LICENSE TERMINATION AGREEMENT
-----------------------------
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. Stat
