Exhibit 10.17
April 30, 1997
Wan Hsien Information International Corporation Ltd.
11th Xxxxx
000 Xxxxx-Xxx X. Xxxx, Xxx. 0
Xxxxxx, Xxxxxx
REPUBLIC OF CHINA
OUTSIDE U.S.A.
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Re: Purchase and Sale of Change of Century Analysis and Conversion Tool
("COCACT") Software Program
Gentlemen:
This letter will set forth our agreement with respect to the purchase by
ZMAX Corporation, a Nevada corporation ("ZMAX") (or one or more controlled
affiliates designated by ZMAX) ("Buyer") of all right, title and interest in and
to the above-referenced COCACT software program and related documentation more
particularly described in the specifications attached to this letter agreement
as Exhibit A (the "Software"). The Software was developed by the Institute for
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Information Industry ("III") and all worldwide rights in and to the Software
have been transferred by III to Wan Hsien Information International Corporation
Ltd. ("Seller").
1. Purchase and Sale. Subject to the terms and conditions of this
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letter, Seller agrees to sell and Buyer agrees to purchase all worldwide right,
title and interest in and to the Software. In particular, Seller agrees to
transfer, sell and assign to Buyer complete, exclusive, worldwide tangible and
intangible rights and property in and to the Software without reservation of any
rights therein, including, without limitation (i) title to and possession of all
media, devices and documentation that constitute copies of the Software, (ii)
all worldwide patent, copyright or other intellectual property rights in the
Software, (iii) all rights in all inventions, discoveries, ideas, trade secrets,
know-how and confidential information related to the Software, and (iv) all
rights in, to and under all licenses and leases of the Software or third-party
components contained in the Software (the Software and the rights described in
(i) through (iv) above are herein collectively called the "Purchased Assets").
Wan Hsien Information International Corporation Ltd.
April 30, 1997
Page 2
2. Purchase Price. In exchange for the Purchased Assets, Buyer will pay
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or cause to be paid to Seller (i) the sum of One Million One Hundred Thousand
Dollars (US$1,100,000) in cash and (ii) One Hundred and Fifty Thousand (150,000)
shares of common stock of ZMAX (collectively, the "Purchase Price").
3. Payment of Purchase Price. At closing, Buyer will deliver to Seller
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Two Hundred and Fifty Thousand Dollars ($250,000) in cash by wire transfer to a
Taiwan bank account designated by Seller. The balance of the Purchase Price
will be payable subject to Buyers cancellation rights under paragraph 7 hereof,
and contingent upon (i) the completion by III and acceptance by Buyer of III's
additional development work on behalf of Seller set forth in Xxxxxxxxx 0x xxxxx,
and (ii) the execution by Buyer and III of the Services and Support Agreement
referred to in Paragraph 6d below. Accordingly, within fifteen (15) days after
completion of the contingencies set forth in (i) and (ii) above, Buyer will
deliver to Seller the One Hundred and Fifty Thousand (150,000) shares of common
stock of ZMAX. Thereafter, subject to the completion of the contingencies set
forth in (i) and (ii) above, the remainder of the cash portion of the Purchase
Price will be paid in three (3) quarterly installments of Two Hundred and
Eighty-Three Thousand Three Hundred Thirty-Three Dollars ($283,333) each,
without interest, commencing on September 1, 1997 and continuing on January 1,
1998 and May 1, 1998. At closing, Buyer will also assume the rights and
obligations of Seller under the assigned contracts referred to in Paragraph
1(iv) above; provided that all liabilities, if any, in excess of Ten Thousand
Dollars ($10,000) under such contracts shall be offset against the cash portion
of the Purchase Price. Buyer shall not assume or be liable for any other
liabilities or obligations of Seller whatsoever.
4. Closing; Closing Deliveries. The closing of the transactions
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contemplated by this letter agreement shall take place at the Buyer's office at
a date and time designated by Buyer within thirty (30) days of the execution
date of this letter. At closing, Seller will deliver good and valid title to
the Software to Buyer, together with (1) Seller's entire inventory of copies of
the Software in object code form; (2) all master copies of the Software (in both
source code and object code form) suitable for copying; (3) all system and user
documentation pertaining to the Software including design or development
specifications, error reports and all other documentation; and (4) all other
documents or agreements required by this letter agreement to be delivered on or
before closing (Seller's Deliveries). The closing will be deemed to have
occurred upon receipt (or waiver by Buyer) of the Seller's Deliveries and
Buyer's delivery of the initial $250,000 portion of the Purchase Price as set
forth in Paragraph 3 above.
5. Representations, Warranties and Indemnity of Seller. Seller hereby
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represents and warrants to Buyer as set forth below and agrees to indemnify and
hold harmless Buyer and its officers, directors and affiliates from any loss,
damage or expense arising out of any breach or inaccuracy in the representations
and warranties set forth below:
Wan Hsien Information International Corporation Ltd.
April 30, 1997
Page 3
a. Seller represents and warrants that Buyer will receive, pursuant to
this letter agreement and as of the closing, complete and exclusive right,
title, and interest in and to all tangible and intangible property rights
existing in the Software. Seller further represents and warrants that it is
sole owner of the Software and that the Software does not contain viruses
and is free and clear of all liens, claims, encumbrances, rights, or
equities whatsoever of any third party.
b. Seller represents and warrants that the Software does not infringe any
patent, copyright, or trade secret of any third party; that the Software is
fully eligible for protection under applicable copyright law and has not
been forfeited to the public domain; and that the source code and system
specifications for the Software have been maintained in confidence.
c. Seller warrants that for a period of twelve (12) months after the
closing of the transactions contemplated by this letter agreement, the
Software will operate in conformance with its functional, performance,
operational, compatibility and other specifications or characteristics
contained in any documentation related to the Software and in any other
written specifications, statement of work or other written agreement
between Buyer and Seller.
d. Seller represents and warrants that all personnel, including employees,
agents, consultants, and contractors, who have contributed to or
participated in the conception and development of the Software either (i)
have been party to a for-hire relationship with Seller or III that has
accorded Seller full, effective, and exclusive original ownership of all
tangible and intangible property thereby arising with respect to the
Software or (ii) have executed appropriate instruments of assignment in
favor of Seller or III as assignee that have conveyed to Seller or III
full, effective, and exclusive ownership of all tangible and intangible
property thereby arising with respect to the Software.
e. Seller represents and warrants that, at the time of the execution of
this Agreement and at the time of the issuance of any shares of ZMAX common
stock under Paragraph 3 above, Seller is (and will be) a non-U.S.
corporation, business trust or partnership not formed for the specific
purpose of acquiring such shares of ZMAX common stock with total assets in
excess of Five Million Dollars (US $5,000,000).
6. Covenants. In connection with the purchase of the Software and the
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Purchased Assets hereunder, Seller agrees as follows:
Wan Hsien Information International Corporation Ltd.
April 30, 1997
Page 4
a. Until the closing of the transactions contemplated by this letter
agreement and for a period of six (6) months thereafter, Seller will not
entertain, solicit, discuss or accept offers from any party other than
Buyer to purchase, license, lease or otherwise transfer any rights in the
Software or Purchased Assets.
b. Prior to and for six (6) months after closing, Seller will make
available to Buyer, and to Buyer's representatives, access to the Seller's
facilities and personnel involved in the development or marketing of the
Software and such information and documents relating to the Software as
Buyer may reasonably request to perform Buyer's due diligence review of the
Software and verify the accuracy of Seller's representations and warranties
herein.
c. Promptly after execution of this letter agreement and for a period of
four (4) months after the date hereof, Seller will, at Seller's expense,
make four (4) COCACT programmers available to Buyer at the offices of
Buyer's affiliate Century Services, Inc. ("CSI") in Germantown, Maryland
for a three (3) month software development and enhancement project pursuant
to which the Software will be enhanced to (i) eliminate all identified
bugs, (ii) to add the new features to be agreed on Exhibit B hereto.
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Unless extended or waived in writing by Buyer, the software features, test
procedures and acceptance test criteria for such development and
enhancement project are to be mutually agreed and set forth on Exhibit B to
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this letter by May 15, 1997. If the development work listed in item (ii)
above requires additional COCACT programmers for timely completion of the
project, Seller agrees, at Seller's expense, to make available to CSI at
its offices all necessary, additional COCACT programmers at CSI's request.
d. Prior to and as a condition to payment of the deferred Purchase Price
under Paragraph 3 above, III shall have entered into a Services and Support
Agreement with CSI to provide computer programming and support services to
CSI and its customers on the terms set forth that certain letter agreement
between Buyer and III dated April 30, 1997.
e. At closing, Seller will deliver to Buyer a letter signed by III,
Seller, IMS International, Inc. ("IMSI") and Multi-Dimension International
("MDI") (i) granting to Buyer the right by written notice at any time to
cancel that certain Exclusive License grant dated April 1, 1996 between MDI
(as successor to IMSI) and CSI (the "North American License") and all
further obligations of CSI thereunder, and (ii) containing a representation
and warranty from IMSI and MDI that IMSI has no present or continuing
rights in the Software and that they have not granted rights in the
Software to any party other than CSI.
Wan Hsien Information International Corporation Ltd.
April 30, 1997
Page 5
7. Termination and/or Recision by Buyer. Buyer may terminate this letter
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agreement by written notice to Seller on or before closing in the event that
Buyer determines that any of Seller's warranties herein are not true at and as
of the closing. In addition, Buyer may also terminate this letter agreement,
rescind the purchase of the Software and exercise the rights set forth below in
the event that (i) Buyer and Seller have not reached written agreement on or
before May 15, 1997 (or such extended date which Buyer in its sole discretion
might designate) on the scope and terms of the additional features and
acceptance tests to be developed for the Software by III and to be attached as
Exhibit B, or (ii) on or before September 30, 1997 either (x) Buyer determines
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that any of Seller's warranties herein were not true at and as of closing, or
(y) Seller has not completed the additional development work described in
Xxxxxxxxx 0x prior to September 30, 1997, or (2) prior to September 30, 1997
Buyer and III have not entered into the Services and Support Agreement referred
to in Paragraph 6d hereto. Upon any termination and recision of the Software
sale under this Paragraph 7(i) or (ii) above, Buyer may, in addition to any
other rights or remedies Buyer may have, choose to return the Purchased Assets
and treat the $250,000 portion of the Purchase Price paid at closing under
Paragraph 4 above as a prepayment of the October 1, 1997 and April 1, 1998
license fees payable by CSI to MDI under the North American License and elect
that CSI continue to license the Software under the terms of the North American
License.
8. Non-Disclosure. Prior to closing, Seller and Buyer agree that under
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no condition will they make any disclosures about the existence or contents of
this letter or negotiations relating to the proposed transaction or cause to be
publicized in any manner (by way of interviews, responses to questions or
inquiries, press releases or otherwise) any aspect of this transaction, except
as may otherwise be required by law. After closing, Buyer may disclose its
ownership of the Software and the fact that the Software was initially developed
by III.
9. Binding Provisions. This letter reflects the parties' agreements and
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shall be construed as a binding and enforceable agreement. Seller represents to
Buyer that Seller is under no obligation, either oral or written, that would
restrict or inhibit Seller's ability to execute and deliver this letter
agreement or to take the actions or to complete the transactions contemplated
herein. Each party will pay its own expenses related to this transaction.
10. Governing Law and Venue. This agreement shall be deemed made in and
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shall be governed and construed in accordance with the internal laws of the
state of Maryland. Seller hereby irrevocably consents to the exclusive
jurisdiction of U.S. courts in any legal or equitable action to enforce this
agreement, and (i) hereby waives sovereign immunity and irrevocably submits
itself to the jurisdiction of the appropriate federal or state court in Maryland
and (ii) to the extent permitted by applicable law, hereby waives and
Wan Hsien Information International Corporation Ltd.
April 30, 1997
Page 6
agrees not to assert that any such action is brought in an inconvenient forum or
that venue of such action is improper.
11. Specific Performance. Seller agrees that upon any breach or
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threatened breach of this agreement irreparable injury will result to Buyer and
money damages will be inadequate to fully remedy Buyer's injury. Therefore, in
the event of any breach or threatened breach hereof, Buyer shall be entitled
without posting a bond to an order of specific performance or other equitable
relief in addition to any other rights or remedies available to Buyer at law.
If the foregoing accurately reflects the agreements between us, please
indicate your acceptance and agreement below.
Very truly yours,
ZMAX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: President
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ACCEPTED AND AGREED, this 30th day of April, 1997:
WAN HSIEN INFORMATION INTERNATIONAL
CORPORATION LTD.
By: /s/ Xx-Xxxxx Hu
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Name: Xx-Xxxxx Hu
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Title: President
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EXHIBIT A
SOFTWARE DESCRIPTION
The Change of Century Analysis and Conversion tool set software ("COCACT" or the
"Software") is a combination of computer code and user documentation which is
based on computer programs and related documentation described in the
specifications below. COCACT consists of source code in the C, C++ and Visual
Basic computer languages with English comments and related development
documentation, and machine-readable object code operable on the IBM and IBM
compatible PC computers with Microsoft DOS and Microsoft Windows operating
systems.
COCACT provides facilities for detecting and analyzing date specific data
elements in computer software applications running on various legacy platforms
which contain no spelling or ambiguous century marker and assists in correcting
them into data elements with non-ambiguous century marker information.
COCACT is a workstation-based system that runs on an IBM Personal computer (PC)
or compatible running under Windows 95 or NT Server environment. COCACT tool
set consists of the following functional modules:
COCACT Manager
a. User definable data name pattern table : both inclusive
and exclusive patterns
b. Programming language parser for COBOL and PL/1
x. Xxxx impact analysis report
d. COCACT Analyst
e. Program browser
f. Program editor
g. Program modification difference report
h. Date element candidates report
EXHIBIT B
ADDITIONAL FEATURES & ACCEPTANCE TESTS
1. Parser
1.1. Languages
1.1.1. COBOL: COBOL 68, COBOL 00, XXXXX 00, XXX XXXXX, XXXXX XX,
XxxxxXxxx COBOL(Unisys), ASCII COBOL (Unisys), UCOBOL
(Unisys)
1.2. Databases and Files
1.2.1. Flat File
1.2.2. VSAM
1.2.3 DB2 and Its Embedded SQL
1.3. CICS
1.3.1 All Data Movement Verbs (e.g. LINK
REETURN,XCTL,READ,WRITE,DELETE,READNEX etc..)
2. Impact Analysis
2.1. Date Candidates Identification
2.1.1. Naming Patterns
2.1.1.1. Application Level
2.1.1.2. Program Module Level
2.1.2. Constraining Data Field Attributes
2.1.2.1. PIC Type (e.g. Note 9999v99)
2.1.2.2. Size (e.g. Not X (50))
2.1.2.3. Level (e.g. Not Xxxxx 00, 00 etc.)
2.2. Externally Specified Date Candidates
2.2.1. Database/File: Field Name
2.3. Equivalence Class Definition
2.3.1. MOVE
2.3.2. IF...THEN...
2.3.3. COMPUTE
2.3.4. REDEFINE
2.3.5. Ability to Include or Exclude Certain Statement Type
2.4. Date Impact Analysis
2.4.1. Impact within a Program
2.4.2. Impact through Copybooks
2.5. Pruning
2.5.1. Tracing a Giving Equivalence Class
3. Marking and/or Pruning an Element within an Equivalence ClassGlobal Data-
flow Analysis
3.1. Import Global Information
3.1.1. Import Global Information from BIC JCL/ECL Parsers
3.2. Global Data-flow Analysis
3.2.1. Data Impact Through Data-flow among Database/File
3.2.2. Positional (Base/Offset) Information for Database/File
3.2.3. Date Impact through Parameter Passing
4. Reports
4.1. Output to an External Standard Format (e.g. spreadsheet format) to be
specified by CSI NLT June 1, 1997
4.2. Generate Batch Reports (Able To Run Unattended)
5. Repository Transition
5.1. Preserve Repository Results Form The Analysis Phase
5.2. Move Repository Results From The Analysis Phase Into Conversion Phase
5.3. Use Analysis Result For Parsing New Work Packages
6. Conversion Process
6.1. Global Mode (Batch Oriented Conversion) Converts All Date Sensitive
Data Directly Or Indirectly
Referencing A Common Global Date Object.
Perform Conversion Based On The Objects Usage And Assigned Category
And Conversion Rule. Perform Automatic Audit Stamping. Algorithm for
Global Mode Conversion to be specified by CSI NLT June 1, 1997
6.2. Interactive Mode: Present conversion recommendation based on the
usage and conversion rule associated with this data. Function key
driven, automatic audit stamping
6.3. Code Marking and Modification
6.3.1. Facility To Xxxx Code Segment For Specific Type of
Conversion. CSI Shall Provide Specifics NLT June 1, 1997.
6.3.2. Provide String Editing Capability For Non-Function Key
Conversion Mode
6.3.3. Audit Stamping And Then Modification
6.4. Support Basic Date Conversion Strategies
6.4.1. Expansion
6.4.2. Windowing (CSI provide algorithm NLT June 1, 1997)
7. PL/1 Parser and Converter
7.1. Parse IBM MVS PL/1
7.2. Analyze Parsed Source To Identify Date Occurrences Through Data-flow
Propagation Analysis
7.3. Convert Date Data To Y2K Compliance Results Through Interactive
Iterative Process With Function Keys.
7.4 Automatic Audit Trail Stamping
8. Documentation
8.1. Design Documentation
8.1.1. System Level
8.1.1.1. System Architecture
8.1.1.1.1. Database/File Layout
8.1.1.2. Development Environment - Compiler, Programming
Tools, etc. (version number)
8.1.2. Program Level
8.1.2.1. Program Dependency Chart - Calling Tree
8.1.2.2. Global Objects: Header Files etc.
8.2. Program Documentation
8.2.1. Concept
8.2.2. Main Programming Logic
ACCEPTANCE CRITERIA
1. COCACT Tool Must Be Able To Pass The Following Acceptance Tests
1.1. Parser Tests: Test Parsing Accuracy And Speed
1.2. Analysis Tests: Test Data-Flow Analysis Accuracy And Speed
1.3. Conversion Tests: Test Both Global And Interactive Conversion
Accuracy And Speed
1.4. Reports Tests: Test Reports Generation
2. COBOL Test Cases Contains The Following Items
2.1. COBOL Versions
2.2. Database/Files
2.2.1. Database Table Definition
2.2.2. Embedded SQL
2.3 Copybooks
2.3.1. Copy
2.3.2. Include
2.4. CICS
3. Specific Test Cases as mutually agreed in writing by Buyer and Seller.
