Exhibit 10.3
EXHIBIT C
SUPPORT AND MAINTENANCE AGREEMENT
SUPPORT AND MAINTENANCE AGREEMENT dated as of April __, 2005 (the
"Effective Date"), between On2 Technologies, Inc., a Delaware corporation
("On2"), and Wildform, Inc., a California corporation ("Wildform"). Capitalized
terms used herein and not defined herein shall have the meanings given to them
in Asset Purchase Agreement (as defined below).
WITNESSETH:
WHEREAS, On2 and Wildform have entered into an Asset Purchase And Software
License Agreement dated as of April 4, 2005 (the "Asset Purchase Agreement")
pursuant to which, among other matters, Wildform has agreed to sell and license
certain assets to On2; and
WHEREAS, in connection with the Asset Purchase Agreement, On2 desires for
Wildform to provide certain services to On2, and Wildform wishes to perform such
services in accordance herewith.
NOW, THEREFORE, subject to the terms, conditions, covenants and provisions
of this Agreement, each of On2 and Wildform mutually covenant and agree as
follows:
ARTICLE I
DEFINITIONS
For purposes hereof, each of the following terms shall have the respective
meaning set forth below, whether employed in the singular or plural, unless the
particular context in which a term is used clearly indicates otherwise:
1.1 "Closing Date Payment Amount" shall have the meaning set forth in the
Asset Purchase Agreement.
1.2 "Common Stock" means the common stock of On2, par value $0.01.
1.3 "Confidential Information" means any and all information disclosed by
one Party (the "Disclosing Party") to the other Party (the "Receiving Party"),
in any manner, prior to the Effective Date and thereafter during the Term.
Confidential Information may include, but is not limited to, the following types
of information and other information of a similar nature, in any form or medium,
in any way perceived: trade secrets, software licensed on an evaluation basis
hereunder (whether source code, executable code or otherwise), source code,
inventions, art, drawings, schematics, files, file data, documentation,
diagrams, specifications, know how, processes, formulas, flow charts, product
criteria, research and development records, procedures, test results and
samples, marketing techniques and materials, marketing and development plans,
pricing data, price lists, business plans, information relating to customer
identities, supplier or other source identities, and financial information.
Confidential Information of a Disclosing Party may also include any information
described above, whether or not owned or developed by it, and any such
information Disclosing Party is obligated to keep confidential by way of a
written agreement with a third party. Notwithstanding the foregoing,
Confidential Information shall not include any of the foregoing that (i) is or
becomes generally available to the public other than as a result of a disclosure
by the Receiving Party, (ii) is rightfully in the possession of Receiving Party
prior to disclosure by Disclosing Party, (iii) is received by Receiving Party
from a third party having the right to make such disclosure and not under a
confidentiality obligation to the Disclosing Party, or (iv) is independently
developed by the Receiving Party without reference to or use of any Confidential
Information of the Disclosing Party.
1.4 "Deliverable" means each item to be delivered by Wildform in
accordance with Exhibit B hereto.
1.5 "Development Work" means the customization and integration of the Flix
Software to be performed by Wildform and described on Exhibit B hereto
1.6 "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
1.7 "Flix Software" means the following software in source code and object
code form: Flix Pro 4 for Windows, Flix Pro 4 for Windows Demo, Flix Pro 3 for
Mac, Flix Pro 3 for Mac Demo, Flix Engine 3.5 for Windows, Flix Engine 3.5 for
Windows Demo, Flix Exporter 4 for Windows (including Flix FLV player) Flix
Exporter 4 for Windows Demo (including Flix FLV player), Flix Exporter 4 for Mac
(including Flix FLV player), Flix Exporter 4 for Mac Demo (including Flix FLV
player), Flix Lite 3 for Windows, Flix Lite 3 for Windows Demo, Flix Lite 3 for
Mac, Flix Lite 3 for Mac Demo.
1.8 "Incorporated Technology" means any technology or materials (including
software source code) provided by On2 to Wildform in order for Wildform to
perform the Development Work.
1.9 "Intellectual Property Rights" means all intellectual property rights
arising under statutory or common law or any other legal system in the world,
including that which is acquired or obtained under a contract with a third
party, and whether or not perfected, comprising any of the following: (i)
copyrights, copyright registrations, mask works and mask work registrations;
(ii) rights relating to the protection of trade secrets and confidential
information; (iii) patents, patent applications, reissue patents and reissue
applications, continuation and continuation in part applications, invention
registrations, xxxxx patents; (iv) trademarks, service marks, trade names, trade
dress, domain names, and registrations for the foregoing, of all kinds and
types; (v) any right analogous to those set forth in this definition in foreign
jurisdictions; and (vi) any renewals or extensions of the foregoing (as and to
the extent applicable) now existing, or hereafter filed, issued or acquired.
1.10 "Incorporated Technology Works" shall mean all inventions,
intellectual property, works, derivative works, innovations, or other
developments made or developed by Wildform solely as a result of and in relation
to the incorporation of the Incorporated Technology to the Flix Software, and
explicitly excluding the Licensed Assets.
1.11 "Nonconformance Notice" shall have the meaning set forth in Section
3.1 hereof.
1.12 "Payment Shares" means Two Hundred Eighty Thousand shares of Common
Stock, subject to adjustment from time to time in connection with any stock
split, reverse stock split, stock dividend or other similar change in On2's
capitalization.
1.13 "Program Errors" means any defect in the Flix Software that 1)
results in the loss or corruption of data on a user's system, 2) causes the Flix
Software to become unstable, 3) eliminates the user's ability to perform
intended functions in the Flix Software, or 4) causes the operating system or
any other programs to become unstable or cease to function. The defect must be
caused by the Flix Software in the form provided by Wildform as a Deliverable.
1.14 "Specifications" shall mean the Flix Software customizations and
integrations described on Exhibit B.
1.15 "Term" shall have the meaning set forth in Section 9.1 hereof.
ARTICLE II
TRANSITION SERVICES PROVIDED
2.1 Transition Services. Upon the terms and subject to the conditions set
forth in this Agreement, with respect to each of those services set forth on
Exhibit A hereto, which Exhibit is made a part of this Agreement, Wildform will
provide to On2 the services indicated on such Exhibit (the "Transition
Services") during the time period for each such Transition Service set forth in
such Exhibit (hereinafter referred to as the "Time Periods" for all of the
Transition Services, and the "Time Period" for each Transition Service).
2.2 Personnel. In providing the Transition Services, Wildform, as it deems
necessary or appropriate in its sole discretion, may (i) use its personnel, and
(ii) employ the services of third parties to the extent such third party
services are reasonably necessary for the efficient performance of any of such
Transition Services, provided, however that the marketing and PR services set
forth on Exhibit A shall be supervised by Xxxxx Xxxxxx or Xxxxxxxx Xxxxx.
2.3 Representatives. Each of On2 and Wildform shall appoint a
representative to act as its primary contact person for the provision of all of
the Transition Services (collectively, the "Primary Coordinators"). The initial
Primary Coordinators shall be Xxxxx Xxxxxxxxx for On2 and Xxxxxxxx Xxxxx for
Wildform. Each party may treat an act of a Primary Coordinator of another party
as being authorized by such other party without inquiring behind such act or
ascertaining whether such Primary Coordinator had authority to so act. Wildform
and On2 shall advise each other in writing of any change in the Primary
Coordinators, setting forth the name of the Primary Coordinator to be replaced
and the name of the replacement, and certifying that the replacement Primary
Coordinator is authorized to act for such party in all matters relating to this
Agreement. Each of On2 and Wildform agree that all communications relating to
the provision of the Transition Services shall be directed to the Primary
Coordinators.
2.4 Level of Transition Services. Wildform shall perform the Transition
Services for which it is responsible hereunder following commonly accepted
standards of care in the industry and exercising the same degree of care as it
exercises in performing the same or similar services for its own business as of
the date of this Agreement.
ARTICLE III
SOFTWARE DELIVERABLES
3.1 Deliverables. Subject to payment by On2 of the Closing Date Payment
Amount in accordance with the Asset Purchase Agreement, Wildform shall deliver
each Deliverable in accordance with the timeframe (the "Timeframe") set forth in
Exhibit B, which Exhibit is made a part of this Agreement. On2 will use
commercially reasonable efforts to cooperate with Wildform as necessary in
completing the Development Work and delivery of the Deliverables. Upon receipt
of each Deliverable, On2 shall have a period of thirty (30) working days within
which to inspect such Deliverable based upon the relevant Specification (an
"Acceptance Period"). Should On2 find that any Deliverable does not
substantially conform to the relevant Specification, On2 shall promptly so
notify Wildform in writing, which notice shall provide sufficiently detailed
explanation of the non-conformities so as to allow Wildform to reproduce them
(any such notice is referred to herein as a "Nonconformance Notice"). Each of
the Deliverables shall be deemed accepted by On2 unless On2 delivers to Wildform
a Nonconformance Notice within thirty (30) business days of the delivery of such
Deliverable. In the event that Wildform receives such Nonconformance Notice from
On2, Wildform shall make commercially reasonable efforts to modify such
Deliverable and re-deliver it to On2 after any such modification is completed.
Each Deliverable shall be deemed to have been accepted by On2 when either (i)
On2 notifies Wildform in writing of its acceptance of such Deliverables or (ii)
On2 does not deliver a Nonconformance Notice to Wildform within the Acceptance
Period. Notwithstanding anything herein to the contrary, On2 shall not
unreasonably withhold acceptance of any Deliverable.
3.2 Program Errors. During the Term, Wildform shall resolve Program Errors
in the manner provided in Exhibit A.
ARTICLE IV
COMPENSATION
As consideration for the services to be provided by Wildform hereunder,
On2 will pay Wildform a total of (i) $160,000 payable as follows: (a) $22,500
per month for each of the four (4) months following the Effective Date and
$10,000 per month for each of the fifth and sixth months following the Effective
Date with the first payment being payable 30 days from the Effective Date, and
each subsequent payment payable within thirty (30) days of the preceding payment
and (b) $50,000 upon On2's acceptance of the Deliverables pursuant to Section
3.1 hereof; and (ii) the Payment Shares, issuable upon the 12-month anniversary
of the Effective Date. The foregoing notwithstanding, the payment provided for
in this Article IV is not intended to constitute consideration for the Purchased
Assets and Licensed Assets, payment for the license of which is provided for in
the Asset Purchase Agreement.
ARTICLE V
CONFIDENTIALITY
5.1 Use of Confidential Information. The Receiving Party represents and
warrants to the Disclosing Party that:
5.1.1 it will keep and maintain all Confidential Information of the
Disclosing Party in strict confidence, using such degree of care as is
appropriate to avoid unauthorized use or disclosure;
5.1.2 it will not, directly or indirectly, disclose any Confidential
Information to any third party, except as contemplated by this Agreement or with
the Disclosing Party's prior written consent;
5.1.3 it will not make use of any Confidential Information for its
own purposes, such as creation of a competitive product; or for the benefit of
anyone or any entity other than as contemplated by this Agreement;
5.1.4 upon the Disclosing Party's written request, at the earlier of
the end of the Term, or receipt of notice from the Disclosing Party of a breach
by it of this Agreement or an Annex, the Receiving Party will deliver promptly
to the Disclosing Party or, at the Receiving Party's option, will destroy all
memoranda, notes, records, reports, media and other documents and materials (and
all copies thereof) regarding or including any Confidential Information which
the Receiving Party may then possess or have under its control; and
5.1.5 it will take no action with respect to the Confidential
Information that is inconsistent with its confidential and proprietary nature.
5.2 Exceptions to Non-Disclosure Obligations. Notwithstanding the
foregoing, the Receiving Party shall be permitted to disclose Confidential
Information without any violation of this Agreement if such disclosure is
required by law, but in such event the Receiving Party shall notify the
Disclosing Party in writing in advance of such disclosure, and provide the
Disclosing Party with copies of any related information so that the Disclosing
Party may take appropriate action to protect its Confidential Information. The
Receiving Party acknowledges that the disclosure of Confidential Information of
the Disclosing Party may cause irreparable injury to the Disclosing Party and
damages that may be difficult to ascertain. The Disclosing Party shall,
therefore, be entitled to injunctive relief upon a disclosure or threatened
disclosure of any Confidential Information of the Disclosing Party in violation
of this Agreement, in addition to such other remedies as may be available at law
or in equity. Without limitation of the foregoing, the Receiving Party shall
promptly advise the Disclosing Party in the event that the Receiving Party
learns or has reason to believe that any person or entity that has had access to
Confidential Information of the Disclosing Party through the Receiving Party has
violated or intends to violate the terms of this Agreement.
5.3 Receiving Party's Duty of Care. Receiving Party shall protect the
Confidential Information from unauthorized use or disclosure by exercising the
same degree of care that Receiving Party uses with respect to information of its
own of a similar nature, but in no event less than reasonable care, until five
(5) years from the later of the Effective Date or the date of receipt of such
Confidential Information. Notwithstanding the prior sentence, with respect to
Receiving Party's employees, Receiving Party shall only disclose Confidential
Information to a Receiving Party employee who has a need to know such
Confidential Information for purposes of this Agreement or any customer
sublicense and is informed of the confidential nature of the Confidential
Information. The foregoing notwithstanding, each Party shall be liable for any
failure by such Party's employees, agents or representatives to comply with the
provisions of this Section 5 as fully as if such employees, agents or
representatives were a party to this Agreement.
ARTICLE VI
WARRANTIES
6.1 On2 Warranties. On2 makes the following representations and warranties
to Wildform.
(a) Authorization; Power and Authority. On2 (i) is a corporation duly
organized under the laws of the state of Delaware, and (ii) has the
requisite corporate power and corporate authority to enter into and
perform its obligations under this Agreement.
(b) Exchange Act Reporting. On2 has filed in a timely manner all
documents that it was required to file under the Exchange Act,
during the twelve (12) months preceding the date of this Agreement.
(c) Payment Shares. The Payment Shares to be issued by On2 to Wildform
hereunder: (i) are duly authorized; and (ii) when issued and
exchanged pursuant to the terms of this Agreement, will be validly
issued, fully paid, non-assessable and not subject to preemptive
rights; and (iii) when issued and exchanged pursuant to the terms of
this Agreement, shall have been approved for listing on the American
Stock Exchange (or such other trading market or exchange on which
the Common Stock is listed or quoted for trading on the date in
question).
6.2 Wildform Warranties. Wildform makes the following representations and
warranties to On2.
(a) Authorization; Power and Authority. Wildform (i) is a corporation
duly organized under the laws of the State of California, (ii) has
the requisite corporate power and corporate authority to enter into
and perform its obligations under this Agreement, and (iii) to the
best of Wildform's knowledge as of the Effective Date, the
Deliverables marked as Deliverable #2 will not infringe any
Intellectual Property Rights held by any third party.
(b) Investment Representation. Wildform acknowledges that it is aware
that the Payment Shares have not been registered under the Act.
Wildform represents and warrants to the Buyer that such Wildform is
acquiring the Payment Shares for investment purposes and not with a
view to or for sale in connection with any distribution thereof or
with any present intention of selling the Payment Shares in
connection with a distribution. Wildform has the capacity to protect
its own interest, can bear the economic risk of its investment, and
has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of the
investment in the Payment Shares. Wildform acknowledges that an
investment in the Payment Shares represents a high degree of risk
and that there is no assurance that Buyer's business or operations
will be successful. Wildform has considered carefully the risks
attendant to an investment in the Payment Shares and acknowledges
that, as a consequence of such risks, such Wildform could lose its
entire investment in the Payment Shares. Wildform acknowledges that,
at a reasonable time prior to the Effective Date, Buyer furnished to
it the information specified in paragraph (b)2(ii)(A) or (B) of, and
in either event the information specified in paragraph (b)(2)(ii)(C)
of, Rule 502 promulgated under Exchange Act.
(c) Restricted Securities. Wildform understands that the Payment Shares
will be "restricted securities" under applicable federal securities
laws and the rules of the Securities and Exchange Commission
promulgated thereunder. Wildform acknowledges that it may dispose of
the Payment Shares only pursuant to an effective registration
statement under the Act or an exception from registration if
available. Wildform further understands that, except as provided in
the Registration Rights Agreement (as defined below), Buyer has no
obligation to register the sale of the Payment Shares or take any
other action so as to permit sales pursuant to the Act. Wildform
further understands that applicable state securities laws may impose
additional constraints upon the sale of securities
6.3 No Warranty. EXCEPT AS PROVIDED IN SUBSECTIONS 6.1 AND 6.2 ABOVE, THE
DELIVERABLES AND INCORPORATED TECHNOLOGY ARE PROVIDED "AS-IS" WITHOUT WARRANTY
OF ANY KIND AND BOTH PARTIES EXPRESSLY AGREE AND ACKNOWLEDGE THAT THE
DELIVERABLES AND INCORPORATED TECHNOLOGY ARE BEING PROVIDED WITHOUT ANY
REPRESENTATIONS, WARRANTIES OR CONDITIONS WHETHER EXPRESS, IMPLIED, STATUTORY,
ARISING OUT OF A COURSE OF DEALING OR USAGE OF TRADE OR OTHERWISE INCLUDING, BUT
NOT LIMITED TO, ANY IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY,
MERCHANTABLE QUALITY, FITNESS OR ADEQUACY FOR ANY PARTICULAR PURPOSE OR USE,
QUALITY, PRODUCTIVENESS, CAPACITY, OR THAT THE OPERATION OF THE DELIVERABLES OR
INCORPORTED TECHNOLOGY WILL BE ERROR-FREE. NO ORAL OR WRITTEN INFORMATION OR
ADVICE GIVEN BY A PARTY, ITS DIRECTORS, OFFICERS, EMPLOYEES, LICENSORS,
SUPPLIERS, AGENTS, OR TO ANYONE ELSE WHO HAS BEEN INVOLVED IN THE CREATION,
PRODUCTION, LICENSING, SUBLICENSING, SUPPLY OR DELIVERY OF THE DELIVERABLES OR
INCORPORATED TECHNOLOGY WILL CREATE A REPRESENTATION, CONDITION, OR WARRANTY AND
NEITHER PARTY MAY NOT RELY ON SUCH INFORMATION OR ADVICE.
ARTICLE VII
INTELLECTUAL PROPERTY RIGHTS
7.1 The Incorporated Technology Works shall be the sole property of On2,
and all right, title and interest therein shall vest solely in On2 and shall be
deemed to be a work made for hire. To the extent that title to any of the
Incorporated Technology Works may not, by operation of law, vest in On2 or such
works may not be considered works made for hire, Wildform hereby irrevocably
assigns to On2 all rights, title and interest in and to such works. All
Incorporated Technology Works shall belong exclusively to On2, which shall have
the right to obtain and to hold in its own name, copyrights, registrations,
patents, or such other protection as may be appropriate to the subject matter,
and any extensions and renewals thereof. Wildform agrees to give On2 and any
person designated by On2 such reasonable assistance, at On2's expense, as is On2
reasonably deems appropriate to perfect, secure, and protect On2's intellectual
property and other rights set forth in this paragraph. Notwithstanding the
foregoing, Wildform shall retain its existing right, title and interest in and
to the Licensed Assets, subject to On2's rights to use such intellectual
property pursuant to the Asset Purchase Agreement.
7.2 On2 Intellectual Property. Wildform acknowledges that On2 retains all
right, title, and interest in and to the Incorporated Technology and the
Incorporated Technologies Works, and in all copies thereof, and no title to the
Incorporated Technology or other rights therein are transferred to Wildform by
virtue of this Agreement other than as explicitly stated herein or reasonably
necessary to accomplish the purposes hereof. 7.3 Wildform Intellectual Property.
Except for Purchased Assets (as defined in the Asset Purchase Agreement) and
Incorporated Technology Works and subject to On2's license rights to the
Licensed Assets, Wildform shall retain all right, title and interest in and to
the Deliverables, excluding the Incorporated Technology.
7.4 Restrictions. Wildform agrees not to cause or permit the porting,
reverse engineering, reverse assembly or reverse compilation of any object code
software provided to Wildform by On2 pursuant to this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 On2's Indemnification of Wildform. On2 agrees to defend, indemnify and
hold harmless Wildform, its officers, directors, employees, agents and customers
from and against any claim, action, damage or costs (including reasonable
attorneys fees) based on any breach by On2 of Sections 5, 6 or 7 of this
Agreement provided that: (i) On2 is promptly notified in writing of such claim
or action, (ii) Wildform grants On2 sole control of the defense and any related
settlement negotiations, and (iii) Wildform reasonably cooperates with On2 in
defense of such claim.
8.2 Wildform's Indemnification of On2. Wildform agrees to defend,
indemnify and hold harmless On2 from and against any claim, action, damage or
costs (including reasonable attorneys fees) (other than an action or claim which
is subject to On2's indemnification of Wildform pursuant to Section 8.1 above)
based on any breach by Wildform of Sections 5, 6 or 7 of this Agreement,
provided that: (i) Wildform is promptly notified in writing of such claim or
action, (ii) On2 grants Wildform sole control of the defense and any related
settlement negotiations, and (iii) On2 reasonably cooperates with Wildform in
defense of such claim.
ARTICLE IX
TERM AND TERMINATION
9.1 Term. Except as otherwise set forth in Sections 9.2 and 9.3 or Exhibit
A hereof, the term of this Agreement shall be eighteen (18) months ("Term").
9.2 Termination. Either of Wildform or On2 may terminate this Agreement if
the other Party is in material breach of this Agreement and fails to cure such
breach within thirty (30) days after written notice. Either of On2 or Wildform
may terminate this Agreement if the other Party becomes bankrupt or a receiver
is appointed for a substantial part of its assets or business, or any order is
made approving a petition or answer seeking reorganization under any applicable
bankruptcy law.
9.3 Events Upon Termination. Upon the termination of this Agreement by
either Party on account of an uncured material breach by the other Party,
without prejudice to any other rights that either Party may have, the following
will occur:
(a) Wildform will immediately cease all use and distribution of the Incorporated
Technology.
(b) Wildform will immediately return to On2, or destroy, all copies of the
Incorporated Technology, and all documentation created under this agreement in
its possession or control. Upon written request from On2, Wildform will promptly
provide On2 with a written certification of Wildform's compliance with the
foregoing.
9.4 Sections which Survive Termination or Expiration of this Agreement.
Articles 1, 4 (with respect to outstanding payments), 5, 6, 7, 8, 9 and 10 of
this Agreement, any other provisions of this Agreement incorporated into or
applicable to such Sections, and any other provisions of this Agreement that by
their terms extend beyond any termination of this Agreement, shall survive any
termination or expiration hereof for any reason.
ARTICLE X
OTHER PROVISIONS
10.1 Status of Parties. Nothing contained in this Agreement nor
performance hereunder shall render either Party, its employees or contractors to
be an agent, employee, joint venturer or partner of the other Party. Neither
Party, nor any of its officers or employees shall have authority to contract for
or bind the other Party in any manner, and each Party agrees that it shall not
represent itself as an agent of the other Party or as otherwise authorized to
act for or on behalf of the other Party.
10.2 Force Majeure. Any failure by either Party to perform, to the extent
and only for so long as such Party is prevented from performing for one or more
of the reasons described herein, any obligation hereunder arising under or in
connection with this Agreement shall be excused (to such extent and for such
period) if such failure shall have been caused by any act or circumstance beyond
the reasonable control of such Party, including, but without limiting the
generality of the foregoing, any Act of God, fire, flood, explosion, lightning,
windstorm, earthquake, general shortage of materials, general discontinuation of
power supply, court order or governmental interference, civil commotion, riot,
war, strike, labor disturbances, transportation difficulties or labor shortages.
10.3 Notice. All notice and other communications required or permitted to
be given under this Agreement must be in writing and will be effective when
delivered personally, via overnight courier, or sent by facsimile later
confirmed by overnight courier, or sent by registered mail, postage prepaid and
addressed to the parties at their respective addresses set forth in the first
paragraph of this Agreement, or at any new address or addresses subsequently
designated in writing by either party to the other.
10.5 Severability of Agreement Provisions. It is the desire and intent of
the parties that the provisions contained in this Agreement shall be enforceable
to the fullest extent permitted by law. The invalidity and/or unenforceability
in whole or in part of any provision of this Agreement shall not render invalid
or unenforceable any other provision of this Agreement, which instead will
remain in full force and effect.
10.6 Entire Agreement. This Agreement constitutes the entire understanding
between the parties regarding to specific subject matter covered herein. This
Agreement supersedes any and all prior written or verbal contracts or
understandings between the parties hereto and neither party shall be bound by
any statements or representations made by either party not embodied in this
Agreement. No provisions herein contained shall be waived, modified or altered,
except by an instrument in writing, duly executed by the parties hereto.
10.7 Governing Law; Forum. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule whether such
provision or rule is that of the State of New York or any other jurisdiction.
10.8 Dispute Resolution. Disputes arising in connection with this
Agreement shall be resolved as follows:
(a) General Intent. The parties intend that all problems and disputes
relating to this Agreement or arising from the transactions contemplated hereby
("Disputes") shall be resolved through the procedures of this Section 10.8;
provided, however, that neither party shall be under any obligation to proceed
in accordance with this Section 10.8 with respect to Disputes concerning any
alleged breach of Article V of this Agreement, as to which a party may take any
legal action in a court of law or equity (without the necessity of posting any
bond) to assert or enforce a claim that it has against the other party under
this Agreement. The procedures in this Section 10.8 shall not replace or
supersede any other remedy to which a party is entitled under this Agreement or
under applicable law.
(b) Informal Resolution Efforts. The parties shall initially attempt to
resolve Disputes through informal negotiations conducted by the Primary
Coordinator of Wildform and Primary Coordinator of On2.
(c) Mediation. If a Dispute cannot be resolved under Subsection 10.8(b)
above, the Dispute shall be submitted to mediation by written notice of the
party seeking mediation to the other party. In the mediation process, the
parties shall attempt in good faith to resolve their differences voluntarily
with the aid of an impartial mediator, who will attempt to facilitate
negotiations. The mediator shall be selected by agreement of the parties. If the
parties cannot agree on a mediator, the American Arbitration Association or JAMS
shall designate a mediator at the request of either party. Any mediator so
designated must be acceptable to both parties. The mediation shall be
confidential, and the mediator may not testify for either party in any later
proceeding relating to the Dispute. Each party shall bear its own costs in the
mediation. The fees and expenses of the mediator shall be shared equally by the
parties.
(d) Court Actions. If the parties cannot resolve a Dispute through
mediation pursuant to Subsection 10.8(c) above, either party may seek further
redress by taking legal action in a court of law or equity to assert or enforce
a claim that it has against the other party under this Agreement. The parties
agree that any legal action, suit or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby shall be instituted by a
party in a Federal or state court sitting in the jurisdiction and venue of the
other party, which shall be the exclusive jurisdiction and venue of said legal
proceedings and each party hereto waives any objection which such party may now
or hereafter have to the laying of venue of any such action, suit or proceeding,
and irrevocably submits to the jurisdiction of any such court in any such
action, suit or proceeding. Any and all service of process and any other notice
in any such action, suit or proceeding shall be effective against such party (or
the subsidiary of such party) when transmitted in accordance with Section 10.8.
Nothing contained herein shall be deemed to affect the right of any party hereto
to serve process in any manner permitted by law.
10.9 No Implied Waivers. No delay or omission by either party to exercise
its rights and remedies in connection with the breach or default of the other
shall operate as or be construed as a waiver of such rights or remedies as to
any subsequent breach.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, but all counterparts hereof shall together constitute but one
agreement.
10.11 Assignment. Neither party will have the right to assign, pledge or
transfer all or any part of this Agreement without the prior written consent of
the other, and any such purported assignment, pledge or transfer by a party
without such prior written consent shall be void ab initio; provided, however,
that either party may assign all or part of its rights and obligations under
this Agreement in connection with a Change of Control (as defined in the Asset
Purchase Agreement). In the event of an assignment pursuant to the proviso
contained in the preceding sentence, the surviving entity shall be bound to this
Agreement in place of such assigning party and this Agreement shall inure to the
benefit of such surviving entity.
10.12 Capacity. Each party represents one to the other that it is under no
incapacity to enter into or perform this Agreement and that each person signing
this Agreement on its behalf has the authority to do so, and each shall never
otherwise assert.
10.13 Captions, Gender and Number. The captions appearing in this
Agreement are inserted only as a matter of convenience and for reference and in
no way define, limit or describe the scope and intent of this Agreement or any
of the provisions hereof.
10.14 UN Convention Does Not Apply. The United Nations Convention on
Contracts for the Sale of Goods shall not apply to this Agreement and any
products and/or services provided pursuant thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Transition
Services Agreement to be executed the Effective Date.
On2 Technologies, Inc Wildform, Inc.
By: By:
--------------------------------- -----------------------------
Name: Name:
Title: Title:
Exhibit A
Transition Services
1. Program Errors. On2 shall promptly report to Wildform any Program Errors
accompanied by documentary evidence in a mutually agreeable form that permits
the defect or error to be reproduced. During the first twelve (12) months of the
Term, Wildform shall use commercially reasonable efforts to correct Program
Errors within the response times set forth below. For purposes of the response
times set forth below a "Serious" Program Error shall be defined as a Program
Error that (a) causes the Deliverables to crash (malfunction), or (b)
substantially degrades the performance, usability or appearance of the
Deliverables. A "Minor" Program Error shall be defined as a bug that causes a
less than substantial degradation in the performance, usability or appearance of
the Deliverables.
Program Error Response Correction
------------- -------- ----------
Serious Within 1 business day Within 8 business days
Minor Within 4 business days Within 15 business days
Failure by Wildform to provide a correction for a Program Error within the
specified period shall not be deemed a breach of this Agreement provided that
Wildform has used commercially reasonable efforts to correct such Program Error.
Wildform shall not be required to provide corrections for defects in or
conflicts with products developed by other companies, including On2, Macromedia
and Microsoft provided that such defect or conflict cannot reasonably be
corrected except through modification of the product of such other companies. If
a Deliverable, including the Macromedia Flash Player that is shipped with the
Deliverable, does not exhibit the Program Error, then no Program Error shall be
deemed to exist.
2. Deliverable Support During the first twelve (12) months of the Term, Wildform
will provide On2 with reasonable technical support for the Deliverables via
phone and email during Wildform's normal business hours with respect to the
following:
o Train On2 personnel in the way the code works.
o Train On2 personnel in how the software is designed, maintained and
compiled.
o Provide ongoing support during the 12-month term for On2's further
development and integration.
The foregoing obligations of Wildform shall be limited to a maximum of forty
(40) hours, or up to a maximum of two hundred twenty (220) emails, whichever
accumulates first.
3. Customer Technical Support email During the first twelve (12) months of the
Term, Wildform will provide On2 via email during Wildform's normal business
hours reasonable technical support for customer technical support questions
received by On2 as follows:
o During the first thirty (30) days of the Term, Wildform will
continue to respond to customer technical support email questions
via email. The foregoing support will be provided as follows: (i)
customer shall be directed to send technical support emails will be
sent to On2; (ii) On2 shall forward such emails to Wildform; (iii)
Wildform shall respond to On2 within 24 hours, except for holidays
and weekends; and (iv) On2 will, in turn, respond to the customer.
o For the remaining eleven (11) months of the Term, On2 may send
customer technical support inquiries via email to Wildform and
Wildform shall respond within 48 hours, except for holidays and
weekends.
o During the first twelve (12) months of the Term, Wildform agrees to
forward to On2 Flix related customer technical support emails
received by Wildform from customers who have purchased the software
from On2 after the Closing. Failure by Wildform to forward these
emails shall not be deemed to be a breach of this Agreement.
The foregoing obligations of Wildform, following the initial thirty (30) day
period, shall be limited to a maximum of thirty (30) hours, or up to a maximum
of two hundred (200) emails, whichever accumulates first.
4. Customer Pre-Purchase Inquiries During the first twelve (12) months of the
Term, Wildform will provide On2 via email during Wildform's normal business
hours reasonable technical support for customer pre-purchase inquiries received
by On2, including the following:
o During the first thirty (30) days of the Term, Wildform will respond
to customer pre-purchase email inquiries. The foregoing support will
be provided as follows: (i) customer shall be directed to send
technical support emails will be sent to On2; (ii) On2 shall forward
such emails to Wildform; (iii) Wildform shall respond to On2 within
24 hours, except for holidays and weekends; and (iv) On2 will, in
turn, respond to the customer.
o For the remaining eleven (11) months of the Term, On2 may send
customer pre-purchase inquiries via email to Wildform and Wildform
shall respond within 48 hours, except for holidays and weekends.
The foregoing obligations of Wildform, following the initial 30 day period,
shall be limited to a maximum of twenty (20) hours, or up to a maximum of one
hundred twenty five (125) emails, whichever accumulates first.
5. PR & Marketing During the first twelve (12) months of the Term (except as
expressly noted below), Wildform will provide On2, via phone and email during
Wildform's normal business hours, reasonable marketing support for the
following:
i) Guide the execution of the On2 Flash 8 Flix product launch:
a. Provide On2 with the press list for approximately 300 leading
tech publications and press, as well as Flash and video
evangelists and web sites to publish news of launch and/or do
product reviews. On2 shall contact these people directly.
b. Assist On2 with doing follow up contact with press to ensure
maximum press coverage, and issue review copies of software
with Wildform's assistance.
c. Write first draft press releases for product releases. (All
subsequent drafts shall be written by On2, with Wildform
providing input as requested on subsequent drafts.)
d. Create digital banners, buttons and product screenshots (based
on existing Flix artwork) announcing On2's next version of
Flix for distribution to sites, and press that request them.
Such digital banners shall be based on the existing artwork
used by Wildform in the marketing of the Flix product line.
Wildform shall not be responsible for creating any new logos,
or other artwork requested by On2 which Wildform does not
already possess. Any additional expenses for additional logos
or artwork shall be borne by On2.
ii) Wildform will provide the following marketing and promotion of the
new Flix products:
a. Within 10 business days of closing publish one (1) issue of
the Wildform newsletter featuring the news of On2's purchase
of Wildform's Flix assets and instructions to Wildform
customers on how and where to buy the new On2 Flix products.
On2 shall provide the text for these mailings up to 150 words,
subject to Wildform's approval, not to be unreasonably
withheld.
b. Announce in one (1) issue of the Wildform newsletter the
launch of On2's next version of Flix with introductory upgrade
offer to Wildform customers per approval of On2's marketing
department. This issue will come out after the release of Flix
5 with Flash 8 codec. On2 shall provide the text for these
mailings up to 150 words, subject to Wildform's approval, not
to be unreasonably withheld.
c. On2 Flix advertisement in 2 consecutive issues of Wildform's
newsletter. On2 shall provide the text for these mailings up
to 150 words, subject to Wildform's approval, not to be
unreasonably withheld.
d. In addition to a.-c. above, two (2) dedicated On2 branded
mailings during the 12 months following closing to Wildform
Flix customers who have opted to receive email from Wildform.
On2 shall provide the text for these mailings up to 150 words,
subject to Wildform's approval, not to be unreasonably
withheld.
e. In the event that Flash 8 is released later than 11 months
following closing and the release of the On2 version of Flix
is delayed as a result of this, Wildform will do the dedicated
mailings and newsletter promotions after the 12 month period
for no additional fee, provided that Wildform will have no
obligation to do any mailings or promotions later than 18
months following closing.
f. Wildform represents that as of April 1, 2005, its newsletter
list consists of approximately seventy thousand (70,000) email
addresses.
ii) Wildform will perform the following marketing services for On2:
a. Search Engine Optimization -Assist On2 personnel in optimizing
the newly updated Flix product pages based on current
keywords. - Assist On2 personnel with initial submission of
new product pages to search engines.
b. Google AdWords sponsored links program
o Delivery of sponsored links advertising data history for
Flix, including keywords, and knowledge of how to best
manage the paid links as well as providing the current
most effective keywords for selling Flix via Google
AdWords.
c. Bring On2 Marketing people up to speed on Internet marketing
for Flix:
- How to best to attract traffic to the Flix web site.
- Strategies for up-selling to current Flix customers.
- How to optimize site for search engines
- How to manage sponsored links
- Strategies for online advertising and marketing
- How to market to Flix customers via a newsletter.
- How to run a newsletter.
It shall be On2's responsibility and On2 shall ensure that On2 has personnel
capable of understanding and executing software marketing.
The foregoing obligations of Wildform shall be limited to a maximum of forty
five (45) hours, or up to a maximum of three hundred (300) emails, whichever
accumulates first.
6. Wildform will establish and maintain the following presence on
xxx.xxxxxxxx.xxx site (18-month Time Period):
a) During first 30 days following closing:
* Conversion of xxx.xxxxxxxx.xxx/xxxx, the Flix main page, to explain On2's
purchase of Flix, with links to On2's site (e.g. On2's main Flix
information page, and shopping cart) as well as explanation to current
Wildform Flix on how to download their license and get continued support.
* Link to xxx.xxxxxxxx.xxx/xxxx in the well of Wildform's front page no
smaller than 150x75 pixels
* Link to xxx.xxxxxxxx.xxx/xxxx in the product drop down menu of main
navigation bar.
* Link to xxx.xxxxxxxx.xxx/xxxx in the main product navigation menu
* Link to xxx.xxxxxxxx.xxx/xxxx on xxx.xxxxxxxx.xxx/xxxxxxxx
* Link to xxx.xxxxxxxx.xxx/xxxx on xxx.xxxxxxxx.xxx/xxxxx
b) For first 90 days after closing:
* Link to xxx.xxxxxxxx.xxx/xxxx in the product drop down menu of main
navigation bar. Should Wildform cease to use drop-down menus this may be
removed without penalty provided that a link to the Flix product will be
included in the Wildform product navigation that replaces the old version.
* Link to xxx.xxxxxxxx.xxx/xxxx in the main product navigation menu. Should
Wildform cease to use main product navigation menus this may be removed
without penalty provided that a link to the Flix product page will be
included in the Wildform product navigation that replaces the old version.
.
* Continued presence of xxx.xxxxxxxx.xxx/xxxx, the Flix main page, to
explain On2's purchase of Flix, with links to On2's site (e.g. On2's main
Flix information page, and shopping cart).
c) Months 4-12 after closing:
* Link to xxx.xxxxxxxx.xxx/xxxx in the product drop down menu of main
navigation bar. Should Wildform cease to use drop-down menus Wildform may
substitute a link to xxx.xxxxxxxx.xxx/xxxx in the main product navigation
menu. Should Wildform cease to use main product navigation menus this may
be removed without penalty provided that a link to the Flix product page
will be included in the Wildform product navigation that replaces the old
version.
* Continued presence of xxx.xxxxxxxx.xxx/xxxx, the Flix main page, to
explain On2's purchase of Flix, with links to On2's site (e.g. On2's main
Flix information page, and shopping cart).
d) Months 13-18:
* Continued presence of xxx.xxxxxxxx.xxx/xxxx, the Flix main page, to
explain On2's purchase of Flix, with links to On2's site (e.g. On2's main
Flix information page, and shopping cart).
7. Website front end
a. Wildform will deliver the following:
-All relevant Flix product web pages (approximately 25) and
content, including product pages, sample videos and faq's
(based on existing artwork).
-All Flix digital graphics including existing Flix sample videos,
logos, banners, buttons, screenshots and other Flix-related
artwork (based on existing artwork).
-All Wildform Flix tutorials (approximately 35) for On2's
non-exclusive use. Should any tutorial author request that On2
remove the tutorial from On2's website, On2 shall comply with
such request.
-All of the following additional resource sections of Wildform's
site: "Wildform in advertising", Wildform in CDRoms", and
"Wildform in Email" for On2's nonexclusive use.
b. Wildform will provide On2, via phone and email during Wildform's
normal business hours, reasonable support for the website front end
deliverables.
It shall be On2's responsibility and On2 shall ensure that On2 has personnel
capable of understanding, supporting and maintaining websites and all website
materials provided by Wildform.
8. Website Back End
a. Wildform will deliver the following pursuant to the Asset Purchase
Agreement, which shall govern On2's use of the following:
- shopping cart system and pages.
- affiliate system, which includes ability to add affiliates,
and track affiliate sales.
- promotion code system that lets you create and track
promotions.
- administrative system that handles:
o software license generation
o automated customer emails
- ecommerce transactions
- banned email address check
- credit card hash check
- Whois queries.
- Ability to generate free licenses of Flix
- Ability to search through all issued licenses
- Serial code generator
- Ability to issue invoices
- Ability to automatically email customers once they install a
demo of Flix
- E-commerce fraud detection tips
- Email list of over 22,000 email addresses from free email
providers and bad customers
Wildform shall deliver the website front end and website back end
electronically. Ensuring that the website works with On2's own merchant account
and databases shall be On2's responsibility and On2 shall ensure that On2 has
personnel capable of handling this transition.
During the first twelve (12) months of the Term, Wildform will provide On2, via
phone and email during Wildform's normal business hours, reasonable support for
the website front end deliverables. The foregoing obligations of Wildform, shall
be limited to a maximum of forty (40) hours, or up to a maximum of two hundred
twenty (220) emails, whichever accumulates first.
Wildform shall deliver the deliverables listed in paragraphs 7 and 8 of this
exhibit and shall provide reasonable support for On2's use of these
deliverables. However, it is On2's responsibility to ensure that On2 has
personnel capable of handling this transition with all requisite skillsets
including C++ programming, Linux, PHP, MYSQL, HTML etc. It is not Wildform's
responsibility to instruct On2 staff in the basic functioning of computer
systems and languages, nor is it Wildform's responsibility to maintain the
deliverables once they have been delivered, except as specifically set forth
herein.
In the event that Flash 8 is released later than 11 months following closing and
the release of the On2 version of Flix is delayed as a result of this On2 can
elect to have Wildform perform whatever PR and marketing services cannot be
performed until immediately prior to the launch of the On2 version of Flix
(other than the above referenced marketing emails and reduced website presence
that Wildform will provide at no additional cost) for a one-time cash payment of
$100,000, provided, however that Wildform shall have no obligation to perform
any services beyond the 18 month anniversary of the closing.
Exhibit B
Deliverables
A. Deliverable #1 (source code for each to be delivered electronically after the
Closing Date, subject to payment of the Closing Payment.):
o Flix Pro 4 for Windows:
o Flix Pro 4 for Windows Demo:
o Flix Pro 3 for Mac:
o Flix Pro 3 for Mac Demo:
o Flix Engine 3.5 for Windows:
o Flix Engine 3.5 for Windows Demo:
o Flix Exporter 4 for Windows (including Flix FLV player):
o Flix Exporter 4 for Windows Demo (including Flix FLV player):
o Flix Exporter 4 for Mac (including Flix FLV player):
o Flix Exporter 4 for Mac Demo (including Flix FLV player):
o Flix Lite 3 for Windows:
o Flix Lite 3 for Windows Demo:
o Flix Lite 3 for Mac:
o Flix Lite 3 for Mac Demo:
o Flix Pro Power Players
B. Deliverable #2 (source code for each to be delivered according to the
following schedule (the start date shall be after On2 has delivered to Wildform
the new Flash 8 video codec with the required Flash 8 player and player
specification (the "Flash 8 Materials"). The Deliverables shall be provided to
On2 in electronic form and in the order shown below.
o Flix Pro Power Players
Change branding from Wildform to On2.
Delivery within 10 days.
o Flix Pro 5 for Windows
Which shall be comprised of Flix Pro 4 for Windows with the On2
branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 30 days.
o Flix Pro 5 for Windows Demo
Which shall be comprised of Flix Pro 4 for Windows Demo with the On2
branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 30 days.
o Flix Engine 5 for Windows
Which shall be comprised of Flix Engine 3.5 for Windows with the On2
branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 60 days.
o Flix Engine 5 for Windows Demo
Which shall be comprised of Flix Engine 3.5 for Windows Demo with the
On2 branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 60 days.
o Flix Pro 5 for Mac
Which shall be comprised of Flix Pro 3 for Mac with the On2 branding
and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 90 days.
o Flix Pro 5 for Mac Demo
Which shall be comprised of Flix Pro 3 for Mac Demo with the On2
branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 90 days.
o Flix Exporter 5 for Windows (including Flix FLV player)
Which shall be comprised of Flix Exporter 4 for Windows with the On2
branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 90 days.
o Flix Exporter 5 for Windows Demo (including Flix FLV player)
Which shall be comprised of Flix Exporter 4 for Windows Demo with the
On2 branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 90 days.
o Flix Exporter 5 for Mac (including Flix FLV player)
Which shall be comprised of Flix Exporter 4 for Mac with the On2
branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 120 days.
o Flix Exporter 5 for Mac Demo (including Flix FLV player)
Which shall be comprised of Flix Exporter 4 for Mac Demo with the On2
branding and addition of the new On2 Flash 8 codec. Update help file.
Change branding from Wildform to On2.
Delivery within 120 days.
o Flix Lite 5 for Windows
Which shall be comprised of Flix Lite 3 for Windows with the On2
branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 120 days.
o Flix Lite 5 for Windows Demo
Which shall be comprised of Flix Lite 3 for Windows Demo with the On2
branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 120 days.
o Flix Lite 5 for Mac
Which shall be comprised of Flix Lite 3 for Mac with the addition of
the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
Delivery within 150 days.
o Flix Lite 5 for Mac Demo
Which shall be comprised of Flix Lite 3 for Mac Demo with the On2
branding and addition of the new On2 Flash 8 codec.
Update help file.
Change branding from Wildform to On2.
. Delivery within 150 days.
Aside from the addition of the On2 Flash 8 codec, no other features shall be
added to the above listed Deliverables.
Delayed delivery by Wildform of the above listed Deliverables shall not be
considered a violation of this Agreement, provided that Wildform has worked in
good faith to provide the Deliverables in a timely fashion, provided however,
that failure to deliver (a) the Flix Pro Windows Deliverables prior to the
91-day anniversary of delivery of the Flash 8 Materials to Wildform or (ii) all
of the Deliverables prior to the 270-day anniversary of the delivery of the
Flash 8 Materials to Wildform, shall be considered a violation of this
Agreement..
It shall be On2's responsibility and On2 shall ensure that On2 has personnel
capable of understanding, supporting and maintaining the software source code
provided by Wildform pursuant to Deliverables #1 and #2.
