SOFTWARE DEVELOPMENT
AND
PURCHASE AGREEMENT
By and Among
Format, Inc.,
a Nevada corporation
and
Digiblue Media, Inc.,
a Nevada corporation
THIS SOFTWARE DEVELOPMENT AND PURCHASE AGREEMENT ("Agreement") is made
and entered into in duplicate this 1st day of May, 2002, by and among Digiblue
Media, Inc., a Nevada corporation ("Contractor"), and Format, Inc., a Nevada
corporation ("Purchaser").
RECITALS
A. The Contractor desires to develop, on the terms and subject to the
conditions specified in this Agreement, certain Software, hereinafter described,
for the Purchaser.
B. Purchaser desires to acquire, and the Contractor desires to sell to
Purchaser, (i) the Software to be designed and developed by Contractor, in
addition to any necessary literature, manuals, handbooks, schematics and
supporting documentation required by Purchaser to utilize the Software, and (ii)
Two Hundred Thousand (200,000 shares) of Contractor's $.001 par value common
stock, on the terms and subject to the conditions specified in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
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ARTICLE I
DEFINITIONS
As used in this Agreement, in addition to terms defined elsewhere in
this Agreement, the terms specified below in this Article I shall have the
definitions and meanings specified immediately after those terms, unless a
different and common meaning of the term is clearly indicated by the context,
and variants and derivatives of the following terms shall have correlative
meanings. To the extent that certain of the definitions and meanings specified
below suggest, indicate, or express agreements between or among parties to this
Agreement, or specify representations or warranties or covenants of a party, the
parties agree to the same by execution of this Agreement. The parties to this
Agreement agree that agreements, representations, warranties, and covenants
expressed in any part or provision of this Agreement shall for all purposes of
this Agreement be treated in the same manner as other such agreements,
representations, warranties, and covenants specified elsewhere in this
Agreement, and the article or section of this Agreement within which such an
agreement, representation, warranty, or covenant is specified shall have no
separate meaning or effect on the same.
1.1 "Agreement". This Software Development and Purchase Agreement,
including all of its schedules and exhibits and all other documents
specifically referred to in this Agreement that have been or are to be
delivered by a party to this Agreement to another such party in connection
with the Transaction or this Agreement, and including all duly adopted
amendments, modifications, and supplements to or of this Agreement and such
schedules, exhibits and other documents.
1.2 "Software". Consists of a program to convert electronically-created
documents produced using commonly-used word processing software, primarily
and specifically Microsoft Word and Microsoft Excel, into a format
acceptable for filing with the United States Securities and Exchange
Commission by means of its Electronic Data Gathering, Analysis, and
Retrieval (EDGAR) system.
1.3 "Purchaser". Format, Inc., a Nevada corporation, which, pursuant to
the provisions of this Agreement, is purchasing the Software.
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1.4 "Contractor". Digiblue Media, Inc., a Nevada corporation, which,
pursuant to the provisions of this Agreement, is developing the Software for
the Purchaser.
1.5 "Proprietary Information". Shall mean and include, without
limitation, any and all marketing and sales data, plans and strategies,
financial projections, Purchaser client lists, prospective client lists,
promotional ideas, data concerning Purchaser's services, designs, methods,
inventions, improvements, discoveries, designs whether or not patentable,
"know-how", training and sales techniques, and any other information of a
similar nature disclosed to Contractor or otherwise made known to Contractor
as a consequence of or through this Agreement during the term hereof. The
term Proprietary Information shall not include any information that (i) at
the time of the disclosure or thereafter is or becomes generally available
to and known by the public, other than as a result of a disclosure by
Contractor or any agent or representative of Contractor in violation of this
Agreement, or (ii) was available to Contractor on a non-confidential basis
from a source other than Purchaser, or any of Purchaser's officers,
directors, employees, agents or other representatives.
1.6 "Software". Consists of the following:
(a) A single computer program designed to reformat
electronically-created document files from commonly available word
processing formats, primarily Microsoft Word and Microsoft Excel, into
a format acceptable for filing into a format acceptable for filing with
the United States Securities and Exchange Commission ("SEC") by means
of its Electronic Data Gathering, Analysis, and Retrieval ("EDGAR")
system, such that electronically-created document files converted into
the format prescribed by EDGAR for filing with the SEC. The Software
will be delivered as follows:
(i) On a compact disk, floppy disks or other medium
as selected by Contractor;
(ii) In object code language or subject code language
as determined by Contractor.
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(b) All related printed documentation, including manuals
covering the installation, application, and use of the computer program
and published specifications.
(c) All subsequent improvements to either the computer program
or the related printed documentation made by either Contractor or
Purchaser.
1.7 "Completion". The completion of the design of the Software by the
Contractor.
1.8 "Completion Date". The date on which the Completion actually
occurs, which shall be no later than May 1, 2003, unless otherwise agreed in
writing by the parties.
1.9 "Consideration". Fifty Thousand Dollars, in U.S. currency
($50,000.00) payable in installments, as specified in Article IV of the
Agreement, by the Purchaser to the Contractor in exchange for the purchase
of the Software and Two Hundred Thousand (200,000) shares of Contractor's
$.001 par value common stock.
1.10 "Transaction". The development and sale of the Software for the
Consideration as contemplated by, and on the terms and subject to the
conditions of, this Agreement.
ARTICLE II
DEVELOPMENT AND PURCHASE AGREEMENT
AND LIMITATIONS
2.1 Development Services. Contractor shall provide the services
necessary to remedy any programming error attributable to Contractor that is
determined to exist in the Software, either by replacing the Software or by
taking appropriate corrective action. Contractor shall take any such
corrective action, make any necessary replacement, or provide other services
promptly after Purchaser identifies a claimed programming or other error
relating to the Software and notifies Contractor of that error. The
development services contemplated by the provisions of this agreement
include, but are not necessarily limited to, two (2) day training sessions
for those persons designated by Purchaser, which training sessions shall be
provided upon Completion of the Software development contemplated by this
Agreement and shall be conducted at the premises of Purchaser.
2.2 Modifications Included. Contractor shall provide Software
development services pursuant to this Agreement with respect to any
improvements, modules, similar or related products, upgrades or similar
modifications to the Software made by Purchaser or to any computer program
comprising or incorporating all or any part of the Software.
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2.3 Access to Data and Computer. On request, Purchaser shall provide
Contractor with printouts of the Software or of data in storage that
exhibits evidence of a programming error. Purchaser shall provide Contractor
with access to Purchaser's computer and sufficient computer time to enable
Contractor to duplicate the problem, determine that it results from the
Software, and, after corrective action or replacement has taken place,
determine that the problem has been alleviated.
2.4 Copies.
(a) Except as provided herein, Purchaser shall not copy any
portion of the Software. Purchaser may make one copy (i.e., a backup
copy) of the computer program portion of the Software for archival
purposes. Purchaser is not authorized to modify or adapt the program or
convert it to a different language or configuration: and may not make
an additional copy of the licensed computer program for use in
adapting, modifying, or converting it as authorized herein. Purchaser
shall provide Contractor a written description of the procedures under
which it makes backup copies, including any that may involve backup of
the Software, and Contractor shall promptly approve or disapprove those
procedures. Contractor's approval shall not be unreasonably withheld.
(b) Purchaser shall keep the Software at its principal place
of business or such other place to which the Purchaser's computer
hardware may subsequently be moved, and all copies thereof shall be
kept at Purchaser's principal place of business.
(c) Purchaser shall reproduce and include the appropriate
copyright notice, patent notice, trademark, service mark, other
proprietary markings, and/or confidential legends on any copies of the
Software, including any modifications, adaptations, or conversions.
2.5 Modifications or Adaptations. Purchaser is free to modify the
Software for its own use and merge it into other material to form revised
materials. Any such revised materials shall be used strictly in accordance
with the terms of this Agreement.
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ARTICLE III.
PROPERTY RIGHTS
3.1 Title to Software. Title to the Software shall pass from Contractor
to Purchaser upon Completion of development. Contractor acknowledges and
agrees that Purchaser shall become and remain, the owner of the Software and
shall be the owner of all copies thereof made by Purchaser.
3.2 Nondisclosure of Software. Purchaser and Contractor acknowledge
that the Software is confidential in nature and constitutes a trade secret
belonging to Contractor that will pass to Purchaser upon Completion of
development. Contractor agrees to not to sell, rent, license, distribute,
transfer, or, directly or indirectly, disclose or permit the sale, rental,
licensing, distribution, transfer, or disclosure of the Software or its
contents to any other party and to use its best efforts to prevent
inadvertent disclosure of the Software to any third party either during the
term of this Agreement or thereafter.
3.3 Security. Purchaser and Contractor agree to keep the Software in a
secure place, under access and use restrictions designed to prevent
disclosure of the Software to unauthorized persons and not less strict than
those applicable to either party's own trade secrets.
3.4 Degree of Care. Purchaser and Contractor further agree to instruct
its personnel to keep the Software confidential by using the same care and
discretion that they use with other data designated by Contractor as
confidential.
3.5 Copyright or Other Marks. Purchaser agrees not to remove, deface,
or destroy any copyright, patent notice, trademark, service mark, other
proprietary markings, or confidential legends placed on or within the
Software.
ARTICLE IV
PAYMENT
4.1 Periodic Payments. In payment for the development and purchase of
the Software and issuance of Two Hundred Thousand (200,000) shares of
Contractor's $.001 par value common stock provided in for this Agreement,
Purchaser will pay Contractor the total sum of Fifty Thousand Dollars
($50,000.00) as a development fee, payable in ten (10) installments of Five
Thousand Dollars ($5,000.00) per month, commencing May 1, 2002, for a period
of ten months. Contractor will issue the Two Hundred Thousand (200,000)
shares of its $.001 par value common stock to Purchaser as of the date of
this Agreement.
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4.2 Full Satisfaction. Contractor hereby acknowledges, represents and
warrants that the sum of Fifty Thousand Dollars ($50,000.00) will be in full
satisfaction of any and all amounts owed by Purchaser to Contractor under
this Agreement. As such, Contractor acknowledges, represents and warrants
that Purchaser has no further financial obligation to Contractor under this
Agreement beyond this sum.
4.3 Payment of Taxes. Purchaser shall pay all taxes that may be
assessed on the Software or its use, including personal property taxes,
sales and use taxes, and excise taxes.
4.4 Registration Rights. Contractor shall prepare and file a
registration statement with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended ("Act"), and cause the Two Hundred
Thousand (200,000) shares issued to Purchaser to be registered pursuant to
the Act. Contractor shall prepare and file with the Commission such
amendments and supplements to the registration statement and the prospectus
used in connection with such registration statement necessary to comply with
the provisions of the Act and to cause such registration statement to become
effective. Contractor shall pay all expenses and fees incurred by Contractor
in registering those Two Hundred Thousand (200,000) shares issued herewith
to Purchaser.
ARTICLE V
DELIVERY, INSTALLATION, AND TRAINING
5.1 Delivery of Software. Contractor shall deliver one copy of the
computer program portion of the Software and one copy of the printed portion
of the Software to the Purchaser at Purchaser's principal place of business
no later than May 1, 2003.
5.2 Risk of Loss. If the Software is lost or damaged during shipment,
Contractor shall replace it at no additional charge to Purchaser. If the
Software is lost or damaged while in Purchaser's possession, Contractor
shall replace it on payment by Purchaser of the cost of reproduction.
5.3 Installation Services. Contractor shall install the computer
program portion of the Software, which shall be installed on the Designated
Hardware within 10 days after Completion of development. Technical services
shall be provided by Contractor in connection with the installation of the
computer program portion of the Software at Purchaser's site for eighteen
(18) months at no charge.
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5.4 Testing. Contractor shall conduct tests of the Software on its
installation. All testing shall be conducted in accordance with
specifications devised for testing of the Software by Contractor, using
projects provided by Purchaser, for a period of 10 days. All testing shall
be performed on the Purchaser's computer hardware.
5.5 Acceptance. The Software shall be deemed to have been accepted by
Purchaser when it has met the acceptance criteria prescribed by the
specifications devised for testing of the Software by Contractor or after
completion of the testing prescribed by Section 5.4 and productive use of
the Software by Purchaser not to exceed 30 days. If the Software is deemed
unacceptable, Purchaser shall return the Software without change with a
report detailing the reasons for its unacceptability.
5.6 Training. Contractor shall provide 30 days of technical orientation
and training for all of Purchaser's computer operations personnel at no
charge. Training and orientation shall be provided at Purchaser's place of
business located at 1102 Buena Vista, San Clemente, California, 92672.
ARTICLE VI
WARRANTY AND WARRANTY SERVICE
6.1 Warranty of Title. Contractor warrants that it has good title to
the Software and the right to sell the Software to Purchaser free of any
proprietary rights of any other party or any other encumbrance whatever.
6.2 Warranty of Title Remedies.
(a) Purchaser shall notify Contractor of the assertion of any
claim that the Software or Purchaser's use thereof under this Agreement
violates the trade secret, trademark, copyright, patent, or other
proprietary right of any other party, and shall cooperate with
Contractor in the investigation and resolution of any such claim.
Contractor shall defend Purchaser against any and all such claims.
Contractor shall indemnify and hold Purchaser harmless from any
liability for damage, costs, or other loss incurred by Purchaser in
connection with any such claim.
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(b) If the Software becomes, or in Contractor's opinion is
likely to become, the subject of a claim of infringement of a copyright
or patent, Contractor may procure for Purchaser the right to continue
using the Software, replace or modify the Software to render it
non-infringing, or discontinue its use.
(c) Contractor shall not indemnify Purchaser against any claim
or liability based on Purchaser's modification or conversion of the
Software and/or the subsequent use of that modification or conversion
or use or combination of the Software with programs or data not
supplied by Contractor if infringement would have been avoided by the
use or combination of the Software with other programs or data.
6.3 Warranty of Conformity to Specifications. Contractor warrants that
the Software shall conform to Contractor's published functional
specifications when delivered to purchaser. ANY MODIFICATION OF THE SOFTWARE
BY ANY PERSONS OTHER THAN CONTRACTOR SHALL VOID THIS WARRANTY.
6.4 Remedy for Nonconforming Software. During a period of 18 months
after acceptance of the Software by Purchaser, Contractor shall, at its own
expense, provide programming services to correct Software defects that cause
the Software to fail to conform to Contractor's published functional
specifications and that significantly affect its performance in accordance
with those specifications, provided that Purchaser has notified Contractor
thereof and, upon inspection, Contractor has found the Software to be
nonconforming.
ARTICLE VII
TERMINATION
7.1 Cause for Termination. The Agreement contemplated herein shall be
terminated automatically and without further notice upon the occurrence of
any of the following:
(a) Expiration of the term specified herein, or of any
optional renewal term in the absence of a subsequent renewal in
accordance with the terms of this Agreement.
(b) Cessation of business by Purchaser or any successor or
assign to whom the Software has been legitimately transferred.
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(c) Commission by Purchaser of an event of default as defined
herein.
7.2 Events of Default. Purchaser shall have committed an event of
default, and this Agreement shall terminate, if any of the following occur:
(a) Purchaser attempts to use, copy, license, or convey the
Software in any manner contrary to the terms of this Agreement or in
derogation of Contractor's proprietary rights in the Software during
the development period.
(b) Purchaser fails to make timely periodic payments as
contemplated by the schedule in Article IV.
(c) Purchaser makes an assignment of Purchaser's business for
the benefit of creditors.
(d) A petition in bankruptcy is filed by or against Purchaser.
(e) A receiver, trustee in bankruptcy, or similar officer is
appointed to take charge of all or part of Purchaser's property.
(f) Purchaser is adjudicated a bankrupt.
7.3 Effect of Termination. Purchaser agrees that immediately upon the
operation of Section 7.1, whether or not it receives notice of termination,
it shall immediately return all copies of the Software to Contractor. Upon
termination of the license granted hereunder, Contractor's and Purchaser's
obligations under this Agreement shall cease.
ARTICLE VIII
NON-DISCLOSURE OF PROPRIETARY INFORMATION;
NON-COMPETITION AND NON-CIRCUMVENTION
8.1 Non-Disclosure of Proprietary and Confidential Information By
Contractor. In consideration and recognition of the fact that during the term of
this Agreement Contractor may have access to the Proprietary Information or
other information and data of a secret and proprietary nature which Purchaser
desires to keep confidential, and that Purchaser has furnished, or during the
term will furnish such information to Contractor, Contractor agrees and
acknowledges (as used in this Article VIII, Contractor shall refer to Contractor
and any subsidiaries, affiliates, related entities, officers, agents,
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shareholders, partners, principals and/or employees) that Purchaser has
exclusive proprietary rights to all Proprietary Information, and Contractor
hereby assigns to Purchaser all rights that Contractor might otherwise possess
in any Proprietary Information. Except as required in the performance of
Contractor's duties to Purchaser, Contractor will not at any time during or
after the term hereof, directly or indirectly use, communicate, disclose,
disseminate, lecture upon, publish articles or otherwise put in the public
domain, any Proprietary Information relating to Purchaser or Purchaser's
services, products or business. Contractor agrees to deliver to Purchaser any
and all copies of Proprietary Information in the possession or control of
Contractor upon the expiration or termination of this Agreement, or at any other
time upon request by Purchaser. The provisions of this section shall survive the
termination of this Agreement.
8.2 Non-Competition and Non-Circumvention by Contractor. In
consideration and recognition of the fact that Contractor has access to
Proprietary Information under the terms and provisions of this Agreement and
that Purchaser will be introducing Contractor to various product manufacturers,
retailers and distributors, Contractor represents, warrants and covenants to
Purchaser as follows:
(a) Contractor shall at no time disclose to any person,
without Purchaser's prior written consent, any of the terms, conditions or
provisions specified in this Agreement unless such disclosure is lawfully
required by any federal governmental agency or is otherwise required to be
disclosed by law or is necessary in any legal proceeding regarding the subject
matter of this Agreement.
(b) During the term of this Agreement, Contractor shall not
circumvent Purchaser for the purpose of transacting any business with any person
or entity which business shall interfere with any relationship whatsoever
between such person or entity and Purchaser, or use any Proprietary Information
to compete with the business of Purchaser. Contractor shall not solicit any of
Purchaser's employees, independent Contractors or agents for employment.
Contractor shall not hire and/or engage in any way, any enterprise or person
that competes with, or is engaged in a business substantially similar to, the
business of Purchaser.
(c) Contractor shall not for a period of two (2) years
immediately following the termination of this Agreement with Purchaser, either
directly or indirectly (i) make known to any person, firm or corporation the
names or addresses of any of Purchaser's clients or any other information
pertaining to them or Purchaser's products or services; or (ii) call on,
solicit, or take away, or attempt to call on, solicit or take away any of
Purchaser's clients either on Purchaser's behalf or that of another person, firm
or corporation.
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(d) Contractor shall not, during the term hereof or for a
period of two (2) years following such term, enter into an agreement or contract
directly with any manufacturer, retailer or distributor introduced to Contractor
by Purchaser for any services provided by Purchaser herein or for any similar
services.
(e) Contractor acknowledges and agrees that the
representations, warranties and covenants made by Contractor and set forth in
this section are material and that Purchaser would not enter into this Agreement
without Contractor's making such representations, warranties and covenants to
Purchaser.
(f) Contractor acknowledges and agrees that any breach by
Contractor of the representations, warranties and covenants contained herein
will cause irreparable harm and loss to Purchaser, which harm and loss cannot be
reasonably or adequately compensated in damages in an action at law. Therefore,
Contractor expressly agrees that, in addition to any other rights or remedies
which Purchaser may possess, Purchaser shall be entitled to injunctive and other
equitable relief to prevent or remedy a breach of the representations,
warranties and covenants made by Contractor herein.
(g) The terms and provisions of this section shall survive
the termination of this Agreement for a period of two (2) years.
ARTICLE IX
GENERAL TERMS AND CONDITIONS
9.1 Notices. Unless otherwise provided in this Agreement, any notice
required or permitted by this Agreement to be given to either party shall be
deemed to have been duly given if in writing and delivered personally or
mailed by first-class, registered, or certified mail, postage prepaid and
addressed as follows:
If to Contractor: Digiblue Media,
a Nevada corporation
32946 Dana Spruce, Suite A
Dana Point, California 92629
If to Purchaser: Format, Inc.,
a Nevada corporation
1102 Buena Vista
San Clemente, CA 92672
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9.2 Assignment of Contract. Purchaser shall not assign or otherwise
transfer its rights under this Agreement, including the license granted
hereunder, without the prior written consent of Contractor. Any attempt to
make such an assignment without Contractor's consent shall be void.
Contractor's consent shall not be unreasonably withheld.
9.3 Amendments. Contractor and Purchaser agree that this Agreement
shall be modified only by a written agreement duly executed by persons
authorized to execute agreements on their behalf.
9.4 Nonwaiver. Contractor and Purchaser agree that no failure to
exercise, and no delay in exercising any right, power, or privilege
hereunder on the part of either party shall operate as a waiver of any
right, power, or privilege. Contractor and Purchaser further agree that no
single or partial exercise of any right, power, or privilege hereunder shall
preclude its further exercise.
9.5 Attorneys' Fees. If any legal action is necessary to enforce the
terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees in addition to any other relief to which that
party may be entitled. This provision shall be construed as applicable to
the entire Agreement.
9.6 Severability. If any part of this Agreement is adjudged by any
court of competent jurisdiction to be invalid, that judgment shall not
affect or nullify the remainder of this Agreement, and the effect shall be
confined to the part immediately involved in the controversy adjudged.
9.7 Governing Law. This Agreement shall be deemed to have been made in,
and shall be construed pursuant to, the laws of the State of California.
9.8 Entire Agreement. Purchaser acknowledges and agrees that this
Agreement is the complete and exclusive statement of the mutual
understanding of the parties and that it supersedes and cancels all previous
written and oral agreements and communications relating to the subject
matter of this Agreement.
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9.9 Indemnification. Contractor shall save Purchaser harmless from and
against and shall indemnify Purchaser for any liability, loss, costs, expenses,
or damages howsoever caused by reason of any injury (whether to body, property,
or personal or business character or reputation) sustained by any person or to
property by reason of any act, neglect, default or omission of Contractor or any
of Contractor's agents, employees, or other representatives, and Contractor
shall pay all amounts to be paid or discharged in case of an action or any such
damages or injuries. If Purchaser is sued in any court for damages by reason of
any of the acts of Contractor, Contractor or such other party shall defend the
resulting action (or cause same to be defended) at Contractor's expense and
shall pay and discharge any judgment that may be rendered in any such action; if
Contractor fails or neglects to so defend in such action, Purchaser may defend
such action and any expenses, including reasonable attorneys' fees, which
Purchaser may pay or incur in defending such action and the amount of any
judgment which Purchaser may be required to pay shall be promptly reimbursed by
Contractor upon demand by Purchaser.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed on
the date first written above.
CONTRACTOR
Digiblue Media, Inc.,
a Nevada corporation
By: /s/ Brian Eddo
Brian Eddo
Its: President
By: /s/ Brian Eddo
Brian Eddo
Its: Secretary
PURCHASER
Format, Inc.,
a Nevada corporation
By: /s/ Ryan Neely
Ryan Neely
Its: President
By: /s/ Ryan Neely
Ryan Neely
Its: Secretary