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LICENSE TERMINATION AGREEMENT
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THIS LICENSE TERMINATION AGREEMENT ("Agreement") is entered into
as of
the 1st day of February, 2005 (the "Effective Date"), by and
between
Integrated Data Corp. ("IDC"), and DataWave Systems, Inc.
("DataWave"), both
Delaware corporations.
Recitals
A. On March 17, 2000, DataWave granted to DataWave International
Limited, a
British limited company ("DataWave International"), an exclusive
license to
make, sell, and use the DataWave trade name, technology,
know-how, trade
secrets and patents then existing and to be developed in future,
to enable
DataWave International to operate in a territory consisting of
world-wide
with the exception of North America, the Caribbean, and South
America (the
"DataWave License," the "DataWave Technology," and the
"Territory,"
respectively).
B. The initial term of the DataWave License was ten years from
and after
March 17, 2000, with a single ten-year renewal, exercisable upon
initial
expiration. The DataWave License contains no restriction that
would prohibit
its assignment.
C. Through a series of wind-ups and corporate consolidations in
the period
2000 to 2002, the DataWave License passed into the hands of IDC
for valid
consideration in December 2002.
D. IDC had intended to exercise its rights under the DataWave
License and
exploit the DataWave Technology throughout the Territory, but in
recent
months has determined instead not to pursue these plans.
E. Both DataWave and IDC (as a shareholder of DataWave), believe
that it is
in their mutual best interests that the DataWave Technology be
introduced and
exploited throughout the Territory, but that in view of
changed
circumstances, the DataWave License should now be terminated and
revoked so
that DataWave can expand its own operations into the
Territory.
F. In an independent valuation conducted by Evans & Evans,
Inc. for IDC on
March 24, 2004, the DataWave License was valued between
US$1,990,000 and
US$2,030,000.
G. For the reasons stated above the parties for good and
valuable
consideration the receipt and sufficiency of which are hereby
acknowledged,
do agree to proceed as set forth in the Agreement Provisions
below.
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Agreement Provisions
1. License Termination and Revocation. Effective immediately
with the
signing and delivery of this Agreement the parties are mutually
agreed that
the DataWave License be and the same shall be terminated and
revoked, and all
of the rights, title and interest in and to the DataWave
Technology granted
to IDC pursuant to the terms and conditions of the DataWave
License shall
cease and revert to and become the sole and exclusive property
of DataWave.
2. Consideration. As consideration to IDC for the termination
and
revocation of the DataWave License, DataWave agrees to pay
total
consideration of US$865,000 to IDC as follows:
2.1 US$265,000 in cash in immediately available funds as of the
date of
this Agreement; and
2.2 Issuance to IDC as holder a note of DataWave in the
principal
amount of US$600,000, having a term of two years, bearing no
interest, and
convertible into shares of DataWave common stock as provided in
paragraph 3.
below (the "Note").
3. Note Convertibility Provisions.
3.1 At any time within two (2) years from and after the date of
this
Agreement, IDC at its sole discretion, shall have the right to
convert the
Note by making demand upon DataWave for the issuance of
7,500,000 shares of
the common stock of DataWave at a price of US$0.08 per share
(the "Conversion
Shares").
3.2 If IDC shall fail to exercise its right to convert as
provided in
paragraph 3.1 above, upon expiration of the term of the Note
then DataWave
shall have the option to pay down the principal balance of the
Note for
US$600,000 in cash, or to issue and tender the Conversion Shares
to IDC.
4. Provisions Relating to Issuance of the Conversion Shares. The
parties
understand and agree that the Conversion Shares, if issued, will
not be
registered under the provisions of the 1933 Securities Act or
the securities
laws of any US state or Canadian province, and will be subject
to the
restrictions imposed under Rule 144 of the Rules and Regulations
of the 1933
Securities Act.
5. Status
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