LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made as of the 5th day of December,
2005
between KINO COMMUNICATIONS, L.L.C., a limited liability company
organized and
existing under the laws of the State of Arizona ("Licensor"), and
KINO
INTERACTIVE GROUP, LLC, a limited liability company organized and
existing under
the laws of the State of Arizona ("Licensee"). Licensor and
Licensee are
sometimes referred to collectively as "Parties" and individually as
"Party".
The Effective Date is December 1, 2005
In consideration of the premises and of the promises and mutual
covenants contained
herein and for other good and valuable consideration, the
receipt and
sufficiency of which is hereby acknowledged, and intending to
be
legally bound hereby,
the parties hereto agree as follows:
SECTION 1.
PURPOSE AND SCOPE
A. Licensor owns the Licensed Programs and Licensed Technical
Information (each as defined below) and copyrights and other
proprietary rights
relating thereto.
B. Subject to the terms, conditions and provisions hereinafter
set
forth, Licensee desires to obtain from Licensor, and Licensor
desires to grant
to Licensee an exclusive, fully paid-up license to (i) use the
Licensed Programs
and Licensed Technical Information on a worldwide basis and (ii)
use and modify
source code of the Licensed Programs.
SECTION 2.
CERTAIN DEFINITIONS.
The following terms, as used herein, shall have the following
meanings:
(i) Affiliate" means, when used with references to Licensee,
any Person directly or indirectly controlling, controlled by or
under
common control with Licensee.
(ii) "Agreed Percentage" means thirty-five percent (35%) for
the period from March 2006 through February 2007, forty-five
percent
(45%) for the period from March 2007 through February 2008 and
fifty
percent (50%) for the period from March 2008 through February
2009.
(iii) "Confidential Information" means and includes (i) the
source code and object code of the Licensed Programs and the
related
Documentation, (ii) the Licensed Technical Information; and (iii)
any
other written or oral information from which the furnishing
party
derives economic value, actual or potential, from such information
not
being generally known to, and not being readily ascertainable by
proper
means by, other persons who can obtain economic value from its
disclosure or use, and which is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
<PAGE>
(iv) "Copyright" means the copyrights related to the Licensed
Work, including the copyright applications and registration(s), if
any,
listed on Exhibit A attached hereto and made part hereof,
authorized
under Title 17 of the United States Code or under the laws of any
other
jurisdiction.
(v) "Customer" means any Person who has executed a valid
sublicense or any other form of agreement relating to the
License.
(vi) "Distributable Cash" means the Agreed Percentage of all
cash receipts received from Licensee's operations in a calendar
month,
minus:
(a) The sum of (1) All expenditures incurred incident
to the normal operation of Licensee's business, including,
without limitation, general and administrative expenses,
current payroll and payroll taxes, commissions, consulting
fees, cost of goods and services sold, accounts payable under
sixty (60) days old, debt service, equipment lease payments,
rent, and (2) Fifteen percent (15%) of Legacy Liabilities;
(b) Reserves; and
(c) Negative Cash Flow.
(vii) "Documentation" means the explanatory and instructive
materials in hardcopy, including manuals and other printed or
visually
perceptible materials that describe the use, function or operation
of a
computer software program.
(viii) "End User Agreement" means an agreement between
Licensee and a Person granting the right to use or benefit from any
of
the rights granted hereinunder.
(ix) "Legacy Liabilities" means all accounts payable in excess
of sixty
(60) days old and delinquent payroll taxes and other tax
liabilities.
(x) "License" means a fully paid up, perpetual, worldwide,
exclusive license, with a right to sublicense to (i) host and use
the
Licensed Work; (ii)
make copies of, and make derivative works of, the
Licensed Work for the use of Licensee in accordance with the terms
of
this Agreement; (iii) distribute, market and Sell the Licensed
Work;
(iv) use and make Modifications to the source code of the
Licensed
Programs; and (v) exploit by implication the Licensed Work by any
other
means.
(xi) "License Fee(s)" means the payments made by Licensee to
Licensor hereunder.
(xii) "Licensed Program(s)" means the StreamSafe,
StreamSyndicate and Webcast software program(s) in source code,
object
code, or any other form having specifications and functionality
described in Exhibits A-1, A-2 and A-3 hereto, together with
(i)
Modifications thereto, (ii) all Documentation, and (iii) all
derivative
works based on the foregoing.
-2-
<PAGE>
(xiii) "Licensed Technical Information" means data furnished
by Licensor that is used to (i) populate the database components of
the
Licensed Programs or (ii) describe the use, function or operation
of
the Programs.
(xiv) "Licensed Work" means the Licensed Programs, the
Licensed Technical Information and any derivative works, as well as
all
United States and foreign Copyrights.
(xv) "Modification(s)" means any and all changes including
improvements, enhancements, corrections, revisions to the work or
any
portion thereof, and any derivative of or work substantially
similar to
any of the foregoing, made by Licensee.
(xvi) "Negative Cash Flow" means the occurrence when all cash
receipts received from Licensee's operations in a calendar month
is
less than the following:
(a) The sum of (1) All expenditures incurred incident
to the normal operation of Licensee's business, including,
without limitation, general and administrative expenses,
current payroll and payroll taxes, commissions, consulting
fees, cost of goods and services sold, accounts payable under
sixty (60) days old, debt service, equipment lease payments,
rent, and (2) Fifteen percent (15%) of Legacy Liabilities,
plus
(b) Reserves.
(xvii) "Person(s)" means any corporation, partnership, joint
venture or natural person.
(xviii) "Protected Information" has the meaning ascribed in
Section 7.
(xix) "Reserves" means, with respect to any calendar month or
other fiscal period, funds set aside or amounts allocated during
such
period to reserves which shall be maintained in amounts deemed
sufficient by the Managers for working capital, capital
expenditures,
and to pay taxes, insurance, or other costs or expenses incident to
the
proper operation of Licensee's business, plus a minimum monthly
balance
in Licensee's operating accounts of not less than seventy-five
thousand
dollars ($75,000).
(xx) "Sell" or "Sale" as applied to the Licensed Work means a
genuine bona fide transaction for which consideration is received
or
expected for the use, lease, transfer or any other disposition of
the
Licensed Work. A Sale of the Licensed Work shall be deemed
completed at
the time Licensee or its sublicensee receives payment for such
Licensed
Work.
-3-
<PAGE>
SECTION 3.
GRANT OF LICENSE
A. Subject
to the terms and conditions contained in this Agreement,
Licensor hereby grants to Licensee for the term of this Agreement
the License.
Licensor reserves no further rights to make copies of, to make
derivative works
of and to use the Licensed Work for commercial purposes and to
license the
Licensed Work to third parties subject to the terms of this
Agreement.
B. Licensee shall have the right to make Modifications of the
Licensed
Work, which Modifications, and all patents, copyrights and
trademarks relating
thereto, shall become the property of Licensee from the moment of
their
creation, subject to the Licensor's license rights hereunder.
C. Licensee will assume all responsibility for hosting and
supporting
the Licensed Work. Licensor is under no obligation to correct
defects and
provide Licensee with fixes to the Licensed Work or to support the
Licensed Work
to assure that it remains commercially viable.
D. Licensee shall be responsible for and shall control the
preparation,
prosecution and maintenance of all copyrights and patent rights
pertaining to
the Licensed Programs.
SECTION 4.
LICENSE FEES
A. In consideration for the License, Licensee shall pay Licensor
a
License Fee, not to exceed an aggregate of one million dollars
($1,000,000)
during the term of the License, as follows:
(i) A lump sum payment of one hundred twenty-five thousand
dollars ($125,000) payable on March 15, 2006;
(ii) Distributable Cash for each calendar month thereafter
commencing April 2006, payable in arrears on the 15th day of the
next
calendar month and each calendar month thereafter with respect to
the
prior calendar month.
B. Licensee will deliver to Licensor within forty-five (45) days
after
the end of each calendar quarter a report, certified by the chief
financial
officer of Licensee, setting forth in reasonable detail the
calculation of the
earned License Fees payable to Licensor for such calendar
quarter.
C. All payments of Licensee Fees and other amounts to Licensor
under
this Agreement will be made in United States dollars by check
payable to
Licensor and sent to such address as Licensor designates. Amounts
that are not
paid when due will accrue interest from the due date until paid, at
a rate equal
to the prime rate as announced from time to time by the Bank of
America plus two
percent (2%) with a maximum cap of eighteen percent (18%). Licensor
may treat
unpaid payments as a breach of this Agreement notwithstanding the
payment of
interest.
-4-
<PAGE>
D. Licensee will maintain complete and accurate books and records
that
enable the License Fees payable hereunder to be verified. The
records for each
calendar quarter will be maintained for five years after the
submission of each
report. Upon reasonable prior notice to Licensee, Licensor and its
accountant
will have access to the relevant books and records of Licensee
necessary to
conduct a review or audit thereof. Such limited access will be
available not
more than twice each calendar year, during normal business hours,
and for three
years after the expiration or termination of this Agreement. If
Licensor
determines that Licensee has underpaid License Fees by ten percent
(10%) or
more, Licensee will immediately pay to Licensor such amount plus
interest as set
forth above in addition to the documented costs and expenses of
Licensor's
accountant in connection with its review or audit. If an
overpayment is
determined to exist, Licensor will refund any monies overpaid by
Licensee back
to Licensee.
E. All payments other amounts to Licensor under this Agreement
shall be
made in United States dollars in immediately available funds to the
location
specified by Licensor from time to time pursuant to the notice
provisions
hereunder.
SECTION 5.
WARRANTIES
A. Each of the Parties warrants and represents to the other that
(i) it
is duly organized, validly existing and in good standing under the
laws of its
state of formation; (ii) it has the full power to enter into this
Agreement and
to grant the rights set forth herein; (iii) this Agreement, when
executed and
delivered by such Party, will be the legal, valid and binding
obligation of such
Party enforceable against it in accordance with its terms without
the consent of
third partie
