Exhibit 10.64
SERVICE AGREEMENT
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This agreement (the "Service Agreement"), dated October 31, 2001 is by and
between Vertical Computer Systems, Inc., 0000 Xxxxxxxx Xxxx, Xxx Xxxxxxx, XX
00000, ("Vertical") and Xxxxxx Xxxxxx, a Texas resident, 000 Xxxxxxx Xxxxx,
Xxxxxxxx Xxxxxxx, Xxxxx 78620,("Xxxxxx").
WHEREAS Vertical agreed to purchase from Paradigm Sales, Inc., 000 Xxxxx Xxxxx,
0xx Xxxxx, Xxx Xxxxxxx, XX 00000, ("Paradigm") certain property of Adhesive
Software (the "Property"), a Texas corporation, which Paradigm intends to
acquire through bank foreclosure sale by Silicon Valley Bank (the "Bank"),
pursuant to the terms and conditions set forth in the Asset Purchase Agreement,
dated October 31, 2001.
The parties hereby agree as follows:
1. Xxxxxx shall facilitate the sale and transfer of the Property to Vertical and
shall cooperate with Vertical as reasonably necessary with respect thereto.
2. Subject to the terms and conditions contained herein, Vertical will execute a
Promissory Note, attached hereto as Exhibit A, and the Asset Pledge Agreement,
attached hereto as Exhibit B, each of which is incorporated herein by this
reference. Xxxxxx acknowledges and agrees that the terms of this Service
Agreement, including, without limitation, the indemnity provisions contained
herein, and the effectiveness of the Promissory Note and the Asset Pledge
Agreement are expressly conditioned upon (a) the effective transfer of all
right, title and interest in and to the Property free and clear of any and all
license, claims or encumbrances by Paradigm to Vertical no later than November
7, 2001, pursuant to the terms of the Asset Purchase Agreement, and (b) the
effective termination of any financial obligation by Enfacet, Inc. to Adhesive
Software, or Paradigm, as the case may be. In the event that all right, title,
and interest in and to the Property is not transferred to Vertical free and
clear of any and all license, claims or encumbrances by November 7, 2001,
Vertical's obligations pursuant to this Service Agreement and the Promissory
Note and the Asset Pledge Agreement shall be null and void and Vertical shall
have no obligations with respect thereto.
3. Both parties acknowledge and agree that the monies paid to Xxxxxx are to be
paid to the IRS for a payroll penalty concerning Adhesive Software for which
Xxxxxx may be liable. In the event that Xxxxxx negotiates a lower amount than
$280,000 with the IRS pursuant to any settlement agreement, Vertical and Xxxxxx
agree to cancel the current Promissory Note and execute a new promissory note
consistent with the terms of such settlement, including without limitation, the
total amount due to the IRS and any installment plan. Any amounts paid to Xxxxxx
pursuant to the Promissory Note shall be credited and /or applied to any new
promissory note executed by the parties pursuant to this paragraph.
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4. Furthermore, Xxxxxx acknowledges and agrees that in the event that the monies
paid pursuant to the Promissory Note are not paid in settlement of the IRS debt,
that the Asset Pledge Agreement shall be deemed void and ineffective and
Vertical shall have all right, title and interest in and to the Siteflash
Technology and Xxxxxx shall have no interest of any kind whatsoever with respect
thereto.
5. Subject to the terms and conditions set forth in Paragraph 2 above, Vertical
shall indemnify, defend and hold Xxxxxx, harmless against loss, damage or
expense incurred by Xxxxxx as a result of any claims, actions, or proceeding
brought by the IRS arising from Xxxxxx'x share of the claims involving Adhesive
Software as such claims relate to Enfacet, Inc. up to an amount not to exceed
Two Hundred Thousand Eighty Thousand dollars ($280,000.00), provided, however,
that (i) Xxxxxx shall give Vertical prompt written notice of any such claim,
demand, suit or action; (ii) Xxxxxx fully cooperates with said defense by
complying with Vertical's reasonable instructions and requests to Xxxxxx in
connection with said defense; and (iii) Vertical shall have sole and absolute
control of the defense of such claim, suit, demand, or action and the settlement
or compromise thereof. Vertical will indemnify Xxxxxx against his reasonable
attorney's fees and costs awarded in respect of any such claims and any suit
raising any such claims in addition to $280,000.00.
6. Unless otherwise specified, all notices or other communications required
herein must be in writing and will be deemed to have been duly served if hand
delivered, sent by first class mail postage prepaid and properly addressed,
return receipt requested, or sent by overnight delivery. Notices shall be
delivered to the address of each party as set forth above or as otherwise
designated by the respective party, as the case may be. All notices to Xxxxxx
shall addressed to to Xxxxxx Xxxxxx at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx,
XX 00000.
7. The parties will execute and deliver such other and further instruments and
documents as are or may become necessary or convenient to effectuate and carry
out the rights, responsibilities, and obligations created by this Service
Agreement, including, without limitation UCC-1 and United States Patent and
Trademark Office documents.
8. If any material provision of the Service Agreement is determined to be
invalid, inoperative, unenforceable or illegal by operation of law, regulation,
judgment or otherwise, then such provision will be deemed to be superseded and
the Service Agreement modified with a provision which most nearly corresponds to
the intent of the parties and is valid, enforceable and legal.
9. This Service Agreement does not constitute and may not be construed as
creating or constituting a partnership or joint venture between the parties.
Neither party may obligate or bind the other party in any manner whatsoever
except as expressly provided herein.
10. This Service Agreement shall be governed by and construed in accordance with
the laws of the State of California and subject to the jurisdiction and venue of
the state and federal courts of the county of Los Angeles in the state of
California .
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11. If any action at law or in equity is brought to enforce or interpret the
provisions of this Agreement, the prevailing party in such action shall be
entitled to reasonable attorneys' fees, court costs and expenses.
12. This Service Agreement constitutes the sole understanding of the parties
about the subject matter hereof and may not be amended or modified except in
writing signed by authorized representatives of each of the parties to the
Service Agreement.
ACCEPTED TO AND AGREED:
_____________________________
Xxxxxxx Xxxx, President
Vertical Computer Systems, Inc.
_____________________________
Xxxxxx Xxxxxx
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