PURCHASE/SALE AGREEMENT
Exhibit 10.1
Agreement made this May 5, 2006 (the “Effective Date”) by and among Xxxxxx Interactive, Inc., a
Delaware corporation with a place of business at 000 Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx,
00000-0000 (“Xxxxxx”); Xxxxxxx X. Xxxxxxx who resides at 000 X 00xx Xxxxxx, Xxx Xxxx, XX
00000 (“Fombrun”), Reputation Institute, Inc., a Delaware corporation with a place of business at
00 Xxxxxxx Xxxxxx Xxx Xxxx, XX 00000 and Reputation Institute LLC, a Delaware limited liability
company with a place of business at 00 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (Reputation Institute,
Inc. and Reputation Institute LLC being referred to jointly and severally as “Reputation
Institute”).
BACKGROUND
Xxxxxx and Xxxxxxx executed a “Strategic Alliance Agreement” dated November 15, 1999 (the
“Xxxxxx/Fombrun Agreement”) for the purpose of memorializing the terms and conditions under which
they would create and promote the standardized measurement of corporate reputation known as the
“Xxxxxx/Xxxxxxx Reputation Quotient.” The parties therein acknowledged that the standard
measurement tool is a joint work of authorship by Xxxxxx and Fombrun and all rights thereto belong
jointly to Xxxxxx and Xxxxxxx.
Xxxxxx and Reputation Institute executed a separate “Strategic Alliance Agreement” dated
November 15, 1999 (the “Xxxxxx/Reputation Institute Agreement”) setting forth the terms and
conditions under which Reputation Institute would be permitted to use the “Xxxxxx/Fombrun
Reputation Quotient.”
The parties hereto have agreed to resolve certain disagreements which have arisen between and
among them and, in addition, Fombrun has agreed to sell to Xxxxxx, and Xxxxxx has agreed to
purchase from Fombrun, all of Fombrun’s right, title and interest in the “Xxxxxx/Xxxxxxx Reputation
Quotient” and every corporate measurement tool to which that trademark refers or has referred, all
pursuant to the terms and conditions set forth hereinafter.
IN CONSIDERATION of the foregoing, which is hereby made a part of this Agreement, and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows.
1. Definitions.
1.1 “Controls” (including the terms “Controlled By” or “Under Common Control”) shall mean but
not be limited to the ownership of ten percent (10%) or more of the outstanding shares of capital
stock of any corporation having voting power for the election of directors, whether or not at the
same time stock of any other class or classes has or might have voting power by reason of the
happening of any contingency, or ownership of ten percent (10%) or more of any interest in any
partnership, limited
liability company, any other type of entity, or any other interest by reason of which a
controlling influence over the affairs of the entity may be exercised.
1.2 “Xxxxxx Affiliate” means any entity which directly or indirectly, or through one or more
intermediaries, Controls or is Controlled By or is Under Common Control with Xxxxxx.
1.3 “Xxxxxx XX Data” means any and all facts, figures, and information at any time generated
from application of the Instrument in the United States, the United Kingdom, Germany, France and/or
Japan including without limitation:
1.3.1 Responses to any questions posed in the course of using the Instrument in those
geographic locations;
1.3.2 Analysis of responses to any questions posed in the course of using the Instrument in
those geographic locations; but excluding facts, figures, and information as have been made public
by their release in The Wall Street Journal or other media.
1.4 “Instrument” has the meaning ascribed to it in Exhibit 1.4.
1.5 “RI Affiliate” means any entity which directly or indirectly, or through one or more
intermediaries, Controls or is Controlled By or is Under Common Control with Fombrun, or Reputation
Institute.
1.6 “RI Member” means any person or entity that now or in the past has had a “Subscriber,”
“Individual,” “Corporate” or other level of membership in Reputation Institute; has received any
benefits or privileges made available to individuals with such levels of membership in Reputation
Institute, including, without limitation, access to all or any part of the Data through Fombrun,
Reputation Institute or any RI Affiliate.
1.7 “Trademark” for purposes of this Agreement (and regardless of whether such “Trademark” has
been registered with the United States trademark office and of whether such a trademark can be
protected against use by any nonparty to this Agreement) means any one or more of the following:
“Xxxxxx/Xxxxxxx Reputation Quotient,” “Reputation Quotient,” “RQ,” or any other phrase which uses
both the word “reputation” and “quotient.”
2. Transfer of Ownership Interest.
2.1 Fombrun hereby conveys and transfers to Xxxxxx any and all right, title and interest
Fombrun has in the Trademark and in the registrations thereof and/or in the Instrument.
2.2 Fombrun shall execute such documents as Xxxxxx reasonably requests an order to memorialize
and effectuate the conveyance and transfer described in
Section 2.1, including without limitation a Trademark Assignment in the form annexed hereto as
Exhibit 2.2.
2.3 Reputation Institute hereby acknowledges that it has no interest whatsoever in the
Trademark or the Instrument.
3. Purchase Price.
3.1 Xxxxxx shall pay to Fombrun in full satisfaction of Xxxxxx’ obligations under the
Xxxxxx/Fombrun Agreement and of Xxxxxx’ obligations under the Xxxxxx/Reputation Institute
Agreement:
3.1.1 Five Hundred Twenty Five Thousand Dollars ($525,000) as consideration for the rights
transferred to Xxxxxx under Section 2.1, payable in immediately available funds on the Effective
Date; plus
3.1.2 $94,032 payable in immediately available funds on the Effective Date as royalties due
from Xxxxxx to Fombrun under Section 9 of the Xxxxxx/Xxxxxxx Agreement and as commissions due from
Xxxxxx to Reputation Institute under Section 12 of the Xxxxxx/Reputation Institute Agreement.
3.2 Reputation Institute authorizes Xxxxxx to make the payment to Fombrun under Section 3.1.2
of commissions that would otherwise be due to Reputation Institute under Section 12 of the
Xxxxxx/Reputation Institute Agreement and acknowledges that such payment will satisfy Xxxxxx’
obligations to Reputation Institute.
4. Termination of Agreements.
4.1 Xxxxxx and Xxxxxxx hereby terminate the Xxxxxx/Fombrun Agreement in its entirety and
neither party shall have any obligations whatsoever under that agreement on and after the Effective
Date.
4.2 Xxxxxx and Reputation Institute hereby terminate the Xxxxxx/Reputation Institute Agreement
in its entirety and neither party shall have any obligations whatsoever under that agreement on and
after the Effective Date.
4.3 Fombrun hereby represents that, notwithstanding any reference to “Xx. Xxxxxxx Xxxxxxx
Reputation Capital Associates LLC” in the Xxxxxx/Fombrun Agreement:
4.3.1 Such agreement was exclusively between Xxxxxx and Xxxxxxx; and
4.3.2 There was and/or is no “Xx. Xxxxxxx Xxxxxxx Reputation Capital Associates LLC” or, if
such an entity ever existed, it no longer exists and never had any rights under any agreement to
which Xxxxxx was or is a party.
5. Additional Obligations of Fombrun and Reputation Institute.
5.1 Fombrun and Reputation Institute acknowledge that Xxxxxx has sole and exclusive rights to
and ownership of the Xxxxxx XX Data, the Instrument and the Trademark. Within 30 days after the
Effective Date, Fombrun and Reputation Institute will:
5.1.1 Cause all of the Xxxxxx XX Data in the possession or control of Fombrun, Reputation
Institute, an RI Affiliate or an RI Member either to be delivered to Xxxxxx or to be destroyed; and
shall ensure that no copies of any such Xxxxxx XX Data in any form whatsoever is retained by
Fombrun, Reputation Institute, an RI Affiliate or an RI Member.
5.1.2 Remove all references to the Trademark, the Instrument, and Xxxxxx from the Reputation
Institute Internet website and from all written materials used by Fombrun, Reputation Institute,
and RI Affiliates, except as otherwise specifically permitted in Section 5.4.
5.2 Within two (2) business days after the Effective Date, Fombrun will notify each of its RI
Affiliates in writing, with a copy to Xxxxxx, to immediately cease any and all use of Xxxxxx XX
Data they may have acquired from Fombrun, Harris, or Reputation Institute and to return or destroy
the Data as required under Section 5.1. If Fombrun or Reputation Institute has provided any Xxxxxx
XX Data to an RI Member, the same notice shall be sent to such RI Member within two (2) business
days after the Effective Date.
5.3 On and after the Effective Date, Fombrun and Reputation Institute will not use or permit
an RI Affiliate or an RI Member to use any of the Xxxxxx XX Data for any purpose.
5.4 On and after the Effective Date, Fombrun and Reputation Institute shall not in any
communication of any type use or refer to the Trademark; provided, however, that Fombrun may refer
to his involvement in “developing the Reputation Quotient (or RQ) instrument jointly with Xxxxxx
Interactive,” so long as in doing so he does not describe the Instrument or any part thereof.
Xxxxxx recognizes, however, that Fombrun and Reputation Institute are entitled to refer to
previously published articles about, as well as publicly released information by Xxxxxx, that
describe the Trademark.
5.5 On and after the Effective Date, Fombrun and Reputation Institute shall not use the
Instrument, and shall cause the RI Affiliates not to do so. In furtherance, and not in limitation,
thereof, Fombrun and Reputation Institute specifically agree not to use a description of the
Instrument or Trademark in any promotional materials.
5.6 At no time during the period commencing on the Effective Date and continuing for 24 full
calendar months thereafter shall Fombrun or Reputation Institute, and Fombrun and Reputation
Institute shall cause the RI Affiliates not to:
5.6.1 Propose or provide to The Wall Street Journal (including all editions including, without
limitation, all global editions) for publication a corporate reputation measurement instrument or
any corporate reputation survey results conducted
by or endorsed by Fombrun, Reputation Institute, or an RI Affiliate acting alone or together
or by Fombrun, Reputation Institute and/or an RI Affiliate in partnership with another party; or
5.6.2 Provide reputation-related services (including without limitation reputation measurement
and reputation consulting services) to the following entities: Sprint, Xxxxxxx & Xxxxxxx, Boeing,
Epcor, Altria, (excluding Xxxxxxx Xxxxxx and Kraft Foods), Xxxxx Fargo, Pfizer, Nike, and Merck;
provided, however, that this shall not prohibit Altria and Xxxxx Fargo from continuing to be RI
Members.
5.6.3 Provide reputation measurement services to Microsoft or Federal Express.
5.7 No later than forty-five (45) days after the Effective Date, Fombrun shall deliver to
Xxxxxx a written certification stating that Fombrun and Reputation Institute have fully performed
their obligations under Sections 5.1 and 5.2 and that Fombrun and Reputation Institute are in
compliance with all other obligations under this Agreement.
5.8 Nothing in this Section 5 or in Section 6 shall be deemed to change in any way the
obligations of Fombrun and Reputation Institute under this Agreement and, in particular, shall not
be deemed to permit Fombrun, Reputation Institute, or any RI Affiliate to use or (except as
specifically permitted Section 5.4) refer to the Instrument or the Trademark.
6. Additional Obligation of Xxxxxx. At no time during the period commencing on the
Effective Date and continuing for 24 full calendar months thereafter shall Xxxxxx provide
reputation-related services (including without limitation reputation measurement and reputation
consulting services) or branding services to Nokia.
7. Confidentiality Obligation.
The parties agree to keep all of the terms of this Agreement confidential, except to the
extent necessary to communicate the same to their lawyers, accountants or other advisors or to
enforce the terms hereof. In furtherance of the foregoing, Fombrun and Reputation Institute
specifically agree not to disclose the contents of Exhibit 1.6 to any third party.
8. Release by Xxxxxx. Xxxxxx Interactive hereby releases and discharges Fombrun and
Reputation Institute and all of their directors, officers, employees, members and their heirs,
personal representatives, administrators, executors, successors and assigns (each referred to in
this Section 7 as “Releasee”) from all actions, causes of action, suits, debts, dues, sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and
damages whatsoever in law or equity which, against Releasee, Xxxxxx Interactive ever had, now have
or hereafter can, shall, or may have for, upon or by reason of any matter, cause or thing from the
first day of the world
to the Effective Date, provided, however, the nothing herein shall be deemed to release a
Releasee from any obligations under this Agreement.
9. Release by Fombrun and Reputation Institute. Fombrun and Reputation Institute
hereby jointly and severally release and discharge Xxxxxx Interactive and all of Xxxxxx
Interactive’s directors, officers, employees, and their heirs, personal representatives,
administrators, executors, successors and assigns (each referred to in this Section 8 as
“Releasee”) from all actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, and damages whatsoever in
law or equity which, against Releasee, Fombrun and/or Reputation Institute ever had, now have or
hereafter can, shall, or may have for, upon or by reason of any matter, cause or thing from the
first day of the world to the Effective Date, provided, however, the nothing herein shall be deemed
to release a Releasee from any obligations under this Agreement.
10. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law. If the application
of any provision of this Agreement to any particular facts or circumstances shall be held to be
invalid or unenforceable by a court of competent jurisdiction, then (i) the validity and
enforceability of such provision as applied to any other particular facts or circumstances and the
validity of other provisions of this Agreement shall not in any way be affected or impaired
thereby, and (ii) such provision shall be enforced to the maximum extent possible so as to effect
the intent of the parties and shall be reformed without further action by the parties to the extent
necessary to make such provision valid and enforceable while preserving the original intent of the
parties.
11. Headings. The section or other headings herein are inserted only for convenience
and ease of reference and are not to be considered in the construction or interpretation of any
provision of this Agreement. Unless otherwise stated, references to Sections herein are references
to Sections hereof.
12. Waiver. The waiver by either party of a breach of or a default under any
provision of this Agreement shall be valid only if in writing and signed by such party and shall
not be construed as a waiver of any subsequent breach of or default under the same or any other
provision of this Agreement; nor shall any delay or omission on the part of either party to
exercise or avail itself of any right or remedy that it has or may have hereunder or by law or at
equity operate as a waiver of any right or remedy.
13. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original and all of which shall constitute one and the same Agreement.
14. Entire Agreement. This Agreement together with the Exhibits hereto constitutes
the entire agreement between the parties pertaining to the subject matter hereof and supersedes all
previous communications, agreements, and understandings between the parties relating to the subject
matter hereof. Neither party has entered into
this Agreement in reliance upon any representation, warranty, or undertaking of the other
party that is not set out or referred to in this Agreement. No amendment or modification of any
provision of this Agreement shall be effective unless in writing and signed by a duly authorized
representative of each party.
15. Representation of Counsel, Mutual Negotiation. Each party acknowledges it has had
the opportunity to be represented by counsel of its choice in negotiating this Agreement. This
Agreement will therefore be deemed to have been negotiated and prepared at the joint request,
direction, and construction of the parties, at arms length, with the advice and participation of
counsel, and will be interpreted in accordance with its terms without favor to any party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the first date above written.
| XXXXXX INTERACTIVE, INC. | REPUTATION INSTITUTE, INC. | |||||||
By:
|
/s/ Xxxxxx X. Xxxxxxxx | By: | /s/ Xxxxxxx X. Xxxxxxx | |||||
| Print Name: Xxxxxx X. Xxxxxxxx | Print Name: Xxxxxxx X. Xxxxxxx | |||||||
| Title: Chief Financial Officer | Title: President | |||||||
| REPUTATION INSTITUTE LLC | ||||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | /s/ Xxxxxxx X. Xxxxxxx | ||||||
| Xxxxxxx X. Xxxxxxx, individually | ||||||||
| Print Name: Xxxxxxx X. Xxxxxxx | ||||||||
| Title: President | ||||||||
