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EXHIBIT 10.4
SOURCE CODE ESCROW AGREEMENT
This Source Code Escrow Agreement (the "Escrow Agreement") is entered
into and effective as of November 10, 2000 (the "Effective Date") by and among
Natural Alternatives International, Inc., a Delaware corporation with its
principal place of business at 0000 Xxxxx Xxxxx Xxxxx, Xxx Xxxxxx, Xxxxxxxxxx
00000 ("Licensee"), FitnessAge Incorporated, a Nevada corporation with its
principal place of business at 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xx Xxxxx, XX
00000 ("Licensor"), and The Chicago Trust Company of California, with its
principal place of business at 000 X Xxxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000
("Escrow Agent").
WHEREAS, Licensor is simultaneously granting a license to Licensee to,
inter alia, use certain computer software (the "Program"), a description of
which is attached hereto as Schedule "A" and incorporated herein by this
reference, pursuant to the terms and conditions of a Software License Agreement
(the "License Agreement"), to which this Escrow Agreement is annexed as Exhibit
A;
WHEREAS, the License Agreement also provides, inter alia, for the
deposit referenced in paragraph 1 thereof upon execution of the License
Agreement and this Escrow Agreement;
WHEREAS, the uninterrupted availability of all forms of such computer
software is critical to Licensee in the conduct of its business; and
WHEREAS, Licensor has agreed to deposit in escrow a copy of the source
code form of the Program covered by the License Agreement, as well as any
corrections or enhancements to such source code, to be held by Escrow Agent in
accordance with the terms and conditions of this Escrow Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:
1. Deposit: Licensor shall, upon execution of this Escrow Agreement
deposit with Escrow Agent a copy of the source code form of the Program, a
description of which is attached hereto as Schedule "A" and incorporated herein
by this reference (the "Source Code"), including all relevant commentary,
explanations, and other documentation of the Source Code, which documentation is
attached hereto as Schedule "B" and incorporated herein by this reference
(collectively, "Commentary") (The Source Code and Commentary are sometimes
collectively referred to herein as the "Escrowed Property"). Licensor also
agrees to deposit with Escrow Agent, at such times as they are made, a copy of
all revisions to the Source Code or Commentary encompassing all corrections or
enhancements made to the Program by Licensor pursuant to the License Agreement,
any Software Maintenance Contract between the parties, or made for any other
reason during the Term of this Escrow Agreement. Promptly after any such
revision is deposited with Escrow Agent, both Licensor and Escrow Agent shall
give written notice thereof to Licensee.
2. Term: This Escrow Agreement shall commence on the Effective Date and
remain in effect during the term of the License Agreement and any Software
Maintenance Contract between Licensee and Licensor. Termination hereof is
automatic upon delivery of all of the deposited Source Code and Commentary to
Licensee in accordance with the provisions hereof.
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3. Default: A default by Licensor shall be deemed to have occurred under
this Escrow Agreement upon the occurrence of any of the following:
(a) if Licensor has availed itself of, or been subjected to by
any third party, a proceeding in bankruptcy in which Licensor is the named
debtor, an assignment by Licensor for the benefit of its creditors, the
appointment of a receiver for Licensor, or any other proceeding involving
insolvency or the protection of, or from, creditors, and same has not been
discharged or terminated without any prejudice to Licensee's rights or interests
under the License Agreement within thirty (30) days, or Licensor otherwise
becomes insolvent; or
(b) if Licensor has ceased its on-going business operations, or
sale, licensing, maintenance or other support of the Program; or
(c) if Licensor fails to pay the annual fee due to Escrow Agent
hereunder; or
(d) an Event of Default, as defined in the Security Agreement,
entered into as of November 10, 2000, by and between the parties hereto; or
(e) if any other event or circumstance occurs which demonstrates
with reasonable certainty the inability or unwillingness of Licensor to fulfill
its obligations to Licensee under the License Agreement, this Escrow Agreement
or any Software Maintenance Contract between the parties, including, without
limitation, the correction of defects in the Program.
4. Notice of Default: Licensee shall give written notice to Escrow Agent
and Licensor of the occurrence of a default hereunder, except that Escrow Agent
shall give notice of the default to Licensee and Licensor if same is based on
the failure of Licensor to pay Escrow Agent's annual fee. Unless within seven
(7) days thereafter Licensor files with the Escrow Agent its affidavit executed
by a responsible executive officer stating that no such default has occurred or
that the default has been cured, then the Escrow Agent shall upon the eighth
(8th) day deliver to Licensee in accordance with Licensee's instructions the
entire Source Code and Commentary with respect to the Program then being held by
Escrow Agent. If Escrow Agent does receive such an affidavit from Licensor prior
to the eighth (8th) day after such notice from Licensee, Escrow Agent shall not
deliver a copy of the Source Code or Commentary to the Licensee, but shall
continue to store the Source Code and Commentary until: (a) otherwise directed
by the Licensor and Licensee by way of an agreement with authorized, notarized
signatures of both Licensor and Licensee, authorizing the release of Source Code
and Commentary to one of the parties hereto; (b) Escrow Agent has received
notice of the resolution of the dispute by a court of competent jurisdiction, or
(c) Escrow Agent has deposited the Source Code and Commentary with a trustee
selected by a court of competent jurisdiction for the purpose of determination
of its obligations under this Escrow Agreement.
5. Responsibilities: The responsibilities and liabilities of the Escrow
Agent include:
(a) Escrow Agent shall hold and release the Source Code and
Commentary in accordance with the terms of this Agreement and shall maintain the
confidentiality of the Source Code and Commentary.
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(b) Escrow Agent shall store all Source Code and Commentary in a
dual controlled, fire-resistant safe cabinet. Escrow Agent shall provide the
same degree of care for all Source Code and Commentary as it maintains for its
valuable documents and those of its clients lodged in the same location with
appropriate atmospheric or other safeguards. The parties hereto agree that
Escrow Agent shall not be held liable for any loss of, destruction of, or damage
to the property caused by anything other than its own gross negligence or
willful misconduct. Among other things, Escrow Agent shall not be held liable
for loss, destruction or damage caused by natural disasters including, but not
limited to, fire, flood, earthquake and other acts of nature and acts of God.
(c) Except as required to carry out its duties hereunder, Escrow
Agent shall use its best efforts to avoid unauthorized access to the Source Code
and Commentary deposited with Escrow Agent hereunder by its employees or any
other person.
6. Compensation: As compensation for the services to be performed by
Escrow Agent hereunder, Licensor shall pay to Escrow Agent an initial fee of
$2,000.00, payable at the time of execution of this Agreement, and an annual fee
in the amount of $1,500.00 to be paid to Escrow Agent in advance on each
anniversary date hereafter during the term of this Agreement.
7. Liability:
(a) Escrow Agent shall not, by reason of its execution of its
Agreement, assume any responsibility or liability for any transaction between
Licensor and Licensee, other than the performance of its obligations as Escrow
Agent with respect to the Source Code and Commentary held by it in accordance
with this Agreement.
(b) Escrow Agent shall be entitled to rely upon, and shall be
fully protected from all liability, loss, cost, damage or expense in acting or
omitting to act pursuant to, any instruction, order, judgment, certification,
affidavit, demand, notice, opinion, instrument or other writing delivered to it
hereunder without being required to determine the authenticity of such document,
the correctness of any fact stated therein, the propriety of the service thereof
or the capacity, identity or authority of any party purporting to sign or
deliver such document.
(c) The duties of the Escrow Agent are only as herein
specifically provided, and are purely ministerial in nature. The Escrow Agent
shall neither be responsible for or under, nor chargeable with knowledge of, the
terms and conditions of any other agreement, instrument or document in
connection herewith, and shall be required to act in respect of the Escrowed
Property only as provided in this Agreement. This Agreement sets forth all the
obligations of the Escrow Agent with respect to any and all matters pertinent to
the escrow contemplated hereunder and no additional obligations of the Escrow
Agent shall be implied from the terms of this Agreement or any other agreement.
The Escrow Agent shall incur no liability in connection with the discharge of
its obligations under this Agreement or otherwise in connection therewith,
except such liability as may arise from the willful misconduct of the Escrow
Agent.
(d) Escrow Agent may consult with counsel of its choice and shall
not be liable for any action taken or omitted to be taken by the Escrow Agent in
accordance with the advice of such counsel.
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(e) Escrow Agent shall not be bound by any modification,
cancellation or rescission of this Agreement unless in writing and signed by the
Escrow Agent.
(f) Escrow Agent is acting as a stakeholder only with respect to
the Escrowed Property. If any dispute arises as to whether the Escrow Agent is
obligated to deliver the Escrowed Property or as to whom the Escrowed Property
is to be delivered or the amount thereof, the Escrow Agent shall not be required
to make any delivery, but in such event the Escrow Agent may hold the Escrowed
Property until receipt by the Escrow Agent of instructions in writing, signed by
all parties which have, or claim to have, an interest in the Escrowed Property,
directing the disposition of the Escrowed Property, or in the absence of such
authorization, the Escrow Agent may hold the Escrowed Property until receipt of
a certified copy of a final judgment of a court of competent jurisdiction
providing for the disposition of the Escrowed Property. The Escrow Agent may
require, as a condition to the disposition of the Escrowed Property pursuant to
written instructions, indemnification and/or opinions of counsel, in form and
substance satisfactory to the Escrow Agent, from each party providing such
instructions. If such written instructions, indemnification and opinions are not
received, or proceedings for such determination are not commenced, within thirty
(30) days after receipt by the Escrow Agent of notice of any such dispute and
diligently continued, or if the Escrow Agent is uncertain as to which party or
parties are entitled to the Escrowed Property, the Escrow Agent may either (i)
hold the Escrowed Property until receipt of (X) such written instructions and
indemnification or (Y) a certified copy of a final judgment of a court of
competent jurisdiction providing for the disposition of the Escrowed Property,
or (ii) deposit the Escrowed Property in the registry of a court of competent
jurisdiction; provided, however, that notwithstanding the foregoing, the Escrow
Agent may, but shall not be required to, institute legal proceedings of any
kind.
(g) Escrow Agent shall have the right at any time to resign for
any reason and be discharged of its duties as Escrow Agent hereunder by giving
written notice of its resignation to the parties at least thirty (30) days prior
to the date specified for such resignation to take effect. The parties shall
have the right at any time jointly to appoint a successor Escrow Agent, and in
the event such appointment is made without the resignation of Escrow Agent,
shall be effective upon thirty (30) days written notice to Escrow Agent. All
obligations of Escrow Agent hereunder shall cease and terminate on the earlier
of the effective date of its resignation or the appointment of a successor
Escrow Agent and its sole responsibility thereafter shall be to transfer any
funds and documents held in escrow to the successor Escrow Agent or other party
as described below. If a successor Escrow Agent shall have been appointed and
written notice thereof shall have been given to the resigning or terminated
Escrow Agent by the parties, then the resigning or terminated Escrow Agent shall
deliver any funds, books, records and other items held under the Escrow
Instructions to the successor Escrow Agent, or if a successor Escrow Agent shall
not have been appointed, for any reason whatsoever, the resigning or terminated
Escrow Agent shall deliver any funds, books, records and other items held under
this Escrow Agreement to a court of competent jurisdiction and give written
notice of the same to the Parties hereto. The resigning or terminated Escrow
Agent shall be entitled to be reimbursed by the Parties for any expenses
incurred in connection with its resignation, termination and transfer of any
property or funds held in escrow.
8. Indemnification: Licensor and Licensee, jointly and severally, agree
to reimburse the Escrow Agent on demand for, and to indemnify and hold the
Escrow Agent harmless against and with respect to, any and all loss, liability,
damage or expense (including, without limitation,
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attorneys' fees and costs) that the Escrow Agent may suffer or incur in
connection with the entering into of this Agreement or otherwise in connection
therewith, except to the extent such loss, liability, damage or expense arises
from the willful misconduct of the Escrow Agent. Without in any way limiting the
foregoing, the Escrow Agent shall be reimbursed for the cost of all legal fees
and costs incurred by it in acting as the Escrow Agent hereunder based on the
normal hourly rates in effect at the time services are rendered. The Escrow
Agent shall have the right at any time and from time to time to charge, and
reimburse itself from, the Escrowed Property for all amounts to which it is
entitled pursuant to this Agreement.
9. Tests: Upon written notice to Licensor and Escrow Agent, Licensee
shall have the right to conduct tests of the Source Code held in escrow, under
the supervision of Licensor, to confirm that it is the current Source Code for
the Program specified in the License Agreement.
10. Confidentiality: Except as provided in this Agreement, Escrow Agent
agrees that it shall not divulge or disclose or otherwise make available to any
third person whatsoever, or make any use whatsoever, of the Source Code or
Commentary, without the express prior written consent of Licensor.
11. Miscellaneous Provisions:
(a) Notices. Except as otherwise provided herein, any notice,
demand, election or other communication (a "Notice") required or permitted to be
given or delivered under this Agreement shall be in writing and shall be given
by (a) mailing the same by certified mail, return receipt requested; (b)
delivery of same to a recognized overnight express mail service or carrier; (c)
personal hand delivery; or (d) electronic facsimile with "hard copy" original to
follow as provided in clause (a), (b) or (c) above, addressed:
if to Licensor, to:
FitnessAge Incorporated
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxx-Xxxxx
if to Licensee, to:
Natural Alternatives International, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxx
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with copies to:
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
and
Xxxxxx Xxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx Xxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
if to Escrow Agent, to:
The Chicago Trust Company of California
000 X Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx Pearl
(b) Assignment. Neither this Escrow Agreement, nor any rights,
liabilities or obligations hereunder may be assigned by Escrow Agent without the
prior written consent of Licensee and Licensor.
(c) Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto relating to the subject matter hereof. No
modification, amendment, waiver, termination or discharge of this Agreement or
any of the terms or provisions hereof shall be binding upon either party hereto
unless confirmed by a written instrument signed by both parties. No waiver by
either party hereto of any term or provision of this Agreement or of any default
hereunder shall affect either party's respective rights thereafter to enforce
such term or provision or to exercise any right or remedy in the event of any
other default, whether or not similar.
(d) Binding Agreement. This Agreement shall be binding on and
inure to the benefit of the respective successors, assigns, licensees and
representatives of each party hereto.
(e) Severability. If any provision of this Agreement shall be
held void, invalid, or inoperative, no other provision of this Agreement shall
be affected as a result thereof, and, accordingly, the remaining provisions of
this Agreement shall remain in full force and effect as though no such void,
invalid, or inoperative provision had been contained herein.
(f) Attorney Fees. In the event of any action, suit, or
proceeding arising from or based upon this agreement brought by either party
hereto against the other, the prevailing party
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shall be entitled to recover from the other its reasonable attorneys' fees in
connection therewith in addition to the costs of such action, suit, or
proceeding.
(g) Governing Law. This Agreement has been entered into in the
State of California and its validity, construction, interpretation and legal
effect shall be governed by the laws of the State of California applicable to
contracts entered into and performed entirely therein. Each party acknowledges
and agrees that they have had the opportunity to be represented by independent
legal counsel of their own choice in connection with the preparation,
negotiation and implementation of this Agreement. If not, either party's failure
to be represented by legal counsel was determined solely by that party and not
by the other party in whole or in part.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
ESCROW AGENT LICENSEE
The Chicago Trust Company of Natural Alternatives International, Inc.
California
By: By:
-------------------------------- -------------------------------------
Xxxxxxx Exeter Xxxxx X. Xxxxx
Its: Executive Vice President Its: CFO and Treasurer
By:
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Xxxxx X. Xxxxxx Pearl
Its: Vice President
LICENSOR
By:
-------------------------------------
Xxxxx X. Xxxxxxxx
Its: Vice Chairman
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SCHEDULE "A"
TO SOURCE CODE ESCROW AGREEMENT
The FitnessAge Assessment Application System consists of the following major
components:
1. Core FitnessAge Assessment Application System
General Description -- A proprietary and patented (patent no. 6,010,452 US
PTO) application program that measures the physiological age of an
individual based on the four physical components of cardiovascular fitness;
muscle and joint flexibility; body fat composition; and muscle strength. The
assessment measures both the individual components as defined above as well
as a composite figure to produce a physiological body age as opposed to your
chronological age.
THE APPLICABLE SOURCE CODE AND USER MANUALS INCLUDED IN THIS LICENSE
ARRANGEMENT REFER TO IVID COMMUNICATIONS SOFTWARE DESIGN SPECIFICATIONS
DOCUMENT -- SCHEDULE B
2. Vcustom Plug-in Application System -- PREVIOUSLY LICENSED EXCLUSIVELY TO
CUSTOM NUTRITION
General Description -- The components of the FitnessAge Assessment
Application System are used to make an individual recommendation for use of
nutritional supplements.
NOT APPLICABLE TO THIS LICENSE AGREEMENT AS IT IS LICENSED EXCLUSIVELY TO
CUSTOM NUTRITION.
3. Core Application Database tables
General Description -- The database tables and fields are required to
capture and report the individual measurements taken from the FitnessAge
Assessment Application Software.
REFER TO IVID COMMUNICATIONS SOFTWARE DESIGN SPECIFICATIONS DOCUMENT
APPENDIX D -- SCHEDULE B
4. FitnessAge Web Applet
General Description -- A Java applet containing the same functionality as
the assessment application used to calculate a fitnessage. This application
can be run on any webserver and is treated as a "blackbox" fitnessage
calculator tool.
5. Administration and Reporting System
General Description -As described on pp 36 to 49 of FitnessAge User's
Guide-Schedule B.
Refer to FitnessAge User's Guide--Schedule B.
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SCHEDULE "B"
TO SOURCE CODE ESCROW AGREEMENT
1. CD-ROM labeled "FitnessAge HTML Kiosk Setup Disk (VCustom)" by IVID
Communications, Inc.
2. CD-ROM labeled "FitnessAge Web Site Files."
3. FitnessAge User's Guide dated April 14, 2000.
4. FitnessAge HTML Kiosk Program Software Design Specifications dated June
26, 2000 prepared by IVID Communications, Inc.
