EXHIBIT 2.1
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SOFTWARE LICENSE AGREEMENT
THIS SOFTWARE LICENSE AGREEMENT (the "License Agreement") is made as of
Monday, July 23, 2007 (the "Effective Date") by and between Semotus Solutions,
Inc. ("Licensor") and Xxxxxxxx.xxx, Incorporated ("Customer" or "Innofone").
This Agreement consists of this signature page, the Basic Terms and
Conditions and the attached Exhibits, which are part of this Agreement and are
incorporated herein by reference. Each party has read, understands and agrees to
the terms and conditions of this Agreement.
ACCEPTED BY CUSTOMER
Semotus Solutions, Inc Xxxxxxxx.xxx, Incorporated
By: /s/ Xxxxxxx XxXxxx By: /s/ Xxxx Xxxxxxxx
Name: Xxxxxxx XxXxxx Name: Xxxx Xxxxxxxx
Title: CEO Title: CEO
Address for Formal Notice: Address for Formal Notice:
Semotus Solutions, Inc. Xxxxxxxx.xxx
000 Xxxxxxxxxx Xxx., Xxxxx 000 0000 Xxxxx Xxx., #0000
Xxx Xxxxx, XX 00000 Xxxxx Xxxxxx, XX 00000
Attn: General Counsel Attn: General Counsel
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BASIC TERMS AND CONDITIONS
ARTICLE 1: DEFINITIONS
"Documentation" means such manuals, documentation and any other supporting
materials relating to the Licensed Software as are currently maintained by
LICENSOR and generally provided to its licensees. Documentation is considered
part of the related Licensed Software.
"Intellectual Property Rights" means any and all rights existing now or in the
future under patent law, copyright law, industrial design rights law, moral
rights law, trade secret law, trademark law, unfair competition law, publicity
rights law, privacy rights law, and any and all similar proprietary rights, and
any and all renewals, extensions, and restorations thereof, now or hereafter in
force and effect worldwide, including, without limitation, in the United States.
"Internal Use" means Customer's internal accounting, inventory, word or data
processing or other internal uses in the United States, but shall exclude any
and all commercial applications or uses in connection with or directly for the
benefit of customers and/or third parties.
"Licensed Software" means the executable files of the computer software obtained
by Customer under this Agreement, any extracts from such software, derivative
works of such software, or collective works constituting such software (such as
subsequent releases) to the extent offered to Customer under this Agreement, and
the related Documentation. The Licensed Software is further described in Exhibit
A, attached hereto and incorporated herein.
"Warranty Period" means the ninety (90) day period beginning on the date of
delivery of the Licensed Software.
ARTICLE 2: SOFTWARE LICENSE
2.1 License. Subject to the terms and conditions of this License Agreement,
LICENSOR grants Customer a worldwide, nonexclusive, royalty free, revocable and
nontransferable license to:
a. Internally use, copy, and display the Licensed Software; and
b. sublicense and distribute copies of the Licensed Software to third party
licensees for their Internal use, subject to a form of sublicense agreement
that has been approved by Licensor and other restrictions as set forth in
this Agreement.
Neither Customer nor its third party licensees may reverse engineer,
disassemble, decompile, or otherwise attempt to derive the source code of
the Licensed Software, nor may Customer sublicense any of the license
rights granted in this License Agreement to third party agents, resellers
or independent contractors.
2.2 Documentation License. Subject to the prior written authorization of
LICENSOR and to any conditions contained in that authorization, Customer may at
its own expense make copies of the Documentation, whereupon any and all such
copies will become and remain Documentation, subject to the terms and conditions
of this License Agreement. Customer will not remove and will affix to the media
upon which it is copied, any proprietary markings or legends placed upon or
contained within the Licensed Software or Documentation.
2.3 Use of Trademarks and Tradenames. Licensor grants to Customer the
non-exclusive terminable right to use certain of its name and marks during the
term of this License Agreement solely with respect to Customer's marketing and
licensing of the Licensed Software in accordance with the terms of this License
Agreement,
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including Exhibit B attached hereto and incorporated herein. Customer's right
created herein shall continue only as long as Customer's marketing and licensing
rights under this License Agreement remain in force. Upon termination of this
License Agreement, Customer will purge such name or marks from all materials,
letterheads, signs and any other media in which Customer displayed such names or
marks, and thereafter, neither Customer nor any parent, subsidiary or affiliate
shall use either the name or like sounding or appearing names or marks in any
fashion, anywhere. Customer shall maintain and allow Licensor to monitor the
quality of workmanship associated with its marks, and Licensor may terminate the
use of its marks if such quality falls below Licensor's own levels. Licensor
makes no representation or warranties as to the registration status of its
tradenames or trademarks. Customer shall notify Licensor of any infringement or
appropriation of Licensor's names or marks during the term of this License
Agreement. 2.4 Ownership. As between the parties hereto, and subject to the
licenses granted to Customer herein, Licensor or its licensors, as applicable,
own and shall retain all right, title and interest in and to the Licensed
Software, and all associated Documentation and all related modifications and
derivative works, and all intellectual property and Intellectual Property Rights
related thereto. Customer will immediately notify Licensor of any infringement,
misappropriation or violation of any Intellectual Property Rights of Licensor
that comes to Customer's attention. Customer will not infringe, and will use its
best efforts to preserve and protect Licensor's interest in all such
Intellectual Property Rights. In the event of any such infringement,
misappropriation or violation relating to the activities of Customer or any of
its officers, directors, employees, agents or contractors, Customer will take
all steps reasonably necessary to terminate any such infringement,
misappropriation or violation.
ARTICLE 3: ORDERS AND PAYMENTS
3.1 Payments. Innofone agrees to issue to Licensor three million seven hundred
and fifty thousand dollars ($3,750,000) worth of Innofone's restricted common
stock (the "Shares") at a price equal to the lower of (i) the average daily
closing price of Innofone's common stock for a period of twenty trading days up
to and including the day prior to the full execution of this License Agreement,
and (ii) the closing price of Innofone's common stock on the Effective Date (the
"Transaction Price"), to be issued within twenty four hours of the Effective
Date and including certain representations and registration rights, as set forth
in Exhibit C. Closing shall occur upon the completion of the issuance of the
Shares.
Fees for professional services, annual maintenance and support of the Licensed
Software are set forth in Exhibit D.
Future milestones between the parties are set forth in Exhibit E, attached
hereto and incorporated herein.
3.2 Shipping. Customer shall be able to download through the internet the
Licensed Software and the Documentation immediately upon Closing.
3.3 Taxes and Other Charges. In addition to all applicable license and
administrative fees, Customer will be responsible for paying any amounts equal
to all sales, use, personal property, value added, and any other taxes resulting
from this License Agreement or any activities under this Agreement, excluding
taxes based on LICENSOR'S net income, unless Customer furnishes proof of
exemption from payment of such taxes which is in a form reasonably acceptable to
LICENSOR. Any sum due LICENSOR for which a time of payment is not specified will
be paid within thirty (30) days after the date of invoice therefore from
LICENSOR. Any sums not paid when due shall automatically accrue interest from
the date when due until actually paid at rate of eighteen percent (18%) per
annum or the highest rate allowed by law, whichever is less.
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3.4 Audit. Licensor may, at any time during the term of this License Agreement
and with seven (7) days prior notice, request and gain access to Customer's
premises, for the limited purpose of conducting an inspection to determine and
verify that Customer is in compliance with the terms and conditions hereof.
Customer will promptly grant such access and cooperate with Licensor in the
inspection; provided, however, that the inspection will be conducted in a manner
not intended to disrupt unreasonably Customer's business and will be restricted
in scope, manner and duration to that reasonably necessary to achieve its
purpose. Licensor shall be provided with one (1) such audit per annum during the
Term of the License only.
ARTICLE 4: MAINTENANCE AND SUPPORT
Subject to the payment of annual maintenance fees, LICENSOR shall provide
maintenance and support for the Licensed Software as described on Exhibit F. New
contracts will need to purchase maintenance within 30 days of the Effective
Date, after that it will be considered lapsed. All maintenance renewals must be
paid by the annual anniversary date. There will be a software re-certification
fee for accounts with lapsed coverage; please see Exhibit D for fee amounts.
Lapsed maintenance coverage renewal will be retroactive to the previous annual
anniversary date. No maintenance or support will be provided by LICENSOR until
payment is received. Alternatively, Customer may pay for
engineering/professional services on a time and material basis at the LICENSOR's
standard hourly rates, as set forth in Exhibit D.
Customer may provide Level 1 Support to any of its licensees under the following
terms and conditions. Level 1 Support means the resolution of minor problems
with the Licensed Software and resolution of all issues related to or arising
from the physical infrastructure and functionality of the servers on which the
Licensed Software is installed. Customer shall provide Level 1 support to
Licensees at least 12 hours per day, seven days per week. Customer shall not
contact Licensor in connection with Level 1 support unless and until it has used
its best efforts to resolve the problem. Customer shall promptly notify Licensor
of all bugs that Customer determines to exist in the Licensed Software. Licensor
shall provide Xxxxx 0 training online to Customer at Licensor's standard hourly
rate. Customer must pass Licensor certification before being allowed to offer
Tier 1 support to its licensees.
Subject to the payment by licensees of maintenance and support fees directly to
Licensor, Licensor shall provide maintenance and support in accordance with
Exhibit F.
ARTICLE 5: REPRESENTATIONS AND WARRANTIES
Limited Product Warranty. LICENSOR warrants that during the Warranty Period the
Licensed Software shall conform in all material respects to the specifications
set forth in the LICENSOR'S Documentation. LICENSOR does not warrant that
operation of the Licensed Software will be uninterrupted or error free. In the
event of a breach of the foregoing warranty, LICENSOR'S sole obligation, and
Customer's sole and exclusive remedy, for such breach shall be that LICENSOR
shall make all commercially reasonable efforts to promptly correct the
non-conforming Licensed Software without charge. Licensee expressly acknowledges
and agrees that the use of the Licensed Software is at Licensee's sole risk. THE
FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, AND LICENSOR EXPRESSLY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED
WARRANTIES OF MERCANTABILITY, FITNESS FOR A PARTICULAR PURPOSE.
Product Representations. Customer shall deliver the Licensed Software to
licensees with Licensor's then current license agreement generally accompanying
the Licensed Software, as it may be amended by Semotus from time to time.
Customer shall make no, and shall indemnify Semotus for any claims arising out
of, representations or
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warranties concerning quality, performance or other characteristics of the
Product other than those which are consistent in all respects with, and do not
expand the scope of, the warranties contained in the applicable license
agreement. Customer agrees to conduct its business in a manner that reflects
favorably at all times on the Licensed Software and the good name, goodwill and
reputation of Semotus. Customer shall identify Semotus as the owner of the
Licensed Software.
Compliance with Laws. Customer shall comply with all applicable supranational,
national, and local laws and regulations in performing its duties hereunder.
Customer must obtain, at its own expense, all necessary registrations, licenses,
permits and approvals as required by any government to import and/or export,
promote, market and resell the Licensed Software, and Semotus shall provide any
necessary information or supporting documentation upon Customer's reasonable
written request to assist Customer with its obligations under this Section.
Customer shall indemnify and hold harmless Semotus for any violation or alleged
violation of this Section.
General Representations and Warranties. Each party has the corporate power and
authority to enter into this Agreement, and to perform its obligations
hereunder. The execution and delivery by each party of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action by each party. This Agreement has been duly
executed and delivered by each party and constitutes the valid and binding
obligation of each party enforceable against it in accordance with its
respective terms, subject to the effects of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and to general equitable principles.
ARTICLE 6: INDEMNIFICATION
LICENSOR shall indemnify and hold Customer harmless from and against any third
party claim that the Licensed Software infringes an existing United States
copyright, provided that Customer promptly notifies LICENSOR in writing of any
such claim and allows LICENSOR to control, and fully cooperates with LICENSOR
in, the defense of any such claim and all related settlement negotiations.
Licensor shall pay any damages finally awarded in such legal action as a result
of such third-party claim. In the event an injunction is sought or obtained
against Customer's use of the Licensed Software as a result of any such
infringement claim, LICENSOR may at its sole option and expense, (a) procure for
Customer the right to continue using the affected Licensed Software or (b)
replace or modify the affected Licensed Software so that it does not infringe,
or (c) refund a pro rata portion of the license fee to the Customer, based on a
5 year life of the Licensed Software. LICENSOR shall have no liability to the
extent that any claim is based upon: (a) the unauthorized combination, operation
or use of any Licensed Software with software not supplied or specified by
LICENSOR; (b) the unauthorized alteration, modification or combination of any
Licensed Software if infringement could have been avoided by use of the
unaltered, unmodified or uncombined Licensed Software; or (c) the failure by
Customer to use the most current version of the Licensed Software. THE FOREGOING
CONSTITUTES THE ENTIRE LIABILITY OF LICENSOR, AND CUSTOMER'S SOLE AND EXCLUSIVE
REMEDY WITH RESPECT TO ANY CLAIMS OF INFRINGEMENT OF THIRD-PARTY RIGHTS.
Customer shall indemnify, defend and hold harmless Licensor, its officers,
directors, employees and agents (each a " Customer Indemnified Party") from any
and all claims, actions, damages, costs, liabilities, judgments or expenses
(including reasonable attorneys' fees and costs) incurred by any Customer
Indemnified Party arising from or related to (1) Customer's acts or omissions
under this Agreement, (2) commitments, claims or representations made by
Customer with respect to the Licensed Software outside the scope of the License
Agreement and/or without Licensor's authorization; (3) services provided by
Customer to any third party, including any licensee; (4) modifications made by
Customer to the Licensed Software; or (5) a breach by
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Customer of its agreement with a licensee or other third party. This provision
shall survive termination or expiration of the License Agreement.
ARTICLE 7: TERMINATION
7.1 Termination. Either party shall be in default if it fails to perform any of
its duties or obligations hereunder and fails to substantially cure such default
within twenty (20) days after written notice is given to the defaulting party.
Upon an event of default, the non-defaulting party may terminate this Agreement
by providing written notice of termination to the defaulting party, reserving
unto the non-defaulting party all other rights and remedies it may have under
this Agreement. If Customer is in default, LICENSOR reserves the right, in
addition to all other rights and remedies it may have, to withhold further
performance of its obligations under this Agreement and may repossess the
Licensed Software and Documentation.
7.2 Effect of Termination. Upon termination of this Agreement for any reason, or
of any licenses granted hereunder, (a) the provisions of Articles 8, 9, and 10
will survive and (b) Customer will promptly remove all affected Licensed
Software from all memory locations, return all copies of the affected Licensed
Software and Documentation to LICENSOR, and execute and deliver to LICENSOR a
certificate stating that all copies of the affected Licensed Software have been
removed and returned or destroyed.
ARTICLE 8: CONFIDENTIAL INFORMATION
Confidential Information shall mean and include: Licensed Software, its source
code, the Documentation and any and all confidential business, technical or data
processing information, trade secret or other proprietary information acquired
by Customer in the course of carrying out the License, whether or not conceived
of or prepared by Licensor or its agents, whether or not reduced to writing, and
whether or not in human readable or machine readable form. Customer will treat
and hold the Confidential Information in strict confidence. Customer
acknowledges that in the course of its relationship with Licensor, it and its
employees, Affiliates, contractors, subcontractors, officers and agents will
acquire or have access to the Confidential Information. Customer acknowledges
that the Confidential Information that is directly or indirectly disclosed by
Licensor to Customer or its employees, Affiliates, contractors, subcontractors,
officers or agents is confidential in nature, constitutes a valuable asset of
Licensor, is proprietary to Licensor, and is properly the subject of protection.
Customer further acknowledges that Licensor may have proprietary or confidential
information of third parties that they may rightfully use in the course of their
businesses. Customer further agrees that any entity or person who obtains or is
provided access to the Confidential Information as an Affiliate, agent or
contractor of Customer will do so only for the purpose of carrying out the
performance of specific terms of this Agreement and shall sign a non-disclosure
agreement with similar terms to this Section with Customer covering this
Confidential Information.
Customer agrees that as a material inducement to Licensor to enter into this
Agreement, neither Customer nor any of its employees, Affiliates, contractors,
subcontractors, officers or agents will use, disclose or otherwise make
available to any person or entity (except as required under the terms of this
Agreement) any of the Confidential Information during the term of this Agreement
or thereafter without the prior written consent of Licensor. Customer further
agrees that it will instruct its employees, Affiliates, contractors,
subcontractors, officers and agents not to, sell, lease, assign, transfer, copy
or reveal any of the Confidential Information obtained from Licensor or any
products or services that embody, in whole or in part, any Confidential
Information without the prior written consent of Licensor. Customer warrants
that it will take all steps necessary to ensure fulfillment of this obligation.
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To the extent the performance of its obligations under this Agreement requires
LICENSOR to be exposed to any information that is identified prior to disclosure
by Customer as being confidential or proprietary, LICENSOR shall not disclose
such information to any third parties and will use such information only to the
extent necessary to perform any support and maintenance services under this
Agreement; provided that this Section 8 shall not be applicable to information
in the public domain, or received from third parties under no obligation of
confidentiality or confidence, and that LICENSOR may reasonably use the name of
Customer, and a description of Customer's use of the Licensed Software, in
advertising and promotional literature.
ARTICLE 9: LIMITATION OF LIABILITY
Licensor's entire liability to Customer for damages concerning performance or
nonperformance by Licensor or in any way related to the subject matter of this
Agreement, and regardless of whether the claim for such damages is based in
contract, tort, strict liability, or otherwise, shall not exceed the amounts
paid by Customer under this Agreement.
ARTICLE 10: CONSEQUENTIAL DAMAGES WAIVER
EXCEPT FOR A BREACH OF ARTICLE 2 OR ARTICLE 8 BY CUSTOMER, IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR SPECIAL
DAMAGES, LOST PROFITS, OR LOST DATA, OR ANY OTHER INDIRECT DAMAGES, EVEN IF SUCH
PARTY HAS BEEN ADVISED AS TO THE POSSIBILITY OF SUCH DAMAGES.
ARTICLE 11: GENERAL
11.1 Force Majeure. Except with respect to the Customer's obligation to make
timely payments, neither party shall be held responsible for any delay or
failure in performance to the extent that such delay or failure is caused by
fires, strikes, embargoes, explosion, earthquakes, floods, wars, water, the
elements, labor disputes, government requirements, civil or military
authorities, acts of God or by the public enemy, inability to secure raw
materials or transportation facilities, acts or omissions of carriers or
suppliers, or other causes beyond its reasonable control.
11.2 Complete Agreement. This Agreement, any exhibits and schedules attached to
it, and any other terms and conditions incorporated by reference herein, contain
the entire understanding of the parties with respect to the subject matter
hereof, and supersede any and all related prior understandings and agreements,
oral or written. This agreement cannot be modified or amended except in a
writing signed by both parties.
11.3 Severability. If any provision of this Agreement is declared or found to be
illegal, unenforceable or void, then each provision not so affected will remain
in full force and effect.
11.4 Assignment. Customer may not assign this Agreement by operation of law or
otherwise without the prior written consent of LICENSOR. LICENSOR may assign any
of its rights and obligations under this Agreement. This agreement will bind
each party and its successors and assigns.
11.5 Disputes. This Agreement and the rights and obligations of the parties
hereunder shall not be governed by the United Nations Convention on Contracts
for the International Sale of Goods, the application of which is expressly
excluded by the parties hereto. The laws of the State of California, regardless
of the choice of law rules of such state or any other jurisdiction, will govern
this Agreement. All disputes arising out of this Agreement shall be subject to
the exclusive jurisdiction of either the state or federal courts located in San
Jose, California, and the parties agree and submit to the personal and exclusive
jurisdiction and venue of these courts.
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The laws of the State of California, other than choice of law rules, will govern
this Agreement. Customer agrees that the Licensed Software is and will remain
after termination of this Agreement the valuable, proprietary, and confidential
property of LICENSOR, that any violation of Article 8 would cause LICENSOR
irreparable injury for which it would have no adequate remedy at law, and that
LICENSOR will be entitled to preliminary and other injunctive relief against any
such violation. Such injunctive relief will be in addition to, and in no way
limitation of, any other remedies or rights that LICENSOR may have at law or in
equity.
11.6 No Waiver. No course of dealing, course of performance, or failure of
either party strictly to enforce any term, right or condition of this
Agreement shall be construed as a waiver of any other term, right or
condition. No waiver or breach of any provision of this Agreement shall be
construed to be a waiver of any subsequent breach of the same of any
provision.
11.7 Relationship of the Parties. Licensor and Customer are independent
contractors.
11.8 Fax Signatures. The parties hereby agree that signatures transmitted and
received via facsimile or other electronic means shall be treated for all
purposes of this Agreement as original signatures and shall be deemed
valid, binding and enforceable by and against both parties.
11.9 Press Releases. All press releases and other public announcements created
by Innofone regarding this Agreement shall not be released until approved
in writing by Licensor.
END BASIC TERMS & CONDITIONS
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EXHIBIT A
DESCRIPTION OF THE LICENSED SOFTWARE:
The foregoing are licensed in object or encrypted code form only: Minimum List Price
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Clickmarks Internal Development System of CIS (minimum configuration of 2 CPUs) CONFIDENTIAL
Clickmarks Production System of CIS (minimum configuration of 3 CPUs) CONFIDENTIAL
HipLinkXS See attached Pricing Sheets
HipLinkES
IQLink
RemLink
OpenLink
QuickLink
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EXHIBIT B
AUTHORIZED MARKS:
SEMOTUS; WIRELESS ARCHITECTS; HIPLINK; HIPLINKXS; HIPLINKES; CLICKMARKS
CUSTOMER'S OBLIGATIONS RE: SEMOTUS' (THE "CORPORATION'S") MARKS:
(a) Customer shall supply Corporation with a sample, prior to the release
of any web site launch, advertisement, brochure or other publicly
distributed documentation or material bearing a Xxxx or advertising the
Products in any way. Or, at any other time following reasonable written
notice from Corporation, Customer shall provide Corporation with a
sample of such advertisement, brochure or other documentation or
Material. Customer shall cooperate fully with Corporation to facilitate
periodic review of Customer's use of the Marks and of Customer's
compliance with this Agreement.
(b) If Corporation notifies Customer of any defect in any web site page,
advertisement, brochure or publicly distributed documentation or
material related to the Products or bearing a Xxxx, or any failure of
any of the foregoing to comply with the requirements of this Agreement,
Customer shall promptly remedy the defect or failure.
(c) Customer acknowledges that this Agreement does not transfer any rights
to use any Marks (except to the limited extent expressly set forth in
this Agreement) and that this Agreement does not and will not confer
any goodwill or other interest in any Marks upon Customer, al rights to
which remain with Corporation.
(d) Customer shall use the Marks in a manner that does not derogate from
Corporation's right in the Marks, and shall take no action that would
interfere with or diminish those rights. Customer shall not reproduce
or use the Marks in any manner whatsoever other than as expressly
authorized by this Agreement or permitted by applicable law without a
license. Customer shall not use as its own any xxxx, work or design
confusingly similar to any Marks, including without limitation any
xxxx, word or design that incorporates the word "Hip", Link",
"Clickmarks" or "Semotus" or any xxxx, word or design confusingly
similar thereto. Customer agrees that all use of the Marks by Customer
will inure to the benefit of Corporation.
(e) Customer agrees to use the appropriate trademark, product descriptor
and trademark symbol (either "TM" or circled "R"), and clearly indicate
Corporation's ownership of its Marks whenever any of the Marks is first
mentioned in any web site, advertisement, brochure or documentation, or
in any other manner in connection with the Products.
(f) Customer shall not use or imitate the trade dress of Corporation's
products or services relating to the Products.
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EXHIBIT C
STOCK ISSUANCE AND REGISTRATION RIGHTS AGREEMENT
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EXHIBIT D
Annual Maintenance and Support Fee: CONFIDENTIAL
Software Re-Certification Fee:
Professional Services Fees: CONFIDENTIAL
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EXHIBIT E
FUTURE MILESTONES
a. Semotus shall sell to Innofone certain assets consisting of its HipLinkXS and
Clickmarks software application products (the "Asset Sale") if the following
conditions are met. In consideration, Innofone shall pay five thousand dollars
($5,000) to Semotus within ten (10) days of full execution of this License
Agreement, two hundred forty five thousand dollars ($245,000) within ninety days
of full execution of this License Agreement, and Innofone shall issue to Semotus
a five hundred thousand dollar ($500,000) convertible promissory note. Innofone
must have one million dollars ($1,000,000) in operating cash at the time of the
closing of the Asset Sale and have resolved any pending litigation (carve out
for Caleum) prior to the close of the Asset Sale. Semotus shall have approval
authority regarding any material Innofone transaction during the period
commencing upon the payment of the $5,000 and continuing thereafter until the
close of the Asset Sale, such approval not to be unreasonably withheld.
Post-Closing Purchase Price Adjustment. In the event that the value of the
Shares following the Closing Date is less than $3.75 million, then and in that
event, the Post Closing Purchase Price Adjustment will be triggered. If the Post
Closing Purchase Price Adjustment is triggered, during each calendar month after
Closing and until the Asset Sale is Closed, Innofone shall promptly deliver
additional shares of its common stock such that Semotus shall have an aggregate
number of shares of Innofone common stock with an aggregate market value as of
the date of payment of no less than Three Million Seven Hundred Fifty Thousand
and 00/100 Dollars ($3,750,000) ("POST-CLOSING PURCHASE PRICE ADJUSTMENT").
Failure to deliver additional shares within 5 business days after month end will
result in termination of "Asset Sale" agreement.
Closing Contingencies:
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1. The appropriate legal documentation and definitive agreements relating
to the Asset Sale having been fully agreed upon by both parties and
fully executed; and
2. Completion of Due Diligence, the approval by each party's Board of
Directors, and Shareholder approval.
b. Upon the close of the Asset Sale, Semotus shall grant to Innofone a Right
of First Refusal to merge with and into Semotus (the "Merger"). The Right
of First Refusal is conditional upon the following factors: (i) Innofone
must have at least four million dollars ($4,000,000) in net shareholder
value, and (ii) Innofone must have at least two million dollars
($2,000,000) in operating cash. Net shareholder value means shareholders'
equity, as determined by the American Stock Exchange listing requirements.
Right of First Refusal. During the time period beginning from the Closing Date
of the Asset Sale and ending ninety (90) calendar days thereafter (the
"Restricted Period"), Innofone shall have a right of first refusal with respect
to any proposed merger undertaken by Semotus, as follows. In the event that,
during the Restriction Period, Semotus proposes to merge with another entity (a
"Proposed Transaction"), then Semotus shall send to Innofone notice in writing
of all of the terms of the Proposed Transaction (such notice, the "Offer
Notice"). The Offer Notice shall constitute an irrevocable offer to merge with
Innofone, on a basis similar to that described in the Proposed Transaction.
At any time within five (5) calendar days after receipt by Innofone of the Offer
Notice (the "Option Period"), Innofone may elect to accept the offer to merge
with Semotus under similar terms of the Proposed Transaction and shall give
written notice of such election, including all of the terms of the Innofone
Proposed Transaction (the "Acceptance Notice") to Semotus within the Option
Period.
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Semotus' Board of Directors shall then determine, in its sole discretion, which
merger transaction (the Proposed Transaction or the Innofone Proposed
Transaction) is in the best interests of Semotus and its shareholders. The
closing for any merger with Innofone shall take place within thirty (30) days
following the expiration of the Option Period. After the expiration of the
Option Period, if Innofone has not provided to Semotus an Acceptance Notice for
the merger under identical terms of the Proposed Transaction, then Semotus may
offer such merger on similar terms to third parties. However, in the course of
negotiation with third parties, if the terms of the Proposed Transaction are
materially modified, then Semotus shall again send an Offer Notice to Innofone
outlining any such material modification of the Proposed Transaction (the
"Revised Transaction") and shall grant Innofone a new Offering Period in which
to accept such Revised Transaction.
Post-Closing Purchase Price Adjustment. In the event that the value of the
Shares following the Closing Date is less than $3.75 million, then and in that
event, the Post Closing Purchase Price Adjustment will be triggered. If the Post
Closing Purchase Price Adjustment is triggered, during each calendar month after
Closing and until the Merger is Closed, Innofone shall promptly deliver
additional shares of its common stock such that Semotus shall have an aggregate
number of shares of Innofone common stock with an aggregate market value as of
the date of payment of no less than Three Million Seven Hundred Fifty Thousand
and 00/100 Dollars ($3,750,000) ("POST-CLOSING PURCHASE PRICE ADJUSTMENT").
Closing Contingencies:
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1. The appropriate legal documentation and definitive agreements relating
to the Merger having been fully agreed upon by both parties and fully
executed; and
2. The approval by each party's Board of Directors, shareholders and the
American Stock Exchange.
c. Innofone shall have the right to buy back the Shares in cash at the
Transaction Price ($3,750,000) should the Merger not close. This buy back option
will be valid for one year from the full execution of this License Agreement.
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EXHIBIT F
TECHNICAL SUPPORT AND ANNUAL MAINTENANCE DOCUMENT
Page 15
