RESCHEDULE AGREEMENT
This Reschedule Agreement is made effective and entered into
for all purposes and in all respects as of this 21st day of
October, 1996, by and between PaperClip Imaging Software,
Inc., with a principal place of business at Three University
Plaza, Hackensack Avenue, Hackensack, New Jersey 07601, USA
("PCLIP") and NCC Export Systems 1995 LTD., an Israeli
corporation with a principal place of business at 00 Xxxxxxx
Xxxxxx, Xxxx Xxxxxxx 00000, Israel ("NCC").
WHEREAS, PCLIP and NCC have entered into that certain Master
Agreement, dated November 1, 1995, that certain Agreement
for the Supply of the WebClip Product, dated November 1,
1995, that certain Agreement for the supply of WebClip
Product, dated February 1, 1996 and that certain MOU for
continuation of the WebClip Development Project (the "MOU"),
dated April 22, 1996 (collectively, the "Effective
Agreements");
WHEREAS, the terms and conditions set forth in the Effective
Agreements govern the relationship of the parties and are
hereby incorporated by reference herein, except as
specifically provided herein; and
WHEREAS, NCC is willing to reschedule the payments due
according to the terms and conditions set forth in this
Reschedule Agreement.
NOW, THEREFORE, in consideration of the foregoing, of the
mutual covenants, undertaking and promises contained herein,
and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the
parties, intending legally to be bound, agree as follows:
1. PAYMENT SCHEDULE
Simultaneously with its execution of this Reschedule
Agreement, PCLIP shall pay and actually deliver to NCC One
Hundred Fifty Thousand U.S. Dollars ($150,000) by certified
check or federal wire-transfer of funds. This payment to
NCC is an absolute and primary condition precedent to this
Reschedule Agreement and no other term or condition of this
Reschedule Agreement shall be effective in any manner
whatsoever without the fulfillment of this condition.
The balance of One Hundred Fifty-Three Thousand U.S. Dollars
($153,000), plus charges for any additional work done,
and/or maintenance services rendered, by NCC in accordance
with Section 4 herein, shall be paid at the earlier of:
(a) Three equal installments on (or, if not a business day,
on the first business day thereafter) each of January 1,
1997, February 1, 1997 and March 1, 1997, or
(b) Within three (3) business days of the completion of any
fund raising resulting in at least Two Hundred Fifty
Thousand U.S. Dollars ($250,000) of net proceeds to PCLIP,
either by private placement or by public offering, as
follows:
(i) As to such proceeds in excess of $250,000 but less than
$600,000, 15% thereof shall be paid to NCC for and with
respect to PCLIP's indebtedness to NCC, in inverse order of
maturity of installments due under this Reschedule
Agreement, and 15% thereof shall be paid to NCC for Product
version upgrades (if requested by PCLIP), on a time and
materials basis; and
(ii) As to such proceeds in excess of $600,000, the same
shall be applied to fully pay any amounts due and payable to
NCC.
2. TRANSFER OF RIGHTS.
(a) For purposes of this Reschedule Agreement, the term
"Product" shall mean and include (without limitation as to
the generality of the foregoing) any and all software and/or
derived software products created or developed under the
Effective Agreements, including any and all object and/or
source code created or developed under the Effective
Agreements and/or related Technical Information (as such
term is defined in the Master Agreement) under the Effective
Agreements. In the event that PCLIP shall breach any of its
covenants, representation or agreements under this
Reschedule Agreement, all rights, title and interest in and
to the Product, as expansively defined hereinabove, shall
automatically be transferred to, and ipso facto, become
owned by, and shall be deemed to be, and shall be, the sole,
absolute, unconditional and irrevocable property of NCC
without any further action on the part of NCC or PCLIP,
notwithstanding any provision in the Effective Agreements to
the contrary.
(b) In the event that the rights in the Product shall be
transferred to NCC according to this Reschedule Agreement,
the parties agree that if NCC shall sell the rights to the
Product to any third party, NCC will deduct any indebtedness
of PCLIP to NCC under this Reschedule Agreement and any and
all other expenses and taxes (other than income taxes) that
NCC incurred as a result of such sale. The remainder of the
proceeds from such sale, after the above deduction, shall be
distributed equally between NCC and PCLIP.
(c) PCLIP shall receive the rights to the Product according
to the Master Agreement Section 3 upon presentation of full
payment as per Section 1 above.
3. ADDITIONAL COLLATERAL.
(a) To further secure the payment of the indebtedness of
PCLIP to NCC according to this Reschedule Agreement, PCLIP
hereby pledges, assigns, grants and conveys to NCC a
security interest and a lien on (i) the accounts receivable
of PCLIP, and all of PCLIP's computer equipment and
inventory (collectively, the "April Collateral") and (ii)
all third-party licenses to any PCLIP software (to the
extent permitted by such licenses), and the source codes in
respect to any software and/or derived software developed
and/or owned by PCLIP, providing an unabridged, human
readable version of any such software and/or derived
software, whether on paper or store on magnetic media,
together with such documentation that is sufficient in
scope, content and level of detail to enable a person with
appropriate training and programming experience with
software of comparable complexity to modify and maintain
same solely by reference to such version thereof and such
documentation (the "July Collateral") (the April Collateral
and July Collateral, collectively, the "Additional
Collateral").
(b) In the event that PCLIP shall breach any of its
covenants, representations or agreements under this
Reschedule Agreement, on April 1, 1996, as to the April
Collateral, and on July 1, 1996, as to the July Collateral,
NCC shall have and enjoy the rights of a secured creditor
under the New Jersey Uniform Commercial Code.
(c) A Security Agreement shall be attached to this
Reschedule Agreement and incorporated herein. The security
interest created herein shall be perfected according to the
New Jersey Uniform Commercial Code and other laws of the
State of New Jersey. In this connection, NCC shall exercise
good faith efforts to sell the Product and/or Additional
Collateral transferred to NCC under such Security Agreement
and shall apply the proceeds from the sale of the Product in
accord with the provisions of Section 2(b) above and the
Proceeds from the sale of the Additional Collateral to the
obligations provided in Section 1 above, with the return of
net excess proceeds to PCLIP.
4. WORK TO BE PERFORMED BY NCC.
After the payment of the first One Hundred Fifty Thousand
U.S. Dollars ($150,000) upon the execution of this
Reschedule Agreement, NCC will continue the development work
according to the MOU ($55/hour), such work not to exceed the
amount of Forty Thousand U.S. Dollars ($40,000). Upon
completion of such work, NCC shall deliver a copy of the
source code thereto to PCLIP, which source code shall be
deemed to be, and shall be, an addition to the Product.
5. CONSTRUCTION.
Notwithstanding any provision in the Effective Agreements to
the contrary, except for the work to be performed pursuant
to as provided in Section 4 above and any additional
upgrades in accordance with Section 1(b)(i) above, PCLIP
hereby waives and releases any claim and/or defense against
NCC arising under the Effective Agreements and/or this
Reschedule Agreement. Except as stated herein, this
Reschedule Agreement shall not be deemed or construed to be
a recession or modification of the Effective Agreements. In
the event that there shall be any conflict between any
provision of the Effective Agreements and any provision of
this Reschedule Agreement, such provision of this Reschedule
Agreement shall govern and control.
6. FURTHER COVENANTS AND AGREEMENTS
PCLIP further covenants and agrees that:
(a) PCLIP shall take any steps deemed reasonably necessary
or advisable to preserve the rights of NCC against prior or
subsequent parties in and to the Product, Technical
Information and/or Additional Collateral and hereby waives
any obligation of NCC to do so;
(b) NCC may exercise its rights with respect to the
Product, Technical Information and/or Additional Collateral
without any necessity on its part or on the part of the
holder of any obligation secured hereby first to realize
upon or enforce any of the security now or hereafter held
for any such obligation, and PCLIP hereby waives (i) any
right to require NCC to proceed against any person or to
pursue any other remedy, and (ii) all suretyship defenses or
other defenses in the nature thereof.
(c) At the request of NCC, PCLIP shall immediately join
with NCC in executing a Financing Statement pursuant to the
New Jersey Uniform Commercial Code in a form satisfactory to
NCC.
(d) PCLIP shall exercise good faith efforts to maintain,
preserve and protect the Product, Technical Information
and/or Additional Collateral.
(e) PCLIP shall not create, incur or permit to exist any
lien, charge, mortgage, security interest or other
encumbrance on the Product, Technical Information and/or
Additional Collateral, other than pursuant to this
Reschedule Agreement.
(f) PCLIP shall be responsible for and shall pay (i) all
costs of NCC, including attorneys' fees and expenses not to
exceed Ten Thousand U.S. Dollars ($10,000), provided,
however, that, with respect to any such attorneys' fees and
expenses, NCC shall present PCLIP with such invoices, in
such detail and with such receipts, as are reasonably
necessary to substantiate same, incurred in connection with
the Reschedule Agreement and/or (ii) all costs relative to
the enforcement of any of NCC's rights and remedies under
the Effective Agreements and/or this Reschedule Agreement.
7. REPRESENTATIONS AND WARRANTIES.
As a material inducement to NCC to enter into this
Reschedule Agreement, PCLIP and Xxxxxxx Xxxxx hereby
represent and warrant to NCC that PCLIP has good and valid
title to the Product currently in existence, Technical
Information and Additional Collateral, free and clear of any
lien, charge or encumbrance, other than pursuant to this
Reschedule Agreement.
8. ESCROW.
As a material inducement to NCC to enter into this
Agreement, it is understood and agreed that upon its
execution hereof, PCLIP shall place a copy of the source
codes to the software and/or derived software, as
contemplated hereinabove, in escrow with Xxxxx Xxxxxxxxx, as
escrow agent, in furtherance of this Agreement and as
partial collateral securing PCLIP's obligations and
covenants herein.
9. MISCELLANEOUS.
(a) This Reschedule Agreement may be executed in any number
of counterparts each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
(b) This Reschedule Agreement sets forth the entire
understanding of the parties as to its subject matter. No
waiver by NCC of any default hereunder shall be effective
unless in writing and signed by NCC, nor shall any effective
waiver operate as a waiver of any other default or of the
same default on a prior or subsequent occasion. This
Reschedule Agreement may not be changed or modified orally,
but only by an agreement in writing and signed by the party
(or all of the parties) against whom enforcement of such
change or modification is sought.
(c) All notices permitted or required by this Reschedule
Agreement shall be deemed duly given if sent by certified
mail, return receipt requested, to the parties at the
respective addresses set forth above.
(d) Except as otherwise provided herein relating to the
Uniform Commercial Code, this Reschedule Agreement and
performance hereunder shall be governed by the laws of the
State of New York.
(e) PCLIP may not assign its rights, duties or obligations
under this Reschedule Agreement, in whole or in part, to any
other person or entity without the prior written consent of
NCC.
(f) The headings of the Sections herein are inserted for
convenience in reference only and are not intended by the
parties to be a part of or affect the meaning or
interpretation of this Agreement.
(g) If any provision of this Reschedule Agreement is held
invalid or otherwise unenforceable, the enforceability of
the remaining provisions shall not be impaired thereby.
IN WITNESS WHEREOF the parties have executed this Reschedule
Agreement on the date first set forth above.
NCC EXPORT SYSTEMS 1995 LTD PAPERCLIP IMAGING
SOFTWARE INC.
By:/s/ Xxxx Xxxxx By:/s/ Xxxxxxx Xxxxx
Xxxx Xxxxx, Managing Director Title: Corporate Executive Officer
The undersigned hereby executes this Reschedule Agreement to
confirm his representations and warranties set forth in
Section 7 hereof.
/s/ Xxxxxxx Xxxxx
XXXXXXX XXXXX
