EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT ("Agreement") is made as of the _____ day
of November, 1998, among Dream Technologies, LLC ("Dream"), a Delaware limited
liability company; Medcard Management Systems, Inc. ("Medcard"), a New York
corporation (Dream and Medcard are sometimes collectively referred to hereon as
"Licensors"), with its principle place of business located at ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and ▇▇▇▇ Communications, Inc., a
Delaware corporation (hereinafter "Licensee"), with its principle place of
business located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇ ▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Dream, whose sole officers, directors and security holders
consist of RP and AP, owns all right, title, and interest in and to that certain
computer program identified as "Win Medsys", "Pos Host" and "Sendclaims" and
associated documentation, a copy of which is attached as Exhibit "A" hereto
(collectively, the "Program"); and
WHEREAS, the Program contains certain software components, including, but
not limited to, lockout protection software and Zip software, that are duly
licensed to Licensor for inclusion in the Program pursuant to the remarketing
agreements identified in Exhibit B attached hereto (the "Remarketing
Agreements"), which are also being licensed to the Licensee pursuant to this
Agreement, and the Program contains no other software components in which any
third party may claim superior or joint ownership, nor is the Program a
derivative work of any other software programs not owned in their entirety by
Licensor; and
WHEREAS, Licensor has granted rights in copies of the Program to third
parties solely pursuant to the End-User License Agreements identified in Exhibit
C attached hereto (the "End-User Agreements") which are to be assigned to, and
assumed by Licensee pursuant to this Agreement; and
WHEREAS, Licensor desires to grant exclusive licensing rights in and to
the Program and certain trademarks associated therewith, and sell certain
hardware associated therewith, to Licensee, and Licensor desires to acquire such
exclusive licensing rights in and to the Program and certain trademarks
associated therewith, and purchase certain hardware associated therewith, from
the Licensor, in accordance with the terms and conditions of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Licensor and Licensee, intending
to be legally bound, hereby agree as follows:
Section 1
GRANT AND CONVEYANCE OF RIGHTS; SALE OF HARDWARE
Effective as of the date hereof, Licensor hereby:
A. grants to Licensee an exclusive license in and to the Program, including both
the tangible and the intangible property constituting the Program, for a term of
fifteen (15) years commencing upon the execution and delivery hereof by all
parties hereto, subject to Licensee's right to renew for successive ten (10)
year[s] periods commencing upon the conclusion of the initial fifteen (15) year
term provided there is a continued compliance by the Licensee with the material
terms and conditions hereof, including the following corporeal and incorporeal
incidents to the Program:
1. An exclusive license to and possession of the media, devices, and
documentation that constitute copies of the Program, its component
parts, and all documentation relating thereto, possessed or
controlled by Licensor, which are to be delivered to Licensee
pursuant to Section 2 of this Agreement;
2. An exclusive worldwide license to all copyright interests owned or claimed
by Licensor pertaining to the Program, including, but not limited to, the
U.S. Copyrights associated therewith (Numbers to be provided by Licensor to
Licensee as soon as obtained by Licensor), together with all other
copyright interests accruing by reason of international copyright
conventions and further including, but not limited to Licensor's rights as
licensee and remarketer of certain software components contained in the
Program pursuant to the Remarketing Agreements identified in Exhibit B;
3. An exclusive worldwide license to all right and benefit of Licensor
in and to all trade names, inventions, discoveries, improvements,
ideas, trade secrets, know-how, confidential information, and all
other intellectual property owned or claimed by Licensor pertaining
to the Program; and
4. All of the right, interest, and benefit of Licensor in, to, and
under all agreements, contracts, licenses, and leases entered into
by Licensor, or having Licensor as a beneficiary, pertaining to the
Program, including, but not limited to [Licensor's rights as
licensor under the End-User License Agreements identified in Exhibit
C.], except for Hypercom, and ______________ where Licensor is
required to and will promptly obtain and deliver to licensee written
consents from such entities relating thereto.
B. grants to Licensee an exclusive license to utilize the following advertising
slogans and trademarks, and the goodwill associated therewith (the "Trademarks")
owned and/or utilized by Licensor in connection with the sale and marketing of
the Program and the Licensor's business and operations: any and all references
to Medcard, Medcard Management Systems and "MMS".
C. sells, assigns and transfers to Licensee all of its right, title, and
interest in and to certain hardware identified on Schedule ___ and made a part
hereof (the "Hardware") free and clear of all liens, claims and encumbrances.
Section 2
EFFECTUATION OF AGREEMENT
Within thirty (30) calendar days after the execution and delivery of this
Agreement by all parties hereto, and provided that ▇▇▇▇ has made the payments
and performed the obligations set forth in Sections 10.1, 10.4, 10.5 and 10.8
herewith and further provided that the contents referred to in Section 1(a)(2)
have been obtained by Licensor (or waived by Licensee as the case may be),
Licensor shall deliver to Licensee (1) its entire inventory of copies of the
Program in source code and object code form; (2) a master copy of the Program,
in both source and object code form, which shall be in a form suitable for
copying; (3) all system and user documentation pertaining to the design,
development, use and maintenance of the Program, including design or development
specifications, error reports, and related correspondence and memoranda; [and]
(4) all records pertaining to all licensees, purchasers and users of the
Program; and (5) all licenses for the lockout protection software and the Zip
software used in conjunction with the Program.
Section 3
REPRESENTATIONS AND WARRANTIES
(a) Licensor represents and warrants to the Licensee as of the date hereof
and as otherwise set forth herein as follows:
3.1 Recitals. The recitals set forth in the beginning of this Agreement
pertaining to the Licensor are true and correct.
3.2 Organization and Standing.
(a) Dream is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, has full
power and authority to own, lease and operate its properties and assets and to
conduct its business as now being conducted, and is duly qualified or licensed
to do business as a foreign limited liability company in each jurisdiction in
which the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified as a
foreign limited liability company would not materially adversely affect the
business of Dream.
(b) Medcard is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York, has full power and
authority to own, lease and operate its properties and assets and to conduct its
business as now being conducted, and is duly qualified or licensed to do
business as a foreign corporation in each jurisdiction in which the nature of
its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified as a foreign
corporation would not materially adversely affect the business of Medcard.
3.3 Authorization.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all members of Dream and by all of the and by all of the stockholders of
Dream and all other action of Dream necessary to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been taken. This Agreement constitutes the valid and binding
obligation of Dream enforceable against it in accordance with the terms hereof.
No consent of any lender, trustee, or other person or entity is required for
Dream to enter into and deliver this Agreement or to consummate the transactions
contemplated hereby, nor do the Certificate of Formation or Operating Agreement
of Dream or any contract, mortgage or other instrument to which Dream is a party
or by which Dream is bound or affecting any of its properties conflict with or
restrict the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. The execution of this Agreement and the
performance by Dream, of its obligations hereunder will not with or without the
giving of notice, lapse of time or both or otherwise materially violate or
breach any law, rule, regulation, order or decree of any court, governmental,
regulatory or self-regulatory authority to which it is bound, or otherwise
violate, result in a breach of or constitute a default under any agreement,
contract, or commitment to which it is a party or otherwise bound or subject.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors and all of the stockholders of Medcard and all other
corporate action of Medcard necessary to authorize the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been taken. This Agreement constitutes the valid and binding obligation of
Medcard enforceable against it in accordance with the terms hereof. No consent
of any lender, trustee, or other person or entity is required for Medcard to
enter into and deliver this Agreement or to consummate the transactions
contemplated hereby, nor do the Articles of Incorporation of Bylaws of Medcard
or any contract, mortgage or other instrument to which Medcard is a party or by
which Medcard is bound or affecting any of its properties conflict with or
restrict the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. The execution of this Agreement and the
performance by Medcard, of its obligations hereunder will not with or without
the giving of notice, lapse of time or both or otherwise materially violate or
breach any law, rule, regulation, order or decree of any court, governmental,
regulatory or self-regulatory authority to which it is bound, or otherwise
violate, result in a breach of or constitute a default under any agreement,
contract, or commitment to which it is a party or otherwise bound or subject.
3.4 Knowledge of Certain Facts and Circumstances Concerning Program.
Licensor does not know of any facts or circumstances not disclosed to Licensee
which indicate that the Program and/or Hardware may be adversely affected or
which otherwise should be disclosed to Licensee in order to make any of the
representations or warranties made herein on the part of the Licensor not
misleading.
3.5 Certain Representations Concerning Shares. Dream is acquiring the
Shares (as defined in Section 10.5 hereof) for its own account and not with a
present view to, or for sale in connection with, any distribution thereof in
violation of the Securities Act of 1933, as amended (the "Securities Act").
Dream consents to the placement of the following legend, or one similar thereto
on each certificate representing the Shares:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE
TRANSFERRED OR SOLD UNLESS SUCH REGISTRATION IS REQUIRED WITH
RESPECT TO SUCH TRANSFER OR SALE."
Dream understands that the Shares will not be registered when issued
and delivered to Dream under the Securities Act for the reason that the sale
provided for in this Agreement is exempt pursuant to Section 4 of the Securities
Act and that the reliance of Licensee on such exemption is predicated in part on
Dream's representations set forth herein. Licensor represents that it is
experienced in evaluating companies such as Licensee, is able to fend for
itself, has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of its investment in the
Shares, and has the ability to suffer the total loss of its investment. Dream
further represents that it has received all of Licensee's reports filed by the
Licensee with the U.S. Securities and Exchange Commission since June 30, 1997
through the date hereof, including but not limited to the Licensee's annual
report on Form 10-KSB for the fiscal year ended June 30, 1998 and that Dream has
read and reviewed the same and has been afforded the opportunity to obtain such
other information as it has deemed necessary to evaluate its investment in the
Shares, ask questions of and receive answers from the Licensee and to obtain
additional information (to the extent the Licensee possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to it or to which it had access. Dream
understands that the Shares may not be sold, transferred or otherwise disposed
of without registration under the Securities Act or an exemption therefrom and
that in the absence of an effective registration statement covering the Shares
or an available exemption from registration under the Securities Act, the Shares
must be held indefinitely. Dream acknowledges that the Licensee is under no
obligation to register the Shares for public resale, however, Licensee (I)
represents and warrants that it and its securities currently meet the
requirements for adequate public information under Rule 144(c), and that the
Licensee has been subject to the relevant reporting requirements thereunder and
has filed all reports required to have been filed thereunder and (ii) covenants
to file all such reports in the future in order to enable the Dream (or its
assigns) to sell the Shares, pursuant to, and in accordance with the applicable
limitations set forth in, Rule 144, including without limitation, the holding
period specified in Rule 144(d).
3.6 Best Efforts to Continue Employment of Software Programmers. Licensor
will use its reasonable best efforts to cause the continued employment of its
software programmers during the term of this Agreement and any extensions
thereof.
3.7 Exclusive License; Exceptions; No Liens, Claims or Encumbrances.
Licensee shall receive, pursuant to this Agreement as of the date of execution
hereof, during the term of the Agreement and any extensions, an exclusive
license in and to the Program, except for those matters addressed in Section 4
and Section 5 of this Agreement and the Remarketing Agreements identified in
Exhibit B hereto. Subject to the foregoing exceptions, Licensor represents and
warrants that it has developed the Program entirely through its own efforts for
its own account, that the Program is free and clear of all liens, claims,
encumbrances, rights, or equities whatsoever of any third party, and that the
Licensor, during the term of this Agreement and any renewals thereof, shall
maintain the Program free and clear of all liens, claims, encumbrances, rights
or equities whatsoever of any third party.
3.8 Intellectual Property Matters. The Program does not infringe any
patent, copyright, trade secret, trademark or any other intellectual property
right of any third party; that the Program is fully eligible for protection
under applicable copyright law and has not been forfeited to the public domain;
and that the source code and system specifications for the Program have been
maintained in confidence.
3.9 Authorship of Program and Related Matters. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Medcard are the sole authors of the Program and the redesign or
development of new source code pursuant to those certain menu items. All
personnel who have contributed to or participated in the conception and
development of the Program either (1) have been an employee or party to a
for-hire relationship with Licensor that has accorded Licensor full, effective,
and exclusive original ownership of all tangible and intangible property thereby
arising with respect to the Program or (2) have executed appropriate instruments
of assignment in favor of Licensor as assignee that have conveyed to Licensor
full, effective, and exclusive ownership of all tangible and intangible property
thereby arising with respect to the Program.
3.10 Marketing and Distribution Agreements. There are no agreements,
arrangements or understandings in effect with respect to the marketing,
distribution, licensing, maintaining or promotion of the Program by any
independent salesperson, distributor, sublicensor, or other remarketer or sales
organization except as set forth in Exhibit C hereof, and the Licensor agrees
not to enter into any other agreements and/or understandings and/or any renewals
with any other third parties with respect thereto during the term hereof without
the prior written consent of Licensee.
3.11 Trademarks. The trademarks rights are owned by the Licensor free and
clear of any liens, claims and/or other encumbrances.
3.12 Hardware. The Hardware is fully paid for and owned by Medcard free
and/or clear of any and all liens, claims and/or other encumbrances. Upon the
sale to the Licensee of the Hardware by Medcard for the consideration set forth
in Section 10.1 hereof, the Licensee will have good title in and to the Hardware
free and clear of any liens, claims and/or other encumbrances other than as may
be created by the actions or inactions of the Licensee.
3.13 Year 2000 Matters. Medcard represents that to the best of its
knowledge, the Program is Year 2000 compliant. Licensor and Licensee further
agree to cooperate to request, from those of its suppliers whose performance may
materially affect its performance hereunder, that each supplier undertake to
ensure Year 2000 compliance with respect to such material performance. The
parties hereto will use reasonable commercial efforts to cooperate and share
information to further comply with this provision, and to minimize the impact of
any Year 2000 problem on performance of this Agreement. Each of the parties will
inform the other parties of any circumstance indicating a possible obstacle to
such compliance, and the steps being taken to avoid or overcome the obstacle.
3.14 Financial Disclosure. Medcard has furnished the Licensee with its
1996 and 1997 Tax Returns, as filed with the Internal Revenue Service and New
York State Department of Taxation. Dream has only recently been formed as a
Delaware limited liability company and has therefore not been required to file
any tax returns.
3.15 No Material Changes Since Date of Tax Returns. Since the date of its
most recent Tax Returns, there has not been any event or condition of any type
that has materially and adversely affected the Medcard's business, prospects,
condition, affairs, operations, properties or assets.
3.16 Title to Property and Assets; Liabilities; Material Agreements and
Current Compliance Therewith. Except (a) as reflected in Medcard's most recent
Tax Returns (b) for liens for current taxes not yet delinquent; (c) for liens
imposed by law and incurred in the ordinary course of business for obligations
not yet due to carriers, warehousemen, laborers, materialmen, and the like; (d)
for liens in respect of pledges or deposits under workers' compensation laws or
similar legislation; or (e) for minor defects in title, none of which,
individually or in the aggregate, materially interfere(s) with the use of such
property, Medcard owns, and has good and marketable title, free and clear of all
mortgages, liens, loans, claims and encumbrances of any nature whatsoever to all
of its assets, properties and rights of every type and description, including,
without limitation, all cash on hand and in banks, good will, its corporate name
and all variants thereof, trademarks and trade names, copyrights and interests
thereunder, licenses and registrations and permits and applications therefor,
all rights and claims under contracts of whatever nature, rights and funds of
whatever nature, books and records and all other property and rights of every
kind and nature owned or held by Medcard as of the date of this Agreement, as of
the date of execution hereof by all parties hereto, except for such assets
disposed of in the ordinary course of business since the date of the Tax
Returns. With respect to the real and personal property it leases and the
material agreements to which it is a party, true and correct copies of all such
leases and material agreements have previously been provided by Medcard to the
Licensee, Medcard holds a valid leasehold interest in all such leases free of
any liens, claims and encumbrances, subject to clauses (b)-(e) above and is in
compliance in all material respects with such leases and material agreements.
3.17 Continued Compliance with Material Agreements and Other Instruments,
Laws, Rules and Regulations. The Licensor is not in violation of any provisions
of its Articles of Incorporation or Bylaws, Operating Agreement and/or Articles
of Organization as same may be amended, as the case may be, and in effect on and
as of the date of execution by all parties hereto, or, in any material respect,
of any provision of any material mortgage, indenture, agreement, instrument,
contract or commitment to which it is a party, or to which it is otherwise bound
or subject or, of any provision of any federal or state judgment, writ, decree,
order, statute, rule or governmental regulation applicable to the Licensor and
its business and operations. The execution, delivery and performance of this
Agreement will not with or without the giving of notice, lapse of time or both,
or otherwise result in any such violation or be in conflict with or constitute a
default under any such provision, law, rule or regulation.
3.18 Governmental Consents. All consents, approvals, orders or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with any federal or state governmental or self-regulatory authority
on the part of the Licensor required in connection with the consummation of the
transactions contemplated by this Agreement shall have been obtained prior to
the execution hereof by all parties hereto.
3.19 Litigation. There is no action, proceeding or investigation pending
or, to the Licensor's respective knowledge, threatened against the Licensor or
any of its employees before any court or administrative agency, that might
result, either individually or in the aggregate, in any material adverse change
in the business, prospects, condition, affairs, operations, properties or assets
of the Licensor, including but not limited to the Program, or in any material
liability on the part of the Licensor. The foregoing includes, without
limitation, actions pending or threatened or any basis therefore involving the
prior employment of any of the Licensor's employees or their use in connection
with the Licensor's business of any information or techniques allegedly
proprietary to any of their former employers.
3.20 Taxes. Medcard has since inception accurately prepared and timely
filed all United States income tax returns and all state and municipal tax
returns that are required to be filed by it, and has paid or made provisions for
the payment of all taxes that have become due pursuant to such returns,
including but not limited to payroll, sales taxes and property taxes. All of
such returns are true and correct in all material respects. The United States
income tax returns of Medcard have not been audited by the Internal Revenue
Service (the "IRS") nor has the IRS made inquiry of, reviewed or otherwise
investigated same. No deficiency, assessment or proposed adjustment of Medcard's
United States income tax or state or municipal taxes is pending and Medcard has
no knowledge of any proposed liability for any tax to be imposed upon its
properties or assets for which there is not an adequate reserve reflected in the
tax returns. Medcard and Dream will during the term of this Agreement and any
renewals thereof each timely file all such tax returns and timely pay in full
all taxes due and owing.
3.21 Employees. The Licensor has no employment contracts with any person,
there are no disputes or threatened disputes with any prior or current employees
of the Licensor nor, to the knowledge of each of the Licensor, is there any
basis for any of the foregoing. There are no employee stock option and/or
employee benefit plans, except for the employee medical plans in effect.
3.22 Insurance. The Licensor has fire and casualty insurance policies,
with extended coverage, sufficient in amount (subject to reasonable deductibles)
to allow it to replace any of its properties that might be damaged or destroyed
and currently complies in all material respects with any and all insurance
coverage provisions set forth in its real property lease.
3.23 Conduct of the Licensor's Business. On the date of execution of this
Agreement by all parties hereto and through the term hereof and any renewal
periods, the Licensor and Licensee agree that Licensor will carry on its
business in, and only in, the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, subject to the terms and
conditions of this Agreement, and, to the extent consistent with such business,
use all reasonable efforts to preserve intact its present business organization,
keep available the services of its present officer(s) and employee(s) (and use
its best efforts to preserve its relationships with clients and others having
business dealings with it to the end that its goodwill and ongoing business
shall not be materially impaired during such time period.
3.24 No Material Misrepresentations or Omissions. No representation,
warranty or covenant made by the Licensor in this Agreement or in any written
statement, Schedule, Exhibit or certificate furnished or to be furnished to the
Licensee pursuant to this Agreement or in connection with the transactions
contemplated in this Agreement contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary to make
the statements made not misleading.
(b) Licensee represents and warrants to the Licensor as follows:
3.1 Organization and Standing. Licensee is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has full power and authority to own, lease and operate its properties and assets
and to conduct business as now being conducted, and is duly qualified or
licensed to do business as a foreign corporation in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified as a foreign
corporation would not materially adversely affect the business of the Licensee.
3.2 Authorization. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Licensee and all other corporate action of Licensee
necessary to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been taken. This
Agreement constitutes the valid and binding obligation of Licensee enforceable
against it in accordance with the terms hereof. No consent of any lender,
trustee, security holder of Licensee, or other person or entity is required for
Licensor to enter into and deliver this Agreement or to consummate the
transactions contemplated hereby, nor does the Certificate of Incorporation, as
amended or By-Laws of Licensee or any contract, mortgage or other instrument to
which Licensee is a party or by which Licensee is bound or affecting any of its
properties conflict with or restrict the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
3.3 No Material Misrepresentations or Omissions. No representation,
warranty or covenant made by the Licensee in this Agreement or in any written
statement, Schedule, Exhibit or certificate furnished or to be furnished to the
Licensor pursuant to this Agreement or in connection with the transactions
contemplated in this Agreement contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary to make
the statements made not misleading.
Section 4
THIRD-PARTY SOFTWARE COMPONENTS
4.1 Licensor has duly obtained or will obtain in accordance with Section
1(a)(2), the right and license to use, copy, modify, and distribute the software
components contained in the Program pursuant to the Remarketing Agreements
identified in Exhibit B; that the Program contains no other software components
in which any third party may claim superior or joint ownership; and that the
Program is not a derivative work of any other software programs not owned in
their entirety by Licensor.
4.2 Licensor represents and warrants that each Remarketing Agreement is in
full force and effective in accordance with its terms without modification or
amendment and without default by either party thereto; that each Remarketing
Agreement grants Licensor the full and effective right and license to use, copy,
modify as necessary, and distribute the pertinent software components as part of
the Program; that each Remarketing Agreement provides only for the payment of
fees and royalties that, to the extent accrued as of the effective date of this
Agreement, have been paid in full; and that each Remarketing Agreement can be
sublicensed to Licensee pursuant to this Agreement, without the requirement of
obtaining any consent or approval, except as set forth in Section 1(a)(2),
giving any prior or subsequent notice, paying further royalty or fee to any
party thereto or to any other third party, or performing any duty that has not
already been fully performed by Licensor or Licensee and shall be sublicensed
upon execution herewith by the parties hereto, subject to the exception
contained in Section 1(a)(2). Licensor and Licensee shall jointly notify all
licensors under the Remarketing Agreements of this Agreement promptly upon
execution hereof by all parties hereto.
Section 5
END-USER AGREEMENTS
5.1 Licensor represents and warrants that it has granted rights in the
Program to third parties solely pursuant to the nonexclusive End-User Agreements
identified in Exhibit C.
5.2 Licensor represents and warrants that each End-User Agreement is in
full force and effect in accordance with its terms without modification or
amendment and without default by either party thereto; that each End-User
Agreement grants the licensee thereunder solely the nonexclusive right and
license to use the Program, for internal purposes only and not for resale or
redistribution; that each End-User Agreement provides only for rendering of
services (including warranty coverage, maintenance, and support) that, to the
extent required to have been performed as of the effective date of this
Agreement, have been performed in full; and that nothing contained in End-User
Agreement prohibits the assignment of said agreement to Licensee pursuant to
this Agreement, requires obtaining any consent or approval, giving any prior or
subsequent notice, paying any further royalty or fee to any party thereto or to
any other third party, or performing any duty that has not already been fully
performed by Licensor. Licensor and Licensee shall jointly notify all end-users
under the End-User Agreements of the foregoing assignment and assumption
promptly upon execution hereof by all parties hereto.
5.3 It is mutually agreed that Licensor shall retain all amounts
previously paid to Licensor under the End-User Agreements and that, to the
extent further payments may be made thereunder following the date of execution
hereof (but excluding accounts receivable of $________ as of the date hereof),
Licensee shall be entitled to receive them directly from such end-users, and, if
such payments nonetheless are made to Licensor, Licensor shall remit such
payments to Licensee. Licensor agrees to allow authorized representatives of the
Licensee to inspect the books and records of the Licensor from time to time upon
reasonable prior notice to insure the Licensor's compliance with this provision.
Section 6
FURTHER ASSURANCES
Licensor shall execute and deliver such further conveyance instruments and
take such reasonable further actions as may be deemed necessary or desirable by
Licensee to evidence more fully the grant of an exclusive license in and to the
Program to Licensee. Licensee shall promptly reimburse Licensor for all
reasonable costs and expenses incurred in connection with such "further
assurances." Licensor therefore agrees:
1. To execute, acknowledge, and deliver any affidavits, documents or
assignments or transfer papers in furtherance of the foregoing;
2. To provide testimony in connection with any proceeding affecting the
interest of Licensee in the Program; and
3. To perform any other acts deemed necessary or desirable by Licensee to
carry out the intent of this Agreement.
Section 7
PROTECTION OF TRADE SECRETS
For purposes of this Agreement, "Program Trade Secret" means the whole or
any portion or phase of any scientific or technical information, design,
process, procedure, formula, or improvement included in the Program that is
valuable and not generally known to the business concerns engaged in the
development or marketing of products competitive with the Program. From and
after the date of execution hereof, and for so long thereafter as the data or
information remains Program Trade Secrets, the parties (including their agents,
affiliates, successors and assigns) shall not use, disclose, or permit any
person to obtain any Program Trade Secrets (whether or not the Program Trade
Secrets are in written or tangible form), except as may be specifically
authorized by the Licensor and Licensee.
Section 8
NON-COMPETITION
For the initial term of this Agreement and any renewals thereof, the
parties (including their agents, affiliates, successors and assigns) agree that
they shall not directly or indirectly develop, market or participate in the
marketing of, nor consult (except as expressly provided for herein) or provide
any services or products to any person or organization in connection with (1)
any programs or products that are similar to the Program, (excluding
modifications thereto); except for the Licensee's 1 One Medical Service Program
and any modifications thereto; (2) any program hereinafter developed by Licensor
or Licensee to serve a similar purpose as that of the Program, (excluding
modifications thereto); or (3) any product or service incorporating Program
Trade Secrets, anywhere in the United States. Licensor and Licensee acknowledge
and agree that the current market for the Program extends throughout the United
States and it is therefore reasonable to prohibit Licensor and Licensee from
competing with each other anywhere in such territory. Following the termination
of this Agreement for any reason (other than by breach by the Licensor) the
Licensee agrees that it shall not directly or indirectly engage in any of the
foregoing relating to the program for a period of three (3) years therefrom
within the United States.
Section 9
ACKNOWLEDGMENT OF RIGHTS
In furtherance of this Agreement, Licensor hereby acknowledges that, for
so long as this Agreement remains in effect, Licensee has acceded to all of
Licensor's right and standing to:
1. Receive all rights and benefits pertaining to the Program, the
Remarketing Agreements (subject to the consent requirements
contained in Section 1(a)(2), and the End-User Agreements;
2. Institute and prosecute all suits and proceedings and take all
actions that Licensor, in its sole discretion, may deem necessary or
proper to collect, assert, or enforce any claim, right, interest and
benefits in the Program, the Remarketing Agreements and the End-User
Agreements; and
3. Defend and compromise any and all such action, suits, or proceedings
relating to such transferred and assigned rights, title, interest
and benefits, and perform all other such acts in relation thereto as
Licensee, in its sole discretion, deems advisable.
Section 10
PAYMENTS BY LICENSEE TO LICENSOR AND RELATED MATTERS
10.1 In consideration of the grant of an exclusive license in and to the
Program, Medcard agrees to transfer all of its right, title and interest in and
to the Hardware associated with the Program, identified by Medcard on Schedule
___ hereto and made a part hereof. In consideration thereof, Licensee will,
following execution hereof by all parties hereto, pay Medcard an initial one
time fee of $450,000.00 payable on or before the close of business on November
16, 1998.
10.2 From and after the effective date of this Agreement, Licensee will
pay a royalty fee to Dream, not to exceed $250,000.00 per month, on a monthly
basis of twenty five percent (25%) of the monthly revenue which may be received
from the use of the Program by Licensee per "Unit", as such term is defined
below, after first deducting "Direct Costs", as such phrase is defined below,
thirty (30) days after payment has been received by Licensee. Notwithstanding
the foregoing, additional royalty fees, if any, in excess of $250,000.00 per
month, will be paid to Dream on a monthly basis of ten percent (10%) of the
monthly revenue which may be received from the use of the Program, after first
deducting Direct Costs, thirty (30) days after payment has been received by
Licensee. For purposes of this Agreement, a "Unit" is defined as a POS terminal
having the capability and equipment to verify medical benefits and process
medical claims, and "Direct Costs" are defined as including (a) Unit lease costs
of up to $50 per month; (b) commission charges not to exceed one third of the
gross monthly billing for each Unit per month (commissions in excess of one
third of the gross monthly billing per month require the approval of Licensor)
payable to agents which place Units with end users; and (c) network costs which
include (i) claim fees payable to Envoy/NEIC, (ii) verification charges for each
verification of insurance, payable to NDC, and (iii) other similar
telecommunications charges related to obtaining claims processing and/or
benefits verification information. Notwithstanding the foregoing, it is agreed
and understood that if Licensee desires to use (i) any program or programs that
are similar to the Program, except for the Licensee's 1 One Medical Service
Program (and any modifications thereto), excepting modifications to the Program;
(ii) any program hereinafter developed by Licensor that is similar to or serves
a similar purpose as that of the Program; or (iii) the Program in any
application other than a POS terminal, an additional license fee, in an amount
to be negotiated, shall be payable by Licensee to Dream.
10.3 Licensee agrees to allow authorized representatives of the Licensor
to inspect the relevant books and records of the Licensee from time to time upon
reasonable notice to insure the Licensee's compliance with paragraph 10.2 above.
10.4 Licensee will pay Dream a non-refundable "advance" of the royalty
fees payable pursuant to paragraph 10.2 above, of $550,000.00 of which
$100,000.00 is payable on or before the close of business on November 16, 1998,
with the balance of $450,000.00 to be paid from time to time from any excess
cash flow from the Licensee's Program operations. It is agreed and understood
that, following the payment of the $450,000.00 balance in full, Licensee shall
be entitled to retain forty percent (40%) of the then monthly royalty fee
otherwise payable to Dream and apply said sum, on a monthly basis, as a credit
until the amount of the "advance" set forth in this paragraph has been offset.
10.5 Concurrent with the execution of this Agreement by all parties
hereto, Licensee will issue to Dream 100,000 shares of the common stock of
Licensee and options to purchase 350,000 shares of the common stock of Licensee
(collectively, the "Shares") exercisable for a period of three (3) years from
the date of issuance of the options at an exercise price equal to an average of
the last sale price for the five (5) trading days prior to execution of this
Agreement. Any exercise of said options may, if so arranged by Licensee with a
third-party, be a "cashless exercise" to Licensee.
10.6 Licensee has advanced to Licensor for the purpose of covering
Licensor's payroll an aggregate of $_______________ to date, which amount shall
be deducted by the Licensee after the $555,000.00 advance described in paragraph
10.4 hereof has been paid in full; such deduction on a monthly basis, not to
exceed forty percent (40%) of any monthly royalty fee otherwise payable to
Dream.
10.7 Licensee agrees to use its reasonable best efforts to achieve
placement (i.e. sale or lease) of a minimum level of fifteen (15,000) Units
within thirty (30) months after the execution of this Agreement. The exclusive
license granted to the Licensee hereunder shall become non-exclusive but this
Agreement shall not be deemed breached or terminated if the minimum level of
fifteen thousand (15,000) Units is not; (i) obtained within thirty (30) months
after the execution of this Agreement, and (ii) maintained throughout the
balance of the term of the Agreement, including any renewed term.
10.8 Licensee agrees upon execution hereof by all parties hereto to retain
each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as consultants to the Licensee on a full time
basis and to pay each of such persons a consultant fee of $2,000.00 per week
together with the incentive based compensation as will be agreed to in writing
by the Licensee and such persons. Each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be
responsible for the timely payment of all applicable taxes due and owing on such
monies paid. It is agreed that the consulting arrangement with each of ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall continue for a period of thirty (30) months from the
date hereof, or for the same thirty (30) month period, if the parties otherwise
negotiate and enter into employment agreements.
Section 11
TERMINATION OF AGREEMENT
This Agreement may be terminated by either party upon thirty (30) days
prior written notice to the other, in the event of any material breach by any of
such parties of their respective representations and warranties set forth
herein, not otherwise cured to the reasonable satisfaction of the other party,
provided that at least ten (10) days prior written notice or such thirty (30)
day period has been received by said party or their counsel as provided in
paragraph 14.8.
Material obligations include, but are not limited to, a default by
Licensee in payment of royalties; cessation of business or filing of a petition
in bankruptcy under U.S. Bankruptcy Law not otherwise withdrawn within sixty
(60) days.
In the event of the termination of this Agreement by Licensor in
accordance with the termination provisions set forth above, Licensee shall
immediately cease and desist from any further use of the Program and shall
surrender any and all copies of said Program to Licensor. Notwithstanding the
foregoing, the parties hereto shall be entitled to seek all remedies available
at law or in equity as may be available to such party/parties.
Section 12
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representation and warranties of each of the parties hereto shall
survive the closing of the transactions contemplated hereby and remain in full
force and effect during the term of this Agreement and any renewals thereof.
Except as specifically provided elsewhere in this Agreement, there are no
warranties, whether expressed or implied, including but not limited to,
warranties of merchantability or fitness for a particular use.
Section 13
INDEMNIFICATION
Each of the parties hereto agrees to indemnify and hold harmless each of
the other parties hereto against and in respect of any liability, damage or
deficiency, actions, suits, proceedings, demands, assessments, judgements, costs
and expenses, including reasonable attorney's fees and costs incident to any of
the foregoing resulting from any material misrepresentation or omission made in
this Agreement, material breach of covenant, representation or warranty or
nonfulfillment of any agreement on the part of any of the parties hereto under
this Agreement or from any material misrepresentation in or omission from any
certificate or other document furnished or to be furnished hereunder. This
indemnification shall survive the termination of this Agreement for any reason.
Section 14
MISCELLANEOUS
14.1 Subject to Licensor's written approval, which approval shall not be
unreasonably withheld, Licensee may assign any or all its rights and obligations
hereunder except those rights and obligations contained in Section 10.5 hereof,
to any of its now or hereafter formed direct or indirect subsidiaries.
14.2 This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, notwithstanding conflict of law
principles. Any action or proceeding relating to or arising out of this
Agreement shall be brought exclusively in the federal and/or state courts
located in New York, New York. The prevailing party in any such action or
proceeding shall be entitled to recover from the other party its reasonable
attorneys' fees and costs. Further, the parties agree that due to the complex
nature of this Agreement, each of the Licensor and Licensee waives its
respective right to a trial by jury.
14.3 This Agreement constitutes the entire agreement between the parties
hereto with respect to the specific subject matter hereof and merges and
supersedes all prior agreements, understandings, negotiations and arrangements,
both oral and written, between the parties hereto with respect to the subject
matter hereof.
14.4 This Agreement may not be amended or modified in any manner, except
by a written instrument executed by each of the parties hereto.
14.5 The invalidity of any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part hereof,
all of which are inserted conditionally on their being valid in law. If any one
or more of the words, phrases, sentences, clauses or sections contained in this
Agreement shall be declared invalid by any court of competent jurisdiction,
then, in any such event, this Agreement shall be construed as if such invalid
word or words, phrase or phrases, sentence or sentences, clause or clauses, or
section or sections had not been inserted.
14.6 The waiver by any party of a breach or violation of any provision of
this Agreement by any other party shall not operate nor be construed as a waiver
of any subsequent breach or violation. The waiver by any party to exercise any
right or remedy it or he may possess shall not operate nor be construed as a bar
to the exercise of such right or remedy by such party upon the occurrence of any
subsequent breach or violation.
14.7 This Agreement may be executed via telecopier in any number of
counterparts and by the separate parties in separate counterparts, each of which
shall be deemed to constitute an original and all of which shall be deemed to
constitute the one and the same instrument.
14.8 All notices and other communications hereunder shall be in writing
and shall be deemed to have been given if delivered in person or sent by prepaid
first class registered or certified mail , return receipt requested, via
telecopier, or via overnight delivery service by a nationally recognized
carrier, if to:
Licensor: at the address first set forth above
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Giacovas LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Licensee: at the address first set forth above
Telecopier No. ( )
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.(▇▇▇) ▇▇▇-▇▇▇▇
14.9 Each of the parties to this Agreement acknowledge that they each have
carefully read and reviewed this Agreement with their respective counsel, and
therefore, agree that the rule of construction that ambiguities shall be
construed against the drafter of the document shall not be applicable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal effective as of the date shown above.
DREAM TECHNOLOGIES, LLC
By:________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Managing Partner
STATE OF NEW YORK )
)SS
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me on this _____ day of
November, 1998 by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Managing Partner of Dream Technologies,
LLC, a Delaware limited liability company, on behalf of such corporation who is
personally known to me or has produced ___________________ as identification and
did/did not take an oath.
Notary Public:
sign____________________________________
print___________________________________
State of New York at Large (Seal)
My Commission Expires: ______________
MEDCARD MANAGEMENT SYSTEMS, INC.
By:________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer
STATE OF NEW YORK )
)SS:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me on this _____ day of
November, 1998 by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Chief Executive Officer of Medcard
Management Systems, Inc., a New York corporation, on behalf of such corporation
who is personally known to me or has produced ___________________ as
identification and did/did not take an oath.
Notary Public:
sign____________________________________
print___________________________________
State of New York at Large (Seal)
My Commission Expires: ________________
▇▇▇▇ COMMUNICATIONS, INC.
By:___________________________
▇▇▇▇ ▇▇▇▇▇▇▇, President
STATE OF CALIFORNIA )
)SS:
COUNTY OF ORANGE )
The foregoing instrument was acknowledged before me this ____ day of
Delaware, 1998 by ▇▇▇▇ ▇▇▇▇▇▇▇, as President of ▇▇▇▇ Communications, Inc., a
Delaware corporation, on behalf of such corporation who is personally known to
me of has produced _______________________ as identification and did/did not
take an oath.
Notary Public:
sign______________________________
print______________________________
State of California at Large (Seal)
My Commission Expires: _______________