Exhibit 10.3
ENGAGEMENT AGREEMENT
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THIS ENGAGEMENT AGREEMENT (the "Agreement") is made and entered into this
10th day of July, 2006 (hereinafter "Effective Date"), by and between Affinity
Technology Group, Inc., a Delaware corporation ("Affinity"), and
decisioning.com, Inc., a Delaware corporation (the "Company"), on the one hand,
and McBride Law, PC, a California professional company (the "Law Firm"), on the
other.
WITNESSETH:
WHEREAS, all the issued and outstanding capital stock of the Company
currently is owned by Affinity; and
WHEREAS, the Company and Withrow & Terranova, PLLC ("W&T") have entered
into a Legal Representation Agreement, dated May 27, 2003, pursuant to which the
Company has engaged W&T on an exclusive basis to represent the Company in
connection with licensing and enforcing patents owned by the Company; and
WHEREAS, the Company desires to engage the Law Firm to assist the Company
and W&T in connection with the solicitation, negotiation and execution of Patent
Agreements with third parties and related patent litigation; and
WHEREAS, the Company and W&T are concurrently entering into an Amended and
Restated Legal Representation Agreement, dated as of the date hereof (the "Legal
Representation Agreement"), to reflect the terms of the Company's engagement of
W&T following the date hereof; and
WHEREAS, the Company and the Law Firm desire to enter into this Agreement
to set forth the terms and conditions of the Company's engagement of the Law
Firm;
NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:
SECTION I
DEFINITIONS
1.1 "Patents" shall mean the U.S. patents listed in Appendix A and their
corresponding non-U.S. counterparts, and all reissuances, re-examinations,
continuations, continuations-in-part, and divisionals, of all of the
aforementioned, if any.
1.2 "Patent Agreement" shall mean an agreement entered into after the date
hereof under which the Company grants a license to all or a subset of the
Patents to any third party, whether with or without patent litigation; provided,
however, that the term Patent Agreement shall not mean any agreement between the
Company and any party with whom the Company currently has an Existing Licensing
Agreement.
1.3 "Litigation" shall mean (1) the filing and prosecution of a lawsuit for
patent infringement against a third party for infringement of one or more of the
Patents (including, but not limited to, defending any counterclaims brought by
such third party in connection therewith); (2) the defense of any of the Patents
in an action against the Company in respect to any of the Patents, including a
declaratory judgment; (3) the filing and prosecution of a patent infringement
counterclaim against a third party that brings an action against the Company in
respect to any of the Patents, including a declaratory judgment against any of
the Patents; or (4) a patent interference proceeding at the U.S. Patent &
Trademark Office (USPTO). If a counterclaim of patent infringement is made by
the Company in a legal action filed by a third party against the Company in
respect to any of the Patents, the defense of such action and counterclaim shall
count as a single Litigation. A Litigation is deemed to have ended when such
Litigation is dismissed from the tribunal in which the Litigation was filed, the
Company decides not to appeal a judgment within the prescribed time under
applicable law, or a judgment is rendered by a tribunal from which no appeal can
be taken. A Litigation instigated by the Company that names multiple independent
parties is considered to be multiple Litigations where the total number of
Litigations is the same as the number of independent parties named in such
Litigation.
SECTION II
ENGAGEMENT OF THE LAW FIRM
2.1 The Company hereby engages the Law Firm to assist the Company and
W&T in connection with the solicitation, negotiation and execution of Patent
Agreements and with third parties and related patent Litigation. In such
capacity, the Law Firm shall become an attorney of record for the Company with
respect to pending Litigations involving the Company's Patents and represent the
Company in such pending Litigations. The Law Firm shall also assist the Company
in the solicitation, negotiation, and execution of Patent Agreements with third
parties and Litigation against prospective licensees if legal action becomes
necessary at the request of the Company. The Company shall have control of any
material decisions in connection with such representation. Notwithstanding the
foregoing, without the consent of the Law Firm, at no time shall the Company
require the Law Firm, and the Law Firm shall not be obligated, to represent the
Company in more than seven (7) Litigations (provided that such number shall be
reduced to five (5) if the engagement by the Company of W&T shall terminate and
the Company shall not have replaced such firm with substitute counsel that
provides substantially the same or similar services as W&T). The Company shall
have control of all material decisions involving any Litigation, including
selection of which third parties legal action shall be brought against, and
settlement of any Litigation. The Law Firm hereby represents and warrants to the
Company that the member of the Law Firm responsible for the Law Firm's duties
and obligations under this Agreement shall be Kevin McBride (the "Member").
2.2 Nothing contained in this Agreement shall be construed as granting or
conveying to the Law Firm any rights to use the Patents, by implication or
otherwise. The Law Firm hereby acknowledges the Company's proprietary interest
in the Patents and all materials related thereto, and the Law Firm hereby agrees
not to take, or authorize the taking of, any action that would compromise,
damage or dilute the interest of the Company in the Patents or any related
materials. The Law Firm hereby agrees that it shall not challenge or otherwise
take any action to impair the Company's rights in the Patents.
SECTION III
DUTIES OF THE LAW FIRM
3.1 The Law Firm hereby agrees in connection with its legal representation
of the Company under this Agreement to use its best efforts to perform its
duties under this Agreement, including without limitation to:
A. Identify prospective licensees based on market analysis;
B. Contact such prospective licensees and discuss possible Patent
licenses;
C. Negotiate, draft and obtain a definitive Patent Agreement with
each such prospective licensee; and
D. If requested by the Company, represent the Company as legal
counsel in connection with any Litigation commenced by the
Company during the term of this Agreement provided that if the
Law Firm is not licensed to practice law in the jurisdiction
where such Litigation is brought or defended, as the case may be,
the Law Firm shall be allowed by the Company to hire local
counsel licensed to practice law in the jurisdiction where such
Litigation is brought or defended, as the case may be. The Law
Firm is only required to commence a Litigation against a third
party if such third party infringes at least one valid claim in
the Patents and the requirements of Rule 11 of the Federal Rules
of Civil Procedure are met and satisfied.
3.2 The Law Firm, under the direction of the Company, shall solicit, draft
and negotiate (subject to Section 3.3 below) Patent Agreements with third
parties.
3.3 Notwithstanding anything in this Agreement to the contrary, all Patent
Agreements shall be in such form and have such terms and conditions, including
pricing terms, as are established and approved by the Company.
3.4 The Company may engage persons and/or other counsel to assist the Law
Firm to perform its duties hereunder. The Law Firm may engage persons and/or
other counsel to assist the Law Firm to perform its duties hereunder subject to
final approval by the Company; provided, however, that (a) the Member shall
directly supervise the activities of any such persons or other counsel; and (b)
the Law Firm shall obtain the Company's approval prior to engaging any such
persons or other counsel, and, if requested by the Company, the Law Firm shall
cause such persons to enter into a non-disclosure agreement and in an
attorney-client relationship (if counsel) with the Company on terms and
conditions reasonably acceptable to the Company. The Law Firm shall at all times
use its best efforts to work cooperatively and diligently with W&T in connection
with their joint representation of the Company under this Agreement and the
Legal Representation Agreement.
3.5 The Law Firm shall not be required to take any action with respect to
the Company or the Patents that is prohibited by law.
3.6 All material decisions that arise out of the Law Firm performing its
duties provided in Section 3 of this Agreement shall be made under the direction
of the Company.
SECTION IV
COVENANTS OF THE COMPANY
4.1 If:
(a) the Company identifies a prospective licensee that, in the
Company's reasonable opinion, infringes all or a subset of
valid claims in any of the Patents; and
(b) after reasonable time and effort by the Law Firm, such
prospective licensee refuses to enter into a Patent
Agreement with the Company,
then, upon the Company's reasonable request, the Law Firm shall promptly
commence a legal action against such prospective licensee for patent
infringement of the Patents in which all or a subset of valid claims of the
Patents are infringed. Notwithstanding the foregoing, without the consent of the
Law Firm, at no time will the Company require the Law Firm to represent the
Company in more than seven (7) Litigations at any one time (provided that such
number shall be reduced to five (5) if the engagement of W&T shall terminate and
the Company shall not have replaced such firm with substitute counsel that
provides substantially the same or similar services as W&T).
4.2 The Company shall promptly advise the Law Firm regarding all inquiries
received by the Company relating to the licensing of any or all of the Patents.
The Law Firm shall promptly advise the Company regarding all inquiries received
by the Law Firm relating to the licensing of any or all of the Patents.
4.3 In consideration of the Law Firm's legal representation services
hereunder, the Company shall pay to the Law Firm the amounts established
pursuant to Sections 5.1 and 5.3 of this Agreement below.
SECTION V
COMPENSATION
5.1 (a) As compensation for its services hereunder, the Law Firm shall
receive a compensation payment equal to (i) a percentage equal to the Litigation
Revenue Percentage set forth on Appendix C to this Agreement (the "Litigation
Revenue Percentage") of all amounts paid as damages, in settlement, or licensing
by any parties against whom Litigation has been commenced by the Company during
the Term of this Agreement (the "Litigation Revenues"); (ii) a percentage equal
to the Licensing Revenue Percentage set forth on Appendix C to this Agreement
(the "Licensing Revenue Percentage") of all other revenues received by the
Company pursuant to any Patent Agreements with any third parties other than
those resulting from Litigation (the "Licensing Revenues"); and (iii) 50% of the
Law Firm's billing rates, as set forth on Appendix C to this Agreement, for
services rendered by the Law Firm during the Term of this Agreement to perform
its obligations under this Agreement, subject to Company's right generally to
approve work to be performed and subject to the maximum amount of monthly
billable hours for each level of professional set forth in Appendix C to this
Agreement. Such compensation shall be payable by the Company to the Law Firm
within thirty (30) days after the Company has received such Litigation Revenues
or Licensing Revenues or an invoice from the Law Firm for billed services
rendered, as the case may be. Notwithstanding the foregoing, the Law Firm shall
not be entitled to receive any compensation with respect to revenues generated
under any agreement between the Company and any of the parties identified on
Appendix B (the "Existing License Agreements").
(b) In addition to the foregoing, if the Company shall sell, directly or
indirectly through the sale of Affinity or the Company, one or more of the
Patents (the "Sold Patents") to a third party (the "Purchaser"), the Law Firm
will be entitled to receive a payment in an amount equal to the Licensing
Revenue Percentage (the "Sales Commission") of the total purchase price paid by
the Purchaser to the Company or Affinity, as the case may be (reduced by all
ordinary and customary expenses incurred in connection with such sale) (the
"Sales Price"). The amount of such Licensing Revenue Percentage shall be
determined as if the Sales Price were Licensing Revenues in accordance with
Appendix C to this Agreement.
If the Sold Patents are sold as a result of the Purchaser purchasing
Affinity, and Affinity is engaged in another business or owns other assets not
related to the licensing or sale of the Sold Patents that are also being sold to
the Purchaser as part of the same sale with the Sold Patents (the "Other
Assets"), the Sales Price to which the Sales Commission shall be applied shall
be the percentage of the Sales Price that is equal to (1) the fair market value
of Sold Patents divided by (2) the fair market value of the Sold Patents plus
the fair market value of the Other Assets (the "Pro-Rata Sales Price"). If there
is any dispute between the parties about the Pro-Rata Sales Price to which the
Sales Commission shall be applied, both parties shall work cooperatively
together in good faith to select an independent appraiser at a cost to be shared
equally between the Company and the Law Firm that is qualified to evaluate the
fair market value of the Sold Patents and the fair market value of the Other
Assets, and the results of such analysis shall be used by the parties to
calculate the Pro-Rata Sales Price.
In addition, the Sales Commission shall not exceed three million dollars
($3,000,000.00) (the "Sales Commission Limit") if such sale occurs within one
year after the Effective Date of this Agreement. On the first anniversary date
of this Agreement, the Sales Commission Limit will be increased to three million
six hundred thousand dollars ($3,600,000.00), and commencing on the second
anniversary of this Agreement, there shall be no Sales Commission Limit to limit
the Law Firm receiving the full Sales Commission. Such Sales Commission
discussed above in this Section 5.1(b), and subject to the provisions set forth
in Section 5.2 below, shall be payable by the Company to the Law Firm within
thirty (30) days after the Company has received the Sales Price from the
Purchaser and shall consist of the same proportionate cash and non-cash
consideration as paid by the Purchaser to the Company. Upon payment of the Sales
Commission, this Agreement shall terminate, and neither the Company nor the
Purchaser(s) shall be obligated to make any further payments to the Law Firm
under or in connection with this Agreement except as provided in Section 5.3 of
this Agreement.
5.2 In the event the Company executes a sales transaction as contemplated
by Section 5.1(b) above and the Purchaser or Purchasers desire to retain the
services of the Law Firm in a professional capacity, the retention of such
services shall be disclosed to the Company in writing within fifteen (15) days
after the closing of the sales transaction and shall be subject to the Company's
written approval. In the event the retention of the Law Firm's services are not
disclosed to the Company within fifteen (15) days of the closing of the sales
transaction or Company withholds its approval, the Law Firm agrees that neither
the Law Firm nor any one of its Member will, for a period of five (5) years
after such sales transaction, provide any professional services to any Purchaser
or Purchasers if such professional services have a bearing directly or
indirectly on the Patents.
5.3 The Company shall be responsible for and shall pay for all
out-of-pocket costs and expenses incurred or to be incurred by the Law Firm in
connection with its services hereunder on a periodic and ongoing basis,
including but not limited to production services, travel and lodging required,
consultants, and other experts, but excluding costs and expenses incurred in
connection with the operations of the Law Firm. All such out-of-pocket expenses
must be pre-approved by the Company.
5.4 The Law Firm may, at its cost and expense, audit the Company's and/or
Affinity's books and records for the purpose of determining the amount of
Revenues received by the Company from the Patent Agreements. Any such audit
shall be no more frequent than once each calendar year.
5.5 The Company and the Law Firm hereby agree that if the engagement by the
Company of W&T shall terminate for any reason, the Litigation Revenue Percentage
and the Licensing Revenue Percentage payable to the Law Firm hereunder shall be
adjusted for Litigation commenced and Patent Agreements executed subsequent to
such termination as follows:
If the Company does not replace W&T in a timely fashion with substitute counsel
that provides substantially the same or similar services as W&T, the Litigation
Revenue Percentage payable to the Law Firm shall increase to 25% and the
Licensing Revenue Percentage payable to the Law Firm as set forth in Appendix C
shall increase to 16% (for licensing revenues less than $100 million), 16% (for
licensing revenues between $100 million and $200 million), 16% (for licensing
revenues between $200 million and $300 million), 13% (for licensing revenues
between $300 million and $400 million), 9% (for licensing revenues between $400
million and $500 million) and 5% ($500 million and more).
If the Company does replace W&T in a timely fashion with substitute counsel that
provides substantially the same or similar services as W&T, the Litigation
Revenue Percentage payable to the Law Firm will be increased to 10% and the
Licensing Revenue Percentage payable to the Law Firm as set forth in Appendix C
will be amended to read 10% (for licensing fees less than $100 million), 10%
(for licensing revenues between $100 million and $200 million), 8.5% (for
licensing revenues between $200 million and $300 million), 6.5% (for licensing
revenues between $300 million and $400 million), 4.5% (for licensing revenues
between $400 million and $500 million) and 2.5% (for licensing revenues over
$500 million).
SECTION VI
TERM AND TERMINATION
6.1 The term of this Agreement shall commence upon the Effective Date of
this Agreement and shall continue until the last to expire of the Patents,
unless earlier terminated by any party in accordance herewith. Either party may
terminate this Agreement for any reason, with or without cause, by providing the
other party with no less than thirty (30) days advance written notice, and
subject to the foregoing, this Agreement shall terminate at such time as set
forth in such notice. In addition, either party may terminate this Agreement for
cause (as specified below) at any time by delivering notice to the other party,
and this Agreement shall thereupon terminate immediately.
6.2 The Company may terminate this Agreement at any time for cause. With
respect to any such termination, "cause" shall mean (i) the Law Firm shall have
materially breached any term of this Agreement or any other agreement between
the Company or any of its affiliates and the Law Firm and, if such breach can be
cured, the Law Firm shall have failed to cure such breach within thirty (30)
days after receiving notice from the Company of such breach; provided, however,
that the Company shall not be required to give notice of any specific type of
breach more than once; (ii) the employment of the Member with the Law Firm shall
terminate, or the Law Firm shall re-assign, without the Company's prior written
consent, primary responsibility for the Law Firm's obligations under this
Agreement to any person other than the Member; (iii) the Law Firm shall have
committed an act of financial dishonesty against the Company; (iv) the Law Firm
shall have committed an act involving a felony or involving moral turpitude that
brings the Company or any of its affiliates into public disrepute; or (v) the
Law Firm shall have demonstrated repeated inattentiveness with respect to its
obligations under this Agreement as evidenced by, without limitation, failure by
the Law Firm to devote the time and attention required to fulfill its
obligations under this Agreement, repeated failure by the Law Firm to return
telephone calls from the Company, repeated failure by the Law Firm to
participate in any meetings reasonable arranged by the Company, or any other
acts or failures to act that evidence the Law Firm's repeated inattentiveness
provided that the Law Firm shall have failed to cure such inattentiveness within
thirty (30) days after receiving notice from the Company of such
inattentiveness; and provided, however, that the Company shall not be required
to give notice of any specific type of inattentiveness more than once.
6.3 The Law Firm may terminate this Agreement at any time for cause. With
respect to any such termination, "cause" shall mean (i) the Company shall have
materially breached any term of this Agreement or any other agreement between
the Company and the Law Firm and, if such breach can be cured, the Company shall
have failed to cure such breach within thirty (30) days after receiving notice
from the Law Firm of such breach; provided, however, that the Law Firm shall not
be required to give notice of any specific type of breach more than once; (ii)
the Company shall have committed an act of financial dishonesty against the Law
Firm; (iii) the Company shall have committed an act involving a felony or
involving moral turpitude that brings the Law Firm or any of its affiliates into
public disrepute; or (iv) the Company shall have demonstrated repeated
inattentiveness with respect to its obligations under this Agreement as
evidenced by, without limitation, failure by the Company to devote the time and
attention required to perform its obligations under this Agreement, repeated
failure by the Company to return telephone calls from the Law Firm, repeated
failure by the Company to participate in any meetings reasonably arranged by the
Law Firm, or any other acts or failures to act that evidence the Company's
repeated inattentiveness provided that the Company shall have failed to cure
such inattentiveness within thirty (30) days after receiving notice from the Law
Firm of such inattentiveness; provided, however, that the Law Firm shall not be
required to give notice of any specific type of inattentiveness more than once.
6.4 If this Agreement is terminated, the Law Firm shall be entitled to the
following:
(a) If the Company terminates this Agreement for "cause" as defined in
Section 6.2 of this Agreement, the Law Firm shall be entitled to
receive the Litigation Revenue Percentage of any Litigation Revenues,
and the Licensing Revenue Percentage of any Licensing Revenues, as the
case may be, thereafter received by the Company attributable to any
Litigation settled and Patent Agreements entered into prior to such
termination. In the event that litigation is in process at the time
the Company terminates this agreement for cause, the Law Firm shall
share pro rata in any settlement with such law firm as may be named by
the Company to continue the litigation; however, in no event will the
Law Firm receive more than fifty percent (50%) of the Litigation
Revenue Percentage of the Litigation Revenues received by the Company
in settlement of such litigation. The Company shall allow and give
permission to the Law Firm to withdraw as counsel from all pending and
anticipated Litigation and prosecution of the Patents provided that
Law Firm shall work cooperatively with the Company to transition such
Litigation and prosecution of the Patents to counsel of the Company's
choosing and the Company shall diligently work to obtain new counsel
to become counsel of record for such Litigation and Patents.
(b) If this Agreement is terminated by the Company without "cause" as
defined in Section 6.2 of this Agreement, or this Agreement is
terminated by the Law Firm "with cause" as defined in Section 6.3 of
this Agreement, the Law Firm shall be entitled to receive (i) the
Litigation Revenue Percentage of any Litigation Revenues, and the
Licensing Revenue Percentage of any Licensing Revenues, as the case
may be, thereafter received by the Company attributable to (A) any
Patent Agreements entered into prior to such termination and (B) any
Patent Agreements entered into after such termination with any
licensee with whom the Law Firm, upon the Company's approval, was
engaged in substantive discussions or substantive negotiations, or to
whom, upon the Company's approval, the Law Firm has sent a
communication notifying such third party of infringement or possible
infringement of any of the Patents prior to notice of termination, or
to whom, upon the Company's approval, the Law Firm has sent a written
inquiry about whether such third party desires to obtain a license to
any of the Patents prior to notice of termination, or against whom,
upon the Company's approval, the Law Firm arranged for and/or
initiated the commencement of Litigation prior to the time of
termination; and (ii) one-half of the Litigation Revenue Percentage of
any Litigation Revenues, and one-half of the Licensing Revenue
Percentage of any Licensing Revenues, as the case may be, thereafter
received by the Company entered into subsequent to such termination
(to the extent not covered by clause 6.4(b)(i) above); and the Company
shall allow and give permission to the Law Firm to withdraw as counsel
from all pending and anticipated Litigation and prosecution of the
Patents provided that Law Firm shall work cooperatively with the
Company to transition such Litigation and prosecution of the Patents
to counsel of the Company's choosing and the Company shall diligently
work to obtain new counsel to become counsel of record for such
Litigation and Patents.
(c) If this Agreement is terminated by the Law Firm without cause, the
Company shall not be obligated to make any further payments to the Law
Firm except as provided in this Section 6.4(c). The Law Firm shall be
required to continue representation of the Company in any pending
Litigations at the time of such termination until such time that the
Company can obtain new counsel of its choosing. The Company shall pay
the Law Firm a pro-rata payment based on a full payment in an amount
equal to the Litigation Revenue Percentage of all Litigation Revenues
received by the Company under any Patent Agreements or judgments that
result from such Litigations wherein the amount of pro-ration shall be
one hundred percent (100%) if no new counsel works on such Litigations
as attorney of record before such Litigations result in a Patent
Agreement or a judgment, and the amount of pro-ration shall be a
percentage in proportion to the amount of work performed by the Law
Firm in relation to new counsel if new counsel is obtained by the
Company to be counsel for the Litigations.
(d) In addition to the payments set forth above, if this Agreement is
terminated by any party, the Company shall remain obligated to pay
and/or reimburse the Law Firm for all outstanding invoices and work in
progress for billed time (in accordance with Appendix C) and/or
out-of-pocket costs and expenses incurred or to be incurred by the Law
Firm in connection with its services hereunder, including but not
limited to production services, travel and lodging required,
consultants, and other experts, but excluding any costs and expenses
incurred in connection with the operations of the Law Firm.
(e) The payments required to be made by the Company to the Law Firm
pursuant to this Section 6.4 shall be the only payments that the
Company shall be obligated to make to the Law Firm following the
termination of this Agreement.
6.5 The provisions of Sections 5.2, 5.3, 5.4, VI (all sections), VII (all
sections), VIII (all sections), and XI (all sections), shall survive any
termination of this Agreement.
SECTION VII
LIMITATION OF LIABILITY
7.1 In no event shall either party be entitled to special, indirect or
consequential damages, including lost profits, for breach of this Agreement by
the other party.
SECTION VIII
INDEMNITIES
8.1 The Company hereby agrees to indemnify the Law Firm from and against
any loss, liability, claim, damage or expense (including reasonable attorneys'
fees and expenses), whether or not involving a third-party claim, arising out of
any material breach by the Company of any of the terms of this Agreement or any
Patent Agreement, or against any action brought by a shareholder of Affinity
against the Law Firm related to this Agreement or Law Firm's services hereunder
if the Law Firm has not breached this Agreement or its duties to the Company,
and the Law Firm has not otherwise violated any law or regulation that is the
cause of such action brought by such shareholder of Affinity.
8.2 Promptly after receipt by the Law Firm of any notice of the
commencement of any action in Section 8.1 of this Agreement, the Law Firm shall
notify the Company in writing of the commencement thereof, but the failure to
give such notice shall not relieve the Company from its obligations hereunder
except to the extent that the Company demonstrates that the defense of such
claim or demand is materially prejudiced by the failure to give such notice. In
case any such action shall be brought by a third party against the Law Firm and
it shall notify the Company of the commencement thereof, the Company shall be
entitled to participate therein and, to the extent that it shall wish, to assume
the defense thereof, with counsel reasonably satisfactory to the Law Firm, and,
after notice from the Company of its election so to assume the defense thereof,
the Company shall not be liable to the Law Firm for any attorneys' fees and
expenses subsequently incurred by the Law Firm. In any such action, each party
hereby agrees to cooperate with the other party in the defense thereof.
SECTION IX
REPRESENTATIONS AND WARRANTIES
9.1 The Company hereby represents and warrants that it is the sole owner of
the Patents and has the right to grant licenses under the Patents to third
parties, the Company has the right to enter into this Agreement and enter into
the commitments provided in this Agreement, and that set forth on Appendix B are
all parties with whom the Company has entered into Existing License Agreements.
9.2. Each party understands and acknowledges that even though it will exert
its best efforts to perform in accordance with this Agreement and to obtain
Patent Agreements between third parties and the Company through negotiations
and/or enforcement of the Patents, such party does not guarantee or warrant that
a third party will execute a Patent Agreement with the Company. Each party
acknowledges that the decision as to whether a third party executes a Patent
Agreement with the Company may be based on a variety of factors and other
reasons that may be beyond the control of both the Company and the Law Firm.
9.3 Section 6148 of the California Business and Professions Code requires
that the Law Firm provide you with a statement regarding our errors and
omissions insurance coverage. In conformance with Section 6148, you are advised
that the Law firm maintains errors and omissions insurance coverage for our
services.
SECTION X
NOTICES
10. All notices, demands, or other communications required or permitted by
this Agreement shall be in writing and shall be sent or given to the following
address:
If to Affinity or the Company, to:
8807 A Two Notch Road
Columbia, South Carolina 29223
Telecopy: (803) 758-2560
Attention: President
If to the Law Firm, to:
McBride Law, PC
1299 Ocean Avenue
Suite 900
Santa Monica, California 9 0401
Telecopy: (310) 395-7317
Attention: Kevin McBride
Such notice shall be deemed to have been duly sent or given when (i) delivered
by hand, (ii) sent by facsimile transmission (with written confirmation of
receipt), provided a copy is mailed by registered mail, return receipt
requested, or (iii) mailed by registered or certified mail, postage prepaid
(return receipt requested), or nationally recognized overnight delivery service.
Either party may change its address or telecopy number for purposes of notices
hereunder upon notice to the other party, provided that such change shall be
effective only upon receipt thereof by the other party.
SECTION XI
CHOICE OF LAW AND ARBITRATION
11.1 This Agreement shall be governed and construed in accordance with the
laws of the State of California without regard to conflict of laws principles.
11.2 The Company is advised that with respect to any controversy, dispute,
or question arising out of, or in connection with, or relating to the
compensation to be paid by the Company to the Law Firm under this Agreement,
including under Sections V, VI, and VIII, the Company has the right under
California law to first submit the disputed matter to non-binding arbitration
pursuant to California Business and Professions Code, ss.6200 et seq. The
parties are permitted a trial after arbitration unless an agreement is reached
in writing after a dispute has arisen that they will be bound by the arbitration
award. Any such arbitration shall take place in Los Angeles California pursuant
to the said C.B.P.C. ss.6200 et seq. governing fee dispute. If the Company
elects to not proceed with non-binding arbitration pursuant to these rules, then
the exclusive remedy shall be binding arbitration conducted in accordance with
the then-existing rules of the American Arbitration Association; and such
arbitration shall take place in Los Angeles, California if initiated by the
Company and shall take place in Columbia, South Carolina if initiated by the Law
Firm. The procedure for conducting arbitration shall be as specified in Section
11.3 below.
11.3 Any controversy, dispute or question arising out of, or in connection
with, or in relation to this Agreement or its interpretation, performance or
non-performance or any breach, other than a dispute regarding payment of
compensation, thereof shall be determined by arbitration conducted in accordance
with then-existing rules of the American Arbitration Association. Each party to
such dispute shall select one arbitrator and the two arbitrators shall select a
third with substantially similar qualifications. Any decision rendered shall be
binding upon the parties thereto and may be enforced in any jurisdiction.
However, the arbitrators shall have no authority to grant any relief that is
inconsistent with the Agreement. The expense of arbitration shall be borne
equally by the parties thereto.
SECTION XII
ASSIGNMENT AND SEVERABILITY
12.1 This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by the Law Firm without the prior
written consent of the Company, and any such attempted assignment shall be null
and void. Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by the Company without the prior written consent of
the Law Firm, and any such attempted assignment shall be null and void. Affinity
and the Company shall be jointly and severally liable for their obligations set
forth in this Agreement.
12.2 The parties intend that this Agreement shall be a valid legal
instrument, and no provision of this Agreement which is later deemed invalid or
unenforceable shall in any way invalidate any other provisions of this
Agreement. In such case, this Agreement shall be reformed to the minimum extent
necessary to correct any invalidity or unenforceability.
SECTION XIII
COMPLETE AGREEMENT
13.1 The Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof. No amendment, waiver or discharge
hereof shall be valid unless it is in writing and executed by the party against
whom such amendment, waiver or discharge is sought to be enforced.
13.2 The parties agree that this Agreement is the complete and exclusive
statement thereof between the parties with respect to the subject matter hereof
and that it supercedes and merges all prior proposals and understandings and all
other agreements, whether written or oral, between the parties relating to the
subject matter hereof. This Agreement may not be modified or altered except by a
written instrument duly executed by the parties hereof.
SECTION XIV
INDEPENDENT LEGAL ADVICE AND REVIEW
14.1 The Company agrees and hereby acknowledges that it has been advised by
the Law Firm to seek independent legal advice regarding this Agreement, and that
the Company has sought and received independent legal advice from an attorney of
law regarding this Agreement, and the Company is entering into this Agreement of
its own volition after receiving such independent legal advice.
(signatures are on the next page)
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as set forth below.
MCBRIDE LAW, PC AFFINITY TECHNOLOGY GROUP, INC.
Signature: /s/ Kevin McBride Signature: /s/ Joseph A. Boyle
Name: Kevin McBride Name: Joseph A. Boyle
Title: President Title: President and Chief
Executive Officer
Date: July 10, 2006
Date: July 10, 2006
DECISIONING.COM, INC.
Signature: /s/ Joseph A. Boyle
Name: Joseph A. Boyle
Title: President and Chief
Executive Officer
Date: July 10, 2006
APPENDIX A
Patents
U.S. Patent No. 6,105,007 C1
U.S. Patent No. 5,870,721 C1
U.S. Patent No. 5,940,811 C1
U.S. Patent No. 5,537,315
APPENDIX B
(NOT USED)
APPENDIX C
Contingency Schedule for Revenue Percentages
"Litigation Revenue Percentage"
6%
"Licensing Revenue Percentage"
Total Licensing Revenues (cumulative) Percentage
- ------------------------------------------------------------------------
Up to $99,999,999.99 6%
$100,000,000 - $199,999,999.99 6%
$200,000,000 - $299,999,999.99 6%
$300,000,000 - $399,999,999.99 6%
$400,000,000 - $499,999,999.99 4.5%
$500,000,000 and above 2.5%
Billable Attorneys, Paralegals, Staff, Bill Rates and Maximum Hours Billable
Per Month
Attorneys Billing Rate Max. Hrs./Month
- --------------------------------------------------------------------------------
K. McBride $162.50 200
Associate #1 $125 200.
Paralegal #1 $85 to $110 200
Database Manager $85 to $110 200
Network Architect $120 50
Database Architect $130 70
*Billing rates listed above are subject to a maximum of 5% increase per calendar
year starting with calendar year 2007