EXHIBIT 10.8
SOFTWARE LICENSE AND DISTRIBUTORSHIP AGREEMENT
This Software License and Distributorship Agreement (this "AGREEMENT")
is entered into as of this 11th day of March, 2003 ("EFFECTIVE DATE") by and
between Scientific Computing Associates, Inc., a Connecticut corporation located
at One Century Tower, 265 Church Street, New Haven, Connecticut ("SCA"), and
TurboWorx, Inc., a Delaware corporation located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ Connecticut ("TURBOWORX").
BACKGROUND
SCA currently makes available certain software to TurboWorx for
distribution or resale by TurboWorx. The parties now desire to memorialize the
terms under which SCA will continue to provide TurboWorx with such software.
Now, therefore, in consideration of the mutual promises and upon the
terms and conditions set forth below, the parties agree as follows:
1. DEFINITIONS
1.1 "CURRENT SCA PRICE" means, with respect to any SCA
Commercial Product, the price of that SCA Commercial Product customarily
received by SCA from customers other than TurboWorx, as set forth on EXHIBIT A,
and updated annually by SCA pursuant to the terms of this Agreement, provided
that SCA cannot increase the Current SCA Price of any SCA Commercial Product
unless SCA has an actual sale to an unassociated entity at the increased price,
or by agreement of the parties.
1.2 "CUSTOMER" means an end user of a product for such end
user's own benefit and not for redistribution, remarketing, or resale.
1.3 "JAVA PIRANHA" means all computer software, in source or
non-source form, including all versions thereof and Upgrades thereto, developed
by SCA as part of an implementation of the Java form of the Piranha application
for Paradise.
1.4 "JAVA PIRANHA LIBRARY" means a certain set of invocable
library functions, in source or non-source form, including all versions thereof
and Upgrades thereto, developed by TurboWorx that, when used in conjunction with
Java Piranha, enables applications written in the Java programming language to
make use of the Piranha task distribution, scheduling, and execution
functionality. Java Piranha Library specifically excludes any computer software
that is specific to particular computing applications that make use of the
Piranha functionality.
1.5 "SCA COMMERCIAL PRODUCTS" means the following products,
including all versions thereof or Upgrades thereto, in the forms that SCA makes
them available to its customers or partners: Paradise Server; C, C++ and Java
APIs for Paradise; and C Piranha application for Paradise. SCA Commercial
Products specifically exclude Java Piranha.
1.6 "UPGRADE" means, with respect to either SCA Commercial
Products or Java Piranha or the Java Piranha Library, as the case may be, any
version thereof that (a) is intended to be made generally available by its
developer to the developer's customers or partners and (b) as compared to prior
releases or versions of the same product, contains functional enhancements,
extensions, error corrections or fixes, or is operable on different combinations
of computer hardware and operating systems.
1.7 "TECHNICAL COMPUTING WORKFLOW" means an automated software
implementation, designed, to solve a technical computing problem, in which data
or control information is passed among multiple independent software components
for action according to procedural rules.
1.8 "TECHNICAL COMPUTING WORKFLOW SYSTEM" means any software
implementation of a system designed to create, debug, execute, or monitor
Technical Computing Workflows, including appropriate user and administrative
interfaces for such a system.
2. LICENSES
2.1 SCA COMMERCIAL PRODUCTS LICENSE. SCA hereby grants to
TurboWorx, subject to Section 3.4(b) and Article 8, a non-transferable,
perpetual, irrevocable, non-exclusive license to use, copy, create derivative
works of, and distribute to its Customers non-source forms of the SCA Commercial
Products only as part of, or in conjunction with, TurboWorx's Technical
Computing Workflow Systems, and to sublicense its Customers to use the
non-source forms of the SCA Commercial Products only in conjunction with
TurboWorx's Technical Computing Workflow Systems, and for no other purpose.
2.2 JAVA PIRANHA LICENSE.
(a) SCA hereby grants to TurboWorx, subject to
Section 3.4(b), Section 7(c) and Article 8, a non-transferable, perpetual,
irrevocable, non-exclusive license to modify the source code of Java Piranha
only for internal research and development purposes according to the terms of
this Agreement and for no other purpose.
(b) SCA hereby grants to TurboWorx, subject to
Section 3.4(b) and Article 8, a non-transferable, perpetual, irrevocable,
non-exclusive license to use, copy, create derivative works of, and distribute
to its Customers non-source forms of Java Piranha, including any modifications
thereto, only as part of or in conjunction with, TurboWorx's Technical Computing
Workflow Systems or the SCA Commercial Products licensed hereunder, and for no
other purpose.
2.3 JAVA PIRANHA LIBRARY LICENSE.
(a) TurboWorx hereby grants to SCA, subject to
Section 3.4(e) and Section 7(c), a non-transferable, perpetual, irrevocable,
non-exclusive license to modify the source code of the Java Piranha Library only
for internal research and development purposes according to the terms of this
Agreement and for no other purpose.
2
(b) TurboWorx hereby grants to SCA, subject to
Section 3.4(c), a non-transferable, perpetual, irrevocable, non-exclusive
license to use, sublicense, copy, create derivative works of, and distribute to
its Customers non-source forms of the Java Piranha Library, including any
modifications thereto, for all purposes other than in competition with TurboWorx
Technical Workflow Systems.
2.4 SUBLICENSE. TurboWorx shall have the right to grant
non-exclusive, non-transferable sublicenses under the licenses granted pursuant
to Sections 2.1 and 2.2(b) to such distributors, manufacturers or other third
parties as TurboWorx may elect to use in connection with the creation,
modification, manufacture, distribution or sale of TurboWorx's Technical
Computing Workflow Systems, including supplemental programs operable therewith
and derivative works thereof, to Customers and for no other purpose. Any such
sublicenses will contain terms and conditions at least as restrictive as those
contained herein, including without limitation, with respect to termination,
warranty and confidentiality; PROVIDED HOWEVER THAT under no circumstances shall
such sublicenses provide such distributors, manufacturers or other parties with
access to any source code for the SCA Commercial Products or Java Piranha.
2.5 RESELLER. Subject to Article 8, in addition to the above
licenses, SCA hereby grants to TurboWorx the non-transferable, non-exclusive
right to resell non-source forms of the SCA Commercial Products and Java Piranha
to TurboWorx's Customers according to the terms of this Agreement. TurboWorx
will resell such SCA Commercial Products and Java Piranha without alteration of
the software or the documentation, packaging, warranties and disclaimers
therefor or other materials provided therewith and will include in the packaging
therefor SCA's prescribed form of license, or with such alterations or
modifications as agreed to by SCA or modifications under Section 2.2(a). So long
as TurboWorx is not in default hereof or of any other agreement or instrument
with SCA, TurboWorx may use SCA's trademarks and trade names, in the forms set
forth on EXHIBIT B, in the advertising and promotion of the SCA Commercial
Products and Java Piranha hereunder. Any use of such trademarks and trade names
by TurboWorx will be under the control and supervision of SCA and will inure to
the sole benefit of SCA. The right to use SCA's trade marks and trade names will
not create in TurboWorx any legal right in such trademarks or trade names.
2.6 LIMITATION ON LICENSE. TurboWorx acknowledges that the
grant of rights herein will not impair or restrict any rights previously granted
by SCA to any third party, or affect SCA's right to grant any such rights in the
future. All rights not expressly granted to TurboWorx herein are reserved to
SCA. TurboWorx may not disassemble, decompile, reverse engineer or attempt in
any way to modify or discover the source code for the SCA Commercial Products
and will use its best efforts to prevent any third party from taking any of the
foregoing actions.
3. FEES
3.1 WARRANTS. In partial consideration of the licenses granted
herein, TurboWorx shall issue certain Warrants to SCA pursuant to the
Subscription Agreement attached hereto as EXHIBIT C.
3
3.2 LICENSE FEES. Subject to Section 3.3, in partial
consideration of the licenses granted herein, TurboWorx shall pay SCA a fee at
the rate of 70% of the Current SCA Price for: (a) each SCA Commercial Product
distributed, licensed, or sold by TurboWorx, other than for evaluation purposes,
alone or as part of any derivative product (including non-workflow parallel or
distributed computing applications) that makes no fundamental use of a TurboWorx
Technical Computing Workflow System, (b) each Technical Computing Workflow
System distributed or sold by TurboWorx where the user, or an application (other
than a Technical Computing Workflow) run by the user, is permitted direct access
to the programming API's of the SCA Commercial Products, provided that no such
fee will be payable in connection with any distribution or sale by TurboWorx of
TurboBlast(R), and (c) any embarrassingly parallel application parallelized by
TurboWorx and sold, licensed or distributed as a stand-alone retail product of
TurboWorx. Notwithstanding the foregoing, TurboWorx will pay SCA a minimum
annual royalty of $25,000 provided that the license granted in Section 2.5 has
not been terminated. Such fees will be payable in accordance with Section 3.6.
3.3 SUBLICENSE FEES. Notwithstanding the terms of Section 3.2,
the amount of any fee payable to SCA under a sublicense pursuant to Section 2.4
for: (a) each SCA Commercial Product distributed, licensed, or sold by a
sublicensee, other than for evaluation purposes alone or as part of any
derivative product (including non-workflow parallel or distributed computing
applications) that makes no fundamental use of a TurboWorx Technical Computing
Workflow System, and (b) each Technical Computing Workflow System distributed or
sold by sublicensee where the user, or an application other than a Technical
Computing Workflow run by the user, is permitted direct access to the
programming API's of the SCA Commercial Products will be negotiated in good
faith at the time of the sublicense by SCA, TurboWorx and the sublicensee,
provided that no such fee will be payable in connection with any sublicensing of
TurboBlast(R), and (c) any embarrassingly parallel application parallelized by
TuroWorx and sold, licensed or distributed as a stand-alone retail product of
TurboWorx.
3.4 TAXES; OTHER CHARGES.
(a) All charges and fees provided for in this
Agreement are exclusive of any taxes, duties, or similar charges imposed by any
government. All such taxes or charges relating to the grant of licenses by SCA
or license fees due to SCA hereunder will be paid by TurboWorx. All such taxes
or charges relating to the grant of licenses by TurboWorx or license fees due to
TurboWorx hereunder will be paid by SCA.
(b) in addition to the fees payable by TurboWorx
under Section 3.2, TurboWorx shall reimburse SCA for the full cost of any third
party components contained in, or associated with, the SCA Commercial Products
and Java Piranha licensed to TurboWorx hereunder, provided that (i) SCA informs
TurboWorx in advance of such costs; (ii) SCA affords TurboWorx the opportunity
to procure its own licenses to such components; and (iii) where technically
feasible, SCA offers TurboWorx, at its sole option, the ability to receive
"unbundled" versions of the SCA Commercial Products and Java Piranha from which
the third party components have been removed.
(c) SCA shall reimburse TurboWorx for the full cost
of any third party components contained in, or associated with, the Java Piranha
Library licensed to SCA
4
hereunder, provided that (i) TurboWorx informs SCA in advance of such costs;
(ii) TurboWorx affords SCA the opportunity to procure its own licenses to such
components; and (iii) where technically feasible, TurboWorx offers SCA, at its
sole option, the ability to receive "unbundled" versions of the Java Piranha
Library from which the third party components have been removed.
3.5 REPORTING AND PAYMENT. TurboWorx will pay to SCA the fees
required under Sections 3.2, 3.3 and 3.4(a) within forty-five (45) days after
the end of each calendar quarter. TurboWorx shall submit with such payment a
report showing: (a) the number of copies of the SCA Commercial Products
distributed or returned during the quarter, (b) whether the distribution was of
the product alone or in a Technical Computing Workflow System, (c) how the
amount of the license fee was calculated, including allowance for fees for
returned products, and (d) sufficient detail about the distributees to enable
SCA to verify the fee calculations. Each party will pay the other party the fees
required under Sections 3.4(b) or 3.4(c) within fifteen (15) days of receipt of
a valid invoice therefor.
3.6 BOOKS AND RECORDS. TurboWorx will keep at its principal
place of business complete and accurate books of account and records with
respect to the distribution of SCA Commercial Products and products containing
Java Piranha. No more than twice in a calendar year, SCA and its authorized
agents shall have the right to inspect such books and records of account at any
time during normal business hours upon reasonable prior notice. In the event of
any discrepancy between such books and records and the report described in
Section 3.5, then TurboWorx shall pay to SCA the amount of such discrepancy and,
if a discrepancy is more than the greater of 5% of the total fees paid during
the period of the discrepancy or $5,000.00, any costs and expenses incurred by
SCA in connection with such inspection. Such payment shall be made immediately
upon receipt and verification by TurboWorx of a notice from SCA detailing the
discrepancy and the amount owed to SCA.
4. OWNERSHIP
4.1 SCA PRODUCTS. SCA shall retain all rights of ownership,
including any registered or unregistered copyrights, to all of the SCA
Commercial Products and Java Piranha, including all upgrades or derivative works
created by SCA. SCA shall also receive all rights of ownership, including any
registered or unregistered copyrights, in any modifications or upgrades to the
SCA Commercial Products or Java Piranha, including without limitation any
modification to the source code thereof, created by TurboWorx pursuant to the
terms of this Agreement. SCA shall also receive all rights of ownership,
including any registered or unregistered copyrights, in any derivative products
incorporating non-source forms of the Java Piranha Library, created by SCA or
its partners or customers pursuant to the terms of this Agreement.
4.2 TURBOWORX PRODUCTS. TurboWorx shall retain all rights of
ownership, including any registered or unregistered copyrights, to the Java
Piranha Library, including all modifications, upgrades or derivative works
created by TurboWorx. TurboWorx shall also receive all rights of ownership,
including any registered or unregistered copyrights, in any modifications or
upgrades to the Java Piranha Library created by SCA pursuant to the terms of
this Agreement. TurboWorx shall also receive all rights of ownership, including
any registered or unregistered copyrights, in any derivative products
incorporating non-source forms of the
5
SCA Commercial Products or Java Piranha, created by TurboWorx or its partners or
customers pursuant to the terms of this Agreement.
4.3 ASSIGNMENTS. Each party agrees to execute any document
reasonably requested by the other party to evidence, transfer, or assign any
rights in the SCA Commercial Products, Java Piranha, Java Piranha Library,
and/or any derivative works thereof in order to effectuate ownership of these
works in accordance with 4.1 and 4.2 hereof.
5. MAINTENANCE AND SUPPORT
5.1 UPGRADES. Throughout the Term of this Agreement, SCA shall
continue to make reasonable efforts to maintain the SCA Commercial Products so
that, in SCA's reasonable judgment, they remain competitive. SCA shall provide
to TurboWorx, subject to the terms of this Agreement, all Upgrades to the SCA
Commercial Products within thirty (30) days of when they become available for
commercial use by any Customer, distributor, affiliate or partner of SCA.
5.2 NEW VERSIONS. In addition to Upgrades to the SCA
Commercial Products developed pursuant to Section 5.1, SCA shall provide
versions of the SCA Commercial Products, including versions with new, different,
enhanced, or improved functionality and versions operable on a specified
combination of computer hardware and operating systems, as reasonably requested
by TurboWorx. SCA shall use reasonable commercial efforts to create and deliver
such a version within a reasonable time period. TurboWorx shall reimburse SCA
for its reasonable costs in connection therewith. At SCA's option, or if SCA is
unable to deliver the requested versions of the SCA Commercial Products within a
reasonable period of time, then TurboWorx will have the right, at its own
expense, to create such versions. In such event: (a) to the extent it is
commercially reasonably able to do so, SCA shall provide TurboWorx advice and
assistance in the creation of such versions, at the expense of TurboWorx, (b)
subject to Section 7(c), SCA shall provide TurboWorx with access to the
necessary source code and tools to enable TurboWorx to create and subsequently
maintain or enhance such versions, and (c) TurboWorx will execute and deliver to
SCA the Software Modification Agreement, attached hereto as EXHIBIT D.
5.3 MAINTENANCE. SCA shall use reasonable commercial efforts
to correct any material errors or defects in any of the SCA Commercial Products,
including all Upgrades. If such errors or defects are reported to SCA within
ninety (90) days after delivery of the affected product or Upgrade to TurboWorx,
any such correction shall be for no additional charge. If such errors or defects
are reported to SCA after ninety (90) days after delivery of the affected
product or Upgrade to TurboWorx, TurboWorx shall reimburse SCA for its
reasonable costs in correcting the errors or defects.
5.4 MAINTENANCE FOR CUSTOMERS. Upon the reasonable request of
TurboWorx, SCA shall provide maintenance and enhancement services to Customers
of TurboWorx using products for which a license has been granted to TurboWorx
hereunder. Such services will be provided under terms and conditions, including
price, no less favorable than those under which SCA makes such services
available to its other customers for the SCA Commercial Products and Java
Piranha; provided that TurboWorx shall respond to all initial
6
customer requests for maintenance when the SCA Commercial Product or Java
Piranha is used as part of or in conjunction with any TurboWorx product.
5.5 JAVA PIRANHA. SCA and TurboWorx shall cooperate to
maintain, upgrade, and enhance Java Piranha and the Java Piranha Library.
Subject to Section 7(c), each party shall provide to the other party, in source
code form, any modifications, upgrades or enhancements to Java Piranha or the
Java Piranha Library, made by it or its customers or licensees, without any
additional compensation, no later than they are made available to other
Customers. All such licenses in section 2.
6. WARRANTIES, COVENANTS, LIABILITY AND INDEMNIFICATION
6.1 MUTUAL WARRANTIES. Each party warrants to the other that
it has the right and authority to enter into this Agreement and that the
execution and delivery of this Agreement will not result in a breach or
violation of any statute, law, rule, regulation, contract, or instrument by
which it is bound.
6.2 EXPORT RESTRICTIONS. Each party agrees not to export or
re-export, or permit exportation or re-exportation, of the products licensed
hereunder outside of the United States except in compliance with the applicable
laws and regulations of the United States.
6.3 SCA DISCLAIMER. EXCEPT AS OTHERWISE SET FORTH [N THIS
AGREEMENT, SCA MAKES NO WARRANTIES WHATSOEVER, WHETHER EXPRESS, IMPLIED, OR
STATUTORY AND SCA HEREBY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND ARISING OUT OF USAGE OF
TRADE OR COURSE OF DEALING OR PERFORMANCE WITH RESPECT TO THE SCA COMMERCIAL
PRODUCTS AND JAVA PIRANHA, AND ANY UPGRADES, MODIFICATIONS OR VERSIONS OF THE
FOREGOING, AND WITH RESPECT TO THE USE OF ANY OF THE FOREGOING.
6.4 TURBOWORX DISCLAIMER. EXCEPT AS OTHERWISE SET FORTH IN
THIS AGREEMENT, TURBOWORX MAKES NO WARRANTIES WHATSOEVER, WHETHER EXPRESS,
IMPLIED, OR STATUTORY AND TURBOWORX HEREBY EXPRESSLY DISCLAIMS ALL IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND ARISING OUT
OF USAGE OF TRADE OR COURSE OF DEALING OR PERFORMANCE WITH RESPECT TO THE JAVA
PIRANHA LIBRARY, AND ANY UPGRADES, MODIFICATIONS OR VERSIONS OF THE FOREGOING,
AND WITH RESPECT TO THE USE OF ANY OF THE FOREGOING.
6.5 LIMITATION OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE
LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE, BUSINESS INTERRUPTION, LOSS OF
DATA, COST OF COVER OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
ANY KIND IN CONNECTION WITH OR ARISING OUT OF THE SUBJECT MATTER OF THIS
AGREEMENT. WITHOUT LIMITING THE FOREGOING, SCA WILL NOT BE LIABLE UNDER ANY
CIRCUMSTANCE HEREUNDER, EXCEPT UNDER SECTION 6.6(a), TO TURBOWORX IN EXCESS OF
THE CONSIDERATION PROVIDED TO SCA BY TURBOWORX HEREUNDER (IN THE FORM
7
PROVIDED) DURING THE TWELVE MONTHS PRECEDING ANY CLAIM FOR LIABILITY.
6.6 INDEMNIFICATION.
(a) SCA, at its expense, shall indemnify, defend and
hold TurboWorx harmless from any cost, expense or liability, including attorneys
fees, as the result of any action, claim, suit, or proceeding that is based, in
whole or in part, upon a claim that any of the SCA Commercial Products and Java
Piranha infringes a copyright, patent, trademark, or other intellectual property
right or misappropriates a trade secret, unless such claim is based upon a
combination of any of the SCA Commercial Products or Java Piranha with any
product of TurboWorx or any third party.
(b) TurboWorx, at its expense, shall indemnify,
defend and hold SCA harmless from any cost, expense or liability, including
attorneys fees, as the result of any action, claim, suit, or proceeding that is
based, in whole or in part, upon a claim that the Java Piranha Library infringes
a copyright, patent, trademark, or other intellectual property right or
misappropriates a trade secret, unless such claim is based upon a combination of
Java Piranha Library with any product of SCA or any third party.
7. CONFIDENTIAL INFORMATION
(a) The parties acknowledge that during the term of
this Agreement they may be exposed to certain information and trade secrets
relating to, or concerning, the other party's business (including without
limitation its operations, financial information, technology, customers,
suppliers, plans, or products) or that the other party has obtained from a third
party under an obligation of confidentiality, that are not generally known to
the public (collectively "Confidential Information"). The parties agree that
during this Agreement, and for a period of seven (7) years thereafter, they will
not use any Confidential Information except in accordance with the provisions
of, and for the purposes described in, this Agreement, and will disclose
Confidential Information to any third party, including without limitation any
employees or contractors of a party hereto, only upon the execution by such
third party of a written agreement to maintain such Confidential Information on
terms at least as restrictive as those contained herein.
(b) The foregoing obligations with respect to
Confidential Information shall not apply to: (i) information generally available
to the public without breach of this Agreement, (ii) information developed
independently by the receiving party (in which case the burden of proof shall be
on the receiving party to prove that such information was developed
independently), (iii) information obtained directly from a third party not under
any obligation of nondisclosure or confidentiality, and (iv) information
required to be disclosed by court order or applicable law, provided, however
that in the event a party intends to use or disclose information in reliance on
any one of the above exceptions, such party must provide the other party with at
least fifteen (15) days prior written notice specifying such party's intent to
disclose such information, the nature and type of the information to be
disclosed and the applicable exception permitting its disclosure.
8
(c) Without limitation on the foregoing, each party
acknowledges that the other party's source code underlying its products is of
paramount importance to the business of such other party and that such other
party will be seriously harmed if such source code (including any source code
derived from such source code) were disclosed in any manner whatsoever without
the prior written consent of such other party. Each party agrees that any source
code (including any source code derived from such source code) provided to it
hereunder: (i) will be considered "Confidential Information" hereunder, (ii)
will be used only by employees or contractors of such party who are under
written obligations at least as restrictive as those contained herein to protect
such Confidential Information, and (iii) will be protected by all reasonably
available security measures. Under no circumstances will either party release or
permit the release of source code express written consent of the other party.
8. NON-COMPETITION. Notwithstanding the licenses granted herein,
TurboWorx will not use and will cause each of its affiliates not to use, the SCA
Commercial Products or Java Piranha or any works derived or resulting therefrom,
including without limitation any Upgrades, versions or modifications thereof, to
develop, manufacture, market or sell any product that competes with the existing
products of MetaServer, Inc., including without limitation its eBusiness Process
Integration Platform.
9. TERM AND TERMINATION
9.1 TERM. This Agreement will take effect on the Effective
Date and will continue indefinitely thereafter, until terminated pursuant to
this Article 9.
9.2 TERMINATION. This Agreement may be terminated:
(a) By a party if the other party is in material
breach of any term, condition or provision of this Agreement, which breach, if
capable of being cured, is not cured within 30 days after the non-breaching
party gives written notice of such breach;
(b) Notwithstanding paragraph (a) above, by a party,
immediately upon notice to the other party, if such other party is in breach of
any term, condition or provision of Articles 7 or 8 or is in material breach of
any other agreement or instrument between the parties.
(c) By a party, immediately upon notice to the other
party, if such other party:
(i) terminates or suspends its business,
(ii) becomes insolvent, is unable to pay its debts or other obligations as they
mature, makes an assignment for the benefit of creditors, or becomes subject to
direct control of a trustee, receiver or similar authority, or (iii) becomes
subject to any bankruptcy or insolvency proceeding under federal or state
statutes.
(d) By TurboWorx, if it ceases to utilize,
distribute, license, or sell any of the SCA Commercial Products, in any manner.
9.3 TERMINATION OF RESELLER AGREEMENT. SCA may terminate the
license granted under Section 2.5 of this Agreement at any time for any reason
whatsoever upon
9
providing TurboWorx with thirty (30) days prior written notice. Any such
termination will not affect any other provision of this Agreement, except that
the provisions of Section 9.4(c) will apply only insofar as it is applicable to
the license granted under Section 2.5.
9.4 EFFECT OF TERMINATION.
(a) Upon termination of this Agreement under Section
9.2(a) other than for material breach of Article 5, or under Sections, 9.2(b) or
9.2(c), all licenses granted hereunder to the breaching party will terminate,
except that any such termination will not affect any sublicenses or other rights
properly granted to any third party under the terms of this Agreement prior to
termination. Any such termination of this Agreement will not affect the licenses
granted to the nonbreaching party hereunder and will not affect the provisions
regarding the parties' treatment of Confidential Information in Article 7 or the
non-competition provisions of Article 8.
(b) Upon termination of this Agreement by TurboWorx
under Section 9.2(d), all licenses granted hereunder to TurboWorx will
terminate, except that any such termination will not affect any sublicenses or
other rights properly granted to any customer under the terms of this Agreement
prior to termination. Any such termination of this Agreement will not affect the
licenses granted to SCA hereunder and will not affect the provisions regarding
the parties' treatment of Confidential Information or the non-competition
provisions of Article 8.
(c) Upon termination of this Agreement by SCA,
TurboWorx will, within ten (10) days after the effective date of any such
termination: (i) pay SCA all amounts due and owing hereunder and cease all use
of SCA's proprietary information and materials, (ii) destroy or return to SCA
all of SCA's Confidential Information in TurboWorx's possession or provided by
TurboWorx to any third party, including without limitation all copies of the SCA
Commercial Products and Java Piranha, any modifications, Upgrades or versions
thereof, and the source code (and any source code derived from such source code)
therefor, and (iii) destroy all electronic copies of the items described in the
preceding clause (ii) and certify the same in writing to SCA.
(d) Upon termination of this Agreement by TurboWorx,
SCA will, within ten (10) days after the effective date of any such termination:
(i) destroy or return to TurboWorx all of TurboWorx's Confidential Information
in SCA's possession or provided by SCA to any third party, including without
limitation all copies of Java Piranha Library, any modifications, Upgrades or
versions thereof, and the source code (and any source code derived from such
source code) therefor, and (iii) destroy all electronic copies of the items
described in the preceding clause (ii) and certify the same in writing to
TurboWorx.
(e) Upon the reasonable request of any party, the
other party will provide written certification of its compliance with this
Article 9.
(f) Termination of this Agreement by SCA under
Section 9.2(a), 9.2(b), or 9.2(c), or by TurboWorx under Section 9.2(d) shall
relieve TurboWorx of any and all future payments or issuance of warrants except
as provided for in the Subscription Agreement
10
attached as Exhibit C, but shall not relieve TurboWorx of any warrants
previously issued, payments previously made, or amounts owed prior to
termination.
10. SOFTWARE ESCROW.
(a) SCA shall deposit a copy of the source code for
each of the SCA Commercial Products as provided to TurboWorx, initially or from
time to time, with an escrow agent selected by SCA. SCA shall ensure that the
latest versions of the source code, as provided to TurboWorx, is always
available at the escrow agent. SCA shall provide to TurboWorx within thirty (30)
days of signature of this Agreement the name and contact details of such escrow
agent and undertakes that no changes to such chosen agent will be made without
prior written consent from TurboWorx. All reasonable costs and expenses of the
escrow agent or otherwise related to the escrow of the source code hereunder
will be paid by TurboWorx.
(b) As long as TurboWorx is not in material default
or violation of any part of this Agreement, TurboWorx shall have a perpetual,
non-exclusive, non-transferable, royalty-free license to the deposited source
code only in the event that: (i) SCA materially breaches Section 5.1 or 5.2 of
this Agreement, or (ii) SCA liquidates, dissolves or ceases to do business
without its obligations hereunder relating to the SCA Commercial Products being
assumed by a successor or assignee.
11. PREFERRED RELATIONSHIPS
11.1 PREFERRED RESELLER. SCA shall designate TurboWorx as a
preferred reseller of the SCA Commercial Products and will refer, at no charge,
sales leads for the SCA Commercial Products to TurboWorx to the extent that, in
the sole judgment of SCA, it is appropriate and commercially reasonable to do
so.
11.2 PREFERRED SERVICES. TurboWorx shall designate SCA a
preferred partner for services relating to parallelization and optimization of
high performance technical computing components and will refer and or
subcontract opportunities for such services, at no charge, to SCA to the extent
that, in the sole judgment of TurboWorx, it is appropriate and commercially
reasonable to do so.
12. MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement (including the Exhibits)
contains the entire agreement of the parties with respect to the subject matter
of this Agreement and supersedes all previous communications, representations,
understandings and agreements, either oral or written, between the parties with
respect to said subject matter.
12.2 GOVERNING LAW. This Agreement is governed by the laws of
the State of Connecticut, without reference to its conflicts of laws principles
and any dispute arising hereunder shall be submitted to the exclusive
jurisdiction of the state and federal courts in Connecticut.
12.3 SEVERABILITY. The provisions of this Agreement will be
deemed severable and the invalidity or unenforceability of any provision will
not affect the validity or
11
enforceability of the other provisions hereof. If any provision of this
Agreement, or the application thereof to any person or entity or circumstance,
is held to be invalid or unenforceable: (a) a suitable and equitable provision
will be substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision,
and (b) the remainder of this Agreement and the application of such provision to
other persons or entities or circumstances will not be affected by such
invalidity or unenforceability. Without limiting any of the foregoing, if any of
the covenants set forth in Articles 7 or 8 are held to be unreasonable,
arbitrary, or against public policy, such covenants will be considered divisible
with respect to scope and time, and in such lesser scope or time, will be
effective, binding and enforceable against TurboWorx and SCA.
12.4 AMENDMENT AND WAIVER. No modification, amendment or
waiver of any provision of this Agreement shall be effective unless in writing
and signed by the parties. No failure or delay by either party in exercising any
right, power, or remedy under this Agreement or to insist upon strict compliance
with any of the terms hereof, except as specifically provided herein, shall
operate as a waiver of the ability to exercise any such right, power or remedy,
or to insist upon strict compliance, in the future.
12.5 ASSIGNMENTS. This Agreement shall inure to the benefit of
and be binding upon each party's successors and assigns. Notwithstanding the
foregoing, neither party may assign or transfer this Agreement or any rights
hereunder without the prior written consent of the other party, which consent
shall not be unreasonably withheld, and any attempt to the contrary is void.
12.6 NOTICES. All notices, demands or consents required or
permitted under this Agreement shall be in writing and delivered to the
addresses provided on the signature page hereof or to such other addresses as
each party may designate in writing from time to time.
12.7 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which so executed will be deemed to be an original and
such counterparts together will constitute one and the same agreement.
12.8 INJUNCTIVE RELIEF. Each party acknowledges that the other
party will not have an adequate remedy at law for the breach of any of the
covenants contained in Articles 7 and 8 or Section 9.4 hereof and hereby
consents to the enforcement of such covenants by means of a temporary or
permanent injunction issued by any court having jurisdiction thereof and further
agrees that each party shall be entitled to assert any claim it may have for
damages resulting from the breach of such covenants in addition to seeking
injunctive or other relief.
12.9 DISPUTES. Each party agrees that this Agreement is valid
and binding upon it and that it will not challenge the validly of this Agreement
in connection with any action. In the event of a dispute regarding this
Agreement which involves intervention of a third party, including a court or
arbitrator, the losing party shall compensate the winning party for reasonable
costs, including reasonable attorneys fees, incurred in connection with the
dispute.
12
The parties have executed this Agreement below to indicate their
acceptance of its terms.
SCIENTIFIC COMPUTING ASSOCIATES, INC. TURBOWORX, INC.
By : By:
---------------------------------- ----------------------------------
Print Name: Print Name:
--------------------------- --------------------------
Title: Title:
-------------------------------- -------------------------------
Address: Address:
------------------------------ -----------------------------
13
EXHIBIT A
SCA PRICE SCHEDULE
EXHIBIT B
SCA TRADEMARKS AND TRADE NAMES
TRADEMARKS AND TRADENAMES
▇▇▇▇▇
Lindaspaces
Paradise
Piranha
Scientific Computing Associates
EXHIBIT C
FORM OF SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT
TurboWorx, Inc.
One Century Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ Augen, President
Ladies and Gentlemen:
1. SUBSCRIPTION
The undersigned hereby subscribes for a warrant (the "Warrant") to
purchase that number of shares of Common Stock, 5.001 par value per share, of
TurboWorx, Inc., a Delaware corporation (the "Company") as is calculated in
accordance with the Warrant, at the purchase price determined in accordance with
the Warrant, on the conditions stated herein.
2. DEFINITIONS
Capitalized terms used herein shall have the meanings set forth herein
or as set forth below:
"COMMON SHARES" shall mean shares of the Company's Common Stock, as now
or hereafter constituted.
"SECURITIES" shall mean the Warrant and the Warrant Shares.
"WARRANT SHARES" shall mean the Common Shares issuable upon exercise of
the Warrant.
3. REPRESENTATIONS AND WARRANTIES OF THE POTENTIAL INVESTOR
The undersigned hereby acknowledges that the undersigned has received
and read (a) this Subscription Agreement, and (b) the Investor Questionnaire
(the "Transaction Documents").
The undersigned understands that the Company is in the early stages of
development. The undersigned acknowledges that the undersigned has had an
opportunity to ask questions of and request additional information concerning
the Company from representatives of the Company. The undersigned has not
received any written information concerning this offering other than the
Transaction Documents and is not relying on any other information provided to
the undersigned or any representations made to the undersigned by anyone other
than the representatives of the Company referred to above.
The undersigned understands that the Company is relying on Section 4(2)
of the Securities Act of 1933, as amended (the "Act"), and the regulations
thereunder, which provides
an exemption from registration under the Act which does not require that any
specific information about the Company be disclosed.
The undersigned acknowledges that the transfer of the Securities shall
be subject to the securities law restrictions set forth in this Section 3 and
the transfer restrictions set forth in Section 4 hereof.
The undersigned understands that the Securities have not been
registered and will not be registered under the Act or any applicable state
securities laws and that the Securities will be sold in transactions exempt from
registration under the Act and such state securities laws. The undersigned
understands that the availability of these exemptions are predicated in part on
the Company's reliance on the undersigned's representations and warranties
herein.
The undersigned hereby represents and warrants to the Company that: (a)
the undersigned is acquiring the Securities for the undersigned's own account
for investment purposes only, and not with a view to the resale or other
distribution thereof, and the undersigned will not transfer, sell or otherwise
dispose of the Securities without registering them under the applicable federal
or state securities laws or seeking an exemption therefrom; (b) the undersigned
has such knowledge and experience in financial and business matters and
particularly this type of investment to evaluate the merits and risks of an
investment in the Company; (c) the undersigned can bear the economic risk of an
investment in the Company, including the risk of a complete loss of the
undersigned's investment; and (d) the undersigned is not committed to illiquid
investments, including the investment in the Company, that are
disproportionately high in comparison with the undersigned's net worth.
The undersigned understands that the undersigned must bear the economic
risk of this investment for an indefinite period of time inasmuch as it has not
been and will not be registered under the Act or any applicable state securities
laws and, therefore, that the Securities cannot be sold, pledged or transferred
unless they are subsequently registered under the Act and qualified under
applicable state securities laws or an exemption from such registration and
qualification is available. The undersigned understands that the Company has no
obligation and does not presently intend to register or qualify any of its
securities or to take any action or provide any information necessary to the
availability of any such exemption.
The undersigned further understands that these restrictions on
transferability will be noted in the Company's records as a stop transfer
instruction, and that the Securities will be subject to the other terms and
conditions of this Subscription Agreement, and, if represented by a certificate,
will bear a legend substantially in the following form, as well as any legend
required by appropriate Blue Sky officials:
"The securities represented by this certificate (1) are subject to the
restrictions on transfer and other terms contained in a Subscription
Agreement dated March 11, 2003 between the Company and the holder of
this certificate (a copy of which is available without charge from the
Company), and (ii) have not been registered under the Securities Act of
1933 or applicable state securities laws and may not be transferred,
sold or otherwise disposed of in the absence of an effective
registration statement with respect to the securities evidenced by this
certificate,
2
filed and made effective under the Securities Act of 1933 and such
applicable state securities laws, or unless the Company receives an
opinion of counsel satisfactory to the Company to the effect that
registration under such Act and such applicable state securities laws
is not required."
The undersigned understands that the Company will require that the
undersigned meet certain investor suitability standards and that the undersigned
be an "accredited investor" as that term is defined in the federal securities
laws. A document entitled "Investor Questionnaire" is attached to elicit certain
information about the undersigned for investment in the Securities.
The information provided to the Company herein and in the Investor
Questionnaire is true and correct in all respects as of the date hereof The
undersigned agrees to notify the Company in writing immediately if any of the
statements made herein or in the Investor Questionnaire shall become untrue.
4. TRANSFER OF SECURITIES
(a) The undersigned agrees that it may not transfer, sell, pledge,
hypothecate or otherwise dispose of any Securities except (i) pursuant to an
effective registration statement under the Act and any applicable state
securities laws, or (ii) upon delivery to the Company of an opinion of counsel
satisfactory to the Company to the effect that registration under the Act and
such state securities laws is not required.
(b) Anything contained herein to the contrary notwithstanding, any
purchaser or other transferee of Securities, other than the Company, shall agree
in writing in advance with the Company to be bound by and comply with all
applicable provisions of this Agreement.
5. TERMS AND CONDITIONS OF WARRANT
The Warrant will be substantially in the form and to the effect of the
Warrant set forth as Exhibit A hereto.
6. REGISTRATION RIGHTS
In the event that the Company determines that it will file a
registration statement under the Act (other than a registration statement on a
Form S-4 or S-8 or filed in connection with an exchange offer) on any form that
would also permit the registration of the Securities and such filing is to be
made on its behalf and/or on behalf of selling holders of its securities for the
general registration of its securities to be sold for cash, at such time the
Company will, within thirty (30) days following such determination, give to the
undersigned written notice by registered mail of such determination setting
forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than thirty (30) days from the date of
such notice, and advising the undersigned of its right to have the Securities
included in such registration. Upon the written request of the undersigned
received by the Company no later than thirty (30) days after the date of the
Company's notice, the Company will use its best efforts to cause to be included
in such registration all of the Securities that the undersigned has so requested
to be registered; PROVIDED HOWEVER, that if, in the written opinion of the
managing underwriter or underwriters (or, in the case of a nonunderwritten
offering, in the written opinion of the placement agent, or if there is none,
the Company), the total amount of such securities to
3
be so registered, including the Securities, will exceed the maximum amount of
the Company's securities which can be marketed (i) at a price reasonably related
to the then current value of such securities; or (ii) without otherwise
materially and adversely affecting the entire offering, then the amount of
Securities to be offered for the account of the undersigned and any other person
who has been granted similar rights will be reduced pro rata to the extent
necessary to reduce the total amount of securities to be included in such
offering to the recommended amount.
7. VALUATION
The undersigned understands that there are a number of factors that are
germane to a full understanding of the valuation of an early stage, private
company's stock. While a discussion of all these factors is outside the scope of
this Subscription Agreement, the undersigned acknowledges and agrees that it has
considered all factors and made all inquiries it has determined to be relevant
in entering into the Subscription Agreement, including, without limitation, the
following: In December, 2002, the Company's Board of Directors determined that
the fair market value of Common Stock was not more than $0.05 per share for the
granting of stock options and for the issuance of restricted stock to its
employees and consultants. The undersigned acknowledges that (i) the Company has
not made, and does not now make, any representations that the value of its
Common Stock exceeds, or will exceed on any future date, the fair market value
of the Common Stock as determined by the Board of Directors, including, without
limitation, any representation that the Common Stock would be valued at $0.05
per share in subsequent transactions between the parties; and (ii) no third
party has passed on the valuation established by the parties.
8. ACCEPTANCE
A complete subscription must include (i) two copies of the signature
page of the Subscription Agreement signed by the undersigned, and (ii) two
copies of the Investor Questionnaire signed by the undersigned.
[SIGNATURE PAGE FOLLOWS]
4
SCIENTIFIC COMPUTING ASSOCIATES, INC.
By:
----------------------------------
Name:
Title:
-------------------------------------
Taxpayer's Identification Number
Address:
One Century Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Accepted by TurboWorx, Ind.
By:
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President, Operations
5
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE (I) ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER AND OTHER TERMS CONTAINED IN A SUBSCRIPTION AGREEMENT
DATED MARCH 11, 2003, BETWEEN THE COMPANY AND THE HOLDER OF THIS WARRANT (A COPY
OF WHICH IS AVAILABLE WITHOUT CHARGE FROM THE COMPANY), AND (II) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES EVIDENCED BY
THIS CERTIFICATE, FILED AND MADE EFFECTIVE UNDER THE SECURITIES ACT OF 1933 AND
SUCH APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY RECEIVES AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER
SUCH ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
TURBOWORX, INC.
No. SCA-l
WARRANT TO SUBSCRIBE FOR COMMON STOCK
STOCK SUBSCRIPTION
WARRANT
MARCH 11,2003
Not Transferable or Exercisable
Except Upon Conditions Herein Specified
THIS CERTIFIES that for value received, Scientific Computing
Associates, Inc. (the "Subscriber"), a corporation with an address at One
Century Tower, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, is entitled to
subscribe for and purchase from TURBOWORX, INC., a Delaware corporation (the
"Company"), that number of shares of Common Stock, $.001 par value per share of
the Company as is determined in accordance with Section 1 hereof ("Warrant
Stock"), at the exercise price per share determined as provided in Section 1
hereof (such price from time to subject to adjustment in accordance with Section
4 hereof and hereinafter called the "Warrant Price"), at any time or from time
to time during the applicable period set forth in Section 1 hereof.
This Warrant is issued pursuant to, and is subject to, that certain
Subscription Agreement, dated as of March II, 2003, by and between the Company
and the Subscriber (the "Subscription by the legal holder hereof at the
principal office of the Company. Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Subscription Agreement.
SECTION 1. Calculation of Warrant Stock; Exercise Price; Term.
(a) Except as otherwise provided herein, the number of shares of
Warrant Stock and the term of exercise shall be calculated as provided below:
(i) At the end of the first calendar quarter during which
gross revenues to the Company (as calculated from the date of incorporation, in
accordance with generally accepted accounting principles, "Gross Revenues") are
equal to or greater than $10,000,000, this Warrant shall be exercisable for that
number of shares of Warrant Stock as equals one percent (1%) of the issued and
outstanding shares of Common Stock of the Company as of such time. The
Subscriber may exercise this Warrant to purchase any Warrant Stock available for
exercise pursuant to this Section l(a)(i) at any time or from time to time
during the period from the date of calculation thereof to the date that is seven
(7) years thereafter.
(ii) At the end of the first calendar quarter during which
Gross Revenues are equal to or greater than $20,000,000, this Warrant shall be
exercisable for that number of shares of Warrant Stock which, when added to the
amount of Warrant Stock set forth in Section 1 (a)(i) above, if any, shall equal
two percent (2%) of the issued and outstanding shares of Common Stock of the
Company as of such time. The Subscriber may exercise this Warrant to purchase
any additional Warrant Stock available for exercise pursuant solely to this
Section l(a)(ii) at any time or from time to time during the period from the
date of calculation thereof to the date that is seven (7) years thereafter.
(iii) At the end of the first calendar quarter during which
Gross Revenues are equal to or greater than $30,000,000, this Warrant shall be
exercisable for that number of shares of Warrant Stock which, when added to the
amount of Warrant Stock set forth in Sections 1(a)(1) and l(a)(ii) above, if
any, shall equal three percent (3%) of the issued and outstanding shares of
Common Stock of the Company as of such time. The Subscriber may exercise this
Warrant to purchase any additional Warrant Stock available for exercise pursuant
solely to this Section 1(a)(iii) at any time or from time to time during the
period from the date of calculation thereof to the date that is seven (7) years
thereafter.
(iv) At the end of the first calendar quarter during which
Gross Revenues are equal to or greater than $40,000,000, this Warrant shall be
exercisable for that number of shares of Warrant Stock which, when added to the
amount of Warrant Stock set forth in Sections l(a)(i) through 1 (a)(iii) above,
if any, shall equal four percent (4%) of the issued and outstanding shares of
Common Stock of the Company as of such time. The Subscriber may exercise this
Warrant to purchase any additional Warrant Stock available for exercise pursuant
solely to this Section l(a)(iv) at any time or from time to time during the
period from the date of calculation thereof to the date that is seven (7) years
thereafter.
(v) At the end of the first calendar quarter during which
Gross Revenues are equal to or greater than $50,000,000, this Warrant shall be
exercisable for that number of shares of Warrant Stock which, when added to the
amount of Warrant Stock set forth in Sections l(a)(i) through 1 (a)(iv) above,
if any, shall equal five percent (5%) of the issued and outstanding shares of
Common Stock of the Company as of such time, The Subscriber may exercise this
Warrant to purchase any additional Warrant Stock available for exercise pursuant
solely to this Section I (a)(v) at any time or from time to time during the
period from the date of calculation thereof to the date that is seven (7) years
thereafter.
2
(vi) At the end of the first calendar quarter during which
Gross Revenues are equal to or greater than $60,000,000, this Warrant shall be
exercisable for that number of shares of Warrant Stock which, when added to the
amount of Warrant Stock set forth in Sections 1 (a)(i) through 1 (a)(v) above,
if any, shall equal six percent (6%) of the issued and outstanding shares of
Common Stock of the Company as of such time. The Subscriber may exercise this
Warrant to purchase any additional Warrant Stock available for exercise pursuant
solely to this Section 1 (a)(vi) at any time or from time to time during the
period from the date of calculation thereof to the date that is seven (7) years
thereafter.
(vii) At the end of the first calendar quarter during which
Gross Revenues are equal to or greater than $70,000,000, this Warrant shall be
exercisable for that number of shares of Warrant Stock which, when added to the
amount of Warrant Stock set forth in Sections 1 (a)(i) through 1(a)(vi) above,
if any, shall equal seven percent (7%) of the issued and outstanding shares of
Common Stock of the Company as of such time. The Subscriber may exercise this
Warrant to purchase any additional Warrant Stock available for exercise pursuant
solely to this Section 1 (a)(vii) at any time or from time to time during the
period from the date of calculation thereof to the date that is seven (7) years
thereafter.
(viii) At the end of the first calendar quarter during which
Gross Revenues are equal to or greater than $80,000,000, this Warrant shall be
exercisable for that number of shares of Warrant Stock which, when added to the
amount of Warrant Stock set forth in Sections l(a)(i) through 1 (a)(vii) above,
if any, shall equal eight percent (8%) of the issued and outstanding shares of
Common Stock of the Company as of such time. The Subscriber may exercise this
Warrant to purchase any additional Warrant Stock available for exercise pursuant
solely to this Section 1 (a)(viii) at any time or from time to time during the
period from the date of calculation thereof to the date that is seven (7) years
thereafter.
(ix) At the end of the first calendar quarter during which
Gross Revenues are equal to or greater than $90,000,000, this Warrant shall be
exercisable for that number of shares of Warrant Stock which, when added to the
amount of Warrant Stock set forth in Sections 1 (a)(i) through l(a)(viii) above,
if any, shall equal nine percent (9%) of the issued and outstanding shares of
Common Stock of the Company as of such time. The Subscriber may exercise this
Warrant to purchase any additional Warrant Stock available for exercise pursuant
solely to this Section l(ix) at any time or from time to time during the period
from the date of calculation thereof to the date that is seven (7) years
thereafter.
(x) At the end of the first calendar quarter during which
Gross Revenues are equal to or greater than $100,000,000, this Warrant shall be
exercisable for that number of shares of Warrant Stock which, when added to the
amount of Warrant Stock set forth in Sections l(a)(i) through I (a)(ix) above,
if any, shall equal ten percent (10%) of the issued and outstanding shares of
Common Stock of the Company as of such time. The Subscriber may exercise this
Warrant to purchase any additional Warrant Stock available for exercise pursuant
solely to this Section 1(j) at any time or from time to time during the period
from the date of calculation thereof to the date that is seven (7) years
thereafter.
(b) Notwithstanding anything herein to the contrary, in the event that
that certain License Agreement, dated as of March 11, 2003, by and between the
Company and the
3
undersigned (the "License Agreement") is terminated by the undersigned, this
Warrant shall be exercisable only for the number of shares of Warrant Stock, if
any, calculated in accordance with Section 1(a) hereof, for any revenue
milestones achieved prior to the effective date of termination of the License
Agreement.
(c) Notwithstanding anything herein to the contrary, in the event that
the License Agreement is terminated by the Company pursuant to Section 9.2(d)
thereof, the Warrant Stock and the term of exercise of this Warrant shall be
calculated as provided below:
(i) This Warrant shall be immediately exercisable for that
number of shares of Warrant Stock as equals one percent (1%) of the issued and
outstanding shares of Common Stock of the Company as of the effective date of
such termination and the undersigned may exercise this Warrant to purchase any
Warrant Stock available for exercise pursuant to this Section l(c)(i) at any
time or from time to time during the period from the effective date of
termination of the License Agreement to the date that is seven (7) years
thereafter.
(ii) Each of the percentages of stock set forth in Section
1(a)(i) through 1(a)(ix) shall be increased by one percent (1%), except that no
shares of Warrant Stock shall issue based upon Gross Revenues equal to or
greater than two times the Gross Revenues as of the effective date of
termination of the License Agreement plus $5,000,000.
(d) Notwithstanding anything herein to the contrary, in the event that
at any time during which the License Agreement is in effect: (i) a Change of
Control (as hereinafter defined) is effected; or (ii) the Company consummates a
Qualified IPO (as hereinafter defined), the number of shares of Warrant Stock
for which this warrant may be exercised shall equal that number of shares of
Warrant Stock which, when added to the amounts of Warrant Stock for which this
Warrant could be exercised prior to such date, equals ten percent (10%) of the
issued and outstanding Common Stock of the Company immediately prior to the
effective date of such event. For purposes hereof:
"Change of Control" shall mean (i) a consolidation or merger of the
Company with or into any other entity or any other transaction in which the
holders of the Company's outstanding shares immediately before such
consolidation, merger or other transaction do not, immediately after such
consolidation, merger or other transaction, retain stock or other equity
interests representing a majority of the voting power of the surviving entity of
such consolidation or merger; or (ii) a sale, lease, exclusive license or other
disposition of all or substantially all of the assets or intellectual property
of the Company.
"Qualified IPO" shall mean the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
filed under the Securities Act of 1933, as amended, covering the offer and sale
of Common Stock for the account of the Company in which the aggregate net
proceeds of such public offering (after deduction of underwriters' discounts and
commissions) equals or exceeds $15,000,000 and where the pre-money equity market
capitalization of the Corporation equals or exceeds $90,000,000.
(e) The Warrant Price for the Warrant Stock as calculated in accordance
with Sections 1(a), 1 (b), 1(c) or 1(d) above, as applicable, shall equal the
exercise price applicable to
4
the most recent option for the Company's Common Stock granted to any employee or
consultant of the Company prior to the time of the applicable Warrant Stock
calculation.
(f) The Company shall, within ten (10) days of receipt of any written
request by the Subscriber therefor, provide to the Subscriber a writing
evidencing: (i) the number of shares of Warrant Stock for which this Warrant may
be exercised as of the date of such writing; and (ii) the Warrant Price
applicable thereto.
SECTION 2. EXERCISE OF WARRANT. The rights represented by this Warrant
may be exercised by the holder hereof in whole at any time or in part from time
to time during the applicable term set forth in Section 1 hereof, but not as to
a fractional share of Warrant Stock, by the surrender of this Warrant (properly
endorsed) at the office of the Company, at One Century Tower, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other agency or office of the Company
in the United States of America as it may designate by notice in writing to the
holder hereof at the address of such holder appearing on the books of the
Company), and by payment to the Company of the Warrant Price in cash or by
certified or cashier's check or wire transfer for each share being purchased.
Notwithstanding anything herein to the contrary, in lieu of exercising
this Warrant as hereinabove permitted, the Subscriber may elect to receive
shares of Warrant Stock equal to the value (as determined below) of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company, together with the properly endorsed
Subscription Form, in which event the Company shall issue to the Subscriber that
number of shares of Warrant Stock computed using the following formula:
SAS = WS x (CP-EP)
------------------
CP
Where:
SAS equals the number of shares of Warrant Stock to be issued to
the Subscriber; and
WS equals the number of shares of Warrant Stock purchasable under
the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised (at the
date of such calculation); and
CP equals the Closing Price (as hereinafter defined) as of the
date of exercise. "Closing Price" on any day shall mean, in
the absence of an established market for the Company's Common
Stock, the valuation per share as determined in good faith by
the Board of Directors; provided, however, that where there
exists a public market for the Common Stock at the time of
such exercise, the Closing Price per share shall be equal to
the average of the closing bid and asked prices of the Common
Stock quoted in the Over-The-Counter Market Summary or the
last reported sale price of the Common Stock or the closing
price quoted on the NASDAQ National Market System or on any
exchange on which the Common Stock is listed, whichever is
applicable, as published in The Wall Street Journal for the
five
5
(5) trading days prior to the date of determination of the
Closing Price. Notwithstanding the foregoing, in the event the
Warrant is exercised in connection with the Company's initial
public offering of Common Stock, the Closing Price per share
shall be equal to the per share offering price to the public
of the Common Stock issued in the initial public offering; and
EP equals the per share exercise price (as calculated in
accordance with Section 1 hereof).
In the event of any exercise of the rights represented by this Warrant,
a certificate or certificates for the shares of Warrant Stock so purchased,
registered in the name of the holder, shall be delivered to the holder hereof
within a reasonable time, not exceeding twenty-five (25) days, after the rights
represented by this Warrant shall have been so exercised; and, unless this
Warrant has expired, a new Warrant of like tenor representing the number of
shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof within such time. The person
in whose name any certificate for shares of Warrant Stock is issued upon
exercise of this Warrant shall for all purposes be deemed to have become the
holder of record of such shares on the date on which the Warrant was surrendered
and payment of the Warrant Price and any applicable taxes was made, irrespective
of the date of delivery of such certificate, except that, if the date of such
surrender and payment is a date when the stock transfer books of the Company are
closed, such person shall be deemed to have become the holder of such shares at
the close of business on the next succeeding date on which the stock transfer
books are open. The Company shall pay any issue tax imposed on exercise of this
Warrant for Warrant Stock, provided, however, that the Subscriber shall be
required to pay any and all taxes which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the Subscriber as reflected upon the books of the Company.
Notwithstanding the foregoing or anything to the contrary herein, this
Warrant may be exercised only upon the delivery to the Company of any
certificates, legal opinions, or other documents reasonably requested by the
Company or its counsel to satisfy the Company and its counsel that the proposed
exercise of this Warrant may be effected without registration under the
Securities Act of 1933, as amended. The Holder shall not be entitled to exercise
this Warrant, or any part hereof, unless and until such certificates, legal
opinions or other documents are reasonably acceptable to the Company and its
counsel.
SECTION 3. COVENANTS AS TO WARRANT STOCK. The Company covenants and
agrees that all shares of Warrant Stock that may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. The Company further covenants and agrees that the
Company will at all times have authorized and reserved, free from preemptive
rights, a sufficient number of shares of its Warrant Stock to provide for the
exercise of the rights represented by this Warrant. The Company further
covenants and agrees that if any shares of capital stock to be reserved for the
purpose of the issuance of shares upon the exercise of this Warrant require
registration with or approval of any governmental authority under any Federal or
State law before such shares may be validly issued or delivered upon exercise,
then the Company will in good faith and as expeditiously as possible endeavor to
secure such registration or
6
approval, as the case may be. If and so long as the Warrant Stock issuable upon
the exercise of this Warrant is listed on any national securities exchange, the
Company will, if permitted by the rules of such exchange, list and keep listed
on such exchange, upon official notice of issuance, all shares of such Warrant
Stock issuable upon exercise of this Warrant.
SECTION 4. ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the
Warrant Price as provided in Section 5, the holder of this Warrant shall
thereafter be entitled to purchase, at the Warrant Price resulting from such
adjustment, the number of shares (calculated to the nearest tenth of a share)
obtained by multiplying the Warrant Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the Warrant Price
resulting from such adjustment.
SECTION 5. ADJUSTMENT OF WARRANT PRICE. The Warrant Price and the
securities purchasable upon exercise of this Warrant shall be subject to
adjustment from time to time as follows:
(i) If, at any time during the Term of this Warrant but after
a calculation of Warrant Stock, the number of shares of Common Stock of the
Company outstanding is increased by a stock dividend payable in shares of Common
Stock or by a subdivision or split-up of shares of Common Stock, then, following
the record date fixed for the determination of holders of Common Stock entitled
to receive such stock dividend, subdivision or split-up, the Warrant Price shall
be appropriately decreased so that the number of shares of Warrant Stock
issuable upon the exercise hereof shall be increased in proportion to such
increase in outstanding shares.
(ii) In any case in which the provision of this Section 5
shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event issuing to the holder of all or any part of this Warrant which is
exercised after such record date and before the occurrence of such event the
additional shares of capital stock issuable upon such exercise by reason of the
adjustment required by such event over and above the shares of capital stock
issuable upon such exercise before giving effect to such adjustment exercise;
provided, however, that the Company shall deliver to such holder a due ▇▇▇▇ or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(iii) The sale or other disposition of any Warrant Stock
theretofore held in the treasury of the Company shall be deemed to be an
issuance thereof.
SECTION 6. STOCKHOLDER RIGHTS. Except as specifically provided for in
this Warrant, this Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company. Upon exercise of this
Warrant and at the request of the Company, the holder hereof shall execute a
joinder agreement whereby it will become a party to such other agreements
between the Company and its shareholders as may be in effect at such time.
SECTION 7. TRANSFER OF WARRANT. Subject to the provisions of the
Subscription Agreement, this Warrant and all rights hereunder are transferable,
in whole or in part, but only upon surrender of this Warrant properly endorsed.
Each taker and holder of this Warrant, by
7
taking or holding the same, consents and agrees that this Warrant, when
endorsed, in blank, shall be deemed negotiable, and when so endorsed the holder
hereof may be treated by the Company and all other persons dealing with this
Warrant as the absolute owner hereof for any purposes and as the person entitled
to exercise the rights represented by this Warrant, or to the transfer hereof on
the books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered holder hereof
as the owner hereof for all purposes.
SECTION 8. EXCHANGE OF WARRANT. This Warrant is exchangeable, upon
surrender hereof by the holder hereof at the office or agency of the Company
designated in Section 2 hereof, for new Warrants of like tenor representing in
the aggregate the right to subscribe for and purchase the number of shares which
may be subscribed for and purchased hereunder, each of such new Warrants to
represent the right to subscribe for and purchase such number of shares as shall
be designated by said holder hereof at the time of such surrender.
SECTION 9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms
as to indemnity or otherwise as it may in its discretion impose (which shall, in
the case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated
or destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
SECTION 10. FRACTIONAL SHARES. Fractional shares shall not be issued
upon the exercise of this Warrant, but in any case where the Subscriber would,
except for the provisions of this Section 10, be entitled under the terms hereof
to receive a fractional share upon the complete exercise of this Warrant, the
Company shall, upon the exercise of this Warrant for the largest number of whole
shares then called for, cancel this Warrant and pay a sum in cash equal to the
value of such fractional share (determined in such reasonable manner as may be
prescribed in good faith by the Board of Directors of the Company).
SECTION 11. INFORMATION RIGHTS.
(a) The Subscriber shall furnish to the Company such information
regarding such Subscriber as the Company may reasonably request in writing and
as shall be reasonably required in connection with any registration,
qualification or compliance.
(b) The Company shall furnish to the Subscriber:
(i) as soon as practicable after the end of each fiscal year
of the Company during which this Warrant may be exercised, and in any event
within ninety (90) days thereafter, a balance sheet of the Company, as at the
end of such fiscal year, and a statement of income and a statement of cash flows
of the Company, for such year, all prepared in accordance with generally
accepted accounting principles consistently applied and setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail, together with management's discussion and analysis of such
statements; and
8
(ii) at the same time and in the same manner as it is provided
to the stockholders of the Company, a copy of any notice, consent or other
communication distributed by the Company to its stockholders as stockholders.
(c) To the extent not otherwise provided herein, in the event of:
(i) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(ii) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, or any
transfer of all or substantially all the assets of the Company to or
consolidation or merger of the Company with or into any other person, or
(iii) any Change of Control, or Company,
then and in each such event the Company will promptly mail or cause to be mailed
to the holder of this Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, Change of Control,
dissolution, liquidation or winding-up is to take place. Such notice shall be
mailed at least five (5) days prior to the date specified in such notice on
which any such action is to be taken.
SECTION 12. LAW GOVERNING. This Warrant shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without giving effect to the principles of conflicts of law thereof.
SECTION 13. MISCELLANEOUS.
(a) This Warrant and any provision hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
(or any predecessor in interest thereof) against which enforcement of the same
is sought. The headings in this Warrant are for purposes of reference only and
shall not affect the meaning or construction of any of the provisions hereof.
(b) Any provision of this Warrant which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(c) The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
9
such terms 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.
Without limiting the generality of the foregoing, the Company (i) will not
increase the par value of any shares of stock receivable on the exercise of the
Warrant above the amount payable therefor on such exercise, and (ii) will take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of stock on the
exercise of this Warrant from time to time outstanding.
[SIGNATURE PAGE FOLLOWS]
10
IN WITNESS WHEREOF, TURBOWORX, INC. has caused this Warrant to be
executed by its duly authorized officer, and this Warrant to be dated March 11,
2003.
TURBOWORX, INC.
By:
-----------------------------
Name: ▇▇▇▇▇▇▇ Augen
Title: President
ATTEST:
--------------------------------
Name:
11
FORM OF SUBSCRIPTION
[To be signed only upon exercise of Warrant[
To: TURBOWORX, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _____________ shares of Common Stock of TURBOWORX, INC. and
herewith makes payment of $________________ therefor, and requests that the
certificates for such shares be issued in the name of, and delivered to,
______________ , whose address is
Dated:
---------------------------
By:
------------------------------
(Signature)
---------------------------------
---------------------------------
(Address)
FORM OF ASSIGNMENT
[To be signed only upon exercise of Warrant[
For value received, the undersigned hereby sells, assigns and transfers
unto _______________________ the right represented by the within Warrant to
purchase _______ shares of Common Stock of TURBOWORX, INC. to which the within
Warrant relates, and appoints ___________________, Attorney, to transfer such
right on the books of TURBOWORX, INC. with full power of substitution in the
premises.
Dated:
---------------------------
By:
------------------------------
(Signature)
---------------------------------
---------------------------------
(Address)
Signed in the Presence of:
-----------------------------
INVESTOR QUESTIONNAIRE
TurboWorx, Inc.
One Century Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ Augen, President
Ladies and Gentlemen:
The information contained herein is furnished to you to enable you to
determine whether the issuance of a warrant ("Warrant") may be made to the
undersigned pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Act"), and regulations thereunder. The Warrant, the shares of stock
issuable upon the exercise of the Warrant (the "Warrant Shares") and any other
shares issued by the Company in exchange for any Warrant Shares are hereinafter
referred to collectively as the "Securities".
The undersigned understands that (i) you will rely upon the information
contained herein for purposes of such determination, (ii) the Securities will
not be registered under the Act in reliance upon the exemption from registration
provided by Section 4(2) of the Act, and (iii) the request that the undersigned
complete this questionnaire does not constitute an offer of the Securities to
the undersigned.
The undersigned represents to you that (i) the information contained
herein is complete and accurate and may be relied upon by you, and (ii) the
undersigned will notify you immediately of any material change in any of such
information occurring prior to the closing of the issuance of the Warrants to
the undersigned.
All information furnished is for the sole use of you and your counsel
and will be held in confidence by you and your counsel, except that this
questionnaire may be furnished to such parties as you deem desirable to
establish compliance with federal or state securities laws.
ALL INFORMATION WILL BE TREATED CONFIDENTIALLY
1. The undersigned considers itself, himself or herself to be an
experienced and sophisticated investor on the basis of knowledge and
experience in financial, business, and investment matters and is
therefore capable of, and does understand the full nature and risk of
an investment in the Securities and can afford the complete loss of the
investment.
2. The undersigned has read a copy of all of the written materials
provided by the Company, and the undersigned understands that such
materials do not purport to describe fully the current condition of the
Company, given its current financial situation and the nature of in a
private placement memorandum).
3. The undersigned has been afforded an opportunity to ask questions of
representatives of the Company regarding the Company and the terms of
this investment in the Securities.
4. The undersigned understands that the Securities have not been and will
not be registered under the Act, or any state securities laws and
cannot be sold or otherwise distributed by the undersigned unless they
either are registered or otherwise qualified under the Act and any
applicable state securities laws or are exempt from such registrations
or qualification.
5. The undersigned [check one]: ____ is not an Accredited Investor, or
|X| is an Accredited Investor by virtue
of the following status:
(i) is a bank as defined in Section 3(a)(2) of the Act or a
savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Act whether acting in its
individual or fiduciary capacity; any broker dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934;
any insurance company as defined in Section 2(13) of the Act;
any investment company registered under the Investment Company
Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; any Small Business Investment
Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment
Act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality
of a state or its political subdivisions, for the benefit of
its employees, if such plan has total assets in excess of
$5,000,000; any employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in
Section 3(2 1) of such Act, which is either a bank, savings
and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000, or, if a self-directed plan,
with investment decisions made solely by persons that are
accredited investors;
YES___ NO___
(ii) is a private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
YES___ NO___
(iii) is a non-profit organization described in Section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or
similar business trust, or partnership, not formed for the
specific purpose of acquiring the securities offered, with
total assets in excess of $5,000,000;
YES___ NO___
(iv) is a director or executive officer of the Company;
YES___ NO___
(v) is a natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
YES___ NO___
(vi) is a natural person who (a) had an individual income (not
including his or her spouse's income) in excess of $200,000 in
each of 2001 and 2002 and who reasonably expects an income in
excess of $200,000 in 2003 or (b) had a joint income with that
person's spouse in excess of $300,000 in each of 2001 and 2002
and has a reasonable expectation of reaching the same income
level in the current year;
YES___ NO___
(vii) is a trust with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person
as described in Rule 506(b)(2)(ii) of Regulation D; or
YES___ NO___
(viii) is an entity in which all of the equity owners are accredited
investors under subparagraphs (i), (ii), (iii), (iv), (v),
(vi) or (vii) above.
YES___ NO___
EXHIBIT D
SOFTWARE MODIFICATION AGREEMENT
SOFTWARE MODIFICATION AGREEMENT
This Agreement is by and between TURBOWORX, INC. ("LICENSEE"), a Connecticut
corporation with offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
and SCIENTIFIC COMPUTING ASSOCIATES, INC. (SCIENTIFIC), a Connecticut
corporation with offices at One Century Tower, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇ (jointly, the Parties).
LICENSEE agrees to receive on loan from SCIENTIFIC the source code for the
SCIENTIFIC program ____________________("Licensed Program"), and LICENSEE agrees
to use this Licensed Program only for the purposes of modifying the Licensed
Program to repair or enhance it as described in Attachment A ("Permitted
Modifications"), including the creation of new non-source forms of the Licensed
Program ("Non-Source Programs") similar to other non-source versions of the
Licensed Program included in that set of software products known as "SCA
Commercial Products" in other license agreements between the Parties. The
Non-Source Programs shall become subject to the license terms and restrictions
applicable to other non-source versions of the Licensed Program included in the
SCA Commercial Products under other agreements between the Parties just as if
they had been delivered by SCIENTIFIC to LICENSEE, SCIENTIFIC is willing to loan
LICENSEE the Licensed Program under the conditions described herein during the
Term of this Agreement, which Term shall commence on _____________ and shall end
on the earliest of _____________,or the date on which LICENSEE delivers to
SCIENTIFIC the source code for the Permitted Modifications as hereinafter
described ("Delivery Date"), or such other date on which LICENSEE terminates
this Agreement by written notice to SCIENTIFIC. This Agreement may only be
extended or modified by written mutual agreement of the Parties.
Upon completion of the Permitted Modifications, LICENSEE shall deliver the
source code for the Licensed Program incorporating the Permitted Modifications
("Modified Licensed Program") to SCIENTIFIC, and SCIENTIFIC shall, at its
commercially reasonable discretion and schedule, incorporate the Permitted
Modifications (or a reasonably equivalent set of alternative modifications) into
the next commercial upgrade release of the Licensed Program ("Upgraded Licensed
Program"). SCIENTIFIC agrees to retain a copy of the source code for the
Modified Licensed Program as delivered by Licensee until such a commercial
release has occurred and SCIENTIFIC has delivered to LICENSEE all non-source
copies of the Upgraded Licensed Program to which LICENSEE may be entitled under
other agreements between the Parties.
Except as may be reasonably required to make the Permitted Modifications and to
create the Non-Source Programs, LICENSEE agrees not to make or permit to be
made,, any copies of the Licensed Program or portions thereof without the
written permission of SCIENTIFIC. All copies. shall contain any and all
proprietary notices or legends that may appear in the Licensed Program. LICENSEE
may make copies of documentation provided by SCIENTIFIC as may be reasonably
required to make the Permitted Modifications and create the Non-Source Programs.
If SCIENTIFIC provides updated copies of the Licensed Program or documentation,
LICENSEE shall install and use only the updated Licensed Program or
documentation. LICENSEE agrees that it will return or destroy the Licensed
Program and all documentation, and to render unusable all Licensed Programs or
copies thereof placed in any storage apparatus, upon termination of this
Agreement. Upon reasonable written request of SCIENTIFIC, LICENSEE shall provide
written certification of its compliance with this obligation.
Within thirty (30) days of the termination of this Agreement, LICENSEE shall,
upon written request of SCIENTIFIC, inform SCIENTIFIC of the results of any
evaluations or assessments of the quality, performance, correctness or other
similar operational behaviors or characteristics of the Licensed Program, either
with or without the Permitted Modifications. Insofar as they relate to
evaluations or assessments of the quality, performance, correctness, fitness, or
other similar operational behaviors or characteristics of the Licensed Program,
LICENSEE shall not, without the written permission of SCIENTIFIC, disclose any
results of its tests of the Licensed Program, in any form, to any party other
than SCIENTIFIC for a period of one (1) year after termination of this
Agreement.
The Licensed Program and the Non-Source Programs, by themselves or with all or
part of the Permitted Modifications, are Confidential Information of SCIENTIFIC.
Nothing in this Agreement grants to LICENSEE the right to sell, lease or
otherwise transfer or dispose of the Licensed Program or the Non-Source Programs
in whole or in part. Nothing in this Agreement grants to LICENSEE any right to:
1) incorporate the Licensed Program or Non-Source Programs in any LICENSEE
product or 2) redistribute the Licensed Program or Non-Source Programs, or 3)
use the Licensed Program or Non-Source Programs for any purpose other than the
purposes described herein.
At all times, LICENSEE must protect the confidential, proprietary and trade
secret nature of the Licensed Program. LICENSEE shall use all reasonable efforts
to ensure that no improper or unauthorized use is made of the Licensed Program.
LICENSEE must ensure that the Licensed Program and any copies permitted
hereunder are at locations under its control and password protected at all
times, with a minimum number of individuals with access to or knowledge of such
password. Each individual having the ability to access the Licensed Program must
first execute a written non-disclosure agreement which obligates such individual
to maintain the confidential, proprietary and trade secret nature of the
Licensed Program and such agreement must be at least as protective of
SCIENTIFIC's rights as this Agreement. LICENSEE may only provide or disclose the
Licensed Program to those of LICENSEE's employees who must have access to the
Licensed Program to complete the Permitted Modifications and who are not
otherwise involved in the development of software products that compete with the
Licensed Program.
THE LICENSED PROGRAM COMES WITH NO WARRANTY AND IS PROVIDED ON AN "AS IS" BASIS.
YOU ASSUME THE ENTIRE COST OF ANY DAMAGE RESULTING FROM THE INFORMATION
CONTAINED IN OR PRODUCED BY THE LICENSED PROGRAM, OR ANY PORTION THEREOF. YOU
ASSUME ALL RESPONSIBILITIES FOR SELECTION OF THE LICENSED PROGRAM TO ACHIEVE
YOUR INTENDED RESULTS, AND FOR THE INSTALLATION OF, USE OF, AND RESULTS OBTAINED
USING IT. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, SCIENTIFIC, ITS
SUPPLIERS AND OTHERS WHO MAY DISTRIBUTE THE LICENSED PROGRAM DISCLAIM ALL
WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED
WARRANTIES OF MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR
PURPOSE,
CONFORMANCE WITH DESCRIPTION, NON-INFRINGEMENT OF THIRD PARTIES RIGHTS, OR
FAILURE TO PROVIDE SUPPORT SERVICES, WITH RESPECT TO THE LICENSED PROGRAM.
THE CUMULATIVE LIABILITY OF SCIENTIFIC, ITS SUPPLIERS OR OTHERS WHO MAY
DISTRIBUTE THE LICENSED PROGRAM, TO YOU OR ANY OTHER PARTY FOR ANY LOSS OR
DAMAGES RESULTING FROM ANY CLAIMS, DEMANDS OR ACTIONS ARISING OUT OF OR RELATING
TO THESE TERMS AND CONDITIONS SHALL NOT EXCEED ONE U.S. DOLLAR. IN NO EVENT
SHALL SCIENTIFIC, ITS SUPPLIERS OR OTHERS WHO MAY DISTRIBUTE THE LICENSED
PROGRAM BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES OR LOST PROFITS WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS
INFORMATION, OR OTHER PECUNIARY LOSS) ARISING OUT OF THE USE OR INABILITY TO USE
THE LICENSED PROGRAM, EVEN IF SCIENTIFIC, ITS SUPPLIERS OR OTHERS WHO MAY
DISTRIBUTE THE LICENSED PROGRAM HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
BECAUSE SOME JURISDICTIONS DO NOT ALLOW THE LIMITATIONS ON IMPLIED WARRANTIES OR
THE EXCLUSION OR LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL
DAMAGES, THE ABOVE LIMITATIONS MAY NOT APPLY TO YOU.
This Agreement shall be governed by, shall be construed in accordance with, and
performance shall be determined in accordance with the laws of the State of
Connecticut without reference to any provisions for conflicts of laws.
Accepted and agreed to:
SCIENTIFIC COMPUTING ASSOCIATES, INC. TURBOWORX, INC.
By: By:
------------------------------------ ---------------------------------
Name: Name:
---------------------------------- -------------------------------
Title: Title:
--------------------------------- ------------------------------
Date: Date:
---------------------------------- -------------------------------
ATTACHMENT A
Permitted Modifications:
Such modifications to the Licensed Program as may be required to {Insert
Description of Changes]