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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 third party selected by Licensor and approved by
Licensee, (the "
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