EXHIBIT 10.22
INTANGIBLE ASSET PURCHASE AGREEMENT
This Intangible Asset Purchase Agreement (this "AGREEMENT") dated
November 23, 1998 (the "EFFECTIVE DATE") is made between Post Digital Software,
Inc. ("SELLER"), a California corporation doing business at 0000 Xxxxxxx Xxx.,
Xxxxx 000, Xxxxx Xxxx, XX 00000, and Radius Inc., a California corporation doing
business at 000 Xxxx Xxxxxxxxxxx Xxxx, Xxxxxxxx Xxxx, XX 00000, and Radius
(Cayman Islands) Ltd., Radius Inc.'s wholly owned subsidiary, (collectively
"BUYER"). Seller is engaged in the business of designing, developing,
assembling, marketing and selling the "SOFTWARE" identified on EXHIBIT A. Buyer
owns other software and products which are complementary to the Software and
wants to acquire the Software and all related intellectual property from Seller.
The parties, therefore, agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
have the following meanings:
1.1 "CLOSING" means the day upon which the conditions to
concluding this Agreement are met and the parties exchange the deliveries
specified in Section 2 below.
1.2 "CONTRACTS" means those agreements between Seller and
third parties assumed by Buyer as of the Closing and which are listed on
EXHIBIT C, if any.
1.3 "DISCLOSURE SCHEDULE" means EXHIBIT B to this Agreement.
1.4 "INTANGIBLE ASSETS" means all right, title and interest
in and to the Software, the other intangible assets identified on EXHIBIT C to
this Agreement and all Intellectual Property Rights therein. The Intangible
Assets do not include the Third Party Intangibles (defined below).
1.5 "INTELLECTUAL PROPERTY RIGHTS" means any and all patents,
patents pending and other patent rights, copyright rights (including but not
limited to rights in audiovisual works), Moral Rights, trade secret rights,
trade and service marks, the right to bring any claim related thereto and the
right to receive income or payments therefrom and any other intellectual
property rights recognized by the law of any jurisdiction.
1.6 "MORAL RIGHTS" means any right to claim authorship of a
work, any right to object to any distortion or other modification of a work, and
any similar right, existing under the law of any country in the world, or under
any treaty.
1.7 "PURCHASE PRICE" means the purchase price payable to
Seller for the Purchased Assets as specified in Section 3.1 below.
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1.8 "PURCHASED ASSETS" means the Intangible Assets and
Seller's rights in the Contracts.
1.9 "SITE" means the street address of Radius Inc. set forth
in the introductory paragraph of this Agreement.
1.10 "SOFTWARE" means the computer program in object and
source code described on EXHIBIT A, including all predecessor versions, and all
related user and developer documentation.
1.11 "THIRD-PARTY INTANGIBLES" means the Intellectual Property
Rights of third parties specifically identified on EXHIBIT B to this Agreement.
1.12 "WARRANT" means the security defined by the provisions of
EXHIBIT D.
2. PURCHASE AND SALE.
2.1 PURCHASE AND SALE. On the Closing, Seller shall grant,
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase
and accept from Seller the Purchased Assets, free and clear of all liens,
claims, encumbrances, security interests, restrictions and rights of any third
parties other than the Third-Party Intangibles.
2.2 TRANSFER OF PURCHASED ASSETS. On or before the Closing,
Seller shall, at its expense, tender possession of the Purchased Assets to Buyer
at the Site or such other locations and times and by such means as have been
agreed by the parties.
2.3 FURTHER ACTION. On and after the Closing, Seller will
execute and deliver to Buyer such documents and instruments of transfer and take
such further action as may be reasonably requested by Buyer to transfer to Buyer
the Purchased Assets and vest or perfect in Buyer good and marketable title in
and to the Purchased Assets subject to the terms of this Agreement. Seller
hereby waives any Moral Rights with respect to the Software and Intangible
Assets.
2.4 NO ASSUMPTION OF LIABILITY. Except to the extent Buyer
assumes prospective liability under the Contracts, Buyer has not and will not,
by the execution, delivery or performance for this Agreement, or otherwise,
assume or otherwise become responsible for any liability or obligation of any
nature of Seller, including without limitation: (i) any liability or obligation
under contracts of Seller arising prior to the Closing; (ii) any tax liabilities
related to the Purchased Assets arising prior to the Closing; (iii) any taxes,
wage claims or liabilities for employment-related contributions or liabilities;
(iv) any liabilities arising from a failure to properly withhold from employees
or a failure to file required tax returns or reports with respect to employees
or consultants: and (v) any compensation or benefits to which the Seller's
employees are entitled from Seller (collectively referred to as "PRE-CLOSING
RISKS"). Seller hereby agrees to indemnify, defend and hold Buyer harmless from
and against all
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loss, liability, claims and expenses (including reasonable attorneys' fees)
related to such Pre-Closing Risks; provided that Buyer gives Seller reasonable
notice of such claim and reasonably cooperates in the defense and settlement of
such claim
3. PURCHASE PRICE AND MANNER OF PAYMENT.
3.1 PURCHASE PRICE. As consideration for the sale of the
Purchased Assets, Buyer will pay Seller payments pursuant to EXHIBIT E and
deliver the Warrant.
3.2 EXPENSES AND TAXES. Each party will bear its own costs
in preparing this Agreement and for taxes in connection with this Agreement and
the transactions contemplated hereby, except as set forth below. Seller agrees
that it shall be responsible for the timely payment of any applicable sales and
use taxes on the transfer of the Purchased Assets and will indemnify Seller from
all loss, liability, claim, risk and expense (including reasonable attorneys'
fees) occasioned by Buyer's failure to pay such taxes.
4. DUE AUTHORIZATION. As of the Effective Date and as of the
Closing:
4.1 BUYER. Buyer hereby represents and warrants to Seller
that Buyer has the full right, power, legal capacity and authority to execute
and delivery this Agreement and to perform its obligations hereunder, and that
no approval and consent of any other person, entity or governmental authority is
necessary to such performance hereof, except as shall be validly and timely
obtained before such performance is required.
4.2 SELLER. Seller hereby represents and warrants to Buyer
that Seller has the full right, power, legal capacity and authority to execute
and deliver this Agreement and to perform its obligations hereunder, and no
approval or consent of any other person, entity or governmental authority is
necessary to such performance thereof, except as shall be validly and timely
obtained prior to Closing.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Buyer that, except as set forth the
Disclosure Schedule attached hereto as EXHIBIT B, the matters set forth in the
following subsections of this Section 5 are true and correct as of the Effective
Date and the Closing.
5.1 CORPORATE ORGANIZATION AND GOOD STANDING. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of California. The nature of the business conducted or properties owned by
Seller do not require Seller to be qualified in any other jurisdiction. Seller
has all corporate power and authority to own, lease and operate its properties
and to conduct its business as such is presently conducted.
5.2 AUTHORIZATION FOR AGREEMENT. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary actions of its Board of Directors and its shareholders, and this
Agreement, when executed and delivered by Seller, will constitute the valid and
binding obligation of Seller,
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enforceable according to its terms.
5.3 NO BREACH OF STATUTE OR CONTRACT. Neither the execution
nor delivery by Seller of this Agreement nor compliance by Seller with the terms
and provisions hereof will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, the Articles of Incorporation or Bylaws of Seller, any judgment or
award of any court or arbitrator or any other material agreement (including any
material agreement with shareholders) or to Seller's knowledge any applicable
law to which Seller or any of the Purchased Assets is subject, nor will such
execution or delivery result in the creation of any lien or charge upon the
Purchased Assets. Seller is not a party to, or otherwise subject to any
provision contained in, any instrument evidencing indebtedness, any agreement
relating thereto or any other contract or agreement (including its Articles of
Incorporation) which restricts or otherwise limits Seller's power or authority
to transfer the Purchased Assets. Seller is not a party to any joint venture or
similar affiliation involving the Purchased Assets.
5.4 TITLE AND CONDITION OF PROPERTY. Seller owns all right,
title and interest in and to the Purchased Assets free and clear of all claims,
mortgages, liens, security interests or encumbrances of any nature other than
the Third Party Intangibles; and (i) to Seller's knowledge, the transfer of the
Purchased Assets to Buyer and Buyer's use thereof does and will not infringe
upon any Intellectual Property Rights of any third party and (ii) to Seller's
knowledge, no third party is using any element of the Purchased Assets nor
infringing on the Intellectual Property Rights therein.
5.5 LITIGATION. There are no actions, suits, investigations
or proceedings pending, or, to the knowledge of Seller, threatened (i) against
Seller, the Purchased Assets or any properties or rights of Seller which arose
out of or are based upon the ownership or use of the Purchased Assets before any
court, arbitrator or administrator or governmental body, and there is no
judgment, order, writ or decree of any governmental authority applicable to
Seller which might result in any material adverse change in the value of the
Purchased Assets or Buyer's ability to design, develop, assemble, market and
incorporate such Assets into Buyer's other products, (ii) challenging the
ownership or use, in any respect, of the Purchased Assets, or (iii) asserting
the invalidity of this Agreement or seeking to prevent any of the transactions
contemplated hereby. To the knowledge of Seller, no valid basis for any
successful action, suit, investigation or proceeding of the nature referred to
above exists, which if so asserted would have a material adverse effect on the
value of the Purchased Assets or Buyer's ability to design, develop, assemble,
market and incorporate such Assets into Buyer's other Products.
5.6 FINANCIAL RECORDS. On or before the Effective Date and
the Closing, Seller has made available to Buyer access to all records of Seller
pertaining to the Purchased Assets (the "FINANCIAL RECORDS").
5.7 UNDISCLOSED LIABILITIES. To Seller's knowledge, Seller
has no obligations or liabilities related to the Purchased Assets of any
material nature, including but not limited to employees or consultants, whether
absolute, accrued, contingent or
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otherwise, except and to the extent disclosed in the Disclosure Schedule or this
Agreement. (Buyer is not assuming any Seller obligations under this Agreement
except as set forth in Section 2.4.)
5.8 PROPRIETARY INFORMATION AGREEMENTS. All persons who have
had access to the confidential and proprietary information related to the
Purchased Assets have executed a non-disclosure agreement and assignment with
Seller. Concurrently with the execution of this Agreement, the rights to
enforce these agreements with respect to the Purchased Assets and the
confidential and proprietary information contained therein is being assigned to
Buyer to the extent necessary to preserve Buyer's Intellectual Property Rights
in the Purchased Assets. Xxxx Xxxxx was at all times an employee of Seller when
authorized to work on the Software.
5.9 SOFTWARE SPECIFICATIONS. The Software conforms to the
specifications included in EXHIBIT A. To Seller's knowledge, the current "bug
list" for the Software provided to Buyer is complete and Seller knows of no
other significant errors in the Software. The Software is year 2000 compliant
and does not contain any computer virus or keying mechanism.
5.10 LIQUIDATION. Seller intends to cease operations, satisfy
all creditor obligations and liquidate its remaining assets after the Closing.
Seller warrants that all creditor obligations will be satisfied in full or
assumed by responsible third parties prior to making any distributions to its
shareholders. To Seller's knowledge, the consideration to be received from
Buyer for the Purchased Assets is reasonable and fair in light of all
circumstances.
5.11 NO OTHER WARRANTIES. Seller makes no other warranties in
connection with the Purchased Assets, express or implied, INCLUDING THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents
and warrants to Seller that the matters set forth in the following subsections
of this Section 6 are true and correct as of the Effective Date and the Closing.
6.1 CORPORATE ORGANIZATION AND GOOD STANDING. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California or the Cayman Islands, as applicable. Buyer has all
corporate power and authority to own, lease and operate its properties and to
conduct its business as such is presently conducted.
6.2 AUTHORIZATION FOR AGREEMENT. The execution and
performance of this Agreement by Buyer has been duly authorized by all necessary
actions of its Board of Directors, and this Agreement, when executed and
delivered by Buyer, will constitute the valid and binding obligation of Buyer,
enforceable against Buyer according to its terms.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. As of the Closing,
the
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following conditions have been satisfied, unless waived by Buyer in accordance
with Section 9:
7.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by Seller in Sections 4 and 5 above shall be
true and correct in all material respects on the Closing Date.
7.2 CORPORATE APPROVALS. On or prior to the Closing, this
Agreement and all transactions contemplated hereby shall have been duly and
validly authorized and adopted by the Board of Directors and shareholders of
Seller.
7.3 CONSENTS. Seller will have obtained all consents,
permits and waivers and made all filings necessary or appropriate for the
consummation of the transactions contemplated hereby, including but not limited
to the approvals of parties to the Contracts.
7.4 CLOSING CERTIFICATE. On the Closing Date, Seller shall
have delivered to Buyer a certificate signed by the chief financial officer of
Seller, dated the Closing Date and certifying to the fulfillment of the
conditions set forth in Sections 7.1, 7.2, and 7.3 above.
7.5 DELIVERIES OBTAINED. All deliveries to Buyer required to
be made by Seller under Section 2 hereof shall have been made.
7.6 DILIGENCE. Buyer is satisfied with the results of its
investigation of the Purchased Assets prior to the Closing and the terms under
which any Contracts are to be assigned.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. As of the
Closing, all of the following conditions shall have been satisfied, unless
waived by Seller in accordance with Section 9:
8.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by Buyer in Sections 4 and 6 above shall be
true and correct in all material respects on the Closing.
8.2 CORPORATE APPROVAL. On or prior to the Closing Date,
this Agreement and all transactions contemplated hereby shall have been duly and
validly authorized and adopted by the Board of Directors of Buyer, and Buyer
shall have delivered to Seller certified copies of the resolutions of its Board
of Directors authorizing the execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
8.3 CLOSING CERTIFICATE. On the Closing Date, Buyer shall
have delivered to Seller a certificate signed by the chief financial officer of
Buyer, dated the Closing Date and certifying to the fulfillment of the
conditions set forth in Sections 8.1 and 8.2 and that there have been no
material adverse changes to Buyer's financial conditions or business.
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8.4 DELIVERIES. Buyer shall deliver the Warrant and the
initial payment specified in EXHIBIT E.
9. WAIVERS OF CONDITIONS; TERMINATION; CERTAIN COVENANTS.
9.1 WAIVERS OF CONDITIONS. Either party can elect to waive
any condition for its benefit on prior written notice to the other party and
upon such waiver will not thereafter be able to seek any legal recourse against
the other party for the failure to satisfy such condition. In any event, Seller
shall have no liability to Buyer if the conditions identified in Section 7.3 are
not satisfied, provided that commercially reasonable efforts are made to satisfy
them during the term of this Agreement.
9.2 TERMINATION OF THIS AGREEMENT. This Agreement may be
terminated upon the mutual written consent of Seller and Buyer, and will be
terminated in any event if the Closing has not occurred by January 31, 1999
(unless extended by agreement of the parties), in which case only the
obligations of Sections 10 and 12 shall survive.
9.3 CERTAIN SELLER COVENANTS.
Until the termination of this Agreement or the Closing:
(a) Seller shall conduct its business with respect to
the Purchased Assets only in the ordinary course.
(b) Seller shall reasonably cooperate with Buyer in
the orderly transition of the business related to the Purchased Assets to
Buyer's control by the Closing.
(c) Seller shall use reasonable best efforts to
preserve for Buyer the good will of Seller's customers and others having
business relations with the Seller related to the Purchased Assets.
(d) Seller shall refrain from negotiating the license
or other form of transfer of any portion of the Purchased Assets with any third
party.
Until the first anniversary of the Closing, Seller shall
use reasonable commercial efforts to ensure that the operator of the Aptos Post,
Inc. web site provides reasonable links to Buyer's web site for site users
interested in the Software, all without charge to Buyer.
10. SURVIVAL, INDEMNIFICATION AND EXCULPATION.
10.1 INDEMNIFICATION OF SELLER. Buyer will defend, indemnify
and hold Seller (including Seller's officers, directors, shareholders,
employees, distributors and agents) harmless from all loss, liability, claims
and expenses (including reasonable
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attorneys' and experts' charges) (collectively, the "LOSSES") occasioned by
Buyer's breach of any of its representations and warranties herein, except to
the extent such Losses are caused by Seller's intentional misconduct or gross
negligence.
10.2 INDEMNIFICATION OF BUYER. Seller will defend, indemnify
and hold Buyer (including Buyer's officers, directors, shareholders, employees,
distributors and agents) harmless from all Losses occasioned by Seller's breach
of any of its representations and warranties herein, except to the extent such
Losses are caused by Buyer's intentional misconduct or gross negligence.
10.3 SURVIVAL. The representations and warranties of Seller
and Buyer pursuant to Articles 4, 5 and 6 respectively will survive as long as
any payments may be payable by Buyer to Seller pursuant to EXHIBIT E or until
the Warrant expires or is completely exercised, whichever is longer. Any
action for breach must therefore accrue prior to such expiration. The
provisions of Sections 1, 10 and 12 shall survive any termination or expiration
of this Agreement. The provisions of Section 12.4 (Confidentiality) shall
survive any termination or expiration of this Agreement for a period of three
years.
11. NONCOMPETITION AND NONSOLICITATION. As an inducement to enter
into this Agreement and consummate the transactions contemplated hereby, the
parties agree as follows:
(a) During the period from the Closing until the first
anniversary of the Closing (the "NONCOMPETE PERIOD"), Seller shall not (i)
develop or assist any other person, entity or venture in developing or
maintaining any software with substantially similar functionality to the
Software, nor (ii) knowingly induce any employee of Buyer to leave the employ of
Buyer without Buyer's written approval; PROVIDED, HOWEVER, that in the event
this Agreement is assigned or the Seller's assets and funds are distributed to
any individual persons in connection with any liquidation, dissolution or
winding up of Seller, the provisions of this Section 11 shall not be binding
upon such persons, unless Seller shall have previously breached this Section 11
or unless such person is Xxxxxxx Xxxxxxxx.
(b) During the Noncompete Period, Buyer and its affiliates
shall not knowingly induce any employee of Seller to leave the employment of
Seller in order to provide services to Buyer without Seller's written approval.
(c) The parties acknowledge and agree that money damages may
not be an adequate remedy for any breach or threatened breach of the provisions
of subparagraph (a) or (b) of this Section 11 and that, in such event, the
aggrieved party or its successors or assigns may, in addition to any other
rights and remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance, injunctive and other relief in order to
enforce or prevent any violations of the provisions of this Section 11
(including the extension of the Noncompete Period by a period equal to the
length of court proceedings necessary to stop such violation). Any injunction
shall be available without the posting of any bond or other security. In the
event of an alleged breach or violation of any of the provisions of this
Section 11, the Noncompete Period
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will be tolled until such alleged breach or violation is resolved; PROVIDED,
HOWEVER, that if it is found that the provisions of this Section 11 have not
been violated, then the Noncompete Period will not be deemed to have been
tolled. The parties agree that the restrictions contained in this Section 11
are reasonable in all respects in light of all circumstances.
12. MISCELLANEOUS
12.1 NO ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement
may not be assigned by Seller or Buyer and any attempt to do so will be void;
except that, subject to the provisions of Section 11, (i) Buyer may assign this
Agreement in connection with a merger or sale of substantially all of its assets
or similar reorganization, and (ii) Seller may assign this Agreement in
connection with the liquidation, dissolution and winding up of Seller provided
that Buyer is timely compensated for any increased administrative expenses
associated with such assignment as such expenses are incurred. This Agreement
and the terms and conditions contained herein are binding upon, and will inure
to the benefit of, the parties hereto and their respective representatives,
executors, administrators, heirs, successors and assigns.
12.2 SEVERABILITY. If any provision of this Agreement is found
to be invalid, illegal or unenforceable, then it will be enforced to the maximum
extent possible and the remaining provisions of this Agreement will continue
unaffected to the extent equitable. Moreover, if for any reason, other than the
knowing fault of Buyer, the transfer of any significant portion of the Purchased
Assets is found by a court to be invalid, illegal or unenforceable and any court
requires in a final judgment that Buyer either return same or relinquish its
ownership rights in a manner that materially and adversely affects Buyer's
interest in the Purchased Assets, then all payments made by Buyer and the
Warrant shall first be returned to Buyer, Buyer shall be relieved of all payment
obligations and Buyer shall continue to have the perpetual, nonexclusive,
irrevocable, transferable and sublicensable right to copy, use, modify, make
derivative works of, market, offer, sell and license all software elements of
the Purchased Assets (including documentation) and all trademarks and
tradenames associated therewith in consideration of the significant resources
devoted by Buyer to the further development of the Purchased Assets.
12.3 WAIVERS. No waiver by any party hereto of any term or
condition of this Agreement will be effective unless set forth in a writing
signed by such party. No waiver of any provision of this Agreement will be
deemed a waiver of any other provision, or constitute a continuing waiver unless
otherwise expressly provided in writing by the waiving party. No failure or
delay on the part of any party in exercising any right, power or privilege under
this Agreement will operate as a waiver thereof, nor will a single or partial
exercise thereof preclude any other or further exercise of any other rights,
powers or privileges.
12.4 CONFIDENTIALITY. Each party acknowledges that it will
receive information which is confidential and proprietary to the other party
(the "CONFIDENTIAL INFORMATION"). Each party agrees not to use the Confidential
Information except in performance of this Agreement and not to disclose the
Confidential Information to third
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parties. Each party shall take all reasonable steps to protect the
Confidential Information from unauthorized or inadvertent disclosure or use,
including without limitation, all steps that it takes to protect its own
proprietary information. Neither party will issue a press release in connection
with the entry into or Closing of this Agreement without the prior approval of
the other party, except as may be required by law
12.5 NOTICES. All notices which are required to be given
hereunder shall be in writing and shall be addressed (i) if to Seller, at
Seller's address set forth in the introductory paragraph of this Agreement, or
(ii) if to Buyer, at the address as set forth in the introductory paragraph of
this Agreement (each to the attention of the chief executive officer or chief
financial officer), or at such other address as the relevant party furnishes to
the other party hereto in writing pursuant to this Section. Any such notice may
be delivered personally, by commercial overnight courier or facsimile
transmission which shall be followed by a hard copy (U.S. mail prepaid, first
class or better) and shall be deemed to have been served if by hand when
delivered, if by commercial overnight courier 48 hours after deposit with such
courier, and if by facsimile transmission when transmission has been confirmed.
12.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts (original or facsimile), each of which shall be deemed an
original and all of which together shall constitute but one instrument.
12.7 BROKER'S FEES/EXPENSES. Each party represents that it
has not engaged the services of any broker or finder in connection with the
transactions contemplated by this Agreement and jointly and severally agree to
indemnify the other and hold it harmless from and against any claims for
broker's or finder's fees or other compensation in connection with such
transactions. Otherwise, each party will bear its own expenses in connection
with this Agreement.
12.8 DISPUTES. If any dispute arising out of or in connection
with this Agreement cannot be resolved by the parties consensually or through
mutually agreeable forms of mediation or arbitration, then such dispute shall be
adjudicated in any court of competent jurisdiction applying California law. The
parties agree that the state or federal courts of Santa Xxxxx County California
are competent to hear any such dispute and consent to service there.
12.9 NO ADDITIONAL REPRESENTATIONS. Buyer and Seller each
acknowledge that the other has not made any representations or warranties, of
any kind, either express or implied.
12.10 ATTORNEYS' FEES. If any action at law or in equity or
arbitration or mediation proceeding is necessary to enforce or interpret the
provisions of this Agreement, then the prevailing party shall be entitled to
reasonable attorneys' and experts' charges in addition to any other relief to
which such prevailing party may be entitled.
12.11 INTEREST. Except as otherwise provided in EXHIBIT E, any
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obligation under the Agreement which can be reduced to a monetary sum and which
is not satisfied when due under this Agreement will bear interest at the rate of
one percent per month or any lower legal maximum until satisfied.
12.12 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement,
together with the exhibits attached hereto, each of which is incorporated herein
by this reference, constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes in its entirety all prior
agreements, understandings, negotiations and discussions between the parties,
whether oral or written, with respect to the subject matter hereof. No
supplement, modification or amendment to this Agreement will be binding unless
executed in writing by all parties hereto. There are no intended third party
beneficiaries of this Agreement. An ambiguity or inconsistency in this
Agreement shall not be construed against its drafter. "Including" and "for
example" are used inclusively, without limitation. The adequacy and fairness of
consideration is acknowledged by each party.
[Balance of page left blank; signature block follows.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written:
POST DIGITAL SOFTWARE, INC. RADIUS INC.
By: By:
--------------------------- ---------------------------
Name: Xxxxxxx Xxxxxxxx Name: Xxxx Xxxxxxx
Title: Chief Executive Officer Title: Chief Executive Officer
Radius (Cayman Islands) Ltd.
By:
---------------------------
Name: Xxxx Xxxxxxx
Title: Chief Executive Officer
EXHIBITS
Exhibit A The Software and its Specifications
Exhibit B Disclosure Schedule and Third Party Intangibles
Exhibit C Other Intellectual Property and the Contracts
Exhibit D The Warrant
Exhibit E Payment Provisions
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EXHIBIT A
The Software and its Specifications
For the purpose of this Agreement, the term "Software" means:
The computer software programs developed by or for Post Digital, Inc. or its
shareholders that comprise the products known as "Roto" and "Media Paint" in
source and object code for all platforms, including Macintosh and Windows,
including but not limited to: (i) the HoloPaint Specification from June 23, 1998
including screen shots, (ii) related databases, (iii) the lite and full
versions; (iv) all other computer code and documentation created, designed,
published, conceptualized, developed, manufactured, assembled, produced,
acquired, licensed, distributed or otherwise disposed of by or for Post Digital
Inc. related to the foregoing, (v) all related or supplementary products and/or
programs related thereto, (vi) all derivative works, modifications,
alterations, amendments, corrections, updates, enhancements, changes, upgrades,
and additions to the foregoing, (vii) all know how, inventions, work in
progress, algorithms, diagnostic routines, processes related to or associated
with the foregoing, (viii) all business files and records relating to or used in
connection with the foregoing, (ix) any and all related manuals, logic diagrams,
flow charts, programmers' notes, and other documentation relating to the
foregoing and (x) bug data bases and tech support files.
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EXHIBIT B
THIRD PARTY INTANGIBLES
Strata Incorporated, a Utah corporation, jointly owns rights to the version of
the source code for Media Paint in existence when the Disengagement Agreement
among Strata Incorporated, Xxxx Media, Inc. and others was entered into as of
January 17, 1997, a copy of which has been provided to Buyer. Under the
Disengagement Agreement, Xxxx Media is restricted to using only the code that
was written as a part of the main application, and is free to develop and derive
any products for sale which are based on the shared source code for Media Paint.
Post Digital Software acquired all of Xxxx Media's right, title and interest to
Media Paint pursuant to the Software Acquisition Agreement among Xxxx Media,
Post Digital Software and others dated January 7, 1997, a copy of which has been
provided to Buyer.
DISCLOSURE SCHEDULE
The following are exceptions to the representations and warranties of
Post Digital Software, Inc. (the "SELLER") contained in the Intangible Asset
Purchase Agreement dated November 23, 1998 (the "AGREEMENT"), and should be
considered an integral part of the Agreement. The section numbers in this
Disclosure Schedule correspond to the section numbers in the Agreement. Any
terms defined in the Agreement shall have the same meaning when used in this
Disclosure Schedule as when used in the Agreement, unless the context otherwise
requires. Copies of agreements and documents described herein have been made
available to the Buyer.
5.4 TITLE AND CONDITION OF PROPERTY
See Exhibit B, "Third Party Intangibles" above; and Section 5.8,
"Proprietary Information Agreements" below.
5.5 LITIGATION
Letter from Puffin Designs, Inc. to Seller dated July 9, 1998, informing
Seller that Puffin Designs has filed a number of patent applications for
features of Commotion, its real time visual effects tool.
5.6 FINANCIAL RECORDS
Seller has not provided Buyer with any financial records.
5.7 UNDISCLOSED LIABILITIES
Seller has issued promissory notes to each of Xxx Xxxxxxxx and Xxxxxxx
Xxxxxxxx, each in the amount of $522,000.
14
5.8 PROPRIETARY INFORMATION AGREEMENTS
Neither Xxxx Xxxxx nor Xxxxx Xxxxx signed employment agreements with
invention assignment provisions. However, each of Xxxx Xxxxx and Xxxxx Xxxxx
were full-time employees, and each signed Seller's standard nondisclosure
agreement. The nondisclosure agreement between Xxxx Xxxxx and Seller is dated
May 6, 1997, and the nondisclosure agreement between Xxxxx Xxxxx and Seller is
dated May 13, 1997.
5.10 LIQUIDATION
Seller has issued promissory notes to each of Xxx Xxxxxxxx and Xxxxxxx
Xxxxxxxx, each in the amount of $522,000.
15
EXHIBIT C
Other Intellectual Property and Contracts
The trademarks and applications therefor of: "Roto" and variations thereof and
all goodwill associated therewith.
All trade dress, labels, logos and box designs, including specifications in all
forms, for all product packaging and promotional materials related to the
Software.
All marketing and promotional literature in all forms.
All prospective customer lists, the lead database from NAB, email addresses of
users registered via the web and the list of VARs who expressed an interest in
handling the Software.
The Roto web site pages and all related source HTML files and documentation
associated with the operation of such site.
Contracts
There are no Contracts assumed by Buyer.
16
EXHIBIT D
WARRANT
THE SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. NO SALE OR OTHER DISPOSITION OR PLEDGE OF THESE
SECURITIES MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING
THERETO OR AN EXEMPTION THEREFROM OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT A PROPOSED DISPOSITION OR PLEDGE IS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR A NO ACTION LETTER OR INTERPRETIVE OPINION
OF THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE ACT.
RADIUS INC. WARRANT
VOID AFTER NOVEMBER 23, 2002
1. THE WARRANT.
(a) THE GRANTING OF A WARRANT. This Warrant is executed and
delivered by Radius Inc., a California corporation (the "COMPANY"), to Post
Digital Software, Inc. (the "Holder") in connection with the closing of the
Intangible Asset Purchase Agreement dated November 23, 1998 (the "Purchase
Agreement").
(b) NUMBER AND PRICE OF SHARES SUBJECT TO WARRANT. Subject to the
terms and conditions herein set forth, Holder is entitled to purchase from the
Company, at any time commencing on the date hereof (the "EXERCISE COMMENCEMENT
DATE") until this Warrant has expired in accordance with subparagraph (e) below,
50,000 shares of fully paid and non-assessable shares of Common Stock of the
Company (the "SHARES") at a purchase price of $1.50 (one and one half dollars)
per share (the "WARRANT PRICE"). The number and purchase price of such shares
are subject to adjustment pursuant to paragraph 2 hereof. This Warrant will be
exercisable by the holder at any time after the earlier to occur of twelve
months from the date of the issuance hereof by its giving to the Company written
notice of its intent to exercise ("EXERCISE NOTICE") on or before the expiration
of this Warrant, in the form attached hereto as ATTACHMENT 1. Upon giving such
notice, the Holder will surrender this Warrant at the principal office of the
Company and pay the full purchase price for the Shares to be acquired upon
payment in cash or by check. Notwithstanding the foregoing, the Warrant will
not be exercisable until May 1, 1999, and then for only up to 12,000 shares.
Thereafter, the Warrant can be exercised for up to 12,000 shares plus an
additional 2,000 shares for each full month which has transpired since April 30,
1999. The Warrant will therefore not be exercisable for the entire 50,000
shares until December 1, 2000.
17
(c) NET EXERCISE. In lieu of exercising this Warrant pursuant to
Section 1(b) above, the Holder may elect to receive a number of Shares to be
calculated as follows:
X = Y(A-B)
------
A
where X = the number of shares of Common Stock to be issued to the
holder.
Y = the number of shares of Common Stock requested to be
exercised under this Warrant.
A = the fair market value of one (1) share of Common Stock.
B = the Warrant Price.
For purposes of the above calculation, current fair market value of
Common Stock shall mean with respect to each share of Common Stock:
(i) if traded on a national securities exchange or the Nasdaq
National Market (or similar national quotation system), the fair market
value shall be deemed to be the closing price (last reported sale) on
the day the current fair market value of the securities is being
determined;
(ii) if traded over-the-counter, the fair market value shall be deemed
to be the average of the closing bid or sales price (as applicable) over
the thirty calendar day period ending three days before the date of
calculation; or
(iii) if at any time the Common Stock is not traded as described in (i)
or (ii) above, the current fair market value shall be the highest price
per share which the Company could obtain from a willing buyer (not a
current employee or director) for shares of Common Stock sold by the
Company, from authorized but unissued shares, as determined in good
faith by its Board of Directors, unless the Company shall become subject
to a merger, acquisition or other consolidation pursuant to which the
Company is not the surviving party, in which case the fair market value
shall be deemed to be the value received by the holders of the Company's
Common Stock on a common equivalent basis pursuant to such merger or
acquisition.
(d) EFFECT OF EXERCISE. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
Shares issuable upon such exercise shall be treated for all purposes as the
holder of record of such shares as of the close of business on such date. As
soon as practicable on or after such date, the Company shall issue and deliver
to the person or persons entitled to receive the same a certificate or
certificates for the number of Shares issuable upon such exercise.
(e) TERM. Unless earlier exercised in whole, this Warrant shall
terminate and expire as of 5:00 p.m. local California time on November 23, 2002.
(f) PARTIAL EXERCISE. This Warrant may be exercised by the holder
from time to time as to all or a portion of the Shares subject hereto. In the
event that this Warrant is exercised as to only a portion of the Shares subject
hereto, the Company will, upon issuance of the Shares so acquired, deliver to
the holder a new Warrant representing the remaining Shares subject hereto.
18
(g) VALIDITY. The Warrant and Warrant Shares, when issued,
delivered and paid for in accordance with this Agreement, will be duly and
validly authorized and issued, fully paid and non-assessable and will not
subject the holder thereof to personal liability by reason of being such holder.
There are no preemptive rights of any shareholder of the Company, as such, to
acquire the Warrant or Warrant Shares.
2. (a) ADJUSTMENT FOR STOCK DIVIDENDS. In case at any time or from time
to time on or after the effective date hereof all holders of the Common Stock of
the Company (or any shares of stock or other securities at the time receivable
upon the exercise of this Warrant) shall have received, or, on or after the
record date fixed for the determination of eligible shareholders, shall have
become entitled to receive, without payment therefor, other or additional stock
of the Company by way of dividend, then and in each case, the Holder of this
Warrant shall, upon the exercise hereof, be entitled to receive, in addition to
the number of shares of Common Stock receivable thereupon, and without payment
of any additional consideration therefor, the amount of such other or additional
stock of the Company which such holder would hold on the date of such exercise
had it been the holder of record of such Common Stock on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by paragraphs (b) and (c) of this paragraph 2.
(b) ADJUSTMENT FOR RECLASSIFICATION, REORGANIZATION OR MERGER. In
case of any reclassification or change of the outstanding securities of the
Company or of any reorganization of the Company (or any other corporation the
stock or securities of which are at the time receivable upon the exercise of
this Warrant) on or after the date hereof, or in case, after such date, the
Company (or any such other corporation) shall merge with or into another
corporation or convey all or substantially all of its assets to another
corporation, then and in each such case the holder or this Warrant, upon the
exercise hereof at any time after the consummation of such reclassification,
change, reorganization, merger or conveyance, shall be entitled to receive, in
lieu of the stock or other securities and property receivable upon the exercise
hereof prior to such consummation, the stock or other securities or property to
which such holder would have been entitled upon such consummation if such holder
had exercised this Warrant immediately prior thereto, all subject to further
adjustment as provided in paragraphs (a) and (c); in each such case, the terms
of this paragraph 2 shall be applicable to the shares of stock or other
securities properly receivable upon the exercise of this Warrant after such
consummation.
(c) STOCK SPLITS AND REVERSE STOCK SPLITS. If at any time on or
after the date hereof the Company shall subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of shares receivable upon exercise of the Warrant shall be
proportionately increased; and, conversely, if at any time on or after the date
hereof the outstanding number of shares of Common Stock shall be combined into a
smaller number of shares, the Warrant Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares
receivable upon exercise of the Warrant shall be proportionately
19
decreased.
3. (a) CERTAIN INFORMATION RIGHTS. Subject to the provisions of Section
2 above, while a public market exists for the Warrant Shares, the Company agrees
to make and keep public information available, as those terms are construed in
Rule 144 under the Securities Act of 1933, to file with the commission in a
timely manner all periodic reports and to use its best efforts to file other
documents required of the Company under the such Act and the Securities Exchange
Act of 1934 for applicable time periods under Rule 144. Upon the request of any
Holder, the Company will furnish such Holder a copy of such filings. Holder can
elect to purchase Shares separately from this Agreement in order to become
eligible to receive information provided to all shareholders and can elect to be
on Company's non obligatory "courtesy copy" fax list in order to receive
corporate (as opposed to commercial or product) press releases along with other
interested parties by providing Company with current contact information from
time to time.
(b) SEC FILINGS. The Company represents and warrants that it has
filed all forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") (the "COMPANY SEC REPORTS"). The
Company SEC Reports, as well as all forms, reports and documents to be filed by
the Company with the SEC after the date of the Purchase Agreement, (i) were or
will be prepared in accordance with the requirements of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended, as the
case may be, and the rules and regulations thereunder, (ii) did not at the time
they were filed, or will not at the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, and (iii)
did not at the time they were filed, or will not at the time they are filed,
omit any documents required to be filed as exhibits thereto. No subsidiary of
the Company is required to file any form, report or other document with the SEC.
4. Holder represents and warrants to, and agrees with, the Company, that:
(a) PURCHASE FOR OWN ACCOUNT. This Warrant and the Warrant Shares
are being acquired for investment for Holder's own account, not as a nominee or
agent, and not with a view to the public resale or distribution thereof within
the meaning of the Act, and such Holder has no present intention of selling,
granting any participation in, or otherwise distributing the same.
(b) DISCLOSURE OF INFORMATION. Holder has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the Warrant. Holder has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the Warrant and the Warrant Shares and to obtain
additional information necessary to verify any information furnished to Holder
or to which Holder had access. Holder acknowledges receipt of Company's most
recent periodic reports on forms 10-K and 10-Q as well as all current reports on
form 8-K.
20
(c) INVESTMENT EXPERIENCE. Holder understands that the receipt of
the Warrants and the purchase of the Warrant Shares involves substantial risk.
Holder: (i) has experience as an investor in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can bear
the economic risk of such investment in the Warrants and Warrant Shares and has
such knowledge and experience in financial or business matters that Holder is
capable of evaluating the merits and risks of this investment in the Warrants
and Warrant Shares and protecting its own interests in connection with this
investment and/or (ii) has a preexisting personal or business relationship with
the Company and certain of its officers, directors or controlling persons of a
nature and duration that enables Holder to be aware of the character, business
acumen and financial circumstances of such persons.
(d) RESTRICTED SECURITIES. Holder understands that the Warrants and
the Warrant Shares are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under the Securities Act
and applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, Holder represents that Holder is familiar with Rule 144 of the
U.S. Securities and Exchange Commission, as presently in effect, and understands
the resale limitations imposed thereby and by the Securities Act. Holder
understands that the Company is under no obligation to register any of the
securities sold hereunder except as set forth in Section 11. Holder understands
that no public market now exists for the Warrant and that it is uncertain
whether a public market will continue to exist for the Warrant Shares.
(e) FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
the representations set forth above, Holder further agrees not to make any
disposition of the Warrant in whole or part or all or any portion of the Warrant
Shares unless and until:
(i) there is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(ii) (A) Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition, and (B) Holder shall
have furnished the Company, at the expense of Holder or its transferee, with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such securities under the
Securities Act.
Notwithstanding the provisions of paragraphs (i) and (ii) above, no such
registration statement or opinion of counsel shall be required: (1) for any
transfer of all or any portion of the Warrant or any Warrant Shares in
compliance with SEC Rule 144 or (2) for the transfer by gift, will or intestate
succession by Holder to his or her spouse or lineal descendants or ancestors or
any trust for any of the foregoing or (3) in connection with a final liquidating
distribution to creditors and shareholders of Holder which has been approved by
a court with jurisdiction and which is exempt from
21
federal securities laws; PROVIDED that in each of the foregoing cases the
transferee agrees in writing to be subject to the terms of this Warrant to the
same extent as if the transferee were the original Holder hereunder.
(f) LEGENDS. It is understood that the certificates evidencing the
Warrant Shares will bear the legends set forth below:
(i) THE SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. NO SALE OR OTHER
DISPOSITION OR PLEDGE OF THESE SECURITIES MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO OR AN EXEMPTION THEREFROM OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT A PROPOSED DISPOSITION OR PLEDGE IS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR A NO ACTION
LETTER OR INTERPRETIVE OPINION OF THE STAFF OF THE SECURITIES AND EXCHANGE
COMMISSION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.
(ii) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 if the California Corporations Code or any
other state securities laws.
The legend set forth in (i) above shall be removed by the Company from any
certificate evidencing Warrant Shares upon delivery to the Company of an opinion
by counsel, reasonably satisfactory to the Company, that a registration
statement under the Securities Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Company issued the Warrant Shares.
(g) PURCHASE AGREEMENT OFFSET. Holder or its predecessor has
received the Warrant in consideration in part for various undertakings in the
Purchase Agreement. The Company can elect to refuse to authorize the transfer
of any Warrant or the issuance of the Warrant Shares until all indemnification
and payment obligations to it under the Purchase Agreement (including Exhibit E)
are satisfied pursuant to the terms of the Purchase Agreement (other than by
discharge in bankruptcy); provided however, that such authorization of transfer
or issuance shall not be unreasonably withheld or delayed. This Section 4(g)
shall not apply to the proposed transfer of the Warrant or Warrant Shares to any
shareholder of the Holder in connection with the liquidation, dissolution and
winding up of Holder.
5. OTHER ADJUSTMENTS. Except as provided in paragraph 2, no adjustment on
account of dividends or interest on Common Stock will be made upon the exercise
hereof.
22
6. NO FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any subscription hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Common Stock on the date of exercise, as determined in good faith by the
Company's Board of Directors.
7. NO SHAREHOLDER RIGHTS. Until effectively exercised, this Warrant shall
not entitle its Holder to any of the rights of a shareholder of the Company. The
Company will not, by amendment of its charter or through reorganization,
consolidation, merger, dissolution, sale of assets or any other voluntary
corporate action, seek to avoid the observance or performance of any of the
terms of this Warrant and will at all times reasonably assist in the carrying
out of all such terms of the Warrant and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the Holder of this
Warrant in accordance with its terms.
8. EXERCISE OF WARRANT. The Holder's ability to exercise this Warrant is
subject to the Company having obtained any necessary regulatory approvals prior
to such exercise. The Company shall use its best efforts to obtain any such
consents after the date hereof. Subject to such approvals, this Warrant (or
portion thereof pursuant to Section 10) may be exercised by each registered
holder or each of its registered assigns on only four occasions and in minimum
increments of 10,000 shares of Common Stock (or any remaining shares of Common
Stock subject to this Warrant if the number of shares of Common Stock subject to
this Warrant is less than 10,000) by the surrender of this Warrant at the
principal office of the Company, accompanied by payment in full of the Warrant
Price as described above. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Common Stock issuable upon such exercise shall be treated for all purposes as
the holder of such Shares of record as of the close of business on such date.
As promptly as practicable on or after such date, the Company shall issue and
deliver to the person or persons entitled to receive the same, a certificate or
certificates for the number of full shares of Common Stock issuable upon such
exercise, together with cash in lieu of any fraction of a share as provided
above. The Company will at all times reserve and keep available, solely for the
issuance and delivery upon the exercise of this Warrant, such shares of Warrant
Shares and other stock, securities and property, as from time to time shall be
issuable upon the exercise of this Warrant.
9. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price is adjusted, as
herein provided, upon written request by the holder, the Company shall deliver
to the record holder of this Warrant a certificate of an officer of the Company
setting forth the (i) Warrant Price after such adjustment, (ii) setting forth a
brief statement of the facts requiring such adjustment, and (iii) the kind and
amount of stock or other securities or property into which this Warrant shall be
exercisable after such adjustment.
10. RESTRICTIONS ON TRANSFER OF WARRANT. This Warrant and all rights
hereunder are transferable, in whole or in part, subject to the provisions of
Sections 4(d), (e), (f) and (g) above; provided that Holder first offer the
Company the opportunity to acquire the Warrant on the same terms as are offered
to or by any bona fide third party (each
23
such opportunity expiring if the Company has not accepted the offer in writing
within seven business days after notice of the terms). The foregoing right of
first refusal shall not apply to the initial Holder's liquidating distribution
to its shareholders, nor to any transfer of the Warrant Shares. The terms of
this Warrant shall be binding upon the successors and assigns of the holder.
11. PIGGYBACK REGISTRATION AND MARKET STANDOFF AGREEMENT. If: (i) Holder is
unable to dispose of its Warrant Shares pursuant to Rule 144 of the SEC (or any
successor regulation) within the three months after the notice referred to
below; (ii) Holder desires to sell all 50,000 Warrant Shares as soon as
practicable (or as many as the Company's investment banker deems prudent); (iii)
the Company has conferred registration rights to third parties and such rights
have been effectively exercised; and (iv) in the Company's reasonable opinion
the inclusion of such Warrant Shares in a registration statement at such time
will not prejudice the rights and opportunity of such third parties or result in
a breach of the Company's obligations to such third parties; then the Company
will notify Holder of the opportunity to participate in such registered
offering. Unless Holder confirms its irrevocable election to participate in the
registered offering within ten days after receipt of such notice, then Holder
will be deemed to have waived its election to participate. If Holder timely
elects to participate, then Holder will enter into the same undertakings
regarding the registered offering as are applicable to the other selling
shareholders (e.g., indemnification). Holder's failure to timely do so will be
deemed to waive Holder's right to participate in the registered offering. If
Holder does not participate in the registered offering after being offered to
participate, the Company is not required to offer further opportunities to
participate in such registered offering and such nonparticipation by Holder
shall not affect Holder's right to participate in a subsequent registered
offering by the Company. In any event, Holder hereby agrees that it shall not,
to the extent requested by an underwriter of securities or the Company, sell or
otherwise transfer or dispose of any Shares (other than to donees or partners of
the holder who agree to be similarly bound) for up to one hundred eighty (180)
days following the effective date of a registration statement of the Company
filed under the Act; PROVIDED, HOWEVER, that all officers and directors of the
Company then holding Common Stock of the Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company shall have the right to
place restrictive legends on the certificates representing the Shares and to
impose stop transfer instructions with respect to the Shares (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.
12. MISCELLANEOUS. This Warrant shall be governed by the laws of the
State of California without giving effect to conflicts of law principles.
The headings in this Warrant are for purposes of convenience and reference
only, and shall not be deemed to constitute a part hereof. Neither this
Warrant nor any term hereof may be changed, waived, discharged or terminated
except by an instrument in writing signed by the Company and the registered
holder hereof. All notices and other communications from the Company to the
holder of this Warrant shall be mailed by first-class registered or certified
mail, postage prepaid, to the address furnished to the Company in writing by
the last holder of this Warrant who shall have furnished an address to the
Company in writing.
24
ISSUED this 23rd day of November, 1998 (the "Effective Date" of this agreement).
HOLDER - POST DIGITAL SOFTWARE, INC. RADIUS INC.
By: By:
------------------------ ------------------------
25
ATTACHMENT 1
EXERCISE NOTICE
1. The undersigned hereby elects to purchase _______ shares of the Common
Stock of Radius Inc. pursuant to the terms of the attached Warrant and to
utilize the net exercise provisions of Section 1(c) of the Warrant (unless
payment of the purchase price of such shares in full is made herewith.)
2. Please issue a certificate representing said shares in the name of the
undersigned or in such other name as specified below:
(Name)
(taxpayer ID#)
(Address)
3. The undersigned represents it is acquiring the shares solely for its own
account and not as a nominee for any other party and not with a view toward the
resale or distribution thereof except in compliance with applicable securities
laws.
(Date) (Signature)
26
Exhibit E Payment Provisions
Pursuant to Section 3.1 of the Intangible Asset Purchase Agreement dated
November 23, 1998, Buyer will pay Seller payments equal to:
(a) $50,000 upon the Closing (the "Initial Payment");
(b) $50,000 upon the earlier of (i) the first anniversary of the Effective
Date or (ii) the "Commercialization" of the Software by Buyer;
Commercialization means the first commercial shipment of any product of
Buyer containing twenty percent or more of the Software object code;
(c) "Unit Payments" equal to ten percent of Buyer's "Net Selling Price" (as
defined below) for the Software when sold on or licensed for the Apple
Macintosh platform; equal to four percent of Buyer's Net Selling Price
for the Software when sold on or licensed for the Windows platform; and
equal to seven percent of Buyer's Net Selling Price for the Software
when sold or licensed as a package for both the Apple Macintosh and
Windows platform ; and
(d) "Prorated Unit Payments" equal to a percentage of Buyer's Net Selling
Price when the Software or certain portions thereof are sold along with
other software or technology of Buyer. Prorated Unit Payments will be
calculated as follows: (i) the included Software must contain one or
more of the "app framework", "paint", "compositor", "particle",
"object", and "realtime playback" functionalities of the Software; (ii)
for each functionality included, the "Factor" will equal twenty percent
(not exceeding one hundred percent), i.e., the presence of two
functionalities would yield a Factor of forty percent; (iii) the list
price of the standalone Software product and the other Buyer product
will be established as "Roto ASP" and "Other Product ASP", respectively;
(iv) the applicable Unit Payment percentage will be established as ten,
four or seven percent depending on whether the combined product is for
use on the Apple Macintosh, Windows platform or both, as applicable;
(v) the "ASP Ratio" will then be determined as the Roto ASP divided by
the sum of the Roto ASP and the Other Product ASP; (vi) the Prorated
Unit Payment for a product sold will then equal the Unit Payment times
the Factor times the ASP Ratio. For example, assuming a Roto ASP and a
Other Product ASP of $1000 each for the Apple Macintosh platform with a
Factor of forty percent, the Prorated Unit Payment will then equal: 10%
times $1000 (assuming no netting factors) or $100 [i.e., the non
prorated Unit Payment] times the Factor of 40% times the ASP Ratio of
fifty percent, or $20.
Notwithstanding the foregoing, the total payments, that is the sum of the
Initial Payment, the payment upon the first anniversary of the Effective Date or
Commericalization, the aggregate Unit Payments and the aggregate Prorated Unit
Payments, will not exceed $750,000. Payments are due within 45 days after the
end of each quarter for transactions closed during such quarter. NET SELLING
PRICE shall mean gross sales revenue and licensing proceeds from all applicable
transactions during the applicable quarter excluding, if applicable, sales, use,
value added and similar taxes, shipping, insurance and actual discounts, less
returns and net deferrals arising from stock balancing, coop advertising, market
development and price protection
27
undertakings. Subject to the foregoing, Buyer will calculate and account for
gross sales revenue and Net Selling Prices from applicable products (i.e., those
containing one or more of the six functionalities of the Software referred to
above) in the same manner as such quantities are established for Buyer's other
products (i.e., those not containing any one of the six functionalities of the
Software referred to above). In the event Buyer assigns (voluntarily or by
operation of law) all of its rights in the Software to a third party or any
affiliate, then the assignee will be subject to the provisions of this Exhibit E
as if the assignee were the Buyer, unless either Buyer or the assignee elects to
and does pay the balance of all payment obligations potentially due in the
future hereunder (i.e., $750,000 less the sum of all payments previously made).
Revenue from the assignment of less than all of Buyer's rights in the Software
shall be treated like revenue from the sale of products including the Software
or the license of the Software pursuant to paragraph (c) above. All payments
under this Agreement will be made in United States currency by bank-to-bank wire
transfer to an account designated by Seller, unless otherwise specified by
Seller in writing.
In the event there are no list prices established for the Software or any other
products sold together with the product containing the Software or one or more
of the six functionalities, then Buyer will establish deemed list prices in good
faith in light of market value and demand. If Seller disputes such deemed prices
by notice to Buyer within thirty days after receipt of Buyer's quarterly report,
then the parties will cooperate to establish mutually acceptable prices.
However, if the parties do not arrive at such mutually acceptable deemed prices
within thirty days after notice of the dispute is given, then the parties will
submit the matter to an appraiser having extensive experience in setting prices
or establishing values for similar products or technology for binding
determination. If the parties cannot agree on the selection of an appraiser
within such time period, then either party can submit such selection for
determination to the American Arbitration Association or any court with
jurisdiction. After appointed, the appraiser will request relevant information
from each party, make such other inquiries as deemed appropriate and notify each
party of the determination and the bases therefore within thirty days. Seller
will bear the cost of the appraiser unless the appraiser determines that Buyer's
deemed list prices understated Seller's applicable payment obligation for the
applicable time period by more than ten percent, in which case Buyer will bear
the expense of the appraiser and promptly pay such deficiency to Seller.
Buyer reserves the right to reduce payments by any sums due it from Seller (its
predecessors and successors) which have not been paid on a net thirty day basis
and payment obligations pursuant to the Agreement. Moreover, Buyer can elect to
reduce payments by any Losses (as defined in Section 10.1 of the Purchase
Agreement) incurred by Buyer (i) in connection with claims by any third party
that the Software or its use infringes its rights whether or not Seller had any
knowledge of such risk of claim, (ii) in enforcing the Intellectual Property
Rights conferred by the Purchase Agreement against third parties who had access
to the Software prior to the Effective Date by or through Seller, (iii) as a
result of the illegality of Seller's entry into or performance of the Agreement
or (iv) as a result of the Xxxxxxx Xxxxxxxx engaging in any conduct prior to the
first anniversary of the Effective Date which would have violated the provisions
of Section 11 of the Agreement had Seller engaged directly in
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such conduct.
All amounts payable under this Agreement are inclusive of all sales, use,
value-added, withholding, and other taxes and duties. Buyer has no obligation to
pay such taxes. Seller will pay all taxes and duties assessed in connection
with these payments by any authority within or outside of the U.S to Seller
under this Agreement. Seller will promptly reimburse Buyer for any and all
taxes or duties that Buyer may be required to pay on Seller's behalf in
connection with each payment. If any withholding or similar tax must be paid
under the laws of any country outside of the U.S. based on the payments due to
Seller under this Agreement, then Buyer may elect to pay all such taxes and the
amounts payable to Seller under this Agreement will be decreased by the amounts
actually so paid. Buyer will provide Seller with written documentation,
including but not limited to copies of receipts, of any and all such taxes paid
on Seller's behalf in connection with this Agreement.
Buyer will maintain complete records regarding the distribution of relevant
products during and for two years after the termination Buyer's obligation to
make payments under this Agreement and for the duration of any dispute which
arises during such time period.
Within 45 days after the close of each quarter ending March 31, June 30,
September 30 and December 31, Buyer will deliver to Seller a report which will
provide all information reasonably necessary for computation and/or confirmation
of the payments, if any, due or credited to Seller for such quarterly period.
Such reports will identify the relevant products sold, the quantities sold, the
list prices of such products, the gross sales revenue therefrom, permissible
deductions to arrive at net revenue, any prorations or allocations of net
revenue and the payment(s) due less any permissible offsets or credits.
An independent certified public accountant selected by Seller (but responsible
to both Seller and Buyer as clients) may, upon reasonable notice and during
normal business hours, inspect the records of Buyer on which such reports are
based. If, upon performing such audit, it is determined that Buyer has
underpaid Seller by an amount greater than five percent of the payments due
Seller in the period being audited, Buyer will bear all reasonable expenses and
costs of such audit in addition to its obligation to make full payment. Such
sum will be paid within thirty days after invoicing by Seller. No transaction
may be audited more than once, nor more than three years after accrued. An
audit may be performed no more frequently than once during any twelve month
period.
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