NON-EXCLUSIVE LICENSE
AGREEMENT
This agreement
entered into this 2 nd day of January 2007, by and
between b-50.com, LLC (B-50) (hereinafter, “Licensor”)
and XFormity, Inc. (“XFormity”), a Texas corporation
located in Dallas, Texas (hereinafter,
“Licensee”);
RECITALS
Whereas
Licensee is in the business of providing above-store reporting
systems and related services to customers in the restaurant
industry. The above-store reports are based on restaurant
point-of-sale (POS) data;
Whereas
Licensor is the owner of United States Patent No. 6,633,851 B1
(“the ‘851 Patent”), which issued October 14,
2003, and, as the owner, is authorized to issue licenses
under;
Whereas
Licensee intends to develop, sell, install, and service certain
above-store reporting products (“the Applicable
Products”) that fall within the claims of the ‘851
Patent;
It is hereby
agreed that Licensor does grant a non-exclusive license to
the Licensee subject to the following terms and
conditions:
TERMS OF THE
NON-EXCLUSIVE LICENSE
1. Licensee
shall be allowed to develop, sell, install, and service certain
above-store reporting products (“the Applicable
Products”).
“Applicable Products” is defined for
purposes of this License Agreement as: those XFormity products and
/ or services for the restaurant industry that are dependent on the
methods defined within the ‘851 patent; products and /or
services used to provide the XFormity products and/or services for
the restaurant industry that are dependent on methods defined
within the ‘851 patent; or products and / or services that
are used in conjunction with other products and / or services that
are dependent on the methods defined within the ‘851 Patent.
The Applicable Products would include but not be limited to: uses
of the QSRx above-store reporting product; any new versions,
derivatives or additions to this product that fall within the scope
of the 851 patent; Accounting Integrations Services for the
restaurant industry; and any other products or services that
incorporate QSRx within the restaurant industry. Applicable
Products shall not include any XFormity products or services
outside of the scope of the ‘851 patent. For example,
Applicable Products shall not include the following XFormity
services: DSL provisioning and installation; Background Checks and
reporting (as it does not relate to POS data); Hosted Accounting
Packages and services such as Great Plains and/or Dynamics;
licensing of XFormity’s core data integration suite currently
marketed under the trademark “Qube” where (a) the
originating source of the data is not a restaurant, or (b) no
reporting related services are involved; and all uses of the QSRx
reporting product and/or XFormity Business Intelligence solution
for any industry or industry segment where the originating source
of the data is not a restaurant.
2. The
financial terms of the License Agreement are as follows:
a) XFormity will pay monthly royalty fees to
B-50 based on the Gross Revenues of Applicable Products.
b) “Gross Revenues” shall be defined
as all revenues collected by XFormity for the provision of products
and / or services utilizing the Applicable Products. However,
“Gross Revenues” shall not include the sales taxes
associated with the acquisition or use of the Applicable
Products.
c) The Royalty Fees will be based on the monthly
Gross Revenue for Applicable Products according to the following
schedule:
1. 0 to $210,000 is 6% of gross monthly revenue
for Applicable Products;
2. $210,000 to $420,000 is 6.5% of gross monthly
revenue for Applicable Products;
3. $420,000 to $625,000 is 7.0% of gross monthly
revenue for Applicable Products;
4. over $625,000 is 7.5% of gross monthly
revenue for Applicable Products.
d) Any location which utilized B-50 services
after January 1 st 2006 and subsequently utilizes
Xformity’s Applicable Products will be a Transfer Location.
The royalty percentage for all Transfer Locations will be doubled
when calculating the monthly royalty for Applicable Products as
described in paragraph 1 (above).
e) This License Agreement doesn’t include
the licensing of the ‘851 patent for YUM Corporate Restaurant
Locations since the royalty for YUM Corporate Restaurant Locations
is undefined at this time. Nothing in this License Agreement shall
prevent b-50 or XFormity from doing future business with any YUM
Corporate Restaurant Location once the royalty for YUM Corporate
Restaurant Locations has been defined. Nothing in this License
Agreement shall prevent b-50 or XFormity from submitting bids, or
otherwise competing to provide services to any YUM Corporate
Restaurant Location.
f) For the first two years of the License
Agreement, B-50 will accept Xformity common stock in payment of
Royalty Fees. The shares will be “restricted
securities” within the meaning of Rule 144 of the Securities
Act of 1933, as amended. The stock will be issued by the Issue Date
to B-50 on a quarterly basis. The amount of XFormity common stock
issued will be based on the sum of the calculated royalty fees for
each of the previous three months using the schedule in Paragraph 2
(c) above divided by the average daily close of the common stock on
the over-the-counter market and quoted on the OTC Bulletin Board
for the three month period for which royalties are being paid. The
Issue Date will be no later than 30 days after the end of the
quarter. If at the end of the first 6 months of this Agreement
XFormity does not provide common stock in payment of the Royalty
Fees that has been registered for sale under the Securities Act of
1933, as amended, then beginning with the 7 th month,
XFormity shall pay the Royalty Fees in cash.
g) Royalty payments shall be due every three
months commencing the date hereof and shall be payable 30 days
after the end of three month period for which they are
due.
h) Royalty payments which are made more than 30
days past the due date set forth in Paragraph 2(g) above shall be
subject to a one and one half percent (1 ½%) per month
finance charge. Failure of the Licensor to exercise the right to
collect late fees under this paragraph shall not constitute a
waiver of the right to collect late fees.
3. Conditions
of Default: The following acts or events shall constitute a
material breach of this License Agreement and also a default under
this License Agreement, which will give the Licensor the immediate
right to terminate the agreement:
a) Late payment
of royalties, which default is not cured after 30 days’
written notice;
b) If the
Licensee challenges the validity of the License Agreement, or
supports, encourages, or assists others to challenge the validity
of the license agreement for the duration of the license term.
However, Licensee shall not be in default under this provision if
Licensee is legally obligated to comply with a court order or
subpoena;
c) If the
Licensee fails to comply with any obligation set forth in this
Agreement, which default is not cured after 30 days’ written
notice.
If Licensor
terminates the agreement for any reason described in Paragraph 3,
Licensee shall no longer have any rights under this Agreement or
the ‘851 Patent. If Licensor terminates the agreement for any
reason described in Paragraph 3, Licensor will retain all rights in
the ‘851 Patent, including the right to enjoin Licensee from
infringing the ‘851 Patent.
4. To enable
the Licensor to verify the accuracy of the royalty amounts,
Licensee shall provide the name(s) of its customers to whom it has
sold any Applicable Products to an independent th
