Form 8-K for MOTRICITY INC
5-Jan-2012
Termination of a Material Definitive Agreement
Item 1.02 Termination of a Material Definitive Agreement.
On December 31, 2011, Motricity, Inc. (the "Company"), through two of its subsidiaries, mCore International, Inc. ("mCore") and PT Motricity Indonesia ("Motricity Indonesia"), agreed to terminate its relationship with PT XL Axiata Tbk ("XL," and together with mCore and Motricity Indonesia, the "Parties"). The termination followed negotiations relating to the continued business relationship among the Parties and XL's indication that it wished to exit its relationship with the Company, as a result of among other things changes in XL's business and strategy and XL's re-evaluation of the economic viability of the contractual relationship. The Parties terminated several agreements pursuant to which the Company provided XL with mobile data and related services in Indonesia. The terminated agreements include (i) the Software License and Maintenance Agreement dated March 18, 2010, by and among mCore and XL ("License Agreement"), (ii) the System Supply Integration and Managed Services Agreement dated August 31, 2010 by and among XL and Motricity Indonesia (the "SSIA Agreement"), (iii) the Hosting Agreement dated June 1, 2011 by and among XL and Motricity Indonesia (the "Hosting Agreement") and (iv) the Master Services Agreement dated June 1, 2011 by and among XL and Motricity Indonesia (the "E&C Agreement" and together with the License Agreement, the SSIA Agreement and the Hosting Agreement, the "XL Agreements"). The License Agreement and the SSIA Agreement were terminated effective December 31, 2011 and the Hosting Agreement and the E&C Agreement are being terminated effective February 29, 2012. Following the termination, the Company is reviewing its agreements with other carrier customers in Asia and re-evaluating its operations in the region. In 2010 and the first nine months of 2011, XL accounted for 13% and 11%, respectively, of the revenue to the Company.
The Company and XL agreed that the Company is entitled to receive its contractual revenue share through December 31, 2012. In addition the Company will receive a cash payment from XL to compensate the Company for software license fees that would otherwise have been due under the XL Agreements. All other payments that would otherwise have been due under the XL Agreements have been waived by both Parties resulting in a net benefit for the Company. No material relationship exists between the Company or its affiliates and XL except in connection with the XL Agreements.
