MANAGEMENT AND MARKETING AGREEMENT
THIS AGREEMENT made as of May 6, 1997.
BETWEEN:
605285 ONTARIO INC., a corporation having an office in Etobicoke, Ontario
(hereinafter referred to as "Owner")
OF THE FIRST PART
AND
DATALINK SYSTEMS CORPORATION, a Nevada corporation, having an office in
San Jose, California (hereinafter referred to as "Manager")
OF THE SECOND PART
WHEREAS:
A. Owner has acquired or developed and owns all of the right, title
and interest to the Technology;
B. Owner wishes to appoint Manager, as Owner's agent, to manage and
market the Technology on the terms and conditions set out in this Agreement.
NOW THEREFORE in consideration of the entitlements to receive certain
cash distributions under this Agreement, and the covenants, agreements and
premises herein contained, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, the recitals and the schedules, if any, the following
words, phrases and expressions will have the following meanings:
a. "Agency Fee" has the meaning specified in Subsection 3.1.c;
b. "Application Software" means the computer programs consisting
of the modules and having the functional and technical specifications more
particularly described in Schedule A to this Agreement together with
Enhancements;
c. "Application Software Purchase Agreement" means the agreement
of purchase and sale made as of May 6, 1997, between Owner and Manager;
d. "Customer" means any person using the Service;
e. "Documentation" has the meaning set out in Subsection v. of
the definition of Technology together with all revisions thereto;
f. "Enhancement" means any improvement, revision or other
modification made to the Application Software by Vendor to be utilized with
the Service, including, without limitation, any improvement, revision or other
modification made by Vendor which is necessary:
i. to provide Customers with a then current Service;
ii. to keep the Service compatible with the personal
computer and networking technology then in use,
iii. to maintain the Service as a state of the art or industry
leading technology,
including, without limitation, the changes set out in Appendix A.1
to Schedule A to the extent that Purchaser's Manager, continues to believe
they make sense in light of then current market conditions and technical
developments;
g. "Expenses" has the meaning specified in Subsection 3.1 c.;
h. "Gross Sales" has the meaning specified in Subsection 3.1
i. "Intellectual Property" has the meaning specified in
Subsection iv. of the definition of Technology;
j. "Interest Amount" means an amount equal to the annual
interest payable under the Note;
k. "Manager" means DataLink Systems Corporation and its
permitted assigns in its capacity as the agent for Owner and Manager of the
Technology appointed by Owner under this Agreement;
l. "Net Revenue" has the meaning specified in Subsection 3.1 c.;
m. "Net Sales" has the meaning specified in Subsection 3.1 c.;
n. "Note" means the 6.0% Secured Term Note dated as of May 6,
1997 issued by Owner to Manager in connection with the purchase of the
Technology;
o. "Overhead and Administration Costs" has the meaning specified
in Subsection 3.1 c.;
p. "Owner's Fee" has the meaning specified in Subsection 3.1
q. "Principal Payments" means the amounts payable to Owner
pursuant to subsections 3.1 b.i. and 3.2 c.ii.A. for payment against the
principal sum outstanding under the Note;
r. "Security Agent" means ▇▇▇▇▇▇/▇▇▇▇ ▇▇▇▇▇▇▇, the Security
Agent under the Security Agent Agreement;
s. "Security Agent Agreement" means the Security Agent Agreement
made as of May 6, 1997, among Owner, Manager and Security Agent;
t. "Service" means a service that provides for the delivery of
real time stock quotes utilizing the Application Software, wireless technology
and alphanumeric paging services, and commonly known as the "QUOTEXPRESS";
u. "Technology" means the Application Software and all of
Owner's property and rights necessary for the operation of the Service,
including, without limitation:
i. all products associated with or derivatives of the
Application Software utilized to provide the Service;
ii. the benefit of all agreements necessary for the
ownership of, operation of, or the realization of the benefit from, the
Service, including,
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without limitation, all service agreements and third party license agreements;
iii. all inventions necessary for the operation of the Service,
including, without limitation, ideas, research, discoveries, designs, systems,
patterns, specifications, technology, know-how, formulae, confidential
information, data, computer software development tools, operating systems,
subroutines, algorithms, methods and processes;
iv. all intellectual property rights necessary for the
operation of the Service, including, without limitation, patents, trade
marks, copyrights and trade secrets and applications for and the right to
apply for any intellectual property (the "Intellectual Property"); and
v. copies of all records, documents (including, without
limitation, user documentation and source code listings), correspondence,
notes and rights related to the foregoing ("Documentation");
1.2 Interpretation
a. The terms "this Agreement", "hereof" "hereunder" and similar
expressions refer to this Agreement and not to any particular Section,
Subsection or other portion of this Agreement and include any agreement
amending or supplemental to this Agreement. Unless something in the subject
matter or context is inconsistent therewith, reference herein to Sections and
Subsections are to Sections and Subsections of this Agreement.
b. Except as specifically stated in this Agreement, all
references to currency is to United States of America dollars. Any currency
conversion required or contemplated by this Agreement with respect to Canadian
and United States of America currency will be based on the rate published by
the Bank of Canada as the noon spot rate applicable for the purchase of United
States of America dollars on the business day immediately before the date of
conversion.
c. This Agreement will be governed by and interpreted in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein, except the conflict of law rules, and the parties attorn
to the jurisdiction of the courts of the Province of Ontario and the Federal
Courts of Canada.
d. Wherever the singular, plural, masculine, feminine or neuter
is used throughout this Agreement the same will be construed as meaning the
singular, plural, masculine, feminine, neuter, body politic or body corporate
where the fact or context so requires and the provisions hereof and all
covenants herein will be construed to be joint and several when applicable to
more than one party.
e. Headings are inserted in the Agreement for convenience of
reference only and are not intended to affect the Agreement's interpretation.
1.3 Schedules
The following schedules are incorporated into and made part of this
Agreement:
Schedule A - Specifications of Application Software
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ARTICLE 2
MANAGEMENT SERVICES
2.1 Appointment of Agent/Manager
Owner hereby appoints Manager as its agent for the sole and specific
purpose of managing the marketing, distribution, sale, Enhancement and support
of the Service, subject to the terms and conditions of this Agreement, and
Manager hereby accepts such appointment.
2.2 Management Duties
a. Manager will, in good faith, observe and perform the
following obligations in respect of the marketing, distribution, sale,
Enhancement and support of the Service in a good and workmanlike manner,
utilizing its capable management and technical expertise:
i. Marketing, Distribution and Sale. Manager will be
responsible for the marketing of the Service including, without limitation,
developing marketing materials, organizing product demonstrations,
establishing distribution channels, pricing, promotion and sale of the
Service. Manager will use commercially reasonable efforts to provide the
Service and maximize sales of it. Manager will be responsible for developing
and negotiating the contracts required to supply the Service to Customers.
Owner will be entitled to receive copies of and to comment on standard form
sales and support service contracts and Manager shall address all such
comments with Owner and take into account all of Owner's directions and
instructions forming a part of such comments. All such contracts will contain
provisions of confidentiality acceptable to Owner. In addition, Manager will
have responsibility for the billing and collection of fees and payments from
Customers and for the payment of fees to Owner.
Owner will be entitled to conduct an inspection of the
management of the marketing, distribution, sale, Enhancement and support of
the Service at any time during regular business hours upon reasonable notice
to Manager. Notwithstanding any other provision in this agreement, Manager
will take into account any and all commercially reasonable directions and/or
specifications given by Owner pertaining to the marketing, distribution, sale,
Enhancement and support of the Service which Manager may receive from Owner
from time to time in writing.
ii. Support, Training and Consulting. Manager will have
complete responsibility for delivery and installation of the Service. Manager
will provide all support services for Customers including telephone and
on-site support. Manager will also provide all required training and
consulting support.
iii. Maintenance and Enhancements. All maintenance
necessary to correct any errors in the Technology found by any Customer will
be provided by Manager pursuant to the terms of its support services
agreements. Manager will provide all Enhancements.
iv. With respect to any third party software contained in
the Application Software which is not assignable or for which the term expires
or is terminated, Manager will procure new licenses in the name of Owner, or
if unavailable, Manager will procure new licenses in the name of Owner to
similar products and will modify the source code of the Application Software,
if necessary, to be compatible;
b. In addition to the duties referred to in Subsection 2.1 a.,
Manager will, in good faith and in satisfaction of its fiduciary duty to Owner
do the following:
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i. Reviews. Manager will review and report to Owner or its
duly appointed agent on Manager's performance under this Agreement on an
annual basis. Such reviews will be scheduled by mutual agreement of all
parties.
ii. Computer Code. Manager will deliver computer code (in
object code and source code form) together with all related documentation and
development tools necessary or desirable to enable the software to operate
properly to Owner or its duly appointed agent quarterly, within thirty (30)
days of the end of each fiscal quarter of Manager. Manager will assist Owner
or its agent in verifying that the computer code delivered to Owner is fully
functional Application Software, or Enhancements.
iii. Conflict of Interest. Manager acknowledges and agrees
that it is acting in a fiduciary capacity as agent of Owner and will conduct
itself as such in all dealings on behalf of Owner and in connection with the
performance of its obligations under this Agreement. In particular, Manager
will avoid conflicts of interest between itself and Owner in connection with
the business of providing the Service.
2.3 Insurance
a. Without in any way limiting the liability of Manager under
this Agreement, Manager will be responsible to maintain and keep in force
during the term of this Agreement the following insurance coverage:
i. automobile liability insurance on all vehicles used in
connection with this Agreement. In respect of such vehicles not owned by
Manager, it will maintain and keep in force as aforesaid non-owned automobile
liability insurance protecting its liability including that assumed under this
Agreement. The limits of such insurance will be at least; for bodily injury
(including passenger hazard) and property damages, one million dollars
($1,000,000.00) inclusive for any one accident.
ii. comprehensive general liability insurance (including
liability under this Agreement) with inclusive limits of not less than two
million dollars ($2,000,000.00) for bodily injury and property damage;
iii. employer's liability insurance with limits of not less
than one million dollars ($1,000,000.00) for each employee engaged in the
services where Workers' Compensation does not exist; and
iv. Unless otherwise directed by Owner, in writing,
insurance covering loss of or damage to all machinery, tools, equipment,
supplies and structures owned by Manager and/or rented or leased from a third
party or parties and used by Manager or its sub-contractors in performing its
obligations under this Agreement.
b. The above insurance policies will not be changed in any
manner which could affect the interests of the Owner without thirty (30) days'
prior written notice by registered mail to the Owner.
c. For greater certainty, the parties agree and understand that
the obligations of Manager, as set forth in this Section 2.3, may be fulfilled
if Manager's existing insurance policy satisfies the requirements of this
Section.
ARTICLE 3
ALLOCATION AND DISTRIBUTION OF FEES
3.1 Distribution of Fees Before Payout of the Note
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a. Manager will distribute, annually, until the Note is paid in
full, the Net Sales in the following order of priority:
i. to pay Owner's Fee; and
ii. to pay the Expenses.
b. Manager will distribute, annually, until the Note is paid in
full, the Net Revenue less Owner's Fee payable in the year in the following
order of priority:
i. 55% to Owner, for payment against the principal sum
outstanding from time to time under the Note and in accordance with the Note;
and
ii. 45% to Owner, for retention by Owner.
c. For the purposes of Subsection 3.1 a. the following terms
have the following meanings:
i. "Agency Fee" means fifteen percent (15%) of the annual
costs of marketing, distributing and selling the Service referred to in
Subsection 3.1 c. ii. A.;
ii. "Expenses" means the following cumulative costs and
fees to the extent not previously recouped by Manager in accordance herewith:
A. costs of marketing, distributing and selling the
Service;
B. cost of Enhancements;
C. Overhead and Administration Costs; and
D. Agency Fee.
iii. "Gross Sales" means gross amounts paid by Customers,
in a year, to install, use and get support for the Service;
iv. "Net Revenue" means Net Sales less Expenses;
v. "Net Sales" means Gross Sales less:
A. normal course of business selling credits for
discounts or rebates for the year; and
B. returns or adjustments for the Service for which a
refund has been paid or credited to the Customer, to the extent of the payment
or credit in the year;
vi. "Overhead and Administration Costs" means the overhead
and administrative costs of Manager to provide the Service, for a year,
determined as the pro rata share of Manager's total overhead and
administrative costs for the year, determined by multiplying Manager's total
overhead and administrative costs by the fraction, the numerator of which is
the Net Sales and the denominator of which is the aggregate gross amount paid
by Manager's customers for installation, use and support for all of Manager's
services less normal course of business selling credits for discounts and
rebates and less returns adjustments for which a refund has been paid or
credited to the customer, to the extent of the payment or credit (For purposes
of this Agreement, overhead and
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administrative costs will exclude any salaries of senior management executives
who did not actively participate in the performance of the management
obligations of Systems set forth herein.); and
vii. "Owner's Fee" means an annual fee payable by Manager
to Owner of $475,000 (prorated for any partial year) on February 28 of each
year during the term of this Agreement, commencing February 28, 1998.
d. Notwithstanding anything else contained in this Agreement, in
no event, without the prior written consent of Owner, will fees or other
amounts for the Service:
i. be set below competitive prices prevailing in the market
for similar services as determined by Manager acting in the best interests of
Owner; and
ii. be discounted for any other consideration granted to
Manager, its affiliates or associates that is not provided to Owner.
e. All amounts to be determined for the purposes of the
calculations required pursuant to this Article 3 will be determined in
accordance with United States generally accepted accounting principles
consistently applied from year to year and consistently applied between the
Service sold by Manager hereunder and the other services sold by Manager
outside the scope of this Agreement.
3.2 Distribution of Owner's Fee
Owner's Fee in any year and the amount payable to Owner pursuant to
Subsection 4.4 b., if any, will be payable in the following order of priority:
a. to pay the Interest Amount;
b. to pay any accrued and unpaid interest on the Note; and
c. the excess
(i) in the case of any amount payable pursuant to subsection
4.4(b), to pay the Interest Amount in respect of any subsequent years;
(ii) in the case of the Owner's Fee, to pay as follows:
A. 55% to Owner, for payment against the principal sum
outstanding from time to time under the Note and in accordance with the Note;
and
B. 45% to Owner, for retention by Owner.
3.3 Distribution of Fees After Payout of the Note
a. Manager will distribute, annually after the Note has been
paid in full, the Net Revenue in the following order of priority:
i. 55% to Manager as an agent's fee; and
ii. 45% to Owner.
b. For the purposes of Subsection 3.3 a., the terms defined in
Subsection 3.1 c. have the same meaning except that Subsection 3.1 c. ii. D.,
the Agency Fee, is deleted from the definition of Expenses.
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3.4 Timing and Payment of Distributions
Amounts payable to Owner for a year pursuant to Sections 3.1, 3.2 and 3.3
will be paid within 60 days following the calendar year end.
3.5 Set Off
Manager will have the right to set off amounts payable by Manager to
Owner under this Agreement against amounts payable to Manager by Owner under
the Note except that Manager will have no right of set off and will pay the
following amounts to Owner without regard to the equities between Manager or
its affiliates and Owner and the parties acknowledge and agree that these
amounts are liquidated amounts payable forthwith:
i. amounts payable to Owner pursuant to Subsections 3.1 b.
ii. and 3.2 c.ii. for their retention; and
ii. amounts payable by Owner as sales taxes or goods and
services taxes, which amounts will be remitted forthwith upon their being due,
by Manager to the appropriate authorities on behalf of Owner.
3.6 Reports
a. Manager will give Owner, on a confidential basis, annual
reports within 90 days of the end of each fiscal year, setting forth the
details in respect of all services provided to Customers for the Service
during such year including the name and address of all Customers, type of
service, amount and type of all fees and other amounts payable to date,
potential Customers and projected revenues.
b. In addition, Manager will give Owner, on a confidential
basis, the detailed calculations necessary to establish Gross Sales, Net Sales
and Net Revenue including, without limitation, the component parts thereof
annually, within 90 days of the end of each fiscal year.
3.7 Financial Statements
Manager will provide the following financial statements, for the business
pertaining to the Service, to Owner, annually, within 90 days of the end of
each fiscal year of Manager:
i. the annual reports referred to in Section 3.6;
ii. an audited income statement; and
iii. an audited balance sheet.
3.8 Books and Records
Manager will keep and maintain complete and accurate books and records
related to the business of providing the Service, separate and apart from the
books and records maintained for its own services. These will include records
of all services provided to Customers for the Service, all costs of providing
the Service and the appropriate fees accruing and collected. These books and
records will be maintained according to U.S. generally accepted accounting
principles and practices respecting all matters pertinent to this Agreement.
Owner will have the right to audit the books and records of Manager pertaining
to the Service once each year for a period of four years after the year end.
For this purpose, Owner or its nominee will have, during normal business
hours, access to and the right
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to copy and remove copies of all books and accounting records relating to the
calculation of fees accrued and collected for Services. All information
obtained by Owner or its nominee will be subject to the confidentiality
obligations of this Agreement.
3.9 Taxes
(a) Manager will charge and collect from Customer any and all
taxes of any type that are imposed on the use, sale or support of the Service
by Manager by any federal provincial, state, local or any other taxing
authority in any country in which the Service is provided and Manager will pay
and duly remit on a timely basis to the appropriate taxation authority the tax
so charged and collected;
(b) Manager is responsible to withhold and remit on a timely
basis the amount of any income, sales or any other tax imposed on the Agency
Fee or any other amount paid or credited to the Manager hereunder by any
federal, provincial, state, local or any other taxation authority in any
country regardless of whether the obligation to withhold and remit such amount
is on the Owner;
(c) Subject to subsections 3.9(b) and 3.5 hereof, the Owner and
Manager are required to pay their respective taxes of any type imposed on them
for fees paid or credited to the Owner or Manager hereunder; and
(d) Manager will prepare or provide the Owner with any and all
information or other documentation on a timely basis required by the Owner to
enable the Owner to prepare any return required to be filed by it with any
taxing authority in connection with an amount withheld in accordance with this
subsection 3.9 or alternately, the Manager shall prepare and file such a
return on the Owner's behalf in the name of the Owner within the time required
to file such return and shall provide a copy thereof to the Owner.
ARTICLE 4
GRANT OF RIGHTS
4.1 In consideration of Owner's Fee and other good and valuable
consideration (the receipt and sufficiency of which is acknowledged by Owner)
Owner hereby grants Manager, during the term of this Agreement and subject to
the restrictions imposed in this Agreement, an exclusive, worldwide right to
use, modify and sub-license the source code and/or the object code for the
Application Software, the Intellectual Property and the Documentation for use
only with products or services other than the Service. Manager's right to
sub-license the source code, as contemplated by this Section, is subject to
the prior written agreement of the sublicensee to be bound by a sublicense
agreement, the terms and conditions of which:
a. are no less restrictive with respect to the use of the source
code than the terms of this Agreement;
b. provide Owner the right to ▇▇▇ the sublicensee directly for a
breach of the sublicense by the sublicensee.
4.2 Any modifications to the Application Software made by Manager
that are not Enhancements will be owned by Manager. Any modifications to the
Intellectual Property or the Documentation that do not relate to an
Enhancement will be owned by Manager.
4.3 Neither Manager nor any of its affiliates or associates will,
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directly or indirectly, develop, acquire or market or be involved with or
support any person that does develop, acquire, market or sell any services
that directly compete with the Service in Canada or the United States of
America during the term of this Agreement.
4.4 Manager will have, upon termination of this Agreement, an
exclusive, world wide, paid up right to use, sub-license (subject to the
provisions of Section 4.1) and modify the Application Software:
a. upon termination of this Agreement by Owner pursuant to
Subsection 5.4, if Manager is not then in default of this Agreement; or
b. upon termination of this Agreement by Owner, pursuant to
Section 5.3, if Manager pays Owner, an amount calculated as the difference
between Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) and the
amount of Owner's Fee credited to Owner to the date of termination.
4.5 Protection of Proprietary Rights
Each party hereto shall promptly notify the other party in writing of any
infringement of, or action contesting the validity of, a patent, copyright or
trademark or misappropriation of any trade secret relating to the Application
Software or the Technology. In the case of an infringement, misappropriation
or other action described herein, Manager is hereby authorized to, but shall
not be required to, institute an action against the infringer, misappropriator
or other third party, and to defend or prosecute such action in whatever
manner deemed appropriate by Manager, in its sole discretion. The reasonable
costs and expenses relating thereto shall be deemed to be included within the
definition of "Expenses". If Manager elects not to commence such an action,
then Owner may, but shall not be required to, institute such an action at its
own cost and expense. Any recoveries obtained as a result of instituting such
an action shall be deemed to be Net Sales for the purposes of distributing
such funds. Owner shall cooperate with and generally assist Manager in taking
any action authorized hereunder. This provision shall survive any termination
or expiration of this Agreement, to the extent Manager retains any license to
the Application Software or the Technology.
ARTICLE 5
TERM AND TERMINATION
5.1 Term
This Agreement will be for an initial term expiring August 31, 2007, (the
"initial term") and may be extended, for two additional two year terms, each
term expiring on the respective second anniversary date of the beginning of
such term.
5.2 Automatic Extension
The initial term or any-extension term of this Agreement will be
automatically extended to the next extension term without notice or election
by Manager. Manager may, during any extension term, terminate this Agreement
on 90 days notice given to Owner.
5.3 Termination
Owner may, during the initial term or any extension term, terminate this
Agreement as follows:
a. upon 10 days written notice by Owner to Manager of a breach
of
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any of Manager's obligations to pay Owner under this Agreement, subject to
Section 3.5, if such breach has not been remedied;
b. upon 30 days written notice by Owner to Manager of a material
breach by Manager (other than a failure to pay referred to in Subsection 5.3
a.) of this Agreement if such breach is not remedied within the 30 day notice
period, or if steps are not being taken by Manager which can reasonably be
expected to remedy such breach within 60 days of the date of the notice; or
c. forthwith upon written notice to Manager, in the case of the
petitioning into bankruptcy of Manager, the appointment of a receiver or the
liquidation of the business and affairs of Manager or the commencement of or
ordering of the winding-up of the business and affairs of Manager.
5.4 Termination by Non-Renewal
Owner may, at the end of the initial term or during any extension term,
terminate this Agreement upon 90 days notice given to Manager and upon payment
of all outstanding principal and accrued and unpaid interest under the Note.
5.5 Rights and Duties on Termination
Should the Agreement terminate pursuant to this Article 5, Manager will:
a. promptly provide to Owner all copies of the Technology and
Enhancements (including, in particular, the most current versions of each);
b. forthwith give the Security Agent under the Security Agent
Agreement notice to release all deposited source code and other materials to
Owner and refrain from objecting to the release of the source code and other
materials by the Security Agent;
c. cease marketing the Service;
d. pay all accrued fees to Owner (subject to Manager's right to
set-off amounts owed to Manager by Owner in accordance with Section 3.5) and
provide a full accounting to Owner for fees payable to Owner under this
Agreement.
e. within 90 days of the termination date, provide to Owner, a
final report setting forth the details in respect of all services provided to
Customers for the Service during the period from the end of the last fiscal
year to the termination date including type of service, amount and type of all
fees and other amounts payable to date, potential Customer and projected
revenues, and all other information necessary and relevant to conducting the
Service for the Customers.
5.6 Surviving Obligations
Section 5.5 and Articles 6, 7 and 8 will survive the termination of this
Agreement.
ARTICLE 6
OWNERSHIP OF TECHNOLOGY
6.1 Ownership of Technology
Manager acknowledges that Owner owns all right, title and interest to the
Technology and the Enhancements and that Manager has no rights thereto except
the
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rights expressly granted by this Agreement.
ARTICLE 7
LIABILITY
7.1 Indemnification by Manager
Manager will be liable to Owner for and indemnify and hold Owner harmless
from any and all claims, losses, liability, costs, taxes (including penalties
and interest thereon), expenses (including reasonable legal costs of a
solicitor) and damages which may arise pursuant to this Agreement including
misrepresentations made by Manager, improper installation of, improper support
of, improper use of or infringement of any third party right by, the
Technology (whether in negligence or otherwise), failure to comply with
subsection 3.9 herein or any other material breach of this Agreement. If any
suit, claim or proceeding involving Owner is based on a cause of action which
if proven would entitle Owner to claim the benefit of the indemnification
provided for herein and provided that Manager is given the complete authority,
information and cooperation of Owner, at Manager's expense, required to defend
or settle the suit Manager will:
a. defend the suit at its own expense; and
b. pay all damages and costs awarded against Owner provided that
Manager will not be responsible for any cost, expense or compromise made by
Owner without Manager's written consent.
Owner will be entitled to appoint its own counsel to represent it in any
such action at Owner's expense. In no event will Owner be responsible to any
Customers for any matter whatsoever.
7.2 Limitation of Liability
Neither party shall be liable for any indirect, incidental, special or
consequential damages including, without limitation, damages for loss of data,
loss of business or failure to realize expected profits or savings or other
economic or commercial loss of any kind or loss of use of the Technology or
the service provided using the Technology and costs of substituted technology
or services, whether under any theory of contract (even in the nature of a
breach of a condition or a fundamental term or a fundamental breach), tort
(including negligence or misrepresentation), strict liability or any other
legal or equitable theory, even if such party has been advised of the
possibility thereof, all of which liability is hereby expressly waived by each
party.
ARTICLE 8
CONFIDENTIALITY AND NON-DISCLOSURE
8.1 Each party acknowledges that all material and information which
is or will come into the possession or knowledge of the other in connection
with this Agreement or the performance thereof, consists of confidential and
proprietary data, whether or not so marked, disclosure of which to or use by
third parties will be damaging. All parties, therefore, agree to hold such
material and information in strictest confidence, not to make use thereof
other than for the performance of this Agreement, to release it only to
employees or persons contracted to either party requiring such information,
and not to release or disclose it to any other party. Each party agrees not to
release such information or material to any employee or contractor who has not
signed a written agreement expressly binding himself not to use or disclose
it. Without limiting the generality of the foregoing, any sublicence of the
source code of the Application Software will require the sublicensee to
execute a written
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agreement expressly binding the sublicensee not to use or disclose the source
code other than as set forth in the sublicence agreement. This paragraph will
survive the termination of this Agreement. Nothing herein will prevent either
party from using, disclosing or authorizing disclosure of information or data:
a. that now or hereafter becomes disclosed in published papers,
literature or patents or is generally known in the trade or public through no
action or failure to act on any party's part;
b. that was in either party's possession or was available to
either party from a third party without restriction on disclosure prior to the
execution of this Agreement but this exception does not include the
Technology;
c. that was received by either party from a third party who was
not under an obligation of confidentiality to the party whose information is
being provided;
d. that is independently developed by either party;
e. that is disclosed with the written consent of the party whose
information is being disclosed; or
f. that is disclosed pursuant to a court order or other legal
compulsion.
8.2 All memoranda, notes, records, reports, papers and any other
documents and all copies thereof about any party's business in any way
obtained by any other party pursuant to this Agreement will be the disclosing
party's property and will be returned promptly to the disclosing party upon
termination of this Agreement or at any time upon request.
8.3 The contents of this Agreement and any agreements entered into
pursuant to this Agreement are hereby declared proprietary and confidential to
the parties hereto.
8.4 Each of the parties (the "Indemnifying Party") agrees to
indemnify the other (the "Indemnified Party") for all damages, costs, and
expenses (including court costs and reasonable legal fees) incurred by the
Indemnified Party as a result of a failure of the Indemnifying Party to comply
with its obligations under this Article 8.
ARTICLE 9
RIGHT OF FIRST REFUSAL
9.1 Subject to Owner's right set out in Section 12.4, in the event
that Owner desires to transfer all or any part of the Application Software (or
is required by operation of law or other involuntary transfer to do so), Owner
shall first offer such Application Software to Manager in accordance with the
following provisions:
a. Owner shall deliver a written notice (the "Notice") to
Manager, stating I. Owner's bona fide intention to transfer the Application
Software; ii. the purchase price and terms of payment for which Owner proposes
to transfer the Application Software; and iii. the name and address of the
proposed transferee.
b. Within ninety (90) days after receipt of the Notice, Manager
shall have the right, but not the obligation, to elect to purchase the
Application Software upon the price and terms of payment designated in the
Notice, by delivering written notice to Owner of such election (the "Election
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Notice"). If the Notice provides for the payment of non-cash consideration,
Manager may elect to pay the consideration in cash equal to the good faith
estimate of the present fair market value of the non-cash consideration
offered.
c. If Manager elects to purchase or obtain the Application
Software designated in the Notice, then the closing of such purchase shall
occur within ninety (90) days after delivery of the Election Notice, and each
of Owner and Manager shall execute such documents and instruments and make
such deliveries as may be reasonably required to consummate such purchase and
sale.
d. If Manager elects not to purchase or acquire the Application
Software, then Owner may transfer the Application Software to the transferee
proposed in the Notice, provided that such transfer: i. is completed within
ninety (90) days after the expiration of Manager's right to elect to purchase
the Application Software, ii. is made on terms no less favourable to Owner
than as designated in the Notice, and iii. complies with all of the terms and
conditions of this Agreement, the Application Software Purchase Agreement and
the Note. If the Application Software is not so transferred, Owner must give
notice in accordance with this Section prior to any other or subsequent
transfer of the Application Software.
ARTICLE 10
ARBITRATION
10.1 Arbitration of Disputes
Any dispute arising between the parties under this Agreement will be
settled by initially escalating the dispute to senior management of the
parties for resolution and, in the event that senior management cannot resolve
the dispute within 30 days of escalation of the dispute to such level, then
the parties agree that such dispute shall be settled by arbitration in
accordance with the Arbitration Act (Ontario) in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. Any party
may at any time serve a notice on the other parties specifying a matter in
dispute and giving notice of its intention to arbitrate such matter. Within 30
days of receiving such notice the parties will appoint a single arbitrator to
determine the dispute. If the parties cannot agree on an arbitrator within
such 30 day period then the arbitrator will be appointed in accordance with
the provisions of the Arbitration Act (Ontario), upon application by any
party.
10.2 Timing of Arbitration Proceedings and Decisions
If the arbitrator fails to commence proceedings within 30 days of being
appointed or fails to render a decision within 30 days after concluding the
arbitration proceedings, a new arbitrator may, at the election of any party,
be chosen in a like manner as if none had previously been appointed.
10.3 Arbitration Decision to be Binding
The decision of the arbitrator will be in writing and signed, and will be
final and binding on the parties as to the question submitted for
determination and the parties will abide by the decision and perform the terms
thereof.
10.4 Costs of Arbitration
Unless otherwise determined by the arbitrator, all expenses in connection
with such arbitration will be divided equally between the parties, with the
exception of expenses of counsel, witnesses and employees of the parties which
will be borne by the parties incurring them.
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10.5 Controlling Provisions
In all respects not otherwise provided for in this Article 10, the
provisions of the Arbitration Act (Ontario), as amended from time to time will
apply to any arbitration undertaken hereunder.
ARTICLE 11
NOTICES
11.1 Notice
Every request, notice, statement, communication, ▇▇▇▇ or waiver provided
for in this Agreement will be in writing and will be directed to whom it is to
be given, made or delivered at such person's address for service as specified
in this Section and may be served:
a. personally, by delivering it to whom it is to be served
during that person's normal business hours. Any personally served notice will
be received by the addressee, for the purposes of this Agreement, when
actually delivered as aforesaid; or
b. by telecopy (or by any other like method by which a written
and recorded message may be sent) directed to whom it is to be given, unless
the sender is aware that the relevant receiving equipment is not functioning
properly. Any notice so served will be received by the addressee, for the
purposes of this Agreement upon written acknowledgment of receipt of such
telecopy.
The addresses for service of notices hereunder of the following
persons will be:
Manager: DataLink Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Attention: President
Fax No. :▇▇▇ ▇▇▇-▇▇▇▇
Owner: 605285 Ontario Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Attention: Secretary
Fax. No.:(▇▇▇) ▇▇▇-▇▇▇▇
Any of the foregoing may change their address for service in this Section
by notice given in accordance with this Section.
ARTICLE 12
GENERAL
12.1 Severability
If any one or more of the provisions or parts thereof contained in this
Agreement should be or become invalid, illegal or unenforceable in any respect
in any jurisdiction, the remaining provisions or parts thereof contained
herein will be and will be conclusively deemed to be, as to such jurisdiction,
severable therefrom and:
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a. the validity, legality or enforceability of such remaining
provisions or parts thereof will not in any way be affected or impaired by the
severance of the provisions or parts thereof severed; and
b. the invalidity, illegality or unenforceability of any
provision or part thereof contained in this Agreement in any jurisdiction will
not affect
or impair such provision or part thereof or any other provisions of this
Agreement in any other jurisdiction.
12.2 Further Assurances
The parties will, at any time and from time to time at the request of the
other, execute and deliver any and all such further instruments or assurances
as may be necessary or desirable to give effect to the terms and conditions of
this Agreement.
12.3 Counterpart and Facsimile Execution
This Agreement, and any and all ancillary documents contemplated herein,
may be executed in one or more counterparts and may be executed by facsimile
signatures and all such counterparts and facsimile signatures taken together
will constitute one and the same Agreement and will be binding on the parties
as if they had originally signed one copy of this Agreement.
12.4 Assignment
a. Owner may assign all or any part of its interest in this
Agreement or the Technology, provided however, that any assignment to a
competitor of Manager, shall require the prior written consent of Manager.
Any assignment shall be effected by:
i. giving written notice of the name and address of the
assignee;
ii. by delivering to Manager a written undertaking of the
assignees acknowledging receipt of a copy of this Agreement and agreeing to be
bound by the terms and conditions of this Agreement.
b. Manager may not assign this Agreement, without the prior
written consent of Owner, except that Manager may assign this Agreement in
whole, but not in part, and only with an assignment of all of its rights and
obligations under the Note and the Security Agent Agreement, to (i) any
corporation, partnership or other entity which is controlled by, controlling
or under common control with, Manager; or (ii) a purchaser of all or
substantially all the assets of Manager, or any person or entity into which
Manager is merged or consolidated by:
i. by giving written notice of the name and address of the
assignee; and
ii. by delivering to Owner a written undertaking of the
assignee acknowledging receipt of a copy of this Agreement and agreeing to be
bound by the terms and conditions of this Agreement.
12.5 Binding Effect
This Agreement and all of its provisions will enure to the benefit of the
parties and their respective successors and assigns, and will be binding upon
the parties and their respective successors and assigns. The expressions the
"Manager" and the "Owner" as used herein will include Manager's and Owner's
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assigns whether immediate or derivative, respectively.
12.6 Relationship of the Parties
This Agreement is not a joint venture or other such business arrangement
and any agreement between the parties as to joint business activities will be
set forth in subsequent written agreements. Each party is acting independently
and not as partner, or joint venturer with the other parties for any purpose.
Except as provided in this Agreement none of the parties will have any right,
power, or authority to act or to create any obligations, express or implied,
on behalf of the other parties hereto.
12.7 Time of the Essence
Time will be of the essence of this Agreement.
12.8 Amendment
This Agreement may be altered or amended in any of its provisions when
any such changes are reduced to writing and signed by the parties hereto but
not otherwise.
12.9 Costs
Each party hereto will bear its-own legal, accounting and other costs
relating to all matters involved in this transaction.
12.10 Confidentiality
The parties will treat this Agreement and all information relating to
this Agreement and the transactions contemplated by this Agreement
confidentially and no public disclosure by either party will be made without
the prior approval of the other, not to be unreasonably withheld, except as
legally required by a party to satisfy disclosure obligations to shareholders
and regulators, in which case simultaneous notice of such disclosure will be
given to the other party.
12.11 Entire Agreement
This Agreement, the Application Software Purchase Agreement, the Note and
the exhibits and schedules referred to therein, constitute the entire
Agreement among the parties and supersede all proposals, oral or written, and
all other communications among them relating to the subject matter hereof.
12.12 Equitable Remedies
The parties acknowledge that money damages would not be a sufficient
remedy for certain violations of the terms of this Agreement and, accordingly,
either party will be entitled to specific performance and injunctive relief as
remedies for such violations of the Agreement by the other party. These
remedies will not be exclusive remedies but will, in addition to all other
remedies, be available to such party, at law or equity.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed
by their duly authorized representatives as of the date first above written.
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DATALINK SYSTEMS CORPORATION 605285 ONTARIO INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer Secretary-Treasurer
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