LICENSE AND OPTION AGREEMENT
This License and Option Agreement (hereinafter "Agreement") is entered
into as of July 1, 1999 by and between Automated Solutions, Inc., a Utah
corporation (hereinafter "Licensor") and PrimeSource Communications Holdings,
Inc., a Delaware corporation, or its authorized designee company, provided such
designee is a wholly-owned subsidiary of PrimeSource Communications Holdings,
Inc., and is not a competitor of Licensor, (hereinafter together, "Licensee").
WHEREAS, Licensor desires to license to Licensee certain technology
described herein below; and
WHEREAS, Licensor desires to sell, and Licensee desires to purchase,
certain assets of Licensor as defined more clearly below and/or as shown in the
exhibits attached hereto; and
THEREFORE, the parties hereby agree as follows:
1. License Grant; Sublease; Equipment Lease.
1.1 In consideration of the non-refundable, irrevocable payment by
Licensee to Licensor of the sum of One Hundred Fifty Thousand Dollars ($150,000)
in immediately available funds (the "License Fee") payable $50,000 upon
execution of this Agreement and the remaining $100,000 not later than 12:00
noon, Friday, July 2, 1999, Licensor hereby grants to Licensee a fully-paid,
non-exclusive, non-assignable, perpetual license to use the Licensor's presently
existing source code (the "Source Code") for Licensor's data extraction software
known as the "Neural Cube?" and the "ADEPT System?" (collectively, the "Data
Extraction Technology") solely in connection with Licensee's data extraction
service bureau business whereby Licensee proposes to extract Current Data (as
such term is defined below) from paper forms and convert such data to electronic
files in a manner similar to Licensor's past practices (the "Field of Use"). For
purposes of this Agreement, "Current Data" shall mean data that has been entered
on paper forms by clients or customers or their affiliates no more than 180 days
prior to submission of such data to Licensee for extraction and conversion to
electronic files. Licensee's license hereunder is limited to the Field of Use.
Licensee acknowledges that its rights in the Data Extraction Technology are
limited to the license granted hereunder and that Licensor retains all right,
title and interest in and to the Data Extraction Technology except for the
limited license specifically granted to Licensee hereunder. Licensor hereby
grants to Licensee a fully-paid, non-exclusive, non-assignable, perpetual
license to use the Licensor's trade names "Neural Cube?" and "ADEPT System?
solely in the Field of Use. Licensee agrees to protect and to not denegrate such
trade names, or to modify, alter, change or revise the Source Code or Data
Extraction Technology or create or market any derivative thereof. If the
Licensee does not exercise the Option (as defined in Section 5 below) prior to
the expiration thereof, Licensor shall deliver to Licensee the Source Code in
tape medium. Licensee may engage Licensor, on mutually agreeable terms to
Licensor and Licensee to install the Data Extraction Technology for use by
Licensee at Licensor's facilities.
1.2 Licensor will license to Licensee all upgrades to the Data
Extraction Technology as and when such upgrades are fully developed and ready
for use; provided, however, Licensee shall, as a condition to receiving such
upgrade licenses, pay Licensor a reasonable and competitive license fee or
royalty in an amount mutually agreeable to Licensor and Licensee. In addition,
Licensor will license to Licensee ongoing Neural Cube? training updates and bug
fixes as such updates and bug fixes are fully developed and ready for use;
provided, however, Licensee shall, as a condition to receiving such training
updates and bug fixes, pay Licensor reasonable license fees or royalties in
amounts mutually agreeable to Licensor and Licensee. Except for liability
resulting from a breach of this Agreement, neither party shall be liable or
obligated under this Agreement or under contract, negligence, strict liability
or any other legal or equitable theory (i) for any amounts in excess of one half
of the License Fee (in the case of the Licensor) or (in the case of the
Licensee) amounts paid or owed by it hereunder or (ii) for any incidental or
consequential damages, lost profits, or lost or corrupted data or interrupted
use or costs of procurement or substitute goods, technology or services.
Licensor makes no warranties to any person or entity with respect to either the
Data Extraction Technology or the licenses granted hereunder or any updates,
upgrades or improvements thereto or any derivatives thereof or any services or
licenses and disclaims all implied warranties, including without limitation,
warranties of merchantability, fitness for a particular purpose and
non-infringement.
1.3 The Data Extraction Technology and the Source Code constitute
proprietary, copyrighted, and confidential information and material of Licensor.
Licensee hereby agrees to keep confidential and to not disclose to any
third-party the Source Code or the Data Extraction Technology. Licensee further
agrees to use the Source Code and the Data Extraction Technology only pursuant
to this License and only in the Field of Use. Licensee will bind its officers,
directors, employees and other persons under its control to this same obligation
of confidentiality and cause them to comply therewith.
1.4 In the event of a breach of this Agreement by Licensee, Licensor
may not be able to be adequately compensated by money damages. Consequently,
Licensor shall be entitled to an injunction and other equitable remedies, in
addition to any remedies available at law, without the necessity of posting a
bond or proving actual damages.
1.5 From the date hereof until 5:00 p.m. Mountain Daylight Time on July
16, 1999 (the "Sublease Term"), the Licensor hereby subleases to Licensee and
Licensee hereby leases from Licensor the real property located at 0000 Xxxx 0000
Xxxxx, Xxx, Xxxx (the "Real Property") and currently leased by Licensor from
C.C. Partnership (the "Landlord") pursuant to a real property lease dated
December 15, 1995, a copy of which has been delivered to the Licensee (the
"Senior Lease"). During the Lease Term, Licensee shall have the right to use the
Personal Property listed on Exhibit "B" hereto in the Field of Use on the Real
Property and shall protect, preserve and maintain such Personal Property in good
working order and condition. Licensee shall protect, preserve and maintain the
Real Property in good working order and condition during the Lease Term. The
Licensee agrees to (i) pay Licensor on the date hereof all amounts owing or
which are expected to become owing by Licensor to the Landlord during the
Sublease Term under the Senior Lease including rent in the amount of $4,000;
(ii) abide by and honor all of the terms of the Senior Lease and not cause
Licensor to be in default thereunder; and (iii) pay Licensor on the date hereof
$5,800 for utilities and telephone expenses, $5,000 for equipment-related lease
and other expenses for equipment included in the Personal Property listed on
Exhibit "B" and $1,000 for office supplies and other expenses. Licensee shall
pay all of its own operating and other expenses related to its business.
1.6 Starting from and after 12:00 noon, Friday, July 2, 1999, Licensor
shall have the right to hire the employees of Licensor (except Xxxxxxx X.
Xxxxxxx, Xxxxx Xxxxxx and Xxxx Xxxxxx). Licensor confirms its intent to hire
substantially all of Licensor's employees on that date and assume employment
related responsibilities and obligations with respect to the hired employees
from and after that date.
2. Assignment.
Neither this Agreement nor any rights, licenses or obligations
hereunder, may be assigned by Licensee including assignment pursuant to a
merger, change of control or operation of law without the prior written approval
of Licensor, which approval shall not be unreasonably withheld. Without limiting
the generality of the foregoing, Licensor's refusal to approve any assignment
shall not be deemed unreasonable if Licensee proposes to assign this Agreement
or any of its rights, licenses or obligations hereunder to any third-party
reasonably considered by Licensor to be a competitor of Licensor.
3. Non-Compete Covenant.
For a period of three years from and after the date of this Agreement,
the Licensor will not engage directly or indirectly in any business activity
using the Data Extraction Technology within the Field of Use. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 3 is invalid or unenforceable, the parties agree that
the court making the determination of invalidity or unenforceability shall have
the power to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Section 3 shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed. In the
event of a breach of this Agreement by Licensor, Licensee may not be able to be
adequately compensated by money damages. Consequently, Licensee shall be
entitled to an injunction and other equitable remedies, in addition to any
remedies available at law, without the necessity of posting a bond or proving
actual damages.
4. Assignment of Customer Contracts.
To the extent assignable, Licensor hereby assigns to Licensee and
Licensee hereby assumes all of Licensor's rights and obligations under any and
all agreements between the Licensor and any of Licensor's current clients or
customers, all of which contracts are identified on Exhibit "A" attached hereto
along with each client's company name, contact name, address and telephone
number. From and after the date hereof, Licensee hereby agrees to hold Licensor
and its affiliates harmless and indemnify Licensor and its affiliates from and
against any and all obligations to the clients and customers referred to in such
contracts; provided however, Licensor shall hold Licensee harmless and indemnify
Licensee and its affiliates from and against any and all obligations to such
clients and customers to the extent such obligations arose prior to July 1,
1999.
5. Option Grant.
As further consideration for this Agreement, Licensor hereby grants to
Licensee an exclusive option (the "Option") to (i) assume the real property
lease dated December 15, 1995 by and between the Licensor and C.C. Partnership
for the property located at 0000 Xxxx 0000 Xxxxx, Xxx, Xxxx (the "Real Property
Lease"); and (ii) purchase any and all of the furniture, equipment,
nonproprietary commercially available software and leasehold improvements listed
on Exhibit "B" attached hereto (the "Personal Property") and assume all
obligations with respect to the Personal Property. The Option shall expire at
5:00 p.m. Mountain Daylight Time on July 16, 1999. If Licensee elects to
exercise the Option, Licensee shall (a) pay to Licensor and Licensor shall have
received prior to expiration of the Option, immediately available funds in the
amount of Two Hundred Fifty Thousand Dollars ($250,000) (the "Option Payment")
and (b) sign and deliver to Licensor the Assignment and Assumption Agreement
attached hereto as Exhibit "C." Upon receipt of the Option payment, Licensor
shall promptly, (i) subject to the consent of C.C. Partnership and pursuant to
the Assignment and Assumption Agreement attached hereto as Exhibit "C," assign
all of Licensor's right, title and interest in and to the Real Property Lease to
Licensee and (ii) execute and deliver to Licensee a xxxx of sale in the form
attached hereto as Exhibit "D" transferring the Personal Property to Licensee
"as-is" "where-is", without warranty of any kind.
6. Limited Representations.
Licensor represents and warrants to the Licensee that Licensor owns and
has the right and power to (i) grant the License set forth above, (ii) assign
the Real Property Lease subject to the consent of C.C. Partnership, (iii) assign
all of the assignable contracts listed on Exhibit "A" and (iv) sell and transfer
the Personal Property.
7. No Brokers.
Neither the Licensor, nor the Licensee has retained nor used, and
neither will retain nor use, the services of a broker or finder which would
result in the imposition of a fee upon the Licensee, the Licensor or the
property of Licensor should the transaction contemplated by this Agreement be
consummated.
8. Governing Law.
This Agreement shall be governed by the internal laws of the State of
Utah.
9. Notices.
All notices and other communications hereunder shall be in writing and
shall be furnished by hand delivery, registered or certified mail, reputable
overnight courier or facsimile to the parties at the addresses set forth below.
Any such notice shall be duly given upon the date it is delivered to the
addresses shown below, addressed as follows:
If to Licensee: If to Licensor:
PrimeSource Communications Holdings, Inc. Automated Solutions, Inc.
0000 Xxxxx Xxxx Xxxxxx #000 1890 West 4000 South
Midvale, Utah 84047 Xxx, Xxxx 00000-0000
Attn: Xxxxx Xxxxxxxxxx Attn: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000 Fax: (000) 000-0000
10. Severability.
If any provision of this Agreement shall be held invalid or
unenforceable to any extent, the remainder of this Agreement shall not be
affected and shall be enforceable to the greatest extent permitted by law. This
Agreement contains the entire agreement between the Licensor and the Licensee
with regard to the matters set forth herein.
11. Counterparts.
This Agreement may be executed in counterparts by facsimile, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the Licensor and Licensee have executed this
License and Option Agreement through their authorized signatories effective as
of the date first above written.
AUTOMATED SOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx, President
PRIMESOURCE COMMUNICATIONS
HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxxx, President/CEO
EXHIBIT "A"
CLIENT AND CUSTOMER CONTRACTS
1. Roadrunner Trucking, dated March 31, 1997
2. Covenant Transport, dated March 6, 1997
3. Xxxxxx Trucking, dated May 14, 1997
4. Xxx Xxxxx Truck Lines, dated March 21, 1997
5. IC One, dated August 13, 1997
6. Net T Tech, dated October 27, 1997
7. Global Health Trax, dated November 20, 1997
8. Morinda, dated November 26, 1997
9. CCG, dated April 17, 1998
10. Xxxxxxxx Xxxxx, dated May 11, 1998
11. P5, dated July 1, 1998 (requires prior written consent of P5
in order to assign agreement)
12. Ogden Clinic, dated March 1, 1999
13. Pepsi-Cola Company, dated March 16, 1999
14. Wal*Mart Stores, Inc., dated April 15, 1999
15. Interim, Inc., dated [______]
EXHIBIT "B"
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (the "Assignment Agreement")
is dated as of July 22, 1999, and is entered into by and between Automated
Solutions, Inc., a Utah corporation ("Automated") and XxxxxXxxxxxxx.Xxx, Inc., a
Delaware corporation ("PS"). Automated and PS are collectively, referred to
herein as the "parties" and, individually, as a "party".
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agrees as follows:
1. Assignment of Obligations. Automated hereby assigns, transfers
and conveys to PS all of its liabilities and obligations set forth on Schedule 1
attached hereto (the "Obligations").
2. Assumption of Obligations. PS hereby accepts the forgoing
assignment and hereby assumes, covenants and agrees with Automated to perform
and discharge all of the Obligations.
3. Indemnification of Automated. PS from and after the date
hereof fully indemnifies and holds harmless Automated from and against the
entirety of any Adverse Consequences (as that term is defined below) that the
Indemnified Persons (or either of them) may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the breach (or the alleged
breach) hereof of arising in connection with the Obligations. For purposes of
this Section 3, the phrase "Adverse Consequences" shall mean all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses and fees, including court costs and reasonable
attorneys' fees and expenses.
4. Binding Effect; Governing Law. This Assignment Agreement will
be binding upon and inure to the benefit of the parties and their respective
successors and assigns and shall be governed by and construed in accordance with
the internal laws (not the conflicts of law rules) of the State of Utah.
IN WITNESS WHEREOF, the undersigned have executed this Assignment and
Assumption Agreement as of the date first-above written.
AUTOMATED SOLUTIONS, INC.,
a Utah corporation
By:
--------------------------------
Its:
XXXXXXXXXXXXX.XXX, INC.,
a Delaware corporation
By:
--------------------------------
Xxxxx X. Xxxxxxxxxx, III
Its:Vice President/CFO
SCHEDULE 1
OBLIGATIONS
1. Convergent Capital Corporation Equipment Lease dated 2/8/99
2. Xerox Lease Agreement dated 11/12/96
3. Revco Leasing Co. Lease Agreement dated 4/22/97
4. AT&T Agreement dated 4/25/94
XXXX OF SALE
Pursuant to the terms of the License and Option Agreement dated July 1,
1999 (the "License Agreement") by and among Automated Solutions, Inc., a Utah
corporation ("Automated") and XxxxxXxxxxxxx.Xxx, Inc. ("PS"), and for good and
valuable consideration as recited in the License Agreement, the receipt and
sufficiency of which are hereby acknowledged, Automated does hereby sell,
convey, transfer, assign and deliver to PS, effective as of July 22, 1999, all
of its right, title and interest in and to all of the property set forth on
Schedule 1 attached hereto except for the personal property listed on Schedule 1
under the headings "Intelisys Fixed Assets" or "Additional Intelisys Fixed
Assets" which are retained by Automated and not conveyed hereby (the
"Property"). Automated owns and is conveying to PS good and marketable title to
the Property subject to liens and claims referenced on Schedule 1 to the
Assignment and Assumption Agreement relating to certain contractual obligations
of Automated and dated July 22, 1999. The Property is conveyed "as-is,"
"where-is," without warranties of any kind whatsoever, including without
limitation, warranties of merchantability, fitness for a particular purpose and
non-infringement.
IN WITNESS WHEREOF, Automated Solutions, Inc. has caused this Xxxx of
Sale to be duly executed on July 22, 1999.
AUTOMATED SOLUTIONS, INC.,
a Utah corporation
By:
--------------------------------
Its:
