ASSET PURCHASE AGREEMENT
BETWEEN
SYCOM SERVICES, INC.
AND
PERFORMANCE ENGINEERING INTERNATIONAL CORP.
Dated as of June 30, 1997
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), is effective
as of June 30, 1997 (the "Effective Date"), between SyCom Services,
Inc., a Delaware corporation ("Seller"), Performance Engineering
International Corp., a Maryland corporation ("Buyer").
RECITALS
R-1. Seller has developed and owns certain computer software
products more fully described in Article I, which can be used in
manufacturing processes (the "Software Products").
R-2. Seller desires to sell and Buyer desires to purchase the
Software Products and certain of Seller's equipment for the purpose
of continuing to develop the Software Products and the business
associated with the Software Products based on the terms and set
forth in this Agreement.
R-3. To induce Seller to enter into this Agreement, Buyer has
agreed to perform certain obligations related to the purchase and
sale of the Software Products.
NOW, THEREFORE, in consideration of the foregoing recitals
which are incorporated and made a part of this Agreement and the
representations, warranties, and agreements contained herein, the
parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have
the following meanings:
"Affiliate" means as to any Person, any other Person that
directly or indirectly controls, or is under common control with,
or is controlled by, such Person. As used in this definition,
"control" (including with its correlation meanings, "controlled by"
and "under common control with") means possession, directly or
indirectly, of the power to direct or cause the direction of
management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or
otherwise).
"Assumed Liabilities" has the meaning set forth in Section
2.2.
"Books and Records" mean those books and records (or copies
thereof), including computerized records and any associated
software and documentation, relating to the Software Products
including, without limitation, books and records relating to or
containing production data, manufacturing and quality control
information, engineering changes, sales or marketing information or
materials (excluding those materials which refer to Hadron, Inc. or
SyCom Services, Inc.), customer lists and information.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Baltimore, Maryland are
authorized or required by law to close. Whenever this Agreement
refers to a number of days, such number shall refer to calendar
days unless Business Days are specified.
"Collateral Material" means all enhancements, modifications,
program interfaces, current and archival versions of patches and
bug fixes, flow charts, input/output formats, drawings,
specifications, user's manuals and technical and other
documentation, instructions, designs, models, data and algorithms,
in whatever form, relating to the Software Products.
"Effective Date" means June 30, 1997.
"Equipment" means the equipment set forth in Schedule 2.1(d).
"Government" means any federal, state, local or foreign
government, authority, agency, department, bureau, commission,
court or other body, officer, instrumentality or entity, and any
arbitrator with authority to bind a party at law.
"Intellectual Property Rights" means the pending application
for a "HeaTreat" trade xxxx and the copyrights in the Software
Products and the Collateral Material.
"Knowledge of Seller" means the actual knowledge of the
officers and directors of the Seller and does not mean the
knowledge of the Transferred Employees.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, the
Seller shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title
retention agreement or security interest relating to such asset.
"Marketing Agreement" means the Agreement attached hereto as
Exhibit D.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any
other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Purchase Price" has the meaning set forth in Section 2.3.
"Purchased Assets" has the meaning set forth in Section 2.1.
"Software Products" means current object code and source code
versions (as of the Effective Date) of HeaTreaT, HeaTreaT Pro and
HeaTreaT Lite currently developed and owned, or being developed by
Seller and licensed or proposed to be licensed by Seller,
regardless of what platform or operating system upon which it
functions.
"Software Products License" means a license pursuant to which
an end user receives object code of any of the Software Products
such that the end user can manipulate data using a particular
application but cannot change the application or develop new
applications.
"Software Products Licensing Revenues" means licensing fees
for the Software Products, to be paid to Buyer by its licensees,
exclusive of taxes, shipping and handling, discounts and credits.
"Sublease" means the Sublease set forth in Exhibit C.
"Tax" means any fee (including license, filing and
registration fees), tax (including any income, value-added, gross
receipts, franchise, sales, use or real, personal, tangible or
intangible property tax), interest equalization or stamp tax,
assessment, levy, impost, duty, charge or withholding of any kind
or nature whatsoever, imposed or assessed by any Government,
together with any penalty, fine or interest thereon.
"Transaction Agreements" means this Agreement; the Notes
required under Section 2.3; the Sublease required under Section
5.3; the Software Agreement referenced in Section 2.1; the
Marketing Agreement as required under section 5.6.
"Transferred Employees" has the meaning set forth in Section
6.1.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Purchased Assets. Seller hereby sells to Buyer and Buyer
hereby purchases and assumes from Seller, for the consideration set
forth in Section 2.3 of this Agreement, all of Seller's right,
title and interest in and to the following assets, properties and
rights (the "Purchased Assets"):
(a) the Software Products excluding, however, the rights
retained by Seller pursuant to the Software Agreement
substantially in the form attached hereto as Exhibit B;
(b) the Collateral Material excluding, however, the rights
retained by Seller pursuant to the Software Agreement
substantially in the form attached hereto as Exhibit B;
(c) the Intellectual Property Rights;
(d) the Equipment and telephone numbers listed in Schedule
2.1(d);
(e) a copy of the Books and Records;
(f) all contracts, purchase orders and rights related to
outstanding proposals with respect to the Software
Products (the "Contracts") set forth in Schedule 2.1(f).
(g) the right to receive Software Products Licensing Revenues
which become due and payable after the Effective Date.
2.2 Assumed Liabilities. Buyer hereby assumes and
agrees to pay, discharge or perform, as appropriate, all
liabilities and obligations of Seller to be paid, discharged or
performed relating to the Contracts on and after the Effective
Date.
2.3 Purchase Price. Concurrently with the execution of this
Agreement, the Buyer shall deliver to the Seller the following
consideration for the Purchased Assets (the "Purchase Price"):
(a) ten percent (10%) of shares of the Buyer's authorized
stock (Seller's 10% Interest");
(b) two promissory notes as follows (collectively, the
"Notes"):
(1) a promissory note in the original principal amount
of Two Million dollars ($2,000,000.00) in
substantially the form attached hereto as Exhibit
A1 (the "Primary Note"), which Primary Note shall
be free of interest for the first two years after
which time, interest shall accrue; provided
however, if the principal balance of the Primary
Note shall be paid in full by June 30, 2000, then
Seller shall forgive any accrued interest. The
Primary Note shall be secured by the Software
Products; and
(2) a promissory note in the original principal amount
of $38,393.00 in substantially the form attached
hereto as Exhibit A2 (the "Equipment Note"), which
Equipment Note shall be interest free for the first
two years after which time, interest shall accrue;
provided however, if the principal balance of the
Equipment Note shall be paid in full by June 30,
2000, then Seller shall forgive any accrued
interest. The Equipment Note shall be secured by
the Equipment.
2.4 Security Agreement. Buyer hereby grants to Seller a
first-priority security interest in the Equipment, Software
Products, Collateral Material and Intellectual Property Rights
together with all updates, enhancements and derivative works now
existing or hereinafter developed or acquired and all present and
future accounts relating thereto (to include serving said
accounts), to secure the payment of the Purchase Price pursuant to
this Agreement. Buyer agrees to execute such documents as Seller
shall reasonably request including, without limitation, any
financing statements required to perfect Seller's security
interest and agrees not to further encumber the Software Products
with any Lien. Buyer agrees to notify Seller upon its filing of any
copyright registrations for the Software Products or any updates,
enhancements and derivative works thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer the following:
3.1 Organization; Qualification. Seller is a corporation
duly organized, validly existing and in good standing under the
laws of Delaware and has corporate power and authority to own all
of its properties and assets and to carry out its business as it is
presently being conducted.
3.2 Authority Relative to this Agreement. Seller has
corporate power and authority to execute and deliver the
Transaction Agreements. The execution and delivery of the
Transaction Agreements have been duly authorized by Seller and no
other corporate proceedings on the part of Seller are necessary
with respect hereto or thereto. Assuming that Buyer has duly
authorized the execution and delivery of each Transaction
Agreement, each Transaction Agreement to be executed by Seller
constitutes the valid and binding obligation of Seller, enforceable
in accordance with its terms except as the same may be limited by
(i) any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or
(ii) general principles of equity, whether considered in a
proceeding in equity or at law.
3.3 Consents and Approvals. Seller is not required to make
any filing with, or to obtain any permit, authorization, consent,
waiver or approval of any Government as a condition to the
execution and delivery by Seller of any Transaction Agreement or
the lawful consummation of the transactions contemplated hereby or
thereby.
3.4 Non-Contravention. The execution and delivery by Seller
of this Agreement does not, and the consummation of the
transactions contemplated hereby, will not (i) violate or result in
a breach of any provision of the Seller's Articles of Incorporation
or Bylaws, (ii) result in a default, or give rise to any right of
termination, cancellation or acceleration (whether immediately or
after the giving of notice or the passage of time, or both), under
the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or
obligation to which any of the Purchased Assets may be bound, or
(iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Purchased Assets.
3.5 Software Products.
(a) To the Knowledge of the Seller, all right, title and
interest in and to the Software Products including the Intellectual
Property Rights are owned by Seller, free and clear of all liens,
claims, charges or encumbrances, except Seller's security interest
provided in this Agreement. Seller's interests in the Software
Products and the Intellectual Property Rights are fully
transferable and will transfer to Buyer as of the date hereof. To
the Knowledge of the Seller, Seller owns the exclusive right to
use, sell, license or dispose of the Software Products and the
Intellectual Property Rights, other than such rights which have
been granted pursuant to software license agreements.
(b) To the Knowledge of Seller, all such Intellectual
Property rights are in full force and effect.
3.6 Title to and Condition of Certain Property. Seller
hereby transfers to Buyer, good and marketable title to, or a valid
leasehold interest pursuant to a lease in, all of the Equipment
which is a part of the Purchased Assets free and clear of any
liens, charges, pledges, mortgages, restrictions, security
interests, claims or other encumbrances. The Equipment is
transferred "as is."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller the following:
4.1 Organization; Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
Maryland and has corporate power and authority to own all of its
properties and assets and carry on its business as it is presently
being conducted. Buyer is duly qualified and in good standing to
do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by
it makes such qualification necessary, except in those
jurisdictions where the failure to be duly qualified and in good
standing would not have a material adverse effect on such
corporations or the businesses conducted by it, considered as a
whole.
4.2 Authority Relative to this Agreement. Buyer has
corporate power and authority to execute and deliver the
Transaction Agreements and to consummate the transactions
contemplated hereby. The execution and delivery by Buyer of the
Transaction Agreements, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by the
Board of Directors of Buyer and no other corporate proceedings on
the part of Buyer are necessary with respect hereto. Assuming that
Seller has duly authorized the execution and delivery of the
Transaction Agreements, the Transaction Agreements to be executed
by Buyer constitute the valid and binding obligation of Buyer,
enforceable in accordance with its terms except as the same may be
limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally or (ii) general principles of equity, whether
considered in a proceeding in equity or at law.
4.3 Consents and Approvals. There is no requirement
applicable to Buyer to make any filing with, or to obtain any
permit, authorization, consent, waiver or approval of any public
body as a condition to the execution and delivery by Buyer of this
Agreement or the lawful consummation of the transactions
contemplated by this Agreement. There is no requirement that any
party to any material contract, instrument or other agreement or
commitment to which the Buyer is a party or by which it is bound
consent to the execution and delivery of, or the consummation of
the transactions contemplated by, this Agreement.
4.4 Non-Contravention. The execution and delivery by Buyer
of this Agreement does not, and the consummation of the
transactions contemplated hereby will not violate, conflict with,
result in a breach of, result in or constitute a default (or an
event which, with notice or lapse of time or both, would constitute
a default) under, or result in the cancellation or unilateral
modification or amendment of, or accelerate the performance
required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Buyer
under any of the terms, conditions or provisions of (i) the
Articles of Incorporation or Bylaws of Buyer, (ii) any note, bond,
mortgage, indenture, deed of trust, license, agreement, lease or
other instrument, obligation or arrangement to which Buyer is a
party or to which Buyer or any of its assets may be subject, except
for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been
or will be obtained by Buyer prior to the Effective Date or the
obtaining of which has been waived by Seller, or (iii) any order,
writ, judgment, injunction, decree, award, ruling, statute, rule or
regulation applicable to Buyer or any of its assets or the business
conducted by Buyer.
4.5 Finders. No broker, finder or investment banker is
entitled to any fee or commission from Buyer for services rendered
on behalf of Buyer in connection with the transactions contemplated
by this Agreement.
4.6 No Knowledge of Breach. None of the Transferred
Employees have knowledge of any misrepresentation or breach of any
representation or warranty of Seller contained herein or in any of
the Transaction Agreements or of any facts or circumstances
constituting such a misrepresentation or breach.
4.7 Capital. Buyer intends to raise sufficient capital to
finance the Buyer and the development of the Software Products so
as to be able to make the scheduled payments on the Notes and so as
to make the Buyer independent financially.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Taxes and Recording Fees. All sales and transfer taxes
and fees (including filing fees, if any) incurred in connection
with this Agreement and the transactions contemplated hereby will
be borne by Buyer. Buyer will file all necessary tax returns and
other documents required to be filed with respect to all such taxes
and filing fees. Seller will cooperate with Buyer to the extent
necessary to enable it to make such filings and join in the
execution of any tax returns or other documents as may be necessary
to enable Buyer to comply with the provisions of this Section.
5.2 Allocation of Purchase Price. The values assigned to the
various assets which constitute the Purchased Assets are as
follows: a) Software Products and Collateral Material: $2,000,000;
b) Equipment: $38,393.00. Seller and Buyer agree that the values
set forth in this Section were separately established as a result
of good faith bargaining and that in reporting the transactions
contemplated by this Agreement to the Internal Revenue Service, as
is required by Section 1060 of the Internal Revenue Code, they will
cooperate with each other in meeting the requirements of the
Internal Revenue Code and the regulations promulgated thereunder.
5.3 Use of Seller's Office Space By Buyer. For a period of
two years after the Effective date, Seller shall sublease to Buyer,
a portion of Seller's office space more specifically described in
the Sublease for the consideration and on the terms and conditions
set forth in the Sublease attached hereto as Exhibit C. The
Sublease shall grant Buyer the limited right to use common areas
and certain equipment, and the limited services of the Seller's
receptionist.
5.4 Updates to Software Products. Buyer agrees to provide to
Seller, free of charge, "Maintenance Modifications" and "PEI
Software" as those terms are defined in the Software Agreement
attached hereto as Exhibit B.
5.5 Buyer's Use of Seller's Internet Access. As more fully
set forth in the Marketing Agreement attached hereto as Exhibit D,
for a period of two (2) years after the Effective Date, Seller
shall host on Seller's Internet home pages information regarding
the Buyer and the Software Products as reasonably requested by, and
provided by, the Buyer, and shall permit Buyer to use Seller's
Internet address to receive Internet mail.
5.6 Seller's Marketing Assistance. For a period of two (2)
years after the Effective Date, the Seller shall permit Buyer the
nonexclusive and limited right to identify itself with Seller and
Seller's parent corporation, pursuant to the Marketing Agreement
attached hereto as Exhibit D.
5.7 Settlement of Certain Accounts Receivable Issues.
Seller shall be entitled to the proceeds of all accounts receivable
that arise from Seller's performance related to the Purchased
Assets prior to the Effective Date. In the event that the Buyer
receives payment in respect of any such accounts receivable, the
Buyer shall hold such amounts in trust for Seller and shall
promptly pay such amounts to Seller.
5.8 Materials Received After the Effective Date. After the
Effective Date, Seller promptly shall deliver to Buyer all mail,
telegrams and other communications it receives relating to the
Purchased Assets.
5.9 Retention of Records. For a period of five years after
the Effective Date, the parties shall retain their records relating
to the Purchased Assets or the Assumed Liabilities. After such
five-year period, each party shall provide not less than 45 nor
more than 90 days prior written notice to the other party of any
proposed destruction or disposition of any such records. If the
recipient of such notice desires to obtain any of the documents to
be destroyed or disposed of, it may do so by notifying the sender
of such notice, in writing, at any time prior to the scheduled date
for such destruction or disposal. The notice must specify the
documents which the requesting party wishes to obtain. The parties
shall then promptly arrange for the delivery of such documents.
All out-of-pocket costs associated with the delivery of the
requested documents shall be paid by the requesting party.
5.10 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby will
be paid by the party incurring such costs and expenses.
5.11 Public Announcements. The parties will consult with one
another before issuing any press releases or otherwise making any
public statements with respect to this Agreement and the
transactions contemplated hereby and will not issue any such press
release or make any such public statement without the written
consent of the other; provided, however, that Buyer or Seller may
make such disclosure as it determines, in its sole discretion, is
required by law.
5.12 Non-competition Covenants. Pursuant to the Software
Agreement, Seller will retain the right for itself and its
Affiliates, to use the Software Products in providing consulting
services, or process management services, worldwide, for both
commercial and governmental customers.
(a) As of the Effective Date and for a period of five (5)
years thereafter, Buyer and its affiliates shall sell or license
the Software Products only to end-users. Buyer and its affiliates
shall not grant any license to any person or entity which would
allow that person or entity to utilize the Software Products to
compete, either directly or indirectly, with Seller. Buyer retains
the right to provide services to commercial enterprises even if
those services compete, either directly or indirectly, with Seller,
but Buyer agrees not to compete with Seller in providing services
to Government contractors or state or federal Governments for a
period of five (5) years following the Effective Date, unless Buyer
has obtained the prior written approval of Seller.
(b) To protect its rights under the prior section, Seller
shall be a third party beneficiary to any of Buyer's Software
Products license agreements and shall have the right to enforce any
of Buyer's license agreements or copyrights if any end-user
violates the license or copyright and uses the Software Products to
compete with Seller. Buyer will include language in its license
agreements that clearly sets forth Seller's right as a third party
beneficiary to enforce the terms of license.
(c) Buyer and Seller acknowledge and agree that the remedy at
law for any breach of this Section 5.12 will be inadequate and
that, in addition to any other relief available to it, the
aggrieved party shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damage.
In the event the provisions of this Section 5.12 are deemed to
exceed the limitation provided by applicable law, the parties agree
that such provisions shall be reformed to set forth the maximum
limitations permitted.
5.13 Buyer's Due Diligence. As of the Effective Date,
the Buyer agrees to use its best efforts to further develop the
Software Products, to market the Software Products, to increase
demand for the Software Products and to make the Software Products
a financially successful line of business.
(a) For a period of two years following the Effective Date,
the Buyer agrees that, should the Buyer fail to achieve the goals
set forth in the plan attached hereto as Schedule 5.13 ("Breach"),
such Breach shall create an option ("Option") for the Seller to
require the Buyer to transfer to the Seller all of the Buyer's
right title and interest in the Software Products along with any
updates or derivative works created based upon the Software
Products, the Collateral Material, the Intellectual Property and
the right to receive Software Products Licensing Revenue with
respect to any existing contract (collectively, the "Collateral").
(b) At any time after the Option is created until two years
after the Effective Date, the Seller may exercise the Option after
a Breach by providing the Buyer written notice that the Buyer must
cure the Breach within sixty (60) days. If the Buyer cures the
Breach, then the Option shall not be exercisable. If the Buyer
does not cure the Default or the Breach within sixty (60) days from
the date of the notice, then the Buyer shall deliver to the Seller
the Collateral and an executed document assigning the Collateral to
the Seller. Such transfer of the Collateral shall satisfy the
obligations under the Note only to the extent of the value of the
Collateral as of the date of the transfer. If Seller fails to
exercise the Option within two years after the date of this
Agreement, then the option shall cease to exist.
(c) In the event that the Seller exercises the Option, the
Buyer will indemnify, defend and hold Seller and Seller's
shareholders, directors, officers, employees and agents, and the
respective heirs, administrators, successors and assigns of each of
the foregoing, harmless from any claim, damage, loss, liability,
judgment, fine, penalty, assessment, settlement, cost or expense
including, without limitation, reasonable expenses of
investigation, reasonable attorneys' fees and other reasonable
legal costs and expenses incident to any of the foregoing or to the
enforcement of this Section, whether or not suit is brought or, if
brought, whether or not such suit is successful in whole or in part
arising out of or relating to, arising from or out of any the
Collateral in which the principal event giving rise thereto
occurred subsequent to the Effective Date and prior to the date the
Buyer transfers the Collateral to the Seller or which result from
or arise out of any action or inaction subsequent to the Effective
Date of Buyer or any director, officer, employee or agent of
Buyer.
5.14 Additional Equity Contribution. For the first six months
following the Effective Date, Seller shall contribute ($20,000)
twenty thousand dollars of capital to Buyer on the first day of the
month each month following the schedule set forth in Schedule 5.14
attached to this Agreement.
ARTICLE VI
EMPLOYEES AND EMPLOYEE MATTERS
6.1 Transferred Employees. Buyer will offer employment to
each of Seller's employees set forth on Schedule 6.1. Seller hereby
consents to the Buyer offering employment to those employees set
forth in Schedule 6.1. To the extent that such offers are accepted,
each employee who, on the Effective Date, is a current employee of
Seller and who is listed on Schedule 6.1, shall be deemed a
"Transferred Employee" as of the Effective Date. Each Transferred
Employee shall release Seller from any liability to such
Transferred Employee for claims arising on or after the Effective
Date.
6.2 Worker's Compensation. Buyer will assume the
responsibility for all worker's compensation claims made by
Transferred Employees arising from events occurring on or after the
Effective Date. Seller will retain the responsibility for all
worker's compensation claims made by its employees or former
employees (whether or not Transferred Employees) that arise from
events that occur before the Effective Date.
6.3 Other Employees. For a period of five years after the
Effective Date, Buyer and Buyer's Affiliates shall not solicit the
employees of Seller or Seller's Affiliates. For a period of five
years after the Effective Date, Seller and Seller's Affiliates will
not solicit the employees of the Buyer or Buyer's Affiliates.
ARTICLE VII
DELIVERIES
7.1 Deliveries by Buyer. Concurrently with the
execution of this Agreement, Buyer shall deliver to Seller the
following:
(a) a certificate representing Seller's 10% Interest;
(b) the Notes;
(c) a Software Agreement for the Software Products
substantially in the form attached as Exhibit B;
7.2 Deliveries by Seller. Concurrently with the execution of
this Agreement, Seller shall deliver to Buyer the following:
(a) possession of the Purchased Assets and such bills
of sale and other documents as may be necessary to transfer all of
Seller's right, title, and interest in and to the Purchased Assets
to Buyer;
(b) any assignments necessary to transfer all of
Seller's right, title, and interest in and to the Purchased Assets
to Buyer;
(c) the Sublease;
(d) the Marketing Agreement;
(e) any other documents reasonably requested by the
Buyer.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Buyer. Buyer will indemnify and hold
Seller and Seller's shareholders, directors, officers, employees
and agents, and the respective heirs, administrators, successors
and assigns of each of the foregoing, harmless from any damage,
loss, liability, judgment, fine, penalty, assessment, settlement,
cost or expense including, without limitation, reasonable expenses
of investigation, reasonable attorneys' fees and other reasonable
legal costs and expenses incident to any of the foregoing or to the
enforcement of this Section, whether or not suit is brought or, if
brought, whether or not such suit is successful in whole or in part
arising out of or relating to:
(a) any misrepresentation or breach of a representation
or warranty made by Buyer in any Transaction Agreement;
(b) the breach of any agreement of Buyer contained in
any Transaction Agreement;
(c) the failure of Buyer to perform any obligation
specifically assumed by it pursuant to the terms of this
Agreement; and
(d) any and all actions, suits, claims or legal,
administrative, arbitration, governmental or other proceedings
that relate to Buyer or the Purchased Assets in which the
principal event giving rise thereto occurred subsequent to the
Effective Date or which result from or arise out of any action
or inaction subsequent to the Effective Date of Buyer or any
director, officer, employee or agent of Buyer.
8.2 Survival; Investigation.
(a) The representations and warranties of the Buyer
contained in this Agreement, in any exhibit or schedule
attached to this Agreement, or in any agreement, instrument,
or document provided to Seller by or on behalf of Buyer in
connection with the transactions contemplated hereby shall
survive the execution of this Agreement.
(b) No investigation by any of the parties, heretofore
or hereafter made, shall affect the survival of any
representation and warranty contained herein.
ARTICLE IX
GENERAL PROVISIONS
9.1 Notices. All notices and other communications required
or permitted to be given by this Agreement shall be in writing and
shall be deemed duly given (i) one Business Day after delivery, if
delivered personally, (ii) seven Business Days after posting, if
mailed by registered or certified first class air mail (return
receipt requested) or (iii) one Business Day after dispatch, if
sent by telex or telefax (with an answer back from the receiving
party and a confirmatory mailing as provided in (ii) by the sender)
to the parties at the following addresses (or at such other address
for the party as shall be specified by like notice):
(i) If to Seller to:
Xxxxxx X. Xxxxxxx
Chief Financial Officer
Hadron, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Telefax No: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx Xxxxxxx, Esquire
McGuire, Woods, Battle & Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, XX 00000
Telefax No: (000) 000-0000
(ii) If to Buyer to:
Xxxxxxx Xxxxx
President
Performance Engineering International Corp.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Telefax No: (000) 000-0000
with a copy to:
Xxxx X. Xxxx, Esquire
Xxxx and Xxxxxxxx, P.A.
0000 Xxx Xxxx, Xxxxx 0X
Xxxxxxxxx, Xxxxxxxx 00000
Telefax No: (000) 000-0000
Rejection or other refusal to accept, or the inability to
deliver because of a changed address of which no notice was given,
shall not affect the date of such notice sent in accordance with
the foregoing provisions.
9.2 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. Unless the context otherwise
requires as used herein, words in the singular shall include words
in the plural and vice versa, words in one gender shall include
words in the other gender and the word "person" shall include
trusts, estates, partnerships, corporations and other business
entities.
9.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and
all of which together shall constitute one and the same instrument.
9.4 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and the provisions of Article
VIII shall inure to the benefit of the indemnified party referred
to therein; provided, however, that neither this Agreement nor any
of the rights, interests or obligations hereunder may be assigned
by any of the parties hereto without the prior written consent of
the other parties.
9.5 Survival. The rights and obligations of the parties set
forth in Sections 2.1, 2.2, 2.3, 2.4, and 5.1 through 5.14,
inclusive, Sections 7.1, and 7.2 and Article 8 (including the
representations and warranties of the parties as set forth in
Section 8.2), shall survive the execution of this Agreement.
9.6 Amendment. This Agreement and the exhibits and
schedules hereto may be amended at any time provided that any such
amendment is approved in writing by each of the parties hereto.
All representations and warranties which are true and correct as
modified and approved shall be deemed true and correct for the
purposes of Sections 8.1.
9.7 Entire Agreement. The Transaction Agreements
(including all exhibits and schedules thereto) constitute the
entire agreement and supersede all other prior agreements and
understandings, both written and oral, between the parties with
respect to the transactions contemplated hereby. There are no
restrictions, agreements, promises, warranties, covenants or
undertakings with respect to the transactions contemplated hereby
other than those expressly set forth therein.
9.8 Governing Law. This Agreement shall be governed in
all respects by the laws of Maryland without regard to its laws or
regulations relating to conflicts of laws.
9.9 Benefits. Except as may be expressly provided
herein, this Agreement is not intended to and shall not confer upon
any other Person, other than the parties hereto, any rights or
remedies with respect to the subject matter hereof.
9.10 Severability. If any one or more of the provisions
of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the
remaining provisions of this Agreement shall not be affected
thereby. To the extent permitted by applicable law, each party
waives any provision of law which renders any provision of this
Agreement invalid, illegal or unenforceable.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed by their duly
authorized officers.
SYCOM SERVICES, INC., a Delaware Corporation
By: /S/ X.X. XXXXXXX
X.X. Xxxxxxx, Chief Executive Officer
PERFORMANCE ENGINEERING INTERNATIONAL CORP., a
Maryland Corporation
By: /S/ XXXXXXX XXXXX
Xxxxxxx Xxxxx, President
EXHIBIT A1
PRIMARY NOTE
See Attached
PROMISSORY NOTE AND SECURITY AGREEMENT
$2,000,000.00 Baltimore, Maryland
June 30, 1997
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay
to the order of SyCom Services, Inc., a Delaware corporation
("SyCom") the principal sum of Two Million Dollars ($2,000,000.00)
together with interest on the principal balance outstanding from
time to time as set forth in this Promissory Note and Security
Agreement (the "Note").
1. Interest Rate. This Note shall bear interest on the
principal balance outstanding beginning two years from the date
hereof, until paid, at the variable prime rate of interest which is
established from time to time by the Century National Bank in
Washington, D.C. Adjustments to the variable rate will be
effective, without notice, as of the effective date of any change.
2. Payment Terms. Maker agrees to pay this Note as follows:
(a) Beginning on September 30, 1998 and for a period of
one year thereafter, in quarterly installments of principal in the
amount of $20,000.00; and then
(b) Beginning September 30, 1999 and for a period of one
year thereafter, in quarterly installments of principal and
interest in the amount of $40,000.00.
(c) Beginning September 30, 2000 and for a period of one
year thereafter, in quarterly installments of principal and
interest in the amount of $50,000.00.
(d) Beginning September 30, 2001 and for a period of one
year thereafter, in quarterly installments of principal and
interest in the amount of $60,000.00.
(e) On July 1, 2002, all principal, interest and all
other remaining charges ("Remaining Balance Due") shall be due and
payable in full and Maker shall use best efforts to obtain
financing, if necessary, to pay the Remaining Balance Due. If,
however, Maker is unable to secure such financing, then Maker shall
execute a note payable to SyCom over a three year period of time
under the same terms as set forth in Section 2(d) hereof.
Principal and interest payments shall be paid in immediately
available United States funds, without offset, at 0000 Xxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx, 00000, or at such other place
as the holder may designate in writing.
3. Prepayment. The principal balance may be prepaid, in
whole or in part, at any time or from time to time without penalty
by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment; provided, however, if
Maker shall pay in full the entire principal balance on or before
June 30, 2000, then SyCom shall forgive any interest accrued as of
June 30, 2000. Partial prepayments, if any, shall be applied to
the installments in the inverse order of their maturity.
4. Financial Statements. At any time upon request, the Maker
agrees to furnish the holder with current, signed, financial
statements.
5. Security.
(a) Grant. To secure the due and punctual payments hereunder,
Maker hereby grants to Seller a first-priority security interest in
all of Maker's right, title and interest in the Software Products,
the Collateral Material and the Intellectual Property, as those
terms are described in that certain Asset Purchase Agreement,
effective as of June 30, 1997 between Maker and SyCom ("Asset
Purchase Agreement"), together with all updates, enhancements and
derivative works thereof now existing or hereafter developed or
acquired and all present and future accounts relating to the
Software Products (collectively, the "Collateral"). For purposes
of this Note, the term "accounts" shall include the right to receive
Software Licence Revenues as that term is defined in the Asset
Purchase Agreement.
(b) Further Agreements. Maker agrees that, except for the
security interest created by this Note, it shall refrain from
encumbering the Collateral. Maker agrees to notify SyCom upon its
filing of any copyright registration for the Software Products or
any updates, enhancements and derivative works thereof. Maker
agrees to execute such documents as SyCom shall reasonably request,
including, without limitation, the financing statement attached
hereto as Exhibit A necessary to perfect SyCom's security interest
and to pay the costs to file such financing statement. SyCom agrees
to release immediately its security interest upon receipt of
payment in full of the Note.
6. Late Fee. The Maker agrees to pay to the holder of this
Note a "late charge" of five percent (5%) of any payment which is
not paid within seven (7) days after its due date. The holder may
apply any payment received by it to the payment of all late charges
then owing before application to interest or principal. Such late
charge is in addition to and not in lieu of or diminution of any
other rights and remedies of the holder of this Note.
7. Default. Upon the happening of a Default (hereinafter
defined) the entire unpaid principal balance of this Note and all
accrued but unpaid interest, if any, shall, at the option of the
holder, immediately become due and payable without presentment,
demand or notice of any kind and the holder may exercise any and
all remedies available to it under applicable law. Any of the
following shall constitute a Default hereunder: (i) the failure of
Maker to perform or observe any term, agreement or obligation in
the "Plan" set forth in the Asset Purchase Agreement as Exhibit 5.13
hereto; (ii) the dissolution, merger, consolidation,
reorganization, dissolution, or termination of existence of Maker
or the pledge, lease or other disposition of all or substantially
all of the assets of Maker; (iii) the insolvency of Maker, the
application for the appointment of a receiver for Maker, the filing
of a petition under any provision of the federal bankruptcy law by
or against Maker, or the making of a general assignment for the
benefit of creditors by any Maker; (iv) the entry of a judgment
against Maker or the making of any attachment, levy or garnishment
against Maker or the property of Maker; (v) any change, or any
transaction which results or could result in a change in the
Control of Maker. For purposes of this Note, the term "Control"
shall mean ownership, control or power to vote 20% or more of any
class of voting securities of the Maker, directly or indirectly or
acting through others.
8. Setoff. SyCom shall have the right (in addition to the
other remedies permitted by law) to set off the amount now or
hereafter due under this Note or due under any other obligation of
the Maker to SyCom, against any amounts held or under control by
SyCom to the account of or to the credit of Maker, without notice
or consent by the Maker.
9. Waiver/Miscellaneous Terms. Maker (i) waives
presentment, protest and notice of dishonor; (ii) waives the
benefit of any exemption as to the debt evidenced by this Note;
(iii) waives any right which it may have to require the holder to
proceed against any other person; (iv) agrees that, without notice
to Maker and without affecting Maker's liability, the holder may,
at any time or times, grant extensions of time for payment to any
party, permit the renewal of this Note or the substitution,
exchange or release of any security for this Note and add or
release a party and no waiver shall be effective unless such waiver
shall be in a writing signed by the parties; (v) agrees that its
obligations with respect to this Note shall remain in effect
notwithstanding any other circumstances which might otherwise
constitute a legal or equitable discharge of its obligations
hereunder; (vi) agrees to pay all collection expenses, including
reasonable attorney's fees of not less than 15% of the unpaid
amount due hereon, and court costs incurred in the collection of
this Note or any part hereof.
10. Use of Proceeds; Governing Law; Jurisdiction. This Note
shall be governed and construed in accordance with the laws of the
State of Maryland. The loan evidenced by this Note is a
"commercial loan" within the meaning of section 12-103(e) and this
Note shall be governed and construed in accordance with section 12-
103(3) of the Commercial Law Article of the Maryland Code
Annotated. The Maker and holder irrevocably (i) submit to the
jurisdiction of any Maryland state court or federal court sitting
in the state of Maryland with respect to any suit, action, or
proceeding relating to this Note, (ii) waive any objection which
they may now or hereafter have to the laying of venue of any such
suit, action, or proceeding brought in any such court and claim
that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum, and (iii) waive the
right to object that any such court does not have jurisdiction over
them.
11. Severability. In the event that any provision of this
Note is held to be invalid, illegal or unenforceable for any
reason, then such provision shall be null and void, and this Note
shall be enforced as though the invalid, illegal or unenforceable
term is not contained in this Agreement or shall be enforced to the
extent permitted by law.
12. Payment of Encumbrances. At its option and without any
obligation to do so, SyCom may discharge or pay any taxes,
assessments, liens, security interest or other encumbrances at any
time levied or placed on or against the Collateral or the Maker,
and may pay for the Collateral's maintenance and preservation. Any
amount so paid, with interest thereon at the maximum rate permitted
by law from the date of the payment until repaid, shall be secured
by the Collateral and shall be repayable by Maker, with interest at
the rate set forth above, on demand.
13. Modifications and Waiver. No modifications or waiver of
any provision of this Note shall be effective unless it is in
writing and signed by the Maker and holder, and any waiver shall be
effective only in the specific instance and for the specific
purpose for which it is given.
The Maker acknowledges that its representative has read and
has agreed to the terms and conditions listed within this Note.
IN WITNESS WHEREOF, this Note has been executed under seal as
of the day and year first written above.
Performance Engineering International
Corp.
Attest: By:/S/ XXXXXXX XXXXX
Xxxxxxx Xxxxx, President
/S/ XXXXXX XXXXXX
Secretary
EXHIBIT A
FINANCING STATEMENT
STATE OF MARYLAND
FINANCING STATEMENT Form UCC-1 Identifying File No.____________
ALL INFORMATION MUST BE TYPEWRITTEN OR PRINTED IN INK.
SIGNATURES MUST IN INK.
________________________________________________________________________
| If transaction or transactions wholly or partially subject to record- |
| tion tax indicate amount of taxable debt here. $_______________ |
|______________________________________________________________________ |
______________________________________
| If this statement is to be recorded |
| in land records check here. |
|_____________________________________ |
This financing statement Dated ________ is presented to a filing
officer for filing pursuant to the Uniform Commercial Code.
1. DEBTOR
Name Performance Engineering International Corp.
________________________________________________________
Address 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000
_________________________________________________________
2. SECURED PARTY
Name SyCom Services, Inc.
_________________________________________________________
Address 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000
_________________________________________________________
XxXxxx X. Xxxxxxxxx, 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx,
XX 00000
_______________________________________________________________
Person and Address to whom Statement Is To Be Returned if
Different From Above
3. Maturity date of obligation (if any)
__________________________________
4. This financing statement covers the following types (or items)
of property: (list)
Collateral attached on Schedule A.
CHECK THE LINES WHICH APPLY
5. (If collateral is crops) The above described crops are growing
or are to be grown on: (describe real estate)
(If collateral is goods which are or are to become fixtures)
The above described goods are affixed or to be affixed to:
(describe real estate)
X (Proceeds of collateral are also covered)
(Proceeds of collateral are also covered)
/S/ J. XXXXXXX XXXXX
______________________________________
(Signature of Debtor)
J. Xxxxxxx Xxxxx, President PEI
______________________________________
Type or Print Above Name on Above Line
/S/ X.X. XXXXXXX
__________________________ ____________________________
(Signature of Debtor) (Signature of Secured Party)
X.X. Xxxxxxx
__________________________ ____________________________
Type or Print Above Name Type or Print Above
Name on Above Line Signature on Above
EXHIBIT A -- COLLATERAL
All of the Debtor's right, title and interest in and the following
"Collateral":
A. SOFTWARE PRODUCTS. "Software Products" means current object
code and source code versions of HeaTreaT, HeaTreaT Pro and
HeaTreaT Lite currently developed and owned, or being
developed by Debtor and licensed or proposed to be licensed by
Debtor, regardless of what platform or operating system upon
which it functions.
B. SOFTWARE PRODUCTS LICENSING REVENUES. "Software Products
Licensing Revenues" means licensing fees for the Software
Products, to be paid by licensees, exclusive of taxes,
shipping and handling, discounts and credits.
C. COLLATERAL MATERIAL. "Collateral Material" means all
enhancements, modifications, program interfaces, current and
archival versions of patches and bug fixes, flow charts,
input/output formats, drawings, specifications, user's manuals
and technical and other documentation, instructions, designs,
models, data and algorithms, in whatever form, relating to the
Software Products.
D. INTELLECTUAL PROPERTY RIGHTS. "Intellectual Property Rights"
means the pending application for a "HeaTreaT" trademark and
the copyrights in the Software Products and the Collateral
Material.
E. PRESENT AND FUTURE ACCOUNTS as defined by the Uniform
Commercial Code, as in effect in Maryland from time to time.
F. EQUIPMENT. Equipment as set forth below.
G. PROCEEDS of any or all of the Collateral.
Equipment includes the
following:
Five Toshiba Laptop computers
Laserjet 111
Digital PC and Monitor
Digital Server
Xxxxx computer 486
Xxxxx computer 486
Xxxxx computer 486
AST computer 466 Bravo
Envisions scanner
HP personal scanner
Projector
Tape Drive
NEC 20" Monitor
Mitsubishi diamond scan 20"
Monitor
NEC 20" Monitor
Hitachi 20" Monitor
Mag 17" Monitor
Mag 17" Monitor
Asante Port and Hub
Sniffer network tool (Network
Gen.)
Optimal software Performance
Powersoft Software
Netviz
Novell Netware 3.12
Windows NT 4.1 server and
upgrade
Netscape communications
Server Software
SQA Suite
Quark Xpress
Act
Master Maps
IQ Software
Sybase SQL Server
Crystal Reports
Doc to Help
S Designer Professional
Powerbuilder CBT
Gupta SQL Base
Gupta SQL Windows
Label Works
MS Project
Powerimage
PB Image
Windows 95 10X
MsOffice 97
Time Lock
PowerDoc
Opts Evaluation SW
EXHIBIT A2
EQUIPMENT NOTE
See Attached
PROMISSORY NOTE AND SECURITY AGREEMENT
$38,393.00 Baltimore, Maryland
June 30, 1997
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay
to the order of SyCom Services, Inc., a Delaware corporation
("SyCom") the principal sum of Thirty Eight Thousand Three Hundred
Ninety Three Dollars ($38,393.00) together with interest on the
principal balance outstanding from time to time as set forth in
this Promissory Note and Security Agreement (the "Note").
1. Interest Rate. This Note shall bear interest on the
principal balance outstanding beginning two years from the date
hereof, until paid, at the variable prime rate of interest which is
established from time to time by the Century National Bank in
Washington, D.C. Adjustments to the variable rate will be
effective, without notice, as of the effective date of any change.
2. Payment Terms. Maker agrees to pay this Note as follows:
(a) Beginning on September 30, 1998 and for a period of
one year thereafter, in quarterly installments of principal in the
amount of $3,100.00; and then
(b) Beginning September 30, 1999 and thereafter, in
quarterly installments of principal and interest in the amount of
$3,100.00.
(c) On June 30, 2000, all principal, interest and all
other remaining charges ("Remaining Balance Due") shall be due and
payable in full.
Principal and interest payments shall be paid in immediately
available United States funds, without offset, at 0000 Xxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx, 00000, or at such other place
as the holder may designate in writing.
3. Prepayment. The principal balance may be prepaid, in
whole or in part, at any time or from time to time without penalty
by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment; provided, however, if
Maker shall pay in full the entire principal balance on or before
June 30, 2000, then SyCom shall forgive any interest accrued as of
June 30, 2000. Partial prepayments, if any, shall be applied to
the installments in the inverse order of their maturity.
4. Financial Statements. At any time upon request, the Maker
agrees to furnish the holder with current, signed, financial
statements.
5. Security.
(a) Grant. To secure the due and punctual payments hereunder,
Maker hereby grants to Seller a first-priority security interest in
all of Maker's right, title and interest in the Equipment (the
"Collateral") as that term is described in that certain Asset
Purchase Agreement, effective as of June 30, 1997 between Maker and
SyCom ("Asset Purchase Agreement").
(b) Further Agreements. Maker agrees that, except for the
security interest created by this Note, it shall refrain from
encumbering the Collateral. Maker agrees to execute such documents
as SyCom shall reasonably request, including, without limitation,
the financing statement attached hereto as Exhibit A necessary to
perfect SyCom's security interest and to pay the costs to file such
financing statement. SyCom agrees to release immediately its
security interest upon receipt of payment in full of the Note.
6. Late Fee. The Maker agrees to pay to the holder of this
Note a "late charge" of five percent (5%) of any payment which is
not paid within seven (7) days after its due date. The holder may
apply any payment received by it to the payment of all late charges
then owing before application to interest or principal. Such late
charge is in addition to and not in lieu of or diminution of any
other rights and remedies of the holder of this Note.
7. Default. Upon the happening of a Default (hereinafter
defined) the entire unpaid principal balance of this Note and all
accrued but unpaid interest, if any, shall, at the option of the
holder, immediately become due and payable without presentment,
demand or notice of any kind and the holder may exercise any and
all remedies available to it under applicable law. Any of the
following shall constitute a Default hereunder: (i) the failure of
Maker to perform or observe any term, agreement or obligation in
the "Plan" set forth in the Asset purchase Agreement as Exhibit 5.13
hereto; (ii) the dissolution, merger, consolidation,
reorganization, dissolution, or termination of existence of Maker
or the pledge, lease or other disposition of all or substantially
all of the assets of Maker; (iii) the insolvency of Maker, the
application for the appointment of a receiver for Maker, the filing
of a petition under any provision of the federal bankruptcy law by
or against Maker, or the making of a general assignment for the
benefit of creditors by any Maker; (iv) the entry of a judgment
against Maker or the making of any attachment, levy or garnishment
against Maker or the property of Maker; (v) any change, or any
transaction which results or could result in a change in the
Control of Maker. For purposes of this Note, the term "Control"
shall mean ownership, control or power to vote 20% or more of any
class of voting securities of the Maker, directly or indirectly or
acting through others.
8. Setoff. SyCom shall have the right (in addition to the
other remedies permitted by law) to set off the amount now or
hereafter due under this Note or due under any other obligation of
the Maker to SyCom, against any amounts held or under control by
SyCom to the account of or to the credit of Maker, without notice
or consent by the Maker.
9. Waiver/Miscellaneous Terms. Maker (i) waives
presentment, protest and notice of dishonor; (ii) waives the
benefit of any exemption as to the debt evidenced by this Note;
(iii) waives any right which it may have to require the holder to
proceed against any other person; (iv) agrees that, without notice
to Maker and without affecting Maker's liability, the holder may,
at any time or times, grant extensions of time for payment to any
party, permit the renewal of this Note or the substitution,
exchange or release of any security for this Note and add or
release a party and no waiver shall be effective unless such waiver
shall be in a writing signed by the parties; (v) agrees that its
obligations with respect to this Note shall remain in effect
notwithstanding any other circumstances which might otherwise
constitute a legal or equitable discharge of its obligations
hereunder; (vi) agrees to pay all collection expenses, including
reasonable attorney's fees of not less than 15% of the unpaid
amount due hereon, and court costs incurred in the collection of
this Note or any part hereof.
10. Use of Proceeds; Governing Law; Jurisdiction. This Note
shall be governed and construed in accordance with the laws of the
State of Maryland. The loan evidenced by this Note is a
"commercial loan" within the meaning of section 12-103(e) and this
Note shall be governed and construed in accordance with section 12-
103(3) of the Commercial Law Article of the Maryland Code
Annotated. The Maker and holder irrevocably (i) submit to the
jurisdiction of any Maryland state court or federal court sitting
in the state of Maryland with respect to any suit, action, or
proceeding relating to this Note, (ii) waive any objection which
they may now or hereafter have to the laying of venue of any such
suit, action, or proceeding brought in any such court and claim
that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum, and (iii) waive the
right to object that any such court does not have jurisdiction over
them.
11. Severability. In the event that any provision of this
Note is held to be invalid, illegal or unenforceable for any
reason, then such provision shall be null and void, and this Note
shall be enforced as though the invalid, illegal or unenforceable
term is not contained in this Agreement or shall be enforced to the
extent permitted by law.
12. Payment of Encumbrances. At its option and without any
obligation to do so, SyCom may discharge or pay any taxes,
assessments, liens, security interest or other encumbrances at any
time levied or placed on or against the Collateral or the Maker,
and may pay for the Collateral's maintenance and preservation. Any
amount so paid, with interest thereon at the maximum rate permitted
by law from the date of the payment until repaid, shall be secured
by the Collateral and shall be repayable by Maker, with interest at
the rate set forth above, on demand.
13. Modifications and Waiver. No modifications or waiver of
any provision of this Note shall be effective unless it is in
writing and signed by the Maker and holder, and any waiver shall be
effective only in the specific instance and for the specific
purpose for which it is given.
The Maker acknowledges that its representative has read and
has agreed to the terms and conditions listed within this Note.
IN WITNESS WHEREOF, this Note has been executed under seal as
of the day and year first written above.
Performance Engineering International
Corp.
Attest: By:/S/ XXXXXXX XXXXX
Xxxxxxx Xxxxx, President
/S/ XXXXXX XXXXXX
Secretary
EXHIBIT A
FINANCING STATEMENT
STATE OF MARYLAND
FINANCING STATEMENT Form UCC-1 Identifying File No.____________
ALL INFORMATION MUST BE TYPEWRITTEN OR PRINTED IN INK.
SIGNATURES MUST IN INK.
_______________________________________________________________________
| If transaction or transactions wholly or partially subject to record- |
| tion tax indicate amount of taxable debt here. $_______________ |
|______________________________________________________________________ |
_______________________________________
| If this statement is to be recorded |
| in land records check here. |
|______________________________________ |
This financing statement Dated ________ is presented to a filing
officer for filing pursuant to the Uniform Commercial Code.
6. DEBTOR
Name Performance Engineering International Corp.
_________________________________________________________
Address 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000
_________________________________________________________
7. SECURED PARTY
Name SyCom Services, Inc.
_________________________________________________________
Address 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000
_________________________________________________________
XxXxxx X. Xxxxxxxxx, 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx,
XX 00000
_______________________________________________________________
Person and Address to whom Statement Is To Be Returned if
Different From Above
8. Maturity date of obligation (if any)
__________________________________
9. This financing statement covers the following types (or items)
of property: (list)
Collateral attached on Schedule A.
CHECK THE LINES WHICH APPLY
10. (If collateral is crops) The above described crops are growing
or are to be grown on: (describe real estate)
(If collateral is goods which are or are to become fixtures)
The above described goods are affixed or to be affixed to:
(describe real estate)
X (Proceeds of collateral are also covered)
(Proceeds of collateral are also covered)
/S/ J. XXXXXXX XXXXX
_____________________________
(Signature of Debtor)
J. Xxxxxxx Xxxxx, President PEI
______________________________________
Type or Print Above Name on Above Line
/S/ X.X. XXXXXXX
______________________________ ____________________________
(Signature of Debtor) (Signature of Secured Party)
X.X. Xxxxxxx
______________________________ ____________________________
Type or Print Above Type or Print Above Signature
Name on Above Line on Above Line
EXHIBIT A -- COLLATERAL
All of the Debtor's right, title and interest in and the following
"Collateral":
A. SOFTWARE PRODUCTS. "Software Products" means current object
code and source code versions of HeaTreaT, HeaTreaT Pro and
HeaTreaT Lite currently developed and owned, or being
developed by Debtor and licensed or proposed to be licensed by
Debtor, regardless of what platform or operating system upon
which it functions.
B. SOFTWARE PRODUCTS LICENSING REVENUES. "Software Products
Licensing Revenues" means licensing fees for the Software
Products, to be paid by licensees, exclusive of taxes,
shipping and handling, discounts and credits.
C. COLLATERAL MATERIAL. "Collateral Material" means all
enhancements, modifications, program interfaces, current and
archival versions of patches and bug fixes, flow charts,
input/output formats, drawings, specifications, user's manuals
and technical and other documentation, instructions, designs,
models, data and algorithms, in whatever form, relating to the
Software Products.
D. INTELLECTUAL PROPERTY RIGHTS. "Intellectual Property Rights"
means the pending application for a "HeaTreaT" trademark and
the copyrights in the Software Products and the Collateral
Material.
E. PRESENT AND FUTURE ACCOUNTS as defined by the Uniform
Commercial Code, as in effect in Maryland from time to time.
F. EQUIPMENT. Equipment as set forth below.
G. PROCEEDS of any or all of the Collateral.
Equipment includes the
following:
Five Toshiba Laptop computers
Laserjet 111
Digital PC and Monitor
Digital Server
Xxxxx computer 486
Xxxxx computer 486
Xxxxx computer 486
AST computer 466 Bravo
Envisions scanner
HP personal scanner
Projector
Tape Drive
NEC 20" Monitor
Mitsubishi diamond scan 20"
Monitor
NEC 20" Monitor
Hitachi 20" Monitor
Mag 17" Monitor
Mag 17" Monitor
Asante Port and Hub
Sniffer network tool (Network
Gen.)
Optimal software Performance
Powersoft Software
Netviz
Novell Netware 3.12
Windows NT 4.1 server and
upgrade
Netscape communications
Server Software
SQA Suite
Quark Xpress
Act
Master Maps
IQ Software
Sybase SQL Server
Crystal Reports
Doc to Help
S Designer Professional
Powerbuilder CBT
Gupta SQL Base
Gupta SQL Windows
Label Works
MS Project
Powerimage
PB Image
Windows 95 10X
MsOffice 97
Time Lock
PowerDoc
Opts Evaluation SW
EXHIBIT B
SOFTWARE AGREEMENT
See Attached
SOFTWARE AGREEMENT
This Software Agreement (the "Agreement") is entered into this 30th
day of June, 1997 (the "Effective Date"), by and between SyCom
Services, Inc., a Delaware corporation, ("SyCom"), and Performance
Engineering International Corp., a Maryland corporation,("PEI").
RECITALS
WHEREAS, SyCom has developed and is in the process of further
refining certain process management software and database (the
"SOFTWARE");
WHEREAS, PEI desires to purchase the SOFTWARE from SyCom, and
further develop it for use by its licensees;
WHEREAS, SyCom has agreed to sell the SOFTWARE and Documentation
(as defined below) to PEI as provided in that certain Asset
Purchase Agreement dated June 30, 1997 (the "Purchase Agreement")
subject, however, to SyCom retaining certain rights to use the
SOFTWARE and Documentation, as provided below and subject further
to PEI licensing to SyCom certain rights with respect to its
enhancements and improvements to the SOFTWARE;
WHEREAS, PEI is willing to appoint SyCom as an authorized reseller
of the PEI SOFTWARE, as defined below;
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, SyCom and PEI agree as follows:
1. DEFINITIONS.
The following capitalized terms shall have the meanings ascribed to
them below:
"Documentation" means the documentation created by SyCom relating
to the SOFTWARE, as listed in Exhibit A attached hereto.
"Maintenance Modifications" means modifications and revisions made
to the SOFTWARE or the PEI SOFTWARE by PEI which correct errors or
"bugs", support new releases of the operating systems with which
the SOFTWARE or the PEI SOFTWARE operates and/or support new input
or output devices.
"PEI SOFTWARE" means program fixes, enhancements, improvements, new
versions of, translations and/or adaptations to the SOFTWARE and
Maintenance Modifications which are developed by PEI and provided
by PEI to any of its customers or distributors, and documentation
related to such software.
"Sublicensees" means customers of SyCom who are granted a license
to use the SOFTWARE or the PEI SOFTWARE and who have executed PEI's
end user license agreement.
"Sublicense" means the grant of the right to use the SOFTWARE or the
PEI SOFTWARE to customers of SyCom, but excludes the use of the
SOFTWARE or the PEI SOFTWARE by affiliates of SyCom for internal
purposes, and excludes the use of the SOFTWARE or the PEI SOFTWARE
to provide services to customers.
2. SOFTWARE AND DOCUMENTATION.
2.1 Retention of Rights. The parties agree that
notwithstanding any provision to the contrary in the Purchase
Agreement, SyCom retains the right for itself, and its corporate
affiliates, to use the SOFTWARE in providing consulting services,
or process management services, worldwide, for both commercial and
governmental customers. This right includes the right to
(a)retain current source and object code versions of the SOFTWARE
(as of June 30, 1997), and copies of the Documentation, (b)modify,
enhance and improve the SOFTWARE for use in providing services, and
(c)create derivative works and new versions of the SOFTWARE for use
in providing services. SyCom understands and agrees that this right
does not encompass the right to license or otherwise provide the
SOFTWARE to any other party.
2.2 License of PEI Software. (a) Subject to the terms of
this Agreement, PEI hereby grants to SyCom a personal, non-
exclusive, non-transferable, limited license to use and reproduce
for its own internal use, for the internal use of its affiliates,
and in providing services to commercial and governmental customers
of SyCom and its affiliates (in accordance with the terms of this
Agreement) the PEI SOFTWARE. Further, PEI hereby grants to SyCom
a personal, non-exclusive, non-transferable, license to internally
use and to make limited copies of the PEI SOFTWARE.
2.3 Delivery and Acceptance. PEI shall deliver to SyCom the
PEI SOFTWARE, in object code versions and the documentation upon
request.
2.4 Limitations. The license rights granted to SyCom by PEI
are limited rights, and PEI reserves all ownership rights in the
PEI SOFTWARE. No right, privilege or grant with respect to the PEI
SOFTWARE is being made unless expressly set out in this Agreement.
SyCom's sublicensing rights granted under this Agreement are
limited to sublicensing to commercial and governmental end users
and does not include the right to license for distribution. The
license of the PEI SOFTWARE to SyCom will not convey to it any
intellectual property rights in the PEI SOFTWARE, including, but
not limited to, any rights under patent, trademark, copyright or
trade secret, except as expressly provided in this Agreement.
3. WARRANTIES.
3.1 Ownership. PEI represents and warrants to SyCom that it
owns the PEI SOFTWARE and the documentation, and that PEI has the
full right and ability to grant the licenses granted in this
Agreement with respect thereto.
3.2 No Infringement. To the knowledge of PEI, none of the
PEI SOFTWARE infringes any United States patent, United States
copyright, United States trade secret or other intellectual
property right under United States laws of any third party.
Further, PEI represents and warrants to SyCom that no claim or
action relating to the infringement of any patent, copyright,
trademark, or other intellectual property right has been made or is
pending or threatened against PEI with respect to any of the PEI
SOFTWARE.
3.3 Freedom from Errors; Compliance with Specifications.
Subject to the limitations of Section 3.4 below, PEI will warrant
to Sublicensees that the PEI SOFTWARE, when delivered to SyCom and
for a period of ninety (90) days thereafter, (a) is free from
material errors that impair the material operations of the PEI
SOFTWARE, and (b) substantially conforms to all of PEI's
specifications with respect thereto.
3.4 Viruses. PEI has no knowledge of the existence of any
computer viruses, worms, or other disabling devices within any
software delivered to SyCom under this Agreement. SyCom agrees to
use best efforts to screen all copies of software delivered to it
by PEI with available virus screening programs.
4. SUPPORT AND MAINTENANCE.
4.1 Telephone Support. PEI shall provide directly to SyCom
support to answer questions and troubleshoot problems with the PEI
SOFTWARE, in accordance with PEI's standard maintenance agreement.
5. SUBLICENSING RIGHTS; ROYALTIES.
5.1 Sublicenses by SyCom.
5.1.1 Right to Sublicense. Subject to the
restrictions of this Agreement, SyCom may Sublicense the SOFTWARE
and the PEI SOFTWARE to any third party for whom it is providing or
has provided consulting services, provided that (a) SyCom shall not
grant any sublicenses of the SOFTWARE or the PEI SOFTWARE that
include the right to grant sub-sublicenses or distribute the
SOFTWARE or the PEI SOFTWARE and (b) all sublicenses shall be
subject to the terms of a written software license agreement
reasonably acceptable to PEI.
5.1.2 SyCom Royalties. For each Sublicense of the
PEI SOFTWARE or SOFTWARE granted by SyCom in accordance with this
Agreement, SyCom shall pay to PEI a royalty (collectively, the
"SyCom Royalties"), as follows:
(a) For each Sublicense of the SOFTWARE or the PEI
SOFTWARE that is granted, a royalty shall be payable in an amount
equal to fifty percent (50%) of the then current list price for the
software, or such other royalty as the parties shall mutually
agree. PEI agrees that it shall not grant to other distributors a
discount that is greater than SyCom's. Furthermore, Seller shall
only sell or license the Software to persons, entities, or
government agencies with whom Seller has a prior existing service
contract or service relationship and if such sale or license is
being done incidental to that contract or service. In the event
Seller is contacted by any person, entity, or government agency
which seeks only to purchase the software for use as an end-user,
Seller may refer such person, entity, or government agency to
Buyer, or may attempt to sell its services to such person, entity,
or government agency.
(b) All SyCom Royalties shall be due and payable to PEI
within thirty (30) days after the end of the calendar month in
which such SyCom Royalties accrued. A royalty shall be deemed to
have accrued the earlier of (i) upon receipt by SyCom; or (ii)
software is made available to each Sublicensee. Notwithstanding
the foregoing, payment of the monthly Royalty by SyCom is
conditioned upon receipt of payment by SyCom, which shall use best
efforts to receive payment.
5.2 Audit Rights. SyCom shall keep accurate and complete
records of all sublicenses of the SOFTWARE and the PEI SOFTWARE.
PEI shall be permitted, at its expense, to conduct an audit, not
more than once per year, solely of those books and records of SyCom
which relate to Sublicenses of the SOFTWARE and the PEI SOFTWARE
and solely for the purpose determining whether royalties have been
properly paid to such party in accordance with Section 5.1.
5.3 Maintenance by PEI. PEI agrees to provide maintenance to
the Sublicensees of the PEI SOFTWARE, subject to the terms of, and
upon execution by such Sublicensees of PEI's standard maintenance
agreement. PEI is under no obligation to provide maintenance for
the SOFTWARE.
6. CONFIDENTIALITY.
The parties hereto may provide to each other confidential
information in connection with their performance hereunder. (Any
such confidential information is hereinafter referred to as
"Confidential Information".) The parties agree to treat, and to
cause their respective representatives and agents to treat, any
Confidential Information received from the other party, its
representatives or agents in a strictly confidential manner and not
to disclose such Confidential Information to any third party (other
than to such party's affiliates, agents, or representatives under
a similar non-disclosure obligation) or use such Confidential
Information for any purpose other than as expressly set forth in
this Agreement. The restrictions contained herein shall not apply
to Confidential Information which the receiving party thereof can
demonstrate:
(i) is wholly and independently developed by the receiving
party without the use of the Confidential Information of the
disclosing party;
(ii) is or has become generally available to the public
without breach of this Agreement by the receiving party;
(iii) at the time of disclosure to the receiving party,
was known to such receiving party free of restriction and evidenced
by documentation in the receiving party's possession; or
(iv) is approved for release by written authorization of the
disclosing party, but only to the extent of and subject to such
conditions as may be imposed in such written authorization.
Upon expiration or any other termination of this Agreement, each
party shall return to the disclosing party all materials containing
any Confidential Information it received under this Agreement or
destroy such materials and certify to the disclosing party that
they have been destroyed.
6.1 PEI Indemnification. PEI agrees to indemnify, defend and
hold SyCom harmless from and against any claims, expenses,
liabilities and damages, including reasonable attorneys' fees,
arising out of or resulting from any claim that the PEI SOFTWARE
infringes any patent, copyright, trademark, trade secret, or other
intellectual property rights of any other party, provided that
SyCom promptly notifies PEI of any such claim and gives PEI
reasonable assistance (at PEI's expense) in the defense of such
claim. In the event that SyCom is enjoined or otherwise prevented
from using or sublicensing any of the PEI SOFTWARE, PEI shall, at
PEI's option, either (a) obtain for SyCom the right to use such PEI
SOFTWARE, (b) modify such PEI SOFTWARE, to render it non-
infringing, so long as the item(s) so modified have the same form,
fit and function as the infringing item(s), or (c) only if neither
(a) nor (b) is reasonably available, compensate SyCom (subject to
Section 7 below) for any damages suffered by SyCom as a result of
such infringement.
7. DISCLAIMER OF INDIRECT DAMAGES.
Notwithstanding any provision in this Agreement to the contrary,
neither party shall be liable to the other party or to any other
company or entity for any incidental, consequential, special, or
any other indirect losses or damages arising out of this Agreement
or any obligation resulting here from, whether in an action for or
arising out of breach of contract, tort, or any other cause of
action.
8. TERMINATION.
Either party hereto may terminate this Agreement and any or all
licenses granted hereunder (except that any sublicenses granted
prior to the date of such termination shall survive such
termination) by notice to the other party if such other party
materially breaches its obligations under this Agreement and fails
to cure such material breach within sixty (60) days or such longer
time permitted in a cure plan after receiving notice with respect
to such material breach from the non-breaching party.
9. NOTICES.
Any notice, demand, acknowledgment, or other communication made or
given by either party in accordance with this Agreement shall be in
writing, and sent via facsimile (with confirmation) or by
registered or certified mail, return receipt requested, or by
courier service and addressed to the other party at its address as
set forth below (or any other address of which the other party is
notified in accordance with this Section):
If to PEI: Performance Engineering International
Corp.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, President
Fax: 410/000-0000
With a copy to: Xxxx X. Xxxx, Esquire
Xxxx and Xxxxxxxx, P.A.
0000 Xxx Xxxx, Xxxxx 0X
Xxxxxxxxx, Xxxxxxxx 00000
Fax: 410/000-0000
If to SyCom: SyCom Services, Inc.
c/o Hadron, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Chief Financial Officer
Fax: 703/000-0000
With a copy to: Xxxxxxx Xxxx Xxxxxxx, Esquire
McGuire, Woods, Battle & Xxxxxx LLP
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Fax: 703/000-0000
10. GENERAL PROVISIONS.
10.1 Governing Law. This Agreement and all disputes and
related issues shall be interpreted under and governed by the laws
of the State of Maryland.
10.2 Force Majeure. Neither party shall be considered in
breach of any provision of this Agreement by reason of any delay in
performance of its obligations hereunder if such delay is caused by
causes beyond its reasonable control, including but not limited to
acts of God or the public enemy; riots or insurrections; war;
accidents; fire; strikes and other labor difficulties (whether or
not the party is in a position to concede to such demands);
embargoes; judicial action; lack of or inability to obtain export
permits or approvals, necessary labor, materials, energy,
components or machinery; and acts of civil or military authorities.
In the event of such delay, the party to which such obligation is
owed (the "Aggrieved Party") shall be provided notice by the party
which is rendered unable to timely perform its obligations
hereunder (the "Affected Party"), of the causes of such delay and
the Affected Party shall use its best efforts to avoid or remove
such causes. If such excusable delay continues for a period of
more than forty-five (45) days after the date of notice, the
Aggrieved Party may terminate this Agreement immediately upon
written notice to the Affected Party.
10.3 Unenforceability. If any provision of this Agreement is
deemed by a court of competent jurisdiction to be unenforceable or
contrary to any applicable law or regulation, such provision shall
be considered deleted and the remainder of this Agreement shall
continue in full force and effect. In the event that the
unenforceable provision is an essential element of the agreement
between the parties hereto, the parties shall promptly negotiate a
reasonable replacement provision consistent with such laws or
regulations.
10.4 No Assignment. Neither of the parties to this Agreement
shall assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of the other
party.
10.5 Independent Contractor Relationship. The relationship
between the parties under this Agreement is that of independent
contractors, and neither party is an employee or agent of the other
party. Neither party is authorized or empowered to act as an agent
for the other party, nor to transact business, incur obligations or
xxxx goods in the other party's name or for the other party's
account. Neither party shall in any way be bound by any acts,
representations, or conduct of the other party to any third party.
10.6 Non-Waiver. The failure or delay of either party to
enforce at any time any provision of this Agreement shall not
constitute a waiver of such party's right thereafter to enforce
each and every provision of this Agreement.
10.7 Cumulative Remedies. No right, power or remedy enjoyed
by either party under this Agreement shall be exclusive, and each
such right, power or remedy shall be, to the full extent permitted
by law, cumulative and in addition to every other such right, power
or remedy.
10.8 Entire Agreement; Modification. This Agreement, together
with all exhibits attached hereto, which are incorporated herein by
this reference, constitutes the entire agreement between the
parties and supersedes all prior negotiations, representations and
agreements between the parties with respect to the subject matter
hereof. No modification, variation, or amendment of this Agreement
shall be effective unless made in writing and signed by both
parties to this Agreement.
10.9 Survivability. The terms and conditions of this
Agreement that by their sense and context are intended to survive
after performance hereunder shall survive the termination or
expiration of this Agreement, including but not limited to Sections
2.1, 3.1, 6, 6.1 and 7.
Performance Engineering
International Corp.
By: /S/ J. XXXXXXX XXXXX
J. Xxxxxxx Xxxxx
President
SyCom Services, Inc.
By: /S/ X.X. XXXXXXX
X.X. Xxxxxxx
Chief Executive Officer
Exhibit A
Source Code
Users Manual
Directory with Design Documents
EXHIBIT C
SUBLEASE
See Attached
________________________________________________
________________________________________________
SYCOM SERVICES, INC.,
Sublessor
TO
PERFORMANCE ENGINEERING INTERNATIONAL CORP.,
Subtenant
____________________________
SUBLEASE
____________________________
Dated: July 1, 1997
________________________________________________
________________________________________________
SUBLEASE AND OFFICE SERVICES AGREEMENT
THIS SUBLEASE AND OFFICE SERVICES AGREEMENT (hereinafter
"Sublease) is effective the first day of July 1997, between SYCOM
SERVICES, INC., a Delaware corporation, having an office at 0000
Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("Sublessor")
and PERFORMANCE ENGINEERING INTERNATIONAL CORP, a Maryland
corporation ("Subtenant"), who hereby agree as follows:
RECITALS:
R-1. Sublessor is a party to a prime lease dated as of April
6, 1990, as amended ("Prime Lease"), between Xxxxxx Center, Inc.,
as successor in interest to Xxxxxx Business Center Limited
Partnership ("Landlord"), by which Sublessor leases 9,331 rentable
square feet of floor space from Landlord.
R-2. Sublessor wishes to lease and Subtenant wishes to hire a
certain amount of space and services from Sublessor based on the
terms and conditions set forth below.
R-3. Sublessor's Landlord has provided its prior written
consent to the sublease.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the parties agree as follows:
10. SPACE AND SERVICES.
(a) Office Space. Sublessor hereby leases to Subtenant,
and Subtenant hereby hires from Sublessor, the office space (the
"Office Space") crosshatched on Exhibit A attached hereto and made
a part hereof, consisting of approximately 856 rentable square feet
of floor space in suite 400 (the "Suite") located at 0000 Xxxxxxxx
Xxxx, Xxxxxxxxx, Xxxxxxxx 00000 (the "Building") and being a part
of the office space which Landlord leased to the Sublessor under
the Prime Lease.
(b) Common Areas. Sublessor hereby grants to
Subtenant the non-exclusive right and privilege to use the Suite's
common areas along with the other tenants and parties that the
Sublessor may permit, in its sole discretion. If Subtenant desires
to use the conference room in the Suite, Subtenant must reserve
the use of the Suite's conference room with the Sublessor's
receptionist in two-hour increments of time. Subtenant's right to
use the conference room shall be subordinate to Sublessor's use
thereof. Sublessor reserves the right to make changes, additions,
alterations or improvements in or to the Suite's common areas; and
to do and perform such other acts in and to said common areas as,
in the use of reasonable judgment, and its sole discretion,
Sublessor shall determine to be advisable.
(c) Services. Sublessor will provide Subtenant with the
services of its reception staff, use of its conference room and
office equipment free of charge to the extent that Subtenant's use
of Services does not exceed use that is normal and customary in the
Suite ("Excessive Usage"). In the event of Excessive Usage by the
Subtenant as determined by Sublessor in the exercise of Sublessor's
sole discretion, Subtenant shall be obligated to pay all costs,
expenses and charges incurred by Sublessor in connection with the
Excessive Usage including without limitation the cost of any
additional copying, and telephone charges. Subtenant shall provide
written notice to Sublessor prior to using any equipment, machinery
or other item which shall result in, or may reasonably be foreseen
to result in, Excessive Usage.
11. TERM.
(a) Term. The term of this Sublease (the "Term") shall
be the period of two (2) years, commencing on July 1, 1997 (the
"Commencement Date"), and ending at midnight on June 30, 1999 (the
"Expiration Date"), unless sooner terminated as herein provided.
Notwithstanding the foregoing, either party may terminate this
Sublease by providing the other party with sixty (60) days' prior
written notice.
(b) Possession. Possession of the Office Space shall be
tendered to Subtenant on July 1, 1997.
12. RENT.
(a) Subtenant's Pro Rata Share. Subtenant's Pro Rata
Share shall be 10.3% of the total amounts owed by the Sublessor
under the Prime Lease (the "Base Rent").
(b) Rent. Commencing upon the Commencement Date and
continuing on the first day of every month thereafter during the
term, Subtenant shall pay to Sublessor the Subtenant's Pro Rata
Share of the basic rent (Subtenant's pro rata share being
hereinafter termed "Rent").
(c) Additional Rent for Operating Expenses, Taxes and
Property Insurance. Beginning on the Commencement Date, and
continuing on the first day of every month thereafter during the
term, Subtenant shall pay to Sublessor, on the first day of each
month during the Term, as an Additional Rent Charge, Subtenant's
Pro Rata Share of (i) Sublessor's Operating Expenses and (ii) Taxes
as those terms are defined in the Prime Lease.
(d) Payments. Rent and all other amounts payable by
Subtenant to Sublessor under the provisions of this Sublease
("Additional Rent Charges") shall be paid promptly when due,
without notice or demand therefor, and without deduction,
abatement, counterclaim or setoff, at the address of Sublessor set
forth at the head of this Sublease or to such other person and/or
at such other address as Sublessor may from time to time designate
by notice to Subtenant. Each monthly installment of Rent and
additional rent charges shall be payable in advance on the first
day of each month during the term of this Sublease. Rent for the
first month shall be payable at the time of execution of this
Sublease by Subtenant.
13. PARKING AND COMMON AREAS OF THE BUILDING. Sublessor
hereby grants to Subtenant a non-exclusive right to use in common
with others, driveways, parking areas, foyer, corridors, elevator
lobby, rest room facilities and other interior and exterior common
areas of the Building, as may exist from time to time, provided
that the same shall be subject to use by others, subject to the use
allowed pursuant to the Prime Lease, and subject to such rules and
regulations as Sublessor's Landlord may from time to time prescribe
governing the same. All such Building common areas shall be and
remain at all times subject to the exclusive control and management
of Sublessor's Landlord. Subtenant shall not at any time interfere
with the rights of Sublessor and others to use any part of the
common areas.
14. TELEPHONE LINE INSTALLATION AND OTHER UTILITIES.
Pursuant to an Asset Purchase Agreement dated June 30, 1997 by and
between Sublessor and Subtenant ("Asset Purchase Agreement"),
Sublessor has transferred certain telephone numbers to Subtenant to
use at the Office Space. If Sublessor requires additional
telephone lines or numbers for facsimile machines or otherwise, it
shall make all necessary arrangements with telephone companies for,
and shall pay for, all additional telephone lines used in the
Office Space. Sublessor shall not be responsible for any failure
or interruption, for any reason whatsoever, of any of the telephone
services or other utilities supplied to the Office Space, and the
same shall not result in any abatement, diminution or reduction of
rent, or constructive eviction, or liability on the part of
Sublessor.
15. PERMITTED USE.
(a) Use. Subtenant shall use and occupy the Office Space
solely for general office use and for no other use and shall use
the Office Space in accordance with the terms of the Prime Lease.
Subtenant shall not use or occupy the Office Space in any manner
which disturbs the Sublessor or other tenants in its use and
occupancy of the Office Space, the Suite, and the Building, shall
comply with, and shall require all of its employees, agents and
invitees to comply with, all rules and regulations as they may be
amended or modified from time to time by Sublessor or the Landlord
(the "Rules and Regulations"), and with such other rules and
regulations affecting the Office Space, the Suite and the Building
as may be adopted, established or enforced from time to time by the
landlord under the Prime Lease. Any failure by Subtenant or such
other parties to comply with the Rules and Regulations shall
constitute an Event of Default under this Lease.
(b) Hours of Operation. Unless such access is
prohibited or otherwise limited by the Landlord under the Prime
Lease, Subtenant shall have access to the Office Space at all
times, twenty-four (24) hours per day, three hundred sixty-five
(365) days per year, including holidays, subject to the operation
of an after-hours access control system, if any. Unless modified
by the Landlord, heating, air-conditioning and elevator service to
the Office Space shall be provided only between the hours of 8:00
a.m. and 6:00 p.m., Monday through Friday of each week, with the
exception of legal holidays.
(c) Compliance with Laws and Rules. Subtenant shall at
all times during the Term comply with (i) the certificate of
occupancy relating to the Office Space, (ii) all laws, statutes,
ordinances, orders, rules, regulations and requirements of all
federal, state and municipal governments and the appropriate
agencies, officers, departments, boards and commissions thereof.
Subtenant shall comply with all rules and regulations for the use
of the Office Space and the Suite's common areas as Sublessor may
from time to time establish.
(d) Hazardous Materials. Subtenant shall not use,
generate, manufacture, produce, store, treat, dispose of or permit
the escape of, on, under, about or from the Office Space, or any
part thereof, any asbestos or any flammable, explosive, radio-
active, hazardous, toxic, contaminating, polluting matter, waste,
or substance or related injurious materials, whether injurious by
themselves or in combination with other materials (collectively
"Hazardous Materials") or any material, substance, or chemical
which is regulated by any federal, state or local law, rule,
ordinance or regulation (collectively "Regulated Materials").
Subtenant shall comply with all laws, rules, regulations, statutes
and ordinances with respect to such use and storage, including,
without limitation, the removal and disposal of such Hazardous
Materials and/or Regulated Materials at the expiration or earlier
termination of the Sublease Term.
(e) Indemnification. Subtenant shall defend (by counsel
reasonably acceptable to Sublessor), indemnify, protect and hold
Sublessor and each of Sublessor's officers, directors,
shareholders, employees, agents, attorneys, successors and assigns,
free and harmless from and against any and all claims, liabilities,
penalties, forfeitures, losses or expenses (including attorney's
fees), or death of or injury to any person or damage to any
property whatsoever, arising from or caused in whole or in part,
directly or indirectly by:
(1) The presence in, on, under or about the
Office Space, or discharge in or from the Office Space of any
Hazardous Materials and/or Regulated Materials introduced into the
Office Space by Subtenant or caused by Subtenant or Subtenant's
use, analysis, storage, removal, transportation, disposal, release,
threatened release, discharge or generation of Hazardous Materials
and/or Regulated Materials to, in, on, under, about or from the
Office Space, or;
(2) Subtenant's failure to comply with any
federal, state, county, municipal, local or other law, rule,
ordinance and regulation now or hereafter in effect relating to the
industrial hygiene, environmental protection, use, analysis,
generation, manufacture, purchase, transportation, storage, removal
and disposal of Hazardous Materials and/or Regulated Materials.
(3) In connection with, or as a result of, (1)
or (2) above, Subtenant's obligations hereunder shall include,
without limitation and whether foreseeable or unforeseeable, all
costs of any required or necessary testing, repair, cleanup,
removal, detoxification or decontamination of or from the Office
Space and the preparation and implementation of any closure,
remedial action, site assessment costs or other required plans in
connection therewith. In addition, upon request from Sublessor at
any time during the Sublease Term, Subtenant shall execute
affidavits, representations, and any other similar documents
concerning Subtenant's best knowledge and belief regarding the
presence of Hazardous Materials and/or Regulated Materials on,
under or about the Office Space. Further, Subtenant's obligations
hereunder shall survive the expiration or earlier termination of
this Sublease. For purposes of this subsection, any acts or
omissions of Subtenant whereby employees, agents, assignees,
contractors or subcontractors of Subtenant or others are acting for
or on behalf of Subtenant (whether or not they are negligent,
intentional, willful or unlawful), will be strictly attributable to
Subtenant.
16. CONDITION OF OFFICE SPACE. Subtenant is leasing, and
hereby accepts, the Office Space "as is". Subtenant acknowledges
that Sublessor has afforded Subtenant the opportunity for, and that
Subtenant has undertaken, full and complete investigations,
examinations, and inspections of the Office Space and has
determined that the Office Space is suitable for Subtenant's
intended use, and represents that Subtenant shall bear full
responsibility for any special requirements in connection with
Subtenant's use of the Office Space. Subtenant shall keep the
Office Space clean, neat, safe, sanitary, in good order, repair and
condition and free of vermin. Subtenant will pay for any repairs
and replacements to the Office Space that are necessitated,
directly or indirectly, by the negligence or misconduct of
Subtenant's employees, agents or invitees.
17. NOTICES. All notices, consents, approvals, demands and
requests (collectively, "Notices") which are required or desired to
be given by either party to the other hereunder shall be in writing
and shall be sent either by United States registered or certified
mail and deposited in a United States Post Office, return receipt
requested and postage prepaid, or by reputable overnight air
courier such as Federal Express, to the addresses provided at the
head of this Sublease.
18. SUBORDINATE TO PRIME LEASE.
(a) Prime Lease. This Sublease is and shall be subject
and subordinate to the Prime Lease and to the matters to which the
Prime Lease is or shall be subject and subordinate. A copy of the
Prime Lease has been delivered to and examined by Subtenant. The
terms, covenants and conditions set forth in the Prime Lease are
incorporated herein by reference, except to the extent that they
are inapplicable, and Subtenant agrees to be bound by all of the
provisions of the Prime Lease applicable with respect to a
sublease.
(b) No Greater Rights. Any obligation of Sublessor
which is contained in this Sublease by the incorporation by
reference of the provisions of the Prime Lease may be observed or
performed by Sublessor using reasonable efforts to cause the
Landlord under the Prime Lease to observe and/or perform the same,
and Sublessor shall have a reasonable time to enforce its rights to
cause such observance or performance. Subtenant shall not in any
event have any rights in respect of the Office Space greater than
Sublessor's rights under the Prime Lease.
(c) Subtenant Not to Breach. Subtenant shall not do or
permit to be done any act or thing which may constitute a breach or
violation of any term, covenant or condition of the Prime Lease by
the tenant thereunder, whether or not such act or thing is
permitted under the provisions of this Sublease.
(d) No Privity of Estate or Contract. Nothing contained
in this Sublease shall be construed to create privity of estate or
of contract between Subtenant and the Landlord under the Prime
Lease.
19. TERMINATION OF PRIME LEASE.
(a) Termination Prior to Expiration Date of Sublease.
If for any reason the term of the Prime Lease shall have terminated
prior to the expiration date of this Sublease, this Sublease shall
thereupon be terminated and Sublessor shall not be liable to
Subtenant by reason thereof. In the event of termination of the
Prime Lease pursuant to casualty or condemnation of the Office
Space or any portion of the Suite, this Sublease shall be
terminated effective on the date of termination of the Prime Lease
and Subtenant shall have no claim against Sublessor or any right to
insurance or condemnation proceeds in connection therewith.
(b) Casualty or Condemnation. In the event of casualty
or condemnation, this Sublease shall continue in effect if the
Prime Lease is not terminated, and the applicable provisions of the
Prime Lease shall govern.
20. INDEMNITY.
(a) Indemnification. Subtenant shall protect,
indemnify, defend and hold harmless Sublessor from and against all
losses, costs, damages, expenses and liabilities, including,
without limitation, reasonable attorney's fees, which Sublessor may
incur or pay out by reason of (i) any accidents, damages or
injuries to persons or property occurring in, on or about the
Office Space, (ii) any breach or default hereunder on Subtenant's
part, (iii) any work done in or to the Office Space, or (iv) any
act, omission or negligence on the part of Subtenant and/or its
employees, agents, contractors and/or invitees, or any person
claiming through or under Subtenant or (v) any termination or
cancellation of the Prime Lease as a result of the acts, negligence
or omissions of Subtenant and its agents, or default by Subtenant
hereunder.
(b) Liability of Sublessor. All property of Subtenant
and its employees, agents, contractors or invitees in or about the
Office Space or elsewhere in the Suite shall be kept and stored at
Subtenant's sole risk, and Subtenant shall hold Sublessor harmless
from any claims arising out of damage to, or loss of, the same,
resulting from (i) any act (including theft) or failure to act, of
any other person, (ii) the leaking of the roof, (iii) the bursting,
rupture, leaking or overflowing of pipes, heating or plumbing
fixtures, (iv) fire or other casualty, (v) malfunction of
electrical wires or fixtures, (vi) failure of HVAC systems, or
(vii) other cause. Sublessor shall not be liable for any
interruption of or loss to Subtenant's business arising from any of
the above-described acts or causes, or for any consequential
damages sustained by Subtenant arising out of the loss of or damage
to any such property.
21. ASSIGNMENT AND SUBLETTING.
(a) Consent Required. Subtenant may not, by operation
of law or otherwise, assign, sell, mortgage, pledge or in any
manner transfer this Sublease or any interest therein, or sublet
the Office Space or any part thereof, or grant any concession,
franchise or license or otherwise permit occupancy of all or any
part of the Office Space by any person.
(b) Restrictions in Prime Lease. Anything to the
contrary contained in this section notwithstanding, it is expressly
understood and agreed that no subletting or assignment shall be
permitted which shall violate any applicable provisions or
requirements of the Prime Lease in respect thereto.
22. INSURANCE.
(a) Subtenant's Insurance. Subtenant shall maintain
throughout the term of this Sublease (i) commercial general public
liability insurance in respect of the Office Space and all
appurtenant areas and the conduct and operation of business
therein, and the acts and omissions of Subtenant, its agents,
employees and contractors, with Sublessor and the Landlord under
the Prime Lease as additional insureds, as primary coverage over
any insurance carried by Sublessor or the Landlord under the Prime
Lease, with limits of not less than $1,000,000 per occurrence and
$2,000,000 general aggregate limit for personal or bodily injury,
death and property damage, endorsed to provide coverage for fire
legal liability and contractual liability for Subtenant's indemnity
obligations under this Sublease, and water damage and sprinkler
leakage legal liability; (ii) all-risk property insurance with
endorsements for vandalism and malicious mischief, water damage and
sprinkler leakage, for the full replacement value of Subtenant's
inventory, equipment, trade fixtures and other personal property
located in the Office Space; and (iii) such other insurance, in
such amounts and against such risks as Sublessor specifies in
writing. Subtenant shall deliver to Sublessor a fully paid-for
policy or certificate prior to the Commencement Date. Subtenant
shall procure and pay for renewals of such insurance from time to
time before the expiration thereof, and Subtenant shall deliver to
Sublessor such renewal policy or certificate at least thirty (30)
days before the expiration of any existing policy. All such
policies shall be issued by companies rated not lower than "B+
Class X" by A.M. Best Co. licensed to do business in the state in
which the Office Space is located, and all such policies shall
contain a provision whereby the same cannot be canceled or modified
unless Sublessor is given at least thirty (30) days' prior written
notice by certified or registered mail of such cancellation or
modification.
(b) Sublessor's Insurance. Sublessor provides no
property insurance for any of Subtenant property in the Office
Space and provides no liability insurance for any of Subtenant's
activities in the Office Space. Sublessor provides no worker's
compensation insurance for Subtenant's employees. Except with
respect to injury or damage resulting directly and exclusively from
the negligence or willful misconduct of Sublessor's employees,
agents or invitees, Sublessor shall not be liable or responsible
for injury or damage resulting to Subtenant's property, employees,
agents or invitees from injury or damage resulting from the acts or
omissions of Sublessor's employees, agents or invitees.
(c) Waiver of Subrogation Rights. Subtenant hereby
releases and waives its rights of recovery against the Landlord
under the Prime Lease to the extent that Sublessor waived its
rights of recovery against the Landlord under the Prime Lease.
Neither Sublessor nor Subtenant shall be liable to the other or to
any insurance company (by way of subrogation or otherwise) insuring
the other party for any loss of or damage to any building,
structure or other tangible property, or any resulting loss of
income, or losses under worker's compensation laws, even though
such loss or damage might have been caused by the negligence of
such party, its agents or employees, if any such loss or damage is
covered by (or was required under this Sublease to be covered by)
insurance benefitting the party suffering such loss or damage, to
the extent of the proceeds of such insurance (or the amount of
coverage required under this Sublease if such insurance was not
obtained or maintained). Subtenant will cause its insurance
carriers to include waiver of subrogation clauses or endorsements
in favor of the Landlord under the Prime Lease and Sublessor.
23. FINANCIAL STATEMENTS AND ESTOPPEL CERTIFICATES.
Subtenant shall, within 10 days after each and every request by
Sublessor, execute, acknowledge and deliver to Sublessor either or
both of the following: (a) an annual financial statement, and (b)
a statement in writing (i) certifying that this Sublease is
unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as
modified, and stating the modifications), and (ii) concerning any
other matter that Sublessor may reasonably request. Any such
statement delivered pursuant to this Section may be relied upon by
any prospective assignee or transferee of the leasehold estate
under the Prime Lease.
24. ALTERATIONS. Subtenant shall not make or cause, suffer
or permit the making of any alteration, addition, change,
replacement, or installation, whether structural or nonstructural
("Alterations"), in or to the Office Space without obtaining the
prior written consent of Sublessor in each instance, which consent
may be withheld, delayed or conditioned in the exercise of
Sublessor's sole discretion. In the event that Sublessor consents
to any Alterations, Sublessor's approval of any plans, specifica-
tions or working drawings for Alterations shall create no
responsibility on the part of Sublessor for their completeness,
design sufficiency, or compliance with any laws, rules or regu-
lations of any government agency or authority. In the event that
any lien is filed against the Office Space, the Suite, or the
Building in connection with labor or materials furnished to
Subtenant, Subtenant shall cause the same to be discharged within
ten (10) days after such lien was filed, at the sole expense of
Subtenant.
25. DEFAULTS.
(a) Events of Default. Each of the following shall be
deemed to be an "Event of Default" by Subtenant and a breach by
Subtenant hereunder: (i) the assignment of this Sublease or the
subletting of the Office Space, whether by operation of the law or
otherwise, (ii) the Office Space being abandoned or becoming vacant
or deserted during the Term and remaining so for ten (10) days
after Sublessor shall have given to Subtenant a notice specifying
the nature of such default, (iii) Subtenant's failure to take
possession of the Office Space within ten (10) days after tender of
possession, (iv) the non-payment of any Rent or Additional Rent
Charges or any part thereof when same is due, or failure to make
any other payment herein provided for, and the continuance of such
non-payment for five (5) days after Sublessor shall have given
notice of nonpayment to Subtenant, or (v) the default in the
performance of any other obligation of Subtenant under this
Sublease, and the continuance of such default for ten (10) days
after Sublessor shall have given to Subtenant a notice specifying
the nature of such default, but if said default shall be of such
nature that it cannot reasonably be cured or remedied within said
ten (10) day period, same shall not be deemed an Event of Default
if Subtenant shall have commenced in good faith the curing or
remedying of such default within such ten (10) day period and shall
thereafter continuously and diligently proceed therewith to
completion.
(b) Remedies of Sublessor. In the event of Subtenant's
default or the occurrence or existence of an Event of Default,
Subtenant shall pay to Sublessor, on demand, such expenses as
Sublessor may incur, including, without limitation, attorneys'
fees, court costs, disbursements, and any and all other costs
incurred by Sublessor in enforcing the performance of any
obligation of Subtenant under this Sublease. If an Event of
Default shall occur, Sublessor shall have the following rights and
remedies, in addition to all rights and remedies available under
law or equity: (i) Sublessor may declare this Sublease terminated
upon written notice to Subtenant; and/or (ii) Sublessor or its
agents, servants, representatives, successors or assigns may,
immediately or at any time thereafter, re-enter and resume
possession of the Office Space and remove all persons and property
therefrom, either by summary dispossess proceedings or by a
suitable action or proceeding at law, or by force or otherwise,
without being liable for any damages therefor, and no such re-entry
shall be deemed an acceptance or surrender of this Sublease; and/or
(iii) Sublessor may, but shall have no obligation to, in its own
name, but as agent for Subtenant if this Sublease is not
terminated, relet the whole or any portion of the Office Space for
any period equal to or greater or less than the period which would
have constituted the balance of the Term, for any sum which
Sublessor may deem reasonable, to any tenant(s) which Sublessor may
deem appropriate, and Sublessor may grant concessions, including
free rent. In the event of any breach or threatened breach by
Subtenant of any of the covenants or provisions of this Sublease,
Sublessor shall have the right of injunction and the right to
invoke any remedy allowed at law or in equity; mention in this
Sublease of any particular remedy shall not preclude Sublessor from
any other remedy at law or in equity.
(c) Damages. Sublessor shall in no event be liable in
any way whatsoever for its failure or refusal to relet the Office
Space or any part thereof, or in the event that the Office Space is
relet for its failure to collect the rent under such reletting, and
no such refusal or failure to relet or failure to collect rent
shall release or affect Subtenant's liability for damages or
otherwise under this Sublease. In addition, whether the Office
Space shall be relet or not, Sublessor shall be entitled to recover
from Subtenant, and Subtenant shall pay to Sublessor, the amounts
equal to all of the expenses incurred by Sublessor in connection
with recovering possession of the Office Space, any reletting(s),
brokerage in connection with any reletting(s), court costs, costs
for making alterations, and repairs in and to the Office Space and
otherwise preparing the same for reletting(s), which amounts shall
be due and payable by Subtenant to Sublessor on demand after any
such expenses are incurred by Sublessor. Subtenant hereby
expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of this Sublease
being terminated and/or Sublessor obtaining possession of the
Office Space pursuant to the provisions of this Section.
Sublessor shall also be entitled to recover from Subtenant for each
month of the balance of the Term or the period which would
otherwise have constituted the balance of the Term, the amount, if
any, by which the sum of each monthly installment of the Rent which
would have been payable had there been no Event of Default, plus
the amount of the Additional Rent Charges which would have been
payable had there been no Event of Default, exceeds the net amount,
if any, of the rents collected on account of the reletting(s) of
the Office Space for the month in question, which amounts shall be
due and payable by Subtenant to Sublessor at Sublessor's option,
either (1) in monthly installments on the last day of each month,
and any suit brought to collect the amount of the deficiency for
any month shall not prejudice in any way the rights of Sublessor to
collect the deficiency for any subsequent month by way of a similar
proceeding, or (2) in a lump sum in advance discounted to present
value at a discount rate of 4% per year. Sublessor, at Sublessor's
option, may make such alterations and repairs in and to the Office
Space as Sublessor in its sole judgment considers advisable and
necessary for the purpose of reletting the Office Space, and the
making of such alterations, and repairs shall not operate or be
construed to release Subtenant from liability hereunder as
aforesaid.
(d) Late Charges. If payment of any Rent or Additional
Rent Charges shall not have been paid by the fifth (5th) day after
the date on which such amount was due and payable, Subtenant shall
pay, as a late charge, an amount equal to five percent (5%) of the
overdue payment, as reimbursement of Sublessor's expenses incurred
as a result of Subtenant's failure to make prompt payment.
(e) Default by Sublessor. Sublessor shall only be
deemed to be in default hereunder in the event Sublessor shall
violate or fail to perform any covenant or agreement hereunder
which is not observed or performed by Sublessor within thirty (30)
days after the receipt by Sublessor of written notice from
Subtenant specifically identifying such violation or failure.
Sublessor shall not be considered in default so long as Sublessor
commences to cure the violation within said thirty (30) day period
and diligently pursues the completion of such cure.
26. BROKERAGE. Subtenant represents to Sublessor that, no
broker or other person had any part, or was instrumental in any
way, in bringing about this Sublease, and Subtenant shall pay, and
shall indemnify, defend and hold harmless, Sublessor from and
against, any claims made by any other broker or other person for a
brokerage commission, finder's fee, or similar compensation, by
reason of or in connection with this Sublease, and any loss,
liability, damage, cost and expense (including, without limitation,
reasonable attorneys' fees) in connection with such claims if such
broker or other person claims to have had dealings with Subtenant.
27. SECURITY. Subtenant shall deposit with Sublessor the sum
of One Thousand and no/100 Dollars ($1,000.00) as security (the
"Security") for the performance and observance by Subtenant of the
obligations on the part of Subtenant to be performed. The
Subtenant shall pay the Security over a 4-month period of time
commencing on August 1, 1997 in increments of $250.00. Said sum
shall not bear interest. Sublessor shall have the right, without
notice to Subtenant, and regardless of the exercise of any other
remedy Sublessor may have by reason of a default, to apply any part
of said deposit to cure any default of Subtenant, and, if Sublessor
does so, Subtenant shall upon demand deposit with Sublessor the
amount applied so that Sublessor shall have the full amount of the
security at all times during the term of this Sublease. If
Subtenant shall fail to make such deposit, Sublessor shall have the
same remedies for such failure as Sublessor has for a default in
the payment of Rent.
28. END OF TERM. At the expiration or sooner termination of
the Term of this Sublease, Subtenant shall quit and surrender to
Sublessor the Office Space, broom clean and in good condition,
ordinary wear and tear excepted. At such expiration or sooner
termination, Subtenant shall remove from the Office Space all
property of Subtenant and, at the option of Sublessor, shall remove
all alterations and other improvements made by Subtenant to the
Office Space, and Subtenant shall repair all damages to the Office
Space caused by any and all such removal and restore the Office
Space to the condition in which they were prior to the installation
of the items so removed. Any property of Subtenant not so removed
may be deemed to be abandoned, or Sublessor may remove the same and
restore any damage, at Subtenant's expense.
29. SUBLESSOR'S ACCESS TO OFFICE SPACE. Sublessor shall have
the right to enter upon and in the Office Space at all reasonable
times to examine the same and to make such repairs, replacements,
alterations, improvements and additions in the Office Space and in
the Prime Lease Office Space as Sublessor may deem necessary or
desirable, and to take all materials into and upon the Office Space
that may be required therefor, without the same constituting an
eviction of Subtenant, and without any abatement of Rent or
Additional Rent Charges. Sublessor shall also have the right to
enter upon the Office Space at reasonable times to show the Office
Space to prospective Sublessors or Subtenants.
30. HOLDOVER. In the event Subtenant remains in possession
of the Office Space after the expiration of the Term or the
termination of this Sublease, Subtenant shall be deemed to be
occupying the Office Space as a tenant from month to month at the
sufferance of Sublessor subject to all of the provisions of this
Sublease, except that the Rent shall be at a monthly rate equal to
twice the monthly rate in effect during the last month of the Term
and Subtenant shall be responsible for any and all other damages
which Sublessor may sustain by reason of such action by Subtenant.
31. OWNERSHIP OF IMPROVEMENTS. All installations,
alterations, additions, betterments and improvements upon the
Office Space, made by any party, (collectively, the
"Installations") shall become the property of Sublessor and, except
as otherwise expressly provided in this Sublease, shall remain upon
and be surrendered with the Office Space as a part thereof at the
expiration or sooner termination of the Term, unless Sublessor
shall give written notice to Subtenant requiring that any or all of
the Installations shall be removed by Subtenant and all damage
caused thereby shall be restored at Subtenant's expense.
32. MISCELLANEOUS COVENANTS. Subtenant shall not commit or
suffer to be committed any waste upon the Office Space or any
nuisance or other act or thing which may disturb the quiet
enjoyment of any other tenant or occupant of the Shopping Center.
33. NO WAIVER. The failure of Sublessor to insist in any one
or more cases upon the strict performance or observance of any
obligation of Subtenant hereunder or to exercise any right or
option contained herein shall not be construed as a waiver or
relinquishment for the future of any such obligation of Subtenant
or any right or option of Sublessor. Sublessor's receipt and
acceptance of Rent or Additional Rent Charges, or Sublessor's
acceptance of performance of any other obligation by Subtenant,
with knowledge of Subtenant's breach of any provision of this
Sublease, shall not be deemed a waiver of such breach. No waiver
by Sublessor of any term, covenant or condition of this Sublease
shall be deemed to have been made unless expressed in writing and
signed by Sublessor.
34. COMPLETE AGREEMENT. There are no representations,
agreements, arrangements or understandings, oral or written,
between the parties relating to the subject matter of this Sublease
which are not fully expressed in this Sublease. This Sublease
cannot be changed or terminated orally or in any manner other than
by a written agreement executed by both parties.
35. SUCCESSORS AND ASSIGNS. The provisions of this Sublease,
except as herein otherwise specifically provided, shall extend to,
bind and inure to the benefit of the parties hereto and their
respective personal representatives, heirs, successors and
permitted assigns. In the event of any assignment or transfer of
the leasehold estate under the Prime Lease, the transferor or
assignor, as the case may be, shall be and hereby is entirely
relieved and freed of all obligations under this Sublease.
36. INTERPRETATION. This Sublease shall be governed by and
construed in accordance with the laws of the State of Maryland. If
any provision of this Sublease or the application thereof to any
person or circumstance shall, for any reason and to any extent, be
invalid or unenforceable, the remainder of this Sublease and the
application of that provision to other persons or circumstances
shall not be affected but rather shall be enforced to the extent
permitted by law. Each covenant, agreement, obligation or other
provision of this Sublease shall be deemed and construed as a
separate and independent covenant of the party bound by, under-
taking or making same, not dependent on any other provisions of
this Sublease unless otherwise expressly provided.
IN WITNESS WHEREOF, Sublessor and Subtenant have hereunto
executed this Sublease as of the day and year first above written.
Sublessor:
SYCOM SERVICES, INC.
By: /S/ X.X. XXXXXXX
X. X. Xxxxxxx, Chief Executive Officer
SUBTENANT:
PERFORMANCE ENGINEERING INTERNATIONAL CORP.
By: /S/ XXXXXXX XXXXX
Xxxxxxx Xxxxx, President
EXHIBIT A
FLOOR PLAN
EXHIBIT D
MARKETING AGREEMENT
THIS MARKETING AGREEMENT (the "Agreement"), is effective as
of June 30, 1997 (the "Effective Date"), between SyCom Services,
Inc., a Delaware corporation ("Seller"), Performance Engineering
International Corp., a Maryland corporation ("Buyer"), and Hadron,
Inc., a New York corporation ("Hadron").
RECITALS
In connection with the Asset Purchase Agreement dated as of
June 30, 1997 between Seller and Buyer ("Asset Purchase Agreement"),
which is incorporated into this Marketing Agreement for all
purposes, Seller and Hadron hereby agree to allow Buyer the limited
rights to identify Seller and Hadron as investors in the Buyer
based upon the terms and conditions set forth below.
LIMITED MARKETING PRIVILEGES
A. Marketing Privileges: For a period of two (2) years after
the Effective Date (the "Term"), and only in the limited manner
set forth below, the Buyer may exercise the following
nonexclusive privileges ("Marketing Privileges"):
(1) Except if the Buyer's marketing, selling or bidding
efforts relate to the provision of consulting services
either in the government or the commercial software
market segments, Buyer may state in its marketing
materials, and verbally state during sales meetings, that
Seller holds a 10% equity interest or is an investor in
Buyer and that Seller is a wholly-owned subsidiary of
Hadron ("Marketing Statement"). In the event that the
Buyer's marketing, selling or bidding efforts relate to
the provision of consulting services either in the
government or the commercial market segments, Buyer must
receive Seller's prior written consent to make or use the
Marketing Statement.
(2) Buyer may use the Xxxxxx.xxx web server and address to
receive Internet mail. Hadron will host "PEI" and
"HeaTreaT" home pages and will include information
regarding the Buyer and the Software Products as
reasonably requested by, and provided by, Buyer.
B. Limitation. During the term of this Agreement, other than the
foregoing Marketing Privileges, Buyer may not state, indicate
or infer in any manner that Seller or Hadron, Inc. is
connected with, affiliated with, related to or responsible for
Seller or the Software Products. Buyer may not in any manner
bind Seller to any contract, warranty or other agreement.
C. Expiration of Term. Upon the expiration of the Term of this
Agreement, Buyer's Marketing Privileges shall expire and for
purposes of marketing or selling the Software Products, Buyer
shall not state, indicate or infer in any manner that Seller
or Hadron, Inc. is connected to, affiliated with, related to
or responsible for Seller or the Software Products without the
prior written consent of the Seller. Further, Seller shall
have not continuing obligation to provide Buyer access to its
server or to host any information on its home page.
INDEMNIFICATION
A. Indemnification by Buyer. Buyer will indemnify and hold
Seller, Hadron and Seller's and Hadron's shareholders,
directors, officers, employees and agents, and the respective
heirs, administrators, successors and assigns of each of the
foregoing, harmless from any damage, loss, liability,
judgment, fine, penalty, assessment, settlement, cost or
expense including, without limitation, reasonable expenses of
investigation, reasonable attorneys' fees and other reasonable
legal costs and expenses incident to any of the foregoing or
to the enforcement of this Marketing Agreement, whether or not
suit is brought or, if brought, whether or not such suit is
successful in whole or in part arising out of or relating to:
(1) the breach of any agreement or promise of Buyer contained
in this Marketing Agreement
(2) the failure of Buyer to perform any obligation
specifically assumed by it pursuant to the terms of this
Marketing Agreement;
(3) any and all actions, suits, claims or legal,
administrative, arbitration, governmental or other
proceedings that relate to this Marketing Agreement in
which the principal event giving rise thereto occurred
subsequent to the date hereof or which result from or
arise out of any action or inaction by Buyer or any
director, officer, employee or agent of Buyer; and
(4) suits relating to products sold, licensed and/or
advertised by Buyer.
MISCELLANEOUS
A. Capitalized terms not defined within this Marketing Agreement
shall have the meaning attributed to them in the Asset
Purchase Agreement.
B. This Marketing Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that
neither this Marketing Agreement nor any of the rights,
interests or obligations hereunder may be assigned by any of
the parties hereto without the prior written consent of the
other parties.
C. This Marketing Agreement may be amended at any time prior
provided that any such amendment is approved in writing by
each of the parties hereto.
D. This Marketing Agreement and the Asset Purchase Agreement
constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, between
the parties. There are no restrictions, agreements, promises,
warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth
herein or in the Asset Purchase Agreement.
E. This Marketing Agreement shall be governed in all respects by
the laws of Maryland without regard to its laws or regulations
relating to conflicts of laws.
F. Except as may be expressly provided herein, this Marketing
Agreement is not intended to and shall not confer upon any
other Person, other than the parties hereto, any rights or
remedies with respect to the subject matter hereof.
G. If any one or more of the provisions of this Marketing
Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the
remaining provisions of this Marketing Agreement shall not be
affected thereby. To the extent permitted by applicable law,
each party waives any provision of law which renders any
provision of this Marketing Agreement invalid, illegal or
unenforceable.
IN WITNESS WHEREOF, the parties hereto have caused this
Marketing Agreement to be executed by their duly authorized
officers.
Seller:
SYCOM SERVICES, INC., a Delaware Corporation
By:/S/ X.X. XXXXXXX
X.X. Xxxxxxx
Chief Executive Officer
Hadron:
HADRON, INC., a New York Corporation
By:/S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
President
Buyer:
PERFORMANCE ENGINEERING INTERNATIONAL CORP., a
Maryland Corporation
By: /S/ XXXXXXX XXXXX
Xxxxxxx Xxxxx, President
SCHEDULE 2.1(d)
EQUIPMENT AND TELEPHONE NUMBERS
The following telephone
numbers:
(000) 000 0000, 61, 62, 63, 66
(888) ISO HEAT
The following Equipment:
Five Toshiba Laptop computers
Laserjet 111
Digital PC and Monitor
Digital Server
Xxxxx computer 486
Xxxxx computer 486
Xxxxx computer 486
AST computer 466 Bravo
Envisions scanner
HP personal scanner
Projector
Tape Drive
NEC 20" Monitor
Mitsubishi diamond scan 20"
Monitor
NEC 20" Monitor
Hitachi 20" Monitor
Mag 17" Monitor
Mag 17" Monitor
Asante Port and Hub
Sniffer network tool (Network
Gen.)
Optimal software Performance
The following Software:
Powersoft Software
Netviz
Novell Netware 3.12
Windows NT 4.1 server and
upgrade
Netscape communications
Server Software
SQA Suite
Quark Xpress
Act
Master Maps
IQ Software
Sybase SQL Server
Crystal Reports
Doc to Help
S Designer Professional
Powerbuilder CBT
Gupta SQL Base
Gupta SQL Windows
Label Works
MS Project
Powerimage
PB Image
Windows 95 10X
MsOffice 97
Time Lock
PowerDoc
Opts Evaluation SW
SCHEDULE 2.1(f)
CONTRACTS
Contracts with the following entities are transferred:
1. Metcor, Inc. of Montreal, Canada
2. Texas Heat Treating of Round Rock, Texas
SCHEDULE 5.13
PLAN
Buyer agrees to use best efforts to ensure the success of
the Software and to ensure the overall success of Buyer's
business. In particular, Buyer has agreed to the following
specifics:
Labor:
Buyer will, at all times, devote the full time efforts
(defined as no less than 30 hours per week averaged over a one
year period of time) of its controlling shareholders Xxxxxx
Xxxxxx and Xxxxxxx Xxxxx to the development, marketing, and
servicing of the Software Products. Buyer expects to devote the
full time efforts of both shareholders to this endeavor for the
foreseeable future.
In addition, Buyer will employ and utilize other technical
and sales individuals for the purposes of developing, marketing,
and servicing of the Software Products, as deemed appropriate
and necessary by Buyer.
Selling Strategy:
Buyer will maintain a software selling program that includes
cold calling of prospective customers and promptly following up
with customers who indicate an interest in the software. Upon
request of potential customers, Buyer will provide a mailed
demonstration, or will make available via the Internet a
demonstration package. Buyer will continue to make on-sight
presentations to customers when deemed appropriate by Buyer. At
the present time, Buyer expects to provide 30 day licenses of the
Software Products for customer evaluation and will provide
support to those customers during the evaluation period.
Customer referrals will be sought from existing customers
and through attendance at industry trade shows. A sales team
will be maintained to support the generation of new leads,
respond to customer requests and make on-sight presentations.
Advertising and Promotion:
Buyer will seek to make the software a recognizable product
within the Metal Heat Treating community. A world wide web home
page will be maintained on the Internet, mailings will be sent
out and press releases issued. Relationships will be sought
with key customers such as Tri-City Heat Treating.
Buyer will investigate the possibility of entering into co-
marketing agreements with industry trade organizations. Buyer
will also investigate potential marketing and sales opportunities
through associations with industry corporations whose products
enhance or supplement Buyer's. These associations are at the
discretion of Buyer whose sole intent is to further the
recognition of the Software Products as the leading product in
the industry of its kind.
SCHEDULE 5.14
ADDITIONAL EQUITY CONTRIBUTION
Payment Date Amount
7/1/97 $20,000.00
8/1/97 $20,000.00
9/1/97 $20,000.00
10/1/97 $20,000.00
11/1/97 $20,000.00
12/1/97 $20,000.00
SCHEDULE 6.1
TRANSFERRED EMPLOYEES
Xxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxxx Xxxx
Xxxx Xxxxxx
