-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IOfpwLdgq0bLcnvtzLEFh/wf/PDl1W2bmxlpjR5PqtqpV3aEYje4YwbAQR7P1hfV MiPmVZlD7gNx2miso1jJ7w== 0001019687-05-000949.txt : 20050404 0001019687-05-000949.hdr.sgml : 20050404 20050404172517 ACCESSION NUMBER: 0001019687-05-000949 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20050331 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Changes in Control of Registrant ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers FILED AS OF DATE: 20050404 DATE AS OF CHANGE: 20050404 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PPOL INC CENTRAL INDEX KEY: 0001202507 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 954436774 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50065 FILM NUMBER: 05731266 BUSINESS ADDRESS: STREET 1: 11661 SAN VICENTE BOULEVARD, #901 CITY: LOS ANGELES STATE: CA ZIP: 90049 BUSINESS PHONE: 310-979-8513 MAIL ADDRESS: STREET 1: 11661 SAN VICENTE BOULEVARD, #901 CITY: LOS ANGELES STATE: CA ZIP: 90049 8-K 1 ppol_8k-033105.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): March 31, 2005 PPOL,INC. (Exact name of registrant as specified in its charter) CALIFORNIA 000-50065 95-4436774 (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification Number) organization) 11661 San Vicente Blvd, Suite 901 90049 Los Angeles, California (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (310) 979-8513 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. Effective March 31, 2005 (the "Effective Date"), Registrant entered into a Purchase Agreement (the "Purchase Agreement") with Forval Corporation ("Forval"), which at the time of the Effective Date owned approximately 10,547,594 shares of common stock of Registrant, representing approximately 58.62% of Registrant's issued and outstanding common stock. Forval's Chief Executive Officer ("CEO"), Hideo Ohkubo, also served as the CEO and Chairman of the Board of Registrant at the time of the Effective Date of the Purchase Agreement. The Purchase Agreement recited that Registrant was the owner of 30,000 shares (the "Gatefor Shares") of the common stock of Gatefor, Inc., a Japan joint stock company ("Gatefor"), representing 100% of the issued and outstanding common stock of Gatefor. The Purchase Agreement also recited that Registrant was the owner of 1,500 shares (the "OI Shares") of common stock of Object Innovation, Inc., a Florida corporation ("OI"). Additionally, the Purchase Agreement recited that Registrant and OI were parties to a certain Exclusive Distribution Agreement, dated May 26, 2004 (the "Exclusive Distribution Agreement), which agreement Registrant assigned (the "Assignment") to Gatefor pursuant to that certain Exclusive Distribution Right License Agreement (the "Distribution Right License Agreement"), dated October 1, 2004, between Registrant and Gatefor. In connection with the Assignment, OI and Gatefor entered into a revised letter of understanding, dated August 11, 2004 (the "Revised Letter of Understanding"), providing for, among other things, OI's right to purchase 5% of the equity of Gatefor and certain payments to be made by Gatefor to OI. In furtherance of the Purchase Agreement, Registrant sold to Forval the Gatefor Shares and the OI Shares, and assigned to Forval Registrant's receivable from Gatefor (the "Gatefor Receivable") in the principal amount of JPY176,662,500, plus accrued interest. The Purchase Agreement valued the Gatefor Shares at JPY150,000,000, and the OI Shares at JPY30,000,000. In connection with Forval's acquisition of the Gatefor Shares, OI Shares and Gatefor Receivable, Forval cancelled Registrant's debt to Forval in the principal amount of JPY340,000,000 plus accrued interest, and further paid Registrant JPY15,331,762. As further consideration in the transaction, Registrant assigned to Forval all of Registrant's right, title and interest in and to, and Forval assumed all obligations under, the Exclusive Distribution Agreement and the Distribution Right License Agreement, except that the payment of JPY100,000,000 previously made by Gatefor to Registrant pursuant to the Distribution Right License Agreement was deemed non-refundable, thus allowing Registrant to retain such payment upon expiration of the Distribution Right License Agreement on September 30, 2007. A Special Committee (the "Committee") of independent directors of Registrant's Board of Directors was formed to review the terms and conditions of the Purchase Agreement. The Committee approved Registrant's execution, delivery and performance of the Purchase Agreement. Copies of the Purchase Agreement, Exclusive Distribution Agreement, Distribution Right License Agreement and Revised Letter of Understanding are attached hereto as Exhibits 10.11, 10.12, 10.13 and 10.14, respectively. ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT. On April 4, 2005, PPOL, Inc. ("PPOL" or "Registrant") announced the completion of a definitive agreement under which Foster Strategic Investment Partnership acquired 10,547,594 shares of PPOL from Forval Corporation, representing 58.6% of PPOL's outstanding shares for $8,370,000 (900,000,000 Japanese Yen). A translation of the Stock Purchase Agreement, originally executed in Japanese, dated March 31, 2005 is attached hereto as Exhibit 99. ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS Effective March 31, 2005, Hideo Ohkubo, Robert Brasch, Lowell Hattori, Naota Hamaguchi and Yoshikazu Ohashi resigned as members of the Board of Directors and committees of the Registrant. The resignations were tendered in connection with the sale of all the shares of common stock of Registrant owned by Forval Corporation to Foster Strategic Investment Partnership, as more fully disclosed elsewhere in this Form 8-K. Additionally, effective March 31, 2005, Ohkubo and Toshiaki Shimojo resigned as CEO and CFO, respectively, of Registrant. In connection with the resignations of Messrs. Brasch and Hattori, each was paid $15,000 and retained their options to purchase 40,000 shares to purchase common stock of Registrant at $4.00 per share, expiring in 2014. Messrs. Ohkubo, Hamaguchi and Ohashi waived their rights to any cash compensation and stock options. New PPOL Directors were named, and include Hisao Inoue (54) as Chairman, and Masao Yamamoto (55) and Richard H. Izumi (51). In addition, PPOL has named Mr. Inoue as Chief Executive Officer, Mr. Yamamoto as Chief Operating Officer and Mr. Izumi as Chief Financial Officer and Secretary. Mr. Hisao Inoue is currently President of HI Consultant, Inc., a financial, sales and marketing, and retailing consulting firm, and is President of Seventy-nine Partners, Inc., a consultancy that includes market research and analysis, U.S.-Japan financing, government relations and human resources. Previously Mr. Inoue held various financial, IT and customer relations positions at American Express International. Mr. Inoue received a BS in Management from Aoyama Gakuin University. Mr. Masao Yamamoto is currently Chief Executive Officer of AJOL Co. Ltd., PPOL's wholly owned subsidiary, where he previously served as General Manager of Finance and Director. Prior to joining AJOL he was General Manager of accounting with Chiiki Shinko Kyouiku Jigyo Foundation. Mr. Yamamoto graduated from the Koganei Industrial School, with a major in Electronics. Mr. Richard Izumi is currently Senior Managing Director of JGS Co. Ltd, a Japanese company primarily involved in the licensing of energy and high-tech related intellectual property. Previously he was an independent consultant to public companies, including the registrant, on financial matters and international transactions, primarily between U.S. and Japan. Earlier he served as Partner at accounting firms Ernst & Young and Price Waterhouse(now known as PricewaterhouseCoopers). Mr. Izumi holds a B.S. in Business Administration from the University of Southern California. * * * SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: April 4, 2005 PPOL, Inc. By: /s/ Richard Izumi ------------------------------------- Richard Izumi Chief Financial Officer and Secretary EX-10.11 2 ppol_8kex10-1.txt EXHIBIT 10.11 EXECUTION VERSION PURCHASE AGREEMENT ------------------ This Purchase Agreement (the "Agreement") is made and entered into as of March 31, 2005, by and between PPOL, Inc., a California corporation ("Seller"), Forval Corporation, a Japan joint stock company ("Purchaser"), and GateFor, Inc., a Japan joint stock company ("Gatefor", and each of Seller, Purchaser and Gatefor a "Party", and collectively, the "Parties"). RECITALS -------- A. Purchaser is the owner of approximately 10,547,594 shares of common stock of the Seller, representing approximately 58.62% of Seller's issued and outstanding common stock. Purchaser's chief executive officer ("CEO"), Hideo Ohkubo, is the CEO and is the chairman of the board of directors of Seller. B. Seller is the owner of 30,000 shares (the "Gatefor Shares") of common stock of Gatefor, representing one hundred percent (100%) of the issued and outstanding common stock of Gatefor. C. Seller is also the owner of 1,500 shares (the "OI Shares") of common stock of Object Innovation, Inc., a Florida corporation ("OI"). The OI Shares were purchased subject to the terms and conditions of that certain Common Stock Purchase Agreement among OI, Seller and others dated May 26, 2004 (the "OI Common Stock Purchase Agreement"). D. Seller and OI have also entered into that certain Exclusive Distribution Agreement, dated May 26, 2004 (the "Exclusive Distribution Agreement"). E. Seller and Gatefor have also entered into that certain Exclusive Distribution Right License Agreement (the "Distribution Right License Agreement"), dated October 1, 2004, providing for, among other things, PPOL's assignment of the Exclusive Distribution Agreement to Gatefor. F. In connection with PPOL's assignment of the Exclusive Distribution Agreement to Gatefor, OI and Gatefor entered into a revised letter of understanding, dated August 11 2004 (the "Revised Letter of Understanding") providing for, among other things, OI's right to purchase five percent (5%) of the equity of Gatefor and certain payments to be made by Gatefor to OI. G. Seller is indebted to Purchaser in the principal amount of JPY340,000,000, plus accrued interest (the "Debt"). H. Gatefor is indebted to Seller in the principal amount of JPY176,662,500, plus accrued interest (the "Gatefor Receivable"), such indebtedness being evidenced by certain documents and instruments (the "Gatefor Receivable Documents"). I. By this Agreement, among other things, Purchaser desires to purchase and acquire from Seller, and Seller desires to sell and transfer to Purchaser, the Gatefor Shares, the OI Shares and the Gatefor Receivable, all upon the terms, conditions and covenants set forth herein. AGREEMENT --------- NOW THEREFORE, in consideration of the foregoing, and for valuable consideration, the receipt and adequacy of which are hereby acknowledged, and subject to the terms, conditions and covenants set forth below, the Parties hereto agree as follows: 1. SALE OF GATEFOR SHARES AND 0I SHARES AND ASSIGNMENT OF GATEFOR RECEIVABLE. Upon the execution hereof, and subject to satisfaction of the conditions set forth in Section 6, below, Seller hereby sells, assigns and transfers, and Purchaser hereby acquires and purchases, the Gatefor Shares, and, subject to the terms and conditions of the OI Common Stock Purchase Agreement, the OI Shares, and the Gatefor Receivable. The Parties acknowledge that the values for which the Gatefor Shares and the OI Shares are purchased by the Purchaser are as indicated on EXHIBITS A and B, respectively. 2. PAYMENT OF PURCHASE PRICE FOR GATEFOR SHARES, OI SHARES AND GATEFOR RECEIVABLE. As consideration for the purchase of the Gatefor Shares, the OI Shares and assignment of the Gatefor Receivable, Purchaser hereby: (i) cancels and forgives the Debt and (ii) pays to Seller, an amount equal to Y15,331,762 in immediately available funds via wire transfer to a bank account designated by the Seller. Seller shall be responsible for all payments to any governmental authority, including but not limited to national, prefectural or local governments, of any and all taxes, including but not limited to, transfer, withholding, stamp and consumption taxes to the extent applicable to the cash payment by Purchaser and the cancellation and forgiveness of the Debt or for the assignment of the Gatefor Receivable. 3. ADDITIONAL CONSIDERATION. As further consideration in connection herewith, Seller hereby assigns to Purchaser all of Seller's right, title and interest in and to, and Purchaser hereby assumes all obligations under, the Exclusive Distribution Agreement and the Distribution Right License Agreement, except that the payment of JPY100,000,000 made by Gatefor to Seller pursuant to Section 6.1(1) of the Distribution Right License Agreement shall be non-refundable and retained by Seller upon expiration of the Distribution Right License Agreement pursuant to Section 7 thereof. Gatefor hereby acknowledges and consents to the assignment of Distribution Right License Agreement as provided hereunder. 4. DELIVERY OF STOCK CERTIFICATES AND ASSIGNMENT OF RECEIVABLE. Upon the execution of this Agreement: (a) Seller shall deliver the following items to Purchaser: (i) stock certificates evidencing the Gatefor Shares with each such certificate to be duly and validly endorsed in favor of Purchaser or accompanied by a separate stock power duly and validly executed by Seller; (ii) a copy of Gatefor board resolutions authorizing the transfer of Gatefor Shares from Seller to Purchaser; (iii) all of the books and records of Seller relating to Gatefor; -2- (iv) stock certificates evidencing the OI Shares, with each such certificate to be duly and validly endorsed in favor of Purchaser or accompanied by a separate stock power duly and validly executed by Seller; (v) written consent of OI of the sale of the OI Shares and assignments of the Exclusive Distribution Agreement and Distribution Right License Agreement; (vi) all of the books and records of Seller relating to OI; and (vii) the Gatefor Receivable Documents and an unconditional consent through written notification with a notarial date stamp (KAKUTEI HIZUKE). 5. REPRESENTATIONS AND WARRANTIES. (a) Seller hereby represents and warrants to Purchaser, as follows: (i) Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of California. Seller has all necessary power and authority to enter into this Agreement and to consummate the transaction contemplated hereby without obtaining the consent or approval of any third party. (ii) All corporate action on the part of the Seller necessary for authorization, execution and delivery of this Agreement and the performance of all obligations of the Seller hereunder has been taken. Upon execution and delivery, this Agreement will be a valid and binding obligation of the Seller, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other laws of general application relating to or affecting enforcement of creditor's rights and by general equitable principles. (iii) The execution, delivery and performance of this Agreement will not, with or without the giving of notice and/or the passage of time, (i) violate any provision of law applicable to Seller (ii) conflict with or result in the breach of, termination of, or constitute a default under or pursuant to any judgment, order, injunction, decree or ruling of any court or governmental authority by which Seller is a party or by which Seller is bound, or (iii) conflict with or result in the breach of, or constitute a default under any of the terms, conditions or provisions of any agreement or instrument or other obligation to which Seller is a party or by which Seller's properties or assets are subject. (iv) The OI Shares are owned by Seller and held by Seller, or by a nominee or custodian for the sole and exclusive benefit of Seller, free and clear of all assignments, pledges, security interests, liens, charges and encumbrances whatsoever. (b) Each of Seller and Gatefor hereby represents and warrants to Purchaser, as follows: (i) Gatefor is a corporation duly organized, validly existing and in good standing under the laws of Japan. (ii) The authorized capital stock of Gatefor consists of 45,000 shares, of which 30,000 shares are issued and outstanding. All the outstanding shares of Gatefor's capital stock are duly authorized, validly issued, fully paid and non-assessable. Except as -3- specifically provided in the Revised Letter of Understanding, there are no existing options, warrants, calls, pre-emptive rights, subscriptions or other rights, agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of Gatefor obligating Gatefor to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock, or other equity or debt interest in, Gatefor or securities convertible into or exchangeable for such shares or equity interests. (iii) The Gatefor Shares represent all of the issued and outstanding capital stock of Gatefor. The Gatefor Shares are owned by Seller and held by Seller, or by a nominee or custodian for the sole and exclusive benefit of Seller, free and clear of all assignments, pledges, security interests, liens, charges and encumbrances whatsoever. (iv) Gatefor has all necessary power and authority to enter into this Agreement and to consummate the transaction contemplated hereby without obtaining the consent or approval of any third party. (v) All corporate action on the part of Gatefor necessary for authorization, execution and delivery of this Agreement and the performance of all obligations of Gatefor hereunder, has been taken. Upon execution and delivery, this Agreement will be a valid and binding obligation of Gatefor, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other laws of general application relating to or affecting enforcement of creditor's rights and by general equitable principles. (vi) The execution, delivery and performance of this Agreement will not, with or without the giving of notice and/or the passage of time, (i) violate any provision of law applicable to Gatefor (ii) conflict with or result in the breach of, termination of, or constitute a default under or pursuant to any judgment, order, injunction, decree or ruling of any court or governmental authority by which Gatefor is a party or by which Gatefor is bound, or (iii) conflict with or result in the breach of, or constitute a default under any of the terms, conditions or provisions of any agreement or instrument or other obligation to which Gatefor is a party or by which Gatefor's properties or assets are subject. (vii) The issuance, sale and delivery of the Gatefor Receivable (i) was within the corporate powers of Gatefor; (ii) was legal and did not conflict with, result in any breach of any of the provisions of, constitute a default under, any agreement, charter instrument, bylaw or other instrument to which it is a party or by which it or any of its properties may be bound or result in the creation of any lien upon any property of Gatefor; and (iii) did not violate any applicable laws or regulations. (viii) Seller is the sole legal and beneficial owner of the Gatefor Receivable, free and clear of all assignments, pledges, security interests, liens, charges and encumbrances, and no other person has claimed any related rights or interests thereto. No person has, and no person has not claimed, any legal or equitable interest in or to the Gatefor Receivable, any portion thereof, or arty revenues, profits, cash flow or gains therefrom. Seller has the full right and authority to assign, transfer and/or pledge the Gatefor Receivable to Purchaser in accordance with the terms of this Agreement. -4- (ix) The Gatefor Receivable Documents have not been amended, modified, supplemented or restated. EXHIBIT C attached hereto and made a part hereof is true, correct and complete copies of all of the Gatefor Receivable Documents and the outstanding principal and interest amounts as of the date hereof. There currently exists no default or event which, with the giving of notice or the lapse of time, or both, would constitute a default under the Gatefor Receivable Documents, and there is no alleged default by Gatefor with respect thereto. (x) Each Gatefor Receivable Document is in full force and effect and constitutes the valid and binding obligation of Gatefor thereunder, enforceable in accordance with its respective terms. There are no claims, interests, offsets or defenses to the enforcement from any third party in relation to the Gatefor Receivable or to the payment of any sums due or to become due or the performance of any obligations to be performed under the Gatefor Receivable Documents. (xi) To the knowledge of Seller and Gatefor, each of the Exclusive Distribution Agreement, the Distributor Right License Agreement and the Revised Letter of Understanding is in full force and effect and constitutes the valid and binding obligation of the parties thereunder, enforceable in accordance with its respective terms. There are no claims, interests, offsets or defenses to the enforcement from any third party in relation to any of the Exclusive Distribution Agreement, the Distributor Right License Agreement or the Revised Letter of Understanding. (c) Purchaser hereby represents and warrants to Seller, as follows: (i) Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Japan. Purchaser has all necessary power and authority to enter into this Agreement and to consummate the transactions contemplated hereby without obtaining the consent or approval of any third party. (ii) All corporate action on the part of the Purchaser necessary for authorization, execution and delivery of this Agreement and the performance of all obligations of the Purchaser hereunder has been taken. Upon execution and delivery, this Agreement will be a valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other laws of general application relating to or affecting enforcement of creditor's rights and by general equitable principles. (iii) The execution, delivery and performance of this Agreement will not, with or without the giving of notice and/or the passage of time, (i) violate any provision of law applicable to Purchaser (ii) conflict with or result in the breach of, termination of, or constitute a default under or pursuant to any judgment, order, injunction, decree or ruling of any court or governmental authority by which Purchaser is a party or by which Purchaser is bound, or (iii) conflict with or result in the breach of, or constitute a default under any of the terms, conditions or provisions of any agreement or instrument or other obligation to which Purchaser is a party or by which Purchaser's properties or assets are subject. (iv) Purchaser (1) is a sophisticated investor and is experienced in evaluating and investing in securities and acknowledges that it is able to fend for itself, and by reason of its knowledge and experience in financial and business matters, or by reason of the -5- business and financial experience of its financial advisor, if any, who is unaffiliated with and who is not compensated, directly or indirectly, by the Seller, it is capable of evaluating the merits and risks of the purchase of the Gatefor Shares and OI Shares contemplated hereunder and of protecting its own interests and/or (2) has preexisting business relationships with Gatefor and OI and certain of their respective officers, directors or controlling persons of a nature and duration that enables Purchaser to be aware of the character, business acumen and financial circumstances of such persons. (v) Purchaser is acquiring the Gatefor Shares and the OI Shares solely for investment for its own account and not with the view to, or for resale in connection with, any distribution thereof. Purchaser understands that the Gatefor Shares and the OI Shares have not been registered, under the Securities Act of 1933, as amended, and that there is no market for such securities. (vi) Purchaser has also received and reviewed the Exclusive Distribution Agreement and the Distribution Right License Agreement and is fully aware of and understands the terms and conditions of both agreements. Purchaser has also reviewed and understands the terms and conditions of the Gatefor Receivable and acknowledges that Seller can provide no assurances with respect to the collectibility thereof. Purchaser has also received and reviewed the Revised Letter of Understanding and is fully aware of and understands the terms and conditions thereof. (d) CONDITIONS. The obligation of the Parties hereunder are subject to the approval of OI of the sale of the OI Shares and assignments of the Exclusive Distribution Agreement and Distribution Right License Agreement. 6. WAIVER OF ALL RIGHTS AND CLAIMS. Except as specifically stated in this Agreement, Seller hereby waives all rights and claims against Gatefor with respect to or in connection with the Exclusive Distribution Agreement and Distribution Right License Agreement, including, but not limited to (i) all rights to market, solicit sub-licenses for and distribute the Software and Documentations (as such terms are defined in the Exclusive Distribution Agreement); (ii) any exclusive distribution rights described in the Distribution Right License Agreement; and (iii) claims against Gatefor relating to the royalty payment due at the end of March, 2005 pursuant to Section 6 of the Distribution Right License Agreement. 7. INDEMNIFICATION. (a) INDEMNIFICATION BY SELLER. Seller shall indemnify, save and hold Purchaser, its officers, directors, employees, advisors and representatives (collectively, the "Purchaser Indemnified Parties") harmless and will pay to any of the Purchaser Indemnified Parties if any of the Purchaser Indemnified Parties shall at any time or from time to time suffer any damage, liability, loss, cost, expense (including all reasonable attorneys' fees, court costs, consulting fees, expert witness fees and expenses incurred in the investigation or defense of any of the same), claim or cause of action arising out of or resulting from (i) any material untruth or inaccuracy in any representation of Seller or Gatefor or the material breach of any warranty of Seller or Gatefor in this Agreement; or (ii) any failure of Seller to duly perform or observe any material term, provision, covenant or agreement on the part of Seller to be performed or observed in this Agreement. -6- (b) INDEMNIFICATION. BY PURCHASER. Purchaser shall indemnify, save and hold Seller, its officers, directors, employees, advisors and representatives (collectively, the "Seller Indemnified Parties") harmless and will pay to any of the Seller Indemnified Parties if any of the Seller Indemnified Parties shall at any time or from time to time suffer any damage, liability, loss, cost, expense (including all reasonable attorneys' fees, court costs, consulting fees, expert witness fees and expenses incurred in the investigation or defense of any of the same), claim or cause of action arising out of or resulting from (i) any material untruth or inaccuracy in any representation of Purchaser or the material breach of any warranty of Purchaser in this Agreement; or (ii) any failure of Purchaser to duly perform or observe any material term, provision, covenant or agreement on the part of Purchaser to be performed or observed in this Agreement. 8. MISCELLANEOUS PROVISIONS. (a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the Parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements, arrangements and understandings with respect thereto. (b) SURVIVAL. All representations, warranties and agreements contained here shall survive the execution of this Agreement and the closing of the transactions contemplated hereby. (c) SUCCESSORS AND ASSIGNS. All of the terms, covenants and conditions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. (d) CLOSING COSTS. Seller and Purchaser shall each bear their respective costs of negotiating and completing this transaction, including attorneys' fees. (e) CONSTRUCTION. Seller and Purchaser agree that no party shall be deemed to be the drafter of this Agreement and that in the event this Agreement is ever construed by a court of law or equity, such court shall not construe this Agreement or any provisions hereof against any party as the drafter of the Agreement. (f) AMENDMENTS. This Agreement shall not be modified except by an instrument in writing signed by the parties hereto. (g) NOTICE. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and delivered personally, by international courier, sent by registered or certified mail (postage prepaid, return receipt requested) or by facsimile (with assurance of receipt in a manner customary for communications of such type) to the parties at the following addresses: (i) If to Seller, to: PPOL, Inc. 11661 San Vicente Blvd., Suite 9O1 Los Angeles, CA 90049 Fax: 310-979-8519 Attention: Toshiaki Shimojo -7- (ii) If to Purchaser, to: Forval Corporation 14F, Aoyama Oval Bldg. 5-52-2 Jingumae Shibuya-ku, Tokyo 150-000O1 JAPAN Fax: +81-3-5467-8035 Attention: Koji Kato {iii) If to Gatefor, to: Gatefor, Inc. 14F, Aoyama Oval Bldg. 5-52-2 Jingumae Shibuya-ku, Tokyo 150-000O1 JAPAN Fax: +81-3-5467-8035 Attention: Yuji Endo or to such other persons or at such other addresses as shall be furnished by any party by like notice to the others, and such notice or communication shall be deemed to have been given or made as of the date so delivered, in the case of hand delivery or facsimile transmission or five days after deposit in the mails, if mailed. No change in any of such addresses shall be effective insofar as notices under this Section 9(g) are concerned unless notice of such change shall have been given to such other party hereto as provided in this Section 9(g). (h) FURTHER ASSURANCES. From time to time, at the request and expense of the requesting party, whether prior to, at or after the closing of the transactions contemplated by this Agreement, and without further consideration and without increasing any party's obligations hereunder, each party agrees to and shall execute and deliver such further instruments and take such other action as the requesting party may reasonably request in order to effectuate the transactions set forth herein. (i) NOTICES, ANNOUNCEMENTS AND COMMUNICATIONS. The Parties hereby agree that, except, as may be required by applicable laws or stock exchange rules and regulations, no press release or similar public announcement or communication shall be made or caused to be made concerning the execution or performance of this Agreement; provided that, Seller shall cause its subsidiaries and affiliates (including specifically AJOL Co., Ltd.) to provide a consistent message and explanation regarding the transaction contemplated under this Agreement to its customers, suppliers and other business contacts. (j) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflicts of law rules; provided that, the provisions relating to the unconditional consent by Gatefor through written notification with a notarial date stamp (KAKUTEI HIZUKE) shall be governed by and construed in accordance with the laws of Japan, without regard to its conflict of law rules. -8- (k) HEADINGS. All of the section headings herein are inserted for convenience only and shall have no meaning for purposes of this Agreement. Recitals are hereby incorporated by reference in and form a party of this Agreement. (l) COUNTERPART FAX SIGNATURE. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by fax and a fax copy shall be treated as an original. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.] -9- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. "SELLER" PPOL, INC. By: /s/ Naota Hamaguchi ------------------------------------------ Name: Naota Hamaguchi, as member of the Special Committee and the authorized signatory with respect hereto "PURCHASER" FORVAL CORPORATION By: /s/ Hideo Ohkubo ------------------------------------------ Name: Hideo Ohkubo Title: President and Chairman "GATEFOR" GATEFOR, INC. By: /s/ Fumitaka Kurimoto ------------------------------------------ Name: Fumitaka Kurimoto Title: Representative Director -10- EXHIBIT A --------- VALUE OF GATEFOR SHARES Y150,000,000 -11- EXHIBIT B --------- VALUE OF OI SHARES Y30,000,000 -12- EXHIBIT C --------- DETAILS OF THE GATEFOR RECEIVABLE A. Loan Agreement dated as of July 22, 2004 by and between Gatefor and Seller: 1. Outstanding Principal Balance as of March 31, 2005: Y26,662,500 2. Outstanding Interest Balance as of March 31, 2005: Y369,623 3. Applicable Withholding Tax (Y36,962) Total: Y26.995,161 ----- ------------ B. Loan Agreement dated as of October 25, 2004 by and between Gatefor and Seller. 1. Outstanding Principal Balance as of March 31, 2005: Y150,000,000 2. Outstanding Interest Balance as of March 31, 2005: Y1,298,630 3. Applicable Withholding Tax (Y129,863) Total: Y151,168,767 ----- ------------- -13- EX-10.12 3 ppol_8kex10-2.txt EXHIBIT 10.12 EXCLUSIVE DISTRIBUTION AGREEMENT This Exclusive Distribution Agreement ("AGREEMENT") is made and entered into as of May 26, 2004 ("AGREEMENT DATE") by and between Object Innovation, Inc., a Florida corporation with its principal place of business at 8130 Baymeadows Way West Suite 307, Jacksonville, Florida 32256 ("VENDOR"), and PPOL, Inc., a California corporation with its principal place of business at 1 City Boulevard West, Suite 870, Orange, CA 92868 ("DISTRIBUTOR"). For purposes related to Section 2.5 (below), or any other Sections requiring similar date calibration, the effective date ("EFFECTIVE DATE") of this Agreement will be July 15, 2004. RECITALS WHEREAS, Vendor has rights to license and distribute, and to sublicense others to license and distribute, the Products in the Territory (as those terms are defined below); and WHEREAS, Vendor desires to have Distributor, and Distributor desires to, license, market and distribute the Products is the Territory pursuant to the terms and conditions of this Agreement. NOW, THEREFORE, is consideration of the mutual representations, warranties, covenants and other terms and conditions contained herein, Vendor and Distributor agree as follows: AGREEMENT 1. DEFINITIONS 1.1 "AFFILIATE" of a Person/Legal Entity shall mean any other Person/Legal Entity controlled by, controlling, or under common control with such first Person/Legal Entity. 1.2 "CONFIDENTIAL INFORMATION" shall mean the source code for the Software and any and all information and material disclosed by either part ("DISCLOSING PARTY") to the other party ("RECEIVING PARTY") (whether in writing, or in oral, graphic, electronic or any other form) that is marked or identified in writing as confidential or proprietary, or if disclosed orally or in other intangible form or in any form that is not so marked, that is identified as confidential at the time of such disclosure and summarized in writing and transmitted to the Receiving Party within thirty (30) days of such disclosure. Notwithstanding the previous sentence, information shall not be deemed Confidential Information to the extent that such information: (a) was generally known and available in the public domain at the time it was disclosed or subsequently becomes generally known and available in the public domain through no fault of the Receiving Party; (b) was known to the Receiving Party at the time of disclosure; (c) is disclosed with the prior written approval of the Disclosing Party; (d) was independently developed by the Receiving Party without any use of the Confidential Information of the Disclosing Party; or (e) becomes known to the Receiving Party from a source other than Disclosing Party within breach of this Agreement by the Receiving Party and is otherwise not in violation of the Disclosing Party's rights. 1.3 "CONTRACT YEAR" shall mean a twelve month period ending on the anniversary of the Effective Date. 1.4 "DOCUMENTATION" shall mean the standard user documentation for the Software, including, without limitation, user manuals, reference manuals, training materials and installation manuals, and including my Japanese language translations thereof. 1.5 "AGREEMENT DATE" shall mean the date that this Agreement is signed and fully takes effect. 1.6 "EFFECTIVE DATE" shall mean that, for purposes related to the sales and Distributor performance contemplated in this Agreement, the date which all performance, milestones, and other metrics will be based. 1.7 "END USER" shall mean a Person, other than Distributor, who has licensed the Products for ordinary internal business usage and not for purposes of further resale. 1.8 "END USER LICENSE AGREEMENT" shall mean the End User terms and conditions of license attached hereto as EXHIBIT A entered into between Distributor (or Subsidiary, as applicable) and End User. 1.9 "ERROR" shall mean a defect or combination of defects in the Software that result in a failure of the Software to function in accordance with the technical specifications for the Software as set forth in the applicable Documentation. Page 1 of 20 1.10 "ERROR CORRECTION" shall mean a bug fix, patch or other modifications or addition that, when made or added to the Software, corrects an Error. 1.11 "FIRM PERIOD" shall have the meaning set forth in Section 8.4. 1.12 "FORCE MAJEURE EVENT" shall have the meaning set forth in Section 16.4. 1.13 "GROSS REVENUE" shall mean all amounts received by Vendor for the license of the Product, less (a) freight, handling, service, refunds for returns, insurance and other charges for delivery of the product (including, without limitation, charges for transmission) and (b) sales, use, excise, value added and other taxes. 1.14 "INITIAL TERM" shall have the meaning set forth in Section 14.1. 1.15 "INTELLECTUAL PROPERTY RIGHTS" shall mean, on a world-wide basis, any and all now known or hereafter known tangible and intangible (a) rights associated with works of authorship, inc, without limitation, copyrights, moral rights and mask-works, (b) rights associated with trademarks, service marks, trade names and similar rights, (c) trade secret rights, (d) patents, designs, algorithms and other industrial property rights, (e) rights in domain names; (f) all registrations, applications, renewals, extensions, continuations, divisions or reissues thereof now or hereafter existing, made or in force (including any rights in any of the foregoing). 1.16 "JAPANESE VERSION" shall have the meaning set forth in Section 2.2. 1.17 "MAINTENANCE RELEASE" shall mean a subsequent version of the Software that including Error Corrections. 1.18 "PERSON" shall mean any natural person, corporation, partnership, firm, association, limited liability company, government, governmental agency or other entity, whether acting as an individual, fiduciary or other capacity. 1.19 "PRICE LIST" shall mean the price list set forth in EXHIBIT C attached hereto. 1.20 "PRODUCTS" shall mean the Software and Documentation, individually or collectively. 1.21 "RENEWAL TERM" shall have the meaning set forth in Section 14.1. 1.22 "SOFTWARE" shall mean the software programs set forth in EXHIBIT B attached hereto, as Exhibit B may be amended from time to time by the parties' mutual consent, and any modifications, changes (including translations or the Japanese Version), improvements, workarounds and updates (including any Error Corrections, Upgrades or Maintenance Releases) made to such software programs during the Term. 1.23 "SUPPORT SERVICES" shall mean the Level One and Level Two maintenance and support serves set forth in EXHIBIT E attached hereto. 1.24 "TERM" shall have the meaning set forth in Section 14.1. 1.25 "TERRITORY" shall mean the country of Japan. 1.26 "TRADEMARKS" shall mean the trademarks, trade names and service marks set forth in EXHIBIT D attached hereto and such other marks as Vendor may designate from time to time in writing during the Term. 1.27 "UPGRADE" shall mean any new version of the Software that adds substantial new functionality to such Software. 2. GRANT OF RIGHTS 2.1 GRANT OF DISTRIBUTORSHIP. Subject to the terms and conditions of this Agreement, Vendor hereby grants to Distributor the exclusive right during the Term, within the Territory, to: (a) market and solicit sub-licenses for the Software and Documentation to End Users and (b) distribute the Software and Documentation to such End Users, provided that such End Users have validity entered into an End User License Agreement with Distributor pursuant to Section 3.1(a) below. The Parties agree that Distributor shall, within one hundred eighty (180) days after the date hereof, assign all of its rights and obligations under this Agreement to a newly formed Japanese entity (the "Subsidiary" that shall be a least majority-owned by PPOL, Inc. and its Affiliates. Upon such assignment, the Page 2 of 20 Subsidiary shall be deemed the "Distributor" hereunder for all purposes. Notwithstanding any such assignment, PPOL, Inc. shall remain liable for all of Distributor's obligations hereunder. 2.2 GRANT OF LICENSE TO SOFWARE AND DOCUMENTATION. Subject to the terms and conditions of this Agreement, Vendor hereby grants to Distributor the exclusive, royalty-free right and license (including the right to sublicense) during the Term: (a) to modify and create derivative works of the Software and Documentation for the purpose of developing a Japanese language version of the Software and Documentation ("JAPANESE VERSION"); (b) to reproduce the Japanese Version for distribution to End Users within the Territory; and (c) to use, perform and display (whether publicly or otherwise) the Software and Documentation for purposes of marketing, demonstrating, soliciting sub-licenses for and distributing the Products, developing the Japanese Version, supporting and maintaining the Products, and granting sub-licenses in accordance with the terms hereof, in each case, solely in connection with fulfilling Distributor's obligations and exercising Distributor's rights set forth in this Agreement. All such derivative works shall, at all times, be the sole and exclusive property of Vendor, but Vendor shall grant Distributor the right to use all such derivative works in connection with fulfilling Distributor's obligations and exercising Distributor's rights as set forth in this Agreement. 2.3 GRANT OF LICENSE TO TRADEMARKS. Subject to the terms and conditions of this Agreement, Vendor, hereby grants to Distributor the non-exclusive right during the Term, within the Territory, to use the Trademarks for purposes of advertising and promoting the Products hereunder. Distributor understands and agrees that the use of any Trademark in connection with this Agreement shall not create any right, title or interest in or to the use of the Trademark, and that all such use and goodwill associated therewith shall inure solely to the benefit of Vendor. 2.4 GRANT OF RIGHT TO APPOINT SUB-DISTRIBUTORS. Subject to the terms and conditions of this Agreement, Vendor hereby grants to Distributor the right during the Term, to appoint sub-distributors within the Territory, in Distributor's reasonable discretion and with Vendor's consent, such consent not to be unreasonably withheld. Distributor shall not grant any sub-distribution rights to a sub-distributor except pursuant to a written agreement in which such sub-distributor agrees to all of the restrictions on the use of the Software and Documentation contained herein and which agreement shall provide for conversion to a non-exclusive agreement, if applicable, as set forth in Section 2.5 hereof. 2.5 LIMITATION ON EXCLUSIVITY. Vendor reserves the right to convert the exclusive right granted to Distributor under Section 2.1 into a non-exclusive right in accordance with the terms of this Section 2.5 (or to terminate this Agreement as set forth in Section 14) in the event that the Distributor, together with its sub-distributors, fails to meet the mutual Gross Revenue goals in the Territory as follows (each, a "Revenue Goal"): Contract Year 1 (commencing with the Effective Date and ending on the day before the first anniversary of the Effective Date): US$1 million Gross Revenues received by Vendor. Contract Year 2 (commencing with the first anniversary of the Effective Date and ending on the day before the second anniversary of the Effective Date): US$2 million Gross Revenues received by Vendor. Contract Year 3 (commencing with the second anniversary of the Effective Date and ending on the day before the third anniversary of the Effective Date): US$3 million Gross Revenues received by Vendor. Contract Year 4 (commencing with the third anniversary of the Effective Date and ending on the day before the fourth anniversary of the Effective Date): US$5 million Gross Revenues received by Vendor. Contract Year 5 (commencing with the fourth anniversary of the Effective Date and ending on the day before the fifth anniversary of the Effective Date): US$5 million Gross Revenues received by Vendor. For the purposes of determining whether the Revenue Goal for that Contract Year has been met, the Gross Revenues actually received by Vendor from distribution shall determine compliance. In the event that Vendor converts the exclusive right granted to distribution under Section 2.1 into a non-exclusive right in accordance with this Section 2.5, then any exclusive sub-distributorship granted by Distributor or its sub-distributors in such Territory will be automatically converted to non-exclusive sub-distributorship. By mutual consent of the Vendor and Distributor, the Effective Date that is referenced herein may be extended to a new date that approximately corresponds with the completion of the localization of Product to the Japanese market. Since the intent is to measure Japanese sales performance, it is reasonable to set the start of the Effective Date to when Japanese sales can actually begin. In the event that localization has not been completed by the Effective Date mentioned herein both parties agree to revise the Effective Date to one that is appropriate. Page 3 of 20 The Revenue Goal in accordance with the terms in Section 2.5 is the basic idea and plan for both parties; however, both parties share the understanding that we shall have time for discussion to adjust the plan before it take place. The fatal conversion of the exclusive right granted to Distributor under Section 2.1 into a non-exclusive right from Vendor occurs in the event that Distributor fails to remit corresponding amount of money to vest the restricted shares they own until the time period in accordance with the terms of 5.7 clause of Stock Purchase Agreement for the Vendor. About the continuation of the Exclusivity, both parties shall discuss after both parties see the performance of the Distributor and the Territory until the time period in accordance with the terms of 5.7 clause of Stock Purchase Agreement. 3. DISTRIBUTOR OBLIGATIONS 3.1 GENERALLY. Distributor shall use commercially reasonable efforts to: (a) advertise, market and promote the Products in the Territory; (b) solicit and promote the sub-licensing of the Software; (c) refrain from discrediting either the Products or Vendor; (d) include in all advertising and promotional materials all applicable copyright and trademark notices as they appear on the Products; (e) provide Level One support to End Users in a professional and workmanlike manner and in accordance with the highest industry standards; (f) obtain, pay all costs associated with, and be in possession of all official approvals, licenses, registrations, and permits required by virtue of any applicable law or regulation for the effective operation of its business and its performance under this Agreement; (g) keep books, records and accounts of all transactions covered by this Agreement and permit Vendor, its agents and representatives to examine the same; (h) commence sales and distribution of the Products as soon as reasonably practicable following execution of this Agreement; (i) not do anything to prevent the sale, or development of sales, of the Products in the Territory; (j) obtain an adequate number of sufficiently qualified staff to enable Distributor to promptly and efficiently perform its obligations under this Agreement; (k) keep Vendor promptly informed of any complaint or dispute concerning the Products supplied by Distributor; (l) conduct Distributor's business in an efficient, responsible, and ethical manner so as to enhance and support the reputation and goodwill of the Products in the Territory; (m) conduct Distributor's business in accordance with all laws applicable in the Territory. Distributor must immediately notify Vendor in writing if any law or regulation of a relevant Territory prevents it from complying fully with the terms of this Agreement; and (n) refrain from producing, selling, licensing or distributing any products which are, in Vendor's sole judgment, directly competitive with the Products; (o) create an End User License Agreement for distribution of the Products and Services to the Japanese market that is materially identical to the sample EULA that is provided in EXHIBIT A as reference, taking common hap laws and practices in consideration when creating the Japanese End User License Agreement. 3.2 SOLICITING LICENSES FOR SOFTWARE. Distributor shall have the right to negotiate with prospective End Users and solicit the sub-licensing of the Software. In the event that a prospective End User wishes to sub-license Software, Distributor shall: Page 4 of 20 (a) Enter into a sub-license agreement for the Product with such End User only upon the terms of the End User License Agreement; (b) negotiate with such End User and, if required by such End User, propose changes to the End User License Agreement, provided that such proposed changes shall be subject to Vendor's prior written approval in its reasonable discretion; and (c) forward to Vendor information regarding each End User, including the following: (i) the Software to be licensed; (ii) the name and site address of the End User; (iii) the name, address and telephone number of a contact person or authorized representative of the End User; (iv) the serial number of the central processing unit on which the licensed Software will run or, in the case of a network license, the number of licensed users; (v) any proposed changes to the End User License Agreement. 3.3 REVERSE ENGINEERING. Distributor shall not translate, disassemble or reverse engineer the Products, in whole or in part. 4. MAINTENANCE AND SUPPORT 4.1 SUPPORT SERVICES. As between Vendor and Distributor, Distributor shall be responsible for providing End Users with Level One Support Services for the Software, as set forth in EXHIBIT E attached hereto. Vendor shall provide Distributor with Level Two Support Services for the Software, as set forth in EXHIBIT E. 4.2 TRAINING. Vendor shall arrange at least one training course for each major release or version upgrade of the Product that may be attended by Distributor's and its sub-distributors' sales and/or technical personnel. These courses shall take place at Vendor's principal place of business first above written and shall include training on the operation of Product, sales training, and technical training increasing the ability of Distributor and its sub-distributors to provide sufficient technical support for their customers who purchase Product. The cost of conducting these training courses shall be borne by Vendor; provided, however, that Distributor and sub-distributors shall bear the traveling and lodging expenses for their respective personnel. 5. CHANGES IN SPECIFICATIONS Vendor reserves the right from time to time to change the specifications of the Products. Vendor shall advise Distributor of any proposed changes in specifications at least ninety (90) days before such changes in specifications or designs are commercially released. 6. OWNERSHIP OF INTELLECTUAL PROPERTY Vendor or its suppliers shall retain ownership of all Intellectual Property Rights embodied in the Products and the Trademarks. Except as provided herein, Distributor is not granted any rights to any Intellectual Property Rights with respect to any Product. 7. CONFIDENTIAL INFORMATION Each party may be exposed to the other party's Confidential Information, Each party agrees that during the Term, and for a period of one (1) year following the Term, it shall use the other party's Confidential Information solely for purposes of performing its obligations and/or exercising its rights under this Agreement, and shall not disclose to any third party any Confidential Information of the other party without prior written consent of such other party. Each party may disclose the other party's Confidential Information only to its employees as is reasonably necessary to allow such party to perform under this Agreement and to obtain the benefits thereof, provided that each such employee is under a written obligation of nondisclosure which protects the other party's Confidential Information under terms substantially similar to those herein. 8. ORDERS; SHIPPING; CANCELLATON Page 5 of 20 8.1 ORDERS. The terms and conditions of this Agreement shall apply to any and all orders submitted to Vendor. If accepted by Vendor, Vendor shall fulfill each order placed by Distributor within 30 days or less, or else give notice as to why fulfillment will take longer. 8.2 SHIPPING. All shipments shall be made FOB Vendor's distribution center. Provided, however, in Vendor's discretion, Vendor may provide for the downloading of the Software by Distributor (or directly by the End User) and, if downloaded by Distributor, Distributor shall only download the permitted number of copies, and shall put any markings or labels on the medium containing the Software as Vendor shall require. Delivery shall be deemed complete and risk of loss or damage to the Products shall pass to Distributor upon Vendor's delivery of Products to the first carrier or, if applicable, when downloaded. Distributor shall instruct Vendor in writing as to which carrier Vendor should use to transport Products ordered by Distributor. If Distributor has not so instructed Vendor at the time of the order, Vendor may select the carrier. Distributor shall pay all costs of transportation, reasonable insurance, export and import fees, customs brokerage expenses and similar charges. 8.3 ACCEPTANCE. Distributor shall, within seven (7) days after delivery, inspect the Product(s) to confirm that the Product(s) are not defective and conform to the Vendor's applicable warranty, the terms of this Agreement and Distributor's order. In the event that Distributor notifies Vendor of defective or non-conforming Products under this section, Vendor shall repair or replace such Products, or refund the purchase price for such Products to Distributor, at Distributor's sole election. 8.4 CANCELLATION AND RESCHEDULING. Distributor shall not reschedule or cancel any purchase order or portion thereof within three (3) business days of the scheduled shipment date for such order ("FIRM PERIOD"). Distributor may cancel or reschedule purchase orders prior to the Firm Period upon written notice to Vendor. 9. PRICE; TAXES; PAYMENTS; REPORTS 9.1 PRICE FOR PRODUCTS. Vendor recognizes that Distributor may need to do market research before appropriate pricing for Products and Services can be set in Japan. Therefore, Vendor and Distributor agree that Distributor will have the ability to establish Products and Services prices in Japan, as it best sees fit, in order to maximize revenue, but that Vendor retains the final right to approve or disapprove such pricing. All Products and Services revenue will be split equally between Vendor and Distributor in a 50/50 ratio, and the money will be remitted to Vendor to U.S. dollars based on the U.S. dollar-to-Japanese yen exchange rate reports in THE WALL STREET JOURNAL on the payment date. In addition, Vendor may, in its discretion, offer Distributor the rights to sub-license other products of Vendor. If the Parties are able to agree upon terms for the licensing of any such other products, they will amend this Agreement accordingly. Vendor and Distributor also agree to review the 50/50 split, sometime prior to the end of the first year of this Agreement, to confirm that such 50/50 split is equitable for both sides, and that they will work in good faith to revise these terms in the event that either side feels it is not equitable for them. 9.2 PRICE FOR SERVICES. Distributor shall pay monthly support fees in advance for the Level Two Support Services, as such fees are set forth in EXHIBIT C ("SUPPORT FEES"). Vendor may not increase the monthly Support Fees charged to Distributor during any Contract Year by more than ten percent (10%) of the then-current Support Fees. 9.3 TAXES. In addition to any payments due to Vendor under this Agreement, Distributor shall pay any sales, use, excise, import, export or value-added tax not based on Vendor's net income. 9.4 PAYMENTS. Distributor shall remit fifty percent (50%) of any payment it or its sub-distributor's receipt of such payment. Payment for the Level Two Support Services shall be due by the tenth day of each calendar month. 9.5 REPORTS. Distributor shall provide Vendor a quarterly report of its sub-licensing activity. Such reports shall include without limitation, the name and address of each End User that entered into a license for the Product during such quarter, the license fees charged and received during such quarter and such other information that Vendor may reasonably request. Distributor shall communication to Vendor any recurring material problems with the Products encountered by customers of Distributor. 9.6 STOCK INCENTIVE. Restricted Shares (as such term is defined in the Stock Purchase Agreement) held by PPOL, Inc., subject to the terms of that certain Common Stock Purchase Agreement entered into between Vendor and PPOL, Inc. contemporaneously herewith (the "STOCK PURCHASE AGREEMENT"), shall vest and become Unrestricted Page 6 of 20 Shares (as such term is defined in the Stock Purchase Agreement) at the rate of one hundred (100) shares for each $10 million in Gross Revenue received by Vendor from Distributor's licensing or sub-licensing of Products hereunder. 10. WARRANTY 10.1 PRODUCTS. Vendor warrants the Products to End Users pursuant to the terms and conditions of the End User License Agreement as set forth in EXHIBIT A. Vendor represents, warrants and covenants to Distributor that: (a) Vendor has the right to grant the rights and licenses contemplated by this Agreement, without the need for any licenses, releases, consents, approvals or immunities not yet granted; (b) the media on which any Products are delivered to Distributor shall be free from material defects in workmanship and materials; (c) the Products shall operate in accordance with the Documentation and other specifications therefore for a period of sixty days from delivery to Distributor; (d) neither the Products nor Distributor's exercise of its rights under this Agreement infringe, misappropriate or violate any U.S. patent, trademark, copyright, privacy or publicity rights, or other rights of any third party, or any law, rule or regulation promulgated by any government or regulatory body; (e) the Products do not contain any material bugs or defects and do not contain or make available any viruses, worms, Trojan horses, web bugs, time bombs, "spyware" or other harmful or invasive code or components; and (f) Vendor has not made and shall not make any commitments inconsistent with Distributor's rights under this Agreement. 10.2 SERVICES. Vendor represents, warrants and covenants to Distributor that the Level Two Support Services shall be performed in a professional and workmanlike manner consistent with the highest industry standards. 10.3 DISTRIBUTOR WARRANTY SERVICE. For Errors or defects in Software discovered during the applicable warranty period, Distributor and Vendor shall provide technical support as described in Section 4 ("Maintenance and Support"). 10.4 Distributor hereby represents and warrants to Vendor as follows: (a) It has no conflicts of interest in entering into this Agreement and that by entering into this Agreement it is not violating or beaching any duty or obligation it may have to any third party. (b) It has not made and promises not to make, any payment to a public official as defined by the United States Foreign Corrupt Practices Act or other applicable laws. Distributor further represents that it is aware of the applicable United States governmental regulations governing bribery, agency, and government purchases and any other relevant regulations and agrees to comply with such rules and regulations. (c) Distributor agrees it will comply, at its own expense, with any requirements to obtain regulatory approvals of, and to make any filings and registrations related to , this Agreement, the End User Agreement or the transaction contemplated herein, that may be necessary, or beneficial to Vendor's rights in the Territory. 10.5 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES (AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS) ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, AND ANY WARRANTIES THAT MAY ARISE FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE. 11. CONSEQUENTIAL DAMAGES WAIVER EXCEPT FOR VENFOR'S AND DISTRIBUTOR'S RESPECTIVE INDEMNITY OBLICATIONS SET FORTH IN SECTION 13, AND FOR ANY BREACH BY DISTRIBUTOR OF ITS CONFIDENTIALITY OBLIGATIONS WITH RESPECT TO THE SOURCE CODE OR ITS OBLIGATIONS UNDER SECTION 3.3, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY UNDER ANY LEGAL THEORY FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, OR ANY DAMAGES FOR LOSS OF PROFITS, REVNEUE OR BUSINESS, EVEN IS SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 12. LIMITATION OF LIABILITY NOTHWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, AND TO THE FULLEST EXTENT ALLOWED UNDER APPLICABLE LAW, EXCEPT FOR DISTRIBUTOR'S BREACH OF CONFIDENTIALITY WITH RESPECT TO THE SOURCE CODE OR OF ITS OBLIGATION UNDER Page 7 of 20 SECTION 3.3, AND EXCEPT FOR VENDOR'S AND DISTRIBUTOR'S RESPECTIVE INDEMNITY OBLIGATIONS SET FORTH IN SECTION 0, EACH PARTY'S AGGREGATE LIABILITY TO THE OTHER PARTY OR ANY THIRD PARTY FOR CLAIMS RELATING TO THIS AGREEMENT, WHETHER FOR BREACH, NEGLIGENCE, INFRINGEMENT, IN TORT OR OTHERWISE, SHALL BE LIMITED TO AN AMOUNT EQUAL TO THE TOTAL PAYMENTS MADE BY DISTRIBUTOR TO VENDOR IN THE MOST RECENT FULL CALENDAR YEAR PRECEDING EITHER PARTY'S INITIAL NOTICE TO THE OTHER PARTY OF ANY CLAIM OR POTENTIAL CLAIM HEREUNDER. 13. INDEMNITY 13.1 VENDOR INDEMNITY. Vendor shall defend, indemnify and hold Distributor harmless against any and all damages, cost, liabilities, expenses (including reasonable attorneys' fees) and settlement amounts incurred in connection with any suit, claim or action by any third party resulting from any breach (or any claim that, if true, would constitute a breach) of Vendor's representations, warranties or covenants set forth in Section 9.1 above; provided, however, Vendor's obligation to indemnify Distributor hereunder is subject to Distributor: (a) giving Vendor prompt written notice of any such claim; (b) giving Vendor control over the defense and settlement of any such claim; (c) providing reasonable cooperation for the defense of any such claim, at Vendor's expense; and (d) not entering information any settlement or compromise of any such claim without Vendor's prior approval. 13.2 DISTRIBUTOR INDEMNITY. Distributor agrees to defend, indemnify and hold harmless Vendor from any and all claims, liabilities, judgments, penalties, losses, costs, damages, and expenses, including without limitation reasonable attorneys' fees and settlement amounts incurred in connection with any suit, claim or action by any third party resulting from, arising by reason of or in connection with any act by Distributor under or in violation of this Agreement or any act or omission of any sub-distributor , including, but not limited to, the promotion, distribution, exploitation, advertising, offering for sale, sale, or use of the Products or use of the Trademarks, except if such claims, liabilities, judgments, penalties, losses, costs, damages and expenses are directly caused by Vendor's negligence or willful misconduct or result from breach of Vendor's warranty contained in the End User Agreement. Distributor will have the right to defend any action or proceeding with attorneys of its own selection provided that such counsel is reasonably acceptable to Vendor. Distributor's obligation to defend Vendor hereunder is subject to Vendor: (a) giving Distributor prompt written notice of any such claim; (b) giving Vendor control over the defense and settlement of any such claim; (c) providing reasonable cooperation for the defense of any such claim without Distributor's prior approval. 14. TERM AND TERMINATION 14.1 TERM. The term of this Agreement shall commence as of the Agreement Date and continue, unless earlier terminated as set forth herein, for five (5) years thereafter ("INITIAL TERM") until ending upon the fifth (5th) anniversary of the Effective Date. Subsequently, this Agreement shall automatically renew for successive one (1) year periods (each, a "RENEWAL TERM"), unless, at least thirty (30) days prior to the end of the then-current term, either party gives the other party written notice of is intent not to renew this Agreement, or unless earlier terminated in accordance with this Agreement. The Initial Term and all Renewal Terms, if any, shall be collectively referred to as the "Term." 14.2 TERMINATION. Either party may terminate this Agreement, without cause, upon sixty (60) days written notice to the other. 14.3 EFFECT OF TERMINATION. (a) Following termination of this Agreement, Distributor may distribute its inventory of the Products, and may continue using the Trademarks for such purpose, until all such inventory has been distributed. (b) At such time as Distributor has distributed all of its inventory pursuant to paragraph (a) above, Distributor shall return to Vendor (or destroy, at Vendor's election) all Software (and all copies and extracts thereof) and Vendor's Confidential Information then in the possession or under the control of Distributor and its employees or agents; (iii) Vendor shall return to Distributor (or destroy, at Distributor's election) all Distributor's Confidential Information then in the possession or under the control of Vendor and its employees or agents; and (iv) Distributor shall cease all use of the Trademarks, and shall, if any form of the Trademarks is used in its name, change its name. Page 8 of 20 (c) Neither Vendor nor Distributor shall be liable to the other, because of such expiration or termination, for compensation, reimbursement or damages; (i) for the loss of prospective profits, anticipated sales or goodwill; (ii) on account of any expenditures, investments or commitments made by either; or (iii) for any other reason whatsoever based upon the result of such expiration or termination. (d) The provisions of the following Sections shall survive any expiration or termination of this Agreement: 6 ("Ownership of Intellectual Property"), 6 ("Confidential Information"), 10.5 ("Disclaimer"), 11 ("Consequential Damages Waiver"), 12 ("Limitation of Liability"), 13 ("Indemnity"), 14.3 ("Effect of Termination"), 15 ("Source Code Delivery"), and 16 ("Miscellaneous Terms"). 15. SOURCE CODE DELIVERY 15.1 ESCROW OF SOURCE CODE. If Distributor's desires, the source code for Product will be escrowed with a reputable agent who will make the code available to Distributor's in the event that Vendor either files for bankruptcy, ceases to do business, or otherwise becomes incapable of functioning as an operational company. Vendor is already using an escrow agent at the request of existing customers, so if Distributor wishes, Distributor's name may be added to the existing escrow account at Distributor's sole discretion and cost. 16. MISCELLANEOUS TERMS 16.1 RELATIONSHIP OF THE PARTIES. This Agreement shall not be construed as creating an agency, partnership, joint venture or any other form of association, for tax purposes or otherwise, between the parties, and the parties, shall at all times be and remain independent contractors. Except as expressly agreed by the parties in writing, neither party shall have any right or authority, express or implied, to assume or create any obligation of any kind, or to make any representation or warranty, on behalf of the other party or to bind the other party in any respect whatsoever. 16.2 IMPORT/EXPORT. Each party shall comply with all applicable foreign and domestic laws and regulations relating to the importation or exportation of the Products. 16.3 GOVERNING LAW, JURISDICTION, AND VENUE. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, U.S.A., without references to its conflicts of law provisions. Any dispute regarding this Agreement shall be subject to the exclusive jurisdiction of the state courts in and for Duval County, Florida, U.S.A. (or, if there is a federal jurisdiction, the United States District Court with jurisdiction for Duval County, Florida). The parties hereby irrevocably agree to submit to the personal and exclusive jurisdiction and venue of the aforementioned courts. This Agreement shall not be governed by the United Nations Convention on Contracts for the International Sale of Goods, the application of which is hereby expressly excluded. 16.4 FORCE MAJEURE. Neither part shall be liable under this Agreement because of any failure or delay in the performance of its obligations on account of strikes, shortages, riots, inability to obtain export clearance from any applicable governmental entity, fire, flood, storm, earthquake, acts of God, hostilities or any other cause beyond its reasonable control (a "FORCE MAJEURE EVENT"), provided that the non-performing party provides prompt written notice of any delay or default and cooperates to minimize the impact of such delay. If the period of nonperformance exceeds fifteen (15) days from receipt of notice of the Force Majeure Event, the party whose performance has not been affected may terminate this Agreement, effective immediately upon written notice to the other party. 16.5 NOTICES. Any notice, request, demand or other communication required or permitted hereunder shall be in writing, shall reference this Agreement and shall be deemed to be properly given: (a) when delivered personally; (b) when sent by facsimile, with written confirmation of receipt by the sending facsimile machine; (c) five (5) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) two (2) business days after deposit with a private industry express courier, with written confirmation of receipt. All notices shall be sent to the address set forth in the first paragraph of this Agreement and to the notice of the person executing this Agreement (or to such other address or person as may be designated by a party by giving written notice to the other party pursuant to this Section). 16.6 ASSIGNMENT. Vendor shall not assign, transfer, delegate or otherwise dispose of this Agreement or any right or obligation hereunder (whether by express transfer, operation of law or otherwise) without the prior written consent of Distributor. Distributor shall be entitled to assign, transfer, delegate or otherwise dispose of, whether Page 9 of 20 voluntarily or involuntarily, by operation of law or otherwise, this Agreement and any of its rights or obligations under this Agreement. Any attempted or purported assignment or other transfer not complying with the foregoing shall be null and void. Subject to the forgoing, this Agreement shall insure the benefit of and bind the successors and assigns of the parties. 16.7 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which together shall constitute a single agreement. 16.8 HEADINGS. The various section headings are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement or any section thereof. 16.9 SEVERABILITY. If any term, provision, covenant or condition of this Agreement is held by a court or submittal panel of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions hereof shall remain in full force and effective and shall in no way be effected, impaired or invalidated. 16.10 CONSTRUCTION. This Agreement shall be deemed to have been drafted by all parties and, in the event of a dispute, no party hereto shall be entitled to claim that any provision should be constructed against any other party by reason of the fact that it was drafted by one particular party. 16.11 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto contain the entire understanding of the parties with reject to the subject matter of this Agreement and merges and supersedes all prior and contemporaneous agreements and understandings between the parties, whether oral or written, with respect to the subject matter of this Agreement. Any wavier, modification or amendment of any provision of this Agreement shall be effective only in writing and signed by the authorized representatives of both parties. IN WITNESS WHEREOF, the parties hereto have executed this Exclusive Distribution Agreement as of the date first written above. VENDOR: DISTRIBUTOR: By: /s/ Scott Sirdevan By: /s/ Nobuo Takada ------------------------------ ------------------------------- Name: Scott Sirdevan Name: Nobuo Takada ---------------------------- ----------------------------- Title: President Title: C.E.O. ---------------------------- ----------------------------- Date: May 24, 2004 Date: May 24, 2004 ---------------------------- ----------------------------- Page 10 of 20 EXHIBIT A [DISTRIBUTOR AGREEMENT PLEASE NOTE: This EULA is provided as a reference document ONLY; see Section 3.1 (o). The Exhibits mentioned in the EULA have been removed so as not to become confused with the Exhibits required as part of this Distributor Agreement.] END USER LICENSE AGREEMENT BRIDGEGATE DEPARTMENTAL SOFTWARE SITE LICENSE AGREEMENT AGREEMENT effective as of this ___day of ___ (the "Effective Date") by and between Objective Innovation, Inc. with offices at 8130 Baymeadows Way West, Suite 307, Jacksonville, Florida 32256 ("Licensor") and _____________________ with offices at ___________________________________________ ("Licensee"). 1. LICENSEE. 1.1 In accordance with this terms herein, Licensor grants to Licensee, and Licensee accepts from Licensor, based upon continued good standing per Exhibit C "Terms & Conditions", a proposal non-exclusive and not-transferable licensee to use (but not to copy or modify except as expressly permitted herein) (i) the current version of Licensor's BridgeGate Software, (ii) any modifications, customizations, deliverables, error corrections, upgrades, updates delivered under the terms of this Agreement by Licensor (collectively the "Software"). The initial version of the Software to be licensed herein is described on Exhibit A and Licensor's specifications are published on Licensor's web site at www.objectinnovation.com (or such other web site as Licensor shall notify Licensee from time to time). 1.2 The Software may be installed on up to three (3) servers and shall be used by Licensee only on the equipment and at the location(s) identified in Exhibit B. Software may be licensed to additional servers according to the price schedule outlined in Exhibit C. Licensee may transfer the Software to other equipment, or move the equipment and the Software to other locations owned and operated by Licensee, with Licensor's prior written consent, such consent not to be unreasonably withheld or delayed. Licensee may use only one copy of the Software in production at any one time, but may use as many additional copies of the software for testing and development instances as required. Licensee may also use one additional copy of Software for Licensee's back up and disaster recovery purposes, provided that; all Software instances remain in Licensee's back up and disaster recovery purposes, provided that all Software instances remain in Licensee's custody and control at all times, that Licensee notifies Licensor in writing of the location of such additional copies (should they be in use at a different location), and provided further that such additional copies (should they be in use at a different location), and provided further that such copies remain within the continental United States. The Software shall be used only for the internal data processing needs of licensee's own business, which shall include processing information received from and sent to Licensee's vendors and suppliers in connection with Licensee's business. Licensee shall not permit any third party to use the Software, or use the Software in the operation of or to provide the services of a service bureau or any applications service provider. The copy of the Software used in production may be temporarily transferred to back-up equipment owned and operated by Licensee and located within the continental United States if the particular equipment on which its installed as permitted herein is inoperative for more than 48 hours, upon prior written notice to Licensor. 1.3 Licensor also hereby grants to Licensee a non-exclusive, no-transferable license contentious with the license in the Software, to use but not to copy or modify, the Documentation. The Documentation shall consist of any user guides, which are provided from time to time by Licensor to Licensee. Page 11 of 20 1.4 Licensee acknowledges that the source code to the Software is not to be delivered hereunder. 2. LICENSEE EQUIPMENT AND SECURITY REQUIREMENTS. LICENSEE AGREES TO OBTAIN AND MAINTAIN THE EQUIPMENT AND SYSTEMS DESCRIBED IN EXHIBIT B, AND AGREES TO EMPLOY AND MAINTAIN ALL SECURITY SYSTEMS AND PROTECTIONS REQUIRED BY LAW FOR THE ENFORMATION TO BE PROCESSED UTILIZING THE SOFTWARE, AS WELL AS SUCH SECURITY SYSTEMS AND PEOTECTIONS AS ARE EXPRESSLY SET FORTH ON EXHIBIT B. 3. MAINTENANCE AND SUPPORT SERVICES. a. Should Licensee choose optional "Maintenance and Support Services", in consideration for timely "Maintenance and Support Services" payments as set forth in Exhibit C. Licensor agrees to provide to Licensee the Maintenance and Support Services described in Exhibit E for the duration of the "Maintenance and Support Services" term, renewable thereafter for successive one year terms ("Renewal Year") upon mutual agreement of the parties. The Initial Maintenance Service Term and each Renewal Year shall constitute the "Maintenance Services Term". b. To the extent that Licensee requests that Licensor provide maintenance, error correction or other related services during the Maintenance Services Term beyond those services provided for the Maintenance and Support Fees, Licensor may provide such services ("Additional Services"), and Licensee shall compensate Licensor for all such services at Licensor's then current hourly rates. c. Its expressly understood by Licensee that Licensor shall have the right to delegate its Installation, Customization, Training Additional Services and/or Maintenance and Support Services obligations hereunder to one or more service providers selected by Licensor from time to time. 4. SOFTWARE OWNERSHIP As between Licensee and Licensor, all right title and interest (including rights of copyright and all other proprietary rights) in the Software and Documentation (other than the licensee rights granted to Licensee herein) and all copies and derivations thereof, and any and all extensions or changes to the Software made by Licensee including the Permitted Adaptations), shall be held by Licensor, including, without limitation, all results and proceeds of Licensor's Maintenance and Support Services, Installation Services, Customization Services, Training Services and Additional Services provided hereunder. Licensee shall not sell, transfer, publish, disclose, display, transmit, distribute, or otherwise make available the Software of copies thereof to others except as expressly permitted herein. Licensee agrees to secure and protect from misuse, theft, unauthorized use or damage the Software, each component thereof delivered hereunder, and the Documentation, in a manner consistent with the maintenance of Licensor's rights therein and as otherwise required herein or by law and to take appropriate action through instruction or agreement with its employees or consultants who are permitted access to each program or software product to satisfy its obligations hereunder. 5. INSTALLATION. IN ACCORDANCE WITH THE INSTALLATION SCHEDULE SET FORTH ON EXHIBIT F, SHOULD LICENSEE CHOOSE TO OPTIONAL "MAINTENANCE AND SUPPORT SERVICES" LICENSOR SHALL PRIVIDE SERVICES TO INSTALL THE SOFTWARE ON THE EQUIPEMNT DESCRIBED ON EXHIBIT B FOR NO ADDITIONAL CHARGE, OTHERWISE LICENSOR SHALL PROVIDE INSTALLATION SERVICES ON A TIME AND MATERIALS BASIS (THE "INSTALLATION SERVICES"). WHEN LICENSOR HAS DETERMINED THAT THE INSTALLATION IS COMPLETE, LICENSOR SHALL NOTIFY LICENSEE. THE INSTALLATION SCHECULE MAY BE MODIFIED FROM TIME TO TIME BY MUTUAL AGREEMENT OF THE PARTIES. LICENSEE ACKNOWLEDGES THAT SUCESSFUL INSTALLATION OF THE SOFTWARE PRUSUANT TO THIS AGREEMENT SHALL REQUIRE LICENSEE'S FULL AND GOOD FAITH COOPERATION, INCLUDING BY PROVIDING LICENSOR WITH TIMELY ACCESS TO LICENSEE'S PREMISES, EQUIPMENT AND SYSTEMS, AND THE COOPERATION OF LICENSEE PERSONNEL. 6. CUSTOMIZATION. 6.1 By Licensor. 6.2 Upon request from Licensee, Licensor shall develop interfaces for use of the Software by Licensee in exchanging information with Licensee's vendors and suppliers and such other customizations as Page 12 of 20 Licensee and Licensor may mutually agree upon. Licensor shall provide such customization services to mutually agreed upon specifications and is accordance with mutually agreed upon timeline at the rates described in Exhibit D. Exceptions to published rates may be specified in Exhibit C. Any work not clearly defined in Exhibit C shall be billed at published rates as specified in Exhibit D. 6.3 By Licensee. Licensee is permitted to utilize the Software in accordance with the Documentation to create the Adaptors, Plug-in Codes and Templates described on Exhibit A, each of which shall be referred to herein as "Permitted Adaptations." 6.4 All such customizations described in Paragraphs 8(a) and (b) above shall become part of the Software and governed by the terms of this Agreement. 7. CONFIDENTIALITY. 7.1 The parties hereby agree to treat the other party's Confidential Information with at least the degree of protection each such party provider its own confidential information and at least the protection required by law. 7.2 Each party shall provide access to the other party's Confidential Information only to those of such party's employees who have a need for such access in order to perform their responsibilities under this Agreement (and in the case of Licensee those employees who need access to the Software in order for Licensee to utilize it for Licensee's business as permitted to its contractors, service providers and other third parties as necessary to permit such contractors and service providers to carry out their responsibilities to Licensor. Neither party shall provide to third parties any access to the other party's Confidential Information unless such access is needed in order for such party perform their obligations under this Agreement and such third parties have agree in writing to treat such Confidential Information as confidential in accordance with this Agreement and provided further that such party agrees to be responsible for any unauthorized use or disclosure by such third party of the other party's Confidential Information. 7.3 Confidential Information shall include any information marked by a party as confidential when disclosed, or If disclosed orally, which is followed up with a reasonable time with a written statement informing the recipient of its confidentiality, Confidential Information of Licensee shall include any date on the systems of Licensee to which Licensor is given access in performing its responsibilities hereunder and Confidential Information of Licensor shall include the Software, all components thereof, the Documentation, any source code of the Software, the terms, of this Agreement, and marketing and financial information about Licensee and its affiliates. 7.4 Notwithstanding anything to the contrary set forth above, Confidential Information shall not include any information which is (i) publicly known; (ii) independently developed by the receiving party without any use of and by employees who had no access to, the confidential information of the other party; or (iii) which is received from a third party who is under no obligation of confidentiality to the owner of the confidential information. 7.5 Neither party shall be in breach of this Agreement if they disclose the Confidential Information of the other party in response to a court order, subpoena or similar legal requirement, provided that they disclose only the information required to be disclosed and notify the other party of such compelled disclosure and cooperate with such other party's efforts, if any, to secure a protective order for such information. 7.6 The parties recognize that disclosure as prohibited herein of any such confidential information may cause irreparable injury to the other party, which is not compensable in monetary damages or where monetary damages may be inadequate or impossible to measure. Each party may seek injunctive relief against the breach or threatened breach of any of the forgoing confidentiality undertakings, in addition to any other legal remedies, which may be available. Licensor may terminate this Agreement immediately, including all license right granted herein, in the event of any breach of the confidentiality obligations set forth herein. 8. LIMITED WARRANTIES AND LIMITED LIABILITY. Page 13 of 20 8.1 Licensor warrants that, for a period of ninety days after Licensor notifies Licensee that the Software has been installed, the Software, once installed, will conform in all material respects, to Licensor's then current published specifications. With regard to other deliverables, such as modifications or customizations delivered hereunder by Licensor, Licensor warrants that for a period of ninety days after delivery (or after installation if Licensor installs such deliverable), such deliverable shall conform to Licensor's specifications therefore, it being understood that this latter warranty shall not require Licensor to fix errors without charge that appear in the underlying Software to the extend such Software was installed more than ninety days earlier, even if such error in the Software causes the new deliverable to operate incorrectly. The foregoing ninety-day periods of warrants shall be referred to herein as the "Warranty Period". 8.2 Licensee shall notify Licensor in writing, within five days Licensee's discovery during the applicable Warranty Period of any future of Software (or deliverable) to conform to the warranty stated above in Section 10(a) (a "Nonconformity"). If Licensor is able to reproduce the Nonconformity, Licensor shall (i) use commercially reasonable efforts to promptly correct such Nonconformity; (ii) if (i) does not result in elimination of the Nonconformity, use commercially reasonable efforts to replace the Software or deliverable with copies of the Software or deliverable that do not result in the Nonconformity; (iii) with regard to a Nonconformity in the underlying Software, if (i) and (ii) do not result in elimination of the Nonconformity, terminate this Agreement and license and return to Licensee all amounts paid by Licensee hereunder; or (iv) with regard to a Nonconformity in any subsequent deliverable, if (i) and (ii) do not result in elimination of the Nonconformity, terminate the license rights for that particular deliverable and refund to Licensee an allocated amount of any license fees paid hereunder for that deliverable (including additional installation fees paid to install or customization fees paid to create such deliverable). 8.3 THE ABOVE IS A LIMITED WARRANTY AND IT IS THE ONLY WARRANTY MADE BY LICENSOR. LICENSOR MAKES AND LINSEE RECEIVES NO WARRANTY, EXPRESS OR IMPLIED, AND THERE ARE EXPRESSLY EXCLUDED ALL WARRANTIES OF MERCHANTABLITY AND FITNESS FOR A PARTICULAR PURPOSE. LICENSOR SHALL HAVE NO LIABILITY WITH RESPECT TO ITS OBLIGATIONS UNDER THIS AGREEMENT FOR CONSEQUENTIAL, EXEMPLARY, OR INCIDENTAL DAMAGES EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE STATED EXPRESS WARRANTY IS IN LIEU OF ALL LIABILITIES OR OBLIGATIONS OF LICENSOR FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE DELIVERY, USE OR PERFORMANCE OF THE SOFTWARE AND ANY OTHER DELIVERABLES OR SERVICES PROVIDED HEREUNDER. 8.4 If any modifications are made to the Software by other than Licensor (other than Permitted Adaptations made in accordance with the Documentation), the forgoing warranty set forth in Paragraph 10(a) shall not apply. 8.5 Notwithstanding anything to the contrary set forth in this Agreement, Licensee agrees that Licensor's liability under this Agreement, or arising out of contract, negligence, strict liability in court or warranty shall not exceed any amounts paid to Licensor by Licensee under this Agreement. 9. INDEMNITIES. 9.1 Licensor shall defend, indemnify and hold harmless Licensee against any claims that the Software delivered hereunder infringes any copyright, patent, or other proprietary right of a third party, provided that, (i) Licensee notifies Licensor promptly of any such claim, (ii) Licensee turns over to Licensor the sole right to control the defense and settlement of such claim with counsel selected by Licensor; and (iii) Licensee fully cooperates in connection with such defense. In no event shall Licensee settle or compromise any such claim, lawsuit or proceeding without Licensor's prior written approval. If, as a result of any such infringement claim, Licensee is enjoined from using the Software, or if Licensor believes that the Software is likely to become the subject of a claim of infringement, Licensor or its option and expense may procure the right for Licensee to continue to use the Software, or may replace or modify the Software so as to make it non-infringing. If neither of these two options is reasonably practicable Licensor may terminate Page 14 of 20 the license granted herein on written notice and in such case shall refund to Licensee the unamortized portion of the License Fees paid hereunder (based on four years straight line depreciation, such depreciation to commence on the Effective Date). The foregoing states the entire liability of Licensor with respect to infringement claims related to the Software. 9.2 Licensor shall not be obligated to indemnify Licensee under Paragraph 11(a) above if (i) the infringement claims would have been avoided or if there would be no judgment of infringement, if Licensee had installed an upgrade, error correction or update that was offered to Licensee without charge (other than changes for Maintenance and Services Fees or Installation Fees); (ii) the claim is based on use of the Software with equipment of other software not approved by Licensor; (iii) the claim is based on modification of the Software by other than Licensor (other than Permitted Adaptations made by Licensee in accordance with the Documentation and the Agreement). 10. TRADING. LICENSOR SHALL PROVIDE THE TRAINING SET FORTH ON EXHIBIT G IN THE AMOUNTS AND IN ACCORDANCE WITH THE SCHEDULE SET FORTH THEREON. THE PARTIES MAY AGREE UPON ADDITIONAL TRAINING FROM TIME TO TIME. 11. TERM AND TERMINATION. 11.1 Licensor shall have the right to terminate this Agreement (and the license rights granted herein): (a) immediately on notice to Licensee in the event that the confidentially obligations of Licensee are violated or in the event Licensee (A) terminates or suspends its business; (B) becomes subject to any bankruptcy or insolvency proceeding under Federal or state statute or (C) becomes insolvent or becomes subject to direct control by a trustee, receiver or similar authority; (b) upon ten days prior written notice to Licensee in the event Licensee fails to pay any amounts when due, and fails to pay such overdue amounts prior to the expirations of such ten day period; and (c) upon thirty days prior written notice to Licensee in the event Licensee violates any other provision of this Agreement and fails to cure such breech prior to the expiration of the thirty-day period. 11.2 In the event of termination of this Agreement, the license rights granted herein shall terminate and Licensor shall have the right to take immediate possession of the Software and Documentation and all copies wherever located, without demand or notice. Within five (5) days after termination of this Agreement, Licensee with return to Licensor the Software in the form provided by Licensor and as modified by the Licensee, or upon request by Licensor shall destroy the Software and all copies, and certify in writing that they have been destroyed. Without limiting any of the above previsions, in the event of termination of this Agreement and the license rights granted herein, Licensee shall continue to be obligated for any payments due for services rendered or use of the Software made prior to the date of termination. Termination of this Agreement shall be in addition to and not in lieu of any equitable remedies available to Licensor. 12. GENERAL 12.1 Licensor may publicize the fact that Licensee is a customer of Licensor and licensee of the Software. 12.2 The parties agree that this is the complete and exclusive statement of the Agreement between the parties, which supersedes and merges all prior proposals, understandings and all other agreements, oral and written, between the parties relating to this Agreement. This Agreement may not be modified or altered except by written instrument duly executed by both parties. 12.3 Dates or times by which licensor is required to make performance under this license shall be postponed automatically to the extant that Licensor is prevented from meeting them by causes beyond its reasonable control, including events of force majeure. Without limiting Page 15 of 20 Licensor's remedies hereunder. Licensor shall be entitled to suspend performance of its obligations under this Agreement in the event of nonpayment by Licensee. 12.4 This Agreement and performance hereunder shall be governed by the laws of the State of Florida. The parties hereby consent to the exclusive jurisdiction of the state and federal courts located in Duval County, Florida, for the resolution of their disputes, and the parties to hereby waive any objection thereto based on inconvenient forum. 12.5 If any provision of this Agreement is invalid under any applicable statute or rule of law, it is to that extent to be deemed omitted. The provisions of Paragraph 6, 9, 10, and 11 and such other provisions which by their plain meaning are intended to survive expiration of termination of this Agreement, shall survive termination or expiration of this Agreement. 12.6 Licensee may not assign, delegate or sub-license this Agreement or any of its rights, duties and obligations set forth herein, in whole or in part, without the prior written consent of Licensor. Licensor may assign this Agreement to any affiliate of Licensor, may assign this Agreement to any entity that acquires all or substantially all of its assets, whether through merger, consolidation, sale or other transfer or by operation of law, and may delegate certain of its service obligations to services providers selected by Licensor from time to time, including, without limitation, the Installation, Training, Customization, and Maintenance and Support Services. For purposes of this Agreement, an affiliate of Licensor is any entity that is controlled by, controls, or is under common control with Licensor or its Principals. 12.7 The waiver or failure of Licensor or Licensee to exercise in any respect any right provided by herein shall not be deemed a waiver of my further right hereunder. AGREED: LICENSOR LICENSEE Name: Scott Sirdevan Name: Nobuo Takada --------------------------------- ---------------------------- (Print) (Print) Address: 8130 Baymeadows Way West Address: --------------------------------- ---------------------------- Suite 307, Jacksonville, FL 32256 ---------------------------- Signature: /s/ Scott Sirdeva Signature: /s/ Nobuo Takada --------------------------------- ---------------------------- Title: President Title: CEO, PPOL, Inc. --------------------------------- ---------------------------- Date: May 26, 2004 Date: May 26, 2004 --------------------------------- ----------------------------
Page 16 of 20 EXHIBIT B PRODUCTS Software: BridgeGate Client, BridgeGate Portal Page 17 of 20 EXHIBIT C PRODUCT PRICE LIST AND DISTRIBUTOR DISCOUNT/SUPPORT FEES 1. PRODUCT PRICE: Enterprise Site License - $3.2 Million dollars. Price may be modified by mutual consent of Vendor and Distributor, based on the circumstances of the sale and the customer who is buying BridgeGate products and services. Departmental Site License - $320,000.00 Lease License (foreign version) - Price must be negotiated with Vendor since too many variable. 2. SUPPORT FEES: (Level Two Support): $70.00 per hour to Distributor $120 per hour to End User on behalf of Distributor Items 1 and 2 (above) that refer to the Site License Fee and Support Fees are for reference only. The Product price(s) will be determined after Distributor has completed its own marketing research. See section 9.1 for explanation. Travel expenses for travel on behalf of Distributor to provide End User support will be paid by End User or Distributor. Travel expenses of behalf of Vendor will be paid by Vendor. Travel expenses for initial training will be paid by Distributor, but Distributor will not be charged for training. Training may be conducted either in Japan or in Florida, at Distributor's option. Page 18 of 20 EXHIBIT D TRADEMARKS BridgeGate BridgeGate Client BridgeGate Portal TEI Transformation & Exchange Infrastructure The "telephone" for the 21st Century Page 19 of 20 EXHIBIT E MAINTENANCE AND SUPPORT SERVICES LEVEL ONE SUPPORT Distributor shall, at its own expense, provide all front-end customer support and training relating to the use of the Products by End Users and Distributor personnel ("LEVEL ONE SUPPORT") for any and all unites of the Products marketed and distributed by Distributor, including, without limitation, reasonable telephone, fax and e-mail support during Distributor's normal business hours, including without limitation, all customer support required under the End User Agreements, but NOT including the provision of any programming necessary to correct Errors. LEVEL TWO SUPPORT Vendor shall provide to Distributor back-end theoretical support, tech information, training, consulting, cooperation and assistance as may be reasonably necessary for Distributor to provide Level One Support to End Users and Distributor personnel, including, without limitation, as set forth in this EXHIBIT E ("LEVEL TWO SUPPORT"). Page 20 of 20 EX-10.13 4 ppol_8kex10-3.txt EXHIBIT 10.13 EXCLUSIVE DISTRIBUTION RIGHT LICENSE AGREEMENT This EXCLUSIVE DISTRIBUTION RIGHT LICENSE AGREEMENT (this "AGREEMENT") is made and entered into by and between Kabushiki Kaisha Gatefor (hereinafter referred to as "DISTRIBUTOR") and PPOL Inc., a California business corporation (hereinafter referred to as "PPOL"), based on the mutual agreement between Distributor and PPOL that PPOL shall grant, on and after October __, 2004, being the effective date of this Agreement, to Distributor the exclusive distribution right which was granted to Object Innovation Inc., a Florida business corporation (hereinafter referred to as "FORMER DISTRIBUTOR") under Article 2 "Grant of Right" of the certain Exclusive Distribution Right Agreement relating to the domestic marketing of the certain software product "BridgeGate" (hereinafter referred to as the "PRODUCT") in Japan, executed as of May 26, 2004 by and between PPOL and Former Distributor (hereinafter referred to as the "ORIGINAL AGREEMENT"). SECTION 1. SUCCESSION OF ORIGINAL AGREEMENT Distributor shall succeed the rights, duties and obligations under the Original Agreement executed between PPOL and Former Distributor as a whole, including any and all terms and conditions, accompanying miscellaneous provisions and supplementary provisions as well as exhibits. PROVIDED, HOWEVER, that, in light of the fact that Distributor is a business corporation incorporated under the laws of Japan, should any inconsistency arise with respect to the interpretation of the laws and regulations, Distributor and PPOL shall respond to the problems in good faith through mutual consultation. SECTION 2. ASSIGNMENT OF DISTRIBUTION RIGHT 2.1 Although PPOL covenanted in the Original Agreement that it would assign the exclusive distribution right referenced in the preamble hereof to a domestic corporation or subsidiary in Japan majority of whose shares would be held and effectively controlled by PPOL within 180 days from the date of the Original Agreement, PPOL shall, as a condition precedent hereto, obtain the consent and the approval of Former Distributor that PPOL will continue to hold the said exclusive distribution right for a considerable period and the above-mentioned covenant shall cease to exist through separate consultation with Former Distributor. 2.2 PPOL shall hereby consent to grant to Distributor the authority to discuss and negotiate with Former Distributor with respect to the future development of marketing activities in Japan in the course of practical discussion and negotiation with Former Distributor. SECTION 3. TERM The initial terns of this Exclusive Distribution Right License Agreement shall be three (3) years running from October __, 2004 to October __, 2007. PROVIDED, HOWEVER, that Distributor and PPOL may terminate and extend this Agreement through mutual consultation regardless of the effectiveness and binding force of the specific provisions such as the effective date, termination date and automatic another one year renewal provisions or early termination by written mutual consent provision of the Original Agreement. -1- SECTION 4. GRANT OF ASSOCIATED LICENSE UNDER DISTRIBUTION RIGHT PPOL shall not, during the Term of the Agreement, derogate the significance of the licenses to develop, modify and duplicate the Software and the Japanese version of the Documentation, create the products, etc, derived therefrom, and the right to solicit the sublicensees for the marketing purpose, provided for in the Original Agreement in association with the backbone provision of Article 2 "Grant of Distribution Right" thereof, and the trademark license (exclusive license of trademark) and the right of appointment of a sub-dealer shall be included herein. For the avoidance of doubt, restrictions on the exclusive right provided for in Article 2, Section 2.5 of the Original Agreement shall govern without any reference thereto. SECTION 5. IMPLEMENTATION OF CAPITAL INCREASE In order to facilitate the marketing activities of the Product under the exclusive distribution right, which is the intrinsic objective hereof, in addition to those, solicitation of sublicense and the appointment of sub-dealers in Japan provided for in Section 3 hereof, PPOL shall discharge the obligation to pay in the money in the aggregate amount of 2.7 million yen as capital increase contribution and advance the money temporarily applied to operating funds, to Distributor by the following due date: 1. For capital increase contribution in the amount of Y 120 million yen: by October 15, 2004 2. For advance in the amount Y 150 million yen: by October 25, 2004 SECTION 6. LICENSE FEE FOR EXCLUSIVE DISTRIBUTION RIGHT 6.1 Distributor shall pay to PPOL the license fee for the exclusive distribution right (hereinafter referred to as "LICENSE FEE") calculated by the following standards: (1) Upon the execution of this Exclusive Distribution Right License Agreement, 100 million yen as the advance payment of the License Fee. This amount is calculated based on the assumption that the Gross Sale of the Product will reach the minimum threshold of Y2 billion yen for three (3) years (2) In addition, for the Gross Sale up to Y2 billion yen minimum threshold, the amount calculated to the equivalent of 5% of the Gross Sale shall be paid throughout the Term of the Agreement as License Fee. (3) For the portion of the Gross Sale exceeding the 2 billion threshold, the amount calculated to the equivalent to 10% of such exceeding portion shall be paid throughout the Term of the Agreement as License Fee. 6.2 Each due date of the payments prescribed in the immediately preceding Paragraph shall be as follows: (1) The payment as prescribed in Item (1) above shall be made within 30 days from the date of the Exclusive Distribution Right License Agreement in Japanese yen. -2- (2) The payment in the amount corresponding to the actual sales performance as prescribed in Items (2) and (3) above shall be made quarterly within 45 days of the end of each quarter in Japanese yen. SECTION 7 MINIMUM GUARANTEE OF LICENSE FEE Even if the aggregate Gross Sale for the initial three (3) year period does not reach Y2 billion yen, the Gross Sale shall be deemed to be Y2 billion yen and the License Fee shall be deemed to be Y100 million yen accordingly, the otherwise refundable balance of the amount which Distributor pays to PPOL pursuant to Item (1) of the immediately preceding Section 6 shall be deemed to be applied to the initial franchise fees (KE'NRI-KIN) for the License Fee and no amount shall be refunded or recouped due to the deficit to the said Gross Sale. " SECTION 8. TRANSFER OF EXCLUSIVE DISTRIBUTION RIGHT The exclusive distribution right under this Agreement shall be assigned and transferred free of charge by PPOL to Distributor after three (3) years lapse from the date of this Agreement or, if and when the initial public offering of the shares of Distributor is completed, PPOL shall assign and transfer the rights to Distributor free of charge at the adequate timing and in the adequate way which Distributor and PPOL determine through mutual consultation. PROVIDED; HOWEVER, that, in each case, prior approval of Former Distributor shall be required. SECTION 9. INCORPORATION BY REFERENCE OF ORIGINAL AGREEMENT The provisions from Article 4 "Maintenance and Support" to Article 16 "Miscellaneous" of the Original Agreement, which lack the corresponding provisions in this Agreement, shall be hereby incorporated by reference. PROVIDED, HOWEVER, that, Article 9, Section 6 of the initial agreement shall be excluded from such incorporation and with respect to the provisions of Article 16, Section 3 of the initial agreement thereof; since they may not be interpreted adequately as to the relationship between a U.S. corporation and a JAPANESE Japanese corporation, the treatment thereof shall be discussed separately. SECTION 10. DAMAGES 10.1 Should any party hereto suffer loss or damage due to the breach of duty under this Agreement by Distributor or PPOL, the party who suffers the damages may demand the compensation for damages to the other party (hereinafter referred to as "INDEMNITOR"). 10.2 The scope of the damages to be compensated pursuant to the immediately preceding Paragraph shall confined within the general damages which obviously result from a breach, and even the damages which arise under the special circumstances which are foreseeable by Indemnitor shall be included in such scope. In addition, Indemnitor shall pay such other costs including, but not limited to reasonable attorney's fees which the other party may bear. -3- SECTION 11. JURISDICTION Should any action is required to be brought relating to this Agreement, the parties hereto shall subject to the consent jurisdiction of the Tokyo District and this Agreement shall be governed by the laws of Japan. SECTION 12. SETTLEMENT OF DIFFERENCE Should any difference arise with respect to the matters not specifically provided for herein or the interpretation of any provision hereof, Distributor and PPOL shall settle such difference through good faith consultation between them. IN WITNESS WHEREOF, the parties hereto have caused this Agreement executed in duplicate by affixing their names and seals below and each party shall retain one (1) original in its possession. October 1, 2004 Distributor: Kabushiki Kaisha Gatefor 52-2, Jungumae 5-chome, Shibuya-ku, Tokyo By: /s/ Fumitaka Kurimoto (Seal) ----------------------- Fumitaka Kurimoto Representative Director PPOL: PPOL, Inc. 1 City Blvd. West, Suite 870 Orange, CA 92868 U.S.A. By: /s/ Hideo Ohkubo (Seal) ----------------------- Hideo Ohkubo CEO -4- EX-10.14 5 ppol_8kex10-4.txt EXHIBIT 10.14 REVISED LETTER OF UNDERSTANDING OBJECT INNOVATION, INC. AND GATEFOR, INC. AUGUST 11, 2004 In consideration of the reassignment of the Distribution Agreement from PPOL, Inc. to GateFor, Inc., and in consideration of the requested change to the terms of our current Distribution Agreement with PPOL, Inc. after it is reassigned to GateFor, Inc., the parties agree to the following: 1. Based upon a $16,000 price of Bridgegate to GateFor, Object Innovation will receive $5,500 (34%) and the received amount will be adjusted as appropriate should Gatefor raise the sale amount. 2. Enterprise Bridgegate sales will be based on an estimated sales amount of $180,000 and Object Innovation will receive 555,000 (30.5%), and the received amount will be adjusted as appropriate should GateFor raise the sale amount. 3. Object Innovation will receive the sum of $180,000 from GateFor to cover various localization work performed by Object Innovation in preparing BridgeGate for the Japanese market, and to purchase co-ownership IP rights to the Japanese-specific Bridgegate 3.OJ resource files. The money will by paid by GateFor to Object Innovation according to the following schedule and at the time of each milestone as follows: a. $60,000 when Object Innovation delivers to GateFor the US beta version of Bridgegate 3.0. This is the first milestone. b. $60,000 one week (evaluation) after Object Innovation delivers to GateFor the initial beta version of Bridgegate 3.OJ (Japanese version). This is the second milestone. c. $60,000 two weeks (evaluation) after Object Innovation delivers to GateFor the final beta version of Bridgegate 3.OJ (Japanese version). This is the third milestone. 4. Commencing on the first month immediately following the completion of the third milestone (as mentioned in 3.c. above), Object Innovation will receive the stun of $9,000 per month from GateFor, payable on the 5th of each month, until April 2005, at which time the amount will increase to $15,000 each month until GateFor goes public. Both parties agree to revise the $15,000 amount in the event that GateFor cannot reasonably support this amount. 5. Object Innovation will be granted stock warrants in GateFor equal to 5% of GateFor's currently issued equity. 6. The existing Distributor Agreement will be revised to reflect NET payments as follows: all GateFor sales will be closed and tallied at the end of each calendar month; payment for these sales will be made to Object Innovation on the 5th of the second month following the month in which the sales were closed and tallied. Object Innovation, Inc. GateFor, Inc. /s/ John Grow /s/ Hiroaki Sato John Grow, CEO Hiroaki Sato, COO EX-99 6 ppol_8kex-99.txt EXHIBIT 99 (Translation) ------------- STOCK PURCHASE AGREEMENT ------------------------ This STOCK PURCHASE AGREEMENT, dated as of March 31, 2005, is made and entered into by and between Forval Corporation ("SELLER") and Foster Strategic Investment Partnership ("BUYER"). Buyer desires to purchase all of the outstanding shares of common stock of PPOL, Inc. (the "COMPANY," and the common stock of the Company as the "COMMON STOCK") on the terms and conditions hereinafter set forth, and Seller desires to sell such shares to Buyer on the terms and conditions hereinafter set forth. The definitions of certain defined terms used herein are set forth in Article 10.10 hereof. Accordingly, in consideration of the items and of the respective covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE 1 --------- PURCHASE AND SALE OF SHARES --------------------------- 1.1 PURCHASE AND SALE. Subject to the terms and conditions set forth in this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from Seller, 10,547,594 shares of Common Stock, which constitute all of the outstanding shares of Common Stock (the "SHARES") (i) for the aggregate purchase price (the "PURCHASE PRICE") of 900,000,000 Japanese YEN in cash, (ii) at the Closing referred to in Article 1.2 hereof: (a) On the Closing Date, Seller shall, upon the fulfillment of the conditions set forth in Article 7, sell, assign and deliver to Buyer the Shares, and deliver all the valid share certificate(s) representing such Shares with all the blanks thereto duly executed, with all necessary share transfer stamps and other necessary documentary stamps affixed thereto; and (b) On the Closing Date, Buyer shall, upon the fulfillment of the conditions set forth in Article 6, accept and purchase the Shares from Seller, and shall, immediately after the fulfillment of the conditions set forth in Article 6.4 and 6.5, deliver to Seller by transferring 900,000,000 Japanese YEN to the accounts designated by Seller as payment for the Purchase Price. 1.2 CLOSING. Subject to the conditions set forth in this Agreement, the purchase and sale of the Shares pursuant to this Agreement (the "CLOSING") shall take place at the principal office of Seller located at Aoyama Oval Building 14th Floor, 52-2, JINGUMAE 5-CHOME, SHIBUYA-KU, TOKYO, at 10:00 AM on (i) March 31, 2005 (Japan time), or (ii) such other date as may be agreed by the parties hereto. The date of the Closing is herein referred to as the "CLOSING DATE". 1.3 DELIVERIES AT THE CLOSING. Subject to the conditions set forth in this Agreement, at the Closing: (a) Seller shall deliver to Buyer (i) all the documents necessary for the transfer of the valid share certificate(s) representing all the Shares with all necessary share transfer stamps and other necessary documentary stamps attached thereto as required by Article 1.1 (a) hereof, (ii) original copies of all the documents in relation to the Company owned by Seller, and (iii) all the documents required to be delivered by Seller or otherwise required in connection herewith at or prior to the Closing; and (b) Buyer shall pay and deliver to Seller all the Purchase Price by transferring funds to the accounts designated by Seller as required by Article 1.1 (b) hereof and all opinions, certificates and other instruments and documents required to be delivered by Buyer or otherwise required in connection herewith at or prior to the Closing. ARTICLE 2 --------- REPRESENTATIONS AND WARRANTIES ------------------------------ OF SELLER AS TO THE COMPANY --------------------------- Seller represents and warrants to Buyer as follows: 2.1 ORGANIZATION AND GOOD STANDING. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California, USA and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified to do business and is in good standing as a foreign corporation in the states and jurisdictions where qualification as a foreign corporation is required. 2.2 CAPITALIZATION. The Shares have been validly authorized and issued, are fully paid and have not been issued in violation of any rights of any other shareholders or of any law and have no pledge or other security interest, option, claim, encumbrance, limitation or any other security or obligation; provided, however, this excludes the stock option granted to the directors of the Company. The issuance of the Shares does not (i) call for the issuance, sale, pledge or other disposition of any shares of the Company or any securities convertible into such shares, or any other rights which enable to acquire such shares, or (ii) obligate the Company to grant, offer or enter into any of the foregoing or securities or rights. 2.3 AUTHORITY, APPROVALS AND CONSENTS. The execution, delivery and performance of this Agreement by the Company and the consummation by Buyer and Seller of the Transactions contemplated hereby do not and will not: (i) contravene any provisions of the Certificate of Incorporation or By-Laws of the Company; 2 (ii) (after notice or lapse of time or both) conflict with, result in a breach of any provision of, constitute a default under, result in the modification or cancellation of, or give rise to any right of termination, or acceleration in respect of, any commitment, contract, agreement or understanding to which the Company is bound (the "COMPANY AGREEMENT"), or require any consent or waiver of any party to any Company Agreement; (iii) result in the creation of any security interest, pledge, lien, claim, option (other than the stock option granted to the directors of the Company) or encumbrance of any nature (the "SECURITY INTEREST") upon, or any person obtaining any right to acquire any properties, assets or rights of the Company (other than the rights of Buyer to acquire the Shares pursuant to this Agreement); (iv) violate or conflict with any Legal Requirements (as defined in Article 2.6 hereof) applicable to the Company or any of its businesses or properties; or (v) require any authorization, consent, order, permit or approval of, or notice to, or filing, registration or qualification with, any governmental, administrative or judicial authority; provided, however, this excludes registrations and reports required under security laws of the United States and Japan in relation to this Agreement. 2.4 ABSENCE OF MATERIAL ADVERSE EFFECT. Since December 14, 2004, there has been no Material Adverse Effect and there is no circumstance of any kind existing or in prospect which, so far as reasonably can be foreseen at this time, may result in any Material Adverse Effect including, without limitation, any Claim (as defined in Article 2.6 hereof) or any damage, destruction or loss to any asset of the Company (whether or not covered by insurance). 2.5 MATERIAL INFORMATION. All pieces of information provided by Seller or the Company are in accordance with the account books in all material respects and accurate, and present fairly the current documents and any other information thereof. The representations and warranties of such information and those by Seller or the Company under this Agreement or any other agreements or documents in relation thereto are true in all material respects and do not have misleading omissions. Buyer had been disclosed all material information known to the Company which reasonably affects the decision of a person considering the purchase of the Shares. 2.6 LEGAL MATTERS. (a) (i) There is no claim, suit, investigation, inquiry, review or proceeding (collectively, the "CLAIMS") pending against, or, to the best knowledge of the Company, threatened against or affecting, the Company, or any of its properties or rights before or by any court, arbitrator, agency or other governmental, administrative or judicial authority, and (ii) the Company is not subject to any judgment, writ, injunction, ruling or order (collectively, the "JUDGMENTS") of any governmental, administrative or judicial authority. (b) The business of the Company is being conducted in compliance with all laws, ordinances, codes, rules, regulations, standards, Judgments and other requirements of all governmental, administrative or judicial authorities (collectively, the "LEGAL REQUIREMENTS") applicable to the Company or any of its businesses or properties in all material respects. 3 (c) The Company holds, and is in compliance with, all licenses, permits, registration, certificates, consents, approvals and authorizations (collectively, the "PERMITS") required by all applicable Legal Requirements. The Company owns or holds all Permits necessary to conduct its business. No event has occurred or is continuing which permits, or after notice or lapse of time or both would permit, any modification or termination of any Permit. ARTICLE 3 --------- REPRESENTATIONS AND WARRANTIES ------------------------------ OF SELLER AS TO THEMSELVES -------------------------- Seller hereby represents and warrants to Buyer with respect to Seller as follows: 3.1 OWNERSHIP OF SHARES. Title. Seller is the practical owner of Shares recorded under the shareholders registry, and the recorded information with respect to Seller thereto is accurate and complete. Seller has, and shall transfer to Buyer at the Closing, good and marketable ownership of the Shares, free and clear of any and all Security Interest, proxies and voting or other agreements. 3.2 AUTHORITY. Seller has all requisite power and authority and, has full legal capacity and is competent to execute, deliver and perform this Agreement and to consummate the transaction contemplated hereby (including the transfer of Seller's Shares to Buyer). This Agreement has been duly executed and delivered by Seller and constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms (provided, however, the enforceability may be limited by applicable bankruptcy, reorganization, or similar laws affecting creditors' rights generally or by the principles governing the availability of equitable remedies). The execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereby do not and will not: (i) (after notice or lapse of time or both) conflict with, result in a breach of any provision of, constitute a default under, result in the modification or cancellation of, or give rise to any right of termination, or acceleration in respect of, any Company Agreement; (ii) violate or conflict with any Legal Requirements applicable to Seller or any of its properties; or (iii) require any authorization, consent, order, permit or approval of, or notice to, or filing, registration or qualification with, any governmental, administrative or judicial authority; provided, however, this excludes registrations and reports required under security laws of the United States and Japan in relation to this Agreement. 4 ARTICLE 4 --------- REPRESENTATIONS AND WARRANTIES ------------------------------ OF BUYER -------- Buyer hereby represents and warrants to Seller as follows: 4.1 AUTHORITY; APPROVALS AND CONSENTS. Buyer has the power and authority to enter into this Agreement and to perform its obligations hereunder. This Agreement has been duly executed and delivered by, and constitutes a valid and binding obligation of, Buyer, enforceable against Buyer in accordance with its terms (provided, however, the enforceability may be limited by applicable bankruptcy, reorganization, or similar laws affecting creditors' rights generally or by the principles governing the availability of equitable remedies). 4.2 ACQUISITION OF SHARES FOR INVESTMENT. Buyer is acquiring the Shares for its own account and with no intention of distributing or reselling all of or any part of the Shares thereof in any transaction which would be in violation of the securities laws of Japan; provided, however, Buyer has the right at all times to sell or otherwise dispose of all or any part of the Shares pursuant to registration or exemption of the registration available under such laws. ARTICLE 5 --------- COVENANTS --------- 5.1 ACCESS; CONFIDENTIALITY. Buyer shall hold in confidence (unless and to the extent compelled to disclose by judicial or administrative proceedings, in the opinion of its counsel, or by other requirements of law) all Confidential Information (as defined below) and shall not disclose the same to any third party except in connection with obtaining financing and otherwise as may reasonably be necessary to carry out this Agreement and the transactions contemplated hereby, including any due diligence review by or on behalf of Buyer. In the event this Agreement is terminated, Buyer will promptly return to the Company, upon the reasonable request of the Company, all Confidential Information furnished by the Company and held by Buyer, including all copies and summaries thereof. As used herein, "CONFIDENTIAL INFORMATION" shall mean all information concerning the Company obtained by Buyer from the Company and Seller in connection with the transactions contemplated by this Agreement except, information; (x) ascertainable or obtained from public information; (y) received from third party not employed by or otherwise affiliated with the Company; or (z) which is or becomes known to the public. 5.2 FURNISHING INFORMATION; ANNOUNCEMENTS. Seller and Buyer will, as soon as practicable after reasonable request therefore, furnish to the other all the information concerning Buyer, Seller or the Company, respectively, required for inclusion in any statement or application made by Seller, Buyer or the Company to any governmental or regulatory authority in connection with the transactions contemplated by this Agreement. Seller shall not, or cause the Company to, issue any press releases or otherwise make any public statement with respect to the transaction contemplated hereby, without the prior consent of Buyer except as may be required by law. 5 5.3 CONDUCT OF BUSINESS OF THE COMPANY PRIOR TO THE CLOSING. Seller agrees and shall cause the Company to agree that, during the period from the date hereof to the Closing Date, The Company shall preserve its business organization intact; provided, however, the Company shall give advance notice of dismissal to its employees on or before the Closing Date stating the dismissal due on the last day of April, 2005. 5.4 CONSENT; COOPERATION. Subject to the terms and conditions hereof, Seller and Buyer shall use their respective Best Efforts at their own expense: (i) to obtain prior to the earlier of either the date required (if so required) or the Closing Date, all waivers, permits, licenses, approvals, authorizations, qualifications, orders and consents of all third parties and governmental authorities, and make all filings and registrations with governmental authorities which are required on their respective parts for the consummation of the transactions contemplated by this Agreement; (ii) to defend, consistent with applicable principles and requirements of law, any lawsuit or other legal proceedings, whether judicial or administrative, whether brought derivatively or on behalf of third Persons (including governmental authorities), of the protests against this Agreement or the transactions contemplated hereby; (iii) to furnish each other such information and assistance as may reasonably be requested in connection with the foregoing; and (iv) to the extent permitted by law, Seller and Buyer will supply each other with copies of all correspondence, filings or written communications by Buyer, Seller or their respective representatives made between any governmental authority or members of their respective staffs with respect to this Agreement and the transactions contemplated hereby. 5.5 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use its Best Efforts at its own expense to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. ARTICLE 6 --------- CONDITIONS TO THE OBLIGATIONS ----------------------------- OF BUYER TO EFFECT THE CLOSING ------------------------------ The obligations of Buyer required to be performed by it at the Closing shall be subject to the satisfaction, at or prior to the Closing (or, as for the conditions set forth in Article 6.4 and 6.5, immediately after the execution of this Agreement, and as for the conditions set forth in Article 6.7, such other date as may be agreed by Seller and Buyer), of each of the following conditions, each of which may be waived by Buyer as provided herein except as otherwise required by applicable law: 6 6.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS. Each of the representations and warranties of Seller contained in this Agreement shall be true and accurate in all respects as of the date hereof. At the Closing, Buyer shall have received a certificate substantially in a form attached as Exhibit hereto, dated as of the Closing Date and duly executed by the representative director of Seller, to the effect that the conditions set forth in the preceding sentences have been satisfied. 6.2 AUTHORIZATION; CONSENTS. All corporate actions necessary to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby shall have been duly and validly taken by the Company and Seller. All notices to, and declarations, filings and registrations with, and consents, authorizations, approvals and waivers from, governmental and regulatory authorities required to consummate the transactions contemplated hereby and all other consents or waivers required pursuant hereto shall have been made or obtained. 6.3 ABSENCE OF LITIGATION. No order, stay, injunction or decree of any court of competent jurisdiction in the United States or in Japan shall be in effect (i) that prevents or delays the consummation of any of the transactions contemplated hereby, or (ii) would impose any material limitation on the ability of Buyer to effectively exercise full right of ownership of the Shares. No action, suit or proceeding before any court or any governmental or regulatory authority shall be pending (or indicated by any governmental or regulatory authority), and no investigation by any governmental or regulatory authority has commenced (or be pending), seeking to restrain or prohibit (or questioning the validity or legality of) the consummation of the transactions contemplated by this Agreement, or seeking material damages in connection therewith which Buyer, in good faith and with the advice of counsel considers it undesirable to proceed with the consummation of the transactions contemplated hereby. 6.4 RESIGNATION OF THE DIRECTORS AND THE EXECUTIVE OFFICERS OF THE COMPANY. Seller shall cause the Company to have all the directors and the CFO of the Company as of the date hereof resign immediately after the execution of this Agreement. The resignation of the directors shall be done in the order of; (i) resignation of current 4 directors; (ii) election of 3 new directors; and (iii) resignation of current 1 director. 6.5 RESIGNATION OF THE DIRECTORS OF AJOL. Seller shall cause AJOL Corporation (the "AJOL") to have MASAHIKO ASAKAWA and ERIKO HONDA, the directors, and AKIRA KUROSAWA, the Statutory Auditor of AJOL as of the date hereof, resign immediately after the execution of this Agreement. 6.6 ACCESS. Buyer, Seller and Company shall, in order to, and as far as necessary to, expedite the process for the consolidated settlement of accounts regarding the term ending on March 2005, promise as follows: (A) Seller shall cause the Gate For Inc. (the "GF") to (i) provide, to the officers and other authorized representatives of the Company, full access, during normal business hours, to any and all premises, properties, files, books, records, documents, and other information of GF, and their officers will furnish the Company and its 7 and other information pertaining to the businesses and properties of GF, and (ii) make available for inspection and copying by the Company true and complete copies of any documents relating to the foregoing, and (B) Buyer shall cause the Company and AJOL to (i) provide, to the officers and other authorized representatives of Seller, full access, during normal business hours, to any and all premises, properties, files, books, records, documents, and other information of the Company and AJOL, and their officers will furnish Seller and its authorized representatives any and all financial, technical and operating data and other information pertaining to the businesses and properties of GF, and (ii) make available for inspection and copying by Seller true and complete copies of any documents relating to the foregoing. Seller and Buyer shall confirm not to disclose such information obtained in accordance with the foregoing to any third party other than the person defined in this Article and its officers, directors, representatives and legal counsel. 6.7 CERTIFICATES. Seller shall have furnished Buyer with such certificates of its officers or others as Buyer may reasonably request to evidence compliance with the conditions set forth in this Article 6. ARTICLE 7 --------- CONDITIONS TO THE OBLIGATIONS OF SELLER --------------------------------------- TO EFFECT THE CLOSING --------------------- The obligations of Seller required to be performed by it at the Closing shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, each of which may be waived by Seller as provided herein except as otherwise required by applicable law: 7.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS. Representations and warranties of Buyer described in this Agreement shall be true and accurate in all respects as of the date hereof. 7.2 AUTHORIZATION. All corporate action necessary to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby shall have been duly and validly taken by Buyer. 7.3 ABSENCE OF LITIGATION. No order, investigation, examination, audit, stay, injunction or decree of any court of competent jurisdiction or any governmental authorization in the United States of America or in Japan shall be in effect that prevents or delays the consummations of the transactions contemplated herein. 7.4 NO SUIT CONFIRMATION. Buyer shall promise not to bring any suit or other action against Robert Brasch, NAOTA HAMAGUCHI, Lowell HATTORI, YOSHIKAZU OHASHI, and HIDEO OHKUBO, the directors of the Company as of the date hereof, and MASAHIKO ASAKAWA and ERIKO HONDA, the directors of AJOL as of the date hereof, regarding operations of the Company or AJOL or in relation to this Agreement. Seller shall promise that Robert Brasch, NAOTA HAMAGUCHI, Lowell HATTORI, YOSHIKAZU OHASHI, and HIDEO OHKUBO, the directors of the Company as of 8 the date hereof, and MASAHIKO ASAKAWA and ERIKO HONDA, the directors of AJOL as of the date hereof, will not bring any suit or other action against the Company and its officers and employees prior to the date hereof with regard to operations of the Company or AJOL or in relation to this Agreement. 7.5 EXTENSION OF THE INSURANCE TERMS OF THE OFFICERS AND OTHERS OF THE COMPANY. Buyer shall promise to extend the insurance terms of the damage insurance for suits against the directors, CEO, CFO, and COO of the Company and directors and officers of the Company's subsidiary for 12 months. ARTICLE 8 --------- TERMINATION ----------- 8.1 TERMINATION. (i) This Agreement may be terminated at any time prior to the Closing by mutual consent of Buyer and Seller; (ii) This Agreement may be terminated by Buyer if the Closing shall not have taken place on or prior to March 31, 2005, or such later date as shall have been approved by Buyer and Seller; and (iii) This Agreement may be terminated by a party if the other party has failed to perform its obligation under this Agreement. If Buyer or Seller shall terminate this Agreement pursuant to the provisions hereof, such termination shall be effective by a notice to the other party specifying the provision hereof pursuant to which such termination it made. 8.2 EFFECT OF TERMINATION. Except for; (i) any willful breach of this Agreement; and (ii) the obligations contained in Article 5.1(b) hereof, upon the termination of this Agreement pursuant to Article 8.1(i) and (ii) hereof, this Agreement shall forthwith become null and void and no party hereto or none of their respective officers, directors, employees, agents, or consultants shall carry any liability or obligation hereunder or with respect hereto. ARTICLES 9 ---------- SURVIVAL AND INDEMNIFICATION ---------------------------- 9.1 SURVIVAL. All representations, warranties, covenants and agreements contained in this Agreement, or in any schedule, certificate, document or statement delivered pursuant hereto, shall survive (and not be affected in any respect by) any investigation conducted by any party hereto and any information which any party may receive as of the date hereof or the Closing Date. 9 9.2 INDEMNIFICATION. The parties hereto shall indemnify each other as set forth below: (a) Seller shall indemnify and hold Buyer and each of its directors, officers, employees, affiliates and agents harmless from and against (i) any and all losses, damages, liabilities and claims arising out of, based upon or resulting from (x) any inaccuracy as of the date hereof or as of the Closing Date of any representation or warranty of Seller which is contained in or made pursuant to this Agreement, or (y) any breach by the Company or Seller of any of their respective obligations contained in or made pursuant to this Agreement, (ii) any and all fees, costs and expenses of any kind related thereto (including, without limitation, any and all Legal Expenses (as defined below)), and (iii) any and all contingent liabilities of the Company arising out of matters existing as of the date hereof or the Closing Date. As used herein, "LEGAL EXPENSES" of a Person shall mean, any and all fees, costs and expenses of any kind reasonably incurred by such Person and its counsel for investigation, preparation, to defend against or provide evidence, produce documents or take other actions with respect to, any threatened or asserted claim; provided, however, Buyer shall indemnify all damages of Seller arising out of the sale of the Company's share owned by Leo Global Fund Ltd. to the residents of Japan, and shall cooperate with and hold Seller harmless if Seller has been sued by a third party in relation thereto (b) Buyer shall indemnify and hold harmless of Seller and each of its directors, officers, employees, affiliates and representatives from and against (i) any and all losses, damages, liabilities and claims arising out of, based upon or resulting from (x) any inaccuracy as of the date hereof or as of the Closing Date of any representation or warranty of Buyer which is contained in or made pursuant to this Agreement, or (y) any breach by Buyer of any of its obligations contained in or made pursuant to this Agreement, and (ii) any and all fees, costs and expenses of any kind related thereto (including, without limitation, any and all Legal Expenses). (c) Promptly after receipt of notice by any Person entitled to indemnification under this Article 9.2 (the "INDEMNIFIED Party") the commencement of any action in respect of which the Indemnified Party will seek indemnification hereunder, the Indemnified Party shall notify each Person that is obligated to provide such indemnification (the "INDEMNIFYING PARTY") thereof in writing; provided, however, any failure to so notify the Indemnifying Party shall not relieve it from any liability that it may have to the Indemnified Party other than those liabilities under this Article 9. The Indemnifying Party shall be entitled to participate in the defense of such action and, provided that within 15 days after receipt of such written notice the Indemnifying Party confirms in writing its responsibility therefore and reasonably demonstrates that it will be able to pay the full amount of potential liability in connection with any such claim, to assume control of such defense with counsel which is reasonably satisfactory to such Indemnified Party; provided, however, that: (i) the Indemnified Party shall be entitled to participate in the defense of such claim and to employ counsel at its own expense to assist in the handling of such claim; (ii) the Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into any settlement of such claim or ceasing to defend against such claim, if pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief would be imposed against the Indemnified Party; and 10 (iii) the Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement of (A) any claim to the extent the claim seeks an order, injunction or other equitable relief against the Indemnified Party which, if successful, could materially interfere with the business, operations, assets, condition (financial or otherwise) or otherwise, or prospects of the Indemnified Party, or (B) any claim relating to taxes. After written notice by the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of any such action, the Indemnifying Party shall not be liable to such Indemnified Party hereunder for any Legal Expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation and of liaison counsel for the Indemnifying Party. If the Indemnifying Party does not assume control of the defense of such claim as provided in this Article 9.2(c), the Indemnified Party shall have the right to defend such claim in such manner as it may deem appropriate at the cost and expense of the Indemnifying Party, and the Indemnifying Party will promptly reimburse the Indemnified Party therefore in accordance with this Article 9.2. The reimbursement of fees, costs and expenses required by this Article 9.2 shall be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred. (d) In the event that the Indemnifying Party shall be obligated to indemnify the Indemnified Party pursuant to this Article 9, the Indemnifying Party shall, upon payment of such indemnity in full, be subrogated to all rights of the Indemnified Party with respect to the claims to which such indemnification relates. ARTICLE 10 ---------- MISCELLANEOUS ------------- 10.1 EXPENSES. Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, investment bankers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby whether or not the transactions contemplated hereby are consummated. 10.2 HEADINGS. The section headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. 10.3 NOTICES. All notices or other communications required or permitted hereunder shall be given in writing and shall be deemed duly given or served when personally delivered against receipt, when sent by facsimile (and confirmation received), on the next Business Day when sent by nationally recognized overnight delivery service, or on the fifth Business Day after deposit with Japan Post for delivery by registered or certified mail, postage prepaid (return receipt requested), as follows: 11 If to Seller: Aoyama Oval Building 14th Floor 52-2, JINGUMAE 5-CHOME, SHIBUYA-KU, TOKYO Forval Corporation KEIRI-BU (Accounting Department) Att.: KOJI KATO Telephone Number: (81) 3-5467-8031 Facsimile Number: (81) 3-5467-8035 If to Buyer: 9 Raffles Place #08-01, Republic Plaza Singapore 048619 c/o ING Asia Private Bank Limited Foster Strategic Investment Partnership Att.: YOSHIHIRO HIROOKA Telephone Number: (65) 6559-8126 Facsimile Number: (65) 6559-8186 or such other address as shall be furnished in writing by such party. Any notice or communication changing any of the addresses set forth above shall be effective and deemed given only upon its receipt. 10.4 ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted transferees, and the provisions of Article 9 hereof shall inure to the benefit of the Indemnified Party referred to therein; provided, however, no party hereof shall transfer any rights, interests, or obligations hereof or hereunder without the prior written consent of the other party; provided, further, that Buyer may transfer its interests hereunder to any of its affiliates by first notifying Seller, without obtaining prior written consent of Seller. 10.5 ENTIRE AGREEMENT. This Agreement (including the exhibit hereto) embodies the entire agreement and understanding of the parties with respect to the transactions contemplated hereby and supersedes all prior written or oral commitments, arrangements or understandings with respect thereto. There are no restrictions, agreements, promises, warranties, covenants or undertakings with respect to the transactions contemplated hereby other than those expressly set forth herein. 12 10.6 MODIFICATIONS, AMENDMENT IN WAIVER. At anytime prior to the Closing, to the extent permitted by law, (i) Buyer and Seller may, by written agreement, modify, amend or supplement any term or provision of this Agreement, and (ii) any term or provision of this Agreement may be waived in writing by the party which is entitled to the benefits thereof. 10.7 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall be one and the same agreement. 10.8 GOVERNING LAW. This Agreement shall be governed by the laws of Japan (regardless of the laws that might be applicable under principles of conflicts of law) as to all matters, including but not limited to matters of validity, interpretation, effect and performance. 10.9 ACCOUNTING TERMS. All accounting terms used herein which are not expressly defined in this Agreement shall have the respective meanings given to them in accordance with generally accepted accounting principles as of the date hereof. 10.10 CERTAIN DEFINITIONS. For purpose of this Agreement: (a) "BUSINESS DAY" shall mean any day that is not a Saturday, Sunday or a holiday pursuant to Article 3 of KOKUMIN NO SHUKUJITSU NI KANSURU HORITSU (National Holiday Act, Law No. 178 of 1948) or other days on which commercial transaction are customarily not taken place. (b) "BEST EFFORTS" shall be deemed not to include any obligation on the part of any Person to undertake any liabilities or perform any acts (except liabilities or performance, other than any best efforts obligations, expressly required to be undertaken by the terms of this Agreement) which are materially burdensome to such Person; provided, however, that notwithstanding the foregoing, the term "Best Efforts" shall include an obligation to take such actions which are normally incident to or reasonably foreseeable in connection with such obligation or the transactions contemplated hereby; (c) "MATERIAL ADVERSE EFFECT" shall mean any change in, or effect on, the Company (including the business thereof) which is, or with reasonable probability might be, materially adverse to the business, operations, assets, condition (financial or otherwise) or prospects of the Company; and (d) "PERSON" shall mean, and include an individual, corporation, partnership, joint venture, association, trust, any other unincorporated organization or entity and a governmental entity or any department or agency thereto. 10.11 SEVERABILITY. If any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected thereby. To the extent permitted by applicable law, each party waives any provision of law which renders any provision of this Agreement invalid, illegal or unenforceable in any respect. 10.12 CONSENT TO JURISDICTION. The parties hereof agree that the Tokyo District Court has first instance jurisdiction in the event that a dispute arises in connection with the Agreement. 13 10.13 SINCERE DISCUSSION. Buyer and Seller shall discuss sincerely and solve in peaceful manner if any dispute arises out of any matter not stated hereunder or interpretation or performance of any provision hereunder. [Remainder of Page Intentionally Blank] 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. [SELLER] Aoyama Oval Building 14th Floor 52-2, JINGUMAE 5-CHOME, SHIBUYA-KU, TOKYO Forval Corporation Representative Director and President HIDEO OKUBO [BUYER] 9 Raffles Place #08-01, Republic Plaza Singapore 048619 c/o ING Asia Private Bank Limited Foster Strategic Investment Partnership Representative SHIGERU UEMURA 15 (Translation) ------------- (EXHIBIT) March 31, 2005 To: Foster Strategic Investment Partnership Forval Corporation Representative Director and President HIDEO OKUBO CERTIFICATE ----------- Forval Corporation ("SELLER") hereby certifies the following as of the date hereof to Foster Strategic Investment Partnership ("BUYER") in accordance with Article 6.1 of the Stock Purchase Agreement (the "AGREEMENT") dated as of March 28, 2005 by and between Seller and Buyer. The representation and warranties by Seller set forth in Article 2 and 3 of the Agreement shall be true and accurate in all respects as of the execution date of the Agreement. 16 -----END PRIVACY-ENHANCED MESSAGE-----