BUSINESS DEVELOPMENT AND MARKETING AGREEMENT
THIS BUSINESS DEVELOPMENT AND MARKETING AGREEMENT (this "Agreement") is
made as of September 7, 2000, by and between Avenel Alliance, Inc., a Florida
corporation ("Avenel Alliance") and its successors and assigns and Vertical
Computer Systems, Inc., a Delaware corporation (the "Company").
RECITALS:
WHEREAS, the Company is in the business of providing Internet services,
including distributing content via multi-lingual portals, developing software
and building e-commerce solutions. The Company desires to have Avenel Alliance
provide certain services to the Company for the conduct of the business of the
Company; and
11
WHEREAS, Avenel Alliance is willing to provide certain services to the
Company on the terms and subject to the conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, do hereby agree as follows:
1. Services.
1.1 Scope of the Services. During the Term (as defined below) and on
the terms and subject to the conditions contained herein, Avenel Alliance shall
provide to the Company those services described on Schedule A attached hereto
and incorporated herein by this reference (the "Services"), and such other
services as the parties may determine, from time to time, which services shall
be set forth in writing and subject to the terms and conditions hereof. Avenel
Alliance shall use commercially reasonable efforts to perform the Services in a
diligent manner; provided, however, the Company acknowledges that Avenel
Alliance will provide services to other entities simultaneously with the
providing of the Services hereunder. Avenel Alliance shall be entitled to
perform the Services through its parent, subsidiaries, affiliates, related
entities and other agents.
1.2 Method of Performing the Services. Avenel Alliance shall have
the right to determine the method, details, hours and means of performing the
Services. The Company shall have no right to, and shall not, control the manner
or determine the method of accomplishing the Services; provided, however, the
Company shall be entitled to exercise the general power of supervision,
including the right to inspect and the right to make suggestions or
recommendations as to the Services. The Company agrees to provide working space,
equipment and facilities, and any other services or materials Avenel Alliance or
its personnel may reasonably request to perform the Services.
1.3 Representatives. Each party shall designate a representative to
act as the primary contact person for the provision of Services (the
"Representatives"). To the extent practicable, all communications relating to
the provision of Services shall be directed through the Representatives. The
Company's initial Representative shall be Xxxxxxx Xxxx and Avenel Alliance's
initial Representative shall be Xxxxx Xxxxxxx. The parties shall advise each
other in writing of any change of their respective Representative.
2. Consideration.
2.1 Monthly Service Xxx.Xx consideration of Avenel Alliance's
performance of the Services (except the "Partner Marketing Services" as defined
on Schedule A attached hereto) the Company agrees to pay to Avenel Alliance
monthly fees (the "Monthly Service Fee") of Five Thousand Dollars ($5,000)
payable in advance on the first (1st) day of each month (or next business day
thereafter) commencing on September 1, 2000 and continuing throughout the Term.
2.2 Partner Marketing Commission. In consideration of Avenel
Alliance's performance of the Partner Marketing Services, the Company agrees to
pay to Avenel Alliance a six percent (6%) commission, or such other amount as
may be mutually agreed to in writing by the parties hereto (the "Marketing
Commission") on all revenue, income, commission, fee, equity or other
consideration of any nature ("Revenue") received by the Company or its
successors, assigns, affiliates or related entities derived from, as a result
of, or in connection with any contract, agreement or understanding, whether oral
or otherwise, with any individual or entity to which Avenel Alliance represents
the Company or in connection with any other relationship established or created,
in whole or in part, by Avenel Alliance pursuant to this Agreement, provided
such representation shall at a minimum be an "Introduction". For purposes of
this Agreement, an Introduction is made by Avenel Alliance when the name of an
individual or entity is provided to or by the Company and Avenel Alliance takes
an additional act(s) resulting in a face-to-face, teleconference or telephonic
meeting, or other direct contact, between the Company and that
12
individual or entity (an "Introduction"). Avenel Alliance shall use reasonable
efforts to notice each Introduction in writing prior to or at the time of such
Introduction, but in any event, Introductions shall be claimed in writing by
Avenel Alliance no later than ten (10) days after the Introduction. If the
Company disputes the notice or claim of Introduction, it shall have three (3)
days after the later of the Introduction or receipt of such written notice or
claim of Introduction to object in writing.
The Marketing Commission shall be computed based on Revenues received exclusive
of normal and recurring bona fide trade discounts, reasonable fees and expenses
and any applicable sales or similar taxes. For example, if $100 in revenue is
generated from a sale, and the same sale has a direct product cost of $40, the
Marketing Commission would be paid only on the remaining $60. Marketing
Commissions owed Avenel Alliance hereunder shall be due and payable on or before
the fifteenth (15th) day of the month (or next business day thereafter)
following the month of receipt of Revenue by the Company, regardless of whether
payments to the Company are periodic, contingent or otherwise, and shall be
payable in such form as Avenel Alliance may, at its sole option and subject to
applicable laws, determine.
The Company hereby agrees to negotiate, if at all, with third parties in good
faith so as not to eliminate the Marketing Commission which would otherwise be
due Avenel Alliance; provided, however, the acceptance or rejection of any
business relationship shall be within the Company's sole and absolute
discretion. The Company shall provide to Avenel Alliance, immediately upon
request, copies of all contracts, agreements, term sheets, summaries of
understandings, correspondence, stock certificates, warrants, notes, wire
transfer confirmations, cancelled checks, financial statements or other
documentation satisfactory to Avenel Alliance, and Avenel Alliance shall have
the right, upon reasonable notice, to cause a reputable accounting firm or
independent certified accountant to audit the Company's books and records (and
the Company shall cooperate fully with Avenel Alliance's auditors), in order to
verify the Marketing Commission. The Company shall promptly pay to Avenel
Alliance any underpayment of Marketing Commissions paid to Avenel Alliance under
this Agreement. All reasonable expenses incurred in connection with any such
audit shall be paid by Avenel Alliance; provided, however, the Company shall pay
all expenses of any audit which reveals an underpayment of ten percent (10%) or
more by the Company. Avenel Alliance shall not perform audits any more
frequently than once every six (6) months; provided, however, if any such audit
reveals an error in excess of ten percent (10%), Avenel Alliance may thereafter
perform audits once every three (3) months. Information reviewed in connection
with any such audit and the results of any such audit shall be deemed
confidential and shall be governed by Section 5.5 hereof. Avenel Alliance's
performance of Partner Marketing Services hereunder shall in no event be deemed
to be a breach of Section 5.5 hereof or any confidentiality agreement or
covenant between the Company and Avenel Alliance, its parent company or any of
their affiliates, whether now or hereafter existing.
In the event of termination of this Agreement by either party for
any or no reason, this Section 2.2 shall survive for a period of five (5) years
from the date of termination (the "Commission Period") and Avenel Alliance shall
be entitled, during the Commission Period, to Marketing Commissions on all
relationships established or created with third parties which are attributable,
in whole or in part, to activities or services performed prior to the effective
date of termination.
2.3 Method of Payment; Late Payments. Monthly Service Fees and
Marketing Commissions are nonrefundable and will be made by the Company in such
form as Avenel Alliance may specify at the address set forth for Avenel Alliance
in Section 12 hereof or by wire transfer into Avenel Alliance's account pursuant
to wire transfer instructions provided by Avenel Alliance. Any portion of the
Monthly Service Fees or Marketing Commissions which have not been paid to Avenel
Alliance in accordance with the time frames set forth in Sections 2.1 and 2.2
above will bear interest at the maximum amount permitted by applicable law, with
interest accruing from the date each such amount first becomes payable.
Notwithstanding the foregoing, the charging of interest is not a consent to late
payment. Avenel Alliance may, at its option, cease providing the Services if any
portion of the Monthly Service Fees or Marketing Commissions have not been paid
in a timely manner. All costs
13
incurred by Avenel Alliance in collecting any amounts not paid when due,
including reasonable attorneys' fees, collection agency fees and court costs,
shall be paid by the Company.
2.4 (i) Stock Grant. In consideration of the promises and covenants
contained in this Agreement and as further compensation for services rendered
hereunder, Avenel Alliance shall acquire all right, title and interest in and to
Five Hundred Thousand (500,000) restricted shares of the common stock of VCSY
(the "Shares") registered in its name. A certificate representing the Shares
shall be delivered to Avenel Alliance within ten (10) days of the date hereof.
The Shares shall have been duly authorized, validly issued, fully paid and
nonassessable, will be free and clear of all liens, and will not be subject to
any preemptive rights, rights of first refusal or redemption rights.
(ii) Warrants. In further consideration of Avenel Alliance's
performance of the Services, the Company shall issue to Avenel Alliance warrants
for the purchase of Seven Million (7,000,000) restricted shares of Common Stock
of the Company with the exercise price on one (1) share of Common Stock of the
Company under the warrants being Thirty-Five Cents ($.35) (which exercise price
and the number of shares for which the warrants are exercisable shall be subject
to anti-dilution adjustments and the other terms and conditions of the warrant).
The warrants shall vest according to the following schedule:
Vesting Date Shares Vested
------------ -------------
September 30, 2000 583,333.33
October 31, 2000 583,333.33
November 30, 2000 583,333.33
December 31, 2000 583,333.33
January 31, 2001 583,333.33
February 28, 2001 583,333.33
March 31, 2001 583,333.33
April 30, 2001 583,333.33
May 31, 2001 583,333.33
June 30, 2001 583,333.33
July 31, 2001 583,333.33
August 31, 2001 583,333.33
----------
Total Vested 7,000,000
14
provided, however, in the event this Agreement is terminated prior to the one
(1) year anniversary hereof (i) by Avenel Alliance for no reason or for a reason
not including a termination of this Agreement by Avenel Alliance pursuant to
Section 4(b) or 4(c) hereof, or (ii) by the Company pursuant to Section 4(b)
hereof, unvested warrants shall be cancelled as of the effective date of
termination. The vested warrants shall be exercisable, in whole or in part, at
any time and from time to time from the date of vesting through the close of
business on the date four (4) years from the dated of vesting.
Subject to termination under Section 4, below, on the first day of each Renewal
Term, the Company shall issue to Avenel Alliance warrants representing one
percent (1%) of the outstanding Common Stock of the Company) or such other
amount as the parties may agree to in writing; provided, however, the exercise
price on one (1) share of Common Stock of the Company under the warrants during
a Renewal Term shall be the average closing price of the Company's Common Stock
over the ten (10) trading days immediately preceding the first (1st) day of such
Renewal Term (which exercise price and the number of shares for which the
warrants are exercisable shall be subject to anti-dilution adjustments and the
other terms and conditions of the warrant).
2.5 Reimbursement of Expenses. The Company shall reimburse Avenel
Alliance for all expenses, including travel, lodging, meals and other
extraordinary expenses, incurred by Avenel Alliance in connection with the
performance of the Services hereunder within fifteen (15) days of receipt of
expense reports from Avenel Alliance, supported by receipts or other reasonable
documentation; provided, however, that any expense in excess of One Thousand
Dollars ($1,000) shall be approved in advance in writing by the Company. If
Avenel Alliance incurs expenses during travel for the benefit of multiple
partner companies, such expenses will be pro-rated accordingly.
3. Term. The term of this Agreement shall commence on the date hereof and
shall continue for a period of one (1) year (the "Initial Term"). At the end of
the Initial Term, this Agreement shall be automatically renewed for successive
one (1) year terms (each, a "Renewal Term") until otherwise terminated pursuant
to the terms and conditions hereof. The Initial Term and all Renewal Terms are
collectively, the "Term".
4. Termination. This Agreement may be terminated at any time by the mutual
written consent of the parties hereto. Either party hereto shall have the right
to terminate this Agreement (a) on the first (1st) anniversary of the first day
of the Initial Term, or on any subsequent anniversary of the first day of a
Renewal Term, by giving at least ninety (90) days' prior written notice to the
other party, (b) upon sixty (60) days' prior written notice in the event that
the other party breaches any of such party's material representations,
warranties, covenants or agreements hereunder, unless such breaching party cures
any such breach within the applicable notice period or, with respect to a breach
which cannot be cured in sixty (60) days, commences cure of such breach and
thereafter proceeds with all diligence to cure same; provided, however, the
Company shall not be entitled to a cure period for monetary breaches of Section
2 hereof or (c) immediately upon providing written notice to the other party in
the event the other party files any bankruptcy or insolvency proceeding. In the
event Avenel Alliance provides notice of termination under Section 4(b) above,
Avenel Alliance shall have the right to suspend performance of the Services for
the notice period unless and until the Company fully remedies the breach prior
to the expiration of the notice period. Termination pursuant to this Section 4
shall not be the exclusive remedy for any breach by either party, but shall be
in addition to any other rights or remedies that the terminating party may have
against the other party. Notwithstanding termination of this Agreement by either
party for any or no reason, Section 2.2 hereof shall survive for the Commission
Period and the Company shall be bound by its covenants thereunder.
5. Proprietary Information.
5.1 The Company's Marks. The Company hereby grants to Avenel
Alliance a non-exclusive license to use the Company's tradenames, logos,
trademarks, service marks and other intellectual property rights (the "Company
Marks") solely in connection with the performance of Services hereunder. Avenel
Alliance agrees to use the Company Marks in accordance with such quality
standards as may be established by the Company and communicated in writing to
Avenel Alliance from time to time. Avenel Alliance understands and
15
agrees that Avenel Alliance's use of the Company Marks in connection with this
Agreement shall not create any right, title or interest of Avenel Alliance in or
to the Company Marks except as otherwise set forth herein and that the Company
Marks and are and shall remain the sole and exclusive property of the Company.
5.2 Avenel Alliance's Trade Secrets. The Company acknowledges that
to perform the Services hereunder, it will be necessary for Avenel Alliance to
disclose to the Company certain data, information, processes, procedures or
improvements that are commercially valuable to Avenel Alliance and not generally
known in the industry ("Avenel Alliance Trade Secrets") that have been developed
by Avenel Alliance at great expense and effort. The Company agrees that it shall
not disclose, transfer, use, copy or allow access to any such Avenel Alliance
Trade Secrets to any employees, agents or third parties, except those on a need
to know basis to give effect to the Company's rights hereunder and who have
bound themselves to protect the confidentiality of such Avenel Alliance Trade
Secrets. Upon termination of this Agreement, the Company will promptly return to
Avenel Alliance all Avenel Alliance Trade Secrets in its possession or the
possession of any agents or affiliates, including copies thereof and notes
relating thereto.
5.3 Intellectual Property Rights Created by Avenel Alliance. Avenel
Alliance shall retain all right, title and interest in and to all products and
intellectual property of any kind developed by Avenel Alliance or its employees,
consultants, agents or partners, including, but not limited to, products and
intellectual property developed during the Term hereof ("Avenel Alliance
Intellectual Property"), and nothing contained herein shall be deemed to grant
to the Company any ownership, security or other interest in any Avenel Alliance
Intellectual Property. The Company agrees, upon the request of Avenel Alliance,
to execute all assignments and other documents necessary to perfect Avenel
Alliance's rights in the Avenel Alliance Intellectual Property.
5.4 Intellectual Property Jointly Developed. The Company shall
retain all right, title and interest in and to all intellectual property jointly
developed by Avenel Alliance and the Company in connection with the performance
of Services hereunder ("Company Intellectual Property"), and nothing contained
herein shall be deemed to grant to Avenel Alliance any ownership, security or
other interest in any Company Intellectual Property. Notwithstanding the
foregoing, any such jointly developed Company Intellectual Property shall be
available for use by Avenel Alliance in performing the Services hereunder.
Avenel Alliance agrees, upon the request of the Company, to execute all
assignments and other documents necessary to perfect the Company's rights in the
Company Intellectual Property.
5.5 Confidentiality; Press Releases. The Company will make available
to Avenel Alliance certain information which is either nonpublic, confidential
or proprietary in nature concerning the Company. Avenel Alliance agrees to keep
all such information confidential and not to (i) disclose such information to
any third party (other than its affiliated entities and its and their directors,
officers, advisors, agents and employees) unless required by law or (ii)
knowingly use such confidential information in any way that is detrimental to
the Company. Avenel Alliance shall have no such obligation, however, with
respect to information which (a) was or becomes generally available to the
public, (b) was or becomes available to Avenel Alliance on a non-confidential
basis from a source other than the Company, or (c) was within Avenel Alliance's
possesion prior to being furnished to Avenel Alliance by the Company. Avenel
Alliance will inform its affiliates and its and their directors, officers,
agents and employees of the confidential nature of the information. Except as
otherwise provided in Section 5.7 hereof, the provisions of this Section 5.5
relating to confidentiality shall terminate two (2) years from the date hereof.
Avenel Alliance acknowledges that the Company is a fully-reporting public
company pursuant to the Securities Exchange Act of 1934 and that all information
granted to Avenel Alliance and its employees is subject to the restrictions of
the Act and other relevant securities laws. Each party agrees that it will not
issue any press release or other public disclosure with respect to the other
party's activities (A) without the prior approval of the other party, which
approval shall not be unreasonably withheld, or (B) except as required by law or
any listing agreement with a securities exchange.
16
5.6 Injunctive Relief. The parties acknowledge and agree that any
remedy at law for any breach of the provisions of this Section 5 would be
inadequate, and that the aggrieved party shall be entitled to obtain, and the
other party shall not oppose, injunctive or other equitable relief for any such
breach in addition to all other remedies available at law or otherwise.
5.7 Survival. The provisions of this Section 5 shall survive any
termination of this Agreement and, with respect to Avenel Alliance Trade Secrets
or the Company's trade secrets, the parties hereto shall be bound by the terms
of this Section 5 indefinitely until such items cease to be trade secrets.
6. Representations, Warranties and Covenants of the Company.
6.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
organization, has all requisite corporate power and authority to execute and
deliver this Agreement and holds all licenses, permits and other required
authorizations from governmental authorities necessary to conduct its business
as it is now being conducted.
6.2 Authorization and Validity. The Company has full authority and
legal capacity to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement, when executed, will constitute
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws and subject
to general principles of equity.
6.3 Capitalization. Upon the date of the issuance of the stock and
warrants (pursuant to Section 2.4 hereof), the authorized capital stock of the
Company shall consist of 1,000,000,000 shares of Common Stock, par value $.00001
per share ("Common Stock"), 746,787,820 shares of which are issued and
outstanding; 600,000 shares of Series A 4% Convertible Preferred Stock, par
value $.001 per share ("Series A Preferred Stock"), 50,000 shares of which are
issued and outstanding; 375,000 shares of Series B 10% Convertible Preferred
Stock, par value $.001 per share ("Series B Preferred Stock"), 7,200 shares of
which are issued and outstanding; and 300,000 shares of Series D 15% Convertible
Preferred Stock, par value $.001 per share ("Series D Preferred Stock"), 25,000
shares of which are issued and outstanding (the Series A Preferred Stock, Series
B Preferred Stock and Series D Preferred Stock are, collectively, the "Preferred
Stock"). All the shares of Common Stock and Preferred Stock will have been duly
authorized, validly issued and will be fully paid, nonassessable and free of
preemptive rights.
6.4 No Infringement. The Company owns the Company Marks, including
its patents and copyrights, and the Company Marks do not (i) infringe upon or
misappropriate in any manner any intellectual property rights of any third
parties, (ii) violate any laws or regulations, (iii) violate rights of any
person or entity, including, without limitation, rights of privacy or publicity,
or (iv) otherwise result in any consumer fraud or other harm to any third party.
6.5 Compliance with Laws. The Company is operating and will continue
to operate its business in compliance with all applicable laws and regulations.
6.6 Access to Information. The Company agrees to make available to
Avenel Alliance such documents and other information as may be necessary to
monitor the Company's performance and for Avenel Alliance to perform the
Services and its other obligations hereunder.
6.7 Material Adverse Changes. The Company shall use its best efforts
to notify Avenel Alliance in writing of any material adverse change in its
business, financial condition or prospects during the Term hereof.
17
6.8 No Misrepresentations or Omissions. The Company's
representations and warranties are true as of the date hereof and shall remain
true at all times during the Term and there are no omissions which make such
representations misleading in any manner.
7. Representations and Warranties of Avenel Alliance.
7.1 Organization. Avenel Alliance is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
organization, has all requisite corporate power and authority to execute and
deliver this Agreement and holds all licenses, permits and other required
authorizations from governmental authorities necessary to conduct its business
as it is now being conducted.
7.2 Authorization and Validity. Avenel Alliance has full authority
and legal capacity to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement, when executed, will constitute
the legal, valid and binding obligation of Avenel Alliance, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws and subject
to general principles of equity.
7.3 No Misrepresentations or Omissions. Avenel Alliance's
representations and warranties are true as of the date hereof and shall remain
true at all times during the Term and there are no omissions which make such
representations misleading in any manner.
8. Indemnification.
8.1 Indemnification of Avenel Alliance.
(a) The Company shall indemnify and hold Avenel Alliance and its
parent, subsidiaries, affiliates and related entities and each
of their directors, members, officers, employees and agents,
harmless from and against all Indemnifiable Losses (as
hereinafter defined) which are actually and reasonably
incurred by Avenel Alliance in connection with, arising out of
or resulting from (i) any threatened, pending or completed
claim, action, suit or proceeding to which Avenel Alliance was
or is a party or is threatened to be made a party by reason of
Avenel Alliance's providing the Services to the Company
hereunder, (ii) the untruth, inaccuracy or breach of any
representation or warranty made by the Company in this
Agreement or (iii) the nonfulfillment or breach of any
covenant, agreement or obligation of the Company contained in
this Agreement. Provided, however, Avenel Alliance shall not
be indemnified for actions constituting bad faith, fraud,
gross negligence, willful breach of this Agreement or willful
or wanton misconduct with respect to the Company's business.
To the extent that Avenel Alliance has been successful on the
merits or otherwise in defense of any such claim, action, suit
or proceeding, Avenel Alliance shall be presumed not to have
engaged in any act of bad faith, fraud, gross negligence,
willful breach of this Agreement or willful or wanton
misconduct with respect to the Company's business.
(b) Expenses (including reasonable attorneys' and accountants'
fees) incurred by Avenel Alliance in defending any claim,
action, suit or proceeding pursuant to Section 8.1(a) (i)
above shall be paid by the Company in advance of the final
disposition of the matter upon receipt of an undertaking by or
on behalf of Avenel Alliance to repay such amount if Avenel
Alliance is ultimately determined not to be entitled to
indemnification by the Company.
8.2 Indemnification of the Company. Avenel Alliance shall indemnify
and hold the Company, its directors, officers, employees and agents, harmless
from and against all Indemnifiable Losses which are actually and reasonably
incurred by the Company in connection with, arising out of or resulting from (i)
any act or services performed by Avenel Alliance on behalf of the Company beyond
the scope of authority conferred upon Avenel Alliance by this Agreement, (ii)
the untruth, inaccuracy or breach of any representation or warranty made by
Avenel Alliance in this Agreement, or (iii) willful or wanton misconduct, bad
faith, fraud, gross negligence or willful breach of this Agreement by or on the
part of Avenel Alliance.
8.3 Notification. If any Indemnity (as hereinafter defined) receives
notice of the assertion or commencement of any claim against such Indemnitee
with respect to which an Indemnifying Party (as hereinafter defined) is
18
obligated to provide Indemnification under this Agreement, the Indemnitee will
give such Indemnifying Party reasonably prompt written notice thereof, but not
later than twenty (20) calendar days after receipt of such notice of such claim.
Such notice will describe the claim in reasonable detail, will include copies of
all material written evidence thereof and will indicate the estimated amount, if
reasonably practicable, of the Indemnifiable Loss that has been or may be
sustained by the Indemnitee. The Indemnifying Party will have the right to
participate in or, by giving written notice to the Indemnitee within ten (10)
calendar days, to assume the defense of any claim at such Indemnifying Party's
own expense and by such Indemnifying Party's own counsel (which counsel shall be
reasonably satisfactory to the Indemnitee), and the Indemnitee will cooperate in
good faith in such defense.
8.4 Defense of Action. If, within ten (10) calendar days after
giving notice of a claim to an Indemnifying Party pursuant to Section 8.3 above,
an Indemnitee receives written notice from the Indemnifying Party that the
Indemnifying Party has elected to assume the defense of such claim as provided
in the last sentence of Section 8.3 above, the Indemnifying Party will not be
liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if (i) the
Indemnifying Party does not assume the defense of such claim (or fails to notify
the Indemnitee that the Indemnifying Party desires to assume such defense as
provided herein), (ii) the Indemnifying Party fails to take reasonable steps
necessary to defend diligently such claim within ten (10) calendar days after
receiving written notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps, (iii) the Indemnitee is
advised by counsel that the Indemnifying Party has separate or inconsistent
defenses to a claim that create significant conflicts of interest or (iv) the
Indemnifying Party otherwise consents, the Indemnitee may assume its own
defense, and the Indemnifying Party will be liable for all reasonable costs or
expenses paid or incurred in connection therewith. Without the prior written
consent of the Indemnitee, the Indemnifying Party will not enter into any
settlement of any claim which could lead to liability or create any financial or
other obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder and which does not contain an
unconditional release of the Indemnitee with respect to such claim.
8.5 Notices. Notwithstanding any other provision of this Agreement,
failure to give timely notice or to include any specified information in any
notice as provided in Sections 8.3 or 8.4 above will not affect the rights or
obligations of any party hereunder, except and only to the extent that, as a
result of such failure, any party which was entitled to receive such notice was
materially prejudiced as a result of such failure.
8.6 Definitions. As used in this Section 8, the term
(i) "Indemnitee" means any person entitled to
indemnification pursuant to this Section 8;
(ii) "Indemnifying Party" means any person required to
provide indemnification pursuant to this Section 8; and
(iii) "Indemnifiable Losses" means any and all damages,
losses, liabilities, obligations, costs and expenses
related to or resulting from any claim, demand, action
or suit (by any person) for which indemnification is
required by this Section 8, including, without
limitation, the reasonable costs and expenses of any and
all actions, suits, proceedings, demands, assessments,
judgments, settlements and compromises relating thereto
and including reasonable attorneys' fees and expert
consultant fees and expenses incurred in connection
therewith.
8.7 Disclaimer. AVENEL ALLIANCE DISCLAIMS ALL WARRANTIES EXPRESS OR
IMPLIED WITH RESPECT TO THE SERVICES RENDERED BY ITS PERSONNEL OR THE RESULTS
OBTAINED FROM THEIR WORK, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OF FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL AVENEL
ALLIANCE BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL
19
DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS OR REVENUES OF THE COMPANY
OR ITS SUCCESSORS, ASSIGNS, AFFILIATES OR RELATED ENTITIES.
9. Nonsolicitation. Each party acknowledges that the other provides a
valuable service by identifying and assigning personnel to perform hereunder and
by permitting the other to work with its personnel on various projects. Each
party further acknowledges that the other would be deprived of the benefits of
its work force if the other party hires any of its personnel. Accordingly,
without the prior written consent of the other party, each party, on behalf of
itself, its affiliates, related entities, successors and assigns agrees not to,
and shall cause of each such entity's shareholders, directors, members,
officers, employees and agents, not to, directly or indirectly, recruit, hire,
or solicit for employment any of the other party's personnel, or attempt to do
any of the foregoing, during the Term hereof and for one (1) year after the
termination of this Agreement. This covenant shall survive the termination of
this Agreement.
10. Governing Law; Arbitration. This Agreement shall be construed in
accordance with, and shall be governed by, the laws of the State of Florida
(without regard to the choice of law provisions thereof). Any controversy or
claim arising out of or relating to this Agreement, or breach thereof, shall be
settled by arbitration in accordance with the Arbitration Rules of the American
Arbitration Association. The Arbitration Tribunal shall consist of three (3)
arbitrators, of whom one shall be nominated by Avenel Alliance, one by the
Company, and the third, who shall serve as Chairman, shall be chosen by the two
party-nominated arbitrators or, in the event that party-nominated arbitrators
are unable to designate the third arbitrator, by the American Arbitration
Association. The award of the arbitrator shall be final and binding. Judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The parties waive any right to appeal the arbitral award,
to the extent a right to appeal may be lawfully waived. Each party retains the
right to seek judicial assistance (i) to compel arbitration, (ii) to obtain
interim measures of protection pending arbitration or (iii) to enforce any
decision of the arbitrators, including the final arbitral award. The prevailing
party in the arbitration shall be entitled to receive reimbursement of its
reasonable expenses incurred in connection therewith.
11. Entire Agreement; Amendment; Waiver. This Agreement, the Schedules
attached hereto and the warrant and other agreements contemplated hereby,
contain the entire understanding and agreement between the parties relating to
the subject matter hereof, except as otherwise referred to herein. Neither this
Agreement nor any provisions hereof may be waived, modified, amended, changed,
discharged or terminated, except by an agreement in writing signed by the party
against whom enforcement of any waiver, modification, change, amendment,
discharge or termination is sought. No waiver of any provision of this Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver.
12. Notices. Every notice or other communication required or permitted to
be given by this Agreement shall be in writing and shall be deemed received when
delivered to the other party personally or by confirmed facsimile or if mailed,
three (3) business days after it is deposited in the United States mail,
certified or registered, return receipt requested, postage prepaid, addressed as
follows, or to such other address that such party may have specified by notice
given to the other parties in accordance with this Section 12:
If to the Company to: Vertical Computer Systems, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxx, President
If to Avenel Alliance to: Avenel Alliance, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
20
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxx Xxxxxx, Esq.
13. Binding Effect; Assignment. The provisions of this Agreement shall
inure to the benefit of and be binding upon the parties and their respective
successors and permitted assigns. This Agreement may not be assigned by either
party without the prior written consent of the other party hereto; provided,
however, Avenel Alliance may assign this Agreement to its parent, subsidiaries,
affiliates and related entities without the consent of the Company.
14. Severability. If any provision or part of any provision of this
Agreement shall be invalid or unenforceable in any respect, such provision or
part of any provision shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts of such
provision or the remaining provisions of this Agreement.
15. No Third-Party Beneficiaries. This Agreement is not intended to, and
shall not be construed to, create any right enforceable by any person not a
party hereto, including any creditor of the Company or of Avenel Alliance.
16. Independent Contractor; No Agency. Each party hereto is engaged in an
independent business and will perform its obligations under this Agreement as an
independent contractor and not as an agent or representative of the other party.
Neither party will have any right or authority to create any obligation or make
any representation or warranty in the name of or on behalf of the other party.
17. Force Majeure. Avenel Alliance shall have no liability for any failure
or delay resulting from any act of God, war, governmental action, legal
prohibition, fire, power failure, labor or materials shortage, carrier
interruption of any kind or other condition beyond the reasonable control of
Avenel Alliance affecting its ability to perform the Services hereunder.
18. Further Assurances. Each party agrees to execute such additional
instruments and take such actions as may be reasonably requested by the other
party to carry out the intent and purposes of this Agreement.
19. Construction. Unless the context otherwise requires, whenever used in
this Agreement, the singular shall include the plural and the plural shall
include the singular.
20. Counterparts/Facsimile Signatures. This Agreement may be executed in
counterparts (whether by facsimile or otherwise), each of which shall be deemed
an original, and all of which shall together constitute one and the same
agreement.
21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
THE COMPANY:
VERTICAL COMPUTER SYSTEMS, INC.
By: _________________________
Xxxxxxx Xxxx
Its: President
ATTEST:
By: ________________________
Its: Secretary
AVENEL ALLIANCE:
AVENEL ALLIANCE, INC.
By: _________________________
Xxxxxxxxxxx Xxxxxxxx
Its: Senior Vice President
ATTEST:
By: ________________________
Its: Secretary
22
SCHEDULE A
SERVICES
The following outlines the currently identified services to be provided to the
Company by Avenel Alliance relating solely to the operation of the Company's
portal sites, xxxxxxxxxx.xxx, and CCP Software (the "Products"):
PARTNER MARKETING SERVICES
Avenel Alliance shall use commercially reasonable efforts to market, promote,
introduce, represent or refer the Company to other entities identified by Avenel
Alliance in the industry in order to find potentially beneficial partners and
establish relationships for the Company ("Partner Marketing Services"). THE
COMPANY UNDERSTANDS THAT AVENEL ALLIANCE MAY ALSO HAVE AGREEMENTS OR
UNDERSTANDINGS WITH THE PARTNER COMPANIES OR OTHER THIRD PARTIES TO WHOM AVENEL
ALLIANCE REPRESENTS THE COMPANY AND BY EXECUTION OF THIS AGREEMENT EXPRESSLY
CONSENTS TO AVENEL ALLIANCE'S ACTING AS AN AGENT FOR AND REPRESENTING EACH SUCH
PARTY.
BUSINESS DEVELOPMENT SERVICES*
Avenel Alliance shall use commercially reasonable efforts to serve as a business
development resource for the Company to create opportunities for the expansion
of the Products:
o Identify opportunities with e-commerce companies, technology
providers and other marketing vehicles for co-branded or private
label sites where appropriate
o Assist in the development of material for the purpose of presenting
the Products to prospective users |X| Represent the Company at
various trade shows, conventions and industry functions for the
purpose of fostering revenue-based relationships for the Products or
the Company as directed
o Identify and xxxxxx relationships with targeted organizations for
the purpose of instituting a revenue-based relationship for the
Products
o Target suitable prospects and work in conjunction with
the Company's staff to present the Products
o Establish a mutual benefit and profitability model for
organizations with an interest in the Products and
propose the terms of a joint venture relationship, as
well as aid in structuring such relationship
o Provide oversight on deployment and integration
o Assist in the development and execution of a Company affiliate
program
23
SALES AND MARKETING SERVICES*
Avenel Alliance shall use commercially reasonable efforts to provide the
following sales and marketing services:
o Review and make recommendations on existing or proposed marketing
initiatives of the Company related to Products that include:
o Consumer-direct marketing plans
o Business to business marketing plans
o Marketing plans for the purpose of licensing sales
o Media strategies and spending
o Tailor client marketing initiatives through strategic planning and
predictive research
o Public Relations' plans and execution strategies of the Company
related to the Products:
o Design and utilization of media lists
o Messaging points strategies
o Provide direction and introductions to position Company
staff as industry experts through public speaking
engagements and visible positions within the industry
o Recommendations on the structure of permission-based online direct
marketing programs for the Company related to the Products:
o Creative element input
o Establish e-mail campaign elements and goals
o Creation of Customer Relationship Management (CRM)
o Develop membership loyalty and retention initiatives
o Provide strategies for cross-selling and up-selling
customer database
o Develop highly segmented target audience profiles and
other advice and counsel with respect to audience
selection o Provide ROI tracking methods and designs o
Make recommendations on updated messaging (creative and
placement) based on quantifiable results
24
MERGER AND ACQUISITION SERVICES*
Avenel Alliance shall use commercially reasonable efforts to provide the
following acquisition services as directed by the Company:
o Identify areas where an acquisition may add value to the Company
o Identify and recommend strategic acquisition candidates
o Aid in the structuring of acquisitions, mergers or joint ventures
o Aid in post-acquisition integration
CLIENT MANAGEMENT AND ACCOUNT SERVICES*
Avenel Alliance shall use commercially reasonable efforts to provide the
following account management and marketing services:
o Review and make recommendations on existing or proposed account
management programs
o Provide structures and requirements
o Identify staffing requirements
o Create job descriptions
o Propose and assist in selection of candidates
WEB SITE ANALYSIS*
Avenel Alliance shall use commercially reasonable efforts to perform an analysis
of current or proposed consumer or business targeted web sites and accompanying
forms, surveys, transaction capabilities, databases, graphic user interface
(GUI) and fulfillment in order to make recommendations on:
o Improved customer retention
o E-commerce functionality and strategies
o Overall design and aesthetics
o Improving conversion ratios and pull-through rates
o Implementation of point-of-sale opportunities
* ANY SERVICES WITHIN THESE CATEGORIES THAT RESULT IN AVENEL ALLIANCE
INTRODUCING OR REPRESENTING THE COMPANY TO OTHER ENTITIES IN THE INDUSTRY OR
FINDING POTENTIAL PARTNERS OR ESTABLISHING RELATIONSHIPS FOR THE COMPANY SHALL
ALSO BE DEEMED TO BE "PARTNER MARKETING SERVICES" AND SHALL BE SUBJECT TO THE
PROVISIONS OF THIS AGREEMENT THAT GOVERN PARTNER MARKETING SERVICES.
25
