Exhibit 10.26
AGREEMENT
This Agreement is made and entered into on January 28,1998 by and between
CONNECT, Inc., a Delaware corporation (the "Company") and Impresso, a Delaware
corporation ("Buyer").
1. Definitions.
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(a) "Online Business" shall mean the online services currently
provided by the Company which allows users to access information such as
newsletters, bulletins and e-mail from the Company's computers.
(b) "Pyramid Systems" shall mean two computer systems, identified by
Connect Property Tag #0032 and #0041, and associated operating systems, Oracle
and Fulcrum Software, as well as disks, identified by Tag #0099, #0100, #0101,
#0102 and #0103, that perform online transactions.
(c) "x.25" shall mean the online service specific T1 and 56KBPS
communication circuits to Pacific Xxxx, AT&T, Sprint and CompuServe that
terminate as the Verilink DSU Rack which connects to the Pyramid Computer
Systems.
2. The Transaction. The Company hereby transfers to the Buyer all right,
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title and interest in the Online Business effective as of January 1, 1998. The
Buyer will continue to occupy the Company's facility, pursuant to Section 3
below, during a transition period which will end on September 30, 1998.
3. Rental Program.
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(a) The rental program described in Section 3(b) shall begin on
January 1, 1998 and end of September 30, 1998. Buyer will pay the Company a fee
of $20,000 per month, payable on or before the 10th day of each calendar month.
(b) The rental fee referred to in Section 3(a) above shall cover the
following: (i) the rental of space at the Company's facility, which space is
currently occupied and used by the Online Business, including access to public
areas, (ii) utilities for the space occupied, including the computer operations
center utilized by the Online Business, (iii) costs of receptionist service,
(iv) general office overhead, (v) reasonable use of copiers, (vi) reasonable use
of office supplies, (vii) lunch room goodies, (viii) continued support on a
seven day, 24 hour basis by operators as long as the Company provides this to
its other customers, (ix) all reasonable telephone costs and data connection
costs, provided, however, that Buyer shall be responsible for the costs incurred
on x.25, (x) storage of backup tapes, (xi) offsite storage and (xii) rent of the
existing computer system equipment or their equivalent currently used by the
Online Business including the Pyramid Systems through September 30, 1998. Buyer
shall be responsible for maintenance on all of these machines commencing January
1, 1998. After December 31, 1997 and at such time as the equipment becomes
unencumbered, the Company shall offer Buyer the
right to buy such unencumbered equipment. The price of the Nile 150 and the 12ES
Pyramid Systems is established to be $18,000 and $4,000, respectively. Buyer
shall cover its own postage, supplies for mass mailings and costs of employee
special events. Buyer may use Xxxxxx'x office at the Company's facility and up
to eight mutually agreeable cubes during the term of the rental period.
(c) Existing internet circuits and service costs incurred by the
Company and/or Buyer during the rental period shall be borne on a pro rata basis
in accordance with actual usage between such parties. If the usage cannot be
accurately determined, Buyer will pay 20% of the Company's total cost for as
long as the Company provides commercial hosting services to its customers.
(d) Buyer will provide the Company with its existing e-mail system as
long as the Pyramid Systems are operational but in no case shall this e-mail
system be terminated prior to March 31, 1998. There will be no charge to the
Company for this service except that users connecting via the x.25 from Malaysia
will incur a charge defined as cost based surcharge in the billing system.
4. Employment Issues.
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(a) No later than October 31, 1997, all Company employees who are
engaged in the Online Business must submit their resignation to the Company
effective at the end of business on December 31, 1997. Should an employee
decide not to submit their resignation by such date, then the Company may
terminate such employees in accordance with the Company's standard policy then
in effect. No later than October 31, 1997, Buyer shall select the employees
working in the Online Business which it intends to hire on January 1, 1998. The
Company shall be responsible for any applicable severance expenses for employees
not hired by Buyer. Should Buyer subsequently hire any person terminated in
this manner, whether the hiring of the person is as an employee, consultant or
through other such arrangement, within 12 months of such termination by the
Company, then Buyer shall pay $30,000 to the Company within 10 days of the date
of hire of such person to reimburse the Company for the severance costs
incurred. Notwithstanding the above, Buyer shall not incur a penalty if this
person is gainfully employed by the Company or another third party and is
willing to provide assistance to Buyer on a part time basis for compensation.
(b) Buyer will use a temporary agency or other service for payroll
matters and shall be responsible for all payroll and personnel matters related
to its employees and consultants.
(c) Buyer will ensure that its employees have workers' compensation
insurance and that Buyer is in compliance with other rules and regulations
relating to employment matters.
(d) Buyer shall carry a liability insurance policy of at least $1
million. Buyer shall provide to the Company a certificate of insurance naming
the Company as an additional insured as long as Buyer is renting space from the
Company pursuant to this Agreement.
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(e) Buyer shall be responsible for all legal and formation costs
relating to the formation of the Buyer.
(f) The Company and Buyer will act in good faith in working out which
employees are retained by the Company, which employees are employed by Buyer and
which employees are terminated. After this has been completed, there will be no
hiring by either the Company or Buyer of employees of the other party for a
period of 12 months without the permission of the other party in writing. Prior
to the end of the twelve month period, each party agrees that the liquidated
damages from hiring an employee currently employed by the other party shall be
$30,000 unless such employee is hired with the permission of the other entity.
This $30,000 amount is payable within 10 days of such employment.
(g) All personnel employed by Buyer will enter into a proprietary
information agreement with Buyer and shall also sign an agreement requiring them
to maintain the confidentiality of any confidential matters relating to the
Company.
5. Technology.
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(a) The Company shall maintain the ownership of the Online Software
(as defined below). Buyer is hereby granted an exclusive, worldwide perpetual
right and license to use the Online Software (as defined below). The Company
shall deliver a copy of the source code for such software to Buyer upon
execution of this Agreement. The license shall include the right to sublicense.
For purposes of this Agreement, "Online Software" shall be defined as
Connect Client Software Version 1.9 for both Macintosh and Windows, the Online
Software version __ Associated Billing Code which is operated on the Pyramid
Systems and the Newsletters Online Version v0-0-131 which is operated on the
Pyramid Systems and a Sun Sparc Station.
(b) Buyer shall pay the Company a royalty equal to 12% of the revenue
received by Buyer from sublicensing or otherwise utilizing the Software in a
given month provided that no royalty will be paid on the first $80,000 of such
revenue in a given month ($960,000 in a given year). No royalty will be payable
on revenues received by the Company prior to December 31, 1997. Royalties will
be payable within 30 days following the date on which payment is received by the
Buyer. The maximum cumulative royalty payable by Buyer to the Company is $1
million at which time this license shall be fully paid and the Company shall be
free to continue to license and otherwise use the software without the payment
of additional amounts to the Company.
(c) Buyer shall provide the Company with monthly statements setting
forth its calculation of the amount of the royalty payment in detail reasonably
satisfactory to the Company. The Company shall have the right, at its own
expense, to have an independent auditor inspect Buyer's records to confirm the
accuracy of such calculations; provided, however, that it may not exercise such
right more than twice in any twelve-month period. In the event that such
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auditor determines that the royalties have been underpaid by more than 5% of the
actual account owed in any three-month period, Buyer shall bear the reasonable
costs of such audit.
(d) THE ONLINE SOFTWARE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY
KIND INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. FURTHER, THE COMPANY DOES NOT WARRANT, GUARANTEE, OR
MAKE ANY REPRESENTATIONS REGARDING THE USE, OR THE RESULTS OF THE USE, OF THE
NEURON DATA SOFTWARE OR WRITTEN MATERIALS IN TERMS OF CORRECTNESS, ACCURACY,
RELIABILITY, OR OTHERWISE. Buyer understands that the Company is not
responsible for and will have no liability for hardware, software, or other
items not licensed from or through the Company hereunder or for any services
provided by any persons other than the Company.
6. Assignments.
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(a) The Company shall transfer to Buyer all accounts receivable
relating to the Online Business existing on December 31, 1997. The purchase
price for such receivables will be equal to the amount of the accounts
receivable which are less than or equal 90 days old. Payment of such amount
shall be made in three equal installments on January 31, 1998, February 28, 1998
and March 31, 1998. Buyer will make a good faith effort to collect all
receivables acquired from the Company and will pay the Company 50% of the amount
collected on receivables having a date prior to October 1, 1997.
(b) The Company hereby assigns to Buyer all customer contracts
relating to the Online Business and Buyer hereby assumes all obligations
thereunder. To the extent the assignment of any such contract requires the
consent of any other person thereto, the Company agrees that it will use
commercially reasonable efforts to obtain any such consent. The Company agrees
to cooperate with Buyer in any reasonable arrangement designed to provide Buyer
with the benefits under the applicable contract. The Company and Buyer will
notify all customers of the Online Business of the assignment to Buyer. This
notification will be done no later than October 31, 1997. This notification
will provide for termination of any contracts on December 31, 1997 if Buyer does
not desire to honor such agreement after the proposed sale of the Online
Business.
7. Indemnification.
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(a) For a period of 36 months after the date of this Agreement (or
until the expiration of the applicable statutes of limitations, in the case of a
Loss (as defined below) relating to taxes, environmental or employee benefit
matters), Buyer shall indemnify, defend and hold harmless the Company and its
officers, directors, agents and stockholders ("Company Indemnified Parties")
against all claims, losses, liabilities, damages, deficiencies, costs and
expenses, including reasonable attorneys, accountants and expert witness' and
the costs and expenses of enforcing this indemnification ("Losses"), including
without limitation, Losses resulting from the defense, settlement or compromise
of a claim or demand or assessment incurred by such Company Indemnified Parties
(1) as a result of or with respect to a breach of
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this Agreement by Buyer, or (2) arising in connection with the Online Business
on or after the date of this Agreement.
(b) For a period of 36 months after the date of this Agreement (or
until the expiration of the applicable statutes of limitations, in the case of a
Loss relating to taxes, environmental or employee benefit matters), the Company
shall indemnify, defend and hold harmless Buyer and its officers, directors,
agents and stockholders (the "Buyer Indemnified Parties") against all Losses,
including without limitation, Losses resulting from the defense, settlement or
compromise of a claim or demand or assessment incurred by such Buyer Indemnified
Parties (1) as a result of or with respect to a breach of this Agreement by the
Company, or (2) arising in connection with the Online Business before the date
of this Agreement.
8. Limitation of Liability. NEITHER PARTY SHALL BE RESPONSIBLE OR LIABLE
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WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT OR ANY ATTACHMENT, PRODUCT
ORDER, SCHEDULE OR TERMS AND CONDITIONS RELATED THERETO UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY: (a) FOR LOSS OR INACCURACY OF
DATA OR COST OF PROCUREMENT OF SUBSTITUTE GOODS, SERVICES OR TECHNOLOGY, (b) FOR
ANY INDIRECT, INCIDENTAL OR CONSEQUENTLY DAMAGES INCLUDING, BUT NOT LIMITED TO
LOSS OF PROFITS; OR (c) FOR ANY MATTER BEYOND ITS REASONABLE CONTROL.
9. Miscellaneous.
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(a) This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and supersedes all prior
discussions, agreements and understandings of every kind and nature between them
and their officers, directors and agents. This Agreement shall not be changed,
modified or amended except by a writing signed by the party to be charged.
(b) This Agreement and its validity, construction and performance
shall be governed in all respects by the laws of the State of California.
(c) This Agreement shall be binding upon and shall enure to the
benefit of the parties hereto and their successors and permitted assigns. This
Agreement may not be assigned by any party hereto except with the prior written
consent of the other party, provided, however, that Buyer may assign all of its
rights under this Agreement to any party acquiring substantially all of its
business.
(d) Notices. Any notice required or permitted by this Agreement shall
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be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice.
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(e) Severability. If one or more provisions of this Agreement are
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held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(f) Independent Contractor. Neither party shall, for any purpose, be
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deemed to be an agent of the other party and the relationship between the
parties shall only be that of independent contractors. Neither party shall have
any right or authority to assume or create any obligations or to make any
representations or warranties on behalf of any other party, whether express or
implied, or to bind the other party in any respect whatsoever.
(g) Force Majeure. In the event that either party is prevented from
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performing or is unable to perform any of its obligations under this Agreement
(other than a payment obligation) due to any Act of God, fire, casualty, flood,
earthquake, war, strike, lockout, epidemic, destruction of production
facilities, riot, insurrection, material or component unavailability or
shortage, or any other cause beyond the reasonable control of the party invoking
this Section (a "Force Majeure") and if such party shall have used its best
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efforts to mitigate its effects, such party shall give prompt written notice to
the other party, its performance shall be excused, and the time for the
performance shall be extended for the period of delay or inability to perform
due to such occurrences. Notwithstanding the foregoing, if such party is not
able to perform within 30 days after the event giving rise to excuse of Force
Majeure, the other party may terminate the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
CONNECT, INC. January 28, 1998
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By: /s/ XXXXXX X. BRIDGE By: /s/ IMPRESSO
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Title: CEO Title: President
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