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Exhibit 10.12
WEB SITE DESIGN AND SERVICE CONTRACT
This Agreement made as of the 15th day of September, 1999, by and
between Shore Venture Group L.L.C., a New Jersey Limited Liability Company,
having its principal offices at 00 Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000
(hereinafter "Shore Venture"), Xxxxxxxxxxxx.Xxx LLC, a Delaware Limited
Liability Company having its principal offices at 0000 Xxxxxxxxxx Xxxxx,
Xxxxxxxxxxx, XX 00000 (hereinafter "Authentidate") and BitWise Designs, Inc., a
Delaware corporation having its principal offices at 0000 Xxxxxxxxxx Xxxxx,
Xxxxxxxxxxx, XX 00000 (hereinafter "BitWise").
WITNESSETH
WHEREAS, Shore Venture is engaged in the business of designing and
maintaining sites and home pages for use in the Internet and World Wide Web and
in connection therewith develops certain software and related technology;
WHEREAS, BitWise is desirous of establishing a World Wide Web site for
its "Authentidate" business and desires to retain Shore Venture to design and
develop the Authentidate site;
WHEREAS, Shore Venture has been assisting BitWise in the design,
development, and implementation of the Authentidate site;
WHEREAS, BitWise has established Xxxxxxxxxxxx.Xxx LLC as a limited
liability company under the laws of the State of Delaware in order to operate
the Authentidate business and BitWise is the sole member of Xxxxxxxxxxxx.Xxx LLC
as of the date hereof;
WHEREAS, although there can be no assurance, it is the intention of
BitWise that Authentidate shall become a "public" company by way of a public
offering in the future; and
WHEREAS, the parties desire to enter into this Agreement (i) to provide
for the establishment of the Authentidate site, and (ii) establish the
consideration to Shore Venture for its services and for certain related matters.
NOW THEREFORE, having considered the foregoing premises, the mutual
promises and understandings contained herein and INTENDING TO BE LEGALLY BOUND
HEREBY, the parties hereby warrant and covenant as follows:
1. SERVICES PROVIDED BY THE PARTIES
a) Shore Venture shall design and develop the Authentidate
site in accordance with Exhibit "A" annexed hereto. The design
and development services include the design and development of
any and all computer software in order to insure that the
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Authentidate site performs in the manner contemplated by the
parties as outlined in Exhibit "A" annexed hereto. Without
limiting the foregoing, Shore Venture understands and agrees
that the Authentidate site will be required to (i) accept and
store e-mail from networks and personal computers throughout
the world and from different operating systems via the
Internet; (ii) allow for confirmation of acceptance of all
e-mails sent to the system; (iii) allow for a secure payment
system, including use of credit cards; and (iv) produce
confirmations of receipt of e-mail.
b) Shore Venture shall meet with personnel of BitWise from
time to time during the period of development to discuss the
status of design and development of the Authentidate site as
depicted in Exhibit "A".
c) Shore Venture shall use commercially reasonable efforts,
giving effect to its expertise in designing and developing web
sites, to complete the Authentidate site by September 30,
1999.
d) BitWise shall provide the support and services set forth on
Exhibit "A" in order to assist Shore Venture in the
performance of its duties hereunder.
2. OWNERSHIP OF TECHNOLOGY/TRADENAME
All software and related technology created by Shore Venture in
connection with the development of the Authentidate site shall be the property
of Authentidate. All work provided or created by Shore Venture in accordance
with this Agreement shall be deemed "work for hire" and shall remain the sole
property of Authentidate. Authentidate shall have all right, title and interest
in and to the tradenames "Authentidate" and "Xxxxxxxxxxxx.Xxx".
Neither Shore Venture nor BitWise, nor their respective personnel shall
file any patent application. All patent applications shall be filed by and
granted in the name of Xxxxxxxxxxxx.xxx LLC, provided, however, Shore Venture
shall be named as an "inventor". All employees, officers and directors of
Authentidate and BitWise shall assign all rights to any of the software and
technology to Xxxxxxxxxxxx.xxx LLC. Shore Venture shall assist Xxxxxxxxxxxx.xxx
LLC in the filing of any and all patent applications. Notwithstanding the
foregoing, in the event that BitWise or Xxxxxxxxxxxx.xxx LLC fails to make
payment to Shore Venture as required hereunder, Shore Venture shall have a lien
and security interest in any patents granted to Xxxxxxxxxxxx.xxx LLC with
respect to the Authentidate site.
3. COMPENSATION.
In consideration of the software development and all rights associated
thereto, BitWise shall compensate Shore Venture in the following manner:
a) BitWise has previously agreed to issue One Hundred Thousand
(100,000) common stock warrants at an exercise price of $.69 per share,
based upon the market price of the BitWise common stock on the date
that BitWise agreed to issue the warrants. The Warrants
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shall be issued in the name or names listed in Exhibit "B" as
determined by Shore Venture in its sole discretion and delivered within
five (5) days of execution of this Agreement. The warrants shall have
an exercise term of five (5) years from the date of grant and be
exchangeable into the underlying, unrestricted common stock of BitWise
or any successor thereof on a one for one basis at any time beginning
with date of issue and extending for a five (5) year period thereafter.
b) BitWise and Authentidate agree that Shore Venture shall receive a
guaranteed minimum of Two Hundred Thousand Dollars ($200,000) of
service fees related to enhancements to, and service of, the
Authentidate site during a one (1) year period commencing on September
30, 1999. Payment shall be made monthly in twelve (12) equal
installments. Shore Venture is to be in receipt of said installment
payments on or before the 15th of each corresponding month. Payment
shall be made to Shore Venture regardless of whether services or
enhancements are actually required to be made to the Authentidate site.
Shore Venture agrees that all service and enhancement requests shall be
made as promptly as possible and in good faith.
c) Within five (5) days of execution of this Agreement, BitWise shall
pay to Shore Venture the sum of Fifteen Thousand Dollars ($15,000)
representing payment in full of cash sums owed by BitWise to Shore
Venture for past design and development services provided by Shore
Venture for the Authentidate site as outlined in Exhibit "A".
d) BitWise shall also pay Shore Venture Forty Thousand Dollars
($40,000.00) for design and development of the fax portion of the
Authentidate site as outlined in Exhibit "C" annexed hereto. Said
payments are to be made according to the following schedule:
1. Within five (5) days of execution of this Agreement, an
initial cash payment of Twenty Thousand Dollars ($20,000.00).
2. Upon demonstration to BitWise and Xxxxxxxxxxxx.xxx LLC of
functionality of the fax portion of the Xxxxxxxxxxxx.xxx site
reasonably satisfactory to BitWise and Authentidate, an additional cash
payment of Ten Thousand Dollars ($10,000.00).
3. Within 10 days of demonstration of functionality of the fax
portion of the Authentidate site as provided in clause 2 above, an
additional cash payment of Ten Thousand Dollars ($10,000.00).
e) Shore Venture shall be deemed an equity owner of 7.5% of the
membership interests of Authentidate as of the date hereof.
Authentidate shall issue to Shore Venture membership interests
representing 7.5% of the outstanding membership interests as of the
date hereof. Shore Venture agrees to execute any such reasonable
subscription agreements or other documents as counsel to Authentidate
may require in order to issue the membership interests. In addition,
Shore Venture shall be required to execute a mutually agreeable
operating agreement governing the membership interests in Authentidate.
BitWise and/or Authentidate agree to provide written notice to Shore
Venture of the terms of all equity or other financing
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received by Authentidate within five (5) days of receipt of such
financing; it being understood and agreed by Shore Venture that nothing
contained in this Agreement shall be construed to provide Shore Venture
with any rights of first refusal with respect to such financing.
f) In the event that Xxxxxxxxxxxx.Xxx LLC has not, prior to March 31,
2001, entered into a bona fide and verifiable letter of
intent/engagement with an underwriter for an underwritten initial
public offering by Authentidate, then the membership interests of Shore
Venture in Authentidate set forth in clause e) above shall be
permitted, upon written request by Shore Venture, to be converted into
Common Stock of BitWise or any successor thereof. The rights granted to
Shore Venture in this clause f) shall be a one time option exercisable
on or before April 10, 2001. In order to determine the amount of
BitWise shares which may be issued to Shore Venture, the parties shall
determine the value of the ownership interest of Shore Venture in
Authentidate as follows.
1. The value of the ownership interests shall be based upon
the valuation of Authentidate established by the managers of
Authentidate and the third party investor in the most recent financing
completed by Authentidate within 180 days of the date of this
Agreement. By way of example, if a third party investor purchases 10%
of Authentidate ownership interests for $1,000,000, then the valuation
of Authentidate shall be deemed to be $10,000,000.
2. Upon determination of the value of the Shore Venture
interests, such sum shall be divided by average of the closing bid
prices of the Common Stock of BitWise or any successor thereof for the
30 trading days ending March 31, 2001 less a discount of 15%; provided,
however, in no event shall the conversion price be less than $.25 per
share.
BitWise hereby agrees to use its best efforts to file a registration
statement with the Securities and Exchange Commission ("SEC") with
respect to the shares of BitWise delivered under this clause f) to
allow the resale of the shares by Shore Venture under the Securities
Act of 1933, as amended on or before May 30, 2001 and to use its best
efforts to have the registration statement declared effective by the
SEC as soon as possible thereafter. BitWise shall not impose any lockup
period on the shares to be issued to Shore Venture.
g) Shore Venture shall have the right, subject to applicable Internal
Revenue Code rules and regulations, to participate in any stock option
plan (or similar plan) which may be established by Authentidate, or, in
the alternative, to receive warrants to purchase additional membership
interests in Authentidate. In the event that Shore Venture does not
receive any options or warrants in accordance with the foregoing, then
Shore Venture shall be entitled to receive 20% of the total amount of
the Authentidate options (or similar rights) received by Xxxx Xxxxx,
which Xxxx Xxxxx hereby agrees to assign to Shore Venture.
h) BitWise shall reimburse Shore Venture for all reasonable printing,
mailing, travel and lodging expenses and other out-of -pocket expenses
incurred by Shore Venture in connection with the services provided
under this agreement.
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i) Xxxxxxxxxxxx.xxx LLC hereby grants to Shore Venture the preferential
right to use the technology owned by Xxxxxxxxxxxx.xxx LLC in Shore
Venture's Internet auction site "XxxxxxxXxx.xxx" (or any successor
thereof) as a transparent service to buyers and sellers to
confirm/timestamp all offers and acceptances. Xxxxxxxxxxxx.xxx LLC
agrees that it shall not issue any license to any other Internet
auction site which competes with XxxxxxxXxx.xxx or any successor
thereof. The parties shall negotiate the terms of the fees of the
master account transaction discount. In addition, Xxxxxxxxxxxx.xxx LLC
hereby agrees to allow Shore Venture the right to serve as a reseller
of the Authentidate technology and the parties shall negotiate in good
faith the terms of such reseller arrangement.
j) BitWise shall provide to Shore Venture at no cost, four (4) Pentium
166 MHz computers with modems as outlined in the BitWise invoice
#12587, dated 08/19/99, and marked as Exhibit "D" annexed hereto.
k) BitWise and Xxxxxxxxxxxx.xxx LLC hereby agree to indemnify and hold
harmless Shore Venture, its officers, directors, agents and employees,
Xxxxxxx X. Xxx, Xxxxxxxx X. Xxxxxx and Xxxxxx Xxxxx (together an
"Indemnified party") with respect to actions, suits, proceedings,
claims, demands, damages, penalties, fines, and costs asserted by
Xxxxxx Xxxxxx, Xxxxxxx X. XxXxxxxx and/or entities controlled by them
against the Indemnified Parties with respect to this Agreement and the
development of the Authentidate technology and site. If any third party
shall notify any Indemnified Party with respect to a third party claim
which may give rise to a claim for indemnification against the
Indemnified Parties, then the Indemnified Party shall promptly (and in
any event within five (5) business days after receiving notice of the
third party claim) notify BitWise or Xxxxxxxxxxxx.xxx LLC thereof in
writing. BitWise will have the right to defend the Indemnified Party
against the third party claim with counsel of its choice. BitWise shall
have the right to settle the third party claim in its sole discretion.
l) BitWise, Authentidate and Shore Venture shall provide mutual "links"
to each other's Internet sites (including Xxxxxxx.Xxx.xxx) for a period
of three (3) years from the date hereof.
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4. REPRESENTATIONS AND WARRANTIES
a) Representations and Warranties of Shore Venture.
1. Shore Venture hereby warrants and covenants that it's
personnel have the necessary expertise in software design and are fully
capable of developing the Authentidate site as outlined in Exhibit "A",
including all necessary software.
2. The Authentidate site will meet the specifications set
forth on Exhibit "A" and all software developed by Shore Venture will
be free from all foreseeable defects, malfunctions and errors.
3. Shore Venture shall own all right, title and interest in
and to all software developed for the Authentidate site, or with
respect to software not developed by Shore Venture but required for
operation and use of the Authentidate site, it will have sufficient
rights or licenses in the software to fulfill its obligations
hereunder, and such rights shall be assigned to Xxxxxxxxxxxx.xxx LLC as
provided in Section 2.
4. To the best of its knowledge, all software developed by
Shore Venture will not infringe upon any patents, copyrights, trade
secrets or licenses of any third parties.
5. Shore Venture shall not, throughout the duration of this
Agreement, offer and/or grant, assign or sell an Xxxxxxxxxxxx.xxx
license or licensing rights to another person or entity unless such
action becomes lawful through a failure by BitWise and/or Authentidate
to pay the consideration described above.
6. Shore Venture has the full corporate power to enter into
this Agreement and to perform its obligations hereunder.
b) Representations and Warranties of BitWise.
1. BitWise has the full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
2. BitWise is the sole owner of membership interests in
Xxxxxxxxxxxx.xxx LLC as of the date hereof. Upon execution of this
Agreement, BitWise shall be the holder of 92.5% of the outstanding
membership interests and Shore Venture shall be the owner of 7.5% of
the outstanding membership interests.
3. BitWise and/or Authentidate shall make no representations
or warranties regarding the Authentidate site and services except those
authorized and/or made by Shore Venture.
4. In the event of a default consisting of non-payment of any
consideration outlined above, BitWise hereby agrees that it shall be
liable for costs of action including but
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not limited to attorney's fees, twelve percent (12%) interest on any
unpaid balance of/from date of default and five percent (5%) penalty.
If non-payment involves any form of securities, BitWise also will bear
the dollar equivalent in lost opportunity, the value of which is to be
determined by the market.
5. BitWise assumes and bears full and exclusive liability in
any legal or regulatory action against any product sold by BitWise
and/or Authentidate (except with respect to paragraphs 4(a)(3) and (4)
and agrees to indemnify and defend Shore Venture against any action
taken by any person, governmental authority or other entity if such
action involves a product developed by Shore Venture.
5. COVENANTS OF BITWISE
a) BitWise intends to market the Authentidate site through traditional
advertising methods as well as through Internet advertising including
but not limited to e-mail solicitation, banner advertising campaigns,
site exchange programs and search engine placement strategy. BitWise
shall use its best efforts to begin to market the Authentidate site by
September 30, 1999, provided that Shore Venture has delivered a
functional site satisfactory to BitWise prior to such date.
b) BitWise shall conduct sales of the Authentidate site and services in
such a manner as to bring no disrepute to Shore Venture, Authentidate
and/or BitWise.
6. TERM OF AGREEMENT; TERMINATION
This Agreement shall be considered in full force and
non-terminable at all times during the period that BitWise or any
successor thereof is employing Authentidate or any modification
thereof. Sections 2, 3, 4(b)(4), 4(b)(5), 6, 8 and 10 shall survive
expiration or termination of this Agreement under all circumstances.
7. NOTICE
All notices required under the terms of this Agreement shall be made in
writing, certified mail, postage prepaid.
If to Shore Venture: With a copy to:
Shore Venture Group, L.L.C. Xxxxxxxx X. Xxxxxx, Esquire
54 Hill Top Drive 0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
If to BitWise: With a copy to:
BitWise Designs, Inc. Xxxxx Xxxxxxxx, Esquire
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Technology Drive Xxxxxxxxx & XxXxxxx LLP
Xxxxxxxxxxx, XX 00000 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
If to Authentidate: With a copy to:
c/o BitWise Designs, Inc. Xxxxx Xxxxxxxx, Esquire
Technology Drive Xxxxxxxxx & XxXxxxx LLP
Xxxxxxxxxxx, XX 00000 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
8. NON-DISCLOSURE/NON-COMPETITION.
a) BitWise, Xxxxxxxxxxxx.xxx LLC and Shore Venture agree that neither
they nor their respective employees, shareholders, officers, directors or agents
shall disclose, without the consent of the other party, any of the terms of this
Agreement, including compensation, to any third party unless required under
applicable law, including federal securities laws, or unless such third party is
considering an investment in Xxxxxxxxxxxx.xxx LLC or BitWise. Violation of this
provision shall be construed as a material breach of this Agreement, and each
party shall be entitled to damages sustained as a result of such breach.
b) Each of the parties shall protect and not disclose any "confidential
information" of the other party to any third party. For purposes of this
Agreement "confidential information" shall mean all written or oral trade
secrets, information, data, software, research, development, concepts, methods,
processes, technology, patents, customer pricing and information. Violation of
this provision shall be construed as a material breach of this Agreement, and
each party shall be entitled to damages sustained as a result of such breach.
9. ENTIRE AGREEMENT
The parties agree that this Agreement constitutes the entire agreement
between the parties and that the Agreement may not be altered except in writing
signed by all parties.
10. MISCELLANEOUS
a) In the event of a dispute between the signatories, the parties
hereby agree to submit the dispute to binding arbitration and
further agree that the proper jurisdiction for disputes under
this Agreement shall be the United States District Court for the
Southern District of New Jersey.
b) Governing Law. The parties hereto acknowledge that this
Agreement shall be construed under the substantive laws of the
State of New Jersey.
c) Nothing contained in this Agreement shall limit or restrict
the right of Shore Venture or of any partner, employee, agent or
representative of Shore Venture, to be
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a partner, director, officer, employee, agent or representative
of, or to engage in, any other business, whether of a similar
nature or not, nor to limit or restrict the right of Shore
Venture to render services of any kind to any other corporation,
firm, individual or association, except with respect to the
technology regarding the Authentidate site.
d) Waiver. Failure of either party at any time to require
performance of any provision of this Agreement shall not limit
the party's right to enforce the provision, nor shall any waiver
of any breach of any provision be a waiver of any succeeding
breach of any provision or a waiver of the provision itself for
any other provision.
e) Titles and Captions. All article, section and paragraph titles
or captions contained in this Agreement are for convenience only
and shall not be deemed part of the context nor affect the
interpretation of this Agreement.
f) Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement,
binding on all the parties hereto even though all the parties are
not signatories to the original or the same counterpart.
g) This agreement shall inure to the benefit of the parties,
their heirs, successors and assigns. The parties hereby agree
that in the event that the managers of Xxxxxxxxxxxx.xxx LLC
determine it to be in the best interests of Xxxxxxxxxxxx.xxx LLC
to change from a limited liability company to a corporation, that
all rights, obligations and interests of the parties, including
without limitation, the equity interests of Shore Venture, shall
be assigned and assumed by the new entity.
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WHEREFORE, having reviewed and accepted the foregoing terms, agreements
and covenants, the parties have affixed their signatures the date first written
above.
SHORE VENTURE GROUP, L.L.C.
A New Jersey Limited Liability Company
By:_______________________________
Name:
Title:
BITWISE DESIGNS, INC.
A Delaware Corporation
By:_______________________________
Name:
Title:
XXXXXXXXXXXX.XXX, LLC
A Delaware Limited Liability Corporation
By:_______________________________
Name:
Title:
Solely for purposes of Section 3 g) hereof:
__________________________________________
Xxxx Xxxxx
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