11.8 Independent Contractor. Divot shall be an independent contractor for
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all purposes hereunder other than as licensee of the Contracts, and shall not
hold itself out as an agent of Network in any context other than as licensee of
the Contracts pursuant to the terms of this Agreement. Divot, unless
specifically authorized in writing by Network, shall not enter into any
contract, sign any agreement or incur any expense on behalf of or in the name of
Network. Any other relationship between Network and Divot outside the scope of
this Agreement to the contrary notwithstanding, nothing contained herein is
intended to, nor shall it be deemed or construed to, constitute Network and
Divot as partners, joint venturers or otherwise other than as principal and
independent contractor or agent, as the case may be.
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Signatures Appear on Following Page
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IN WITNESS WHEREOF, Network and Divot has each caused this Agreement to be
executed and sealed by its duly authorized signatories as of the date first
above written.
ORBIT NETWORK, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇
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Title: President
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DIVOT GOLF CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Chairman & CEO
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EXHIBIT A
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LICENSED CONTRACTS
1. Agreement between Orbit Network, Inc. and Amadeus (as set out in Exhibit
10.25 Form 10-KSB for the year ended December 31, 1999).
2. Agreement between Orbit Network, Inc. and Sabre (as set out in Exhibit 10.26
to Form 10-KSB for the year ended December 31, 1999).
3. Agreement between Orbit Network, Inc. and Galileo (as set out in Exhibit
10.27 to Form 10-KSB for the year ended December 31, 1999).
4. Agreement between Orbit Network, Inc. and WorldSpan (as set out in Exhibit
10.28 to Form 10-KSB for the year ended December 31, 1999).
5. Interactive Services Agreement between America Online, Inc. and Orbit
Network, Inc. (as set out in Exhibit 10.24 to Form 10-KSB for the year ended
December 31, 1999).
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EXHIBIT B
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FURNITURE & EQUIPMENT
To be determined prior to option purchase date.
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EXHIBIT C
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ASSUMED LIABILITIES
NONE
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