SOFTWARE LICENSE AGREEMENT
THIS
SOFTWARE LICENSE AGREEMENT (the “License Agreement”) is made as of
_____________________ (the “Effective Date”) by and between Semotus Solutions,
Inc. (“Licensor”) and Xxxxxxxx.xxx, Incorporated (“Customer” or
“Innofone”).
This
Agreement consists of this signature page, the Basic Terms and Conditions
and
the attached Exhibits, which are part of this Agreement and are incorporated
herein by reference. Each party has read, understands and agrees to the terms
and conditions of this Agreement.
| Accepted by | Customer |
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Semotus
Solutions, Inc
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Xxxxxxxx.xxx,
Incorporated
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By:___________________________
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By:_________________________________
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Name:_________________________
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Name:______________________________
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Title:__________________________
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Title:_______________________________
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Address
for Formal Notice:
|
Address
for Formal Notice:
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Semotus
Solutions, Inc.
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____________________________________
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000
Xxxxxxxxxx Xxx., Xxxxx 000
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____________________________________
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Xxx
Xxxxx, XX 00000
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____________________________________
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Attn:
General Counsel
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____________________________________
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BASIC
TERMS AND CONDITIONS
ARTICLE
1: DEFINITIONS
“Documentation”
means such manuals, documentation and any other supporting materials relating
to
the Licensed Software as are currently maintained by LICENSOR and generally
provided to its licensees. Documentation is considered part of the related
Licensed Software.
"Intellectual
Property Rights" means any and all rights existing now or in the future under
patent law, copyright law, industrial design rights law, moral rights law,
trade
secret law, trademark law, unfair competition law, publicity rights law,
privacy
rights law, and any and all similar proprietary rights, and any and all
renewals, extensions, and restorations thereof, now or hereafter
in force and effect worldwide, including, without limitation, in the United
States.
“Internal
Use” means Customer’s internal accounting, inventory, word or data processing or
other internal uses in the United States, but shall exclude any and all
commercial applications or uses in connection with or directly for the benefit
of customers and/or third parties.
“Licensed
Software” means the executable files of the computer software obtained by
Customer under this Agreement, any extracts from such software, derivative
works
of such software, or collective works constituting such software (such as
subsequent releases) to the extent offered to Customer under this Agreement,
and
the related Documentation. The Licensed Software is further described in
Exhibit
A, attached hereto and incorporated herein.
“Warranty
Period” means the ninety (90) day period beginning on the date of delivery of
the Licensed Software.
ARTICLE
2: SOFTWARE LICENSE
2.1
License. Subject to the terms and conditions of this License Agreement, LICENSOR
grants Customer a worldwide, nonexclusive, royalty free, revocable and
nontransferable license to:
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a.
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Internally
use, copy, and display the Licensed Software;
and
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b.
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sublicense
and distribute copies of the Licensed Software to third party licensees
for their Internal use, subject to a form of sublicense agreement
that has
been approved by Licensor and other restrictions as set forth in
this
Agreement.
|
Neither
Customer nor its third party licensees may reverse engineer, disassemble,
decompile, or otherwise attempt to derive the source code of the Licensed
Software, nor may Customer sublicense any of the license rights granted in
this
License Agreement to third party agents, resellers or independent
contractors.
2.2 Documentation
License. Subject to the prior written authorization of LICENSOR and to any
conditions contained in that authorization, Customer may at its own expense
make
copies of the Documentation, whereupon any and all such copies will become
and
remain Documentation, subject to the terms and conditions of this License
Agreement. Customer will not remove and will affix to the media upon which
it is
copied, any proprietary markings or legends placed upon or contained within
the
Licensed Software or Documentation.
2.3
Use of
Trademarks and Tradenames. Licensor grants to Customer the non-exclusive
terminable right to use certain of its name and marks during the term of
this
License Agreement solely with respect to Customer's marketing and licensing
of
the Licensed Software in accordance with the terms of this License Agreement,
including Exhibit B attached hereto and incorporated herein. Customer's right
created herein shall continue only as long as Customer's marketing and licensing
rights under this License Agreement remain in force. Upon termination of
this
License Agreement, Customer will purge such name or marks from all materials,
letterheads, signs and any other media in which Customer displayed such names
or
marks, and thereafter, neither Customer nor any parent, subsidiary or affiliate
shall use either the name or like sounding or appearing names or marks in
any
fashion, anywhere. Customer shall maintain and allow Licensor to monitor
the
quality of workmanship associated with its marks, and Licensor may terminate
the
use of its marks if such quality falls below Licensor’s own levels. Licensor
makes no representation or warranties as to the registration status of its
tradenames or trademarks. Customer shall notify Licensor of any infringement
or
appropriation of Licensor’s names or marks during the term of this License
Agreement.
Page
2
2.4
Ownership. As between the parties hereto, and subject to the licenses granted
to
Customer herein, Licensor or its licensors, as applicable, own and shall
retain
all right, title and interest in and to the Licensed Software, and all
associated Documentation and all related modifications and derivative works,
and
all intellectual property and Intellectual Property Rights related thereto.
Customer will immediately notify Licensor of any infringement, misappropriation
or violation of any Intellectual Property Rights of Licensor that comes to
Customer’s attention. Customer will not infringe, and will use its best efforts
to preserve and protect Licensor’s interest in all such Intellectual Property
Rights. In the event of any such infringement, misappropriation or violation
relating to the activities of Customer or any of its officers, directors,
employees, agents or contractors, Customer will take all steps reasonably
necessary to terminate any such infringement, misappropriation or
violation.
ARTICLE
3: ORDERS AND PAYMENTS
3.1 Payments.
Innofone agrees to issue to Licensor three million seven hundred and fifty
thousand dollars ($3,750,000) worth of Innofone’s restricted common stock (the
“Shares”) at a price equal to the lower of (i) the average daily closing price
of Innofone’s common stock for a period of twenty trading days up to and
including the day prior to the full execution of this License Agreement,
and
(ii) the closing price of Innofone’s common stock on the Effective Date (the
“Transaction Price”), to be issued within twenty four hours of the Effective
Date and including certain representations and registration rights, as set
forth
in Exhibit C. Closing shall occur upon the completion of the issuance of
the
Shares.
Fees
for
professional services, annual maintenance and support of the Licensed Software
are set forth in Exhibit D.
Future
milestones between the parties are set forth in Exhibit E, attached hereto
and
incorporated herein.
3.2
Shipping. Customer shall be able to download through the internet the Licensed
Software and the Documentation immediately upon Closing.
3.3 Taxes
and
Other Charges. In addition to all applicable license and administrative fees,
Customer will be responsible for paying any amounts equal to all sales, use,
personal property, value added, and any other taxes resulting from this License
Agreement or any activities under this Agreement, excluding taxes based on
LICENSOR’S net income, unless Customer furnishes proof of exemption from payment
of such taxes which is in a form reasonably acceptable to LICENSOR. Any sum
due
LICENSOR for which a time of payment is not specified will be paid within
thirty
(30) days after the date of invoice therefore from LICENSOR. Any sums not
paid
when due shall automatically accrue interest from the date when due until
actually paid at rate of eighteen percent (18%) per annum or the highest
rate
allowed by law, whichever is less.
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3
3.4
Audit.
Licensor may, at any time during the term of this License Agreement and with
seven (7) days prior notice, request and gain access to Customer’s premises, for
the limited purpose of conducting an inspection to determine and verify that
Customer is in compliance with the terms and conditions hereof. Customer
will
promptly grant such access and cooperate with Licensor in the inspection;
provided, however, that the inspection will be conducted in a manner not
intended to disrupt unreasonably Customer’s business and will be restricted in
scope, manner and duration to that reasonably necessary to achieve its purpose.
Licensor shall be provided with one (1) such audit per annum during the Term
of
the License only.
ARTICLE
4: MAINTENANCE AND SUPPORT
Subject
to the payment of annual maintenance fees, LICENSOR shall provide maintenance
and support for the Licensed Software as described on Exhibit F. New contracts
will need to purchase maintenance within 30 days of the Effective Date, after
that it will be considered lapsed. All maintenance renewals must be paid
by the
annual anniversary date. There will be a software re-certification fee for
accounts with lapsed coverage; please see Exhibit D for fee amounts. Lapsed
maintenance coverage renewal will be retroactive to the previous annual
anniversary date. No maintenance or support will be provided by LICENSOR
until
payment is received. Alternatively, Customer may pay for
engineering/professional services on a time and material basis at the LICENSOR’s
standard hourly rates, as set forth in Exhibit D.
Customer
may provide Level 1 Support to any of its licensees under the following terms
and conditions. Level 1 Support means the resolution of minor problems with
the
Licensed Software and resolution of all issues related to or arising from
the
physical infrastructure and functionality of the servers on which the Licensed
Software is installed. Customer shall provide Level 1 support to Licensees
at
least 12 hours per day, seven days per week. Customer shall not contact Licensor
in connection with Level 1 support unless and until it has used its best
efforts
to resolve the problem. Customer shall promptly notify Licensor of all bugs
that
Customer determines to exist in the Licensed Software. Licensor shall provide
Xxxxx 0 training online to Customer at Licensor’s standard hourly rate. Customer
must pass Licensor certification before being allowed to offer Tier 1 support
to
its licensees.
Subject
to the payment by licensees of maintenance and support fees directly to
Licensor, Licensor shall provide maintenance and support in accordance with
Exhibit F.
ARTICLE
5: Representations and Warranties
Limited
Product Warranty. LICENSOR warrants that during the Warranty Period the Licensed
Software shall conform in all material respects to the specifications set
forth
in the LICENSOR’S Documentation. LICENSOR does not warrant that operation of the
Licensed Software will be uninterrupted or error free. In the event of a
breach
of the foregoing warranty, LICENSOR’S sole obligation, and Customer’s sole and
exclusive remedy, for such breach shall be that LICENSOR shall make all
commercially reasonable efforts to promptly correct the non-conforming Licensed
Software without charge. Licensee expressly acknowledges and agrees that
the use
of the Licensed Software is at Licensee's sole risk. THE FOREGOING WARRANTY
IS
IN LIEU OF ALL OTHER WARRANTIES, AND LICENSOR EXPRESSLY DISCLAIMS ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF
MERCANTABILITY, FITNESS FOR A PARTICULAR PURPOSE.
Product
Representations. Customer shall deliver the Licensed Software to licensees
with
Licensor’s then current license agreement generally accompanying the Licensed
Software, as it may be amended by Semotus from time to time. Customer shall
make
no, and shall indemnify Semotus for any claims arising out of, representations
or warranties concerning quality, performance or other characteristics of
the
Product other than those which are consistent in all respects with, and do
not
expand the scope of, the warranties contained in the applicable license
agreement. Customer agrees to conduct its business in a manner that reflects
favorably at all times on the Licensed Software and the good name, goodwill
and
reputation of Semotus. Customer shall identify Semotus as the owner of the
Licensed Software.
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4
Compliance
with Laws. Customer shall comply with all applicable supranational, national,
and local laws and regulations in performing its duties hereunder. Customer
must
obtain, at its own expense, all necessary registrations, licenses, permits
and
approvals as required by any government to import and/or export, promote,
market
and resell the Licensed Software, and Semotus shall provide any necessary
information or supporting documentation upon Customer’s reasonable written
request to assist Customer with its obligations under this Section. Customer
shall indemnify and hold harmless Semotus for any violation or alleged violation
of this Section.
General
Representations and Warranties. Each party has the corporate power and authority
to enter into this Agreement, and to perform its obligations hereunder. The
execution and delivery by each party of this Agreement and the consummation
of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action by each party. This Agreement has been duly executed and
delivered by each party and constitutes the valid and binding obligation
of each
party enforceable against it in accordance with its respective terms, subject
to
the effects of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights generally and to general equitable
principles.
ARTICLE
6: INDEMNIFICATION
LICENSOR
shall indemnify and hold Customer harmless from and against any third party
claim that the Licensed Software infringes an existing United States copyright,
provided that Customer promptly notifies LICENSOR in writing of any such
claim
and allows LICENSOR to control, and fully cooperates with LICENSOR in, the
defense of any such claim and all related settlement negotiations. Licensor
shall pay any damages finally awarded in such legal action as a result of
such
third-party claim. In the event an injunction is sought or obtained against
Customer’s use of the Licensed Software as a result of any such infringement
claim, LICENSOR may at its sole option and expense, (a) procure for Customer
the
right to continue using the affected Licensed Software or (b) replace or
modify
the affected Licensed Software so that it does not infringe, or (c) refund
a pro
rata portion of the license fee to the Customer, based on a 5 year life of
the
Licensed Software. LICENSOR shall
have no liability to the extent that any claim is based upon: (a) the
unauthorized combination, operation or use of any Licensed Software with
software not supplied or specified by LICENSOR;
(b) the unauthorized alteration, modification or combination of any
Licensed Software if infringement could have been avoided by use of the
unaltered, unmodified or uncombined Licensed Software; or (c) the failure
by Customer to use the most current version of the Licensed
Software.
THE
FOREGOING CONSTITUTES THE ENTIRE LIABILITY OF LICENSOR, AND CUSTOMER’S SOLE AND
EXCLUSIVE REMEDY WITH RESPECT TO ANY CLAIMS OF INFRINGEMENT OF THIRD-PARTY
RIGHTS.
Customer
shall indemnify, defend and hold harmless Licensor, its officers, directors,
employees and agents (each a “ Customer Indemnified Party”) from any and all
claims, actions, damages, costs, liabilities, judgments or expenses (including
reasonable attorneys’ fees and costs) incurred by any Customer Indemnified Party
arising from or related to (1) Customer’s acts or omissions under this
Agreement, (2) commitments, claims or representations made by Customer with
respect to the Licensed Software outside the scope of the License Agreement
and/or without Licensor’s authorization; (3) services provided by Customer to
any third party, including any licensee; (4) modifications made by Customer
to
the Licensed Software; or (5) a breach by Customer of its agreement with
a
licensee or other third party. This provision shall survive termination or
expiration of the License Agreement.
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5
ARTICLE
7: TERMINATION
7.1 Termination.
Either party shall be in default if it fails to perform any of its duties
or
obligations hereunder and fails to substantially cure such default within
twenty
(20) days after written notice is given to the defaulting party. Upon an
event
of default, the non-defaulting party may terminate this Agreement by providing
written notice of termination to the defaulting party, reserving unto the
non-defaulting party all other rights and remedies it may have under this
Agreement. If Customer is in default, LICENSOR reserves the right, in addition
to all other rights and remedies it may have, to withhold further performance
of
its obligations under this Agreement and may repossess the Licensed Software
and
Documentation.
7.2 Effect
of
Termination. Upon termination of this Agreement for any reason, or of any
licenses granted hereunder, (a) the provisions of Articles 8, 9, and 10 will
survive and (b) Customer will promptly remove all affected Licensed Software
from all memory locations, return all copies of the affected Licensed Software
and Documentation to LICENSOR, and execute and deliver to LICENSOR a certificate
stating that all copies of the affected Licensed Software have been removed
and
returned or destroyed.
ARTICLE
8: CONFIDENTIAL INFORMATION
Confidential
Information shall mean and include: Licensed Software, its source code, the
Documentation and any and all confidential
business, technical or data processing information, trade secret or other
proprietary information acquired by Customer in the course of carrying out
the
License, whether or not conceived of or prepared by Licensor or its agents,
whether or not reduced to writing, and whether or not in human readable or
machine readable form. Customer
will treat and hold the Confidential Information in strict confidence.
Customer
acknowledges that in the course of its relationship with Licensor, it and
its
employees, Affiliates, contractors, subcontractors, officers and agents will
acquire or have access to the Confidential Information. Customer acknowledges
that the Confidential Information that is directly or indirectly disclosed
by
Licensor to Customer or its employees, Affiliates, contractors, subcontractors,
officers or agents is confidential in nature, constitutes a valuable asset
of
Licensor, is proprietary to Licensor, and is properly the subject of protection.
Customer further acknowledges that Licensor may have proprietary or confidential
information of third parties that they may rightfully use in the course of
their
businesses. Customer further agrees that any
entity
or person who obtains or is provided access to the Confidential Information
as
an Affiliate, agent or contractor of Customer will do so only for the purpose
of
carrying out the performance of specific terms of this Agreement and shall
sign
a non-disclosure agreement with similar terms to this Section with Customer
covering this Confidential Information.
Customer
agrees that as a material inducement to Licensor to enter into this Agreement,
neither Customer nor any of its employees,
Affiliates, contractors, subcontractors, officers or agents
will
use, disclose or otherwise make available to any person or entity (except
as
required under the terms of this Agreement) any of the Confidential Information
during the term of this Agreement or thereafter without the prior written
consent of Licensor. Customer further agrees that it will instruct its
employees, Affiliates, contractors, subcontractors, officers and agents not
to,
sell, lease, assign, transfer, copy or reveal any of the Confidential
Information obtained from Licensor or any products or services that embody,
in
whole or in part, any Confidential Information without the prior written
consent
of Licensor. Customer warrants that it will take all steps necessary to ensure
fulfillment of this obligation.
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6
To
the
extent the performance of its obligations under this Agreement requires LICENSOR
to be exposed to any information that is identified prior to disclosure by
Customer as being confidential or proprietary, LICENSOR shall not disclose
such
information to any third parties and will use such information only to the
extent necessary to perform any support and maintenance services under this
Agreement; provided that this Section 8 shall not be applicable to information
in the public domain, or received from third parties under no obligation
of
confidentiality or confidence, and that LICENSOR may reasonably use the name
of
Customer, and a description of Customer’s use of the Licensed Software, in
advertising and promotional literature.
ARTICLE
9: LIMITATION OF LIABILITY
Licensor’s
entire liability to Customer for damages concerning performance or
nonperformance by Licensor or in any way related to the subject matter of
this
Agreement, and regardless of whether the claim for such damages is based
in
contract, tort, strict liability, or otherwise, shall not exceed the amounts
paid by Customer under this Agreement.
ARTICLE
10: CONSEQUENTIAL DAMAGES WAIVER
EXCEPT
FOR A BREACH OF ARTICLE 2 OR ARTICLE 8 BY CUSTOMER, IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES,
LOST PROFITS, OR LOST DATA, OR ANY OTHER INDIRECT DAMAGES, EVEN IF SUCH PARTY
HAS BEEN ADVISED AS TO THE POSSIBILITY OF SUCH DAMAGES.
ARTICLE
11: GENERAL
11.1 Force
Majeure. Except with respect to the Customer’s obligation to make timely
payments, neither party shall be held responsible for any delay or failure
in
performance to the extent that such delay or failure is caused by fires,
strikes, embargoes, explosion, earthquakes, floods, wars, water, the elements,
labor disputes, government requirements, civil or military authorities, acts
of
God or by the public enemy, inability to secure raw materials or transportation
facilities, acts or omissions of carriers or suppliers, or other causes beyond
its reasonable control.
11.2 Complete
Agreement. This Agreement, any exhibits and schedules attached to it, and
any
other terms and conditions incorporated by reference herein, contain the
entire
understanding of the parties with respect to the subject matter hereof, and
supersede any and all related prior understandings and agreements, oral or
written. This agreement cannot be modified or amended except in a writing
signed
by both parties.
11.3 Severability.
If any provision of this Agreement is declared or found to be illegal,
unenforceable or void, then each provision not so affected will remain in
full
force and effect.
11.4
Assignment. Customer may not assign this Agreement by operation of law or
otherwise without the prior written consent of LICENSOR. LICENSOR may assign
any
of its rights and obligations under this Agreement. This agreement will bind
each party and its successors and assigns.
11.5
Disputes. This Agreement and the rights and obligations of the parties hereunder
shall not be governed by the United Nations Convention on Contracts for the
International Sale of Goods, the application of which is expressly excluded
by
the parties hereto. The laws of the State of California, regardless of the
choice of law rules of such state or any other jurisdiction, will govern
this
Agreement. All disputes arising out of this Agreement shall be subject to
the
exclusive jurisdiction of either the state or federal courts located in San
Jose, California, and the parties agree and submit to the personal and exclusive
jurisdiction and venue of these courts. The laws of the State of California,
other than choice of law rules, will govern this Agreement. Customer agrees
that
the Licensed Software is and will remain after termination of this Agreement
the
valuable, proprietary, and confidential property of LICENSOR, that any violation
of Article 8 would cause LICENSOR irreparable injury for which it would have
no
adequate remedy at law, and that LICENSOR will be entitled to preliminary
and
other injunctive relief against any such violation. Such injunctive relief
will
be in addition to, and in no way limitation of, any other remedies or rights
that LICENSOR may have at law or in equity.
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7
11.6
No
Waiver. No course of dealing, course of performance, or failure of either
party
strictly to enforce any term, right or condition of this Agreement shall
be
construed as a waiver of any other term, right or condition. No waiver
or breach
of any provision of this Agreement shall be construed to be a waiver
of any
subsequent breach of the same of any provision.
11.7
Relationship
of the Parties. Licensor and Customer are independent contractors.
11.8
Fax
Signatures. The parties hereby agree that signatures transmitted and
received
via facsimile or other electronic means shall be treated for all purposes
of
this Agreement as original signatures and shall be deemed valid, binding
and
enforceable by and against both parties.
11.9
Press
Releases. All press releases and other public announcements created by
Innofone
regarding this Agreement shall not be released until approved in writing
by
Licensor.
END
BASIC TERMS & CONDITIONS
Page
8
EXHIBIT
A
Description
of the Licensed Software:
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The
foregoing are licensed in object or encrypted code form
only:
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Minimum
List Price
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Clickmarks
Internal Development System of CIS (minimum configuration of
2
CPUs)
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$24,000
per CPU
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|
Clickmarks
Production System of CIS (minimum configuration of 3 CPUs)
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$24,000
per CPU
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HipLinkXS
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See
attached Pricing Sheets
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HipLinkES
IQLink
RemLink
OpenLink
QuickLink
Page
9
EXHIBIT
B
Authorized
Marks:
Semotus;
Wireless Architects; HipLink; HipLinkXS; HipLinkES;
Clickmarks
Customer’s
Obligations
re: Semotus’ (the “Corporation’s”) Marks:
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(a)
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Customer
shall supply Corporation with a sample, prior to the release of
any web
site launch, advertisement, brochure or other publicly distributed
documentation or material bearing a Xxxx or advertising the Products
in
any way. Or, at any other time following reasonable written notice
from
Corporation, Customer shall provide Corporation with a sample of
such
advertisement, brochure or other documentation or Material. Customer
shall
cooperate fully with Corporation to facilitate periodic review
of
Customer’s use of the Marks and of Customer’s compliance with this
Agreement.
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(b)
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If
Corporation notifies Customer of any defect in any web site page,
advertisement, brochure or publicly distributed documentation or
material
related to the Products or bearing a Xxxx, or any failure of any
of the
foregoing to comply with the requirements of this Agreement, Customer
shall promptly remedy the defect or failure.
|
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(c)
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Customer
acknowledges that this Agreement does not transfer any rights to
use any
Marks (except to the limited extent expressly set forth in this
Agreement)
and that this Agreement does not and will not confer any goodwill
or other
interest in any Marks upon Customer, al rights to which remain
with
Corporation.
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(d)
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Customer
shall use the Marks in a manner that does not derogate from Corporation’s
right in the Marks, and shall take no action that would interfere
with or
diminish those rights. Customer shall not reproduce or use the
Marks in
any manner whatsoever other than as expressly authorized by this
Agreement
or permitted by applicable law without a license. Customer shall
not use
as its own any xxxx, work or design confusingly similar to any
Marks,
including without limitation any xxxx, word or design that incorporates
the word “Hip”, Link”, “Clickmarks” or “Semotus” or any xxxx, word or
design confusingly similar thereto. Customer agrees that all use
of the
Marks by Customer will inure to the benefit of
Corporation.
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(e)
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Customer
agrees to use the appropriate trademark, product descriptor and
trademark
symbol (either “TM” or circled “R”), and clearly indicate Corporation’s
ownership of its Marks whenever any of the Marks is first mentioned
in any
web site, advertisement, brochure or documentation, or in any other
manner
in connection with the Products.
|
|
(f)
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Customer
shall not use or imitate the trade dress of Corporation’s products or
services relating to the Products.
|
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10
EXHIBIT
C
Stock
Issuance and Registration Rights Agreement
EXHIBIT
C
TO
LICENSE
AGREEMENT
STOCK
ISSUANCE AND REGISTRATION RIGHTS AGREEMENT
THIS
STOCK ISSUANCE AND REGISTRATION RIGHTS AGREEMENT,
dated
as of July __, 2007 (this "Agreement"), is made by and between SEMOTUS
SOLUTIONS, INC., a Nevada corporation, with headquarters located at 000
Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000 (“Semotus”), and Xxxxxxxx.xxx
Incorporated, a ________ corporation located at 0000 Xxxxx Xxx., Xxxxx
0000,
Xxxxx Xxxxxx, XX 00000 (“Innofone”).
W
I T N E S S E T H:
WHEREAS,
upon
the terms and subject to the conditions of the Software License Agreement,
dated
as of July __, 2007, between Semotus and Innofone (the “License Agreement”;
terms not otherwise defined herein shall have the meanings ascribed to
them in
the License Agreement), Innofone has agreed to issue and sell to Semotus
the
Shares;
and
WHEREAS,
to
induce Semotus to execute and deliver the License
Agreement, Innofone has agreed to provide certain representations and
registration rights under the Securities Act;
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein
and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, Innofone and Semotus hereby agree as follows:
1. Definitions.
As used
in this Agreement, the following terms shall have the following
meanings:
(a) "Computation
Date" means (A) the date which is the earlier of thirty (30) days after
the
Required Filing Date or the Required Effective Date (with respect to payments
due as contemplated by Section 2(b)(ii) hereof), as the case may be, and
(B)
each date which is thirty (30) days after the previous Computation
Date.
(b)
“Effective Date” means the date the SEC declares a Registration Statement
covering Registrable Securities and otherwise meeting the conditions
contemplated hereby to be effective.
(c) “Semotus”
means Semotus or
any
permitted transferee or assignee who agrees to become bound by the provisions
of
this Agreement in accordance with Section 9 hereof and who holds Registrable
Securities, as the context may require.
Page
11
(d) “Shares”
means the $3,750,0000 worth of shares of Innofone common stock to be issued
pursuant to the License Agreement, and any shares of Innofone common stock
issued based upon the Post-Closing Purchase Price Adjustment, and any additional
shares of common stock issued pursuant to the terms of this Registration
Rights
Agreement.
(e) “Register,”
“Registered,” and “Registration” refer to a registration effected by preparing
and filing a Registration Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis
(“Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement by the Commission.
(f) "Registrable
Securities" means the Shares and any additional shares of common stock
issued
pursuant to this Agreement or upon conversion of a promissory note that
may be
issued to Semotus in the future.
(g) “Registration
Statement” means a registration statement of the Innofone under the Securities
Act covering Registrable Securities on Form S-3, if Innofone is then eligible
to
file using such form, and if not eligible, on Form SB-2 or other appropriate
form.
(h) “Required
Effective Date” means 60
days
after the Required Filing Date.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the License Agreement or in the Rules of the
SEC.
2. Registration.
(a) Mandatory
Registration. Innofone
shall prepare and file with the SEC, as soon as practicable but not later
than
90 days
after Semotus sends written notice to Innofone that Semotus desires to
have the
Registrable Shares registered (the “Required Filing Date”), a Registration
Statement registering for resale by Semotus a sufficient number of shares
of
Common Stock for Semotus to sell all of the Registrable Securities. The
Registration Statement shall also state that, in accordance with Rules
416 and
457 under the Securities Act, it also covers such indeterminate number
of
additional shares of Common Stock as may become issuable to
prevent dilution resulting from stock splits, or stock dividends. Innofone
will
use its reasonable best efforts to cause such Registration Statement to
be
declared effective on a date (the “Initial Required Effective Date”) which is no
later than the earlier of (Y) five (5) business days after oral or written
notice by the SEC that it may be declared effective or (Z) the
Required Effective Date.
(b) Piggy
Back Registration Rights.
If (but
without any obligation to do so) Innofone proposes to register any of its
securities on a registration statement (other than a registration relating
solely to the sale of securities to participants in a Company stock option
plan), Innofone shall, at such time, promptly give Semotus written notice
of
such registration. Upon the written request of Semotus given within ten
(10)
days after receipt of such notice by Semotus, Innofone shall use all reasonable
efforts to cause to be registered under the Act all of the Registrable
Shares
that Semotus has requested to be registered on a date (the “Initial Required
Effective Date”) which is no later than the earlier of (Y) five (5) business
days after oral or written notice by the SEC that it may be declared effective
or (Z) the Required Effective Date. For purposes of computing penalties
under
Section 2(c), the actual filing date with the SEC shall be deemed the Required
Filing Date under this Section 2(b).
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12
(c) Adjustments
and Penalties.
(i) If
the
Registration Statement covering the Registrable Securities is not filed
by the
Required Filing Date, or declared effective by the Required
Effective Date, then Innofone will make payments to Semotus in such amounts
and
at such times as shall be determined pursuant to this Section 2(c).
(ii) The
amount (the “Periodic Amount”) to be paid by Innofone to Semotus shall be
determined as of each Computation Date (as defined below) and such amount
shall
be equal to three percent (3%) of the Transaction Price.
(iii) Each
Periodic Amount will be payable by Innofone, except as provided in the
other
provisions of this subparagraph (iv), by the issuance of additional shares
of
Common Stock to Semotus ("Periodic Amount Shares") in an amount equal to
the
Periodic Amount being paid thereby divided by the average Closing Price
for the
last ten (10) trading days prior to the Computation Date, or
in
cash or other immediately available funds to Semotus
(1) on
the third business day after the Required Effective Date, and (2) on the
earlier
of (A) the third business day after each thirtieth day thereafter, (B)
the third
business day after the date the Registration Statement is filed or is declared
effective, in each case without requiring demand therefor by Semotus. Any
Adjustment Shares, to the extent adjustment shares are issued prior to
the
registration statement going effective, and any Periodic Amount Shares
issued
pursuant to this subsection (iii) shares shall be included as Registrable
Shares.
(iv) The
parties acknowledge that the damages which may be incurred by Semotus if
the
Registration Statement has not been declared effective by the Required
Effective
Date may be difficult to ascertain. The parties agree that the Periodic
Amounts
represent a reasonable estimate on the part of the parties, as of the date
of
this Agreement, of the amount of such damages. Innofone shall only be obligated
to make payments to Semotus pursuant to this Section 2(c) for Periodic
Amounts
accruing and payable through the fifteenth (15th)
Computation Date.
(v) Notwithstanding
the foregoing, the amounts payable by Innofone pursuant to this provision
shall
not be payable to the extent any delay in the effectiveness of the Registration
Statement occurs because of an act of, or a failure to act or to act timely
by
the Semotus or its counsel.
(vi)
During
the time period beginning from the Closing Date and ending on the earlier
to
occur of (a) 90 calendar days subsequent to the Effective Date and (b)
the two
(2) year anniversary of the Closing Date, if Innofone issues common stock
or
securities convertible or exercisable into stock at a price (or conversion
or
exercise right) that is less than the per share Transaction Price (the
“Adjustment
Price”),
then,
at the time of such issuance(s) Innofone shall issue to Semotus an additional
number of shares of Common Stock pursuant to the following formula: the
quotient
determined by dividing (i) the Aggregate Amount by (ii) the Adjustment
Price and
then subtracted by the Shares (the “Adjustment Shares”). Any Adjustment Shares
to be issued shall be included in the registration statement filed by Innofone
pursuant to its obligations under this Agreement to the extent that such
registration statement has not yet been declared effective by the
SEC.
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13
3. Obligations
of Innofone.
In
connection with the registration of the Registrable Securities, Innofone
shall
do each of the following:
(a) Prepare
and file, with the SEC a Registration Statement with respect to not less
than
the number of Registrable Securities as provided in Section 2(a) above,
but only
the Registrable Securities, and thereafter use its reasonable best efforts
to
cause such Registration Statement relating to Registrable Securities to
become
effective by the Required Effective Date and keep the Registration Statement
effective at all times during the period (the “Registration Period”) continuing
until the earlier of (i) the date when the Semotus may sell all Registrable
Securities under Rule 144(k) without volume or other restrictions or limits,
(ii) the date the Semotus no longer owns any of the Registrable Securities,
which Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) shall not contain any untrue statement
of a
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements therein, in light of the circumstances
in which
they were made, not misleading, or (iii) one (1) year after the Effective
Date
of the Registration Statement.
(b) Prepare
and file with the SEC such amendments (including post-effective amendments)
and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the Registration
Statement effective at all times during the Registration Period, and, during
the
Registration Period, use its reasonable best efforts to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of Innofone covered by the Registration Statement
until
such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
(c) Permit
a
single counsel designated by Semotus to review the Registration Statement
and
all amendments and supplements thereto for a reasonable period of time
(but not
less than three (3) business days) prior to their filing with the SEC,
and not
file any document in a form to which such counsel reasonably
objects;
(d) Notify
Semotus’ Counsel and any managing underwriters immediately (and, in the case of
(i)(A) below, not less than three (3) business days prior to such filing)
and
(if requested by any such person) confirm such notice in writing no later
than
one (1) business day following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (B) whenever the SEC notifies the Innofone whether
there will be a “review” of such Registration Statement; (C) whenever the
Innofone receives (or a representative of Innofone receives on its behalf)
any
oral or written comments from the SEC in respect of a Registration Statement
(copies or, in the case of oral comments, summaries of such comments (as
such
comments relate to the Semotus) shall be promptly furnished by Innofone
to
Semotus); and (D) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any other Federal or state governmental authority
for
amendments or supplements to the Registration Statement or Prospectus or
for
additional information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement covering any
or all
of the Registrable Securities or the initiation of any proceedings for
that
purpose; (iv) if at any time any of the representations or warranties of
Innofone contained in any agreement (including any underwriting agreement)
contemplated hereby ceases to be true and correct in all material respects;
(v)
of the receipt by Innofone of any notification with respect to the suspension
of
the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening
of any
proceeding for such purpose; and (vi) of the occurrence of any event that
to the
best knowledge of Innofone makes any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material
fact
or omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which
they were
made, not misleading. In addition, Innofone shall furnish Semotus’ Counsel with
copies of all intended written responses to the comments contemplated in
clause
(C) of this Section 3(d) that relate to Semotus not later than one (1)
business
day in advance of the filing of such responses with the SEC so that Semotus
shall have the opportunity to comment thereon;
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14
(e) Furnish
to Semotus’ Counsel (i) promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by Innofone, one (1) copy
of the
Registration Statement, each preliminary prospectus and prospectus, and
each
amendment or supplement thereto, all correspondence to, with, or from the
SEC,
and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto (as contemplated in Section 3(d) above) and such other
documents, as Semotus may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by Semotus;
(f) As
promptly as practicable after becoming aware thereof, notify the Semotus
of the
happening of any event of which Innofone has knowledge, as a result of
which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading,
and use
its best efforts promptly to prepare a supplement or amendment to the
Registration Statement or other appropriate filing with the SEC to correct
such
untrue statement or omission, and deliver a number of copies of such supplement
or amendment to each Semotus as such Semotus may reasonably
request;
(g) As
promptly as practicable after becoming aware thereof, notify the Semotus
who
holds Registrable Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance by the SEC of a Notice
of
Effectiveness or any notice of effectiveness or any stop order or other
suspension of the effectiveness of the Registration Statement at the earliest
possible time;
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15
(h) Use
its
reasonable efforts to secure and maintain the designation and listing of
all the
Registrable Securities covered by the Registration Statement on the Principal
Trading Market within the meaning of Rule 11Aa2-1 of the SEC under the
Exchange
Act and the quotation of the Registrable Securities on the Principal Trading
Market;
(i) Provide
a
transfer agent and registrar, which may be a single entity, for the Registrable
Securities not later than the initial Effective Date;
(j) Cooperate
with Semotus to facilitate the timely preparation and delivery of certificates
for the Registrable Securities to be offered pursuant to the Registration
Statement and enable such certificates for the Registrable Securities to
be in
such denominations or amounts as the case may be, as Semotus may reasonably
request, and, within five (5) business days after a Registration Statement
which
includes Registrable Securities is ordered effective by the SEC, the Innofone
shall deliver, and shall cause legal counsel selected by Innofone to deliver,
to
the transfer agent for the Registrable Securities (with copies to Semotus)
an
appropriate instruction and opinion of such counsel, which shall include,
without limitation, directions to the transfer agent to issue certificates
of
Registrable Securities (including
certificates for Registrable Securities to be issued after the Effective
Date
and replacement certificates for Registrable Securities previously issued)
without legends or other restrictions; provided
that Innofone has received the deliveries required in the Purchase
Agreement;
(k) Take
all
other reasonable actions necessary to expedite and facilitate disposition
by
Semotus of the Registrable Securities pursuant to the Registration
Statement;
and
(l) Use
its
reasonable best efforts to comply with all applicable rules and regulations
of
the Commission and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities
Act and
Rule 158 not later than 45 days after the end of any 12-month period (or
90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities
are
sold to underwriters in a firm commitment or best efforts underwritten
offering
and (ii) if not sold to underwriters in such an offering, commencing on
the
first day of the first fiscal quarter of Innofone after the effective date
of
the Registration Statement, which statement shall cover said 12-month period,
or
end shorter periods as is consistent with the requirements of Rule
158.
4. Obligations
of Semotus.
In
connection with the registration of the Registrable Securities, Semotus
shall
have the following obligations:
(a) Semotus,
by Semotus' acceptance of the Registrable Securities, agrees to cooperate
with
Innofone as reasonably requested by Innofone in connection with the preparation
and filing of the Registration Statement hereunder; and
(b) Semotus
agrees that, upon receipt of any notice from Innofone of the happening
of any
event of the kind described in Section 3(f) or 3(g), above, Semotus will
immediately discontinue disposition of Registrable Securities pursuant
to the
Registration Statement covering such Registrable Securities until Semotus'
receipt of the copies of the supplemented or amended prospectus contemplated
by
Section 3(f) or 3(g) and, if so directed by Innofone, Semotus shall deliver
to
Innofone (at the expense of Innofone) or destroy (and deliver to Innofone
a
certificate of destruction) all copies in Semotus' possession, of the prospectus
covering such Registrable Securities current at the time of receipt of
such
notice.
5. Expenses
of Registration.
All
reasonable expenses (other than underwriting discounts and commissions
of
Semotus) incurred in connection with registrations, filings or qualifications
pursuant to Section 3, including, without limitation, all registration,
listing,
and qualifications fees, printers and accounting fees, and the fees and
disbursements of counsel for the Innofone
(but
excluding Semotus’ Counsel fees and expenses) shall be borne by Innofone.
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16
6.Representations
And Warranties Of Innofone.
Innofone represents and warrants to Semotus that:
(a) Innofone
has the corporate power and authority to enter into this Agreement, and
to
perform its obligations hereunder. The execution and delivery by Innofone
of
this Agreement and the consummation by the Innofone of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action
on the part of the Innofone. This Agreement has been duly executed and
delivered
by Innofone and constitutes the valid and binding obligation of Innofone
enforceable against it in accordance with its respective terms, subject
to the
effects of any applicable bankruptcy, insolvency, reorganization, moratorium
or
similar laws affecting creditors’ rights generally and to general equitable
principles.
(b) Except
as
set forth in the SEC Documents (as hereinafter defined), there is no pending,
or
to the knowledge of Innofone, threatened, judicial, administrative or arbitral
action, claim, suit, proceeding or investigation which might affect the
validity
or enforceability of this Agreement or which involves Innofone and which
if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.
(c) Except
as
contemplated by this Agreement, any applicable state or Federal securities
law
filings, no consent or approval of, or exemption by, or filing with, any
party
or governmental or public body or authority is required in connection with
the
execution, delivery and performance under this Agreement or the taking
of any
action contemplated hereunder.
(d) Innofone
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation.
(e) The
execution, delivery and performance of this Agreement by Innofone, and
the
consummation of the transactions contemplated hereby, will not (i) violate
any
provision of Innofone’s certificate of incorporation or bylaws, (ii) violate,
conflict with or result in the breach of any of the terms of, result in
a
material modification of the effect of, otherwise, give any other contracting
party the right to terminate, or constitute (or with notice or lapse of
time or
both constitute) a default under, any contract or other agreement to which
Innofone is a party or by or to which Innofone or any of Innofone’s assets or
properties may be bound or subject, (iii) violate any order, judgment,
injunction, award or decree of any court, arbitrator or governmental or
regulatory body by which Innofone, or the assets or properties of Innofone
are
bound and (iv) to Innofone’s knowledge, violate any statute, law or
regulation.
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17
(f) The
Shares have been duly authorized and, when issued and paid for in accordance
with the License Agreement, will be duly and validly issued, fully paid
and
nonassessable, free and clear of all liens, claims or encumbrances. Innofone
has
reserved from its duly authorized capital stock the maximum number of shares
of
common stock issuable pursuant to this Agreement in order to issue the
full
number of the Shares as are or may become issuable.
(g) Innofone
is eligible to register the resale of its Common Stock for resale by Semotus
under Form S-3 promulgated under the Securities Act.
(h) The
issuance and sale of the Shares hereunder does not contravene the rules
and
regulations of any applicable state or Federal securities law, and no approval
of the shareholders of Innofone is required for Innofone to issue and deliver
to
Semotus the maximum number of shares of common stock contemplated in this
transaction.
(i) Absence
of Certain Changes. Since the Last Audited Date, there has been no material
adverse change and no Material Adverse Effect, except as disclosed in Innofone’s
SEC Documents. Since the Last Audited Date, except as provided in Innofone’s SEC
Documents or disclosed in the Transaction Documents, Innofone has not
(i) incurred or become subject to any material liabilities (absolute or
contingent) except liabilities incurred in the ordinary course of business
consistent with past practices; (ii) declared or made any payment or
distribution of cash or other property to shareholders with respect to
its
capital stock, or purchased or redeemed, or made any agreements to purchase
or
redeem, any shares of its capital stock; (iii) sold, assigned or
transferred any other tangible assets, or canceled any debts or claims,
except
in the ordinary course of business consistent with past practices;
(iv) suffered any substantial losses or waived any rights of material
value, whether or not in the ordinary course of business, or suffered the
loss
of any material amount of existing business; (v) made any changes in
employee compensation, except in the ordinary course of business consistent
with
past practices; or (vi) experienced any material problems with labor or
management in connection with the terms and conditions of their
employment.
(j) Absence
of Litigation. Except as disclosed in Innofone’s SEC Documents, (i) there
is no action, suit, proceeding, inquiry or investigation before or by any
court,
public board or body pending or, to the knowledge of the Innofone, threatened
against or affecting Innofone before or by any governmental authority or
nongovernmental department, commission, board, bureau, agency or instrumentality
or any other person,
wherein
an unfavorable decision, ruling or finding would have a Material Adverse
Effect
or which would adversely affect the validity or enforceability of, or the
authority or ability of Innofone to perform its obligations under, any
of the
Transaction Agreements; (ii) Innofone is not aware of any valid basis for
any such claim that (either individually or in the aggregate with all other
such
events and circumstances) could reasonably be expected to have a Material
Adverse Effect; or (iii) there are no outstanding or unsatisfied judgments,
orders, decrees, writs, injunctions or stipulations to which Innofone is
a party
or by which it or any of its properties is bound, that involve the transaction
contemplated herein or that, alone or in the aggregate, could reasonably
be
expect to have a Material Adverse Effect.
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18
(k) No
Undisclosed Liabilities or Events. Innofone has no liabilities or obligations
other than those disclosed in the Transaction Agreements or Innofone’s SEC
Documents or those incurred in the ordinary course of Innofone’s business since
the Last Audited Date, or which individually or in the aggregate, would
have a
Material Adverse Effect. No event or circumstances has occurred or exists
with
respect to Innofone or its properties, business, operations, financial
condition, or results of operations, which, under applicable law, rule
or
regulation, requires public disclosure or announcement prior to the date
hereof
by Innofone but which has not been so publicly announced or disclosed.
There are
no proposals currently under consideration or currently anticipated to
be under
consideration by the board of directors or the executive officers of Innofone
which proposals would (x) change the certificate of incorporation or other
charter document or by-laws of Innofone, each as currently in effect, with
or
without shareholder approval, which change would reduce or otherwise adversely
affect the rights and powers of the shareholders of the Common Stock or
(y)
materially or substantially change the business, assets or capital of Innofone,
including its interests in subsidiaries.
(l)
The
number of Shares issuable hereunder may have a dilutive effect on the ownership
interests of the other shareholders (and persons
having
the right to become shareholders) of the Innofone. Innofone's executive
officers
and directors have studied and fully
understand the nature of the
Shares
being issued hereby and recognize that they have such a potential dilutive
effect. The board of directors of Innofone has concluded, in its good faith
business judgment, that such issuance is in the best interests of Innofone.
Innofone specifically acknowledges that its obligation to issue the Shares
is
binding upon Innofone and enforceable regardless of the dilution such issuance
may have on the ownership interests of other shareholders of
Innofone.
7. Indemnification.
In the
event any Registrable Securities are included in a Registration Statement
under
this Agreement:
(a) To
the
extent permitted by law, Innofone will indemnify and hold harmless each
Semotus
who holds such Registrable Securities, the directors, if any, of such Semotus,
the officers, if any, of such Semotus, each person, if any, who controls
any
Semotus within the meaning of the Securities Act or the Exchange Act (each,
an
“Indemnified Person” or “Indemnified Party”), against any losses, claims,
damages, liabilities or expenses (joint or several) incurred (collectively,
“Claims”) to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are
based
upon any of the following statements, omissions or violations in the
Registration Statement, or any post-effective amendment thereof, or any
prospectus included therein: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
any
post-effective amendment thereof or the omission or alleged omission to
state
therein a material fact required to be stated therein or necessary to make
the
statements therein not misleading, (ii) any untrue statement or alleged
untrue
statement of a material fact contained in the final prospectus (as amended
or
supplemented, if Innofone files any amendment thereof or supplement thereto
with
the SEC) or the omission or alleged omission to state therein any material
fact
necessary to make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading or (iii) any
violation or alleged violation by the Innofone of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation under
the
Securities Act, the Exchange Act or any state securities law (the matters
in the
foregoing clauses (i) through (iii) being, collectively, “Violations”). Subject
to clause (b) of this Section 6, Innofone shall reimburse Semotus, promptly
as
such expenses are incurred and are due and payable, for any legal fees
or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) shall
not
(I) apply to a Claim arising out of or based upon a Violation which occurs
in
reliance upon and in conformity with information furnished in writing to
Innofone by or on behalf of any Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, after such prospectus was made
available by Innofone pursuant to Section 3(c) hereof; (II) be available
to the
extent such Claim is based on a failure of the Semotus to deliver or cause
to be
delivered the prospectus made available by Innofone or the amendment or
supplement thereto made available by Innofone; (III) be available to the
extent
such Claim is based on the delivery of a prospectus by the Semotus after
receiving notice from Innofone under Section 3(f), (g) or (h) hereof (other
than
a notice regarding the effectiveness of the Registration Statement or any
amendment or supplement thereto), or (IV) apply to amounts paid in settlement
of
any Claim if such settlement is effected without the prior written consent
of
Innofone, which consent shall not be unreasonably withheld or delayed.
Each
Semotus will indemnify, severally and not jointly, Innofone and its officers,
directors and agents (each, an “Indemnified Person” or “Indemnified Party”)
against any claims arising out of or based upon a Violation which occurs
in
reliance upon and in conformity with information furnished in writing to
Innofone, by or on behalf of such Semotus, expressly for use in connection
with
the preparation of the Registration Statement or the amendment or supplement
thereto, subject to such limitations and conditions as are applicable to
the
indemnification provided by Innofone to this Section 6. Such indemnity
shall
remain in full force and effect regardless of any investigation made by
or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by Semotus pursuant to Section 9.
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(b) Promptly
after receipt by an Indemnified Person or Indemnified Party under this
Section 6
of notice of the commencement of any action (including any governmental
action),
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section
6,
deliver to the indemnifying party a written notice of the commencement
thereof
and the indemnifying party shall have the right to participate in, and,
to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with
counsel
mutually satisfactory to the indemnifying party and the Indemnified Person
or
the Indemnified Party, as the case may be. In case any such action is brought
against any Indemnified Person or Indemnified Party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be
entitled to participate in, and, to the extent that it may wish, jointly
with
any other indemnifying party similarly notified, assume the defense thereof,
subject to the provisions herein stated and after notice from the indemnifying
party to such Indemnified Person or Indemnified Party of its election so
to
assume the defense thereof, the indemnifying party will not be liable to
such
Indemnified Person or Indemnified Party under this Section 6 for any legal
or
other reasonable out-of-pocket expenses subsequently incurred by such
Indemnified Person or Indemnified Party in connection with the defense
thereof
other than reasonable costs of investigation, unless the indemnifying party
shall not pursue the action to its final conclusion. The Indemnified Person
or
Indemnified Party shall have the right to employ separate counsel in any
such
action and to participate in the defense thereof, but the fees and reasonable
out-of-pocket expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of
the
action with counsel reasonably satisfactory to the Indemnified Person or
Indemnified Party provided such counsel is of the opinion that all defenses
available to the Indemnified Party can be maintained without prejudicing
the
rights of the indemnifying party. The failure to deliver written notice
to the
indemnifying party within a reasonable time of the commencement of any
such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to
the
extent that the indemnifying party is prejudiced in its ability to defend
such
action. The indemnification required by this Section 6 shall be made by
periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is
due and
payable.
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20
8. Contribution.
To the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with
respect
to any amounts for which it would otherwise be liable under Section 6 to
the
fullest extent permitted by law; provided,
however,
that
(a) no contribution shall be made under circumstances where the maker would
not
have been liable for indemnification under the fault standards set forth
in
Section 6; (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act)
shall be entitled to contribution from any seller of Registrable Securities
who
was not guilty of such fraudulent misrepresentation; and (c) except where
the
seller has committed fraud (other than a fraud by reason of the information
included or omitted from the Registration Statement as to which Innofone
has not
given notice as contemplated under Section 3 hereof) or intentional misconduct,
contribution by any seller of Registrable Securities shall be limited in
amount
to the net amount of proceeds received by such seller from the sale of
such
Registrable Securities.
9. Reports
under Securities Act and Exchange Act.
With a
view to making available to Semotus the benefits of Rule 144 promulgated
under
the Securities Act or any other similar rule or regulation of the SEC that
may
at any time permit Semotus to sell securities of Innofone to the public
without
Registration (“Rule 144”), Innofone agrees to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
(b) file
with
the SEC in a timely manner all reports and other documents required of
the
Innofone under the Securities Act and the Exchange Act; and
(c) furnish
to Semotus so long as Semotus owns Registrable Securities, promptly upon
request, (i) a written statement by the Innofone that it has complied with
the
reporting requirements of the Securities Act and the Exchange Act, (ii)
a copy
of the most recent annual or quarterly report of the Innofone and such
other
reports and documents so filed by the Innofone and (iii) such other information
as may be reasonably requested to permit Semotus to sell such securities
pursuant to Rule 144 without Registration.
(d) Innofone
will, at the request of any Holder of Registrable Securities, in connection
with
the sale of some or all of the Registrable Securities pursuant to Rule
144
upon
receipt from such Holder of a certificate certifying (i) that such Holder
has
held such Registrable Securities for a period of not less than one (1)
year,
(ii) that such Holder has not been an affiliate (as defined in Rule 144)
of
Innofone for more than the ninety (90) preceding days, and (iii) as to
such
other matters as may be appropriate in accordance with such Rule, remove
from
the stock certificate representing such Registrable Securities that portion
of
any restrictive legend which relates to the registration provisions of
the
Securities Act, provided, however, that, if Innofone fails to provide such
instructions and opinion within three business days of receipt of the above
certifications (i) through (iii), at Innofone’s cost and expense, counsel to
Semotus may provide such instructions and opinion to the transfer agent
regarding the removal of the restrictive legend.
Page
21
9. Assignment
of the Registration Rights.
The
rights to have Innofone register Registrable Securities pursuant to this
Agreement shall be automatically assigned by Semotus to any transferee
of the
Registrable Securities.
10. Amendment
of Registration Rights.
Any
provision of this Agreement may be amended and the observance thereof may
be
waived (either generally or in a particular instance and either retroactively
or
prospectively), only with the written consent of Innofone and Semotus.
Any
amendment or waiver effected in accordance with this Section 10 shall be
binding
upon Semotus and Innofone.
11. Miscellaneous.
(a) Notices
required or permitted to be given hereunder shall be given in the manner
contemplated by the Purchase Agreement, (i) if to the Innofone or to the
Semotus, to their respective address contemplated by the Purchase Agreement,
and
(ii) if to any other Semotus, at such address as such Semotus shall have
provided in writing to the Innofone, or at such other address as each such
party
furnishes by notice given in accordance with this Section 11(b).
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate
as a
waiver thereof.
(d) The
corporate laws of the State of Nevada shall govern all issues concerning
the
relative rights of Innofone and Semotus as its stockholder. All other questions
concerning this
Agreement shall be governed by and construed and enforced in accordance
with the
internal laws of the State of California without regard to the principles
of
conflicts of law thereof. The
parties hereto hereby submit to the exclusive jurisdiction of the United
States
federal and state courts located in Santa Xxxxx County, State of California
with
respect to any dispute arising under this Agreement or the transactions
contemplated hereby.
(e) Innofone
and Semotus hereby waive a trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other
in
respect of any matter arising out of or in connection with this Agreement
or any
of the other Transaction Agreements.
(f) If
any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the
validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
Page
22
(g) Subject
to the requirements of Section 9 hereof, this Agreement shall inure to
the
benefit of and be binding upon the successors and assigns of each of the
parties
hereto.
(h) All
pronouns and any variations thereof refer to the masculine, feminine or
neuter,
singular or plural, as the context may require.
(i) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning thereof.
(j) This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other
party
hereto by telephone line facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(k) Innofone
acknowledges that any failure by Innofone to perform its obligations under
Section 2(a) hereof, or any delay in such performance could result in loss
to
Semotus, and Innofone agrees that, in addition to any other liability Innofone
may have by reason of such failure or delay, Innofone shall be liable for
all
direct damages caused by any such failure or delay, unless the same is
the
result of force majeure. Neither party shall be liable for consequential
damages.
(l) This
Agreement constitutes the entire agreement among the parties hereto with
respect
to the subject matter hereof. There are no restrictions, promises, warranties
or
undertakings, other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings among the parties hereto
with
respect to the subject matter hereof. This Agreement may be amended only
by an
instrument in writing signed by the party to be charged with enforcement
thereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
Page
23
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by
their respective officers thereunto duly authorized as of the day and year
first
above written.
| SEMOTUS SOLUTIONS, INC. | ||
| |
|
|
| By: | ||
| Name: | ||
| Title: | ||
| Xxxxxxxx.xxx Incorporated | ||
| |
|
|
| By: | ||
| Name: | ||
| Title: | ||
Page
24
EXHIBIT
D
Annual
Maintenance and Support Fee: 18% of the total license fee = $675,000 /
year
Software
Re-Certification Fee:
Professional
Services Fees: $125 / hour with a minimum of eight (8) hours.
Page
25
EXHIBIT
E
Future
Milestones
a. Semotus
shall sell to Innofone certain assets consisting of the HiplinkXS, Clickmarks,
and related software applications (the “Asset Sale”) if the following conditions
are met. In consideration, Innofone shall pay five thousand dollars ($5,000)
to
Semotus within ten (10) days of full execution of this License Agreement,
two
hundred forty five thousand dollars ($245,000) within ninety days of full
execution of this License Agreement, and Innofone shall issue to Semotus
a five
hundred thousand dollar ($500,000) convertible promissory note. Innofone
must
have one million dollars ($1,000,000) in operating cash at the time of the
closing of the Asset Sale and have resolved any pending litigation (carve
out
for Caleum) prior to the close of the Asset Sale. Semotus shall have approval
authority regarding any material Innofone transaction during the period
commencing upon the payment of the $5,000 and continuing thereafter until
the
close of the Asset Sale, such approval not to be unreasonably withheld.
Post-Closing
Purchase Price Adjustment. In the event that the value of the Shares
following the Closing Date is less than $3.75 million, then and in that event,
the Post Closing Purchase Price Adjustment will be triggered. If the Post
Closing Purchase Price Adjustment is triggered, during each calendar month
after
Closing and until the Asset Sale is Closed, Innofone shall promptly deliver
additional shares of its common stock such that Semotus shall have an aggregate
number of shares of Innofone common stock with an aggregate market value
as of
the date of payment of no less than Three Million Seven Hundred Fifty Thousand
and 00/100 Dollars ($3,750,000) (“Post-Closing
Purchase Price Adjustment”).
Failure to deliver additional shares within 5 business days after month end
will
result in termination of “Asset Sale” agreement.
Closing
Contingencies:
|
1.
|
The
appropriate legal documentation and definitive agreements relating
to the
Asset Sale having been fully agreed upon by both parties and
fully
executed; and
|
|
2.
|
Completion
of Due Diligence, the approval by each party’s Board of Directors, and
Shareholder approval.
|
c. Upon
the
close of the Asset Sale, Semotus shall grant to Innofone a Right of First
Refusal to merge with and into Semotus (the “Merger”). The Right of First
Refusal is conditional upon the following factors: (i) Innofone must have
at
least four million dollars ($4,000,000) in net shareholder value, and (ii)
Innofone must have at least two million dollars ($2,000,000) in operating
cash.
Net shareholder value means shareholders’ equity, as determined by the American
Stock Exchange listing requirements.
Right
of First Refusal.
During
the time period beginning from the Closing Date of the Asset Sale and ending
ninety (90) calendar days thereafter (the “Restricted Period”), Innofone shall
have a right of first refusal with respect to any proposed merger undertaken
by
Semotus, as follows. In the event that, during the Restriction Period,
Semotus
proposes to merge with another entity (a “Proposed
Transaction”),
then
Semotus shall send to Innofone notice in writing of all of the terms of
the
Proposed Transaction (such notice, the “Offer
Notice”).
The
Offer Notice shall constitute an irrevocable offer to merge with Innofone,
on a
basis similar to that described in the Proposed Transaction.
At
any
time within five (5) calendar days after receipt by Innofone of the Offer
Notice
(the “Option
Period”),
Innofone may elect to accept the offer to merge with Semotus under similar
terms
of the Proposed Transaction and shall give written notice of such election,
including all of the terms of the Innofone Proposed Transaction (the
“Acceptance
Notice”)
to
Semotus within the Option Period. Semotus’ Board of Directors shall then
determine, in its sole discretion, which merger transaction (the Proposed
Transaction or the Innofone Proposed Transaction) is in the best interests
of
Semotus and its shareholders. The closing for any merger with Innofone
shall
take place within thirty (30) days following the expiration of the Option
Period. After the expiration of the Option Period, if Innofone has not
provided
to Semotus an Acceptance Notice for the merger under identical terms of
the
Proposed Transaction, then Semotus may offer such merger on similar terms
to
third parties. However, in the course of negotiation with third parties,
if the
terms of the Proposed Transaction are materially modified, then Semotus
shall
again send an Offer Notice to Innofone outlining any such material modification
of the Proposed Transaction (the “Revised Transaction”) and shall grant Innofone
a new Offering Period in which to accept such Revised Transaction.
Page
26
Post-Closing
Purchase Price Adjustment. In the event that the value of the Shares
following the Closing Date is less than $3.75 million, then and in that
event,
the Post Closing Purchase Price Adjustment will be triggered. If the Post
Closing Purchase Price Adjustment is triggered, during each calendar month
after
Closing and until the Merger is Closed, Innofone shall promptly deliver
additional shares of its common stock such that Semotus shall have an aggregate
number of shares of Innofone common stock with an aggregate market value
as of
the date of payment of no less than Three Million Seven Hundred Fifty Thousand
and 00/100 Dollars ($3,750,000) (“Post-Closing
Purchase Price Adjustment”).
Closing
Contingencies:
|
1.
|
The
appropriate legal documentation and definitive agreements relating
to the
Merger having been fully agreed upon by both parties and fully
executed;
and
|
|
2.
|
The
approval by each party’s Board of Directors, shareholders and the American
Stock Exchange.
|
c.
Innofone shall have the right to buy back the Shares in cash at the Transaction
Price ($3,750,000) should the Merger not close. This buy back option will
be
valid for one year from the full execution of this License Agreement.
Page
27
EXHIBIT
F
Technical
Support and Annual Maintenance Document
Page
28
