AGREEMENT OF PURCHASE AND SALE OF ASSETS
This Agreement (the "Agreement") is entered into as of
May 9, 1997, by and between VIE Systems, Inc., a Delaware
corporation ("Buyer"), and New Paradigm Software Corp., a New
York corporation ("Seller").
W I T N E S E T H:
WHEREAS, Seller desires to transfer, convey and assign
to Buyer all rights in and to its COPERNICUS software, the "New
Paradigm Architecture", related intellectual property rights and
the business, activities and operations of Seller of or related
thereto, and certain other specified tangible assets of Seller, on
the terms and subject to the conditions hereinafter set forth
(with all such business, activities and operations of or related
to the COPERNICUS software and the "New Paradigm Architecture"
engaged in by or through Seller being referred to herein as the
"Business").
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties
hereto hereby agree as follows:
PURCHASE AND SALE OF ASSETS
1.1 Purchased Assets. Subject to and upon the terms
and conditions of this Agreement, on the Closing Date, Seller
shall sell, transfer, convey, assign, and deliver to Buyer
all of Seller's right, title and interest to the hardware and other
tangible assets of Seller listed on Schedule 1.1 attached hereto
(and not previously transferred to Buyer) (the "Equipment"), and
all intellectual property and other related assets (other than
hardware and other tangible assets) of or used in the Business, of
every kind, nature and description, owned, leased or licensed,
wherever located and whether or not carried or reflected on the
books or records of Seller, as the same shall exist on the Closing
Date, except for the Excluded Assets (as hereinafter defined),
including, without limiting the generality of the foregoing:
(a) all trademarks, trademark applications, trade
names, designs, logos and service marks owned or used by
Seller in the Business, including without limitation, "COPERNICUS", and
the other names, designs and logos set forth on Schedule 1.1(a)
hereto, and any names similar to or any derivation or
variation of any and all such names, designs and logos, and the goodwill
pertaining thereto and the right to fully exploit such names
(collectively, "Marks");
(b) all copyrights and copyright applications
owned or used by Seller in the Business, including without
limitation, the copyrights and copyright applications set
forth on Schedule 1.1(b) hereto (collectively, "Copyrights");
(c) all patents and patent applications owned or
used by Seller in the Business, including without limitation, the
patent applications set forth on Schedule 1.1(c) hereto, and the
goodwill pertaining thereto and the right to fully exploit, and
enforce infringement claims in respect of, such patents
(collectively, "Patents");
(d) all of the right, title and interest
(including by reason of license or lease) of Seller in or to any
software, computer program or software product owned, used,
developed or being developed by or for Seller and used in or
necessary for the operation of the Business, whether for internal
use (including without limitation, sales, marketing and training
programs) or for sale or license to others, and any software,
computer program or software product, manufactured, published,
licensed and/or marketed by Seller through the Business at any
time prior to the Closing, including, without limitation, all
software which pertains to and consists of or which is
incorporated, integrated, bundled, merged or otherwise included as
part of or within the computer programs known and/or marketed as
"COPERNICUS" and more fully described on Schedule 1.1(d) hereto,
in all versions and releases, including all run-time systems,
libraries, examples, utilities, data files, manuals, guides and
written and related materials and all Proprietary Rights and
Documentation (as each are hereinafter defined), whether or not
patented or copyrighted, related to the implementation or use
thereof (collectively, "Programs");
(e) all documentation, records and software,
whether in machine or visually readable or other tangible form,
evidencing, representing or containing any Proprietary Rights in
the possession or under the control of Seller relating to a
Program or used in or necessary to the Business, including,
without limitation, any manuals, functional and design
specifications, user and programmer instructions, sales and
marketing training and instructions, flow charts and diagrams,
coding constructions, alpha and beta testing notes, error reports
and logs, patches and patch instructions, itemizations of
development tools, and all other writings which might be necessary
or helpful to a skilled programmer or skilled software salesperson
or marketeer to understand, maintain and enhance any Program
(collectively, "Documentation");
(f) all mailing lists and lists and records of
customers and prospects and related information and data base or
bases used by Seller in connection with the Business, including
without limitation, the names of all persons actually known to
have licensed or purchased products or services of or from the
Business, other users of such products and services known to
Seller and user prospects of such products and services known to
Seller, together with file layouts and other information related
to such products and services necessary to the convenient
processing of such information by Buyer (collectively, the
"Lists");
(g) all know-how and other intellectual property
of Seller relating to or necessary for the operation of the
Business, including, without limitation, the "New Paradigm
Architecture" described on Schedule 1.1(g) hereto, and all trade
secrets, vendor information, lists and data bases, proprietary
processes, methods and apparatus, information not known to the
general public, each literary work, whether or not copyrightable,
ideas, concepts, designs, discoveries, formulae, patents, patent
applications, product and service developments, inventions,
improvements, disclosures, software, source codes and materials,
object codes and materials, algorithms, techniques, architecture,
mask work rights, prototypes, engineering and design models,
information with respect to firmware and hardware, and any
information relating to any product or program which has either
been developed, acquired or licensed for or by Seller and used in
or necessary for the operation of the Business, including the
maintenance, modification or enhancement thereof, all vendor and
customer sales and purchase records and files of or related to the
Business, and all publishing, outsourcing, fulfillment, reseller
and manufacturing information (collectively, together with the
Marks, Copyrights, Patents, Lists and Programs, "Proprietary
Rights");
(h) each contract, agreement, lease, license,
franchise, purchase order, sale order, permit, instrument,
commitment, arrangement and understanding (in each case, whether
written or oral and including all amendments thereto) to which
Seller is a party or by which it is bound or under which it has
any rights or is entitled to benefits, relating to the Business,
including, without limitation, all license, supply, purchase,
distribution, OEM, VAR, dealer, advertising and promotional
services agreements and agreements for software acquisition,
development, publishing, support, maintenance, outsourcing,
manufacture and fulfillment, reseller and manufacture, including,
without limitation, those listed on Schedule 1.1(h) hereto
(collectively, "Contracts");
(i) the non-exclusive right to all restrictive and
negative covenants, non-competition, proprietary property and
confidentiality agreements in favor of Seller, including, without
limitation, those with any and all former or current employees,
consultants, customers, vendors or others having access to
Proprietary Rights or rendering services to Seller in connection
with the Business;
(j) all inventory, samples, goods-in-transit,
work-in-process, raw materials, promotional materials and other
materials and supplies of every kind, nature and description used
or which are used in or necessary for the operation of the
Business (other than generic office supplies), including, without
limitation, all physical copies of items constituting any part
thereof such as user manuals and diskettes, and all advertising,
artwork, templates and related creative materials for
advertisements, catalog insertions, page layouts, promotional and
product literature and displays, sales literature, marketing
materials, brochures, pamphlets and packaging and printed material
related to any of the foregoing, in each case, in which Seller has
any right, title or interest and of the type sold or offered for
sale by or through the Business (collectively, "Business Materials");
(k) all accounts, notes and other receivables of
Seller arising from the Business or products or services sold by
or through the Business (whether payable in cash or product)
outstanding as of the Closing Date, and all rights of Seller under
any security agreements with respect thereto, including rights to
all files and documentation substantiating Seller's rights to said
Receivables in sufficient diary form to effect an efficient
collection of said receivables (collectively, "Receivables");
(l) the proceeds of any insurance, and the right
to receive the proceeds of any insurance, with respect to any
claims which have been or may be asserted in connection with any
of the Purchased Assets (as hereinafter defined) and the right to
continue and maintain any insurance with respect thereto;
(m) all unfilled sales, purchase orders and
commitments of or related to the Business made or entered into by
Seller in the ordinary course of its business and all rights which
Seller may have against its licensors and other suppliers under
express or implied warranties related to the Business or products
or services sold or offered by or through the Business, and the
right to receive mail and other communications and shipments of
merchandise addressed to Seller related to the Business;
(n) all books and records necessary for the use of
any of the Purchased Assets and used in or necessary for the
operation of the Business, and all of the goodwill of the Business
as a going concern.
The business, properties, assets, licenses, franchises, goodwill
and rights to be sold, transferred, conveyed, assigned, granted
and/or delivered to Buyer are hereinafter sometimes collectively
referred to as the "Purchased Assets". The Purchased Assets shall
be transferred to Buyer at the Closing pursuant to the form of
▇▇▇▇ of Sale annexed as Exhibit 1.1 hereto (the "▇▇▇▇ of Sale").
1.2 Excluded Assets. Notwithstanding anything to the
contrary contained in this Agreement, it is understood that Seller
is not selling and Buyer is not acquiring any real property owned
or leased by Seller or those assets referred to in the ▇▇▇▇ of
Sale as "Excluded Assets" which include all of the assets used
solely in, and accounts receivable related exclusively to, the
business conducted by Seller's two subsidiaries, New Paradigm
Commerce, Inc. and New Paradigm Inter-Link, Inc. (collectively,
the "Subsidiary Businesses"), and those certain assets used
jointly in the Subsidiary Businesses and the Business which
are listed on Schedule 1.2 hereto and in Schedule A to the ▇▇▇▇
of Sale.
1.3 Title to Purchased Assets. At the Closing, Seller
shall deliver or cause to be delivered to Buyer all right, title
and interest of Seller in and to the Purchased Assets, free and
clear of any and all mortgage, pledge, hypothecation, assignment,
deposit arrangement, claim, encumbrance, lien (statutory or
other), preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement
or any financing statement filed under the Uniform Commercial Code
or comparable law of any jurisdiction) (collectively, "Liens").
1.4 Satisfaction of Liabilities. (a) On or prior to
the Closing, Seller shall cause all Liens securing indebtedness of
Seller or otherwise in, on or against any of the Purchased Assets
to be released and to cause to be delivered at the Closing
releases and discharges of all Liens relating to any of such
indebtedness (including, without limitation, all required Form
UCC-3 releases) in form and substance reasonably satisfactory to
Buyer.
(a) On or prior to the Closing, Seller shall cause
all past due indebtedness owing to suppliers, vendors, licensees
or licensors of or related to the Purchased Assets and/or the
Business to be satisfied in full (or shall make arrangements for
such payments to be made on terms acceptable to such suppliers,
vendors, licensees and licensors and approved in writing by Buyer,
which approval shall not be unreasonably withheld). Without
limiting any of Buyer's rights under Section 3.3 hereto, following
the Closing, Buyer shall be entitled, but shall have no obligation
whatsoever, following written notice to Seller (which notice shall
specify the indebtedness to be repaid and any proposed offset), to
satisfy any such unpaid or unresolved indebtedness, on behalf of
Seller, and offset any amount so paid against the Escrow Fund (as
hereinafter defined) and/or any amounts payable to Seller in
connection herewith, including, without limitation, from amounts
payable by Buyer in respect of the Royalty.
1.5 Assignments of Contracts. Buyer and Seller
acknowledge that certain of the Contracts included in the
Purchased Assets, and the rights and benefits thereunder, may not,
by their terms, be assignable. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an
agreement to assign any such Contract if an attempted assignment
thereof, without the consent of a third party thereto, would
constitute a breach thereof or adversely affect the rights under
any such Contract of Buyer or Seller thereunder. In such event,
Seller will cooperate with Buyer and use its best efforts to
provide for Buyer all benefits to which Seller is entitled under
such Contracts, and any transfer or assignment to Buyer by Seller
of any such Contract or any right or benefit arising thereunder or
resulting therefrom which shall require the consent or approval of
any third party shall be made subject to such consent or approval
being obtained. Seller shall use its best efforts to obtain such
consents and approvals. If and when any such consent or approval
shall be obtained or such Contract shall otherwise become
assignable to Buyer, Seller shall promptly assign all of its
rights thereunder to Buyer. Until such time, Seller shall not
enter into any amendment of any such Contract without the prior
written consent of Buyer. Notwithstanding anything to the
contrary herein, Seller shall not be obligated to incur any
additional financial obligation or liability to the party under
any Contract for which such consent or approval is required.
PURCHASE PRICE; LIMITED ASSUMPTION OF LIABILITIES
2.1 Purchase Price. Subject to and upon the terms and
conditions of this Agreement, Buyer shall pay or deliver to or for
the benefit of Seller, in full payment and consideration for the
Purchased Assets, a total amount (the "Purchase Price") payable as
follows:
(a) At the Closing, Buyer shall pay to or for the
benefit of Seller One Million Eight Hundred Thousand Dollars
($1,800,000), plus (i) the amount, in excess of $50,000, payable
and paid by Seller to Level 8 Systems, Inc. in respect of a break-
up fee, but in no event more than a total of $50,000, less
(ii) any payments made to Seller pursuant to the License Agreement
(as hereinafter defined) and less (iii) any Liabilities Adjustment
(as hereinafter defined), by certified check, bank check or wire
transfer in immediately available funds (the "Closing Payment").
(b) At the Closing, Buyer shall pay to the Escrow
Agent under the Escrow Agreement in the form of Exhibit 2.1(b)
hereto (the "Escrow Agreement"), the sum of Two Hundred Thousand
Dollars ($200,000) (the "Escrow Fund"), such amount to be held and
dealt with as provided in the Escrow Agreement. As more fully set
forth in the Escrow Agreement, the escrow period shall expire on
the date six (6) months after the Closing Date, except with
respect to claims on the Escrow Fund made prior to such date.
(c) Beginning from and after the first anniversary
of the Closing Date, Buyer shall pay to Seller a royalty equal to
5% of the Net Revenue (as defined in Schedule 3.2 hereto) of Buyer
commencing on and after the first anniversary of the Closing Date,
as the same shall be determined, calculated and payable in
accordance with, and containing such other terms and provisions as
are set forth in, Schedule 2.1(c) hereto (the "Royalty").
2.2 Allocation of Purchase Price. The parties hereto
hereby agree that the Purchase Price shall be allocated in
accordance with Schedule 2.2 hereto.
2.3 Liabilities Undertaking. Buyer shall, at the
Closing, execute and deliver to Seller a Liabilities Undertaking
(the "Liabilities Undertaking") in the form of Exhibit 2.3 hereto,
the provisions of which shall, effective upon the Closing, be
deemed incorporated herein by reference as if set forth in full
herein. Except as expressly set forth in the Liabilities
Undertaking, Buyer shall not assume or be responsible for any
debts, commitments, obligations or liabilities of Seller of any
nature whatsoever. Without limiting the generality of the
foregoing, Buyer shall not assume any of the following (herein
collectively referred to as the "Excluded Liabilities"):
(a) any obligation or liability of Seller to
distribute to its shareholders or otherwise apply all or any part
of the Purchase Price received hereunder;
(b) any obligation or liability of Seller based
upon acts or omissions of Seller occurring after the Closing Date;
(c) Seller's obligations under any stock option or
profit-sharing plans or under any outstanding qualified or non-
qualified stock options;
(d) any brokerage or finder's fee payable by
Seller in connection with the transactions contemplated
hereby;
(e) any liabilities of Seller to any of its
present or former shareholders as such arising out of any action
by Seller in connection with the transactions contemplated hereby;
(f) any and all obligations of Seller for
indebtedness for borrowed money or other amounts payable to third
parties in the nature of "break-up" fees, including without
limitation, any amounts payable to Level 8 Systems, Inc. (subject
only to Buyer's obligation to pay Seller the amount specified in
Section 2.1(a)(i) hereof);
(g) any and all debts, liabilities and obligations
of Seller incurred or accrued with respect to any period, or
circumstances, or state of facts or occurrences, on or prior to
the Closing Date, relating to bonuses, salaries, wages, incentive
compensation, compensated absences, workmen's compensation, FICA,
unemployment taxes, employee benefits, deferred compensation, wage
continuation, severance, termination, pension, section 401(k)
plans, cafeteria, retirement, profit-sharing or similar plans or
arrangements and any and all vacation, holiday or sick pay or
leave incurred or accrued with respect to any employees of Seller
whether or not such employees become employees of Buyer, and any
and all liabilities or obligations incurred or accrued under
Benefit Plans (as hereinafter defined), including, without
limitation, contractual and statutory wage continuation,
severance, reemployment assistance, termination pay and other
benefits;
(h) any and all domestic and foreign federal,
state and local income, payroll, property, sales, use, franchise
or value added tax liabilities, imposed on Seller or with respect
to income or activities of Seller, including assessments and
governmental charges or levies imposed in respect of such taxes;
(i) any and all obligations and liabilities of
Seller arising under this Agreement (including, without
limitation, indemnification obligations and obligations to pay
expenses arising out of this Agreement), or from its failure to
perform any of its agreements contained herein or incurred by it
in connection with the consummation of the transactions
contemplated hereby, or for which Seller is responsible under this
Agreement, including, without limitation, fees of lawyers,
accountants and other advisors;
(j) any and all liabilities and obligations with
respect to claims, suits, legal, administrative, arbitral or other
actions, proceedings and judgments with respect to causes of
action or disputes arising, and other non-contractual liabilities
of Seller asserted or imposed, or arising out of, any events
occurring, or circumstances or state of facts existing, on or
prior to the Closing Date, or any product liability or warranty
claim with respect to products sold, licensed or distributed or
services rendered by Seller prior to the Closing Date;
(k) any and all leases of real property or
improvements thereon, including, without limitation, any and all
premises occupied by Seller, all leases of tangible personal
property not specifically assumed pursuant to the Liabilities
Undertaking hereto; and
(l) any commitment, liability or obligation under
any contracts or other agreements other than those liabilities
under the Contracts specifically assumed by Buyer pursuant to the
Liabilities Undertaking.
2.4 Collection of Accounts Receivable. Without
limiting Section 3.2(b) hereof, Seller agrees that after the
Closing Date Buyer shall have the right and authority to collect
for its own account all Receivables and other items which shall be
included within the Purchased Assets and to endorse with the name
of Seller any checks received on account of any such Receivables
or other items.
CONTEMPORANEOUS ACTIONS AND DELIVERIES; OTHER AGREEMENTS
3.1 Contemporaneous Actions and Deliveries.
Contemporaneously with the execution and delivery of this
Agreement, Seller and/or Buyer have taken the following actions
and executed and/or delivered the following agreements, assets and
documentation:
(a) Seller and Buyer have entered into the License
Agreement attached as Exhibit 3.1(a) hereto (the "License
Agreement").
(b) Seller has loaned to Buyer until the Closing
(at which time it will be transferred to Buyer) the hardware,
Business Materials and other tangible assets necessary to enable
Buyer to exploit the License, including, without limitation, those
assets listed on Schedule 3.1(b) hereto (the "Loaned Assets").
(c) ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
Lancer Holdings, Inc. and Midland Associates have each entered
into the voting agreements with respect to the shares of preferred
stock or common stock owned by them, attached as Exhibit 3.1(c)
hereto (the "Voting Agreements").
(d) ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to Seller, has
delivered to Buyer the legal opinion with respect to the
transactions contemplated hereby attached as Exhibit 3.1(d) hereto
(the "Signing Legal Opinion").
(e) ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (collectively,
the "Designated Employees") have each terminated their employment
with Seller and entered into an Employment Agreement with Buyer,
in the form attached as Exhibit 3.1(e)(i) and Exhibit 3.1(e)(ii)
hereto, respectively (the "Employment Agreements")
(f) Seller has delivered to Buyer a certificate of
the Secretary or an Assistant Secretary of Seller, dated the date
hereof as to (i) the resolutions of the Board of Directors of
Seller authorizing the execution, delivery and performance of this
Agreement and the License Agreement, and the consummation of the
transactions contemplated herein and therein; and (ii) the
incumbency and signatures of the officers of Seller executing all
such agreements.
3.2 Operation of the Business. (a) Commencing with
the date hereof, Seller hereby irrevocably appoints Buyer as its
exclusive agent to operate the Business on behalf of Seller,
including, without limitation, the exclusive right to develop,
market, license and support the Programs and to service, on a
subcontract basis, the IBM Agreement and all of the Assumed
Contracts (as hereinafter defined). Between the date hereof and
the Closing (and thereafter if the Closing shall occur), Seller
shall not incur any obligations, grant any licenses, contract on
behalf of or otherwise take part in any of the operations of the
Business without the prior written consent of Buyer. In
connection therewith, Buyer agrees to perform, in accordance with
the terms thereof, the unperformed and unfulfilled obligations of
Seller to perform maintenance and support services from and after
the date hereof under the IBM Agreement and the Assumed Contracts,
and to assume those contractual liabilities of Seller specifically
listed on Schedule 3.2 hereto (the "Assumed Liabilities"). Except
for the Assumed Liabilities (and from and after the Closing Date,
those liabilities specifically listed on the Liabilities
Undertaking), Buyer shall not assume or be responsible for any
debts, commitments, obligations or liabilities of Seller of any
nature whatsoever. Buyer also agrees that (i) it will not amend
the IBM Agreement or any of the Assumed Contracts until such time
as such contract shall have been assigned to Buyer, or incur any
contractual obligation on behalf of Seller without Seller's prior
written consent if Seller would be required to assume, perform or
satisfy such obligation in the event that the Closing does not
occur, and (ii) it shall commence a reasonable sales effort with
respect to the licensing of the COPERNICUS Programs and shall
otherwise conduct the Business in a commercially reasonable
manner. Without in any way limiting Buyer's rights under the
License Agreement, the foregoing authorization shall terminate in
the event that the Closing shall not occur within one hundred
eighty (180) days from the date hereof.
(a) Subject to the royalty payable under the License
Agreement, from and after the date hereof, as its fee for
performing Seller's obligations under the IBM Agreement and the
Assumed Contracts and assuming the Assumed Liabilities, Buyer
shall be entitled to receive and retain any and all amounts paid
and payable from and after the date hereof to Seller in respect of
the IBM Agreement and the Assumed Contracts, including, without
limitation, those payments in respect of accounts receivable and
work-in-process in existence on or prior to the date hereof. In
the event that any such amounts are received by Seller and not
promptly paid over to Buyer, Buyer shall be entitled to deduct all
such unpaid amounts from the Closing Payment.
(b) Notwithstanding the foregoing, in the event
that Shareholder Authorization (as hereinafter defined) shall not
be obtained and the Closing shall not occur, following the
termination of this Agreement, Buyer shall return to Seller the
Loaned Assets (in as-is condition and subject to depletion due to
use) and Seller shall once again be entitled to operate the
Business, subject only to the License Agreement, with respect to
all industries other than the Licensed Industries. It is hereby
understood and agreed that the License Agreement (and the
provisions of this Agreement incorporated into the License
Agreement by reference) shall survive any such termination of this
Agreement and Buyer shall be entitled to retain all of the rights
granted pursuant to the License Agreement.
3.3 Liabilities Adjustment. Without limiting any of
its rights under the Agreement, and except for Assumed
Liabilities, at or prior to the Closing, Buyer may, but shall have
no obligation to, assume all other trade and other accounts
payable and accrued expenses payable and other indebtedness and
liabilities of Seller of or related to the Business, and reduce
the Closing Payment dollar-for-dollar by the amount of any such
liabilities of Seller so assumed (the "Liabilities Adjustment").
Buyer agrees to give Seller not less than five (5) days prior
written notice of its intention to assume and satisfy any such
liabilities of Seller.
3.4 Further Assurances. At any time and from time to
time after the date hereof, at Buyer's request, and without
further consideration therefor, Seller will execute and deliver
such other instruments or agreements as Buyer may reasonably deem
necessary in order more effectively to transfer to Buyer, and to
confirm Buyer's interest in, the License, and to assist Buyer in
exercising all rights with respect thereto. Buyer and Seller
hereby agree to cooperate to effectively vest in Buyer the rights
transferred to Buyer pursuant to this Article 3.
3.5 Capitalization of Buyer. Buyer will capitalize
itself with not less than four million dollars ($4,000,000) within
seven (7) days of the date hereof, and agrees to maintain not less
than two million dollars ($2,000,000) in a liquid investment or
money market account until the earlier to occur of (a) the Closing
and (b) July 17, 1997.
4
Closing; Deliveries; Conditions Precedent.
4.1 Closing. (a) The Closing under this Agreement
(the "Closing") shall take place at the offices of Golenbock,
Eiseman, Assor & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, at 10:00 A.M. local time on June 20, 1997, or such other
date, place or time as the parties hereto shall mutually agree
upon (the date of the Closing being called the "Closing Date").
In the event either of the parties is entitled not to close on the
scheduled date because a condition to the Closing set forth in
Section 4.5 or 4.6 hereof has not been met (or waived by the party
or parties entitled to waive it), such party may postpone the
Closing from time to time until the condition has been met,
but in no event to a date later than December 31, 1997. Any such
postponement shall not effect the rights or remedies to which a
party is entitled to in respect of any breach of non-compliance
with this Agreement.
(a) All proceedings to be taken and all documents
to be executed and delivered by all parties at the Closing shall
be deemed to have been taken and executed simultaneously and no
proceedings shall be deemed taken nor any documents executed or
delivered until all have been taken, executed and delivered.
4.2 Deliveries of Seller. At the Closing Seller shall
deliver to Buyer:
(a) the ▇▇▇▇ of Sale, executed by Seller;
(b) an Assignment of Copyrights in the form of
Exhibit 4.2(b)-1 hereto, an Assignment of Patents in the form of
Exhibit 4.2(b)-2, and an Assignment of Trademarks in the form of
Exhibit 4.2(b)-3, in each case in recordable form, each executed
by Seller (collectively, the "Proprietary Rights Assignments");
(c) possession and control over, (i) the Programs
in machine readable Object Code and Source Code for computers,
(ii) the Programs' Documentation in machine readable form or in
paper or in other electronic medium (including, but not limited to
user Documentation, technical Documentation, production materials
and marketing materials) in the possession of Seller, (iii) a
copy (in paper and electronic form) of the Lists, (iv) copies of
all agreements, commitments, records and other data relating to
the Purchased Assets reasonably necessary for the marketing and
licensing of the Programs by Buyer, (v) all master artwork in
existence on the Closing Date used for current advertising and
packaging in suitable form, and (vi) all Business Materials and
other tangible and intangible property constituting part of the
Purchased Assets; and
(d) Instruments of Assignment and Assumption in
the forms attached as Exhibit 4.2(d) hereto (each a "Contract
Assignment" and collectively the "Contract Assignments"), with
respect to the Worldwide Vendor Agreement and related agreements
between Seller and International Business Machines Corporation
(the "IBM Agreement") and each of the other Contracts listed on
Schedule 4.2(d) hereto (the "Assumed Contracts"), executed by
Seller as assignor and, if such consent is required by the terms
of such Contract, consented to in writing (in form and substance
reasonably required by Buyer) by each applicable contracting
party; and together with the IBM Agreement and each such Contract
Assignment, the form of Estoppel Certificate attached to the
Contract Assignments, executed by each applicable contracting party;
(e) a Confidentiality and Non-Competition
Agreement in favor of Buyer in the forms of Exhibit 4.2(e) hereto,
executed by Seller, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ (collectively,
the "Non-Compete Agreements"), provided that ▇▇▇▇ ▇▇▇▇▇ shall only
be required to be a party to the Non-Compete in the event that he
shall not then be bound by the terms of the Employment Agreement
with Buyer;
(f) the legal opinion of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP in
the form of Exhibit 4.2(f), hereto, executed by ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
LLP (the "Closing Legal Opinion");
(g) a long form certificate of subsistence of
Seller, issued as of a recent date by the Secretary of State of
the State of New York;
(h) written confirmation from Seller to Buyer, in
form and substance reasonably acceptable to Buyer, that effective
upon the Closing, the License Agreement shall terminate and be of
no further force and effect;
(i) a certificate of the Secretary or an Assistant
Secretary of Seller, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer, as to (i) the resolutions of the
Board of Directors of Seller authorizing the execution, delivery
and performance of this Agreement and each exhibit hereto to which
it is a party and the consummation of the transactions
contemplated herein and therein; (ii) certification that
Shareholder Authorization has been duly and properly
obtained, and
(iii) the incumbency and signatures of the officers of Seller
executing this Agreement and any Seller Documents (as hereinafter
defined); and
(j) all other documents, materials, items and
property required by the terms of this Agreement to be delivered
to Buyer under or to effect the provisions of this Agreement.
4.3 Deliveries of Buyer. At the Closing, Buyer will
deliver to Seller or the Escrow Agent, as the case may be:
(a) the Closing Payment to Seller;
(b) the Escrow Fund to the Escrow Agent;
(c) the Escrow Agreement, executed by Buyer;
(d) the Liabilities Undertaking, executed by
Buyer;
(e) the legal opinion of Golenbock, Eiseman, Assor
& ▇▇▇▇ in the form of Exhibit 4.3(e) hereto, executed by
Golenbock, Eiseman, Assor & ▇▇▇▇;
(f) a certificate of good standing of Buyer,
issued as of a recent date by the Secretary of State of the State
of Delaware;
(g) a certificate of the Secretary or an Assistant
Secretary of Buyer, dated the Closing Date, in form and substance
reasonably satisfactory to Seller, as to (i) the resolutions of
the Board of Directors of Buyer authorizing the execution delivery
and performance of this Agreement and each exhibit hereto to which
it is a party and the consummation of the transactions
contemplated herein and therein; and (ii) the incumbency and
signatures of the officers of Buyer executing this Agreement and
each exhibit hereto to which it is a party; and
(h) all other documents required by the terms of
this Agreement to be delivered to Seller at the Closing under or
to effect the provisions of this Agreement.
4.4 Further Assurances. At any time and from time to
time after the Closing, at Buyer's request, and without further
consideration therefor, Seller will execute and deliver such other
instruments of sale, transfer, conveyance, assignment and
confirmation as Buyer may reasonably deem necessary in order more
effectively to transfer, convey and assign to Buyer, and to
confirm Buyer's title to, all of the Purchased Assets, whether
tangible or intangible, to put Buyer in actual possession and
operating control thereof, and to assist Buyer in exercising all
rights with respect thereto. Buyer and Seller hereby agree to
cooperate to effectively transfer the Business to Buyer.
4.5 Conditions Precedent of Buyer. The obligations of
Buyer under this Agreement to proceed with the purchase and other
transactions contemplated hereby, are, at the option of Buyer in
its sole discretion, subject to the fulfillment of all of the
following conditions at or prior to the Closing, and Seller shall
use its best efforts to cause each such condition to be fulfilled:
(a) No Litigation. No action, suit, proceeding or
investigation shall have been instituted against Buyer or Seller
and be continuing before or by any court, tribunal or governmental
body or agency or have been threatened, and be unresolved, to
restrain or prevent, or to obtain substantial damages by reason
of, any of the transactions contemplated hereby;
(b) Representations. The representations and
warranties of Seller contained in this Agreement, and any
Schedules hereto and any certificate or documents delivered in
accordance with this Agreement shall be true and correct at the
time of the Closing with the same force and effect as though such
representations and warranties were made at that time except for
changes expressly permitted by this Agreement;
(c) Performance of Covenants. Each covenant,
agreement and obligation required by the terms of this Agreement
to be complied with and performed by Seller at or prior to the
Closing shall have been duly and properly complied with and
performed;
(d) No Material Adverse Change. Since the date of
this Agreement, there shall not have occurred any material adverse
change in the condition (financial or otherwise), business,
properties, assets, liabilities, prospects or results of Seller or
the Business, or in the value or utilizability of the Purchased
Assets to Buyer, except for such change caused by Buyer in
connection with its operation of the Business following the date
hereof (it being acknowledged by Buyer that the continued
deterioration in Seller's working capital position consistent
with
recent months, absent any other adverse change or occurrence not
contemplated by this Agreement, shall not constitute a material
adverse change for purposes of this Section 4.5(d);
(e) Assignment of IBM Agreement; No Cancellation.
All consents necessary to the assignment of the IBM Agreement
shall have been obtained by Seller, and there shall have been
delivered to Buyer an executed counterpart reasonably satisfactory
in form and substance to Buyer and its counsel of such consent and
IBM shall not have notified Seller or Buyer of its intent to
terminate the IBM Agreement;
(f) Consents. All consents necessary to the
assignment of the Assumed Contracts shall have been obtained by
Seller, and there shall have been delivered to Buyer executed
counterparts reasonably satisfactory in form and substance to
Buyer and its counsel, of all such consents;
(g) Shareholder Authorization. This Agreement and
each exhibit hereto to which Seller is a party shall have been
duly authorized, and the consummation of the transactions
contemplated hereby and thereby shall have been duly approved, by
written consent or affirmative vote of the requisite holders of
shares of capital stock of Seller entitled to vote thereon and by
the written consent or affirmative vote of the requisite holders
of the shares of each class and series of capital stock of Seller
entitled to vote thereon, as required by the New York Business
Corporation Law, as amended (the "NYBCL"), the Certificate of
Incorporation of Seller and all applicable federal and state
securities laws ("Shareholder Authorization");
(h) Certificate. There shall have been delivered
to Buyer a certificate executed by the President of Seller, dated
the date of the Closing, certifying that the conditions set forth
in subsections (a) through (f) of this Section 4.5 have been fulfilled;
(i) Certain Agreements. Each other document,
instrument and agreement contemplated by Section 4.2 shall have
been executed and delivered by each party thereto other than
Buyer; and
(j) Opinion of Counsel. Buyer shall have received
the Closing Legal Opinion, in form and substance reasonably
satisfactory to Buyer.
4.6 Conditions Precedent of Seller. The obligations of
Seller under this Agreement to proceed with the sale contemplated
hereby and to proceed with the other transactions contemplated
hereby, are, at the option of Seller in its sole discretion,
subject to the fulfillment of all of the following conditions at
or prior to the Closing, and Buyer shall use its best efforts to
cause each such condition to be fulfilled:
(a) No Litigation. No action, suit, proceeding or
investigation shall have been instituted against Buyer or Seller
and be continuing before or by any court, tribunal or governmental
body or agency or have been threatened, and be unresolved, to
restrain or prevent, or to obtain substantial damages by reason
of, any of the transactions contemplated hereby;
(b) Representations. The representations and
warranties of Buyer contained in this Agreement or any
certificates or documents delivered in accordance with this
Agreement shall be true and correct at the time of the Closing
with the same force and effect as though such representations and
warranties were made at that time except for changes expressly
permitted by this Agreement;
(c) Performance of Covenants. Each covenant,
agreement and obligation required by the terms of this Agreement
to be complied with and performed by Buyer at or prior to the
Closing, shall have been duly and properly complied with and
performed;
(d) Certificate. There shall have been delivered
to Seller a certificate executed by an officer of Buyer, dated the
date of the Closing, certifying that the conditions set forth in
subsections (a), (b) and (c) of this Section 4.6 have been
fulfilled;
(e) Certain Agreements. Each other document,
instrument and agreement contemplated by Section 4.3 shall have
been executed and delivered by each party thereto other than
Seller; and
(f) Shareholder Authorization. Shareholder
Authorization shall have been obtained.
5
Representations and Warranties of Seller.
Seller hereby represents and warrants to Buyer as follows:
5.1 Organization, Standing and Qualification;
Subsidiaries. (a) Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State
of New York and has all requisite power and authority and is
entitled to own, lease and operate its properties and to carry on
its business as and in the places such properties are now owned,
leased or operated and where such business is presently conducted.
Seller is qualified to do business and is in good standing in
each state or jurisdiction listed in Schedule 5.1 of the
Disclosure Schedule delivered by Seller in connection and
concurrently with the execution and delivery of this Agreement
(the "Disclosure Schedule"), which states constitute all states in
which the failure to be so qualified could have a material adverse
effect on the condition (financial or otherwise), business,
properties, assets, liabilities, prospects or results of the
operations of Seller. The copies of the Certificate of
Incorporation and By-Laws of Seller delivered by Seller to Buyer
are complete and correct.
(a) No part or aspect of the Business has been
conducted through any direct or indirect subsidiary or any direct
or indirect affiliate of Seller.
5.2 Authority; Options. (a) Seller has all requisite
power and authority to enter into this Agreement, and each other
agreement, document and instrument to be executed or delivered by
it in accordance with this Agreement, including, without
limitation, the License Agreement, the ▇▇▇▇ of Sale, the
Proprietary Rights Assignments and the Contract Assignments (the
"Seller Documents"), and to carry out the transactions
contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Seller Documents by Seller
have been duly authorized and approved by its board of directors
and, except for Shareholder Authorization (as hereinafter
defined), no other corporate proceedings on the part of Seller are
necessary to authorize this Agreement, the Seller Documents and
the transactions contemplated hereby and thereby, provided,
however, that the consent or approval by the shareholders of
Seller is not required for Seller to enter into the License
Agreement in order to have such agreement be a legal, valid and
binding obligation of Seller enforceable in accordance with its
terms. This Agreement has been duly authorized, executed and
delivered by Seller and is the legal, valid and binding obligation
of Seller enforceable in accordance with its terms, and each of
the Seller Documents has been duly authorized by Seller and is, or
upon execution and delivery by Seller of any thereof at the
Closing will be, a legal, valid and binding obligation of Seller
enforceable in accordance with its terms.
(a) Except as set forth on Schedule 5.2(b) of the
Disclosure Schedule, there are no outstanding subscriptions,
options, warrants, calls, puts, contracts, demands, commitments,
convertible securities or other agreements or arrangements of any
character or nature whatever under which Seller or any shareholder
or trustee thereof or holder of a beneficial interest therein is
or may become obligated to issue, assign, purchase, acquire or
transfer, (i) shares of the capital stock or securities of, or
beneficial interest or equity interests in, Seller, or (ii) any of
the Purchased Assets (except for non-exclusive licenses entered
into in the ordinary course of business on customary terms and
conditions).
5.3 No Violation. Except as required under the NYBCL
and the Securities Exchange Act of 1934, as amended (the "1934
Act"), and except as set forth in Schedule 5.3 of the Disclosure
Schedule, neither the execution or delivery of this Agreement, nor
the consummation of the transactions contemplated herein, will
with or without the giving of notice or the lapse of time or both
(a) violate or conflict with any provision of Seller's Certificate
of Incorporation or Bylaws, as each may have been amended, (b)
result in (i) a breach of, or violate, or be in conflict with or
constitute a default under, or result in the termination or
cancellation of, or accelerate the performance required under, any
security instrument, mortgage, note, debenture, indenture, loan,
lease, contract, agreement or other instrument, to which Seller is
a party or by which it or any of its properties or assets are
bound, or (ii) the loss or adverse modification of any lease,
franchise, license or other contractual right or other
authorization granted to or otherwise held by Seller or with
respect to the Purchased Assets, (c) require the consent of any
party to any such agreement or commitment to which Seller is a
party or by which any of its properties or assets are bound, (d)
result in the creation or imposition of any Lien upon any property
or assets of Seller, (e) require any consent, approval,
authorization, order, filing, registration or qualification of or
with any court or governmental authority or arbitrator to which
Seller is subject or by which any of its properties or assets may
be bound or affected.
5.4 Financial Statements. Seller has delivered to
Buyer copies of the audited and unaudited financial statements of
Seller listed on Schedule 5.4 of the Disclosure Schedule (the
"Financial Statements"), including without limitation, the audited
balance sheet of Seller as at March 31, 1996 (the "Balance Sheet")
and the unaudited balance sheet and income statement of Seller for
the quarter ended March 31, 1997. All of the Financial Statements
are complete and correct, have been prepared from the books and
records of Seller in accordance with generally accepted accounting
principles consistently applied and maintained throughout the
periods indicated and fairly present the financial condition of
Seller as at their respective dates and the results of operations
of Seller for the periods covered thereby. Such Financial
Statements do not contain any items of special or nonrecurring
income or any other income not earned in the ordinary course of
business except as expressly specified therein, and include all
adjustments, which consist only of normal recurring accruals,
necessary for such fair presentation.
5.5 Absence of Undisclosed Liabilities. Except as and
to the extent reflected or reserved against on the face of the
Balance Sheet (including the notes thereto), or set forth on
Schedule 5.5 of the Disclosure Schedule, as of the Balance Sheet
Date, Seller had no material debts, liabilities or obligations
(whether absolute, accrued, contingent or otherwise) relating to
or arising out of any act, transaction, circumstance or state of
facts which occurred or existed on or before March 31, 1996 (the
"Balance Sheet Date"), whether or not then known, due or payable.
5.6 Absence of Changes or Events. Except as set forth
on Schedule 5.6 of the Disclosure Schedule, since the Balance
Sheet Date Seller has conducted its business only in the ordinary
course in a manner consistent with past practices. Without
limiting the foregoing, since such date, Seller has not:
(a) incurred any obligation or liability,
absolute, accrued, contingent or otherwise, whether due or to
become due, except current liabilities for trade or business
obligations incurred in the ordinary course of business and
consistent with its prior practice, none of which liabilities, in
any case or in the aggregate, materially and adversely affects the
condition (financial or otherwise), prospects or results of
operations of Seller or the Business or the Purchased Assets;
(b) mortgaged, pledged or subjected to any Lien
any of its property, business or assets, tangible or
intangible;
(c) sold, transferred, leased to others or
otherwise disposed of any assets used in or necessary to conduct
the Business, or licensed any of the Programs, or canceled or
compromised any material debt or claim, or waived or released any
right of substantial value of or relating to the Purchased Assets
and/or the Business;
(d) received any notice of actual or threatened
termination of any contract, lease or other agreement or other
business relationship or suffered any damage, destruction or loss
(whether or not covered by insurance) which, in any case or in the
aggregate, has had or could have a materially adverse effect on
the condition (financial or otherwise), prospects or results of
operations of Seller or of or on the Business or the Purchased
Assets;
(e) encountered any labor union organizing
activity, had any actual or threatened employee strikes, work-
stoppages, slow downs or lockouts, or had any material change in
its relations with its employees, agents, customers or suppliers
or any governmental regulatory authority or self-regulatory
authorities;
(f) made any capital expenditures or capital
additions or betterment in excess of an aggregate of $250,000;
(g) transferred or granted any rights under, or
entered into any settlement regarding the breach or infringement
of, any license, patent, copyright, trademark, trade name, service
▇▇▇▇ or other Proprietary Rights, or modified any then existing
rights with respect thereto of or relating to the Purchased Assets
and/or the Business;
(h) instituted, settled or agreed to settle any
litigation, action or proceeding before any court or governmental
body relating to Seller or any of its assets, properties or rights;
(i) suffered any damage, destruction, loss,
change, event or condition which, in any case or in the aggregate,
has had or may have a material adverse effect on the condition
(financial or otherwise), prospects or results of operations of
Seller or of or on the Business or the Purchased Assets,
including, without limitation, any change in revenues, costs,
levels or types of warranty or defective product claims, or
relations with employees, landlords, agents, customers or
suppliers;
(j) entered into any transaction, contract or
commitment other than in the ordinary course of business, or paid
or agreed to pay any brokerage, finder's fee, or other
compensation in connection with, or incurred any severance pay
obligations or "break-up" fee obligations by reason of, this
Agreement or the transactions contemplated hereby;
(k) received any notice from any customer or
supplier that it, nor has knowledge that any customer or supplier,
intends to cease doing business with Seller, which, in any case,
has had or could have a material adverse effect on the condition
(financial or otherwise), prospects or results of operations of
Seller or of or on the Business or the Purchased Assets;
(l) made any purchase commitment in excess of the
normal, ordinary and usual requirements of the Business or made
any material change in its selling, pricing, advertising or
personnel practices inconsistent with Seller's prior practice
relating to the Business; or
(m) entered into any agreement or made any
commitment to take any of the types of actions described in any of
subsections (a) through (m) above.
5.7 Title to and Condition of Purchased Assets; Leases.
(a) Seller does not own any real property. Except for the
assets subject to Personal Property Leases (as hereinafter
defined), Seller has good and marketable title to all of the
Purchased Assets which it owns or uses in the Business or purports
to own. Except as set forth in Schedule 5.7(a) of the Disclosure
Schedule, none of the Purchased Assets are subject to any Lien of
any nature whatsoever, direct or indirect, whether accrued,
absolute, contingent or otherwise.
(a) All of the tangible Purchased Assets are in
good operating condition and repair, are suitable for the purposes
used and are adequate and sufficient for the operation of the
Business. Seller enjoys peaceful possession of all leasehold
interests and personal property constituting any part of the
Purchased Assets and held under lease or license.
(b) The Purchased Assets constitute all of the
assets, properties, and rights necessary to conduct the Business
as presently conducted (other than an office, office supplies and
telephones). None of the Excluded Assets are assets, properties
or rights necessary to conduct the Business as presently
conducted. The Subsidiary Businesses do not compete or conflict
with the Business.
(c) Seller has delivered to Buyer true and
complete copies of each of the Contracts prior to the execution of
this Agreement. To the best of Seller's knowledge, all of the
Contracts are in full force and effect with respect to Seller in
accordance with their terms and there is no violation or default
under the Contracts and to the best of Seller's knowledge no event
has occurred or circumstance exists which with notice or lapse of
time or both would constitute an event of default, or give rise to
a right of termination or cancellation, or result in the loss or
adverse modification of any right or benefit thereunder. No party
to any Contract has given Seller written notice of or made a claim
with respect to, and Seller is not otherwise aware of, any
material breach or default under any thereof. To the best of
Seller's knowledge, Seller enjoys peaceful possession and quiet
enjoyment of the Purchased Assets, tangible and intangible, held
under license; and all such licenses are in good standing, in full
force and effect and are valid, binding and enforceable
obligations of Seller, and to the best of Seller's knowledge, of
the licensors thereunder. None of the Contracts impose any
obligation on Seller other than to provide service in the ordinary
course. Except as set forth on Schedule 5.7(d) to the Disclosure
Schedule, there have been no oral or written modifications to the
terms or provisions of any of the Contracts. No amount payable or
reserved under any Contract has been assigned or anticipated and
no amount payable under any Contract is in arrears or has been
collected in advance and to the best of Seller's knowledge, there
exists no offset or defense to payment of any amount under a
Contract.
5.8 Proprietary Rights. (a) Seller owns or possesses
the perpetual and royalty-free licenses and other rights to use
all Proprietary Rights used in or necessary to conduct the
Business as it is presently operated, including, without
limitation, any necessary to develop, market, license and support
the Programs, all of which are in good standing and uncontested
and free and clear of any Liens and rights of others of any kind.
No Proprietary Rights are owned or licensed or held by any
shareholder, director, officer, consultant or employee of Seller,
or by any entity controlled by or affiliated with Seller or by any
of such persons, including, without limitation, Management
Technologies, Inc., Lancer Holdings, Inc., or Midland Associates,
all such Proprietary Rights being owned or licensed by Seller
itself. Except as set forth on Schedule 5.8(a) of the Disclosure
Schedule, to the best of Seller's knowledge, Seller is not
infringing upon or otherwise acting adversely to any copyrights,
trademarks, trademark rights, service marks, service names,
trade names, patents, patent applications, licenses or trade
secrets or other proprietary rights or intellectual property of any
other person or entity. No claim, suit, demand, proceeding or
investigation is pending, has been asserted or is threatened
by or against Seller with respect to, based on or alleging
infringement of any such rights or the proprietary rights or intellectual
property of any third party, or challenging the validity or
effectiveness of any license for such rights, and Seller knows of
no basis for any such claim, suit, demand, proceeding or investigation.
(a) Seller has the exclusive right to manufacture,
develop, publish, market, license and sell the Programs. Except
as set forth on Schedule 5.8(b)(i) of the Disclosure Schedule, no
person or entity other than Seller may manufacture, develop,
publish, market, license or sell all or any part of the Programs
without the prior consent of Seller (in Seller's sole discretion)
and Seller has not given any such consent and Seller owns all
right, title and interest in and to the Programs and the exclusive
right to apply for copyright and patent protection therefor. To
the best of Seller's knowledge, no director, officer, employee or
independent contract of Seller has in his or her personal
possession outside the offices of Seller, for safekeeping,
convenience of work or otherwise, any proprietary material of
Seller. None of the individuals or entities who have performed
services in connection with the development of any of the
Programs, as employees or as independent contractors, or any other
employee of Seller, holds any proprietary or other ownership
rights with respect to such Programs and each of such employees
and independent contractors has signed an employment contract or
confidentiality agreement with Seller in the form annexed to
Schedule 5.8(b)(ii) of the Disclosure Schedule, which contains a
covenant prohibiting the use or disclosure of confidential
information and proprietary rights.
(b) Except for commercially available off-the-
shelf software and software which is otherwise available in the
public domain, and except for the software used solely in
connection with the Subsidiary Businesses, Schedule 5.8(c)(i) of
the Disclosure Schedule contains a true and complete list of all
software licensed to, owned, developed, or published by Seller,
including, without limitation, the Programs, as well as a
description of any instructions or sequences of instructions, in
whatever form embodied, which are included in any of the Programs
and which requires the consent (whether subject to royalty or
otherwise) of a party other than Seller in order for any of
the Programs to be sold, transferred, used, licensed, updated,
enhanced or modified or integrated with other software by Seller,
Buyer or any other party together with true and correct copies of
all contracts between or among a Seller, on the one hand, and such
authors or licensors, on the other hand. There has been no
publication or public distribution of any of the Source Code of
any of the Programs that would in any way affect the right of
Seller or Buyer to seek copyright protection for such Programs.
With respect to the Contracts pertaining to Programs entered into
by Seller, Seller has licensed the Programs and not sold them,
thus retaining ownership of the underlying software, and has not
granted any exclusive licenses in respect thereof. Seller is not
aware of any claims actually or purporting to be within the scope
of any warranty coverage, express or implied, afforded to licensees of any
Programs or of any errors, omissions or
failures to perform. There are no bugs in the Programs reasonably
detectable with normal use of the Programs except as set forth in
Schedule 5.8(c)(ii) of the Disclosure Schedule, all of which can
be corrected by Buyer without unreasonable effort or expense.
(c) Seller is not a party to or bound by any oral
or written contract or understanding relating to or which might
interfere with the full exploitation of any rights or property
being transferred to Buyer under this Agreement or which restricts
its right to enter into this Agreement or to perform in accordance
herewith. Seller has not entered into any agreements not conveyed
herein to Buyer which involves the publication, development,
manufacture or marketing of any computer software in substantial
competition with any of the Programs; and has not entered into any
transactions with respect to any assets, liabilities or business
operations referred to or contemplated by this Agreement with any
party other than Buyer, except in the ordinary course of business.
Except as set forth on Schedule 5.8(d) of the Disclosure
Schedule, no part of any of the Proprietary Rights, including,
without limitation, any source code, is subject to or held in
escrow or is in any third party's possession.
5.9 Litigation. (a) Except as set forth on Schedule
5.9(a) of the Disclosure Schedule, there is no action, suit,
proceeding, arbitration or investigation pending against, asserted
by, or affecting Seller or the transactions contemplated by this
Agreement, nor to the best of the knowledge of Seller, any basis
therefor or threat thereof which, in any case or in the aggregate,
could if adversely determined have a material adverse effect on
the business, assets, liabilities, operations or financial
condition of Seller, the Business or the Purchased Assets or the
use thereof by Buyer. Neither Seller nor any of its subsidiaries
is subject to any court or administrative order, writ, injunction
or decree, applicable to it or to its business, property or
employees, nor is it in default with respect to any order, writ,
injunction or decree, of any court or federal, state, municipal or
other governmental department, commission, board, agency or
instrumentality, domestic or foreign.
(a) Schedule 5.9(b) of the Disclosure Schedule
sets forth a complete list and description of all defective
product or service warranty and/or third party liability claims,
made against Seller during the past three years, together with the
resolution thereof (whether under insurance policies or otherwise).
5.10 Compliance; Permits. (a) Neither Seller, nor any
officer or director thereof has violated any law, rule,
regulation, order, judgment or decree applicable to Seller, any of
its employees, any of the Purchased Assets and/or any aspect of
the Business, including without limitation, any laws, rules,
regulations, ordinances, codes, orders, judgments or decrees as to
zoning, building requirements or standards, import, export,
environmental, health and/or safety matters, which violation could
have a material adverse effect on the condition (financial or
otherwise), business, properties, assets, liabilities, prospects
or results of the operations of Seller, the Purchased Assets or
the Business. Seller has all licenses, consents, certificates,
franchises, permits, and authorizations issued by any department,
board, commission, bureau or instrumentality ("Governmental
Licenses") necessary to conduct the Business in the manner that it
is currently conducted by it, and none of operations of Seller are
being conducted in any manner which violates in any material
respect any of the terms of conditions under which such
Governmental License was granted. Each Governmental License has
been duly obtained, is valid and in full force and effect, and is
not subject to any pending or, to the knowledge of Seller,
threatened administrative or judicial proceeding to revoke, cancel
or declare such Governmental License invalid in any respect. No
Governmental Licenses by their terms will terminate or lapse by
reason of the transaction contemplated by this Agreement.
5.11 Absence of Certain Business Practices. Neither
Seller nor any officer, employee or agent of Seller, nor any other
person acting on its behalf, has, directly or indirectly, within
the past five years given or agreed to give any gift or similar
benefit to any customer, supplier, governmental employee or other
person who is or may be in a position to help or hinder the
business of Seller (or assist Seller in connection with any actual
or proposed transaction) which (a) might subject Seller to any
damage or penalty in any civil, criminal or governmental
litigation or proceeding, (b) if not given in the past, might have
had an adverse effect on the assets, business or operations of
Seller or the Business, or (c) if not continued in the future,
might adversely affect Seller's assets, business, operations or
prospects or the Business or which might subject Seller to suit or
penalty in any private or governmental litigation or proceeding.
5.12 Schedules. Schedule 5.12 of the Disclosure
Schedule hereto contains a true, complete and accurate list and
description of the following:
(a) all real property in which Seller has an
ownership, leasehold or other interest or which is used by Seller
in connection with the conduct of its business (the "Properties");
(b) all material items of hardware and other
equipment, owned, leased or used by Seller in the Business, and
setting forth with respect to all such listed property a summary
description of all leases relating thereto, identifying the
parties thereto, the rental or other payment terms, expiration
date and cancellation and renewal terms thereof (the "Personal
Property Leases");
(c) all sales, agency, supply, purchase,
distribution, OEM, VAR, dealer, advertising, promotional, support,
maintenance, outsourcing, manufacture and fulfillment agreements
or franchises, and agreements for software acquisition,
development agreements, author agreements and publishing
agreements of or relating to the Purchased Assets or the Business,
and all agreements providing for the services of an independent
contractor to which Seller is a party or by which it is bound and
which relate to any of the Purchased Assets or the conduct of the
Business, including, without limitation, a true and complete
itemized description of all contracts between Seller and software
developers, licensors and authors or pursuant to which any royalty
or similar payment shall be payable;
(d) all contracts, agreements, commitments,
purchase orders, leases, licenses or other understandings or
arrangements to which Seller is a party or by which it or any of
its property is bound or affected, relating to the Business,
except for (i) those listed on Schedule 5.12(c) of the Disclosure
Schedule (ii) entered into in the ordinary course of business that
are terminable by Seller on less than 30 days' notice without any
penalty or consideration, and (iii) involve payments or receipts
during the entire life of such contracts by Seller of less than
$2,000 in the case of any single contract but not more than
$10,000 in the aggregate;
(e) all guarantees, loan agreements, indentures,
mortgages and pledges, all conditional sale or title retention
agreements, security agreements, equipment obligations, leases or
lease purchase agreements as to items of personal property
(excluding equipment obligations, leases or lease purchase
agreements not relating to the Purchased Assets), in each case to
which Seller is a party or by which it is bound or under which it
has rights;
(f) all employment and consulting agreements,
including, without limitation, obligations for severance,
reemployment assistance, termination, deferred compensation, or
vacation pay, to which Seller is a party or by which it is bound;
(g) as of a date no earlier than May 9, 1997, all
of Seller's accounts receivables relating to or arising out of the
Business, together with information as to each such listed
receivable which has been outstanding for more than 30 days;
(h) as of a date no earlier than May 9, 1997, all
of Seller's accounts payable relating to or arising out of the
Business;
True and complete copies of all contracts,
agreements, plans, arrangements, commitments and documents
required to be listed or identified pursuant to this Section 5.12
(to the extent in writing or if not in writing, an accurate
summary thereof), together with any and all amendments thereto,
have either been delivered to Buyer or attached to Schedule 5.12
of the Disclosure Schedule.
Except as set forth on Schedule 5.12 of the
Disclosure Schedule, all of the contracts and agreements required
to be listed or identified pursuant to this Section 5.12 (other
than those which have been fully performed) are legal, valid,
binding and enforceable in accordance with their respective terms,
in full force and effect, do not require the consent or approval
of any party to the assignment thereof and will be unaffected by
the sale or other transfer of the Purchased Assets to Buyer
hereunder, and Buyer will be entitled to the full benefits
thereof, and none of such contracts and agreements is with a
governmental agency or authority. To the best of the knowledge of
Seller, there is not under any contract or agreement required to
be listed or identified pursuant to this Section 5.12 any existing
default or event which, after notice or lapse of time, or both,
would constitute a default or result in a right to accelerate or
loss of rights. There have been no oral or written modifications
to the terms or provisions of any of such agreements. No amount
payable or reserved under any such agreement has been assigned or
anticipated and no amount payable under any such agreement is in
arrears or has been collected in advance and to the best of the
knowledge of Seller, there exists no offset or defense to payment
of any amount under such an agreement.
5.13 Taxes. Seller has paid or made adequate provision
for the payment of all taxes, fees, assessments and charges,
including, without limitation, income, property, sales, use,
franchise, added value, employees' income withholding and social
security taxes, imposed by the United States or by any foreign
country, or by any state, municipality or instrumentality of any
of same or by any other taxing authority, and for all penalties
and interest thereon, which has or may become due for or during
all periods ending, and in respect of all operations, on or prior
to the Closing Date. All tax returns required to be filed in
connection therewith have been accurately prepared and filed and
all deposits required by law to be made by Seller with respect
thereto have been duly made. Seller is not a party to any pending
action, proceeding or audit by any governmental authority for
assessment or collection of any amount of taxes for which it may
be directly or indirectly liable, and there is no claim for
assessment or collection of any amount of taxes for which it may
be directly or indirectly liable.
5.14 Employee Benefits; Labor Matters. (a) All
pension, retirement, profit-sharing, deferred compensation, bonus,
incentive, medical, vision, dental and other health insurance,
life insurance or any other employees benefit plan, arrangement or
understanding and any trusts or insurance contracts maintained in
connection therewith (collectively, "Benefit Plans"), conform to,
and the administration thereof is in material compliance with, all
applicable laws and regulations, including, without limitation,
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Internal Revenue Code of 1986, as amended (the
"Code"), and comparable foreign laws, rules and regulations, and
neither the operation or administration of any such Benefit Plan,
nor the transactions contemplated by this Agreement will result in
any liability to Seller or Buyer under or in respect of any of
such Benefit Plans, in Buyer incurring or suffering any liability,
or have any adverse effect on the financial condition, assets
liabilities or results of operations of Seller, Buyer or the
Business. All contributions required, by law or by contract, to
be made to any Benefit Plans subject to ERISA or any foreign law
for any plan year, or other period on the basis of which
contributions are required, ending before the date hereof, have
been made as of the date hereof. Seller has complied in all
material respects with all reporting and disclosure requirements
with respect to each Benefit Plan. No such Benefit Plan
(including any trust created thereunder), nor any trustee or
administrator thereof, has engaged in any transaction prohibited
by ERISA or any foreign law, or by Section 4975 of the Code, which
could subject Seller, or such Plan to any penalty imposed under
ERISA or any foreign law or to any tax imposed by Section 4975 of
the Code or any foreign law or, if any such transaction has
occurred, it has been corrected within the meaning of Section 4975
of the Code or such foreign law, and all applicable taxes and
penalties with respect thereto have been paid. No "reportable
event" as that term is defined in ERISA has occurred with respect
to any of the Benefit Plans. No liability to the Pension Benefit
Guaranty Corporation or comparable foreign authority has been or
is expected to be incurred with respect to any of such Benefit
Plans. Seller does not participate, maintain or contribute to (or
within the preceding three years participated, maintained or
contributed to) and has no liability or obligation under or with
respect to any multi-employer plan governed by or subject to ERISA
or any foreign law, nor has it participated, maintained,
contributed or incurred any liability in respect of any thereof
within the last three fiscal years. Seller has no liability or
obligation with respect to any Benefit Plan or trust related
thereto that may have been terminated prior to the date
hereof.
(a) Seller has complied in all material respects
with all applicable laws, rules and regulations relating to the
employment of labor, including those relating to hiring, wages,
hours, collective bargaining and the payment and withholding of
taxes, and has withheld all amounts required by law, regulation or
agreement to be withheld from the wages or salaries of its
employees and is not liable for any arrears of wages or any taxes
or penalties for failure to comply with any of the foregoing.
Seller has not engaged in any unfair labor practice, and there is
no unfair labor practice, sexual harassment or other employment-
related complaint pending, or, to the knowledge of Seller,
threatened against Seller or any officer, director or employee
thereof. There do not exist any pending workmen's compensation
claims against Seller that are not adequately provided for by
insurance, or any pending or, to the knowledge of Seller,
threatened claims that the workplace of Seller is unsafe or that
Seller has engaged in unfair labor practices, employment
discrimination or wrongful discharge. No union, trade, guild or
collective bargaining unit represents any employees of Seller, and
no union organizing or election activities involving any non-union
employees of Seller is now in progress or, to the best of Seller's
knowledge, threatened.
5.15 Accounts Receivables. All Receivables
constituting any part of the Purchased Assets have arisen only
from bona fide transactions in the ordinary course of business and
are collectible in accordance with their terms.
5.16 Environmental Matters. (a) As a result of
Seller's action or inaction, and to the best knowledge of Seller,
no Hazardous Substance (as hereinafter defined) is present or at
any time has been stored, treated, recycled, released, disposed of
or discharged on, about, from or affecting the Properties in any
material amounts, and Seller has no liability or potential
liability which is based upon or related to the environmental
conditions under or about the Properties.
(a) Neither Seller nor, to the knowledge of
Seller, any prior or current owner, tenant or occupant of any of
Properties, has received (i) any notification or advice from or
given any report or notice to any governmental agency or authority
involving the use, handling, transport, presence, spill, escape,
leakage, release, remediation or clean-up of any Hazardous
Substance on or about any of the Properties or caused by Seller or
any affiliate of Seller or (ii) any complaint, order, citation or
notice with regard to any emission, discharge, storage or
disposal, any Hazardous Substance or any other environmental,
health or safety matter affecting any of the Properties, or any
property or location at any time occupied or used by any Seller,
under any other federal, state or local law, ordinance, rule or
regulation.
(b) To the best of Seller's knowledge, there are
no fuel or gasoline storage tanks presently in use or at any time
abandoned in, on or under any of the Properties. None of the
Properties contains any asbestos or asbestos-containing materials.
(c) The term "Hazardous Substance" as used in this
Agreement shall include, without limitation, gasoline, oil and
other petroleum products, explosives, radioactive materials and
related and similar materials, and any other substance or material
defined as a hazardous, toxic or polluting substance or material
by any federal, state or local law, ordinance, rule or regulation,
including asbestos and asbestos-containing materials, PCBs and
urea formaldehyde foam insulation.
5.17 SEC Filings. Seller has filed with the Securities
and Exchange Commission (the "SEC") all notices, prospectuses,
offering statements and registration statements required to be
filed in connection with the offer or sale of securities by Seller
under the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations promulgated thereunder. All
such notices, prospectuses, offering statements and registration
statements comply in all material respects with the requirements
of the Securities Act, and the rules and regulations promulgated
thereunder, and such notices, prospectuses, offering statements
and registration statements at the date of filing thereof with the
SEC did not contain an untrue statement of any material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading
in light of the circumstances under which they were made. In
addition, Seller has filed with the SEC all reports and proxy
statements required to be filed by Seller under the 1934 Act, and
the rules and regulations promulgated thereunder, and such reports
and proxy statements at the date of filing thereof with the SEC
did not contain an untrue statement of any material fact nor omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Seller has
delivered to Buyer copies of (i) all notices, prospectuses,
offering statements and registration statements filed with the SEC
by Seller under the Securities Act since August 11, 1995; and (ii)
all reports and definitive proxy statements filed with the SEC by
Seller under the 1934 Act since such date.
5.18 Information Statement. (a) The information
statement and related materials (collectively, the "Information
Statement") to be prepared by Seller in accordance with Section
7.7 and used in connection with Seller's Special Meeting of
Shareholders described in Section 7.8, relating to the
authorization of this Agreement, the sale of the Purchased Assets
and other transactions contemplated hereby (the "Special Meeting")
will, when prepared by Seller and distributed to the shareholders,
comply in all material respects with the provisions of the NYBCL
and the 1934 Act and the rules and regulations promulgated
thereunder and will not, at the time of the mailing of the
Information Statement to the holders of capital stock of Seller
(the "Shareholders") or at the Closing Date, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they are made, not misleading; provided, that Seller makes no
representation with respect to information concerning Buyer
supplied by Buyer to Seller for inclusion in the Information
Statement. The manner and conduct of the Special Meeting by
Seller shall comply in all material respects with the provisions
of the NYBCL and the 1934 Act and the rules and regulations
promulgated thereunder.
(a) Set forth on Schedule 5.18 to the Disclosure
Schedule is a list of not more than ten (10) persons (within the
meaning of Rule 14a-2(b)(2) promulgated under the 1934 Act),
specifying the number of shares of Common Stock or Preferred Stock
of Seller owned or believed by Seller to be controlled by each
such person and the percentage ownership of each such person based
on the number of shares entitled to be voted at the Special
Meeting. Such persons are the owners of or control the vote of
greater than two-thirds of the shares of capital stock of Seller
entitled to vote at the Special Meeting and also the requisite
number of shares of each class and series of capital stock of
Seller entitled to vote thereat and have duly and validly approved
at the Special Meeting the matters covered by the Information
Statement, as required by the NYBCL, the Certificate of
Incorporation of Seller and all applicable federal and state
securities laws.
5.19 Customers and Suppliers. Set forth in Schedule
5.19 of the Disclosure Schedule is a list of the names and
addresses of the seven (7) largest customers and the ten (10)
largest suppliers (measured by dollar volume of purchases or sales
in each case) of the Business and the percentage of the business
of the Business which each such customer or supplier represented
during each of the years ended March 31, 1997 and 1996. Except as
set forth in Schedule 5.19 of the Disclosure Schedule, there
exists no actual or threatened termination, cancellation or
limitation of, or any modification or change in, the business
relationship of Seller with any supplier or customer listed such
Schedule 5.19.
5.20 Solvency. On the date hereof, the present fair
saleable value of the assets of Seller, on a going-concern basis,
exceeds the amount that will be required to be paid on or in
respect of its existing debts and other liabilities (including
contingent liabilities) as they mature. After giving effect
to the transactions contemplated hereby, Seller will have sufficient
capital for it to carry on its business as proposed to be
conducted, including its existing capital needs.
5.21 Disclosure. No representation or warranty by
Seller contained in this Agreement nor any written statement or
certificate furnished or to be furnished by or on behalf of Seller
to Buyer in connection herewith contains or will contain any
untrue statement of a material fact, or omits or will omit to
state any material fact required to make the statements herein or
therein contained, under the circumstances under which made, not
misleading or necessary in order to provide a prospective
purchaser of the Purchased Assets with adequate information as to
the operations of Seller, the Business and the Purchased Assets
and Seller has disclosed to Buyer in writing all material adverse
facts known to it relating to the same. The representations and
warranties contained in this Agreement or any document delivered
in connection with this Agreement shall not be affected or deemed
waived by reason of the fact that Buyer and/or any of its
representatives knew or should have known that any such
representation or warranty is or might be inaccurate in any
respect.
6
Representations and Warranties of Buyer
Buyer represents and warrants to Seller that:
6.1 Organization and Standing. Buyer is a corporation
duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate
power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby.
6.2 Authority of Buyer. The execution, delivery and
performance of this Agreement and all the agreements and
instruments of Buyer relating hereto and the consummation of the
transactions contemplated hereby shall have been duly authorized
by all necessary corporate action on the part of Buyer at or prior
to the Closing; this Agreement has been duly executed by a duly
authorized officer of Buyer; and this Agreement and such
agreements and instruments constitute the legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with
their terms.
7
Covenants of Seller
7.1 Conduct of Business. Without in any way limiting
the provisions of Article 3 of this Agreement, during the period
from the date of this Agreement to and including the Closing Date,
Seller shall not take any action which might result in any
material change in the operations of the Business or which might
have a materially adverse effect on the value of the Purchased
Assets or the Business other than changes made with the prior
written consent of Buyer. Without limiting the generality of the
foregoing, prior to the Closing, Seller will not, without the
prior written consent of Buyer:
(a) dissolve, liquidate, merge or consolidate or
sell or otherwise dispose of all or any substantial portion of its
assets or obligate itself to do so, unless such transaction is
specifically conditioned upon, and will not occur until after, the
Closing, and will otherwise not involve or have any effect on or
otherwise conflict with the Business or the transactions
contemplated by this Agreement;
(b) sell, transfer, lease or otherwise dispose of
any assets or properties of or related to the Business, or license
any of the Programs;
(c) amend, modify, change, alter, terminate,
rescind or waive any rights or benefits under any Contract;
(d) fail to maintain the Purchased Assets in
reasonably good condition, repair and working order, reasonable
and ordinary wear and tear excepted;
(e) perform, take any action or incur or permit to
exist any of the acts, transactions, events or occurrences of a
type which would be inconsistent with or render untrue any of the
representations or warranties set forth in Section 5.6 hereof had
the same occurred after the Balance Sheet Date and prior to the
date hereof;
(f) cancel, compromise or modify or agree to
cancel, compromise or modify any Receivable; or
(g) cancel any of the current insurance policies
or any of the coverage thereunder maintained for the protection of
any of the Purchased Assets or the Business, or the operation
thereof.
7.2 Changes in Information. During the period from the
date of this Agreement to the Closing Date, Seller shall give
Buyer prompt written notice of any change in, or any of the
information contained in, the representations and warranties made
by it in or pursuant to this Agreement or the Disclosure Schedule
or of any event or circumstance which if it had occurred on or
prior to the date hereof, would cause any of such representations
or warranties not to be true or correct.
7.3 Access to Information. During the period from the
date of this Agreement to the Closing Date, Buyer and its counsel,
accountants and other representatives shall be given, during
normal business hours, full access to and copies of all of the
books, tax returns, contracts, commitments, records, facilities
and properties of Seller pertaining to the Business or
constituting any part of the Purchased Assets, work papers of
accountants of Seller pertaining to the Business and all personnel
of Seller, and they shall be furnished with all such documents and
information with respect to the affairs of Seller pertaining to
the Business as may from time to time reasonably be requested,
including without limitation, employee files, employee benefit
files, contracts with the current customer and vendor base of the
Business, projections of customer and vendor activities, all
computer files, systems and records, leases, and accounts payable
and receivable. Seller and its directors, officers and employees
shall cooperate fully with Buyer's investigation, provided that
Seller shall not be required to incur any out of pocket costs in
connection therewith. Buyer will (and will cause its
representatives to) maintain the confidentiality of the
confidential information it receives from Seller, provided that
such information may be disclosed (in confidence) to lawyers,
accountants, prospective lenders and investors, and other persons
or entities involved in the transactions, and that nothing herein
shall prevent disclosure or use of any information as may be
required by applicable law or that is at the date hereof or
hereafter becomes generally available to and known by the public
other than by reason of Buyer's breach of its obligations under
this Section 7.3, or is or becomes available to Buyer on a non-
confidential basis from a source that is not known by Buyer to be
prohibited from disclosing such information pursuant to a
confidentiality agreement with Buyer or its representatives.
Notwithstanding the foregoing, Buyer shall be entitled to utilize
all such confidential information in connection with its operation
of the Business from and after the date hereof.
7.4 Confidentiality. Seller shall hold confidential
all information disclosed to or obtained by it from or concerning
Buyer or otherwise arising out of its negotiations with Buyer or
investigations of Buyer and such information shall not be used or
disclosed except in furtherance of the transactions contemplated
herein or as otherwise required by law.
7.5 Preservation of Business. During the period from
the date of this Agreement to the Closing Date, Seller shall use
its best efforts to preserve intact the present goodwill of Seller
and the relationships of Seller with customers, dealers, OEMs,
VARs, suppliers, creditors, distributors, consultants,
governmental authorities and others having business relations with
it and the present business organization and personnel of such
Seller. Seller shall cause to be paid before they become
delinquent all taxes, assessments, and governmental charges or
levies imposed prior to the Closing Date upon its business or
properties and all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords, and other similar persons
asserted prior to the Closing Date which, if unpaid, might result
in the creation of a Lien upon any Purchased Assets or otherwise
have an adverse effect on the conduct the Business.
7.6 Employees. (a) Buyer has no obligation to employ
any of Seller's employees in its business following the date
hereof or the Closing Date. Notwithstanding any offer or
determination to so employ any employee, Buyer shall not be
obligated to maintain any employee for any specific length of time
and, except as otherwise provided by the Employment Agreements,
all such employees shall be employees at will.
(a) Seller shall promptly pay all amounts due and
payable to, or accrued in respect of, its employees in the nature
of wages, commissions, salary, insurance and other benefits
(including accrued vacation and sick pay and unearned bonuses),
and shall pay all withholding tax and similar obligations in each
case with respect to all employees of Seller and all periods
ending on or prior to the Closing Date, and with respect to the
Designated Employees, for all periods ending on or prior to the
date hereof.
(b) Seller shall be solely responsible for, and
shall indemnify and hold harmless Buyer from and against, any and
all claims and obligations, if any, for severance pay, termination
pay and other benefits arising or claimed to arise out of (i) the
termination of employment of any employee of Seller on or prior to
the Closing Date, and with respect to the Designated Employees, on
or prior to the date hereof, (ii) the effect of the transactions
contemplated by this Agreement on the employment status of any of
the employees of Seller, including the Designated Employees and
any others which may hereafter be employed by Buyer, and/or (iii)
the termination of employment with Buyer within 120 days after the
Closing Date of any employee, including the Designated Employees,
who prior to the Closing Date (or the date hereof in the case of
the Designated Employees) was an employee of Seller and thereafter
becomes an employee of Buyer (in this latter case to the same
extent as if any such employee were then still employed by Seller,
but only with respect to such severance pay, termination pay or
other benefits which arise or are claimed to arise out of the
employee's employment with Seller).
(c) Nothing in this Section 7.6 or elsewhere in
this Agreement, express or implied, shall be construed to confer
any rights or remedies on any employee of Seller. All liabilities
of Seller under this Section shall constitute Excluded Liabilities.
7.7 Preparation of Information Statement; Action by
Shareholders. (a) Seller shall prepare the Information Statement
as promptly as possible after the date hereof and shall cause the
preliminary Information Statement to be filed with the SEC within
fourteen (14) days after the date hereof. Seller shall submit the
proposed Information Statement to Buyer and its counsel not less
than two days prior to submitting the Information Statement to the
SEC or the Shareholders. Buyer shall promptly furnish Seller with
such information concerning Buyer as Seller shall reasonably
request for inclusion in the Information Statement, and Seller
shall be responsible for all other information included therein.
Seller shall cause to be distributed to the Shareholders of record
as of the record date for the Special Meeting, in accordance with
the applicable regulations of the SEC and the applicable
provisions of the NYBCL, a copy of the Information Statement filed
by Seller with and cleared by the SEC. Seller shall use
commercially reasonable efforts to mail the Information Statement
to Shareholders on or before May 16, 1997. If prior to the
Closing Date either Seller or Buyer determines that the
Information Statement needs to be amended or supplemented in
order to comply with the 1934 Act or the rules and regulations
promulgated thereunder or for Seller's representations or
warranties in Section 5.18 to be correct, Buyer or Seller, as the
case may be, shall notify the other of such determination and
shall deliver to the other such amendment or supplement as such
party believes is necessary to comply with the applicable
regulations of the SEC and to make such representation and
warranty correct. Seller shall consider all such amendments
proposed by Buyer, and shall cause all such amendments or
supplements that the parties reasonably believe are necessary to
be mailed to the Shareholders as soon as practicable after such
delivery.
(a) Seller shall, through its Board of Directors,
recommend to the Shareholders the adoption of this Agreement and
approval of all matters contemplated by or in furtherance of this
Agreement to be acted on at the Special Meeting, and shall use all
reasonable efforts to make the actions contemplated by the Special
Meeting to be effective on or before June 20, 1997.
7.8 Information Provided to Shareholders. Between the
date of this Agreement and the Closing Date, Seller shall deliver
to Buyer true and correct copies of all information, materials,
notices, mailings and other written communications sent by Seller
to its Shareholders or any class or series thereof
contemporaneously with the distribution thereof.
7.9 Interim Financial Statements. Seller shall cause
to be promptly prepared and delivered to Buyer promptly upon
completion (but no later than May 31, 1997), income statements and
balance sheets of Company for its fiscal quarter ending March 31,
1997 (the "Interim Financial Statements"). The Interim Financial
Statements shall be prepared in a manner consistent with the
Financial Statements and in accordance with generally accepted
accounting principles, but need not be audited. The Interim
Financial Statements, when delivered to Buyer, shall be deemed
"Financial Statements" for purposes of Section 5.4 hereof and
the representations and warranties set forth in Section 5.4 hereof
shall be deemed to apply with equal force and effect as of the
date of such delivery and as of the Closing Date to the Interim
Financial Statements.
8
Further Agreements.
8.1 Sales and Other Taxes. Seller shall pay all sales
tax, transfer tax, intangibles tax, filing fees, recording and
registration fees and similar government charges applicable to the
transactions contemplated by this Agreement, including, without
limitation, all taxes and charges payable, if any, upon the
transfer of title to any Purchased Assets. Buyer and Seller will
cooperate to prepare and file with the proper public officials, as
and to the extent available and necessary, all appropriate sales
tax exemption certificates or similar instruments as may be
necessary to avoid the imposition of sales, transfer and similar
taxes on the transfer of Purchased Assets pursuant hereto.
8.2 Brokerage and Finder's Fee. Buyer represents and
warrants to Seller and Seller represents and warrants to Buyer,
that no person is entitled to any brokerage commissions or
finder's fees in connection with the transactions contemplated by
this Agreement as a result of any action taken by it or any
of its affiliates, officers, directors or employees.
8.3 Referral. Seller shall use its best efforts to
refer all requests for and forward all orders for products to
Buyer at such telephone number and address as Buyer from time to
time informs Seller. Seller and Buyer shall each attempt in good
faith to direct or deliver to the other all incoming mail,
telephone or other communications or deliveries which are not
received by the appropriate party (that is, Buyer in the case of
matters or materials pertaining to the Business and Seller in the
case of all other matters or materials).
8.4 Break-up Fee. (a) In addition to, and without
limiting any of Buyer's rights under or pursuant to this Agreement
and the transactions contemplated hereby, subject to and upon the
occurrence of a "Break-up Event" (as defined in Subsection 8.4(b)
below) on or prior to the expiration of one hundred and eighty
(180) days from the date hereof, Seller shall pay, in immediately
available funds, to Buyer, at the offices of its counsel in New
York, New York, the "Break-up Fee" specified in subsection 8.4(c)
hereof.
(a) The following shall each be a "Break-up Event":
(i) Seller (or any successor, assign, trustee
or custodian thereof) shall execute or the Board of Directors of
Seller shall authorize or approve (with or without and whether or
not subject to, diligence, financing or other conditions), or
publicly announce or confirm an agreement with any group, entity
or person other than Buyer providing for the acquisition of all or
any portion of the Purchased Assets by such other party, whether
by merger, purchase of assets or stock, purchase of claims against
Seller or its estate, plan of reorganization, liquidation or
otherwise;
(ii) A Change of Control of Seller shall
occur. For purposes of this paragraph, "Change of Control" shall
mean:
(A) a stock purchase of any "person" or
"entity" (as such terms are used in Sections 13(d) and 14(d)
(2) of the Securities Exchange Act of 1934, as amended) who
then owns or by virtue of such purchase becomes the
beneficial owner of, directly or indirectly, voting
securities of Seller or of any of the subsidiaries, or rights
or options with respect thereto or securities convertible
into or exchangeable for any of same, representing 25% or
more of the combined voting power of the then outstanding
voting securities of Seller or any of its subsidiaries, and
such person or entity does not sign a Voting Agreement
referred to in Section 3.1(c) hereof;
(B) any change in the composition of the
Board of Directors of Seller in any period which involves a
majority of such directors and such new Board of Directors
does not approve or otherwise seeks to repudiate the
transactions contemplated by this Agreement, or
(C) any proxy, voting trust, or any
voting or other agreement by any of the shareholders signing
this Agreement, or any management agreement, having the
effect of transferring the power or authority (whether or not
exercised) to influence control (affirmatively or negatively)
over Seller, a subsidiary or its operations, where such
agreement seek to repudiate or would have the effect of
repudiating the transactions contemplated by this Agreement.
(iii) Shareholder Authorization shall not be
obtained prior to July 17, 1997 (the "Break-up Date"), provided,
however, that this subsection (iii) shall not be a "Break-up
Event" if (A) Shareholder Authorization is not obtained by such
date because the SEC had delayed the release by Seller of the
Information Statement to its shareholders to a date less than
twenty (20) days prior to the Break-up Date, and (B) such
Information Statement was filed by Seller not later than fourteen
(14) days following the date hereof and Seller had made diligent
efforts to timely respond to all SEC comments given in respect
thereof, if any.
(b) The Break-up Fee shall be $250,000; provided,
that the obligation of Seller to pay such Break-up Fee shall be
subject to the satisfaction of the following conditions:
(i) Buyer shall not have theretofore
exercised any right or stated its intent to terminate or not to
perform this Agreement, except as a consequence of the failure of
Seller to perform its obligations hereunder;
(ii) the representations and warranties of
Buyer contained in this Agreement shall have been true and correct
in all material respects and Buyer shall have performed all of its
obligations under the this Agreement to the extent required to be
performed on or prior to the date of the Break-up Event; and
(iii) consummation of the transaction
contemplated thereby shall not have been prevented by the failure
of any condition to the obligations of Seller set forth in the
this Agreement to have been satisfied as a consequence of any act
or omission by Buyer.
(c) The obligations of Seller to pay the Break-up
Fee shall be absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which Seller may
have against Buyer or any principal thereof, or anyone else.
Neither Buyer nor any principal thereof shall be required to
mitigate its or his damages. The Break-Up Fee shall not
constitute liquidated damages and shall be in addition to, and
without limiting any of Buyer's rights under or pursuant to this
Agreement and the transactions contemplated hereby, and shall be
in addition to any other remedies that Buyer may have at law, in
equity or otherwise.
(d) If a Break-up Event occurs, Buyer shall
nevertheless continue to enforce its rights under this Agreement
and be entitled to make competing bids for any or all of the
business Seller (and to present the relative merits of bids it may
make to parties in interest), but in the event that Buyer is
the successful bidder, then Buyer shall not be entitled to the Break-
up Fee.
8.5 No Shop. From the date hereof until the expiration
of the "Restricted Period" described below, (a) Seller agrees,
directly or indirectly, without Buyer's prior written consent,
that it shall not and shall not permit any subsidiary to (i) offer
or convey, sell or license any of the Purchased Assets or the
Business, (ii) issue, sell or purchase any shares of any class or
series of any of the issued and outstanding capital stock of
Seller or any security convertible into or exchangeable for such
stock or any option or warrant with respect to such stock (except
options granted under existing stock option plans and shares of
Seller capital stock issuable upon the exercise or conversion of
options, rights, or securities presently outstanding), or
(iii) merge or consolidate with another entity, and (b) Seller
will not solicit, entertain, continue, respond to or encourage
inquiries or proposals, or enter into, pursue, or carry on any
discussions or negotiations, with respect to any transaction of
the type referred to in clause (a) above with any person or entity
other than Buyer. Seller will immediately cease and cause to be
terminated any existing activities, discussions or negotiations
with any parties conducted heretofore in respect of any such
transaction. Seller will promptly advise Buyer of the identity of
any offeror and communicate to Buyer the terms of any oral inquiry
or proposal which it may receive and deliver to Buyer a copy of
any such offer in writing. Without limiting the rights of Buyer
to pursue any remedies, the parties agree that damages are not an
adequate remedy for a breach of this Section and that the
obligations hereunder may be specifically enforced. The
"Restricted Period" shall continue until the expiration of the
earlier of (a) one hundred and eighty (180) days after the date of
the execution and delivery of this Agreement by all parties and
(b) the Closing. Notwithstanding the foregoing, Seller shall be
entitled to enter into any of the foregoing transactions, provided
that such transaction is specifically conditioned upon, and will
not occur until after, the Closing, and will otherwise not involve
or have any effect on or otherwise conflict with the Business or
the transactions contemplated by this Agreement.
8.6 OEM License. Subject to the terms of this
Agreement and the schedules and exhibits hereto, including,
without limitation, the Non-Compete Agreement, from and after the
Closing, Buyer agrees to grant to Seller, on a product-by-product
basis, an OEM license (an "OEM") to utilize the COPERNICUS
programs in a non-competitive software product to be developed or
sold by Seller (a "Product"), provided that (a) any such OEM shall
be on substantially similar terms and conditions as Buyer's
arrangements with its other OEM's and otherwise on Buyer's
standard form and (b) Buyer shall have the right to refuse to
grant to Seller a OEM for any reasonable business reason,
including, without limitation, any of the following:
(i) the proposed Product is not consistent
with Buyer's business plan or relates to an area or field in which
Buyer does not wish its products utilized;
(ii) Buyer desires to enter the market with a
product similar to the Product;
(iii) Buyer has previously granted, or
desires to grant, an OEM to an alternative vendor for a similar
product or related field;
(iv) Buyer does not wish to do business with
any party affiliated or involved with Seller in the development or
sale of the Product for any reason whatsoever;
(v) Seller's financial status is below the
standard required by Buyer for its VARs, OEMs or
distributors, or
Buyer believes, in its sole discretion, that Seller's financial
situation at such time not sufficient to provide adequate support
for the Product; or
(vi) Buyer, in its sole discretion, believes
the Product or any potential use thereof to be competitive with
any product sold or licensed by Buyer or otherwise competitive
with Buyer's business.
(A) Buyer, or any of its subsidiaries, shall become subject to
the reporting requirements of the Securities Exchange Act of 1934,
(B) Buyer shall effect a sale of the assets of or relating to the
COPERNICUS programs, (C) any person who is not a stockholder of
Buyer as of the Closing (or any affiliate of any such stockholder)
shall hold 25% or more of the equity of Buyer or (D) Buyer shall
have tendered to Seller the Termination Payment (as defined in
Schedule 2.1(c) hereto).
9
9.1 Obligation to Indemnify. (a) Buyer hereby assumes
and agree to save, indemnify and hold harmless Seller from and
against, and shall on demand reimburse Seller for:
(i) any and all loss, liability, damage or
deficiency suffered or incurred by Seller by reason of any
misrepresentation or breach of warranty by Buyer or nonfulfillment
of any covenant or agreement to be performed or complied with by
Buyer under this Agreement or in any agreement, certificate,
document or instrument executed by Buyer and delivered to Seller
pursuant to or in connection with this Agreement; and
(ii) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses,
including reasonable attorneys' fees, incident to any of the
foregoing, or reasonably incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof, or in
enforcing any of the obligations under this Section 9.1(a).
(b) Seller hereby assumes and agrees to save,
indemnify and hold harmless Buyer from, against and in respect of,
and shall on demand reimburse Buyer for:
(i) any and all loss, liability, damage or
deficiency suffered or incurred by Buyer by reason of any
misrepresentation, breach of warranty or nonfulfillment of any
covenant or agreement to be performed or complied with by Seller
under this Agreement or any agreement, certificate, document or
instrument executed by Seller and delivered to Buyer pursuant to
or in connection with this Agreement;
(ii) any and all loss, liability, damage,
cost or expense suffered or incurred by Buyer in respect of or in
connection with any and all debts, liabilities and obligations of,
and any and all violation of laws, rules, regulations, codes or
orders by Seller, direct or indirect, fixed, contingent, legal,
statutory, contractual or otherwise, which exist at or as of the
Closing Date or which arise after the Closing Date but which are
based upon or arise from any act, transaction, circumstance, sale
of goods or services, state of facts or other condition which
occurred or existed on or before the Closing Date, whether or not
then known, due or payable, except to the extent specifically
assumed by Buyer under the terms of this Agreement;
(iii) any and all loss, liability, damage,
cost or expense suffered or incurred by Buyer based on or arising
out of the infringement or alleged infringement of any of the
Programs as they exist on the date hereof of the proprietary
rights of any third party (provided that any such claim pursuant
to this subparagraph (iii) is made within three years of the date
hereof);
(iv) any and all loss, liability, damage,
cost or expense suffered or incurred by Buyer based on or arising
out of any defective or allegedly defective product or service
warranty and/or third party liability claims (whether alleged in
contract, tort, strict liability or otherwise), which exist at or
as of the Closing Date or which arise after the Closing Date but
which are based upon or arise from any act, transaction,
circumstance, sale of goods or services, state of facts or other
condition which occurred or existed on or before the Closing Date,
including, without limitation, any products manufactured,
assembled, sold or distributed by Seller or its predecessors in
interest at any time;
(v) any and all loss, liability, damage, cost
or expense suffered or incurred by Buyer based on or arising from
(A) the presence of any Hazardous Substance on or about any
premises occupied by Seller or any hazardous discharge on or prior
to the Closing Date, and/or any environmental complaint, and/or
the failure to obtain any license or permit required in connection
with any Hazardous Substance or hazardous discharge or the
retention, disposal, treatment or use thereof, and/or arising out
of any noncompliance with any environmental, health or safety law,
ordinance, rule or regulation (each, an "Environmental
Requirement"), in each case, based on or arising from any act,
transaction, state of facts or other condition which occurred or
existed on or before the Closing Date, whether or not then known,
(B) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to any
hazardous discharge, the presence, use, disposal or treatment of a
Hazardous Substance, or noncompliance with any Environmental
Requirement, on or prior to the Closing Date, and/or (C) any
environmental complaint and/or any demand of any government agency
or authority prior to, on or after the Closing Date which is based
upon or in any way related to any hazardous discharge, the
presence, use, disposal or treatment of a Hazardous Substance,
and/or noncompliance with any Environmental Requirement on or
prior to the Closing Date, and including, without limitation and
in each such case under this clause (v), the reasonable costs and
expenses of all remedial action and clean-up, attorney and
consultant fees, investigation, sampling and laboratory fees,
court costs and litigation expense and costs arising out of
emergency or temporary assistance or action undertaken by or as
required by any duly authorized regulatory body in connection with
any of the foregoing;
(vi) any and all taxes, including, without
limitation, income, franchise, property, sales, use, added value,
employees' income withholding and social security taxes, and all
assessments or governmental charges imposed by the United States
or by any foreign country or by any state, municipality,
subdivision or instrumentality of the United States or of any
foreign country, or by any other taxing authority, which are due
or payable by Seller in connection with or arising out of the
operation of Seller's business on or prior to the Closing Date and
all interest and penalties thereon;
(vii) any and all loss, liability, damage,
cost or expense suffered or incurred by Buyer by reason of any
claims of or entitlements to severance pay, termination pay and/or
other benefits arising or accruing or claimed to arise or accrue
with respect to any employee of Seller, whether by reason of or in
connection with any of the transactions contemplated by this
Agreement or otherwise to the extent based on any employment of
such employee by Seller; and
(viii) any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs and
expenses, including, without limitation, reasonable attorneys'
fees, incident to any of the foregoing or reasonably incurred in
investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing any of the obligations under
this Section 9.1(b).
9.2 Survival and Other Matters. Each representation,
warranty, indemnity, covenant and agreement of each of the parties
hereto shall survive the Closing; provided, however, that no party
shall be entitled to assert claims against the other for
misrepresentations or breach of warranty under or pursuant to this
Agreement unless the party asserting such claim shall notify the
other in writing of such claim within three (3) years after the
Closing Date; provided, further, that the foregoing limitation on
the survival of representations and warranties shall not apply to
any of the representations and warranties in Sections 5.2, 5.7(a),
5.13 and 5.16 hereof.
9.3 Offsets. Without limiting its other rights and
remedies, Buyer shall have the right to set off the amount of any
claims reasonably asserted by Buyer in good faith that it is
entitled to a deduction or setoff in respect of any obligation
under Section 9.1(b) or otherwise under this Agreement against the
Closing Payment, the Escrow Fund and/or, under any instrument or
agreement executed and delivered by Buyer in accordance with or as
contemplated by this Agreement, including, without limitation, the
License Agreement and the Royalty, in each case at the option of
Buyer, in such order as Buyer shall determine. No such setoff
shall constitute a default under this Agreement or otherwise, it
being agreed that Buyer shall have a period of ten (10) days after
the final and binding resolution of all such good faith claims
and/or disputes relating to such non-payment to pay the amounts
determined as a result of such resolution to be due and payable.
If it shall be determined that Buyer improperly (despite Buyer's
good faith belief that such setoff was proper) withheld any
payment under this Section, such amount shall bear interest at the
rate of ten percent (10%) per annum from the date such amount was
due. The remedies provided for in this Agreement are not
exclusive and shall be in addition to any other remedies that
Buyer may have at law, in equity or otherwise.
10
Miscellaneous
10.1 Specific Performance. Seller agrees that the
Purchased Assets are unique property that cannot be readily
obtained on the open market and that Buyer will be irreparably
injured if this Agreement is not specifically enforced.
Therefore, Buyer shall have the right specifically to enforce the
performance of Seller under this Agreement without the necessity
of posting any bond or other security, and Seller hereby waives
the defense in any such suit that Buyer has an adequate remedy at
law and agree not to interpose any opposition, legal or otherwise,
as to the propriety of specific performance as a remedy. The
remedy of specifically enforcing any or all of the provisions of
this Agreement in accordance with this Section 10.1 shall not be
exclusive of any other rights which Buyer may have to terminate
this Agreement, or of any other rights or remedies which Buyer may
otherwise have under this Agreement or otherwise, all of which
rights and remedies shall be cumulative.
10.2 Binding Agreement; Assignment. All the terms and
provisions of this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties hereto and their
respective heirs, legal representatives, successors and assigns.
This Agreement and all rights of Buyer shall be assignable to one
or more subsidiaries or affiliates of Buyer. Such assignment
shall not relieve Buyer of its obligations hereunder.
10.3 No Public Announcement. No party hereto shall,
without the prior written approval of all of the other parties,
make any press release or other public announcement concerning the
transactions contemplated by this Agreement, except as and to the
extent that Buyer or Seller shall be so obligated by law or the
rules of any stock exchange, in which case such party shall so
advise the other party and Buyer and Seller shall use their
reasonable best efforts to cause a mutually agreeable release or
announcement to be issued; provided that the foregoing shall not
preclude communications or disclosures necessary to implement the
provisions of this Agreement or to comply with accounting and SEC
disclosure or reporting obligations.
10.4 Law To Govern. This Agreement shall be construed
and enforced in accordance with the internal laws of the State of
New York, without regard to principles of conflict of laws.
10.5 Notices. All notices shall be in writing and shall
be deemed to have been duly given to a party hereto if delivered
personally, then on the date of such delivery, or on the fifth day
after being deposited in the mail if mailed via registered or
certified mail, return receipt requested, postage prepaid, or on
the next business day after being sent by recognized national
overnight courier services, in each case, to such party, at the
following respective addresses:
if to Seller, to:
New Paradigm Software Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
if to Buyer, to:
VIE Systems, Inc.
▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
Golenbock, Eiseman, Assor & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇, Esq.
or to such other address as any such party may designate in
writing in accordance with this Section 10.5.
10.6 Fees and Expenses. Except as expressly set forth
in this Agreement, each of the parties shall pay its own fees and
expenses with respect to the transactions contemplated hereby.
10.7 Entire Agreement. This Agreement sets forth the
entire understanding of the parties hereto in respect of the
subject matter hereof and may not be modified, amended or
terminated except by a written agreement specifically referring to
this Agreement signed by all of the parties hereto. This
Agreement supersedes all prior agreements and understandings among
the parties with respect to such subject matter.
10.8 Waivers. The failure by any party to this
Agreement to comply with any of its obligations hereunder may be
waived by any Seller in the case of a default by Buyer and by
Buyer in case of a default by Seller. No waiver shall be
effective unless in writing and signed by the party granting such
waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature.
10.9 No Third-Party Beneficiaries. Nothing herein,
express or implied, is intended or shall be construed to confer
upon or give to any person, firm, corporation or legal entity,
other than the parties hereto, any rights, remedies or other
benefits under or by reason of this Agreement or any documents
executed in connection with this Agreement.
10.10 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same
agreement.
10.11 Headings. The Section and paragraph headings
contained herein are for the purposes of convenience only and are
not intended to define or limit the contents of said Sections and
paragraphs.
IN WITNESS WHEREOF, the parties have duly executed
this
Agreement as of the date first above written.
NEW PARADIGM SOFTWARE CORP.
By:________________________
VIE SYSTEMS, INC.
By:________________________
Exhibit 1.1
▇▇▇▇ OF SALE
THIS ▇▇▇▇ OF SALE ("▇▇▇▇ of Sale"), dated
, 1997, is entered into by
and between VIE Systems, Inc., a Delaware corporation (the
"Buyer"), and New Paradigm
Software Corp., a New York corporation ("Seller") pursuant to
the terms of the Agreement of
Purchase and Sale of Assets (the "Agreement"), dated as of
May ____, 1997, by and among
Buyer and Seller.
Capitalized terms used herein shall have the same meanings
and definitions as set forth in the
Agreement, unless otherwise specifically defined in this ▇▇▇▇
of Sale.
KNOW ALL MEN BY THESE PRESENTS, that pursuant to the terms and
conditions of the Agreement and for the consideration set
forth therein, the receipt and
sufficiency of which are hereby acknowledged, Seller hereby
grants, conveys, assigns, transfers
and delivers to Buyer all of Seller's right, title, interest
and benefit, of whatever kind and nature,
in and to the Purchased Assets and excepting only those
assets listed on Schedule A hereto (the
"Excluded Assets"), free and clear of any liens, charges and
encumbrances of any nature
whatsoever.
TO HAVE AND TO HOLD the same unto Buyer, its
successors and assigns forever.
All of the terms and provisions of this ▇▇▇▇ of
Sale will be binding upon and inure
to the benefit of the parties hereto and their successors and
assigns.
Seller hereby constitutes and appoints Buyer, and
its successors and assigns, the
true and lawful attorney or attorneys of Seller, with full
power of substitution, in the name of
Buyer or in the name of Seller, by and on behalf of and for
the sole benefit of Buyer, its
successors and assigns, to demand and receive from time to
time any and all of the Purchased
Assets, and from time to time to institute and prosecute, in
the name of Seller or otherwise, any
and all proceedings at law, in equity or otherwise, which
Buyer or its successors or assigns, may
deem necessary or desirable in order to receive, collect,
assert or enforce any claim, right or title
of any kind in or to the Purchased Assets hereby transferred,
assigned and conveyed to Buyer and
to defend and compromise any and all actions, suits or
proceedings in respect thereof and to do
all such acts and things and execute any instruments in
relation thereto as Buyer or its successors
or assigns shall deem advisable. Without limitation of the
foregoing, Seller hereby authorize any
officer of Buyer to endorse or assign any instrument,
contract or chattel paper relating to the
Purchased Assets. Seller agrees that the foregoing
appointment made and the powers hereby
granted are coupled with an interest and shall be
irrevocable.
Notwithstanding the foregoing, no provision of this
▇▇▇▇ of Sale shall in any way
modify, replace, amend, change, rescind, waive or in any way
affect the express provisions
(including the warranties, covenants, agreements, conditions,
representations or any of the
obligations and indemnifications, and the limitations related
thereto) set forth in the Agreement,
this ▇▇▇▇ of Sale being intended solely to effect the
transfer of property sold and purchased
pursuant to the Agreement in accordance with the Agreement.
IN WITNESS WHEREOF, each of the parties hereto has
executed this ▇▇▇▇ of
Sale on the date first above written.
VIE SYSTEMS, INC.
By:_________________________________
Name:
Title:
NEW PARADIGM SOFTWARE CORP.
By:_________________________________
Name:
Title:
Schedule 2.1(c)
The Royalty
Subject to and upon the terms and conditions of
this
Agreement, Buyer shall pay to Seller a Royalty, determined
and
payable as follows:
1 Calculation of the Royalty. The Royalty shall be
equal to five percent (5%) of "Net Revenue" of Buyer commencing on
and after the first anniversary of the Closing Date. For purposes
hereof, "Net Revenue" shall be equal to the amount of cash
received and retained by Buyer from the sale, license and
distribution of the computer programs known and/or marketed as
"COPERNICUS" software (the "COPERNICUS Programs"), less the sum of
(i) any applicable credits, discounts and rebates, including, but
not limited to, quantity, dealer, distributor and promotional
credits, discounts, adjustments and rebates, and (ii) taxes (such
as sales, use or similar taxes) paid or payable by Buyer in
connection with such sale or license. If Buyer refunds or issues
a credit memo on a customer's price due to customer
dissatisfaction or other valid reason, this negative price shall
result in a reduction in Net Revenue and therefore a reduction of
the Royalty due to Seller. If any COPERNICUS Program is included
by Buyer in a program or combination of programs, the aggregate
functionality of which extends beyond such COPERNICUS Program, and
which additional functionality is either (l) distinct from the
collective functionality of the COPERNICUS Program, and/or (2)
separately available from Buyer and/or any person other than Buyer
(without royalty payable hereunder), then the Net Revenue
attributable to the sale, license or distribution of such product
shall be proportionately allocated among all significant
components of such combination product. From and after the
Closing Date, Buyer agrees not to materially alter its pricing
policies with respect to the sale, license or distribution of the
COPERNICUS Programs for purposes of reducing or otherwise negating
its obligation to pay the Royalty to Seller (for example, by
increasing its charges for maintenance fees or consulting services
at the expense of license fees so as to reduce the Net Revenue
calculation).
2 Payment of the Royalty. The Royalty shall be paid
to Seller on a quarterly basis, within fifteen (15) days following
the close of each calendar quarter commencing with the first
calendar quarter following the first anniversary of the Closing
Date (each such payment being referred to herein as a "Royalty
Payment"). If Seller shall so request in writing, Buyer shall
provide Seller with a statement setting forth the basis for
determination of a Royalty Payment in respect of the period or
periods referenced in such request. Buyer shall, at Seller's sole
cost and expense, permit Seller access, during normal business
hours and on reasonable notice, to those records of Buyer relevant
to the calculation of any such Royalty Payment and shall retain
such records for a period of two years after the close of the
fiscal quarter in which a Royalty Payment is due. Seller shall
keep all such information confidential and not use it for any
purpose other than for determining compliance with this Agreement.
3 Audit. Seller shall be entitled to have the
applicable books and records of Buyer examined for purposes of
showing compliance with this Agreement (an "Audit") by an
independent public accountant mutually acceptable to the parties
hereto, who shall have access to such records during normal
business hours. If Buyer and Seller are unable to agree on the
choice of an accounting firm, they will select by lot a
nationally-recognized firm of independent certified public
accountants (after excluding Buyer's and Seller's regular outside
accounting firm). The fees expenses of the accounting firm shall
be borne by Seller unless the firm's determination of the Royalty
payable in respect of the period that is subject to the Audit
exceeds the Royalty calculated as payable by Buyer by 5% or more.
Seller shall not be entitled to conduct an Audit more than once
in any calendar year.
4 Royalty Termination Right. Notwithstanding anything
to the contrary contained herein, Buyer shall have the right, in
its sole and absolute discretion, to cause an immediate
termination its obligation to pay any future Royalty to Seller
hereunder, if at any time on or prior to the fourth (4th)
anniversary of the Closing Date, Buyer provides written notice to
Seller of its intention to effect its termination right hereunder
and pays to or for the benefit of Seller, together with such
termination notice, an amount equal to the greater of (a) all
Royalties previously paid to Seller (or accrued as payable as of
the date of such notice) pursuant to the provisions of this
Schedule 2.1(c) and (b) $1,000,000 (the "Termination Payment").
Seller shall have the obligation to accept such Termination
Payment when tendered. Upon tendering of the Termination Payment,
Buyer's obligation to pay any Royalty accruing from and after the
date the Termination Payment is tendered to Seller shall
immediately cease and be of no further force or effect.
5 Sale of the COPERNICUS Programs. (a) In the event
that at any time prior to the fourth (4th) anniversary of the
Closing Date, Buyer shall transfer to an unrelated third party all
of its rights and interest in and to the COPERNICUS Programs, and
such purchaser does not assume, by operation of law or otherwise,
the Royalty obligations hereunder, Buyer shall be required to pay
to Seller, on or prior to the closing of such sale transaction, an
amount equal to the Termination Payment.
.1 In the event that at any time following the
fourth (4th) anniversary of the Closing Date, Buyer shall transfer
to an unrelated third party all of its rights and interest in and
to the COPERNICUS Programs, and such purchaser does not assume, by
operation of law or otherwise, the Royalty obligations hereunder,
Buyer shall be required to pay to Seller, on or prior to the
closing of such sale transaction, an amount equal to the greater
of (i) the Termination Payment and (ii) five percent (5%) of the
consideration actually received by Buyer for the COPERNICUS
Programs in connection with such sale.
6 Offset Right. The provisions of this Schedule
2.1(c) are subject to the provisions of Section 9.3 of the
Agreement.
schedule 2.1 Escrow Agreement
INDEMNIFICATION ESCROW AGREEMENT
AGREEMENT dated as of _______, 1997, among VIE
Systems,
Inc., a Delaware corporation ("Buyer"), having offices at
and New Paradigm Software
Corp.,
a New York corporation ("Seller"), having offices at
, and Golenbock, Eiseman,
Assor &
▇▇▇▇, having offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇
▇▇▇▇▇ (the "Escrow Agent"). Buyer and Seller are hereinafter
sometimes referred to as the "Parties".
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement of
Purchase
and Sale of Assets, dated as of __________, 1997 (the "Purchase
Agreement"), among Buyer and Seller, Buyer is concurrently
herewith purchasing from Seller the Purchased Assets, with any
capitalized term used herein but not otherwise defined having the
meaning ascribed to such term in the Purchase Agreement.
WHEREAS, pursuant to Section 2.1(b) of the Purchase
Agreement, the Parties have agreed that on the date hereof,
$200,000 of the Purchase Price shall be deposited into escrow upon
the terms stated herein.
WHEREAS, the Parties desire to establish with the Escrow
Agent the escrow contemplated by the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as
follows:
1. Appointment. The Parties hereby appoint and
designate the law firm of Golenbock, Eiseman, Assor & ▇▇▇▇ as
the Escrow Agent for the purposes herein set forth, and the
Escrow Agent hereby accepts such appointment, subject to and in
accordance with the provisions of this Escrow Agreement.
2. Deposit. Seller hereby authorizes Buyer to deliver
to the Escrow Agent on behalf of Seller, simultaneously with the
execution and delivery of this Agreement and as partial payment of
the Purchase Price under the Purchase Agreement, $200,000 (such
amount, or any future balance thereof, being referred to herein as
the "Escrow Fund"), to be held in accordance with the terms of
this Agreement in an account of (the "Escrow Account").
3. Claims Procedure.
3. 1 Notice of Claims. At any time prior to the
Second Escrow Termination Date (as hereinafter defined), Buyer may
give notice to the Escrow Agent and Seller that pursuant to the
terms of the Purchase Agreement Buyer is asserting a claim
("Claim") against Seller. Such notice shall constitute the
assertion of such Claim by Buyer against the Escrow Fund held in
escrow hereunder. Buyer shall be entitled to make or assert a
Claim under the Purchase Agreement, including, without limitation,
that it is entitled to (a) reimbursement for amounts paid to
suppliers, vendors, licensees or licensors of Seller of or related
to the Purchased Assets and/or the Business in respect of pre-
Closing Date liabilities of Seller pursuant to Section 1.4(b) of
the Purchase Agreement, or (b) indemnification under the Purchase
Agreement. Upon the receipt of such notice of a Claim by the
Escrow Agent, the Escrow Agent shall hold in escrow hereunder such
portion of the Escrow Fund as shall equal the amount of such Claim
and all other pending Claims hereunder. Notice of a Claim given
to the Escrow Agent and Seller pursuant to this Section 3.1 shall
briefly set forth the basis of the Claim and, if then determinable
by Buyer, a reasonable estimate of the amount thereof, which
estimate may include an estimate of attorneys', accountants' and
other fees to be incurred to resolve such Claim. If the estimated
amount of a Claim is not set forth in the notice of the Claim
given to the Escrow Agent and Seller, Buyer will give a further
notice to the Escrow Agent and Seller setting forth Buyer's
estimate of the amount of such Claim promptly after it is
reasonably able to make such estimate.
3.2 Objection; Delivery. For a period of ten (10)
days after the giving of any such notice of Claim to Seller, the
Escrow Agent shall make no payment of any of the Escrow Funds in
respect thereof unless the Escrow Agent shall have received
written authorization from Seller to make such payment with
respect to such Claim. After the expiration of such ten (10) day
period, the Escrow Agent shall, to the extent of the Escrow Fund,
make payment to Buyer of the amount stated in the notice of such
Claim given by Buyer pursuant to Section 3.1 hereof, unless prior
to the expiration of such ten-day period the Escrow Agent and
Buyer have received written notice from Seller that it disputes
the Claim. In the event of a payment to Buyer, the Claim shall be
deemed to have resulted in a determination in favor of Buyer,
solely for purposes of delivery of the Escrow Fund to Buyer. Any
such written objection by Seller shall specify the amount stated
in the notice of Claim, if any, Seller agrees Buyer is entitled to
in respect of any such Claim. In the event of such specification
by Seller, the Escrow Agent shall, to the extent of the Escrow
Fund, make payment to Buyer of the amount agreed to by Seller in
such notice.
3.3 Determination of Claims. In case Seller
shall, in the manner provided in Section 3.2 hereof, object in
respect of any Claim (or any portion thereof) made by Buyer, then
Seller and Buyer shall, within the seven (7) day period beginning
on the date of the receipt by Buyer of such written objection,
attempt in good faith to agree upon the rights and obligations of
the respective parties with respect to such Claim and how such
Claim shall be paid. If Seller and Buyer so agree, a memorandum
setting forth such agreement shall be prepared and signed by both
parties. The Escrow Agent shall be entitled to rely on any such
memorandum and shall, to the extent of the Escrow Fund and the
direction in such memorandum, make payment to Buyer as provided in
such memorandum. If Seller and Buyer fail to so agree, such
dispute shall be settled either by (a) mutual agreement of Buyer
and Seller, evidenced by single written instructions to the Escrow
Agent, (b) a binding and final arbitration award, provided the
parties have agreed in the Purchase Agreement or otherwise to
arbitration with respect to the matters in dispute, or (c) a final
judgment, order or decree of a court of competent jurisdiction in
the United States of America (the time for appeal therefrom having
expired and no appeal having been perfected), all costs and
expenses of which (including reasonable attorneys' fees) shall be
borne by the party against whom the dispute is settled as
aforesaid. Buyer and Seller agree to proceed in good faith and
use their best efforts to resolve any disputes hereunder in a
timely and commercially reasonable manner. The Escrow Agent shall
be under no duty to institute or defend any such proceedings, and
none of the costs and expenses of any such proceedings shall be
borne by the Escrow Agent. Upon receipt of a certificate of Buyer
as to such determination, the Escrow Agent shall deliver to Buyer
free and clear of any interest of Seller, from the Escrow Fund, an
amount equal to the amount of such Claim payable to Buyer pursuant
to such determination.
4. Term.
(a) the thirtieth (30th) day from the date of this
Agreement (the "First Escrow Termination Date"), and (b) the
sixtieth (60th) day from the date of this Agreement (the "Second
Escrow Termination Date"), respectively, with respect to the
amounts indicated below, except with respect to any then pending
Claim.
4.2 No Claims at Termination. If at the First
Escrow Termination Date there shall be no Claims pending or awards
or judgments outstanding, the Escrow Agent shall deliver to Seller
the lesser of (a) (i) $100,000 minus (ii) any Claims previously
paid out of the Escrow Fund, and (b) the amount of the Escrow
Funds then being held by it. If at the Second Escrow Termination
Date there shall be no Claims pending or awards or judgments
outstanding, the Escrow Agent shall deliver the remainder of the
Escrow Funds then being held by it to Seller, if any.
4.3 Claims at Termination. If at either the First
Escrow Termination Date or the Second Escrow Termination Date
there shall be any Claims pending or awards or judgments
outstanding, the Escrow Agent shall retain, until the final
disposition of such Claim, such amount of the Escrow Fund as shall
equal the amount of such Claim stated in the notice thereof. If
the Escrow Fund is equal to or less than the aggregate of the
outstanding Claims, awards and judgments, the full amount of the
Escrow Fund shall continue to be held in escrow. Any amount not
theretofore delivered to Seller shall be delivered to Seller at
such time or from time to time when the Claim, award or judgment
to which the retained Escrow Funds relate has been fully rendered
as herein provided and all amounts payable as a result thereof
have been paid to Buyer.
4.4 Delivery. Promptly after the determination of
a Claim in accordance with the provisions of Section 3.2 hereof
and promptly after giving receipt of notice of the determination
of a Claim in accordance with the provisions of Section 3.3
hereof, the Escrow Agent shall deliver to Buyer, free and clear of
any interest of Seller therein, from the Escrow Fund, an amount
equal to the amount of such Claim payable to Buyer pursuant to
such determination. If the amount of the Escrow Fund then held by
the Escrow Agent is less than or equal to the amount of such Claim
so payable, the Escrow Agent shall deliver to Buyer all of the
Escrow Fund then held by it, free and clear of any interest of
Seller therein.
4.5 Remedies Cumulative. The rights and remedies
of Buyer under this Agreement are cumulative with, and in addition
to, any and all other rights and remedies which Buyer may have
under the Purchase Agreement.
5. The Escrow Agent.
5.1 Disputes. In the event the Escrow Agent shall
believe there shall be any disagreement among or between the
Parties resulting in adverse claims or demands being made in
connection with the Escrow Fund, or in the event that the Escrow
Agent in good faith is in doubt as to what action it should take
hereunder, the Escrow Agent shall be entitled, at its option, (a)
to refuse to comply with any claims or demands on it as long as
such disagreement shall continue and, in so refusing, shall make
no delivery or other disposition of the Escrow Fund pursuant to
the terms of this Agreement and shall not be or become liable in
any way or to any person for its failure or refusal to comply with
such conflicting or adverse claims or demands and shall be
entitled to continue so to refrain from acting and so to refuse to
act until the Escrow Agent shall have received (i) a final and
non-appealable order of a court of competent jurisdiction
directing delivery of the Escrow Fund, or (ii) a written agreement
executed by Buyer and Seller directing delivery of the Escrow
Fund, in which event the Escrow Agent shall disburse the Escrow
Fund in accordance with such order or agreement, or (b) to place
the Escrow Fund with a proper court and to apply to any court of
competent jurisdiction (including the commencement of immediate
action or suit) to determine the rights of the parties. Any court
order referred to in (i) above shall be accompanied by a legal
opinion by counsel for the presenting party satisfactory to the
Escrow Agent to the effect that said court order is final and non-
appealable. The Escrow Agent shall act on such court order and
legal opinion without further question.
5.2 Performance. To induce the Escrow Agent to
act hereunder, it is further agreed by the parties that:
(a) The duties and obligations of the Escrow
Agent shall be determined solely by the express provisions of this
Agreement. No implied duties or obligations shall be read into
this Agreement against the Escrow Agent. The Escrow Agent shall
not be under any duty to give the Escrow Fund held by it hereunder
any greater degree of care than it gives its own similar property
and shall not be required to invest any funds held hereunder
except as directed in this Agreement. Uninvested funds held
hereunder shall not earn or accrue interest.
(b) The Escrow Agent shall be entitled to rely
upon any order, judgment, certification, demand, notice,
instrument or other writing delivered to it hereunder without
being required to determine the authenticity or the correctness of
any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any
instrument or signature believed by it in good faith to be genuine
and may assume, if in good faith, that any person purporting to
give notice or receipt or advice or make any statement or execute
any document in connection with the provisions hereof has been
duly authorized to do so.
(c) The Escrow Agent shall not be bound or in
any way affected by any notice of any modification or cancellation
of this Agreement or the Purchase Agreement, or of any fact or
circumstance affecting or alleged to affect rights or liabilities
hereunder other than as is herein set forth, or affecting or
alleged to affect the rights and liabilities of any other person,
unless notice of the same is delivered to the Escrow Agent in
writing, signed by the proper parties to the Escrow Agent's
satisfaction and, in the case of modification of the duties or
responsibilities of the Escrow Agent, unless such modification
shall be satisfactory to the Escrow Agent and approved by the
Escrow Agent in writing.
(d) The Escrow Agent shall not be liable for
any error of judgment, or any action taken by it in good faith and
believed by it to be authorized or within the rights or powers
conferred upon it by this Agreement, except in the case of its
gross negligence, nor shall it be liable for the default or
misconduct of any employee, agent or attorney appointed by it who
shall have been selected with reasonable care. The Parties shall
defend (by attorneys selected by the Escrow Agent), indemnify and
hold harmless the Escrow Agent (and any successor escrow agent)
from and against any and all losses, liabilities, claims, actions,
judgments, damages, costs and expenses arising out of and in
connection with this Agreement or the Escrow Agent's duties or
services hereunder. This indemnity includes, without limitation,
disbursements and reasonable attorneys' fees either paid to retain
attorneys or representing the fair value of legal services
rendered by the Escrow Agent to itself. Without limiting the
foregoing, the Escrow Agent shall in no event be liable in
connection with its investment or reinvestment of any cash
held by
it hereunder, in accordance with the terms hereof, including
without limitation, any liability for any delays (not resulting
from gross negligence) in the investment or reinvestment of the
Escrow Fund or any loss of interest incident to any such
delays.
(e) The Escrow Agent shall not charge a
separate administrative fee for its services as Escrow Agent
hereunder. However, the Parties agree to pay or reimburse the
Escrow Agent upon request for all expenses, disbursements and
advances, including reasonable attorneys' fees, incurred or made
by it in the performance of its duties hereunder.
(f) The Escrow Agent shall be entitled to
consult with counsel of its own choice and shall have full and
complete authorization and protection for any action taken or
suffered by it hereunder in good faith and in accordance with the
opinion of such counsel.
(g) Escrow Agent shall be entitled to
represent or to act as an advisor of Buyer and its affiliates in
any lawsuit or any other matter.
(h) The Escrow Agent does not have any
interest in the Escrow Fund deposited hereunder but is serving as
stakeholder only. Upon payment of the Escrow Fund as herein
provided, the Escrow Agent shall be fully released from all
liability and obligations with respect thereto.
6. Resignation. The Escrow Agent (and any successor
escrow agent) at any time may be discharged from its duties and
obligations hereunder by the delivery to it of notice of
termination signed by the Parties or at any time may resign by
giving written notice to such effect to the Parties. Upon any
such termination or resignation, the Escrow Agent shall deliver
the Escrow Fund to any successor escrow agent designated by the
Parties in writing, or to any court of competent jurisdiction if
no such successor escrow agent is agreed upon, whereupon the
Escrow Agent shall be discharged of and from any and all further
obligations arising in connection with this Agreement. The
termination or resignation of the Escrow Agent shall take effect
on the earlier of (i) the appointment of a successor (including a
court of competent jurisdiction) or (ii) the day that is 30 days
after the date of delivery: (A) to the Escrow Agent of the other
parties' notice of termination or (B) to the other parties hereto
of the Escrow Agent's written notice of resignation. If at that
time the Escrow Agent has not received a designation of a
successor escrow agent, the Escrow Agent's sole responsibility
after that time shall be to keep the Escrow Fund until receipt of
a designation of successor escrow agent or a joint written
disposition instruction by the other parties hereto or an
enforceable order of a court of competent jurisdiction.
(i) submit to the jurisdiction of any New York State or
federal court sitting in New York in any action or proceeding
arising out of or relating to this Agreement, (ii) agree that all
claims with respect to such action or proceeding shall be heard
and determined in such New York State or federal court and
(iii) waive, to the fullest extent possible, the defenses of an
inconvenient forum. The parties hereby consent to and grant any
such court jurisdiction over the persons of such parties and over
the subject matter of any such dispute and agree that delivery or
mailing of process or other papers in connection with any such
action or proceeding in the manner provided hereinabove, or in
such other manner as may be permitted by law, shall be valid and
sufficient service thereof.
8. Notices. All notices, instructions and other
communications required or permitted to be given, forwarded or
transmitted hereunder or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been duly
given if delivered personally, or three business days after being
sent by registered or certified mail, return receipt requested,
postage prepaid, addressed to the address set forth above, or one
business day after being delivered to a nationally recognized
overnight courier service or when sent by electronic facsimile
transmission, or to such other address as the person to whom
notice is to be given shall have given notice of pursuant
hereto.
9. Miscellaneous. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their
respective successors and assigns and shall not be enforceable by
or inure to the benefit of any other third party except as
provided with respect to the termination of, or resignation by,
the Escrow Agent. No party may assign any of its rights or
obligations under this Agreement without the written consent of
the other parties. No waiver hereunder shall be effective unless
in a writing signed by the party to be charged. This Agreement
may be amended, modified, superseded, or canceled, and any of the
terms hereof may be waived, only by a written instrument executed
by the parties hereto. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the
State of New York, without reference to conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date and year first above
written.
VIE SYSTEMS, INC.
By:
▇▇▇▇ ▇▇▇▇▇▇, President
NEW PARADIGM SOFTWARE CORP.
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇, President
GOLENBOCK, EISEMAN, ASSOR & ▇▇▇▇, as
Escrow Agent
By:
Schedule 3.1
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is entered
into as of May 9, 1997 between New Paradigm Software Corp., a
New York corporation ("Licensor"), and VIE Systems, Inc., a
Delaware corporation ("VIE").
WHEREAS, Licensor has developed and owns certain
software products and programs known as "COPERNICUS";
WHEREAS, Licensor and VIE have entered into an
Agreement of Purchase and Sale of Assets (the "Purchase
Agreement"), pursuant to which VIE has agreed to purchase and
Licensor has agreed to sell to VIE, inter alia, certain of
its assets and software known as COPERNICUS;
WHEREAS, this is the License Agreement contemplated
by Section 3.1(a) of the Purchase Agreement;
WHEREAS, in addition to and not in limitation of
the provisions of the Purchase Agreement, and intending this
Agreement to survive in the event that the Closing
contemplated under the Purchase Agreement shall not occur,
VIE desires to obtain a license on the terms and conditions
contained herein; and
WHEREAS, this Agreement is intended to fall within
the purview of 11 U.S.C. 365(n);
NOW, THEREFORE, in consideration of the above and
the mutual promises and covenants herein, the parties hereby
agree as follows (capitalized terms not otherwise defined
herein shall have the meanings specified in the Purchase
Agreement):
1. Definitions. As used herein, the following
terms shall have the following meanings:
"Additional Methods" includes, but is not limited
to, the programs, routines, subroutines, translators,
compilers, assemblers, operating systems, conversion filers,
encryption and encryption algorithms and codes, protocol
modifications made thereto, and all support documentation
related thereto, including, but not limited to, flowcharts,
instructions, end-user manuals, demonstration models and test
aids, including any and all updates and modifications made
thereto, which may be developed by or for VIE for the purpose
of exploiting the distribution of the Programs (as defined
below).
"Affiliate" shall mean any entity having any
relationship, contract, or arrangement with VIE with respect
to any matter which affects or is affected by this Agreement
wherein VIE has or exercises or has the power to exercise,
directly or indirectly (in any manner) control, direction, or
restraint of such entity, or wherein such entity has the
power to exercise, directly or indirectly (in any manner)
control, direction, or restraint of VIE, or wherein such
entity and VIE are subject to common or mutual control,
direction, or restraint.
"Documentation" is the documentation included
within the Source Code and shall mean all written information
relating to the design, use, implementation and correction of
algorithms, mask work rights and other programs, including,
without limitation, any functional and design specifications,
notes on the architecture, use and programmer instructions,
logic, flow charts, principles of operation and diagrams,
coding conventions, alpha and beta testing notes, test
suites, test plans, regression suites, error reports and
logs, patches and patch instructions, project history
documents and other technology or information, proprietary
development tools, and all other writings which are necessary
or helpful to a skilled programmer to create, understand,
maintain, modify, correct errors and enhance any program
thereof without assistance from Licensor, as more fully
described in Schedule A hereto.
"Information" shall mean any and all information
relating to or arising out of the Programs, Source Code,
Documentation and/or Additional Methods, and including,
without limitation, trade secrets and any and all embodiments
and representations of Intellectual Property Rights.
"Intellectual Property Rights" shall include, but
not be limited to, rights associated with the Programs in
know-how, trademarks, copyrights, patents, patent
applications (including without limitation patent
applications set forth in Schedule 1.1(c) of the Purchase
Agreement and proprietary rights with respect thereto, in all
languages and computer platforms, operating systems and
environments, patent reissues, renewals, continuations,
continuations-in-part, or divisions of any patent or patent
application), trade secrets (as defined in the Restatement of
Torts), instructions, improvements, modifications,
suggestions, proposals, programs, ideas, writings, and the
like of any sort whatsoever, and any embodiment thereof
including, but not limited to, computer programs,
documentation of programs, assembly and detailed drawings,
plans, specifications, results of technical investigations
and research, assembly, and parts manuals, and any other
information which are owned or controlled by Licensor.
"Object Code" shall mean the machine readable
Programs which result from the translation of the Source Code
into machine readable.
"Programs" shall mean, alone or in combination, the
programs which make up the COPERNICUS computer programs and
Documentation, including the META system, METAbase
database, UNIVERSAL TRANSLATOR (also known as COPERNICUS),
and any extensions which are dependent upon the foregoing for
their function, as more fully described in Schedule A hereto.
"Source Code" shall mean visual and machine
readable embodiments of an algorithm, mask work rights or
computer program, including the process or method thereof and
the concepts contained therein, and the representation in the
original language in which the program was coded and any
languages into which the same may have been translated,
together with instructions and any other information
necessary or convenient to the compilation and/or editing of
such code into object code, including any and all comments by
authors, procedural code (such as job control language) and
related documentation.
"Trademark" shall mean any term or terms supplied
by Licensor and used in any form or format, style or design,
as applied to the Programs and Additional Methods in whatever
form and identifies business names, trademarks, and service
marks, as well as any goodwill and rights, at common law or
otherwise, pertinent thereto, and refers to trademarks,
service marks and trade names as set forth on Schedule B
hereto.
"Trademark Registrations" shall mean any United
States Trademark Registration or any other domestic
application or registration made by VIE now or hereafter
obtained.
"VIE Improvements" means changes or additions at
any time after the signature of this Agreement made by VIE to
the Programs or Additional Methods, other than maintenance
modifications, which add one or more significant new program
functions to the Programs or Additional methods or
significantly improve their performance by changes in system
design and/or coding.
2. Deliveries. On the date hereof, Licensor
shall deliver to VIE, a master copy of the Programs and
Documentation for use by VIE to publish the same, and a copy
of the Source Code.
3. License Grant.
(a) Grant. Subject to the provisions of this
Agreement, Licensor hereby grants to VIE a license (alone or
in combination with any other programs, products or services)
to use, sublicense, distribute or otherwise commercialize and
exploit the Programs and to translate, modify, make
derivative works of, revise, upgrade, enhance, reproduce,
manufacture, market and distribute the Programs in all
languages and computer platforms, operating systems and
environments; to translate, modify and to make Additional
Methods and to, create VIE Improvements, as follows:
(i) An exclusive license for a period of five
(5) years from the date hereof (the "Exclusive License") for
the United States (including its territories and possessions)
and Canada in and only in the industry fields of financial
services, health care and food and to all federal, state,
provincial and local governments (the "Licensed Industry
Fields");
(ii) In addition to, and without limiting the
Exclusive License, a perpetual non-exclusive license (the
"Non-Exclusive License") in all markets and industries for
all territories throughout the world (the Non-Exclusive
License and the Exclusive License together being hereinafter
referred to as the "License").
(b) The License does not confer upon VIE the right
to sell, assign or transfer, pledge, encumber, subject to any
lien, or otherwise convey title, in whole or in part, whether
or not for value, in the Programs or Intellectual Property
Rights; provided, however VIE shall be permitted to place a
copy of the Source Code in escrow for the benefit of its
sublicensees (including any OEMs).
(c) The License granted pursuant to Section 3(a)
includes the right for VIE to reproduce at its own expense
the Programs and supporting materials contained on magnetic
media in non-printed, machine readable form solely for the
purposes of the License and rights granted hereunder. VIE
may, at its own expense, copy for its own internal use and
for the internal use of its sublicensees (including any
OEMs), all Documentation included as a part of the Programs
as listed in Schedule A attached hereto. VIE shall, on a
quarterly basis, notify Licensor in writing of the number of
copies of programs reproduced. Except as expressly permitted
in this Section 3, VIE shall not copy, reproduce,
remanufacture or duplicate all or any part of any physical or
magnetic version of the Programs or supporting materials.
(d) Sublicensees. VIE shall, consistent with the
scope of and terms applicable to the License, have the right
to grant sublicenses to Affiliates and end users, without
prior written notice to Licensor, and shall have the right to
grant sublicenses to OEMs upon prior written notice to
Licensor. Any sublicense granted by VIE shall be subject to
the confidentiality provisions of Section 12 herein and shall
provide for the return of all copies of the Program to VIE
upon termination of said license.
(e) Trademarks.
(i) Licensor hereby grants to VIE the right
to use any Trademark and any Trademark Registration in
connection with the License hereunder, as, or as part
of, the marks for or in conjunction with any of the
Programs under the existing names or marks of Programs.
Notwithstanding anything to the contrary contained
herein, any use by VIE of any Trademark shall be deemed
a use on behalf of and as agent for Licensor.
(ii) In order to protect the copyrights of
Licensor in, and Trademarks of Licensor used with, the
Programs, Documentation and supporting materials, VIE
agrees to reproduce all proprietary legends of Licensor,
including all copyright and/or trademark notices
contained on the copies of the Program and supporting
materials delivered to VIE pursuant to this Agreement in
or on any copies or partial copies (including those made
with respect to Additional Methods) made by VIE,
including, for the on screen sign-on.
(iii) It is agreed between the parties hereto
that twenty-five percent (25%) of any Royalty (as
hereinafter defined) shall be attributable to use of the
Trademarks.
4. Term. The term of the License shall commence
on the date hereof and terminate either (i) in the event of a
Closing pursuant to the Purchase Agreement, on the effective
date of said Closing; (ii) in the event the Closing under the
Purchase Agreement does not occur , then on the fifth
anniversary of the date hereof with respect to the Exclusive
License but shall not terminate with respect to the Non-
Exclusive License; or (iii) in accordance with the terms of
Section 13 herein.
5. Royalty. During the term of this License,
royalties shall be payable to Licensor at the rate of five
percent (5%) of "Net Revenue" of VIE commencing on the date
hereof (the "Royalty"). For purposes herein, "Net Revenue"
shall be equal to the sums received and retained by VIE from
the sale, license and distribution of the Programs less the
sum of (i) any applicable credits, discounts and rebates,
including, but not limited to, quantity, dealer, distributor
and promotional credits, discounts, adjustments and rebates,
and (ii) taxes (such as sales, use or similar taxes) paid or
payable by VIE in connection with such sale or license. If
VIE refunds or issues a credit memo on a customer's price due
to customer dissatisfaction or other valid reason, this
negative price shall result in a reduction in Net Revenue and
therefore a reduction of the Royalty due to Licensor. If any
Programs is included by VIE in a program or combination of
programs, the aggregate functionality of which extends beyond
any of such Programs, and which additional functionality is
either (1) distinct from the collective functionality of the
Programs, and/or (2) separately available from VIE and/or any
person other than VIE (without royalty payable hereunder),
then the Net Revenue attributable to the sale, license or
distribution of such product shall be proportionately and
fairly allocated among all significant components of such
combination product. From and after the date hereof, VIE
agrees not to materially alter its pricing strategy with
respect to the sale, license or distribution of the Programs
for purposes of reducing or otherwise negating its obligation
to pay the Royalty to Licensor (for example, by increasing
its charges for maintenance fees or consulting services at
the expense of license fees so as to reduce the Net Revenue
calculation).
6. Payment of Royalties.
(i) The Royalty shall be paid to Licensor on
a quarterly basis within fifteen (15) days following the
close of each calendar quarter; provided, however,
royalty payments for the first two quarters hereunder
shall accrue but not be payable until the third calendar
quarter following the date hereof (each such payment
being referred to herein as a "Royalty Payment"). With
each Royalty Payment, VIE shall provide Licensor with a
statement setting forth the basis for determination of
each such Royalty Payment in respect of the period
applicable to the Royalty Payment due. In the event
that the Closing under the Purchase Agreement shall
occur, no Royalty Payments shall be due or payable
pursuant to the terms of this Agreement.
(ii) Records. Vie shall, for itself and its
sublicensees, keep full and accurate written books and
records, for a period of no less than three (3) years
after termination or expiration of this Agreement, in
sufficient detail and in accordance with the terms of
this Agreement, to permit verification of the sums
payable under this Agreement. VIE shall, at Licensor's
sole cost and expense, permit Licensor or any
representative of Licensor to access, during normal
business hours and on reasonable notice, to any such
records of VIE. Licensor shall keep all such
information confidential and not use it for any purpose
other than for determining compliance with this
Agreement.
7. Audit Right. Licensor shall be entitled to
have the applicable books and records of VIE examined for the
purposes of showing compliance with this Agreement (the
"Audit") by a nationally-recognized firm of independent
certified public accountants, during normal business hours,
together with any other relevant records for purposes of
verifying any Royalty Payments as well as, more generally,
the accuracy of statements made, or reports submitted, to
Licensor in connection with the payment of any Royalties
hereunder. Such Audit shall be at Licensor's expense except
in the event that an adjustment upward resulting from
underpayment of Royalties due by VIE is greater than five
(5%) percent of fees due for the period audited, in which
case VIE shall pay all expenses associated with the Audit and
all sums identified as due and interest thereon at the rate
of 1 1/2 percent per month (or maximum rate available by law)
and adjustment in royalties due, whether such underpayment
results from error, omission or otherwise. If VIE objects to
the Licensor's choice of accountants, Licensor and VIE will
select by lot a nationally-recognized firm of independent
certified public accountants (after excluding Licensor's and
VIE's regular outside accounting firms).
8. Assignment of Certain Third Party Contracts.
In the event that the Closing under the Purchase Agreement
shall not occur, all of Licensor's rights under the IBM
Agreement and the other agreements specified in Schedule C
hereto (the "Third Party Contracts") hereto shall be deemed
automatically assigned to VIE pursuant to the terms hereof
(and Licensor shall execute any other instrument reasonably
satisfactory to VIE with respect to such assignment), and
Licensor shall use its best efforts to cause each other
contracting party thereto to consent to such assignment.
Licensor acknowledges that the inability to assign any of
such Third Party Contracts shall not relieve Licensor of any
of its other obligations hereunder. Anything in this License
to the contrary notwithstanding, this Section 8 shall not
constitute an agreement to assign any unassignable Third
Party Contracts if an attempted assignment thereof, without
the consent of a third party thereto, would constitute a
breach thereof or in any way affect the rights of Licensor or
VIE thereunder. Licensor promptly shall use its best efforts
to obtain all of such consents at its own cost and expense
and until such consents are obtained, Licensor will cooperate
with VIE in any arrangement designed to provide for VIE all
rights and benefits under all unassignable Third Party
Contracts, including enforcement for the benefit of VIE of
any and all rights of Licensor against any third party
thereto arising out of the breach or cancellation by such
third party or otherwise, and Licensor shall, without further
consideration therefor, pay, assign and remit to VIE promptly
all monies and, to the extent permitted, all other rights or
consideration received, or which may be received or obtained
in respect of performance of any unassignable Third Party
Contracts. Licensor shall not renew, extend or modify any
such Third Party Contracts without the prior written consent
of VIE.
9. Certain Representations.
(i) The representations and warranties of Licensor
contained in Article 5 of the Purchase Agreement are
incorporated herein by reference as if set forth herein in
their entirety, it being specifically understood that such
incorporated provisions shall have effect herein independent
of their effect in the Purchase Agreement.
(ii) Licensor makes no representations and
warranties with respect to intellectual property rights of
third parties in connection with any such party's software
under Third Party Contracts assigned to VIE in accordance
with Section 8 herein.
(iii) Licensor understands and agrees, on its own
behalf and that of its sublicensees, that in the event that
VIE or any of its licensees or customers shall develop their
own Additional Methods without having had access to
Licensor's Additional Methods, neither Licensor nor its
sublicensees shall hold VIE or its licensees and/or customers
liable with respect to any ownership rights which Licensor
may claim.
10. VIE's Representations.
(i) The representations and warranties of VIE
contained in Section 6 of the Purchase Agreement are
incorporated herein by reference as if set forth herein in
their entirety, it being specifically understood that such
incorporated provisions shall have effect herein independent
of their effect in the Purchase Agreement.
(ii) VIE understands and agrees, on its own behalf
and that of its sublicensees, that in the event that Licensor
or any of its existing licensees or customers shall develop
their own Additional Methods without having had access to
Licensee's Additional Methods, neither VIE nor its
sublicensees shall hold Licensor, its licensees and/or
customers liable with respect to any ownership rights which
VIE may claim.
(iii) VIE hereby represents and warrants that it
shall use the Trademark at all times in a manner which is
consistent with the quality of the Trademark and the goods it
identifies.
11. Indemnification; Limitations. Without
limiting any of the provisions of Section 9 of the Purchase
Agreement, Licensor agrees to indemnify and to hold VIE
harmless from and against and in respect of, and VIE agrees
to indemnify and to hold Licensor harmless from and against
and in respect of, any losses, damages, claims, liabilities,
costs and expenses (including without limitation any
reasonable legal, accounting or other expenses for
investigating or defending any actions or threatened actions)
incurred by the indemnified party in connection with:
(a) any damage or deficiency resulting from
any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part
of the indemnifying party under this Agreement;
(b) any and all claims made against the
indemnified party in respect of liabilities or
obligations of the indemnifying party (including
liabilities for taxes) relating to the Programs, the
Intellectual Property Rights, Additional Methods, and
related rights and assets to the extent such liabilities
and obligations of the indemnifying party are not to be
assumed by the indemnified party or are not attributable
to acts or omissions of the indemnified party;
(c) any and all loss, liability, damage, cost
or expense suffered or incurred by VIE based on or
arising out of the infringement or alleged infringement
of any of the Programs as they exist on the date hereof
of the proprietary rights of any third party; and
(d) all reasonable costs and expenses
(including attorneys' fees) incurred by the indemnified
party in connection with any claim, action, suit,
proceeding, demand, assessment or judgment incident to
any of the matters the indemnified party is indemnified
against by the indemnifying party in this Agreement.
12. CONFIDENTIALITY
(a) Information is the essence of this Agreement.
Accordingly, VIE, on behalf of itself and its employees,
agrees that all of said Information shall be held in
confidence by VIE and that VIE shall not disclose the same to
others, nor (directly or indirectly) assist others to use the
same for itself or others except in furtherance of the
transactions contemplated in Section 3 above or as otherwise
required by law. Notwithstanding anything to the contrary
contained above, VIE shall obtain Licensor's express prior
written consent to each disclosure of Source Code to third
parties, which consent shall not be unreasonably withheld.
(b) This requirement of confidentiality extends to
any and all Information previously acquired by VIE from
Licensor and shall survive the termination of this Agreement
for any reason.
(c) VIE shall secure written agreements from its
employees, consultants, agents, licensees, OEMs and customers
(hereinafter a "Person") to hold Information in confidence
which is consistent with VIE's obligations under this
Agreement.
13. Events of Termination.
This Agreement and the License granted herein may
be terminated:
(i) at any time by mutual written consent; or
(ii) by Licensor upon written notice in the event
that VIE shall breach any of the
confidentiality obligations listed in
subparagraphs (a) through (c) below, and such
breach, if curable, is not cured within thirty
(30) days of written notice to VIE from
Licensor that Licensor intends to terminate
this Agreement as a result of such breach (it
being understood that a breach shall only be
deemed incurable if as a result of such breach
the Source Code has been disclosed to any
person or entity from whom a written
obligation of confidentiality consistent with
VIE's obligations under this Agreement, is or
would be impossible to be obtained such that
the obligations would be effective prior to
such disclosure, it being further understood
that this Agreement shall be terminable
immediately upon written notice in the event
of such incurable breach):
(a) VIE shall fail to maintain a corporate
policy wherein its employees having
access to Source Code are required to
execute an employment or confidentiality
agreement requiring such employee to hold
Source Code in confidence consistent with
VIE's obligations under this Agreement;
(b) VIE shall fail to obtain confidentiality
agreements from its consultants
affiliates, or any other third parties
prior to having access to the Source Code
binding such consultants, affiliates, or
third parties to hold the Source Code in
confidence consistent with VIE's
obligations under this Agreement; or
(c) VIE shall make a distribution of the
Source Code to any third party in
contravention of the last sentence of
Section 12(a) above (provided, however,
that a distribution of the Source Code
not authorized or aided by VIE by a
Person subject to a confidentiality
agreement with VIE shall not give the
Licensor the right to terminate this
Agreement pursuant to this Section 13).
(iii) by Licensor in the event that VIE shall have
terminated or suspended its business and
failed to remedy such termination or
suspension within ninety (90) days after
receipt of written notice from the Licensor,
provided, however, that this notice shall not
prejudice the right of Licensor to recover any
royalties or other sums due at the time of
such termination and shall not prejudice any
cause of action or claim Licensor accrued or
may accrue on account of any breach or default
by VIE; or
(iv) by Licensor upon thirty (30) days' written
notice to VIE in the event that the Closing
under the Purchase Agreement shall not have
occurred due solely to a breach by VIE of any
of its obligations under the Purchase
Agreement provided that Licensor shall have
satisfied all of the conditions to Closing as
set forth in Section 4.5 of the Purchase
Agreement.
14. Effect of Termination.
(a) Upon the termination of this Agreement
pursuant to the terms of Section 13 above, VIE shall return
to Licensor all copies of the Programs and supporting
materials or, upon Licensor's request, destroy all such
copies of the Programs for Additional Methods and certify to
Licensor in writing that they have been destroyed. VIE's
obligations regarding confidentiality pursuant to this
Agreement and its obligation to make payments to Licensor for
all sums due pursuant to Section 5 hereof shall survive the
termination of this Agreement; however, except as otherwise
provided in Section 13 hereof, it is expressly agreed that
VIE's failure to pay Royalties when due or its failure to
perform any of its other covenants hereunder shall not be
grounds for termination of the License hereunder and
Licensor's sole remedy for any such breach shall be an action
for monetary damages to the fullest extent permitted by
applicable law.
(b) Upon termination of this Agreement, however
occurring, all accrued royalties on the Programs which have
been made, used, licensed, or otherwise disposed of by or on
behalf of VIE, shall immediately become due and payable to
Licensor. Any Program in existence at the termination of
this Agreement and upon which royalty has not been so paid
shall become immediately due and payable to Licensor.
(c) With respect to all agreements between VIE and
third parties, upon termination of this Agreement for any
reason, any and all rights and benefits to VIE under any such
agreements shall vest in Licensor, at Licensor's option. All
use of any Trademark shall cease and VIE shall return all
copies of the Program(s) and Additional Method(s).
(d) Upon the termination of this Agreement, VIE
shall be entitled to continue to provide maintenance and
support for its existing end users (in the event that
Licensor has not exercised its option as set forth in Section
14(c) above) and Licensor shall grant to VIE a License to
permit VIE to provide such maintenance and support but VIE
shall not be entitled to grant any further sublicense or to
use the Programs to develop further Additional Methods.
15. Expenses. Each of the parties shall pay its
own fees and expenses with respect to the transactions
contemplated hereby.
16. Injunction Relief. (a) VIE agrees that the
obligations and promises of VIE under this Agreement are of a
unique character that gives them particular value. VIE
acknowledges and agrees that a breach of any promise or
covenant regarding confidential Information or Intellectual
Property Rights may result in irreparable and continuing
damage to Licensor for which there may be no adequate remedy
at law and, in the event of such breach, Licensor shall be
entitled to seek injunctive relief and/or a decree for
specific performance, and such other further relief as may be
proper to specifically enforce those covenants, without the
posting of any bond. VIE agrees to pay to Licensor any
reasonable expenses, including but not limited to attorney
fees, incurred in obtaining such specific enforcement (in
addition to any other relief to which Licensor may be
entitled).
(b) Licensor hereby acknowledges and agrees that a
breach of any covenant by Licensor hereunder may result in
irreparable and continuing damage to VIE for which there may
be no adequate remedy at law and, in the event of such
breach, VIE shall be entitled to seek injunctive relief
and/or a decree for specific performance, and such other
further relief as may be proper to specifically enforce those
covenants, without the posting of any bond. Licensor agrees
to pay VIE any reasonable expenses, including but not limited
to attorneys fees, incurred in obtaining such specific
enforcement (in addition to any other relief to which VIE may
be entitled).
17. Jurisdiction; forum; governing law.
(a) This Agreement shall be deemed entered into
the State of New York and shall be construed and governed
solely by the laws of the State of New York applicable to
agreements made to be performed entirely within the State.
(b) For purposes of this Agreement, the parties
hereby irrevocably submit to the exclusive jurisdiction of
any New York State or federal court sitting in New York
county, New York or the Southern District of the State of New
York. Each party irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or
proceeding brought in any such court, any claim that any such
court, action or proceeding brought in such a court has been
brought in an inconvenient forum and the right to object,
with respect to any such suit, action or proceeding brought
in any such court, that such court does not have jurisdiction
over such party.
18. Survival of Restrictive Covenants. The
covenants herein concerning Intellectual Property Rights will
be construed as independent of any other provision hereof.
The provisions of Section 5 (royalties), Section 11
(indemnification) and 12 (confidentiality) shall survive the
termination of this Agreement.
19. Effect of Partial Invalidity. If any one or
more of the provisions of this Agreement should be ruled
wholly or partly invalid or unenforceable by a court or other
government body of competent jurisdiction, then: (a) the
validity and enforceability of all provisions to this
Agreement not ruled to be invalid or unenforceable with be
unaffected; (b) the effect of the ruling will be limited to
the jurisdiction of the court or other government body making
the ruling; (c) the provision(s) held wholly or partly
invalid or unenforceable will be deemed amended, and the
court or other government body is authorized to reform the
provision(s), to the minimum extent necessary to render them
valid and enforceable in conformity with the parties' intent
as manifested herein; and (d) if the ruling, and/or the
controlling principle of law or equity leading to the ruling,
is subsequently overruled, modified, or amended by
legislative, judicial, or administrative action, then the
provision(s) in question as originally set forth in this
Agreement will be deemed valid and enforceable to the maximum
extent permitted by the new controlling principle of law or
equity.
20. Notices. All notices shall be in writing and
shall be deemed to have been duly given to a party hereto if
delivered personally, then on the date of such delivery, or
on the fifth day after being deposited in the mail if mailed
via registered or certified mail, return receipt requested,
postage prepaid, or on the next business day after being sent
by recognized national overnight courier services, in each
case, to such party, at the following respective addresses:
if to Licensor, to
New Paradigm Software Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
if to VIE, to
VIE Systems, Inc.
▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
Golenbock, Eiseman, Assor & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇, Esq.
21. No Third-Party Beneficiaries. Nothing herein,
express or implied, is intended or shall be construed to
confer upon or give to any person, firm, corporation or legal
entity, other than the parties hereto, any rights, remedies
or other benefits under or by reason of this Agreement or any
documents executed in connection with this Agreement.
22. Miscellaneous. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument. The paragraph headings are for convenience
only and are not a part of this agreement. This Agreement
shall inure to the benefit of and be binding upon the parties
and their respective successors and permitted assigns. Any
and all rights and remedies of the parties hereunder shall be
separate and apart from, and in addition to, any and all
rights and remedies of the parties pursuant to the terms of
the Purchase Agreement.
23. Assignment. This Agreement may be freely
assigned by VIE to an Affiliate of VIE, without the prior
written consent of the Licensor, or to a third party with the
prior written consent of the Licensor (which consent shall
not be unreasonably withheld or delayed); provided, each
assignee of this Agreement shall acknowledge in writing to
the Licensor that it will be legally bound by the obligations
of the VIE set forth herein.
IN WITNESS WHEREOF, the parties have duly executed
this Agreement as of the date first above written.
NEW PARADIGM SOFTWARE CORP.
By:
Name:
Title:
VIE SYSTEMS, INC.
By:
Name:
Title:
Exhibit 3.1(c)
VOTING AGREEMENT
AGREEMENT dated as of this day of
____________, 1997, by and between
the undersigned shareholder and VIE Systems, Inc., a Delaware
corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, the undersigned is a shareholder of New
Paradigm Software Corp., a New York corporation (the
"Company"); and
WHEREAS, the undersigned desires to induce Buyer to
enter into an Agreement of Purchase and Sale of Assets with
the Company, as hereafter amended (the "Purchase Agreement"),
providing for the purchase by Buyer of, inter alia, all of
the assets and business of the Company relating to its
COPERNICUS software and "New Paradigm Architecture" (the
"Sale Transaction"), for the consideration and on the terms
and conditions set forth in the form of Purchase Agreement, a
copy of which has been delivered to the undersigned.
NOW, THEREFORE, in consideration of the foregoing,
the parties do hereby agree as follows:
1. Representations and Warranties. The
undersigned hereby represents and warrants to Buyer that the
undersigned (a) owns of record and beneficially the number of
shares of capital stock of each class or series of the
Company set forth below the undersigned's name below, (b) is
entitled to vote such shares at the Special Meeting (as
defined in the Purchase Agreement), and such shares represent
the number of outstanding shares of common stock of the
Company entitled to vote at the Special Meeting set forth
below the undersigned's name below, and (c) has full power
and authority to make, enter into and carry out the terms of
this Agreement.
2. Agreement to Vote Shares. Until the Expiration
Date, the undersigned shall vote or cause to be voted, and/or
execute a written consent of shareholders with respect to,
all of the shares of capital stock of the Company owned of
record or beneficially by the undersigned and any shares of
capital stock of the Company hereafter acquired by the
undersigned (collectively, the "Shares"), for and in favor of
the Sale Transaction and the transactions contemplated by the
Purchase Agreement at any meeting of shareholders of the
Company called therefor or at any adjournment thereof or by
any consent related thereto (and, if applicable, against any
competing proposals and/or transactions).
3. Conditional Irrevocable Proxy. Concurrently
with the execution and delivery of this Agreement, the
undersigned has executed and delivered to Buyer, pursuant to
Section 212 of the New York Business Corporation Law, an
irrevocable proxy, in the form attached as
Exhibit A hereto, with respect the Shares. Buyer may
exercise such proxy only if it appears that any of the Shares
are or may be voted or a consent given otherwise than in
accordance with this Agreement or the Shares are not voted or
no consent is given.
4. Agreement Not to Transfer Shares. Until the
Expiration Date, the undersigned hereby agrees not to sell,
grant an option for the sale of, assign, transfer, pledge or
otherwise encumber or grant any proxy or voting rights
(except to Buyer) with respect to any of the Shares.
5. Expiration Date. This Agreement shall expire
upon the earliest to occur of (a) the closing of the Sale
Transaction and (b) one hundred and twenty (120) days after
the date of the execution and delivery of the Purchase
Agreement by all parties thereto (the "Expiration Date"),
6. Legend. Upon the request of Buyer,
certificates representing the Shares shall bear the following
legend:
The shares represented by this certificate are
subject to certain voting restrictions set forth in a certain
voting agreement dated __________, 1997, by and among the
parties named therein. A copy of such agreement is on file
at the executive office of the Company.
7. Further Assurances. From and after the date of
this Agreement, the undersigned shall from time to time, at
the request of Buyer and without further consideration, do,
execute and deliver, or cause to be done executed and
delivered (without cost or liability to the undersigned), all
such other and further acts, things, instruments or documents
as may be reasonably requested or required in order to
provide to Buyer the benefits contemplated by this Agreement.
8. Notices. All notices, instructions and other
communications required or permitted to be given, forwarded
or transmitted hereunder or necessary or convenient in
connection herewith shall be in writing and shall be deemed
to have been duly given if delivered personally, or three
business days after being sent by registered or certified
mail, return receipt requested, postage prepaid, addressed to
the address set forth above, or one business day after being
delivered to a nationally recognized overnight courier
service or when sent by electronic facsimile transmission.
Notices shall be sent to the undersigned at its address
indicated below, and to Buyer at ▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, with a
copy to Golenbock, Eiseman, Assor & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇.▇. ▇▇▇▇▇▇, Esq., or
to such other persons or addresses as may be designated by
like notice hereunder.
9. Miscellaneous. (a) This Agreement constitutes
the entire agreement between the parties hereto with respect
to the subject matter hereof and may not be modified or
amended nor may any right be waived except by a writing which
expressly refers to this Agreement, states that it is a
modification, amendment or waiver and is signed by all
parties with respect to a modification or amendment or the
party granting the waiver with respect to a waiver. No
course of conduct or dealing and no trade custom or usage
shall modify any provision of this Agreement.
(b) This Agreement shall be governed by and
construed in accordance with the internal laws of the State
of New York, without regard to principles of conflicts of
laws.
(c) This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their
respective successors and permitted assigns.
(d) The undersigned acknowledges that its
agreement to vote and take (and refrain from taking) other
actions herein, the agreement of the undersigned contained
herein not to sell or otherwise dispose of the Shares covered
by all of the foregoing are unique; and that Buyer will not
have adequate remedies at law if the undersigned fails to
perform any of its obligations under this Agreement.
Accordingly, the undersigned agrees that Buyer shall have the
right (without the necessity of posting any bond) to specific
performance and equitable injunctive relief if the
undersigned shall fail or threaten to fail to perform any of
its obligations under this Agreement. Buyer agrees that the
undersigned shall have no liability for money damages or any
other monetary liability under or pursuant to this Agreement.
(e) In the event that any term or provision
of this Agreement shall be deemed by a court of competent
jurisdiction to be invalid, void or unenforceable, the court
considering the same shall have the power and is hereby
authorized and directed to limit such invalid, void or
unenforceable provision, so that such term or provision is no
longer invalid, void or unenforceable and to enforce the same
as so limited. Subject to the foregoing sentence, in the
event any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, such invalidity or
unenforceability shall attach only to such provision and
shall not affect or render invalid or unenforceable any other
provision of this Agreement.
(f) The representations and warranties of the
contained in this Agreement shall survive the Expiration
Date.
(g) All references to any gender shall be
deemed to include the masculine, feminine or neuter gender,
the singular shall include the plural, and the plural shall
include the singular. The section headings contained herein
are for the purposes of convenience only and are not intended
to define or limit the contents of said sections.
(h) This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
document.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year above written.
VIE SYSTEMS, INC.
_________________________________
Signature of Shareholder
By:_______________________________
_________________________________
Name of Shareholder
__________________________________
Address of Shareholder
__________________________________
Number of Shares
__________________________________
Number of Shares able to
be Voted
Exhibit A
IRREVOCABLE PROXY FOR
SHARES OF CAPITAL STOCK
OF
NEW PARADIGM SOFTWARE CORP.
PURSUANT TO SECTION 212 OF THE
NEW YORK BUSINESS CORPORATION LAW
KNOW ALL MEN BY THESE PRESENTS:
The undersigned hereby IRREVOCABLY MAKES,
CONSTITUTES, AND APPOINTS VIE Systems, Inc. ("Buyer") the
attorney and proxy of the undersigned for the term hereof
with respect to all of the shares of capital stock of New
Paradigm Software Corp. (the "Company") set forth below (and
any shares hereafter acquired), with full power of
substitution, to vote for and in favor of the purchase by
Buyer of, inter alia, all of the assets and business of the
Company relating to its "COPERNICUS" software and the "New
Paradigm Architecture" (the "Sale Transaction") as
contemplated by the Agreement of Purchase and Sale of Assets
with the Company, as hereafter amended (the "Purchase
Agreement"), and to attend and vote all such shares at any
annual or special meeting of shareholders, and any
adjournments thereof, at which the Sale Transaction or any
other transaction contemplating the sale of any assets or
securities of the Company has been submitted to the
shareholders for approval.
This Proxy and all authority hereby conferred are
granted and conferred in furtherance of and in consideration
for Buyer undertaking to entering into the Purchase Agreement
and shall be deemed irrevocable and coupled with an interest.
The undersigned acknowledges and agrees that Buyer
will use this Proxy to vote in its own self-interest and that
Buyer shall be entitled to vote the Shares notwithstanding
the fact that such vote may inure to the benefit of Buyer.
The terms of this Proxy shall expire upon the
earliest to occur of (i) the closing of the Sale Transaction
and (ii) one hundred and twenty (120) days after the date of
the execution and delivery of the Purchase Agreement by all
parties thereto.
Dated: _______________, 1997.
Number of Shares and
Class Name of Shareholder
Signature of Shareholder
Exhibit 4.2(e)
CONFIDENTIALITY AND NON-COMPETITION UNDERTAKING
UNDERTAKING, dated as of ____________, 1997, from
New
Paradigm Software Corp. ("Seller"), ▇▇▇▇ ▇▇▇▇▇▇▇▇ *[and ▇▇▇▇
▇▇▇▇▇]* (collectively, "Shareholders" and together with Seller
hereinafter called the "Selling Parties").
W I T N E S S E T H:
WHEREAS, pursuant to an Agreement of Purchase and Sale
of Assets, dated as of _______, 1997 (the "Purchase Agreement"),
Buyer is purchasing from Seller, and the Seller is selling, the
Purchased Assets (as defined in the Purchase Agreement);
WHEREAS, it is a condition precedent to the Purchase
Agreement, that the Selling Parties enter into this
Confidentiality and Non-Competition Undertaking.
NOW, THEREFORE, for good and valuable
consideration, the
receipt of which by the undersigned is hereby acknowledged, and in
order to induce Buyer to purchase the Purchased Assets pursuant to
the terms of the Purchase Agreement, the Selling Parties hereby
jointly and severally undertake and agree as follows:
1. The Selling Parties will not and will not permit any
person or entity directly or indirectly (alone or together with
others) controlling, controlled by, affiliated with or related to,
any of the Selling Parties (collectively "Seller Affiliates"), to,
for a period of three (3) years from the date hereof (or one (1)
year in the case of ▇▇▇▇ ▇▇▇▇▇▇▇▇) (the "Limited Period"):
(a) directly or indirectly, anywhere throughout
the world (the "Territory"), own, manage, operate or control, or
participate in the ownership, management, operation or control of,
or be connected with or have any interest in, as a stockholder,
agent, consultant, partner or otherwise, or refer or exploit any
customers, business or opportunities to or with, or otherwise
assist in any manner, (i) any business which sells, distributes
or provides "middleware" software products (i.e. products whose
primary functionality or purpose is systems-to-systems
connectivity, message translation or message routing), or any
other products or services which have been sold, distributed
or provided by Seller in the Business (as defined in the Purchase
Agreement) or which are competitive therewith or (ii) any other
business which is competitive within the Territory with any
business (A) heretofore conducted by Seller in the Business and/or
(B) hereafter conducted by Buyer or any of its subsidiaries or
affiliates and reasonably related or substantially similar to any
of the business activities heretofore conducted by Seller in the
Business; provided that the foregoing shall not prohibit the
undersigned from owning less than 1% of any class of securities
listed on a national securities exchange or traded publicly in the
over-the-counter market; or
(b) without the express prior written consent of
Buyer, directly or indirectly employ or attempt to employ or
engage or knowingly arrange or solicit to have any other person or
entity employ or engage any person, who heretofore has been, or
is, on the date hereof in the employ of Buyer or any corporation
or entity controlling, controlled by or under common control with
Buyer (collectively referred to herein as the "Buyer Affiliates"),
or who has heretofore been in the employ of Seller and becomes or
has become an employee of Buyer or any of the Buyer Affiliates,
for a period of two (2) years after such person shall no longer be
employed with Seller, Buyer or any of the Buyer Affiliates.
2. The Selling Parties will not, and will not permit
any of the Seller Affiliates to, at any time, divulge or make
available to any person or entity, except as expressly consented
to in writing by Buyer, or use, any confidential information or
any documents, files or other papers concerning the business or
financial affairs of Buyer or any of the Buyer Affiliates and/or
the business or assets relating to or derived from the Business
(as defined in the Purchase Agreement), except such disclosure
which is otherwise required by applicable law or regulations. The
Selling Parties further agree that, during the Limited Period,
they will refer to Buyer prospective customers who contact them
(it being understood that this shall not constitute an affirmative
obligation on the part of the Selling Parties to seek out or
contact customers for Buyer). The Selling Parties shall not
disparage Buyer or the Business, and shall not, and shall not
permit any of the Seller Affiliates to, commit any act, or in any
way assist others to commit any act, which will injure Buyer or
the business heretofore conducted by Seller.
3. The parties recognize that irreparable damage will
result in the event that the provisions hereof shall not be
specifically enforced. If any dispute arises concerning action
alleged to be in violation of any such provision, the parties
hereto agree that an injunction may be issued restraining such
action pending determination of such controversy and that no bond
or other security shall be required in connection therewith. If
any dispute arises concerning the right or obligation of any party
hereto, such right or obligation shall be enforceable by a decree
of specific performance. Such remedies shall, however, not be
exclusive of and shall be in addition to any other remedies which
Buyer may have, including injunctive relief and actions for damages.
4. In the event that any of the provisions contained
herein would be held to be invalid, prohibited or unenforceable in
any jurisdiction for any reason because of the scope, duration or
area of its applicability or for any other reason, unless narrowed
by construction, such provision shall for purposes of such
jurisdiction only, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to
be invalid, prohibited or unenforceable (or if such language
cannot be drawn narrowly enough, the court making any such
determination shall have the power to modify, to the extent
necessary to make such provision or provisions enforceable in such
jurisdiction, such scope, duration or area or all of them, and
such provision shall then be applicable in such modified form).
If, notwithstanding the foregoing, any such provision would be
held to be invalid, prohibited or unenforceable in any
jurisdiction for any reason, such provision, as to such
jurisdiction only, shall be ineffective to the extent of such
invalidity, prohibition or unenforceability, without invalidating
the remaining provisions hereof. No narrowed construction, court-
modification or invalidation of any provision shall affect the
construction, validity or enforceability of such provision in any
other jurisdiction.
5. Each of the Selling Parties represents to Buyer
that the enforcement of the restrictions of this Agreement would
not be unduly burdensome to such Selling Party. The
representations and covenants contained in this Agreement on the
part of the Selling Parties shall be construed as ancillary to and
independent of any other provision of the Purchase Agreement. If
any of the Selling Parties violates any covenant contained in this
Agreement and Buyer brings a legal action for injunctive or other
relief, Buyer shall not, as a result of the time involved in
obtaining the relief, be deprived of the benefit of the full
period of any such covenant. Accordingly, the duration of each
such covenant of any of the Selling Parties shall be deemed to
have been extended as if the Limited Period with respect thereto
began on the date of entry by a court of competent jurisdiction of
a final judgment enforcing such covenant of such Selling Party
under this Agreement.
6. This Agreement shall inure to the benefit of Buyer
and its successors and assigns, and shall be binding upon each of
the Selling Parties and their respective heirs, personal
representatives, successors and assigns, and may not be
modified or terminated orally.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth in the introductory paragraph
hereof.
NEW PARADIGM SOFTWARE CORP.
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
4.2 (F)
OPINION LETTER
VIE Systems, Inc.
▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇. ▇▇▇▇ ▇▇ ▇▇▇▇
Gentlemen:
We have acted as counsel for New Paradigm Software
Corp. ("NPS"), a New York corporation in connection with the
execution and delivery of the following documents:
a) An Agreement of Purchase and Sale of Assets
between NPS and VIE Systems, Inc. ("VIE") dated May 9, 1997
(the "Purchase Agreement");
b) A License Agreement between NPS and VIE dated
May 9, 1997 (the "License Agreement");
c) A Confidentiality and Non-Competition
Undertaking dated May 9, 1997 by NPS, and ▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇ individually (the "Non-Competition
Undertaking"); and
d) An Indemnification Escrow Agreement dated
May 9, 1997 by and among NPS, VIE and Messrs. Golenbock,
Eiseman, Assor and ▇▇▇▇, as escrow agent (the "Escrow
Agreement").
The foregoing are collectively referred to as the Documents.
Capitalized terms used herein shall have the meanings assigned
to said terms in the Documents.
In addition, we wish to call your attention to the
fact that NPS issued 800,000 Series C Redeemable Preferred
Stock, par value $0.01 per share (the "Preferred Shares") to ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇ on April 11, 1997 pursuant to a resolution of the
Board of Directors of NPS adopted on March 15, 1997 at a meeting
of the Board.
We have reviewed such matters of law and have examined
such documents, records, agreements, and certificates of public
officials and officers of the NPS as we have deemed necessary
for the opinions hereinafter expressed. In such examination, we
have assumed the genuineness of signatures on original documents
and the conformity to original documents of all copies submitted
to us as certified, conformed or photographic copies; and as to
certificates of public officials, we have assumed the same to
have been properly given and to be accurate. As to various
questions of fact material to our opinion, we have relied upon
the attached certificates of officers of NPS. As to any matter
of fact contained in such certificates of officers of the NPS,
we have no reason to believe such certificates to be inaccurate.
On the basis of the foregoing, we are of the opinion that:
1. NPS is a corporation duly organized and validly
existing and in good standing under the laws of the State
of New York and has all requisite corporate power and
authority to carry on its business as now conducted and as
proposed to be conducted.
2. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental
authority on the part of NPS is required in connection with
the consummation of the transactions contemplated by the
Documents or related documents.
3. Subject only to the authorization of the holders
of two-thirds of all outstanding shares entitled to vote
with respect to the transactions contemplated by the
Purchase Agreement at a meeting of the shareholders, all
corporate action on the part of NPS, its officers and
directors necessary for the authorization, execution and
delivery of the Purchase Agreement, the Non-Competition
Agreement and the Escrow Agreement has been taken and the
performance of all obligations of NPS thereunder, and the
Purchase Agreement, the Non-Competition Agreement and the
Escrow Agreement constitute valid and legally binding
obligations of NPS enforceable in accordance with their
respective terms except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws relating to
or affecting the rights of creditors generally, including,
without limitation, laws relating to fraudulent transfers
or conveyances, preferences and equitable subordination.
The enforceability of the NPS's obligations under the
Purchase Agreement, the Non-Competition Agreement and the
Escrow Agreement is subject to general principles of equity
(regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4. The authorization of the shareholders of NPS is
not required for the execution and delivery of the License
Agreement by NPS and all corporate action on the part of
NPS, its officers and directors necessary for the
authorization, execution and delivery of the License
Agreement has been taken and the performance of all
obligations of NPS thereunder, and the License Agreement
constitutes the valid and legally binding obligation of NPS
enforceable in accordance with its terms except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or
other similar laws relating to or affecting the rights of
creditors generally, including, without limitation, laws
relating to fraudulent transfers or conveyances,
preferences and equitable subordination. The
enforceability of the License Agreement is subject to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or
at law.)
5. The execution, delivery and performance of the
Documents and the consummation of the transactions
contemplated thereby, do not nor will not (i) conflict with
or violate any provisions of the Certificate of
Incorporation or By-Laws of NPS, (ii) to our knowledge,
with or without the giving of notice or the passage of
time, or both, result in a breach of, or violate, or be in
conflict with, or constitute a default under, or permit the
termination of, or cause of permit acceleration under, any
agreement or instrument of any debt or obligation to which
NPS is a party or any of its assets is subject or bound,
(iii) to our knowledge, require the consent of any party to
any agreement to which the NPS is a party, or to which any
of the Purchased Assets is subject or bound, (iv) to our
knowledge, result in the creation or imposition of any lien
upon any of the Purchased Assets, or (v) violate any law,
rule or regulation or, to our knowledge, any order,
judgment, decree or award, of any court, governmental
authority or arbitrator to or by which the NPS or any of
the Purchased Assets is subject or bound; except we note
that prior to the date hereof a UCC-1 financing statement
was executed by NPS in favor of Level 8, Inc. with respect
to the Copernicus software and may be filed by Level 8,
Inc. at any time. Nevertheless, we understand that if such
financing statement is filed, it will be terminated
simultaneously with the Closing under the Purchase
Agreement.
6. The Preferred Shares were duly authorized and
issued to ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, are fully-paid and non-
assessable, and such Preferred Shares are entitled to cast
four votes per share (or an aggregate of 3,200,000 votes)
at the Special Meeting or any other meeting of the
shareholders, and if voted, will be counted at the Special
Meeting as outstanding shares of NPS entitled to vote in
favor of the transactions contemplated by the Purchase
Agreement for purposes of compliance by NPS with the
provisions of Section 909 of the Business Corporation Law
of New York.
Very truly yours,
Exhibit 4.3(e)
GEAB OPINION
1. Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of
Delaware.
2. The execution, delivery and performance of the
Agreement and has been duly and validly authorized by all
necessary corporate action of Buyer. Buyer has duly executed and
delivered the Agreement.
