EXHIBIT 99.2
OBJECT INNOVATION, INC.
COMMON STOCK PURCHASE AGREEMENT
May 26, 2004
TABLE OF CONTENTS
PAGE
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1. Purchase and Sale of Stock..................................................1
1.1 Authorization and Sale of Common Stock ...............................1
1.2 Closing...............................................................2
2. Representations and Warranties of the Company...............................2
2.1 Organization, Good Standing and Qualification.........................2
2.2 Capitalization........................................................2
2.3 Subsidiaries..........................................................3
2.4 Authorization.........................................................3
2.5 Valid Issuance of Common Stock........................................3
2.6 Governmental Consents.................................................3
2.7 Offering..............................................................3
2.8 Litigation............................................................4
2.9 Patents and Trademarks................................................4
2.10 Compliance with Other Instruments, Title..............................4
3. Representations, Warranties and Covenants of the Purchaser..................4
3.1 Authorization.........................................................4
3.2 Purchase Entirely for Own Account.....................................5
3.3 Disclosure of Information.............................................5
3.4 Investment Experience.................................................5
3.5 Restricted Securities.................................................5
3.6 Further Limitations on Disposition....................................5
3.7 Legends...............................................................6
4. Restrictions on Vesting.....................................................6
4.1 Lapse of Restrictions.................................................6
5. Company Repurchase Right....................................................6
5.1 Conditions Precedent to Exercise......................................6
5.2 Repurchase Terms of Price and Payment.................................6
5.3 Exercise of Repurchase Right..........................................7
5.4 Additional Shares or Substituted Securities...........................7
5.5 Termination of Rights as Shareholder..................................7
5.6 Assignment............................................................7
5.7 Further Repurchase Rights.............................................8
6. California Commissioner of Corporations.....................................8
6.1 Corporate Securities Law..............................................8
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TABLE OF CONTENTS
(continued)
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7. Covenants of the Company and Founders.......................................8
7.1 Board of Directors....................................................8
7.2 Election of Directors.................................................8
7.3 No Liability for Election of Recommended Directors....................8
7.4 Use of Proceeds.......................................................9
7.5 Covenants of the Company and Founders.................................9
8. Conditions to Purchaser's Obligations at Closing............................9
8.1 Representations and Warranties........................................9
8.2 Performance...........................................................9
8.3 Closing Documents.....................................................9
8.4 Qualifications........................................................9
8.5 Distribution Agreement................................................9
9. Conditions to the Company's Obligations at Closing.........................10
9.1 Representations and Warranties.......................................10
9.2 Payment of Purchase Price............................................10
9.3 Performance..........................................................10
9.4 Qualifications.......................................................10
9.5 Distribution Agreement...............................................10
10. Miscellaneous.............................................................10
10.1 Survival.............................................................10
10.2 Successors and Assigns...............................................10
10.3 Governing Law; Venue.................................................10
10.4 Titles and Subtitles.................................................10
10.5 Notices..............................................................11
10.6 Finder's Fee.........................................................11
10.7 Amendments and Waivers...............................................11
10.8 Fees and Expenses....................................................11
10.9 Severability.........................................................11
10.10 Entire Agreement.....................................................11
10.11 Further Assurances...................................................11
10.12 Counterparts.........................................................11
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TABLE OF CONTENTS
(continued)
PAGE
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List of Exhibits and Schedules
Exhibit A Schedule of Disclosures
Exhibit B Exclusive Distribution Agreement
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OBJECT INNOVATION, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and
entered into as of May 26, 2004, by and among Object Innovation, Inc., a Florida
corporation (the "COMPANY"), PPOL, Inc., a California corporation (the
"PURCHASER"), and Scott Sirdevan and John Grow (collectively, the "Founders").
R E C I T A L S
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WHEREAS, the Company and the Purchaser desire to enter into an
investment and distribution relationship to grant the Purchaser exclusive
distribution rights in connection with the distribution of the Company's
BridgeGate software product into the Japanese market;
WHEREAS, concurrently herewith, the Company and the Purchaser shall
have entered into the Exclusive Distribution Agreement (the "DISTRIBUTION
AGREEMENT") for the purpose of establishing the terms of distribution for
BridgeGate software product; and
WHEREAS, the obligations of the Company and the Purchaser under the
Distribution Agreement are conditioned, among other things, upon the execution
and delivery of this Agreement by the Company, the Purchaser and the Founders,
and upon the purchase of shares of common stock of the Company by the Purchaser
pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, the
Purchaser and the Founders hereby agree as follows:
1. Purchase and Sale of Stock.
1.1 Authorization and Sale of Common Stock .
(a) The Company has issued and outstanding one hundred (100) shares of
common stock (the "COMMON STOCK") in equal amounts to each of the current
Founders, John Grow and Scott Sirdevan. Prior to the Closing, the Company will
have amended its Articles of Incorporation to (i) provide for an authorized
capital of one hundred thousand shares (100,000) of Common Stock and (ii) effect
an 85-for-1 stock split to create eight thousand five hundred (8,500) shares
outstanding, with said eight thousand five hundred (8,500) shares being
allocated and fully vested to the current Founders; of the ninety-one thousand
five hundred (91,500) authorized and unissued shares of Common Stock, one
thousand five hundred (1,500) shares shall be available for sale to Purchaser
subject to the terms and conditions of this Agreement.
(b) Subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase at the Closing (as defined below), and the Company
agrees to sell to the Purchaser at the Closing, one thousand five hundred
(1,500) shares of Common Stock at a purchase price of $200 per share (the
"ORIGINAL PURCHASE PRICE").
(c) The Company may, from time to time, elect to issue additional
shares from the remaining pool of 91,500 authorized shares. In such an event,
the Company will notify Purchaser of its intent to issue the additional shares,
and will grant Purchaser the option of purchasing some of these shares at the
prevailing price set by the Company. Purchaser may exercise this option at its
own discretion, and is under no obligation.
1.2 CLOSING. The purchase and sale of the Common Stock as set forth herein
shall take place at the offices of Object Innovation, Inc., 8130 Baymeadows Way
West, Suite 307, Jacksonville, Florida on May 26, 2004, at 1:00 p.m. or at such
other place and time as the Company and the Purchaser mutually agree (which
date, time and place are designated the "CLOSING"). At the Closing the Company
shall deliver to the Purchaser a certificate representing the shares of Common
Stock being purchased by the Purchaser against payment of the purchase price
therefor by cashiers check payable to, or wire transfer of immediately available
funds to an account designated by, the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents
and warrants to the Purchaser that as of the Closing, except as set forth herein
or on the Schedule of Disclosures attached hereto as EXHIBIT A specifically
identifying the relevant subparagraph hereof, which disclosures shall be deemed
to be representations and warranties as if made hereunder:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. The Company is duly qualified to transact business and
is in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its business or properties. The Company
has all required power and authority necessary to own and operate its property,
to carry on its business as now conducted and presently proposed to be conducted
and to carry out the transactions contemplated by this Agreement.
2.2 CAPITALIZATION. The authorized capital of the Company consists, or will
consist immediately prior to the Closing, of:
(a) COMMON STOCK. One hundred thousand (100,000) shares of Common Stock
authorized, of which eight thousand five hundred (8,500) shares are issued and
outstanding.
(b) OTHER RIGHTS. Except as set forth in Section 2.2(b) of the Schedule
of Disclosures, there are no outstanding options, warrants, rights (including
conversion or preemptive rights) or agreements for the purchase or acquisition
from the Company of any shares of its capital stock.
(c) VALID ISSUANCE. The outstanding shares of Common Stock are all duly
and validly authorized and issued, fully paid and nonassessable, and were issued
in accordance with the registration or qualification provisions of the
Securities Act of 1933, as amended (the "ACT"), and any relevant state
securities laws, or pursuant to valid exemptions therefrom.
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2.3 SUBSIDIARIES. The Company does not presently own or control, directly
or indirectly, or hold any rights to acquire, any interest in any other
corporation, association, or other business entity nor has the Company ever held
such interest. Except for strategic relationships to promote the Company's
products and services, which relationships are conducted through contractual
relationships between the Company and its strategic partners, but do not involve
any interest of the Company in any separate legal entities, the Company is not a
participant in any joint venture, partnership, or similar arrangement.
2.4 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, the Distribution Agreement and all other
agreements contemplated hereby or thereby to which the Company is a party, the
performance of all obligations of the Company hereunder and thereunder, the
authorization, issuance (or reservation for issuance), sale and delivery of the
Common Stock being sold hereunder, has been taken or will be taken prior to the
Closing. This Agreement, the Distribution Agreement and all other agreements
contemplated hereby or thereby to which the Company is a party constitute valid
and legally binding obligations of the Company, enforceable in accordance with
their respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or
other equitable remedies.
2.5 VALID ISSUANCE OF COMMON STOCK. The Common Stock that is being
purchased by the Purchaser hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable, and will
be free of restrictions on transfer, other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws. Based in
part upon the representations of the Purchaser in this Agreement, the Common
Stock being purchased by the Purchaser hereunder shall be issued in compliance
with all applicable federal and state securities laws. The Company further
acknowledges that the sale and issuance of shares of Common Stock to Purchaser
hereunder will result in the Company no longer being a Subchapter S Corporation
for federal income tax purposes, and thus being required to file its federal
income tax returns as a "C" corporation.
2.6 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with this Agreement, the Distribution Agreement and the
consummation of the transactions contemplated by this Agreement, except for such
filings required pursuant to applicable federal and state securities laws, which
filings will be effected within the required statutory period.
2.7 OFFERING. Subject in part to the truth and accuracy of the Purchaser's
representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Common Stock as contemplated by this Agreement are exempt from
the registration requirements of the Act, and the qualification or registration
requirements of the California Corporate Securities Law of 1968, as amended, or
other applicable blue sky laws. Neither the Company nor any authorized agent
acting on its behalf will take any action hereafter that would cause the loss of
such exemptions.
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2.8 LITIGATION. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the
Company. The Company is not aware that it is a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality.
2.9 PATENTS AND TRADEMARKS. The Company owns or has a valid right to use
all U.S. patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without any conflict
with or infringement of the rights of others. The Schedule of Disclosures
attached as EXHIBIT A hereto contains a complete list of patents and pending
patent applications of the Company. There are no outstanding options, licenses,
or agreements of any kind granted by the Company relating to the foregoing, nor
is the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity, except, in either case, for standard
end-user agreements with respect to commercially readily available intellectual
property such as "off the shelf" computer software. The Company has not received
any communications alleging that the Company has violated any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware that
any of its officers or employees or consultants is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his, her or its best efforts to
promote the interests of the Company or that would conflict with the Company's
business as proposed to be conducted. Neither the execution nor delivery of this
Agreement, the Distribution Agreement, or any other agreement contemplated
hereby or thereby, nor the carrying on of the Company's business by the
employees of the Company, will conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated. The
Company does not believe it is or will be necessary to utilize any inventions of
any of its employees (or people it currently intends to hire) made prior to or
outside the scope of their employment by the Company.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS, TITLE. Neither the execution and
delivery of the Agreement nor the performance by the Company of its obligations
under the Agreement will violate any provisions of the Articles of Incorporation
or the bylaws of the Company. Except as set forth in Section 2.10 of the
Schedule of Disclosures, and other than the Distribution Agreement and any
agreement entered into in connection therewith, the Company is not a party to or
obligated under any debt instrument, mortgages, lien, lease, statutory liens
other than for taxes not yet due.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The PURCHASER
hereby represents, warrants and covenants to the Company that:
3.1 AUTHORIZATION. The Purchaser has full power and authority to enter into
the Agreement, and this Agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
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3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Purchaser understands that the
Common Stock being sold hereunder is not registered under the Act on the ground
that the sale provided for in this Agreement and the issuance of securities
hereunder is exempt from registration under the Act pursuant to Section 4(2)
thereof, and that the Company's reliance on such exemption is predicated, in
part, on the Purchaser' representations set forth herein. By Purchaser's
execution of this Agreement, Purchaser hereby confirms that the Common Stock to
be received by Purchaser will be acquired for investment for Purchaser's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Purchaser has no present intention of
selling, granting any participation in or otherwise distributing the same. By
executing this Agreement, Purchaser further represents that Purchaser does not
have any intention, contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the Common Stock.
3.3 DISCLOSURE OF INFORMATION. The Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with the
Company's management. The Purchaser has also had an opportunity to ask questions
of officers of the Company, which questions were answered to the Purchaser's
satisfaction. The Purchaser understands that such discussions, as well as any
written information issued by the Company, were intended to describe certain
aspects of the Company's business and prospects but were not an exhaustive
description.
3.4 INVESTMENT EXPERIENCE. The Purchaser is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Common Stock. The Purchaser also
represents that it has not been organized for the purpose of acquiring the
Common Stock. Furthermore, Purchaser is an "Accredited Investor" as such term is
defined in Rule 501 of Regulation D of the Act.
3.5 RESTRICTED SECURITIES. The Purchaser understands that the shares of
Common Stock it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such Common Stock may be resold without registration
under the Act only in certain limited circumstances. In the absence of an
effective registration statement covering the Common Stock or an available
exemption from registration under the Act, the Common Stock must be held
indefinitely.
3.6 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting the
representations set forth above, the Purchaser further agrees not to make any
disposition of all or any portion of the Common Stock unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Agreement, and:
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(a) There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or
(b) (i) The Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if requested by
the Company, the Purchaser shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company that such disposition will not
require registration of such shares under the Act. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule 144
promulgated under the Act except in unusual circumstances.
3.7 LEGENDS. It is understood that the certificates evidencing the shares
of Common Stock may bear one or all of the following legends:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED.
4. RESTRICTIONS ON VESTING. The shares of Common Stock purchased under this
Agreement (collectively, the "RESTRICTED SHARES") shall be subject to a
Repurchase Right (as such term is defined in Section 5) in favor of the Company
as set forth in Section 5, which Repurchase Right shall lapse as set forth below
in Section 4.1, and shall also remain subject to other restrictions on transfer
set forth in the Agreement.
4.1 LAPSE OF RESTRICTIONS. As used herein, the term "vest" shall mean, with
respect to any Restricted Shares, that such shares are no longer subject to the
Repurchase Right. Upon vesting, any Restricted Shares shall thereafter be deemed
"Unrestricted Shares." Twenty percent (20%) of the Restricted Shares (or three
hundred (300) shares) shall not be subject to the Repurchase Right and shall be
deemed Unrestricted Shares upon the date hereof. The remaining eighty percent
(80%) of the Restricted Shares (or twelve hundred (1,200) shares) will vest and
become Unrestricted Shares at the rate of one hundred (100) shares for each $1.0
million in Gross Revenues (as such term is defined in the Distribution
Agreement) attained by the Company. In addition, for purposes of calculating the
number of Restricted Shares that become Unrestricted Shares as set forth above,
the shares shall vest at the rate of 100 shares at a time, based upon each one
million dollars ($1,000,000.00) in Gross Revenue received by the Company from
revenue that is generated in Japan according to the Distribution Agreement.
5. COMPANY REPURCHASE RIGHT. The Common Stock purchased hereunder shall be
subject to a right (but not an obligation) of repurchase by the Company at the
price and on the other terms and conditions set forth below (the "REPURCHASE
RIGHT").
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5.1 CONDITIONS PRECEDENT TO EXERCISE.
(a) The Repurchase Right shall be exercisable by the Company only with
respect to such shares that are deemed Restricted Shares in accordance with the
terms of Section 4.1, and only during the sixty (60) day period immediately
following the effective date of termination of the Distribution Agreement by the
Company (a "REPURCHASE EVENT").
(b) If the Company elects to exercise the Repurchase Right pursuant to
Section 5.1(a), the Company shall, prior to the expiration of the sixty (60) day
period, notify the Purchaser in writing of the number of shares of Common Stock
the Company elects to repurchase pursuant to Section 5.1(a) (the "Repurchased
Shares").
5.2 REPURCHASE TERMS OF PRICE AND PAYMENT. The purchase price for each
Repurchased Share shall be an amount equal to the Original Purchase Price.
5.3 EXERCISE OF REPURCHASE RIGHT. The Repurchase Right shall be exercisable
by written notice delivered to the Purchaser prior to the expiration of the
sixty (60) day period specified in Section 5.1(a) above. Each such notice shall
set forth the date, time and place for the repurchase, the number of shares of
Common Stock to be repurchased and the purchase price therefor. Such date shall
not be less than ten (10) nor more than thirty (30) days after the date of the
notice. The certificate(s) representing the Repurchased Shares to be repurchased
shall, prior to the close of business on the date specified for the repurchase,
be delivered to the Company thereof (if any certificates are held by the
Purchaser) properly endorsed for transfer and the Purchaser shall provide
representations and warranties with respect to the title and transfer of such
shares as shall be reasonably requested by the Company thereof. The Company
shall, concurrently with the receipt of such certificate(s), pay to the
Purchaser the purchase price determined according to Section 5.3 above. The
Repurchase Right shall terminate with respect to any Common Stock for which it
has not been timely exercised pursuant to this Section 5.4.
5.4 ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any shares of Common Stock purchased hereunder, or
into which any such shares thereby become convertible, shall immediately be
subject to the right of repurchase hereunder. Appropriate adjustments to reflect
the distribution of such securities or property shall be made to the number
and/or class of the shares of Common Stock purchased hereunder. Appropriate
adjustments shall also, after each such transaction, be made to the price per
share to be paid upon the exercise of the right of repurchase in order to
reflect any change in the Company's outstanding securities effected without
receipt of consideration therefor; provided, however, that the aggregate
purchase price payable for all of the shares of Common Stock that are subject to
the Repurchase Right shall remain the same.
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5.5 TERMINATION OF RIGHTS AS SHAREHOLDER. Notwithstanding anything to the
contrary herein, the parties agree that if the Company makes available at the
time and place and in the amount and form provided in the notice mentioned in
Section 5.4 hereof, the consideration for the Repurchased Shares to be
repurchased in accordance with such notice, then after such time the person from
whom such shares are repurchased shall no longer have any rights as a holder of
such shares (other than the right to receive payment of such consideration in
accordance with such notice). Such Repurchased Shares shall be deemed to have
been repurchased in accordance with the applicable provisions hereof, whether or
not the certificate(s) therefor have been delivered as required by such notice.
5.6 ASSIGNMENT. Whenever the Company shall have the right to purchase
shares of Common Stock under this Section 5 or elsewhere mentioned in this
Agreement, the Company may designate and assign one or more officers, directors
or shareholders of the Company, to exercise all or a part of the Company's
Repurchase Right.
5.7 FURTHER REPURCHASE RIGHTS. Upon date of Closing this Agreement,
Purchaser will be immediately vested with 300 Unrestricted Shares, which are
fully vested and not subject to the Repurchase Rights. Of the remaining twelve
hundred (1200) Restricted Shares, Purchaser shall have until December 31, 2010
to remit to the Company, per the terms of the Distribution Agreement, the Gross
Revenue necessary to vest all remaining twelve hundred (1200) Restricted Shares
and convert them to Unrestricted Shares. In the event that there has been
insufficient Japanese sales activity, by the said date, to generate the Gross
Revenue required to vest all remaining Restricted Shares and convert them to
Unrestricted Shares, all outstanding and remaining Restricted Shares shall
become available to the Company for repurchase under the Company's Repurchase
Right.
6. CALIFORNIA COMMISSIONER OF CORPORATIONS.
6.1 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES THAT ARE THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
7. COVENANTS OF THE COMPANY AND FOUNDERS.
7.1 BOARD OF DIRECTORS. The Purchaser and each of John Grow and Scott
Sirdevan (collectively, the "FOUNDERS") shall vote at regular or special
meetings of shareholders, and shall give written consent with respect to, such
shares of Common Stock owned by them (or as to which they have voting power) to
ensure that the size of the Board of Directors of the Company (the "BOARD")
shall not exceed five (5) directors without unanimous Board of Directors
consent. So long as Purchaser and Company mutually agree at the Closing under
this Agreement, Purchaser shall have the right to designate one (1) director who
shall be reasonably satisfactory to the Founders. The other directors shall be
designated by the holders of Common Stock. The directors to be elected effective
as of the Closing shall be John Grow, who shall be Chairman, Scott Sirdevan, and
the one representative designated by the Purchaser at the Closing.
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7.2 ELECTION OF DIRECTORS. On all matters relating to the election of one
or more directors of the Company, each of the Purchaser and the Founders shall
vote at regular or special meetings of shareholders and give written consent
necessary to elect to the Board one (1) representative designated by the
Purchaser as set forth and to the extent required in Section 7.1.
7.3 NO LIABILITY FOR ELECTION OF RECOMMENDED DIRECTORS. Neither the
Purchaser, nor any officer, director, stockholder or shareholder, partner,
employee or agent of the Party, makes any representation or warranty as to the
fitness or competence of the nominee of the Purchaser hereunder to serve on the
Board by virtue of such party's execution of this Agreement or by the act of
such party in voting for such nominee pursuant to this Agreement.
7.4 USE OF PROCEEDS. The Company shall use the proceeds from the sale of
shares that are contemplated by this Agreement as it sees fit, with no
restrictions whatsoever.
7.5 COVENANTS OF THE COMPANY AND FOUNDERS. Neither the Company nor the
Founders shall, by any voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be performed hereunder by the Company or
the Founders, but shall at all times in good faith assist in the carrying out of
all of the provisions of this Agreement and in the taking of all such actions as
may be necessary, appropriate or reasonably requested by the holders of a
majority of the outstanding voting securities held by the parties hereto
assuming conversion of all outstanding securities in order to protect the rights
of the parties hereunder against impairment.
8. CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING. The obligations of the
Purchaser under subsection 1.2 of this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions, the waiver of
which shall not be effective against the Purchaser who does not consent in
writing thereto:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true and correct on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
8.2 PERFORMANCE. The Company shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing.
8.3 CLOSING DOCUMENTS. The Company shall have delivered, on or before the
Closing, to the Purchaser all of the following documents:
(a) An Officer's Certificate, dated as of the Closing, stating that the
conditions specified in Sections 8.1 and 8.2 have been fulfilled and stating
that there shall have been no material adverse change in the business, affairs,
operations, properties, assets or condition (financial or otherwise) of the
Company.
9
(b) A Secretary's Certificate, certifying copies of the resolutions
duly adopted by the Company's board of directors and shareholders authorizing
the execution, delivery and performance of the Agreement and each of the other
agreements contemplated hereby, the issuance and sale of the Common Stock and
the consummation of all other transactions contemplated by the Agreement.
8.4 QUALIFICATIONS. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or foreign jurisdiction that are required in connection with the lawful
issuance and sale of the Securities pursuant to this Agreement shall be duly
obtained and effective as of the Closing.
8.5 DISTRIBUTION AGREEMENT. The Company and the Purchaser shall have
executed the Distribution Agreement, in the form attached hereto as EXHIBIT B.
9. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of the
Company to the Purchaser under this Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions by the Purchaser:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Purchaser contained in Section 3 shall be true on and as of the Closing.
9.2 PAYMENT OF PURCHASE PRICE. The Purchaser shall have delivered at the
Closing the purchase price specified in Section 1.2.
9.3 PERFORMANCE. The Purchaser shall have performed and complied with all
covenants, agreements, obligations, and conditions contained in this Agreement
that are required to be performed and complied with on or before the Closing.
9.4 QUALIFICATIONS. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or foreign jurisdiction that are required in connection with the lawful
issuance and sale of the Securities pursuant to this Agreement shall be duly
obtained and effective as of the Closing.
9.5 DISTRIBUTION AGREEMENT. The Company and the Purchaser shall have
executed the Distribution Agreement, in the form attached hereto as EXHIBIT B.
10. MISCELLANEOUS.
10.1 SURVIVAL. The warranties, representations and covenants of the Company
and Purchaser contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing for a period of one
year provided that both parties will reexamine after a period one year.
10.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
10
10.3 GOVERNING Law AND VENUE. This Agreement is to be construed in
accordance with and governed by the internal laws of the State of Florida
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Florida to the rights and duties of the parties. All disputes and controversies
arising out of or in connection with this Agreement shall be resolved
exclusively by the state and federal courts located in Duval County in the State
of Florida, and each party hereto agrees to submit to the jurisdiction of said
courts and agrees that venue shall lie exclusively with such courts.
10.4 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
10.5 NOTICES. Unless otherwise provided, any notices required or permitted
hereunder shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed
telex, electronic mail or facsimile if sent during normal business hours of the
recipient, if not, then on the next business day; (iii) five (5) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid; or (iv) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the address as set forth on the
signature page hereof or at such other address as such party may designate by
ten days advance written notice to the other parties hereto.
10.6 FINDER'S FEE. Each party represents that, except for finder's fees
that the Company owes, or may owe, it neither is nor will be obligated for any
sales commission in connection with this transaction.
10.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Purchaser. Any amendment or waiver
effected in accordance with this Paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities and the Company.
10.8 FEES AND EXPENSES. The parties hereto shall pay all costs and expenses
that each respective party incurs with respect to the negotiation, execution,
delivery and performance of this Agreement and the Agreement. If any action at
law or in equity is necessary to enforce or interpret the terms of the
Agreement, the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.
11
10.9 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
10.10 ENTIRE AGREEMENT. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and any and all other written
or oral agreements relating to the subject matter hereof existing among any of
the parties hereto are expressly cancelled.
10.11 FURTHER ASSURANCES. Each of the Company and the Purchaser from time
to time and at all times hereafter make, do, execute, or cause or procure to be
made, done and executed such further acts, deeds, conveyances, consents and
assurances without further consideration, which may reasonably be required to
effect the transactions contemplated by this Agreement.
10.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(SIGNATURE PAGE FOLLOWS)
1
IN WITNESS WHEREOF, the parties have executed this Common Stock
Purchase Agreement as of the date first above written.
COMPANY
OBJECT INNOVATION, INC.,
a Florida corporation
By: _________________________
Name:
Title:
c/o __________________________
Attention:____________________
______________________________
______________________________
PURCHASER
PPOL, INC.,
a California corporation
By: _________________________
Name:
Title:
FOUNDERS, FOR PURPOSES OF SECTION 7 ONLY!
______________________________
SCOTT SIRDEVAN
______________________________
JOHN GROW
EXHIBIT A
---------
SCHEDULE OF DISCLOSURES
Section 2.2(b)
The Company has been informed by Celia Ching that, pursuant to the instructions
of David Valentine, who had been acting as finder for the Company in its efforts
to raise financing, she has transferred $100,000 to an account designated by Mr.
Valentine (at First Diversified Financial Services) and for the benefit of the
Company. Of such funds, approximately $18,000 has been remitted to the Company.
The nature and purpose of these funds have not yet been documented, and the
Company is currently in discussions with Ms. Ching regarding its settlement. Ms.
Ching may be entitled to cash as well as stock, the exact amounts to be
negotiated. This transaction is part of Company business and the Purchaser
understands and agrees that the Founders are not personally liable, that the
Company may be liable, and that the Company will do its best to negotiate with
Ms. Ching an equitable resolution if it is found that the Company is, in fact,
liable.
Section 2.9
BridgeGate Patents are as follows: U.S. Patent Application No. 10/456,293 filed
June 6, 2003.
Section 2.10
See disclosure for Section 2.2(b) above regarding $100,000 payment by Ms. Ching.
The Company owes bank loans in the amount of: five hundred thousand dollars
($500,000.00) to First Community Bank (under an SBA loan agreement), and one
hundred thousand dollars ($100,000.00) to Wachovia Bank.
EXHIBIT B
---------
EXCLUSIVE DISTRIBUTION AGREEMENT
This Exclusive Distribution Agreement ("AGREEMENT") is made and entered into as
of May 26, 2004 ("AGREEMENT DATE") by and between Object Innovation, Inc., a
Florida corporation with its principal place of business at 8130 Baymeadows Way
West Suite 307, Jacksonville, Florida 32256 ("VENDOR"), and PPOL, Inc., a
California corporation with its principal place of business at 1 City Boulevard
West, Suite 870, Orange, CA 92868 ("DISTRIBUTOR"). For purposes related to
Section 2.5 (below), or any other Sections requiring similar date calibration,
the effective date ("EFFECTIVE DATE") of this Agreement will be July 15, 2004.
RECITALS
WHEREAS, Vendor has rights to license and distribute, and to sublicense others
to license and distribute, the Products in the Territory (as those terms are
defined below); and
WHEREAS, Vendor desires to have Distributor, and Distributor desires to,
license, market and distribute the Products in the Territory pursuant to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and other terms and conditions contained herein, Vendor and
Distributor agree as follows:
AGREEMENT
1. DEFINITIONS
1.1 "AFFILIATE" of a Person/Legal Entity shall mean any other
Person/Legal Entity controlled by, controlling, or under common control with
such first Person/Legal Entity.
1.2 "CONFIDENTIAL INFORMATION" shall mean the source code for the
Software and any and all information and material disclosed by either party
("DISCLOSING PARTY") to the other party ("RECEIVING PARTY") (whether in writing,
or in oral, graphic, electronic or any other form) that is marked or identified
in writing as confidential or proprietary, or if disclosed orally or in other
intangible form or in any form that is not so marked, that is identified as
confidential at the time of such disclosure and summarized in writing and
transmitted to the Receiving Party within thirty (30) days of such disclosure.
Notwithstanding the previous sentence, information shall not be deemed
Confidential Information to the extent that such information: (a) was generally
known and available in the public domain at the time it was disclosed or
subsequently becomes generally known and available in the public domain through
no fault of the Receiving Party; (b) was known to the Receiving Party at the
time of disclosure; (c) is disclosed with the prior written approval of the
Disclosing Party; (d) was independently developed by the Receiving Party without
any use of the Confidential Information of the Disclosing Party; or (e) becomes
known to the Receiving Party from a source other than Disclosing Party without
breach of this Agreement by the Receiving Party and is otherwise not in
violation of the Disclosing Party's rights.
1.3 "CONTRACT YEAR" shall mean a twelve month period ending on the
anniversary of the Effective Date.
1.4 "DOCUMENTATION" shall mean the standard user documentation for the
Software, including, without limitation, user manuals, reference manuals,
training manuals and installation manuals, and including any Japanese language
translations thereof.
1.5 "AGREEMENT DATE" shall mean the date that this Agreement is signed
and fully takes effect.
1.6 "EFFECTIVE DATE" shall mean that, for purposes related to the sales
and Distributor performance contemplated in this Agreement, the date which all
performance, milestones, and other metrics will be based.
1.7 "END USER" shall mean a Person, other than Distributor, who has
licensed the Products for ordinary internal business usage and not for purposes
of further resale.
1.8 "END USER LICENSE AGREEMENT" shall mean the End User terms and
conditions of license attached hereto as EXHIBIT A entered into between
Distributor (or Subsidiary, as applicable) and End User.
1.9 "ERROR" shall mean a defect or combination of defects in the
Software that result in a failure of the Software to function in accordance with
the technical specifications for the Software as set forth in the applicable
Documentation.
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1.10 "ERROR CORRECTION" shall mean a bug fix, patch or other
modification or addition that, when made or added to the Software, corrects an
Error.
1.11 "FIRM PERIOD" shall have the meaning set forth in Section 8.4.
1.12 "FORCE MAJEURE EVENT" shall have the meaning set forth in Section
16.4.
1.13 "GROSS REVENUE" shall mean all amounts received by Vendor for the
license of the Products, less (a) freight, handling, service, refunds for
returns, insurance and other charges for delivery of the product (including,
without limitation, charges for transmission) and (b) sales, use, excise, value
added and other taxes.
1.14 "INITIAL TERM" shall have the meaning set forth in Section 14.1.
1.15 "INTELLECTUAL PROPERTY RIGHTS" shall mean, on a world-wide basis,
any and all now known or hereafter known tangible and intangible (a) rights
associated with works of authorship, including, without limitation, copyrights,
moral rights and mask-works, (b) rights associated with trademarks, service
marks, trade names and similar rights, (c) trade secret rights, (d) patents,
designs, algorithms and other industrial property rights, (e) rights in domain
names; (f) all other intellectual and industrial property rights of every kind
and nature and however designated, whether arising by operation of law,
contract, license or otherwise, and (f) all registrations, applications,
renewals, extensions, continuations, divisions or reissues thereof now or
hereafter existing, made or in force (including any rights in any of the
foregoing).
1.16 "JAPANESE VERSION" shall have the meaning set forth in Section
2.2.
1.17 "MAINTENANCE RELEASE" shall mean a subsequent version of the
Software that includes Error Corrections.
1.18 "PERSON" shall mean any natural person, corporation, partnership,
firm, association, limited liability company, government, governmental agency or
other entity, whether acting in an individual, fiduciary or other capacity.
1.19 "PRICE LIST" shall mean the price list set forth in EXHIBIT C
attached hereto.
1.20 "PRODUCTS" shall mean the Software and Documentation, individually
or collectively.
1.21 "RENEWAL TERM" shall have the meaning set forth in Section 14.1.
1.22 "SOFTWARE" shall mean the software programs set forth in EXHIBIT B
attached hereto, as Exhibit B may be amended from time to time by the parties'
mutual consent, and any modifications, changes (including translations or the
Japanese Version), improvements, workarounds and updates (including any Error
Corrections, Upgrades or Maintenance Releases) made to such software programs
during the Term.
1.23 "SUPPORT SERVICES" shall mean the Level One and Level Two
maintenance and support services set forth in EXHIBIT E attached hereto.
1.24 "TERM" shall have the meaning set forth in Section 14.1.
1.25 "TERRITORY" shall mean the country of Japan.
1.26 "TRADEMARKS" shall mean the trademarks, trade names and service
marks set forth in EXHIBIT D attached hereto and such other marks as Vendor may
designate from time to time in writing during the Term.
1.27 "UPGRADE" shall mean any new version of the Software that adds
substantial new functionality to such Software.
2. GRANT OF RIGHTS
2.1 GRANT OF DISTRIBUTORSHIP. Subject to the terms and conditions of
this Agreement, Vendor hereby grants to Distributor the exclusive right during
the Term, within the Territory, to: (a) market and solicit sub-licenses for the
Software and Documentation to End Users and (b) distribute the Software and
Documentation to such End Users, provided that such End Users have validly
entered into an End User License Agreement with Distributor pursuant to Section
3.1(a) below. The Parties agree that Distributor shall, within one hundred
eighty (180) days after the date hereof, assign all of its rights and
obligations under this Agreement to a newly formed Japanese entity (the
"Subsidiary") that shall be at least majority-owned by PPOL, Inc. and its
Affiliates. Upon such assignment, the Subsidiary shall be deemed the
Page 2 of 20
"Distributor" hereunder for all purposes. Notwithstanding any such assignment,
PPOL, Inc. shall remain liable for all of Distributor's obligations hereunder.
2.2 GRANT OF LICENSE TO SOFTWARE AND DOCUMENTATION. Subject to the
terms and conditions of this Agreement, Vendor hereby grants to Distributor the
exclusive, royalty-free right and license (including the right to sublicense)
during the Term: (a) to modify and create derivative works of the Software and
Documentation for the purpose of developing a Japanese language version of the
Software and Documentation ("Japanese Version"); (b) to reproduce the Japanese
Version for distribution to End Users within the Territory; and (c) to use,
perform and display (whether publicly or otherwise) the Software and
Documentation for purposes of marketing, demonstrating, soliciting sub-licenses
for and distributing the Products, developing the Japanese Version, supporting
and maintaining the Products, and granting sub-licenses in accordance with the
terms hereof, in each case, solely in connection with fulfilling Distributor's
obligations and exercising Distributor's rights set forth in this Agreement. All
such derivative works shall, at all times, be the sole and exclusive property of
Vendor, but Vendor shall grant Distributor the right to use all such derivative
works in connection with fulfilling Distributor's obligations and exercising
Distributor's rights as set forth in this Agreement.
2.3 GRANT OF LICENSE TO TRADEMARKS. Subject to the terms and conditions
of this Agreement, Vendor hereby grants to Distributor the non-exclusive right
during the Term, within the Territory, to use the Trademarks for purposes of
advertising and promoting the Products hereunder. Distributor understands and
agrees that the use of any Trademark in connection with this Agreement shall not
create any right, title or interest in or to the use of the Trademark, and that
all such use and goodwill associated therewith shall inure solely to the benefit
of Vendor.
2.4 GRANT OF RIGHT TO APPOINT SUB-DISTRIBUTORS. Subject to the terms
and conditions of this Agreement, Vendor hereby grants to Distributor the right
during the Term, to appoint sub-distributors within the Territory, in
Distributor's reasonable discretion and with Vendor's consent, such consent not
to be unreasonably withheld. Distributor shall not grant any sub-distribution
rights to a sub-distributor except pursuant to a written agreement in which such
sub-distributor agrees to all of the restrictions on the use of the Software and
Documentation contained herein and which agreement shall provide for conversion
to a non-exclusive agreement, if applicable, as set forth in Section 2.5 hereof.
2.5 LIMITATION ON EXCLUSIVITY. Vendor reserves the right to convert the
exclusive right granted to Distributor under Section 2.1 into a non-exclusive
right in accordance with the terms of this Section 2.5 (or to terminate this
Agreement as set forth in Section 14) in the event that the Distributor,
together with its sub-distributors, fails to meet the annual Gross Revenue goals
in the Territory as follows (each, a "Revenue Goal"):
Contract Year 1 (commencing with the Effective Date and ending on
the day before the first anniversary of the Effective Date): US $1 million Gross
Revenues received by Vendor.
Contract Year 2 (commencing with the first anniversary of the
Effective Date and ending on the day before the second anniversary of the
Effective Date): US $2 million Gross Revenues received by Vendor.
Contract Year 3 (commencing with the second anniversary of the
Effective Date and ending on the day before the third anniversary of the
Effective Date): US$3 million Gross Revenues received by Vendor.
Contract Year 4 (commencing with the third anniversary of the
Effective Date and ending on the day before the fourth anniversary of the
Effective Date): US$5 million Gross Revenues received by Vendor.
Contract Year 5 (commencing with the fourth anniversary of the
Effective Date and ending on the day before the fifth anniversary of the
Effective Date): US$5 million Gross Revenues received by Vendor.
For the purposes of determining whether the Revenue Goal for that
Contract Year has been met, the Gross Revenues actually received by Vendor from
Distributor shall determine compliance. In the event that Vendor converts the
exclusive right granted to Distributor under Section 2.1 into a non-exclusive
right in accordance with this Section 2.5, then any exclusive
sub-distributorship granted by Distributor or its sub-distributors in such
Territory will be automatically converted to non-exclusive sub-distributorship.
By mutual consent of the Vendor and Distributor, the Effective Date
that is referenced herein may be extended to a new date that approximately
corresponds with the completion of the localization of Product to the Japanese
market. Since the intent is to measure Japanese sales performance, it is
reasonable to set the start of the Effective Date to when Japanese sales can
actually begin. In the event that localization has not been completed by the
Effective Date mentioned herein, both parties agree to revise the Effective Date
to one that is appropriate.
Page 3 of 20
The Revenue Goal in accordance with the terms in Section 2.5 is the
basic idea and plan for both parties; however, both parties share the
understanding that we shall have time for discussion to adjust the plan before
it takes place. The fatal conversion of the exclusive right granted to
Distributor under Section 2.1 into a non-exclusive right from Vendor occurs in
the event that Distributor fails to remit corresponding amount of money to vest
the restricted shares they own until the time period in accordance with the
terms of 5.7 clause of Stock Purchase Agreement for the Vendor. About the
continuation of the Exclusivity, both parties shall discuss after both parties
see the performance of the Distributor and the Territory until the time period
in accordance with the terms of 5.7 clause of Stock Purchase Agreement
3. DISTRIBUTOR OBLIGATIONS
3.1 GENERALLY. Distributor shall use commercially reasonable efforts
to:
(a) advertise, market and promote the Products in the Territory;
(b) solicit and promote the sub-licensing of the Software;
(c) refrain from discrediting either the Products or Vendor;
(d) include in all advertising and promotional materials all
applicable copyright and trademark notices as they appear on the Products;
(e) provide Level One support to End-Users in a professional and
workmanlike manner and in accordance with the highest industry standards;
(f) obtain, pay all costs associated with, and be in possession of
all official approvals, licenses, registrations, and permits required by virtue
of any applicable law or regulation for the effective operation of its business
and its performance under this Agreement;
(g) keep books, records and accounts of all transactions covered by
this Agreement and permit Vendor, its agents and representatives to examine the
same;
(h) commence sales and distribution of the Products as soon as
reasonably practicable following execution of this Agreement;
(i) not do anything to prevent the sale, or development of sales,
of the Products in the Territory;
(j) obtain an adequate number of sufficiently qualified staff to
enable Distributor to promptly and efficiently perform its obligations under
this Agreement;
(k) keep Vendor promptly informed of any complaint or dispute
concerning the Products supplied by Distributor;
(l) conduct Distributor's business in an efficient, responsible,
and ethical manner so as to enhance and support the reputation and goodwill of
the Products in the Territory;
(m) conduct Distributor's business in accordance with all laws
applicable in the Territory. Distributor must immediately notify Vendor in
writing if any law or regulation of a relevant Territory prevents it from
complying fully with the terms of this Agreement; and
(n) refrain from producing, selling, licensing or distributing any
products which are, in Vendor's sole judgment, directly competitive with the
Products.
(o) create an End User License Agreement for distribution of the
Products and Services to the Japanese market that is materially identical to the
sample EULA that is provided in EXHIBIT A as reference, taking common Japanese
laws and practices in consideration when creating the Japanese End User License
Agreement.
3.2 SOLICITING LICENSES FOR SOFTWARE. Distributor shall have the right
to negotiate with prospective End Users and solicit the sub-licensing of the
Software. In the event that a prospective End User wishes to sub-license
Software, Distributor shall:
Page 4 of 20
(a) Enter into a sub-license agreement for the Product with such
End User only upon the terms of the End User License Agreement;
(b) negotiate with such End User and, if required by such End User,
propose changes to the End User License Agreement, provided that any such
proposed changes shall be subject to Vendor's prior written approval in its
reasonable discretion; and
(c) forward to Vendor information regarding each End User,
including the following:
(i) the Software to be licensed;
(ii) the name and site address of the End User;
(iii) the name, address and telephone number of a contact
person or authorized representative of the End User;
(iv) the serial number of the central processing unit on which
the licensed Software will run or, in the case of a network
license, the number of licensed users;
(v) any proposed changes to the End User License Agreement.
3.3 REVERSE ENGINEERING. Distributor shall not translate, disassemble
or reverse engineer the Products, in whole or in part.
4. MAINTENANCE AND SUPPORT
4.1 SUPPORT SERVICES. As between Vendor and Distributor, Distributor
shall be responsible for providing End Users with Level One Support Services for
the Software, as set forth in EXHIBIT E attached hereto. Vendor shall provide
Distributor with Level Two Support Services for the Software, as set forth in
EXHIBIT E.
4.2 TRAINING. Vendor shall arrange at least one training course for
each major release or version upgrade of the Product that may be attended by
Distributor's and its sub-distributors' sales and/or technical personnel. These
courses shall take place at Vendor's principal place of business first above
written and shall include training on the operation of Product, sales training,
and technical training increasing the ability of Distributor and its
sub-distributors to provide sufficient technical support for their customers who
purchase Product. The cost of conducting these training courses shall be borne
by Vendor; provided, however, that Distributor and sub-distributors shall bear
the traveling and lodging expenses for their respective personnel.
5. CHANGES IN SPECIFICATIONS
Vendor reserves the right from time to time to change the specifications of the
Products. Vendor shall advise Distributor of any proposed changes in
specifications at least ninety (90) days before such changes in specifications
or designs are commercially released.
6. OWNERSHIP OF INTELLECTUAL PROPERTY
Vendor or its suppliers shall retain ownership of all Intellectual Property
Rights embodied in the Products and the Trademarks. Except as provided herein,
Distributor is not granted any rights to any Intellectual Property Rights with
respect to any Product.
7. CONFIDENTIAL INFORMATION
Each party may be exposed to the other party's Confidential Information. Each
party agrees that during the Term, and for a period of one (1) year following
the Term, it shall use the other party's Confidential Information solely for
purposes of performing its obligations and/or exercising its rights under this
Agreement, and shall not disclose to any third party any Confidential
Information of the other party without the prior written consent of such other
party. Each party may disclose the other party's Confidential Information only
to its employees as is reasonably necessary to allow such party to perform under
this Agreement and to obtain the benefits thereof, provided that each such
employee is under a written obligation of nondisclosure which protects the other
party's Confidential Information under terms substantially similar to those
herein.
Page 5 of 20
8. ORDERS; SHIPPING; CANCELLATION
8.1 ORDERS. The terms and conditions of this Agreement shall apply to
any and all orders submitted to Vendor. If accepted by Vendor, Vendor shall
fulfill each order placed by Distributor within 30 days or less, or else give
notice as to why fulfillment will take longer.
8.2 SHIPPING. All shipments shall be made FOB Vendor's distribution
center. Provided, however, in Vendor's discretion, Vendor may provide for the
downloading of the Software by Distributor (or directly by the End User) and, if
downloaded by Distributor, Distributor shall only download the permitted number
of copies, and shall put any markings or labels on the medium containing the
Software as Vendor shall require. Delivery shall be deemed complete and risk of
loss or damage to the Products shall pass to Distributor upon Vendor's delivery
of Products to the first carrier or, if applicable, when downloaded. Distributor
shall instruct Vendor in writing as to which carrier Vendor should use to
transport Products ordered by Distributor. If Distributor has not so instructed
Vendor at the time of the order, Vendor may select the carrier. Distributor
shall pay all costs of transportation, reasonable insurance, export and import
fees, customs brokerage expenses and similar charges.
8.3 ACCEPTANCE. Distributor shall, within seven (7) days after
delivery, inspect the Product(s) to confirm that the Product(s) are not
defective and conform to the Vendor's applicable warranty, the terms of this
Agreement and Distributor's order. In the event that Distributor notifies Vendor
of defective or non-conforming Products under this section, Vendor shall repair
or replace such Products, or refund the purchase price for such Products to
Distributor, at Distributor's sole election.
8.4 CANCELLATION AND RESCHEDULING. Distributor shall not reschedule or
cancel any purchase order or portion thereof within three (3) business days of
the scheduled shipment date for such order ("FIRM Period"). Distributor may
cancel or reschedule purchase orders prior to the Firm Period upon written
notice to Vendor.
9. PRICE; TAXES; PAYMENTS; REPORTS
9.1 PRICE FOR PRODUCTS. Vendor recognizes that Distributor may need to
do market research before appropriate pricing for Products and Services can be
set in Japan. Therefore, Vendor and Distributor agree that Distributor will have
the ability to establish Products and Services prices in Japan, as it best sees
fit, in order to maximize revenue, but that Vendor retains the final right to
approve or disapprove such pricing. All Products and Services revenue will be
split equally between Vendor and Distributor in a 50/50 ratio, and the money
will be remitted to Vendor in U.S. dollars based on the U.S. dollar-to-Japanese
yen exchange rate reported in THE WALL STREET JOURNAL on the payment date. In
addition, Vendor may, in its discretion, offer Distributor the rights to
sub-license other products of Vendor. If the Parties are able to agree upon
terms for the licensing of any such other products, they will amend this
Agreement accordingly. Vendor and Distributor also agree to review the 50/50
split, sometime prior to the end of the first year of this Agreement, to confirm
that such 50/50 split is equitable for both sides, and that they will work in
good faith to revise these terms in the event that either side feels it is not
equitable for them.
9.2 PRICE FOR SERVICES. Distributor shall pay monthly support fees in
advance for the Level Two Support Services, as such fees are set forth in
EXHIBIT C ("SUPPORT FEES"). Vendor may not increase the monthly Support Fees
charged to Distributor during any Contract Year by more than ten percent (10%)
of the then-current Support Fees.
9.3 TAXES. In addition to any payments due to Vendor under this
Agreement, Distributor shall pay any sales, use, excise, import, export or
value-added tax not based on Vendor's net income.
9.4 PAYMENTS. Distributor shall remit fifty percent (50%) of any
payment it or its sub-distributors receive from an End User within NET thirty
(30) days after its or its sub-distributor's receipt of such payment. Payment
for the Level Two Support Services shall be due by the tenth day of each
calendar month.
9.5 REPORTS. Distributor shall provide Vendor a quarterly report of its
sub-licensing activity. Such reports shall include without limitation, the name
and address of each End-User that entered into a license for the Product during
such quarter, the license fees charged and received during such quarter and such
other information that Vendor may reasonably request. Distributor shall
communicate to Vendor any recurring material problems with the Products
encountered by customers of Distributor.
Page 6 of 20
9.6 STOCK INCENTIVE. Restricted Shares (as such term is defined in the
Stock Purchase Agreement) held by PPOL, Inc., subject to the terms of that
certain Common Stock Purchase Agreement entered into between Vendor and PPOL,
Inc. contemporaneously herewith (the "Stock Purchase Agreement"), shall vest and
become Unrestricted Shares (as such term is defined in the Stock Purchase
Agreement) at the rate of one hundred (100) shares for each $1.0 million in
Gross Revenue received by Vendor from Distributor's licensing or sub-licensing
of Products hereunder.
10. WARRANTY
10.1 PRODUCTS. Vendor warrants the Products to End Users pursuant to
the terms and conditions of the End User License Agreement as set forth in
EXHIBIT A. Vendor represents, warrants and covenants to Distributor that: (a)
Vendor has the right to grant the rights and licenses contemplated by this
Agreement, without the need for any licenses, releases, consents, approvals or
immunities not yet granted; (b) the media on which any Products are delivered to
Distributor shall be free from material defects in workmanship and materials;
(c) the Products shall operate in accordance with the Documentation and other
specifications therefore for a period of sixty days from delivery to
Distributor; (d) neither the Products nor Distributor's exercise of its rights
under this Agreement infringe, misappropriate or violate any U.S. patent,
trademark, copyright, privacy or publicity rights, or other rights of any third
party, or any law, rule or regulation promulgated by any government or
regulatory body; (e) the Products do not contain any material bugs or defects
and do not contain or make available any viruses, worms, Trojan horses, web
bugs, time bombs, "spyware" or other harmful or invasive code or components; and
(f) Vendor has not made and shall not make any commitments inconsistent with
Distributor's rights under this Agreement.
10.2 SERVICES. Vendor represents, warrants and covenants to Distributor
that the Level Two Support Services shall be performed in a professional and
workmanlike manner consistent with the highest industry standards.
10.3 DISTRIBUTOR WARRANTY SERVICE. For Errors or defects in Software
discovered during the applicable warranty period, Distributor and Vendor shall
provide technical support as described in Section 4 ("Maintenance and Support").
10.4 Distributor hereby represents and warrants to Vendor as follows:
(a) It has no conflicts of interest in entering into this
Agreement and that by entering into this Agreement it is not violating or
breaching any duty or obligation it may have to any third party.
(b) It has not made and promises not to make, any payment to a
public official as defined by the United States Foreign Corrupt Practices Act or
other applicable laws. Distributor further represents that it is aware of the
applicable United States governmental regulations governing bribery, agency, and
government purchases and any other relevant regulations and agrees to comply
with such rules and regulations.
(c) Distributor agrees it will comply, at its own expense, with
any requirements to obtain regulatory approvals of, and to make any filings and
registrations related to, this Agreement, the End User Agreement or the
transactions contemplated herein, that may be necessary, or beneficial to
Vendor's rights in the Territory.
10.5 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES (AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS) ANY
OTHER REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, AND ANY WARRANTIES THAT
MAY ARISE FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.
11. CONSEQUENTIAL DAMAGES WAIVER
EXCEPT FOR VENDOR'S AND DISTRIBUTOR'S RESPECTIVE INDEMNITY OBLIGATIONS SET FORTH
IN SECTION 13, AND FOR ANY BREACH BY DISTRIBUTOR OF ITS CONFIDENTIALITY
OBLIGATIONS WITH RESPECT TO THE SOURCE CODE OR ITS OBLIGATIONS UNDER SECTION
3.3, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD
PARTY UNDER ANY LEGAL THEORY FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES, or ANY damages for loss of profits, revenue
OR businesS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
Page 7 of 20
12. LIMITATION OF LIABILITY
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, AND TO THE FULLEST EXTENT
ALLOWED UNDER APPLICABLE LAW, EXCEPT FOR DISTRIBUTOR'S BREACH OF CONFIDENTIALITY
WITH RESPECT TO THE SOURCE CODE OR OF ITS OBLIGATION UNDER SECTION 3.3, AND
EXCEPT FOR VENDOR'S AND DISTRIBUTOR'S RESPECTIVE INDEMNITY OBLIGATIONS SET FORTH
IN SECTION 0, EACH PARTY'S AGGREGATE LIABILITY TO THE OTHER PARTY OR ANY THIRD
PARTY FOR CLAIMS RELATING TO THIS AGREEMENT, WHETHER FOR BREACH, NEGLIGENCE,
INFRINGEMENT, IN TORT OR OTHERWISE, SHALL BE LIMITED TO AN AMOUNT EQUAL TO THE
TOTAL PAYMENTS MADE BY DISTRIBUTOR TO VENDOR IN THE MOST RECENT FULL CALENDAR
YEAR PRECEDING EITHER PARTY'S INITIAL NOTICE TO THE OTHER PARTY OF ANY CLAIM OR
POTENTIAL CLAIM HEREUNDER.
13. INDEMNITY
13.1 VENDOR INDEMNITY. Vendor shall defend, indemnify and hold
Distributor harmless against any and all damages, costs, liabilities, expenses
(including reasonable attorneys' fees) and settlement amounts incurred in
connection with any suit, claim or action by any third party resulting from any
breach (or any claim that, if true, would constitute a breach) of Vendor's
representations, warranties or covenants set forth in Section 9.1 above;
provided, however, Vendor's obligation to indemnify Distributor hereunder is
subject to Distributor: (a) giving Vendor prompt written notice of any such
claim; (b) giving Vendor control over the defense and settlement of any such
claim; (c) providing reasonable cooperation for the defense of any such claim,
at Vendor's expense; and (d) not entering into any settlement or compromise of
any such claim without Vendor's prior approval.
13.2 DISTRIBUTOR INDEMNITY. Distributor agrees to defend, indemnify and
hold harmless Vendor from any and all claims, liabilities, judgments, penalties,
losses, costs, damages, and expenses, including without limitation reasonable
attorneys' fees and settlement amounts incurred in connection with any suit,
claim or action by any third party resulting from, arising by reason of or in
connection with any act by Distributor under or in violation of this Agreement
or any act or omission of any sub-distributor, including, but not limited to,
the promotion, distribution, exploitation, advertising, offering for sale, sale,
or use of the Products or use of the Trademarks, except if such claims,
liabilities, judgments, penalties, losses, costs, damages and expenses are
directly caused by Vendor's negligence or willful misconduct or result from
breach of Vendor's warranty contained in the End-User Agreement. Distributor
will have the right to defend any action or proceeding with attorneys of its own
selection provided that such counsel is reasonably acceptable to Vendor.
Distributor's obligation to defend Vendor hereunder is subject to Vendor: (a)
giving Distributor prompt written notice of any such claim; (b) giving Vendor
control over the defense and settlement of any such claim; (c) providing
reasonable cooperation for the defense of any such claim at Distributor's
expense; and (d) not entering into any settlement or compromise of any such
claim without Distributor's prior approval.
14. TERM AND TERMINATION
14.1 TERM. The term of this Agreement shall commence as of the
Agreement Date and continue, unless earlier terminated as set forth herein, for
five (5) years thereafter ("INITIAL TERM") until ending upon the fifth (5th)
anniversary of the Effective Date. Subsequently, this Agreement shall
automatically renew for successive one (1) year periods (each, a "RENEWAL
TERM"), unless, at least thirty (30) days prior to the end of the then-current
term, either party gives the other party written notice of its intent not to
renew this Agreement, or unless earlier terminated in accordance with this
Agreement. The Initial Term and all Renewal Terms, if any, shall be collectively
referred to as the "TERM."
14.2 TERMINATION. Either party may terminate this Agreement, without
cause, upon sixty (60) days written notice to the other.
14.3 EFFECT OF TERMINATION.
(a) Following termination of this Agreement, Distributor may
distribute its inventory of the Products, and may continue using the Trademarks
for such purpose, until all such inventory has been distributed.
Page 8 of 20
(b) At such time as Distributor has distributed all of its
inventory pursuant to paragraph (a) above, Distributor shall return to Vendor
(or destroy, at Vendor's election) all Software (and all copies and extracts
thereof) and Vendor's Confidential Information then in the possession or under
the control of Distributor and its employees or agents; (iii) Vendor shall
return to Distributor (or destroy, at Distributor's election) all Distributor's
Confidential Information then in the possession or under the control of Vendor
and its employees or agents; and (iv) Distributor shall cease all use of the
Trademarks, and shall, if any form of the Trademarks is used in its name, change
its name.
(c) Neither Vendor nor Distributor shall be liable to the other,
because of such expiration or termination, for compensation, reimbursement or
damages: (i) for the loss of prospective profits, anticipated sales or goodwill;
(ii) on account of any expenditures, investments or commitments made by either;
or (iii) for any other reason whatsoever based upon the result of such
expiration or termination.
(d) The provisions of the following Sections shall survive any
expiration or termination of this Agreement: 6 ("Ownership of Intellectual
Property"), 7 ("Confidential Information"), 10.5 ("Disclaimer"), 11
("Consequential Damages Waiver"), 12 ("Limitation of Liability"), 13
("Indemnity"), 14.3 ("Effect of Termination") and 16 ("Miscellaneous Terms").
15. SOURCE CODE DELIVERY
15.1 ESCROW OF SOURCE CODE. If Distributor desires, the source code for
Product will be escrowed with a reputable agent who will make the code available
to Distributor in the event that Vendor either files for bankruptcy, ceases to
do business, or otherwise becomes incapable of functioning as an operational
company. Vendor is already using an escrow agent at the request of existing
customers, so if Distributor wishes, Distributor's name may be added to the
existing escrow account at Distributor's sole discretion and cost.
16. MISCELLANEOUS TERMS
16.1 RELATIONSHIP OF THE PARTIES. This Agreement shall not be construed
as creating an agency, partnership, joint venture or any other form of
association, for tax purposes or otherwise, between the parties, and the parties
shall at all times be and remain independent contractors. Except as expressly
agreed by the parties in writing, neither party shall have any right or
authority, express or implied, to assume or create any obligation of any kind,
or to make any representation or warranty, on behalf of the other party or to
bind the other party in any respect whatsoever.
16.2 IMPORT/EXPORT. Each party shall comply with all applicable foreign
and domestic laws and regulations relating to the importation or exportation of
the Products.
16.3 GOVERNING LAW, JURISDICTION, AND VENUE. This Agreement shall be
governed by and construed in accordance with the laws of the State of Florida,
U.S.A., without reference to its conflicts of law provisions. Any dispute
regarding this Agreement shall be subject to the exclusive jurisdiction of the
state courts in and for Duval County, Florida, U.S.A. (or, if there is federal
jurisdiction, the United States District Court with jurisdiction for Duval
County, Florida). The parties hereby irrevocably agree to submit to the personal
and exclusive jurisdiction and venue of the aforementioned courts. This
Agreement shall not be governed by the United Nations Convention on Contracts
for the International Sale of Goods, the application of which is hereby
expressly excluded.
16.4 FORCE MAJEURE. Neither party shall be liable under this Agreement
because of any failure or delay in the performance of its obligations on account
of strikes, shortages, riots, inability to obtain export clearance from any
applicable governmental entity, fire, flood, storm, earthquake, acts of God,
hostilities or any other cause beyond its reasonable control (a "FORCE MAJEURE
EVENT"), provided that the non-performing party provides prompt written notice
of any delay or default and cooperates to minimize the impact of such delay. If
the period of nonperformance exceeds fifteen (15) days from receipt of notice of
the Force Majeure Event, the party whose performance has not been affected may
terminate this Agreement, effective immediately upon written notice to the other
party.
16.5 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing, shall reference this
Agreement and shall be deemed to be properly given: (a) when delivered
personally; (b) when sent by facsimile, with written confirmation of receipt by
the sending facsimile machine; (c) five (5) business days after having been sent
by registered or certified mail, return receipt requested, postage prepaid; or
(d) two (2) business days after deposit with a private industry express courier,
with written confirmation of receipt. All notices shall be sent to the address
Page 9 of 20
set forth in the first paragraph of this Agreement and to the notice of the
person executing this Agreement (or to such other address or person as may be
designated by a party by giving written notice to the other party pursuant to
this Section).
16.6 ASSIGNMENT. Vendor shall not assign, transfer, delegate or
otherwise dispose of this Agreement or any right or obligation hereunder
(whether by express transfer, operation of law or otherwise) without the prior
written consent of Distributor. Distributor shall be entitled to assign,
transfer, delegate or otherwise dispose of, whether voluntarily or
involuntarily, by operation of law or otherwise, this Agreement and any of its
rights or obligations under this Agreement. Any attempted or purported
assignment or other transfer not complying with the foregoing shall be null and
void. Subject to the foregoing, this Agreement shall inure to the benefit of and
bind the successors and assigns of the parties.
16.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which together shall constitute a single agreement.
16.8 HEADINGS. The various section headings are inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement or any section thereof.
16.9 SEVERABILITY. If any term, provision, covenant or condition of
this Agreement is held by a court or arbitral panel of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the provisions hereof shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
16.10 CONSTRUCTION. This Agreement shall be deemed to have been drafted
by all parties and, in the event of a dispute, no party hereto shall be entitled
to claim that any provision should be construed against any other party by
reason of the fact that it was drafted by one particular party.
16.11 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto contain
the entire understanding of the parties with respect to the subject matter of
this Agreement and merges and supersedes all prior and contemporaneous
agreements and understandings between the parties, whether oral or written, with
respect to the subject matter of this Agreement. Any waiver, modification or
amendment of any provision of this Agreement shall be effective only if in
writing and signed by the authorized representatives of both parties
IN WITNESS WHEREOF, the parties hereto have executed this Exclusive Distribution
Agreement as of the date first written above.
VENDOR: DISTRIBUTOR:
By:___________________________________ By:___________________________________
Name:_________________________________ Name:_________________________________
Title:________________________________ Title:________________________________
Date:_________________________________ Date:_________________________________
Page 10 of 20
EXHIBIT A
[DISTRIBUTOR AGREEMENT PLEASE NOTE: This EULA is provided as a reference
document ONLY; see Section 3.1 (o). The Exhibits mentioned in this EULA have
been removed so as not to become confused with the Exhibits required as part of
this Distributor Agreement.]
END USER LICENSE AGREEMENT
BRIDGEGATE DEPARTMENTAL SOFTWARE SITE LICENSE AGREEMENT
AGREEMENT effective as of this ____ day of _____ (the "Effective Date")
by and between Object Innovation, Inc. with offices at 8130 Baymeadows Way West,
Suite 307, Jacksonville, Florida 32256 ("Licensor") and ________________________
with offices at __________________________________________________ ("Licensee").
1. LICENSE.
1.1 . In accordance with the terms herein, Licensor grants to
Licensee, and Licensee accepts from Licensor, based upon
continued good standing per EXHIBIT C "Terms & Conditions", a
perpetual non-exclusive and non-transferable license to use
(but not to copy or modify except as expressly permitted
herein) (i) the current version of Licensor's BridgeGate
Software, (ii) any modifications, customizations,
deliverables, error corrections, upgrades, updates delivered
under the terms of this Agreement by Licensor, and (iii) any
results of any services required to be delivered hereunder by
Licensor (collectively the "Software"). The initial version of
the Software to be licensed herein is described on EXHIBIT A
and Licensor's specifications are published on Licensor's web
site at www.objectinnovation.com (or such other web site as
Licensor shall notify Licensee from time to time).
1.2 . The Software may be installed on up to three (3) servers and
shall be used by Licensee only on the equipment and at the
location(s) identified in EXHIBIT B. Software may be licensed
to additional servers according to the price schedule outlined
in EXHIBIT C. Licensee may transfer the Software to other
equipment, or move the equipment and the Software to other
locations owned and operated by Licensee, with Licensor's
prior written consent, such consent not to be unreasonably
withheld or delayed. Licensee may use only one copy of the
Software in production at any one time, but may use as many
additional copies of the software for testing and development
instances as required. Licensee may also use one additional
copy of the Software for Licensee's back up and disaster
recovery purposes, provided that: all Software instances
remain in Licensee's custody and control at all times, that
Licensee notifies Licensor in writing of the location of such
additional copies (should they be in use at a different
location), and provided further that such copies remain within
the continental United States. The Software shall be used only
for the internal data processing needs of Licensee's own
business, which shall include processing information received
from and sent to Licensee's vendors and suppliers in
connection with Licensee's business. Licensee shall not permit
any third party to use the Software, or use the Software in
the operation of or to provide the services of a service
bureau or an application service provider. The copy of the
Software used in production may be temporarily transferred to
back-up equipment owned and operated by Licensee and located
within the continental United States if the particular
equipment on which it is installed as permitted herein is
inoperative for more than 48 hours, upon prior written notice
to Licensor.
1.3 . Licensor also hereby grants to Licensee a non-exclusive,
non-transferable license co-terminus with the license in the
Software, to use but not to copy or modify, the Documentation.
The Documentation shall consist of any user guides, which are
provided from time to time by Licensor to Licensee.
Page 11 of 20
1.4 . Licensee acknowledges that the source code to the Software
is not to be delivered hereunder.
2. . LICENSEE EQUIPMENT AND SECURITY REQUIREMENTS. LICENSEE AGREES TO
OBTAIN AND MAINTAIN THE EQUIPMENT AND SYSTEMS DESCRIBED IN EXHIBIT B,
AND AGREES TO EMPLOY AND MAINTAIN ALL SECURITY SYSTEMS AND PROTECTIONS
REQUIRED BY LAW FOR THE INFORMATION TO BE PROCESSED UTILIZING THE
SOFTWARE, AS WELL AS SUCH SECURITY SYSTEMS AND PROTECTIONS AS ARE
EXPRESSLY SET FORTH ON EXHIBIT B.
3. . MAINTENANCE AND SUPPORT SERVICES.
a. Should Licensee choose optional "Maintenance and Support Services",
in consideration for timely "Maintenance and Support Services" payments
as set forth in EXHIBIT C, Licensor agrees to provide to Licensee the
Maintenance and Support Services described in EXHIBIT E for the
duration of the "Maintenance and Support Services" term, renewable
thereafter for successive one year terms ("Renewal Year") upon mutual
agreement of the parties. The Initial Maintenance Services Term and
each Renewal Year shall constitute the "Maintenance Services Term".
b. To the extent that Licensee requests that Licensor provide
maintenance, error correction or other related services during the
Maintenance Services Term beyond those services provided for the
Maintenance and Support Fees, Licensor may provide such services
("Additional Services"), and Licensee shall compensate Licensor for all
such services at Licensor's then current hourly rates.
c. It is expressly understood by Licensee that Licensor shall have the
right to delegate its Installation, Customization, Training Additional
Services and/or Maintenance and Support Services obligations hereunder
to one or more service providers selected by Licensor from time to
time.
4. . SOFTWARE OWNERSHIP
As between Licensee and Licensor, all right, title and interest
(including rights of copyright and all other proprietary rights) in the
Software and Documentation (other than the license rights granted to
Licensee herein) and all copies and derivations thereof, and any and
all extensions or changes to the Software made by Licensee (including
the Permitted Adaptations), shall be held by Licensor, including,
without limitation, all results and proceeds of Licensor's Maintenance
and Support Services, Installation Services, Customization Services,
Training Services and Additional Services provided hereunder. Licensee
shall not sell, transfer, publish, disclose, display, transmit,
distribute, or otherwise make available the Software or copies thereof
to others except as expressly permitted herein. Licensee agrees to
secure and protect from misuse, theft, unauthorized use or damage the
Software, each component thereof delivered hereunder, and the
Documentation, in a manner consistent with the maintenance of
Licensor's rights therein and as otherwise required herein or by law,
and to take appropriate action through instruction or agreement with
its employees or consultants who are permitted access to each program
or software product to satisfy its obligations hereunder.
5. . INSTALLATION. IN ACCORDANCE WITH THE INSTALLATION SCHEDULE SET FORTH
ON EXHIBIT F, SHOULD LICENSEE CHOOSE OPTIONAL "MAINTENANCE AND SUPPORT
SERVICES" LICENSOR SHALL PROVIDE SERVICES TO INSTALL THE SOFTWARE ON
THE EQUIPMENT DESCRIBED ON EXHIBIT B FOR NO ADDITIONAL CHARGE,
OTHERWISE LICENSOR SHALL PROVIDE INSTALLATION SERVICES ON A TIME AND
MATERIALS BASIS (THE "INSTALLATION SERVICES"). WHEN LICENSOR HAS
DETERMINED THAT THE INSTALLATION IS COMPLETE, LICENSOR SHALL NOTIFY
LICENSEE. THE INSTALLATION SCHEDULE MAY BE MODIFIED FROM TIME TO TIME
BY MUTUAL AGREEMENT OF THE PARTIES. LICENSEE ACKNOWLEDGES THAT
SUCCESSFUL INSTALLATION OF THE SOFTWARE PURSUANT TO THIS AGREEMENT
SHALL REQUIRE LICENSEE'S FULL AND GOOD FAITH COOPERATION, INCLUDING BY
PROVIDING LICENSOR WITH TIMELY ACCESS TO LICENSEE'S PREMISES, EQUIPMENT
AND SYSTEMS, AND THE COOPERATION OF LICENSEE PERSONNEL.
6. . CUSTOMIZATION.
6.1 . By Licensor.
6.2 Upon request from Licensee, Licensor shall develop interfaces
for use of the Software by Licensee in exchanging information
with Licensee's vendors and suppliers and such other
customizations as Licensee and Licensor may mutually agree
Page 12 of 20
upon. Licensor shall provide such customization services to
mutually agreed upon specifications and in accordance with a
mutually agreed upon timeline at the rates described in
EXHIBIT D. Exceptions to published rates may be specified in
EXHIBIT C. Any work not clearly defined in EXHIBIT C shall be
billed at published rates as specified in EXHIBIT D.
6.3 . By Licensee. Licensee is permitted to utilize the Software
in accordance with the Documentation to create the Adaptors,
Plug-in Codes and Templates described on EXHIBIT A, each of
which shall be referred to herein as "Permitted Adaptations."
6.4 . All such customizations described in Paragraphs 8(a) and (b)
above shall become part of the Software and governed by the
terms of this Agreement.
7. . CONFIDENTIALITY.
7.1 . The parties hereby agree to treat the other party's
Confidential Information with at least the degree of
protection each such party provides its own confidential
information and at least the protection required by law.
7.2 . Each party shall provide access to the other party's
Confidential Information only to those of such party's
employees who have a need for such access in order to perform
their responsibilities under this Agreement (and in the case
of Licensee those employees who need access to the Software in
order for Licensee to utilize it for Licensee's business as
permitted in this Agreement). Licensor may provide access to
Licensee's Confidential Information to its contractors,
service providers and other third parties as necessary to
permit such contractors and service providers to carry out
their responsibilities to Licensor. Neither party shall
provide to third parties any access to the other party's
Confidential Information unless such access is needed in order
for such party to perform their obligations under this
Agreement and such third parties have agreed in writing to
treat such Confidential Information as confidential in
accordance with this Agreement and provided further that such
party agrees to be responsible for any unauthorized use or
disclosure by such third party of the other party's
Confidential Information.
7.3 . Confidential Information shall include any information
marked by a party as confidential when disclosed, or if
disclosed orally, which is followed up within a reasonable
time with a written statement informing the recipient of its
confidentiality. Confidential Information of Licensee shall
include any data on the systems of Licensee to which Licensor
is given access in performing its responsibilities hereunder
and Confidential Information of Licensor shall include the
Software, all components thereof, the Documentation, any
source code of the Software, the terms of this Agreement, and
marketing and financial information about Licensee and its
affiliates
7.4 . Notwithstanding anything to the contrary set forth above,
Confidential Information shall not include any information
which is (i) publicly known; (ii) independently developed by
the receiving party without any use of and by employees who
had no access to, the confidential information of the other
party; or (iii) which is received from a third party who is
under no obligation of confidentiality to the owner of the
confidential information.
7.5 . Neither party shall be in breach of this Agreement if they
disclose the Confidential Information of the other party in
response to a court order, subpoena or similar legal
requirement, provided that they disclose only the information
required to be disclosed and notify the other party of such
compelled disclosure and cooperate with such other party's
efforts, if any, to secure a protective order for such
information.
7.6 . The parties recognize that disclosure as prohibited herein
of any such confidential information may cause irreparable
injury to the other party, which is not compensable in
monetary damages or where monetary damages may be inadequate
or impossible to measure. Each party may seek injunctive
relief against the breach or threatened breach of any of the
foregoing confidentiality undertakings, in addition to any
other legal remedies, which may be available. Licensor may
terminate this Agreement immediately, including all license
rights granted herein, in the event of any breach of the
confidentiality obligations set forth herein.
8. . LIMITED WARRANTIES AND LIMITED LIABILITY.
Page 13 of 20
8.1 . Licensor warrants that, for a period of ninety days after
Licensor notifies Licensee that the Software has been
installed, the Software, once installed, will conform in all
material respects, to Licensor's then current published
specifications. With regard to other deliverables, such as
modifications or customizations delivered hereunder by
Licensor, Licensor warrants that for a period of ninety days
after delivery (or after installation if Licensor installs
such deliverable), such deliverable shall conform to
Licensor's specifications therefore, it being understood that
this latter warranty shall not require Licensor to fix errors
without charge that appear in the underlying Software to the
extent such Software was installed more than ninety days
earlier, even if such error in the Software causes the new
deliverable to operate incorrectly. The foregoing ninety-day
periods of warranty shall be referred to herein as the
"Warranty Period".
8.2 . Licensee shall notify Licensor in writing, within five days
of Licensee's discovery during the applicable Warranty Period
of any failure of the Software (or deliverable) to conform to
the warranty stated above in Section 10(a) (a
"Nonconformity"). If Licensor is able to reproduce the
Nonconformity, Licensor shall (i) use commercially reasonable
efforts to promptly correct such Nonconformity; (ii) if (i)
does not result in elimination of the Nonconformity, use
commercially reasonable efforts to replace the Software or
deliverable with copies of the Software or deliverable that do
not result in the Nonconformity; (iii) with regard to a
Nonconformity in the underlying Software, if (i) and (ii) do
not result in elimination of the Nonconformity, terminate this
Agreement and license and return to Licensee all amounts paid
by Licensee hereunder; or (iv) with regard to a Nonconformity
in any subsequent deliverable, if (i) and (ii) do not result
in elimination of the Nonconformity, terminate the license
rights for that particular deliverable and refund to Licensee
an allocated amount of any license fees paid hereunder for
that deliverable (including additional installation fees paid
to install or customization fees paid to create, such
deliverable).
8.3 . THE ABOVE IS A LIMITED WARRANTY AND IT IS THE ONLY WARRANTY
MADE BY LICENSOR. LICENSOR MAKES AND LICENSEE RECEIVES NO
OTHER WARRANTY, EXPRESS OR IMPLIED, AND THERE ARE EXPRESSLY
EXCLUDED ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. LICENSOR SHALL HAVE NO LIABILITY WITH
RESPECT TO ITS OBLIGATIONS UNDER THIS AGREEMENT FOR
CONSEQUENTIAL, EXEMPLARY, OR INCIDENTAL DAMAGES EVEN IF IT HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE STATED
EXPRESS WARRANTY IS IN LIEU OF ALL LIABILITIES OR OBLIGATIONS
OF LICENSOR FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH
THE DELIVERY, USE, OR PERFORMANCE OF THE SOFTWARE AND ANY
OTHER DELIVERABLES DELIVERED OR SERVICES PROVIDED HEREUNDER.
8.4 . If any modifications are made to the Software by other than
Licensor (other than Permitted Adaptations made in accordance
with the Documentation), the foregoing warranty set forth in
Paragraph 10(a) shall not apply.
8.5 . Notwithstanding anything to the contrary set forth in this
Agreement, Licensee agrees that Licensor's liability under
this Agreement, or arising out of contract, negligence, strict
liability in tort or warranty shall not exceed any amounts
paid to Licensor by Licensee under this Agreement.
9. . INDEMNITIES.
9.1 . Licensor shall defend, indemnify and hold harmless Licensee
against any claims that the Software delivered hereunder
infringes any copyright, patent, or other proprietary right of
a third party, provided that, (i) Licensee notifies Licensor
promptly of any such claim, (ii) Licensee turns over to
Licensor the sole right to control the defense and settlement
of such claim with counsel selected by Licensor; and (iii)
Licensee fully cooperates in connection with such defense. In
no event shall Licensee settle or compromise any such claim,
lawsuit or proceeding without Licensor's prior written
approval. If, as a result of any such infringement claim,
Licensee is enjoined from using the Software, or if Licensor
believes that the Software is likely to become the subject of
a claim of infringement, Licensor at its option and expense
may procure the right for Licensee to continue to use the
Software, or may replace or modify the Software so as to make
it non-infringing. If neither of these two options is
reasonably practicable Licensor may terminate the license
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granted herein on written notice and in such case shall refund
to Licensee the unamortized portion of the License Fees paid
hereunder (based on four years straight line depreciation,
such depreciation to commence on the Effective Date). The
foregoing states the entire liability of Licensor with respect
to infringement claims related to the Software.
9.2 . Licensor shall not be obligated to indemnify Licensee under
Paragraph 11(a) above if (i) the infringement claim would have
been avoided or if there would be no judgment of infringement,
if Licensee had installed an upgrade, error correction or
update that was offered to Licensee without charge (other than
charges for Maintenance and Services Fees or Installation
Fees); (ii) the claim is based on use of the Software with
equipment or other software not approved by Licensor; (iii)
the claim is based on modification of the Software by other
than Licensor (other than Permitted Adaptations made by
Licensee in accordance with the Documentation and this
Agreement).
10. . TRAINING. LICENSOR SHALL PROVIDE THE TRAINING SET FORTH ON EXHIBIT G
IN THE AMOUNTS AND IN ACCORDANCE WITH THE SCHEDULE SET FORTH THEREON.
THE PARTIES MAY AGREE UPON ADDITIONAL TRAINING FROM TIME TO TIME.
11. . TERM AND TERMINATION.
11.1 . Licensor shall have the right to terminate this Agreement
(and the license rights granted herein):
(a) . immediately on notice to Licensee in the event that
the confidentiality obligations of Licensee are
violated or in the event Licensee (A) terminates or
suspends its business; (B) becomes subject to any
bankruptcy or insolvency proceeding under Federal or
state statute or (C) becomes insolvent or becomes
subject to direct control by a trustee, receiver or
similar authority;
(b) . upon ten days prior written notice to Licensee in
the event Licensee fails to pay any amounts when due,
and fails to pay such overdue amounts prior to the
expiration of such ten day period; and
(c) upon thirty days prior written notice to Licensee in
the event Licensee violates any other provision of
this Agreement and fails to cure such breach prior to
the expiration of the thirty-day period.
11.2 . In the event of termination of this Agreement, the license
rights granted herein shall terminate and Licensor shall have
the right to take immediate possession of the Software and
Documentation and all copies wherever located, without demand
or notice. Within five (5) days after termination of this
Agreement, Licensee will return to Licensor the Software in
the form provided by Licensor and as modified by the Licensee,
or upon request by Licensor shall destroy the Software and all
copies, and certify in writing that they have been destroyed.
Without limiting any of the above provisions, in the event of
termination of this Agreement and the license rights granted
herein, Licensee shall continue to be obligated for any
payments due for services rendered or use of the Software made
prior to the date of termination. Termination of this
Agreement shall be in addition to and not in lieu of any
equitable remedies available to Licensor.
12. . GENERAL.
12.1 . Licensor may publicize the fact that Licensee is a customer
of Licensor and a licensee of the Software.
12.2 . The parties agree that this is the complete and exclusive
statement of the Agreement between the parties, which
supersedes and merges all prior proposals, understandings and
all other agreements, oral and written, between the parties
relating to this Agreement. This Agreement may not be modified
or altered except by written instrument duly executed by both
parties.
12.3 . Dates or times by which Licensor is required to make
performance under this license shall be postponed
automatically to the extent that Licensor is prevented from
meeting them by causes beyond its reasonable control,
including events of force majeure. Without limiting Licensor's
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remedies hereunder, Licensor shall be entitled to suspend
performance of its obligations under this Agreement in the
event of nonpayment by Licensee.
12.4 . This Agreement and performance hereunder shall be governed
by the laws of the State of Florida. The parties hereby
consent to the exclusive jurisdiction of the state and federal
courts located in Duval County, Florida, for the resolution of
their disputes, and the parties do hereby waive any objection
thereto based on inconvenient forum.
12.5 . If any provision of this Agreement is invalid under any
applicable statute or rule of law, it is to that extent to be
deemed omitted. The provisions of Paragraph 6, 9, 10, and 11
and such other provisions which by their plain meaning are
intended to survive expiration of termination of this
Agreement, shall survive termination or expiration of this
Agreement.
12.6 . Licensee may not assign, delegate or sub-license this
Agreement or any of its rights, duties and obligations set
forth herein, in whole or in part, without the prior written
consent of Licensor. Licensor may assign this Agreement to any
affiliate of Licensor, may assign this Agreement to any entity
that acquires all or substantially all of its assets, whether
through merger, consolidation, sale or other transfer or by
operation of law, and may delegate certain of its service
obligations to service providers selected by Licensor from
time to time, including, without limitation, the Installation,
Training, Customization, and Maintenance and Support Services.
For purposes of this Agreement, an affiliate of Licensor is
any entity that is controlled by, controls, or is under common
control with Licensor or its Principals.
12.7 . The waiver or failure of Licensor or Licensee to exercise in
any respect any right provided for herein shall not be deemed
a waiver of any further right hereunder.
AGREED:
LICENSOR, INC. LICENSEE
Name: SCOTT SIRDEVAN Name:
-------------------------------------- ------------------------------
(Print) (Print)
Address: 8130 BAYMEADOWS WAY WEST Address:
-------------------------------------- ------------------------------
SUITE 307, JACKSONVILLE, FL 32256
-------------------------------------- ------------------------------
Signature: Signature:
--------------------------------- -------------------------
Title: PRESIDENT Title:
------------------------------------- -----------------------------
Date: Date:
-------------------------------------- ------------------------------
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EXHIBIT B
PRODUCTS
Software: BridgeGate Client, BridgeGate Portal
Page 17 of 20
EXHIBIT C
PRODUCT PRICE LIST AND DISTRIBUTOR DISCOUNT/SUPPORT FEES
1. Product Price:
Enterprise Site License - $3.2 Million dollars. Price may be modified
by mutual consent of Vendor and Distributor, based on the circumstances
of the sale and the customer who is buying BridgeGate products and
services.
Departmental Site License - $320,000.00
Lease License (foreign version) - Price must be negotiated with Vendor
since too many variables
2. Support Fees: (Level Two Support):
$70.00 per hour to Distributor
$120 per hour to End User on behalf of Distributor
Items 1 and 2 (above) that refer to the Site License Fee and Support Fees are
for reference only. The Product price(s) will be determined after Distributor
has completed its own marketing research. See section 9.1 for explanation.
Travel expenses for travel on behalf of Distributor to provide End User support
will be paid by End User or Distributor.
Travel expenses on behalf of Vendor will be paid by Vendor.
Travel expenses for initial training will be paid by Distributor, but
Distributor will not be charged for training. Training may be conducted either
in Japan or in Florida, at Distributor's option.
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EXHIBIT D
TRADEMARKS
BridgeGate
BridgeGate Client
BridgeGate Portal
TEI
Transformation & Exchange Infrastructure
The `telephone' for the 21st Century
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EXHIBIT E
MAINTENANCE AND SUPPORT SERVICES
I. LEVEL ONE SUPPORT
Distributor shall, at its own expense, provide all front-end customer
support and training relating to the use of the Products by End Users
and Distributor personnel ("LEVEL ONE SUPPORT") for any and all units
of the Products marketed and distributed by Distributor, including,
without limitation, reasonable telephone, fax and e-mail support during
Distributor's normal business hours, including without limitation, all
customer support required under the End-User Agreements, but NOT
including the provision of any programming necessary to correct Errors
II. LEVEL TWO SUPPORT
Vendor shall provide to Distributor back-end theoretical support,
technical information, training, consulting, cooperation and assistance
as may be reasonably necessary for Distributor to provide Level One
Support to End Users and Distributor personnel, including, without
limitation, as set forth in this EXHIBIT E ("LEVEL TWO SUPPORT").
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