EXHIBIT 10.72
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of April 19, 2002 (the
"Agreement"), by and among Vertex Interactive, Inc., a New Jersey corporation
(the "Company"). Renaissance Software Inc., a Delaware corporation and
wholly-owned subsidiary of Company ("Renaissance") (the Company and Renaissance
shall be collectively referred to herein as the "Sellers"), and Pitney Xxxxx
Inc., a Delaware corporation ("Buyer").
WHEREAS, the Sellers own all right, title and interest in and to the
TMS Assets (as defined below); and
WHEREAS, the Buyer desires to purchase and acquire the TMS Assets free
and clear of any Liens (as defined herein), in the manner set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Access Capital" means Access Capital, Inc. and all of its Affiliates
that are parties to financing agreements with the Sellers.
"Affiliate" means any Person who is an "affiliate" as defined in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Buyer" has the meaning set forth in the Preamble of this Agreement.
"Buyer Claim" and "Buyer Claims" have the meanings set forth in
Section, 8.1 of this Agreement.
"Buyer Indemnified Party" has the meaning set forth in Section 9.1 of
this Agreement.
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"Cash Amount" has the meaning set forth in Section 2.5 of this
Agreement.
"Claim" and "Claims" have the meanings set forth in Section 4.5 of
this Agreement.
"Closing Date" has the meaning set forth in Section 3.1 of this
Agreement.
"Closing" has the meaning set forth in Section 3.1 of this Agreement.
"Commission" means the United States Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.
"Company" has the meaning set forth in the Preamble to this Agreement.
"Condition of the Sellers" has the meaning set forth in Section 4.2 of
this Agreement.
"Consideration" has the meaning set forth in Section 2.5 of this
Agreement.
"Contractual Obligations" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
"Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"GAAP" means United States generally accepted accounting principles in
effect from time to time.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Indemnified Party" has the meaning set forth in Section 9.2 of the
Agreement.
"Indemnifying Party" has the meaning set forth in Section 9.3 of the
Agreement.
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"Intellectual Property" has the meaning set forth in Section 4.13 of
this Agreement.
"Internet Assets" means any Internet domain names and other computer
user identifiers and any rights in and to sites on the worldwide web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.
"Knowledge" means the knowledge of Buyer or the Company, as the case
may be, or its respective Subsidiaries after due inquiry.
"Laurus" means Laurus Master Fund, Ltd. and all of its Affiliates that
are parties to financing arrangements with the Sellers.
"Liabilities" has the meaning set forth in Section 4.12 of this
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
license, assignment, encumbrance, lien (statutory or other) or preference,
priority, restriction on use right or other security interest or preferential
arrangement of any kind or nature whatsoever.
"Losses" has the meaning set forth in Section 9.1 of this Agreement.
"MidMark Investments" shall mean MidMark Investments, Inc., a New
Jersey corporation and all of its Affiliates that are parties to financing
arrangements with the Sellers.
"Note" means the Promissory Note issued by the Company to Buyer on
February 1, 2002 with a principal amount of $1,000,000.
"Orders" has the meaning set forth in Section 4.2 of this Agreement.
"Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
"PB Release" has the meaning set forth in Section 3.1 of this
Agreement.
"Permits" has the meaning set forth in Section 4.7(b) of this
Agreement.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Releases" means, collectively, the PB Release and the Sellers
Release.
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"Renaissance" has the meaning set forth in the preamble to this
Agreement.
"Requirements of Law" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license or franchise
or determination of an arbitrator or a court or other Governmental Authority or
stock exchange, in each case applicable or binding upon such Person or any of
its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.
"Reseller Agreement" means the Authorized Marketing Program Reseller
Agreement made on February 7, 2001, as supplemented, among the Buyer and the
Sellers.
"SEC Reports" has the meaning set forth in Section 4.9(a) of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Sellers" has the meaning set forth in the Preamble of this Agreement.
"Sellers Claim" and "Sellers Claims" have the meaning set forth in
Section 8.2 of this Agreement.
"Sellers Indemnified Party" has the meaning set forth in Section 9.2
of this Agreement.
"Sellers Release" has the meaning set forth in Section 3.1 of this
Agreement.
"Services Agreement" has the meaning set forth in Section 6.5 of this
Agreement.
"Software" means computer software programs, source code, object code,
data and documentation, including, without limitation, any computer software
programs that incorporate or run pricing models, formulas and algorithms.
"Subsidiaries" means, as of the relevant date of determination, with
respect to any Person, a corporation or other Person of which 50% or more of the
voting power of the outstanding voting equity securities or 50% or more of the
outstanding economic equity interest is held, directly or indirectly, by such
Person.
"Tax" or "Taxes" means any federal, state, local, foreign and other
taxes, charges, fees, levies or other assessments, however designated,
(including, without limitation, income, profits, gains, windfall profits,
alternative, minimum, accumulated earnings, personal holding company, capital
stock, premium, estimated, excise, sales, use, license, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy,
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production, transfer, withholding, employment, unemployment compensation,
payroll and property taxes, social security, stamp, registration, documentation
and environmental taxes, import duties and other governmental charges and
assessments), whether or not measured in whole or in part by net income, and
including deficiencies, interest, additions to tax or interest, and penalties
with respect thereto, imposed by any federal, state, local or foreign
government.
"Tax Returns" means all reports, estimates, information returns,
statements and other documents (including any related or supporting information)
filed or required to be filed with any Tax authority in connection with the
determination, assessment, collection, or administration of any Taxes.
"TMS Assets" has the meaning set forth on Schedule 2.1(b) of this
Agreement.
"TMS Contracts" has the meaning set forth in Section 4.6 of this
Agreement.
"Trade Secrets" means any trade secrets, research records, processes,
procedures, manufacturing formulae, technical know-how, technology, blue prints,
designs, plans, inventions (whether patentable and whether reduced to practice),
invention disclosures and improvements thereto.
"Trademarks" means any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, slogans,
corporate names, domain names, product or service identifiers, whether
registered or unregistered, and all registrations and applications for
registration thereof.
"Transaction Documents" means, collectively, this Agreement, the
Releases and the Instrument of Assignment and Assumption.
ARTICLE II
SALE OF ASSETS; PURCHASE PRICE
2.1 Purchase and Sale of the TMS Assets and License of Related
Intellectual Property.
(a) Subject to the terms and conditions of this Agreement, at the
Closing, the Sellers agree to sell, assign, transfer, convey and deliver to the
Buyer, and the Buyer agrees to purchase and accept from the Sellers, all of the
right, title and interest of the Sellers, to the TMS Assets free and clear of
all Liens.
(b) In consideration for the payments to be made pursuant to
Section 2.5, the Sellers hereby grant to Buyer, a royalty-free, fully paid,
world-wide, perpetual, irrevocable, transferable license (i) with respect to any
Trade Secrets and any Intellectual Property which is not a part of the TMS
Assets or cannot be transferred
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pursuant to this Agreement and is necessary or appropriate to use, maintain,
modify, resell or otherwise enjoy the full economic benefit of the TMS Assets
and (ii) to use the trademarks "Powered by Rensoft" and "Powered by Vertex" in
connection with its marketing, distribution and sale of services and products to
any Person for a period beginning on the Closing Date and ending twelve (12)
months after the Closing Date, provided, however, that the Buyer will use
commercially reasonable efforts to stop using the trademarks "Powered by
Rensoft" and "Powered by Vertex" prior to the end of such period. The Sellers
shall execute and deliver such instruments and take other such action as may be
reasonably required and requested by Buyer to carry out the license made
pursuant to this Section.
2.2 No Assumed Liabilities.
The Buyer shall not assume any liabilities or obligations of the
Sellers whether, arising from or related to the TMS Assets or otherwise, whether
such liabilities or obligations are matured or unmatured, absolute or
contingent, accrued, liquidated or unliquidated, and whether or not required to
be disclosed on a balance sheet prepared in accordance with GAAP.
2.3 Conveyance. At the Closing, the conveyance, transfer and
assignment of the TMS Assets by the Sellers to the Buyer shall be effected by
the delivery by the Sellers to the Buyer and by the Buyer to the Sellers of:
(a) a duly executed Instrument of Assignment and Assumption in
the form attached hereto as Exhibit A; and
(b) such other good and sufficient duly executed instruments of
conveyance, transfer, assignment and assumption as shall be necessary to vest in
the Buyer all of the right, title and interest of the Sellers in the TMS Assets.
2.4 Further Assurances. Subsequent to the date hereof, each party
hereto shall, from time to time, at the request of any other party and without
further cost or expense to the party making the request, execute and deliver
(and, if appropriate, file) or cause to be executed and delivered (and, if
appropriate, filed) such other instruments of conveyance and transfer as any
other party may reasonably request, and continue to use the reasonable efforts
to obtain any consents, approvals, authorizations and waivers necessary in order
to more effectively consummate the transactions contemplated herein.
2.5 Purchase Price. Subject to the terms and conditions herein set
forth, at the Closing, in consideration for the transfer to the Buyer of the TMS
Assets, the Buyer will pay the Company a total consideration of $1,658,055 (the
"Consideration"), consisting of:
(i) $500,000 in cash (the "Cash Amount"); and
(ii) $1,158,055 representing the entire principal amount of
the Note, plus all accrued but unpaid interest and fees payable pursuant to the
Note as of the date hereof.
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2.6 Adjustments to Cash Amount. At Closing, the Cash Amount shall be
payable by the Buyer in the manner specified in Section 3.1 of this Agreement
and shall be adjusted at Closing as follows: (i) $278,137, representing the
amounts due and owing by the Company to the Buyer on the date hereof pursuant to
the Services Agreement dated February 7, 2001 between Renaissance and the Buyer
shall be subtracted from the Cash Amount, and (ii) $173,823 representing all of
the amounts payable by the Buyer to the Company for certain items (including
consulting services) related to products marketed as "eWMS" and related to other
matters, as evidenced, in part, by the invoices specified on Schedule 2.6
hereto, shall be added to the Cash Amount.
2.7 Allocation of Purchase Price. As soon as practicable after the
Closing Date, and in any event within sixty (60) days of such date, Buyer shall
prepare and submit to the Sellers a computation of the allocation of the
purchase price among the TMS Assets. The Sellers shall have full opportunity to
review such allocation for twenty (20) days after receipt of such allocation
from Buyer. The Sellers may dispute any items in the allocation. Unless the
Sellers deliver notice to Buyer on or prior to the 20th day after receipt by the
Sellers of the allocation specifying any dispute with the allocation, the
Sellers shall be deemed to have accepted and agreed to the allocation, and the
allocation shall be final. If the Sellers so notify Buyer of any objection to
the allocation, the Sellers and Buyer shall, during the twenty (20) day period
following such notice of dispute, attempt to resolve their differences and any
resolution by them as to any disputed items shall be final, conclusive and
binding on the parties. If at the end of the resolution period there remain any
disputed items, then all such remaining disputed items shall be submitted to an
independent third party mutually acceptable to both parties for resolution. Such
independent party shall resolve any disputed items within twenty (20) days of
its appointment thereby and resolution by such independent party shall be
conclusive, binding and final on the parties hereto. For purposes of determining
Buyer's basis in the TMS Assets and gain or loss recognized by the Sellers with
respect to the sale of the TMS Assets to Buyer, Buyer and the Sellers covenant
and agree that the aggregate purchase price shall be allocated by them among the
TMS Assets consistent with the allocation, and the parties further agree that
they shall file all Tax Returns and related forms (including, without
limitation, Form 8594) in accordance with the final allocation and shall not
make any inconsistent written statement or take any inconsistent position on any
Tax Returns, in any refund claims, or during the course of any Internal Revenue
Service or other Tax audit.
ARTICLE III
CLOSING
3.1 Closing. The closing of the sale and the transfer of the TMS
Assets (the "Closing") shall take place at the offices of Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx, at 10:00 a.m., local time, on the date hereof, or at such
other time, place and date that the parties may agree in writing (the "Closing
Date"). On the Closing Date: (a) the Sellers and the Buyer shall execute and
deliver the Assignment and Assumption Agreement and (b) the Buyer shall (i)
deliver, by wire transfer an aggregate amount of
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cash equal to $628,525, which represents the Cash Amount, as adjusted pursuant
to Section 2.6 of this Agreement, and all of the amounts due Sellers from the
Buyer which were assigned by the Sellers to either or both of Laurus and Access,
including the full satisfaction for the invoices specified on Schedule 3.1 being
satisfied by the Buyer that were previously assigned by the Sellers to either or
both of Laurus and Access, with such aggregate amount being wired to an account
designated in writing by Access, (ii) deliver the Note to the Company marked
"cancelled" and (iii) execute and deliver to the Sellers the Mutual Release in
the form of Exhibit B hereto (the "PB Release"), releasing the Sellers from the
Claims specified therein, including the payment of the Buyer invoices set forth
on Schedule 2.6, all in consideration for the transfer to it of the TMS Assets
and (c) each of the Sellers shall each deliver to the Buyer the Mutual Release
in form of Exhibit B hereto (the "Sellers Release") releasing the Buyer from the
Claims specified therein, including the payment of the Seller invoices set forth
on Schedule 2.6 and the payment of any additional royalties, fees or other
amounts under the Reseller Agreement or otherwise, all as specified therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers jointly and severally represent and warrant to Buyer as
follows:
4.1 Corporate Existence and Power. The Company and Renaissance: (a)
are corporations duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation; (b) have all requisite power
and authority to own and operate their property, to lease the property they
operate as lessee and to conduct the businesses in which they are currently, or
are proposed to be, engaged; (c) are duly qualified as foreign corporations,
licensed and in good standing under the laws of each jurisdiction in which their
ownership, lease or operation of property or the conduct of their respective
businesses requires such qualification, except to the extent such failure would
not reasonably be expected to have a material adverse effect on the Condition of
the Sellers; and (d) have the corporate power and authority to execute, deliver
and perform their respective obligations under this Agreement and each of the
other Transaction Documents.
4.2 Authorization: No Contravention. The execution, delivery and
performance by the Sellers of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby (including,
without limitation, the sale and transfer of TMS Assets): (a) have been duly
authorized by all necessary corporate action of each of the Sellers; (b) do not
contravene the terms of the Certificates of Incorporation or the Bylaws of the
Sellers; (c) do not violate, conflict with or result in any breach, default or
contravention of (or with due notice or lapse of time or both would result in
any breach, default or contravention of), or the creation of any Lien under, any
Contractual Obligation of either of the Sellers or any Requirement of Law
applicable to either of the Sellers; and (d) do not violate any judgment,
injunction, writ, award, decree or order of any nature (collectively, "Orders")
of any Governmental
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Authority against, or binding upon, either of the Sellers, excluding from the
foregoing clauses (c) and (d) violations, conflicts, breaches, defaults,
contraventions and creation of Liens which, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on the
financial and operating condition of the Sellers, including the TMS Assets (the
"Condition of the Sellers") or on the ability of either of the Sellers to
consummate the transactions contemplated by this Agreement following
consummation of the transactions contemplated by this Agreement. The Buyer will
have good, valid and marketable title to the TMS Assets, free and clear of any
Liens at Closing.
4.3 Governmental Authorization: Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, notice to, or
filing with, any Governmental Authority or any other Person, and no lapse of a
waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the sale and transfer of the TMS Assets) by, or enforcement against,
the Sellers of this Agreement and the other Transaction Documents or the
transactions contemplated hereby and thereby. Except as set forth in Schedule
4.3, the Sellers own all right, title and interest to the TMS Assets free and
clear of all Liens and the Sellers may freely license the TMS product included
in the TMS Assets, without limitation at Closing.
4.4 Binding Effect. This Agreement and each of the other Transaction
Documents have been duly executed and delivered by the Sellers, and constitute
the legal, valid and binding obligations of the Sellers, enforceable against the
Sellers in accordance with their terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
4.5 Litigation. Except as disclosed in the SEC Reports, there are no
actions, suits, proceedings, claims, complaints, disputes, arbitrations or
investigations (each, a "Claim", collectively, "Claims") pending or, to the
Knowledge of the Sellers, threatened, at law, in equity, in arbitration or
before any Governmental or Regulatory Authority against either of the Sellers
that, individually or in the aggregate, has resulted or could reasonably be
expected to adversely affect the TMS Assets. No Order has been issued by any
court or other Governmental or Regulatory Authority against either of the
Sellers or any of their respective Subsidiaries purporting to enjoin or restrain
the execution, delivery or performance of this Agreement or any of the other
Transaction Documents.
4.6 Contracts.
(a) Schedule 4.6(a) sets forth a list of all of the Contractual
Obligations affecting, covering or involving the TMS Assets (the "TMS
Contracts") (specifying in each case the name of, date of and parties to such
Contractual Obligation and all amendments, modifications and supplements
thereto). Other than the TMS
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Contracts, there are no Contractual Obligations relating to the TMS Assets or by
which the TMS Assets are bound.
(b) Except as set forth on Schedule 4.6(b):
(i) the Sellers have performed each material term, covenant
and condition of each TMS Contract, and no default or event which, with the
passing of time or giving of notice (or both) would constitute a default on the
part of either of the Sellers, or to the Knowledge of either of the Sellers, any
other party thereto, exists under any such TMS Contract;
(ii) each of the TMS Contracts is in full force and effect,
unimpaired by any acts or omissions of either of the Sellers, and constitutes
the legal, valid and binding obligation of each of the Sellers that is a party
thereto, enforceable against such Seller in accordance with its terms and, to
the Knowledge of the Sellers, against each other party thereto;
(iii) the Sellers have furnished the Buyer with true,
correct and complete copies of the TMS Contracts, including all amendments,
modifications and supplements thereto;
(iv) the Sellers' right, title and interest in and to each
of the TMS Contracts is fully assignable to the Buyer without the consent,
approval or waiver of any other Person; and
(v) the TMS Contracts do not contain any provision which
provides for automatic termination upon the occurrence of the transactions
contemplated hereby or for the right of any party to any Contractual Obligation
to terminate, accelerate or receive any payment or other more favorable
condition upon occurrence of the transactions contemplated hereby.
4.7 Compliance with Laws.
(a) Each of the Sellers and each of their respective Subsidiaries
is in compliance with all material Requirements of Law and all Orders issued by
any court or Governmental or Regulatory Authority against either of the Sellers
or any of their respective Subsidiaries, with respect to the TMS Assets. To the
Seller's Knowledge, there is no existing or proposed Requirement of Law which
could reasonably be expected to prohibit or restrict either of the Sellers or
any of their respective Subsidiaries from, or otherwise materially adversely
affect either of the Sellers or any of their respective Subsidiaries in,
conducting its businesses in any jurisdiction in which it now conducts or
proposes to conduct its businesses, except to the extent such prohibition or
restriction would not reasonably be expected to have a material adverse effect
on the Condition of the Sellers.
(b) Each of the Sellers and each of their respective Subsidiaries
(i) has all material licenses, permits and approvals of any Governmental
Authority (collectively, "Permits") that are necessary for the conduct of the
business of each of the
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Sellers and each of their respective Subsidiaries with respect to the TMS
Assets; (ii) such Permits are in full force and effect; and (iii) no violations
are or have been recorded in respect of any such Permit, except as could not
reasonably be expected to have a material adverse effect on the Condition of the
Sellers.
4.8 No Default or Breach: Contractual Obligations. Except as set forth
on Schedule 4.8, neither of the Sellers has received notice of a default and
neither of the Sellers is in default under, or with respect to, any Contractual
Obligation involving or affecting the TMS Assets nor does any condition exist
that with notice or lapse of time or both would constitute a default thereunder.
All such Contractual Obligations of either of the Sellers are valid and legally
binding obligations of the parties thereto, enforceable in accordance with their
terms, and are subsisting, in full force and effect and binding upon the
relevant Seller and the other parties thereto, and the relevant Seller has paid
in full or accrued all amounts due thereunder and has satisfied in full or
provided for all of its liabilities and obligations thereunder. To the Knowledge
of the Sellers, no other party to any such Contractual Obligation is in
Violation of or in default thereunder, nor does any condition exist that with
notice or lapse of time or both would constitute a default by such other party
thereunder.
4.9 SEC Filings: Financial Statements.
(a) The Company has filed all forms, reports, schedules,
statements and other documents (including all exhibits, annexes, supplements and
amendments to such documents) required to be filed by it under the Exchange Act
and the Securities Act since January 1,1999 (such documents shall be referred to
herein as, the "SEC Reports"). The SEC Reports, including any financial
statements or schedules included or incorporated therein by reference, at the
time they were filed, (i) except as specified in the letter attached to Schedule
4.9. complied in all material respects with the requirements of the Exchange Act
or the Securities Act or both, as the case may be, applicable to those SEC
Reports and (ii) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated or necessary in order to make the
statements made in those SEC Reports, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the SEC Reports (including the related notes and
schedules) fairly presented, in all material respects, the consolidated
financial position of the Company as of the dates set forth in those
consolidated balance sheets. Each of the consolidated statements of income and
of cash flows included in or incorporated by reference into the SEC Reports
(including any related notes and schedules) fairly presented, in all material
respects, the consolidated results of operations and cash flows, as the case may
be, of the Company and the consolidated Subsidiaries of the Company for the
periods set forth in those consolidated statements of income and of cash flows
(subject, in the case of unaudited quarterly statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in conformity with GAAP (except, in the case of unaudited quarterly
statements, as permitted by Form 10-Q of the Commission) consistently applied
throughout the periods indicated. All of such
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balance sheets and statements complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries of the Company as
of December 31, 2001, including the related notes, neither the Company nor any
Subsidiary of the Company has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on a balance sheet or in the related notes prepared in accordance
with GAAP, except for liabilities or obligations that, individually or in the
aggregate, could not reasonably be expected to result in a material adverse
change in the Condition of the Company.
4.10 Taxes. To the best Knowledge of the Sellers (a) each of the
Sellers has paid or reserved for all Taxes shown on its Tax Returns that have
come due and are required to be paid by it on and through the date hereof, other
than Taxes being disputed by such Seller in good faith for which adequate
reserves have been made in accordance with GAAP and which are shown on the
financial statements of such Seller; (b) except for certain filings which have
not been timely filed but for which there will be no material impact, either
individually or in the aggregate, on the Condition of the Sellers, each of the
Sellers has timely filed or caused to be filed all Tax Returns that it is
required to file on and through the date hereof (including all applicable
extensions), and all such Tax Returns are accurate and complete in all material
respects; (c) with respect to all Tax Returns of either of the Sellers, (i)
there is no unassessed Tax deficiency proposed or threatened against such
Sellers that is material in amount and has not been reserved for and (ii) no
audit or other administrative or judicial proceeding is in progress with respect
to any Tax Returns, no extension of time is in force with respect to any date on
which any Tax Return was or is to be filed and no waiver or agreement is in
force for the extension of time for the assessment or payment of any Tax; and
(d) there are no Liens for Taxes on the TMS Assets.
4.11 Ordinary Course of Business. Except as publicly disclosed prior
to the date hereof, since December 31, 2001, (a) neither of the Sellers has
participated in any transaction material to the Condition of the Sellers or
otherwise acted outside the ordinary course of business, including, without
limitation, declaring or paying any dividend or declaring or making any
distribution to its stockholders except out of the earnings of the Sellers, (b)
neither of the Sellers has increased the compensation of any of its officers or
the rate of pay of any of its employees, except as part of regular compensation
increases in the ordinary course of business, (c) other than the Liens to the
Buyer, MidMark Investments, Laurus and Access, neither of the Sellers has
created or assumed any Lien on the TMS Assets, (d) neither of the Sellers has
entered into any Contractual Obligation, other than in the ordinary course of
business and (e) there has not occurred a material change in either of the
Sellers' accounting principles or practice except as required by reason of a
change in GAAP.
4.12 Liabilities. Neither of the Sellers has any direct or indirect
obligation or liability ("Liabilities") other than (a) Liabilities fully and
adequately
12
reflected or reserved against on any financial statements or schedules included
or incorporated by reference into the SEC Reports and (b) Liabilities incurred
since December 31, 2001 in the ordinary course of business. Neither of the
Sellers has any Knowledge of any circumstance, condition, event or arrangement
that could reasonably be expected to give rise hereafter to any Liabilities of
either of the Sellers except in the ordinary course of business.
4.13 Intellectual Property.
(a) (i) The Sellers are the owners of all, or have a valid,
binding and transferable license or right to use, sell and license all of, the
material Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets,
Software, know-how, processes and other proprietary rights (collectively,
"Intellectual Property") that are included in the TMS Assets free and clear of
all Liens (other than Liens in favor of Buyer MidMark Investments, Laurus and
Access). None of Sellers' respective Subsidiaries is the owner of, or licensee
with respect to, any of such Intellectual Property. All of the licenses for
Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets, Software,
know-how, processes and other proprietary rights included in the TMS Assets,
which were not conveyed to either of the Sellers by the Buyer, are listed on
Schedule 4.13(a) and may be transferred to the Buyer free and clear of all Liens
without the consent of any Person (other than MidMark Investments and Laurus).
(ii) None of the Intellectual Property included in the TMS
Assets is subject to any outstanding Order, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand is pending or, to the
Knowledge of the Sellers, threatened, which challenges the validity,
enforceability, use or ownership of the item nor, to the Knowledge of Sellers,
is there any basis for the foregoing. All of the Intellectual Property is in
full force and effect.
(iii) The Sellers have substantially performed all
obligations imposed upon them under all Intellectual Property licenses,
sublicenses, distributor agreements and other agreements included in the TMS
Assets under which either of the Sellers is either a licensor, licensee or
distributor, and are not, nor to the Knowledge of the Sellers is any other party
thereto, in breach of or default thereunder in any respect, nor is there any
event which with notice or lapse of time or both would constitute a default
thereunder. All of the Intellectual Property licenses included in the TMS Assets
are valid, enforceable and in full force and effect in all material respects,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
(iv) None of the Intellectual Property included in the TMS
Assets infringes upon or otherwise violates any Intellectual Property rights of
others.
13
(v) No litigation is pending and no Claim has been made
against either of the Sellers or any of their respective Subsidiaries or, to the
Knowledge of the Sellers, is threatened, contesting the right of either of the
Sellers or any of their respective Subsidiaries to sell or license to any Person
or use the Intellectual Property included in the TMS Assets presently sold or
licensed to such Person or used by either of the Sellers or any of their
Subsidiaries, nor to the Knowledge of the Sellers, is there any basis for the
foregoing.
(b) To the Knowledge of the Sellers, no Person is infringing upon
or otherwise violating the Intellectual Property included in the TMS Assets
rights of the Sellers or any of their Subsidiaries.
(c) None of the Trade Secrets included in the Intellectual
Property have been disclosed by either of the Sellers or any of their respective
Subsidiaries to any third party absent an attendant duty, in conformance with
the Sellers' practices, but no less than reasonable practices under the
circumstances, to maintain the trade secret status thereof.
(d) The Software included in the Intellectual Property is not
contaminated by material bugs, viruses, or other harmful computer programming
code. The Software included in the Intellectual Property functions substantially
in accordance with its specifications and documentation listed on Schedule
4.13(d)
4.14 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with either of the Sellers or any action taken by either of the
Sellers.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Sellers as follows:
5.1 Existence and Power. The Buyer (a) is a corporation duly organized
and validly existing under the laws of the jurisdiction of its formation and (b)
has the requisite power and authority to execute, deliver and perform its
obligations under this Agreement and each of the other Transaction Documents to
which it is a party.
5.2 Authorization; No Contravention. The execution, delivery and
performance by the Buyer of this Agreement and each of the other Transaction
Documents to which it is a party and the transactions contemplated hereby and
thereby, (a) have been duly authorized by all necessary corporate action, (b) do
not contravene the terms of the Buyer's organizational documents, or any
amendment thereof, (c) do not violate, conflict with or result in any breach or
contravention of, or the creation of any Lien under, any Contractual Obligation
of the Buyer or any Requirement of Law applicable to the Buyer and (d) do not
violate any Orders of any Governmental Authority
14
against, or binding upon, the Buyer, excluding from the foregoing clauses (c)
and (d) violations, conflicts, breaches, defaults, contraventions and creation
of Liens that, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the Condition of the Buyer or on
the ability of the Buyer to consummate the transactions contemplated by this
Agreement.
5.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under any Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the purchase of the Note) by, or enforcement against, the Buyer of
this Agreement and each of the other Transaction Documents to which it is a
party or the transactions contemplated hereby and thereby.
5.4 Binding Effect. This Agreement and each of the other Transaction
Documents to which it is a party have been duly executed and delivered by the
Buyer and constitute the legal, valid and binding obligations of the Buyer,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).
5.5 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transaction contemplated hereby based on any agreement, arrangement or
understanding with Buyer or any action taken by Buyer.
5.6 Removal of Certain Software. The "PB WMS" software, which was
installed by the Sellers as part of consulting services provided to Buyer by
Sellers, has been removed from any servers owned by Buyer.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Patent License Agreement. Notwithstanding language therein
granting an irrevocable license, the Buyer and Sellers hereby terminate in full
the Patent License Agreement dated February 7, 2001 by and among the Sellers and
Buyer with no further action required at the Closing by the Parties to effect
such termination. Following the date hereof, the Buyer and Sellers acknowledge
and agree that such Patent License Agreement shall be terminated and of no
further force and effect.
6.2 Intellectual Property. Sellers shall not use the Intellectual
Property that is included in the TMS Assets to recreate all or a part of the TMS
Assets or replace all or a part of the TMS Assets. Sellers shall not use any
Intellectual Property conveyed
15
to Buyer pursuant to this Agreement for any purpose. Within five(5) Business
Days after the Closing, Sellers shall destroy any copies of Intellectual
Property included in the TMS Assets which are not conveyed to Buyer.
6.3 Public Disclosure. Buyer, on the one hand, and Sellers, on the
other hand, will consult with each other, and shall obtain the consent, which
shall not be unreasonably withheld, of the other party before issuing any press
release or otherwise making any public statement with respect to: (i) the
purchase and sale of the TMS Assets and the license of related Intellectual
Property; (ii) this Agreement; or (iii) any transactions contemplated herein,
and will not issue any such press release or make any such public statement
prior to such consultation, except as may be required by law or any listing
agreement with a national securities exchange.
6.4 Reseller Agreement. Buyer and the Sellers hereby amend, as of the
date hereof, the Reseller Agreement to exclude any and all TMS Assets
(including, without limitation, RenSoft TMS) from the definition of the term
"Licensed Software" as used in the Reseller Agreement and to terminate the
Reseller Agreement only with respect to RenSoft TMS. The Buyer and the Sellers
further acknowledge and agree that from and after the date hereof the Buyer
shall not be obligated to make any payments or deliver any reports to the
Sellers with respect to any RenSoft TMS products. Notwithstanding the foregoing,
all provisions of the Reseller Agreement that expressly survive a termination,
shall survive with respect to RenSoft TMS.
6.5 Services Agreement. Buyer and the Sellers hereby terminate in full
the Services Agreement dated as of February 7, 2001 among Buyer and the Sellers
(the "Services Agreement"). Following the date hereof, the Buyer and the Sellers
acknowledge and agree that the Services Agreement shall be terminated and of no
further force and effect.
6.6 Confidentiality of Agreement and Public Announcements. The Sellers
agree that the terms, conditions and existence of this Agreement shall be
treated as the Buyer's confidential information and that no reference to the
terms, conditions or existence of this Agreement or to activities pertaining
thereto may be made in any form of public or commercial announcement or
advertising without the prior consent of the Buyer; provided, however, that the
Sellers may disclose the terms and conditions of this Agreement: (i) as required
by any court or other governmental body; (ii) as otherwise required by
applicable law; or (iii) to legal counsel of the Sellers. The Sellers shall not
issue any statement or communication to any third party (other than their
respective agents) regarding the subject matter of this Agreement or the
transactions contemplated in this Agreement, without the consent of the Buyer,
except that this restriction shall be subject to the Sellers' obligation to
comply with applicable securities laws (and in such event the Seller shall use
reasonable efforts to provide the Buyer with a copy of any such statement or
communication in advance of such issuance).
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ARTICLE VII
CONDITIONS TO THE OBLIGATION
OF BUYER TO CLOSE
The obligation of Buyer to purchase the TMS Assets at the Closing and
perform any obligations hereunder shall be subject to the satisfaction or waiver
by Buyer, of the following conditions on or before the Closing Date.
7.1 Representations and Warranties. The representations and warranties
of the Sellers contained in Article IV hereof shall be true and correct in all
respects (except for any such representations and warranties that are qualified
by their terms to materiality or material adverse effect, which representations
as so qualified shall be true and correct in all respects) at and on the Closing
Date as if made at and on such date.
7.2 Compliance with this Agreement. The Sellers shall have performed
and compiled in all material respects with all of their agreements set forth
herein that are required to be performed by the Sellers on or before the Closing
Date.
7.3 Officer's Certificate of the Company. The Buyer shall have
received a certificate from the Company, in form and substance reasonably
satisfactory to the Buyer, dated the Closing Date, and signed by the Chief
Executive Officer and Vice President of Marketing and Business Development,
certifying as to the matters set forth in Section 7.1 and 7.2.
7.4 Secretary's Certificate. Buyer shall have received a certificate
from each of the Sellers, in form and substance reasonably satisfactory to
Buyer, dated the Closing Date and signed by the Secretary or an Assistant
Secretary of such Seller, certifying (a) that the Company is in good standing
with the Secretary of State of the State of New Jersey, and Renaissance is in
good standing with the Secretary of State of Delaware (b) that the attached
copies of the resolutions of the Board of Directors of the Company and
Renaissance approving this Agreement and each of the other Transaction Documents
and the transactions contemplated hereby and thereby, are all true, complete and
correct and remain unamended and in full force and effect and (c) as to the
incumbency and specimen signature of each officer of the Company and Renaissance
executing this Agreement, each other Transaction Document and any other document
delivered in connection herewith on behalf of the Company and Renaissance.
7.5 Transaction Documents. Each of the Sellers shall have duly
executed and delivered the other Transaction Documents to which it is a party,
including, but not limited to, the Releases.
7.6 Opinion of Counsel. Buyer shall have received an opinion of the
law offices of Xxxxxxx X. Xxxxx, P.C., counsel to the Company, dated the Closing
Date, relating to the transactions contemplated by or referred to herein,
substantially in the form attached hereto as Exhibit C.
17
7.7 Consents and Approvals. All consents, exemptions, authorizations,
or other actions by, or notice to, or filings with, Governmental Authorities and
other Persons in respect of all Requirements of Law and with respect to those
Contractual Obligations of the Sellers which are necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, the Sellers of this Agreement and each of the other Transaction
Documents shall have been obtained and be in full force and effect, and the
Buyer shall have been furnished with appropriate evidence thereof and all
applicable waiting periods shall have expired without any action being taken or
threatened which would have a material adverse effect on the Condition of the
Sellers.
7.8 Release of MidMark Lien and General Release. MidMark shall have:
(i) entered into a release, in form and substance reasonably satisfactory to
Buyer, releasing any MidMark security interest in the TMS Assets; (ii) made any
UCC-3 filings deemed necessary in the discretion of Buyer's counsel; and (iii)
executed a Mutual Release with the Buyer substantially in the form attached
hereto as Exhibit D.
7.9 Laurus and Access Capital. Each of Laurus and Access Capital shall
have: (i) entered into an agreement with the Sellers and the Buyer in form and
substance satisfactory to the Buyer providing for the acknowledgment and
agreement by each of Laurus and Access Capital that the invoices set forth on
Schedule 3.1 shall be deemed paid and satisfied in full by the payment by Buyer
to an account designated by Access Capital in the manner specified in Section
3.1 of this Agreement; and (ii) executed a Mutual Release with the Buyer
substantially in the form attached hereto as Exhibit E.
7.10 Release of Laurus Lien. Laurus shall have: (i) entered into a
release, in form and substance reasonably satisfactory to Buyer, releasing any
security interest that each such Person may have in the TMS Assets; and (ii)
made any UCC-3 filings deemed necessary in the discretion of Buyer's counsel.
ARTICLE VIII
CONDITIONS TO THE OBLIGATION
OF THE SELLERS TO CLOSE
The obligation of the Sellers to transfer the TMS Assets and the
obligation of the Sellers to perform their other obligations hereunder shall be
subject to the satisfaction or waiver by the Sellers of the following conditions
on or before the Closing Date:
8.1 Representations and Warranties. The representations and warranties
of the Buyer contained in Article V hereof shall be true and correct in all
material respects (except for any such representations and warranties which are
qualified by their terms by a reference to materiality or material adverse
effect, which representations as so qualified shall be true and correct in all
respects) at and on the Closing Date as if made at and on such date.
18
8.2 Compliance with this Agreement. The Buyer shall have performed and
compiled in all material respects with all of its agreements set forth herein
that are required to be performed by the Buyer on or before the Closing Date.
8.3 Transaction Documents. Buyer shall have duly executed and
delivered the other Transaction Documents to which it is a party, including, but
not limited to, the Releases.
ARTICLE IX
INDEMNIFICATION
9.1 Sellers Indemnification. Subject to the terms and conditions of
this Article IX, the Sellers, jointly and severally, agree to indemnify and hold
harmless the Buyer, its officers, directors, shareholders and Affiliates and the
successors and assigns of each of them (the party or parties being indemnified
under this Section 9.1 collectively referred to herein as, the "Buyer
Indemnified Party") from and against each and every demand, claim, loss,
liability, damages, cost and expense (including, without limitation, interest,
penalties, and reasonable attorneys' fees and disbursements) (collectively,
"Losses") imposed upon or incurred by the Buyer Indemnified Party, directly or
indirectly resulting from or arising out of (i) any breach of any representation
or warranty of the Sellers contained herein and any actual or threatened action
or proceeding in connection therewith, (ii) any failure to comply with any
covenant or other agreement of the Sellers contained herein and any actual or
threatened action or proceeding in connection therewith, (iii) any claim or
demand for commission or other compensation arising out of the transactions
contemplated by this Agreement by any broker, finder or agent claiming to be
entitled thereto resulting from, an act or acts of the Sellers, or (iv) any
other liability or obligation of the Sellers. Each matter for which the Sellers
have agreed to provide indemnification pursuant to this Section 9.1 is
hereinafter referred to individually as a "Buyer Claim" and collectively as the
"Buyer Claims."
9.2 Buyer Indemnification. Subject to the terms and conditions of this
Article IX, the Buyer agrees to indemnify and hold harmless the Sellers, their
officers, directors, Shareholders and Affiliates and the successors and assigns
of each of them (the party or parties being indemnified under this Section 9.2
collectively referred to herein as the "Sellers Indemnified Party") (either of
the Sellers Indemnified Party or the Buyer Indemnified Party shall be referred
to hereinafter as an "Indemnified Party") from and against Losses imposed upon
or incurred by the Sellers Indemnified Party, directly or indirectly resulting
from or arising out of (i) any breach of any representation or warranty of the
Buyer contained herein and any actual or threatened action or proceeding in
connection therewith, (ii) any failure to comply with any covenant or other
agreement of the Buyer contained herein and any actual or threatened action or
proceeding in connection therewith, (iii) any claim or demand for commission or
other compensation arising out of the transactions contemplated by this
Agreement by any broker, finder or agent claiming to be entitled thereto
resulting from an act or acts of the Buyer, or (iv) any other liability
obligation of the Buyer. Each matter for which the Buyer has agreed to
19
provide indemnification pursuant to this Section 9.2 is hereinafter referred to
individually as a "Sellers Claim" and collectively as the "Sellers Claims".
9.3 Notification of Indemnifying Party, (a) An Indemnified Party
shall, promptly after the receipt of notice of the commencement of any Claim
against such Indemnified Party in respect of which indemnity may be sought from
the party against which indemnification is being sought (the "Indemnifying
Party") under this Article IX, notify the Indemnifying Party in writing of the
commencement thereof. The omission of any Indemnified Party to so notify the
Indemnifying Party of any such action shall not relieve the Indemnifying Party
from any liability which they may have to such Indemnified Party (i) other than
pursuant to this Article VIII or (ii) under this Article IX unless, and only to
the extent that, such omission results in the Indemnifying Party's forfeiture of
substantive rights or defenses, or the Indemnifying Party is otherwise
materially prejudiced.
(b) In case any Buyer Claim shall be brought against any Buyer
Indemnified Party, and it shall notify the Sellers of the commencement thereof,
the Buyer Indemnified Party may either (i) elect to defend any such Buyer Claim
at the sole cost and expense of the Sellers (who shall pay or reimburse the
Buyer Indemnified Party for all legal fees and expenses incurred in defending
any such Buyer Claim as they are incurred) or (ii) if the Buyer Indemnified
Party so elects, the Sellers shall be entitled to assume the defense thereof at
their own expense by so notifying the Buyer Indemnified Party within twenty (20)
Business Days of receipt of the notice of the commencement of any Buyer Claim
with counsel satisfactory to such Buyer Indemnified Party in its reasonable
judgment; provided, however, that any Buyer Indemnified Party may if it elects
to have the Sellers defend the Buyer Claim, at its own expense, retain separate
counsel to participate in such defense at its own expense. If the Buyer
Indemnified Party permits the Sellers to defend any Buyer Claim and the Sellers
do not provide notice to the Buyer Indemnified Party of its assumption of the
defense of a Buyer Claim within twenty (20) Business Days of notice of the
commencement of a Buyer Claim, the Buyer Indemnified Party shall have the right
to employ counsel in connection with the defense of such Buyer Claim; provided,
that the Sellers shall not be liable for the fees and expenses of more than one
counsel to all Buyer Indemnified Parties.
(c) In case any Sellers Claim shall be brought against any
Sellers Indemnified Party, the Sellers shall give prompt written notice of such
Sellers Claim to the Buyer Indemnifying Party and the Buyer shall be entitled to
assume the defense thereof at its own expense with counsel selected at the sole
discretion of the Buyer by so notifying the Sellers within twenty (20) Business
Days of receipt of the notice of the commencement of any Seller Claim. The
Sellers may employ separate counsel, but the Buyer shall not be liable for the
fees and expenses of counsel to any Sellers Indemnified Parties.
(d) The Indemnifying Party agrees that it will not, without the
prior written consent, which consent shall not be unreasonably withheld, of the
Indemnified Party, settle, compromise or consent to the entry of any judgment in
any pending or threatened Claim relating to the matters contemplated hereby (if
any
20
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent (i) includes an
unconditional release of each Indemnified Party from all liability arising or
that may arise out of such Claim and (ii) does not require any action other than
the payment of money. The Indemnifying Party shall not be liable for any
settlement of any Claim effected against an Indemnified Party without the
Indemnifying Party's written consent, which consent shall not be unreasonably
withheld.
9.4 Contribution. If the indemnification provided for in this Article
IX from the Sellers is unavailable to an Indemnified Party hereunder in respect
of any Losses referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions which resulted in such Losses,
as well as any other relevant equitable considerations. The relative faults of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the Losses referred
to above shall be deemed to include, subject to the limitations set forth in
this Article IX, any legal or other fees, charges or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
ARTICLE X
MISCELLANEOUS
10.1 Survival of Representations and Warranties. The representations
and warranties made herein shall survive the execution and delivery of this
Agreement (i) until the third anniversary of the Closing Date with respect to
Section 4.13, and (ii) until the second anniversary of the Closing Date in the
case of all other representations and warranties.
10.2 Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery;
(i) if to Buyer:
Pitney Xxxxx Inc.
0 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxx, Vice President and
Chief Financial Officer
Facsimile: 000-000-0000
21
with a copy to:
Pitney Xxxxx Inc.
0 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Senior Vice President and
General Counsel
Facsimile: (000) 000-0000
and
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
(ii) if to the Company:
Vertex Interactive, Inc.
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X.X. Xxxx
Facsimile: (000) 000-0000
with a copy to:
Law Offices of Xxxxxxx Xxxxx, P.C.
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(iii) if to Renaissance:
Renaissance Software, Inc.
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X.X. Xxxx
Facsimile: (000) 000-0000
All such notices, demands and other communications shall be deemed to
have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 10.2 designate another address or
Person for receipt of notices hereunder.
22
10.3 Successors and Assigns; Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the parties hereto. Neither the Company nor Renaissance may assign
any of their rights or obligations under this Agreement or the other Transaction
Documents without the written consent of Buyer. Buyer may not assign any of its
rights under this Agreement without the written consent of the Company except
that Buyer may by notice to the Company direct that the TMS Assets be
transferred to a wholly-owned Subsidiary of Buyer. Except as provided in Article
IX, no Person, other than the parties hereto and their successors and permitted
assigns, is intended to be a beneficiary of this Agreement. The Buyer and the
Sellers each acknowledge and agree that while the Buyer shall not be obligated
to offer employment to any employee or former employee of the Sellers who works
or worked on the development, maintenance, distribution or sale of the TMS
Assets, the Buyer shall be entitled to make any and all such offers on such
terms as it desires without any liability or consequence to Buyer or such
offeree to the Sellers or any other Person.
10.4 Amendment and Waiver.
(a) No failure or delay on the part of Buyer or the Sellers in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by Buyer or the Sellers from the terms of any
provision of this Agreement, shall be effective (i) only if it is made or given
in writing and signed by Buyer and the Sellers, and (ii) only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Agreement, no notice to or demand on
Sellers in any case shall entitle Sellers to any other or further notice or
demand in similar or other circumstances.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
10.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
10.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
10.8 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or
23
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
10.9 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
10.10 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto, and the other Transaction Documents are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits and schedules hereto, and the other Transaction Documents supersede
all prior agreements and understandings between the parties with respect to such
subject matter.
10.11 Expenses. Except as otherwise provided in this Agreement, each
party will pay its own costs and expenses incurred in connection with the
negotiation, execution and closing of this Agreement and the transactions
contemplated hereby.
10.12 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
[Remainder of Page Left Blank Intentionally; Signature Page Follows]
24
IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Agreement on the date first written above.
PITNEY XXXXX INC.
By: Xxxxx Xxxxx
-------------------------
Name:
Title: EVP + CFO
VERTEX INTERACTIVE, INC.
By:
-------------------------
Name:
Title:
RENAISSANCE SOFTWARE INC.
By:
-------------------------
Name:
Title:
[Signature Page to Asset Purchase Agreement]
IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Agreement on the date first written above.
PITNEY XXXXX INC.
By:
-------------------------
Name:
Title:
VERTEX INTERACTIVE, INC.
By: X. Xxxx
-------------------------
Name: X. Xxxx
Title: CEO
RENAISSANCE SOFTWARE INC.
By: X. Xxxx
-------------------------
Name: X. Xxxx
Title: CEO
[Signature Page to Asset Purchase Agreement]
Schedule 2.1(b)
"TMS Assets" consists of:
(i) the solutions for transportation management of the Company and/or
Renaissance that
(A) are marketed by, or on behalf of, the Company and/or
Renaissance under the name RenSoftTMS (or any name that has
replaced or modified such name), including, but not limited to,
the client server and enterprise editions thereof; or
(B) are marketed by, or on behalf of, the Buyer by agreement with
the Company and/or Renaissance under the name PB TMS, (or any
name that has replaced or modified such name), including, but not
limited to, the client server and enterprise editions thereof; or
(C) software solutions that perform a significant portion of the
functions that any of the foregoing perform and that are based on
the source code or engineering of the items specified in (A) and
(B);
(ii) the names and source codes, object codes, programs, Trademarks,
Copyrights, Trade Secrets, know-how, Patents, licenses, domain names, contracts,
Software and other Intellectual Property that are owned by or licensed to the
Company and/or Renaissance and used in connection with the business of the
Company and/or Renaissance relating to any of the items specified in Clause (i),
above, including, but not limited to, technical and user documentation,
development and design documents, marketing and sales collateral and tools, use
cases, requirements documents, case studies, customer support and service
records, training materials, customer lists and other customer records and white
papers and all modifications made by the Sellers pursuant to Section 4.1.2 of
the Reseller Agreement;
(iii) any and all written or electronic plans, manuals, studies,
records and other documentation and materials relating to the development,
testing, implementation, marketing, sales and customer support of any of the
foregoing solutions, systems or software;
(iv) all rights of the Sellers under any consulting agreement,
proprietary invention assignment or confidentiality agreement or similar
agreement with any Person relating to the development, creation, programming or
exploitation of the items specified in clauses (i) through (iii) above; and
(v) all equipment used, including, but not limited to, computers and
servers in connection with the business of the Sellers relating to any of the
items specified on Annex A hereof.
Annex A to Schedule 2.1(b)
QA Lab
-----------------------------------------------------------------------------
Acq
Qty Machine Type Date
-----------------------------------------------------------------------------
5 PowerEdge 2450 Dual 866Mhz Rack Servers Aug-00
-----------------------------------------------------------------------------
1 PowerEdge 6300 Quad 500Mhz Server Feb-00
-----------------------------------------------------------------------------
9 Optiplex GX200 Desktop 933Mhz Aug-00
-----------------------------------------------------------------------------
2 Dell Server Rack with keyboard and display Aug-00
-----------------------------------------------------------------------------
1 UPS Matrix Aug-00
-----------------------------------------------------------------------------
Developer PCs
-----------------------------------------------------------------------------
Acq
Qty Machine Type Date
-----------------------------------------------------------------------------
6 Optiplex GX200 933Mhz Sep-00
-----------------------------------------------------------------------------
1 Optiplex GX200 933Mhz Jan-01
-----------------------------------------------------------------------------
4 Optiplex GX300 800Mhz Jun-00
-----------------------------------------------------------------------------
2 Optiplex GX300 800Mhz Sep-OO
-----------------------------------------------------------------------------
6 Latitude CPX 750Mhz Aug-00
-----------------------------------------------------------------------------
1 Latitude CPX 750Mhz Dec-00
-----------------------------------------------------------------------------
4 Dell PIII Dec-00
-----------------------------------------------------------------------------
1 Latitude CPXI Pentium Feb-00
-----------------------------------------------------------------------------
Developer Servers
-----------------------------------------------------------------------------
Acq
Qty Machine Type Date
-----------------------------------------------------------------------------
1 PowerEdge 4400 550Mhz Server Dec-00
-----------------------------------------------------------------------------
1 PowerEdge 2400 Dual 450Mhz Server Dec-00
-----------------------------------------------------------------------------
Printers
-----------------------------------------------------------------------------
Acq
Qty Machine Type Date
-----------------------------------------------------------------------------
1 Printer Feb-97
-----------------------------------------------------------------------------
1 High Speed Label Printer Feb-97
-----------------------------------------------------------------------------
Office equipment & furniture; miscellaneous
-----------------------------------------------------------------------------
Qty Machine Type
-----------------------------------------------------------------------------
Desks & workface counters, bookcases, meeting tables,
overhead cubby holders (approx.14)
-----------------------------------------------------------------------------
29 8x8 grey cubicles with built-in desks & workspaces
-----------------------------------------------------------------------------
38 Swivel ergonomically correct office chairs
-----------------------------------------------------------------------------
Approx. 45 Guest chairs
-----------------------------------------------------------------------------
40 Whiteboards
-----------------------------------------------------------------------------
5 -- 6 Bookshelves
-----------------------------------------------------------------------------
Miscellaneous desk/workspace for holding printers,
PC's in test areas, etc.
-----------------------------------------------------------------------------
Schedule 2.6
----------------------------------------------------------------------
----------------------------------------------------------------------
Invoice
Description Number Invoice Total Agreed Amount
----------------------------------------------------------------------
----------------------------------------------------------------------
21 Days in Feb 02 for Xxxxx NA $15,750.00 $ 15,750.00
Dimora
----------------------------------------------------------------------
March 2002 Maint Royalty $ 15,430.00
----------------------------------------------------------------------
March 2002 New Sales Royalty $105,143.00
----------------------------------------------------------------------
April 2002 Maint Royalty
(April 15th) $ 7,500.00
----------------------------------------------------------------------
April 2002 New Sales Royalty $ 30,000.00
---------------------------------------------------------=============
Total Amount Due to Vertex for TMS Business Related
Activities $173,823.00
----------------------------------------------------------------------
Schedule 3.1
-------------------------------------------------------------------
Invoice/Payment Reconciliation
-------------------------------------------------------------------
-------------------------------------------------------------------
Invoice
Number Description Invoice Total Disbursement
-------------------------------------------------------------------
-------------------------------------------------------------------
Access
-------------------------------------------------------------------
ATS:
-------------------------------------------------------------------
0007602 WMF Customer Invoice $ 29,362.50 $ 29,362.50
-------------------------------------------------------------------
0007684 WMF Customer Invoice 38,700.00 38,700.00
-------------------------------------------------------------------
0007741 WMF Customer Invoice 225.00 225.00
-------------------------------------------------------------------
0007787 WMF Customer Invoice 1,125.00 1,125.00
-------------------------------------------------------------------
0007798 WMF Customer Invoice 825.00 825.00
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
Renaissance:
-------------------------------------------------------------------
21338 eWMS Software Installation 500,000.00 --
-------------------------------------------------------------------
-------------------------------------------------------------------
21339 Preparation for CRP 55,550.00 24,000.00
-------------------------------------------------------------------
21344 CRP Consulting 57,775.00 45,450.00
-------------------------------------------------------------------
21350 CRP Consulting 43,225.00 33,600.00
-------------------------------------------------------------------
21361 CRP Summary Document 28,250.00 21,900.00
-------------------------------------------------------------------
NA Voyager Consulting 19,200.00 19,200.00
-------------------------------------------------------------------
-------------------------------------------------------------------
21340 Travel & expenses Voyager 794.98 794.98
-------------------------------------------------------------------
21343 Travel & expenses Voyager 1,700.97 1,700.97
-------------------------------------------------------------------
21346 Travel & expenses Voyager 5,547.70 5,547,70
-------------------------------------------------------------------
21351 Travel & expenses Voyager 3,424.38 3,424.38
-------------------------------------------------------------------
21354 Travel & expenses Voyager 2,081.51 2,081.51
-------------------------------------------------------------------
21356 Travel & expenses Voyager 1,849.84 1,849.84
-------------------------------------------------------------------
21358 Travel & expenses Voyager 765.26 765.26
-------------------------------------------------------------------
21362 Travel & expenses Voyager 1,635.61 1,635.61
-------------------------------------------------------------------
2
-------------------------------------------------------------------
21367 Travel & expenses Voyager 651.15 651.15
-------------------------------------------------------------------
21369 TMS installation 17,995.00 --
-------------------------------------------------------------------
Total Amount Due to Access $810,683.90 $232,838.90
---------------------------------------============================
3
Schedule 4.3
MidMark:
Financing dated June 19, 2001 and associated documents
Financing dated November 1, 2001 and associated documents
Intercreditor Agreement dated February 1, 2002 associated with Pitney Xxxxx
financing
Intercreditor Agreement dated February 27, 2002 associated with Laurus
financing
Laurus:
Financing dated November 20, 2001 and associated documents
Financing dated February 27, 2002 and associated documents
Access Capital:
Financing dated February 27, 2002 and associated documents
Schedule 4.6(a)
Authorized Marketing Program Reseller Agreement among Renaissance Software Inc.,
Vertex Interactive, Inc. and Pitney Xxxxx Inc. dated as of February 7, 2001, as
supplemented by the Supplement to the Authorized Marketing Program Reseller
Agreement made on February 1, 2002.
Schedule 4.6(b)
None
Schedule 4.8
None
Schedule 4.9
SEC Letter
[LOGO VERTEX INTERACTIVE] Vertex Interactive Inc.
00 Xxxxxx Xxxxx, Xxxxxxxxx, XX 00000-0000
Telephone: x0 (0) 000 000 0000 Fax: x0 (0) 000 000 0000 E- Mail:
xxxx@xxxxxxxxxxxxxxxxx.xxx URL: xxx.xxxxxxxxxxxxxxxxx.xxx
Facsimile
To: Xxxxxxx X. Xxxxx From: Xxxxxx X. Xxxxxx
--------------------------------------------------------------------------------
Copies to:
--------------------------------------------------------------------------------
Company/Organization:
--------------------------------------------------------------------------------
Fax Number: 000.000.0000 Date: April 17, 2002
--------------------------------------------------------------------------------
Pages, Including this one): 12
--------------------------------------------------------------------------------
Jai,
Here is the SEC letter.
Don
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
[SEAL]
Division Of
Corporation Finance
October 26, 2001
By facsimile to (000)000-0000 and U.S. Mail
Xx. Xxxxxxxx X.X Xxxx
Chief Executive Officer and Acting North American Chief Operating Officer
Vertex Interactive, Inc.
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
RE: Vertex Interactive, Inc.
Registration Statement on Form S-3
Filed September 28, 2001
File No. 333-70490
Annual Report on Form 10-K for the fiscal year ended September 30, 2000 and
Definitive Proxy Statement on Schedule 14A
Filed December 19, 2000 and January 17, 2001
File Nos. 0-15066
Quarterly Reports on Form 10-Q for December 31, 2000, March 31, 2001, and
June 30, 2001
Filed February 20, 2001, May 15, 2001, and August 14, 2001
File Nos. 0-15066
Current Report on Form 8-K dated August 23, 2001
Filed September 7, 2001
File No. 0-15066
Dear Xx. Xxxx:
We reviewed the filings and have the comments below. Where indicated, we
think that you should revise the documents in response to the comments. If you
disagree, we will consider your explanation why a comment is inapplicable or a
revision is unnecessary. Be as detailed as necessary in your explanation. To
better understand your disclosure, we may ask you in some
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 2
comments to provide us supplemental information. We may raise additional
comments after reviewing this information.
Our review process' purpose is to assist you in your compliance with
applicable disclosure requirements and to enhance the overall disclosure in your
documents. We look forward to working with you to achieve these objectives. We
welcome any questions that you may have about comments or any other aspect of
our review. You may call us at the telephone numbers listed at the end of this
letter.
S-3
General
1. If applicable, comments on the S-3 are comments on the 10-K and vice versa.
2. It appears that Vertex's current report on Form 8-K dated December 29, 2000
that was filed on March 2, 2001 was not filed in a timely manner. Thus,
Vertex appears not to satisfy the registrant requirements for use of Form
S-3 as specified in that form's General Instruction I.A.3. Unless Vertex
obtains a waiver from the Division's Office of Chief Counsel, Form S-3
appears unavailable for the offering. Advise or withdraw the registration
statement. See Rule 477 of Regulation C under the Securities Act.
3. Alternatively, if Vertex wishes to proceed with the offering, amend the S-3
on a form whose eligibility requirements Vertex is able to satisfy. For
example, consider filing a pre-effective amendment on Form S-1 to the
registration statement on Form S-3. If you do, explain why in a cover
letter. Ensure that the amendment is tagged on the XXXXX system as a
pre-effective amendment on Form S-1 to the registration statement on Form
S-3. In the calculation of registration fee table on the registration
statement's facing page, indicate by footnote or in some other manner that
the fee was paid previously when Vertex filed initially the registration
statement on Form S-3. The file number shown above will not change.
4. Tell us how you have considered Rule 3-12(b) of Regulation S-X for updating
your financial statements through the end of the current fiscal year.
5. Avoid repeating disclosures that increase the document's size but do not
enhance the information's quality. See note to Item 421(b) of Regulation C
under the Securities Act. For example, you repeat in the summary's second
paragraph information that you include in the first paragraph on the
prospectus' outside from cover page.
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 3
6. We are not making any determinations whether the disclosures, including,
for example, cautionary language or the disclosures' placement, satisfy the
sections' requirements if the filing states that it:
o includes forward looking statements within the meaning of section
27A of the Securities Act and section 21E of the Exchange Act;
o otherwise makes reference to those provisions; or
o makes reference to the Private Securities Litigation Reform Act
of 1995 generally.
Prospectus' Outside Front Cover Page
7. Limit information on the prospectus' outside front cover page to
information required by Item 501 of Regulation S-K. For example, refer to
the first paragraph's first sentence.
8. Move the prospectus' date from the summary section to the prospectus'
outside front cover page. See Item 501(b)(9) of Regulation S-K.
9. Besides this offering, Vertex has filed other registration statements for
resales of shares of its common stock. Since it appears that the other
distributions may take place concurrently with the shares being registered
under this registration statement, expand the prospectus' cover page
disclosure to inform investors of the other registration statements and the
aggregate number of shares offered for resale under them. Further, include
quantitative information on the other offerings in the sixth risk factor's
discussion.
Summary
10. In the prospectus and various incorporated filings, including the notes to
the financial statements for September 30, 2000, you frequently refer to
Vertex or to acquired companies as "leading provides" of their products or
services. In each instance, you should expand to describe briefly the basis
on which each claim of this type is made. For example, if it is based on a
belief that the products are technologically superior to those of
competitors, explain why and provide supplemental support for the claims.
As a further example, if the leading position comes from a dominant market
position, provide supplemental support for the belief that a dominant
position has been achieved.
11. Under "Recent Developments," state the value assigned to the 40 million
shares of Vertex's common stock. Provide quantitative data for Plus
Integration, for example, its revenues, operating income, and net income
during the most recent year, to give
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 4
shareholders sufficient information to put the proposed acquisition in an
appropriate context.
Risk Factors
12. Except for the sixth risk factor, this section's captions or headings state
merely a fact or describe an event that may occur in the future or are too
vague to describe adequately the risk that follows. State succinctly the
risk that follows from the fact or uncertainty. Avoid generic conclusions
such as Vertex's results of operations, business or financial condition
would or could be materially and adversely affected or would or could be
harmed. Rather, explain specifically what the risk's consequences or
effects are for Vertex and its stockholders.
13. The actual risks you are trying to convey do not stand out from the
extensive detail that you provide in some risk factors. For example, refer
to the first, second, and fourth risk factors. Revise so that you are
stating the risk in at least the second or third sentence. Provide just
enough detail to place the risk in context.
14. Generally, each risk factor should discuss a single risk. For example,
refer to the fifth risk factor's second paragraph.
15. Delete any mitigating language in this section. For example, refer to third
risk factor's second paragraph.
16. Refer to the last paragraph under MD&A in the June 30, 2001 10-Q.
Disclosure there indicates that, unless economic conditions improve
dramatically, Vertex believes that it will need additional external
financing to fund its cash requirements for at least the next twelve
months. Advise whether you have considered providing risk factor disclosure
of Vertex's possible need for additional external financing.
17. We note that Vertex's common stock hit a new 52 week low of $0.55 on
October 15, 2001. Advise whether you have considered providing risk factor
disclosure of Vertex's common stock's potential inability to remain quoted
on The Nasdaq National Market.
18. Note 2 of the financial statements included in the 10-K for the year ended
September 30, 2000 indicates that Vertex has been substantially dependent
upon revenues from principal customers in various periods. Why is there not
a risk factor that identifies the principal customers, discloses the extent
of Vertex's historical dependency on those customers, and describes the
potential adverse effect of any loss of those customers?
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 5
Plan of Distribution
19. The plan of distribution indicates that the selling shareholders may engage
in short sales. Have the selling shareholders created any short positions
since the registration statement's filing? If so, describe in your response
letter the terms of the short positions that they have taken. Also describe
how the selling shareholders might cover short positions, and provide
appropriate disclosure in the prospectus. Provide us your analysis of
whether the selling shareholders' covering of short sales during the
distribution period is consistent with Regulation M and Rule 102 of
Regulation M. We understand that the Division of Market Regulation is of
the view that the failure to cover a short position at the request of a
lender may be an inducement of the lender to purchase by the selling
shareholder that fails to cover the short position.
Experts
20. We are unable to locate any information under this caption or heading.
Revise and advise.
Exhibits
21. Include an exhibit index immediately before the exhibits filed with the
registration statement. Further, in response to Item 16 of Form S-3,
identify each exhibit filed with the registration statement.
22. We are unable to locate any exhibits filed with the registration statement.
We assume that omission of exhibits required by subparagraphs (b)(5),
(b)(23), and (b)(24) of Regulation S-K is inadvertent. Revise and advise.
Signatures
23. Revise the first paragraph to conform to the signature certification
language specified for filing of Form S-3. See signatures on Form S-3.
24. Vertex's principal financial officer and controller or principal accounting
officer also must sign the registration statement. Further, any person who
occupies more than one of the specified positions, for example, principal
financial officer and controller or principal accounting officer, must
indicate each capacity in which he signs the registration statement. See
instructions 1 and 2 to signatures on Form S-3, and revise.
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 6
10-K
Business
25. Under "Customers," identify any customer accounting for 10% or more of
Vertex's total revenues during any period presented and whose loss would
have a materially adverse effect on Vertex. See Item 101(c)(1)(vii) of
Regulation S-K.
Market for Company's Common Equity and Related Stockholder Matters
26. It appears that Vertex issued common stock during the quarter ended
September 30, 2000 in transactions that were not registered under the
Securities Act. For example, note 9 to the financial statements for the
year ended September 30, 2000 indicates that 80,386 shares were issued in
the Netweave transaction during the fiscal year's fourth quarter. However,
Item 5 of the 10-K does not include the information required by Item 701 of
Regulation S-K. See Item 5(a) of Form 10-K, and revise.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
27. Where two or more factors contribute to a material change in results of
operations during the periods presented, quantify the portion of the change
that resulted from each factor. Where a change is the net result of
offsetting factors, quantify the impact of each material offsetting factor.
28. Expand your discussion of operating revenues to address any trends in
product shipments or customers.
29. We note that you quantify incremental revenue attributable to each of your
significant acquisitions. Clarify your disclosure to indicate how each of
these newly acquired companies is producing revenue. Is each of these newly
acquired companies selling its products on a stand-alone basis or
integrating them with products from other acquired companies? Also discuss
how the revenue obtained from each of the acquired companies has compared
to your initial expectations or budgets.
30. Based on your revenue recognition policy, it appears that you recognize
software license revenue at the time of shipment or under contract
accounting, depending on the specific terms of the license arrangement,
etc. Expand your disclosure to clarify how you recognize revenue for each
of your products. Also quantify the amount of software license revenue that
is obtained upfront versus contract accounting.
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 7
31. Discuss Vertex's liquidity on both a short term and a long term basis. See
instruction 5 to Item 301(a) of Regulation S-K and section III.C. of
Release 34-26831.
32. If a credit facility or other financial instrument requires Vertex to
satisfy specified financial ratios and tests, state what the limits of all
of the material financial ratios and tests are. Also indicate whether
Vertex is in compliance with them.
Statement of Operations
33. Disclose separately revenue attributable to services, product sales, and
software licenses, and the related cost of revenue. Refer to Rule 5-03 of
Regulation S-X.
Note 1. Recent Developments and Nature of Presentation
Acquisitions
34. Disclose the period in which material net cash inflows from the significant
in-process research and development projects are expected to begin.
35. Expand the disclosure here or in MD&A to discuss for your significant
in-process research and development projects:
o nature of the project acquired;
o status of development and complexity or uniqueness of the work
completed at the acquisition date;
o nature and timing of remaining efforts for completion;
o anticipated completion date and the date on which you will begin
benefiting from the IPR&D;
o risks and uncertainties in completing development within a
reasonable period of time; and
o risks involved if the IPR&D is not completed on a timely basis.
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 8
36. In future filings:
o disclose the status of your efforts for completion of the R&D
project and the impact of any delays; and
o explain material variations between projected results and actual
results and how failure to achieve projected results impacted or
will impact expected return on investment, future results and
financial condition.
Note 2. Summary of Significant Accounting Policies
Revenue Recognition
37. Tell us if you offer your customers a right of return. If so, tell us how
your revenue recognition policy is in compliance with paragraph 6 of SFAS
48.
38. Disclose the impact, if any, on your financial statements from your
adoption of SOP 97-2.
39. Expand your disclosure to identify the elements that you have and have not
established VSOE of fair value.
Note 13. Segment Information and International Operations
40. Disclose the reason for the disparity between North American and European
gross margin as a percentage of revenue.
41. Provide the product and services disclosures required by paragraph 37 of
SFAS 131 or explain to us why they are not required. Include for us
descriptions of each of your significant products and the reason why the
disclosure is not required.
42. Disclose separately revenue attributable to any individually material
European countries.
43. Tell us why you do not consider each of your significant acquisitions a
separate segment as defined under SFAS 131 and the basis for your
conclusion. We note that in MD&A you discuss revenue and gross profit
numbers for your acquisitions.
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 9
Exhibits
44. Note 12 to the financial statements discloses that Vertex has employment
agreements with its key employees. Are any of the agreements with
executives named in the summary compensation table? If so, why are the
agreements with those executives not filed and listed in the exhibit index?
See Item 601(b)(10)(iii)(A) of Regulation S-K. Revise or advise.
Signatures
45. Vertex's controller or principal accounting officer also must sign the
10-K. Further, any person who occupies more than one of the specified
positions, for example, principal financial officer and controller or
principal accounting officer, must indicate each capacity in which he signs
the 10-K. See subparagraphs (2)(a) and (2)(b) of General Instruction D. to
Form 10-K, and revise in future filings.
14A
Certain Relationships and Related Transactions
46. State the value of the 29,892 shares of Vertex's common stock received by
Xx. Xxxxxxx X. Xxxxx for his ownership interest in PDI.
Executive Compensation
47. Refer to "Section 16(a) Beneficial Ownership Reporting Compliance." We
assume the statement that during fiscal 2000 Vertex believes all section
16(a) filing requirements "had not" been satisfied on a timely basis for
members of its board of directors and executive officers is incorrect.
Advise. Alternatively, if the there were tardy filings of section 16
reports, you should indicate the number of late reports for each late filer
whom you identify. Further, you must disclose the number of transactions
that were required to be reported in the reports that were not filed on a
timely basis.
Compensation Committee Report on Executive Compensation
48. In future filings, clarify whether the "companies deemed comparable" used
by the committee in establishing the base salary guidelines for Vertex's
executive officers are companies appearing in the performance graph's peer
index.
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 10
49. Under "Compensation of the Chief Executive Officer," explain the basis for
the committee's belief that the compensation paid to Messrs. Byer,
Biermann, and Toms was "reasonable."
10-Qs
50. Amend each 10-Q to include the information required by Item 701 of
Regulation S-K. See Item 2(c) of Part II of Form 10-Q. For example, refer
to the second paragraph under "Stockholders' Equity" in the June 30, 2001
10-Q, the third and fourth paragraphs under "Stockholders' Equity" in the
March 31, 2001 10-Q, and the first, second, and third paragraphs under
"Stockholders' Equity" in the December 30, 2001 10-Q
51. For all equity securities sold by Vertex during the period covered by each
10-Q that were not registered under the Securities Act, describe in
sufficient detail the facts relied upon to make the exemption available.
Where you rely upon the Securities Act's section 4(2), state specifically
whether the purchasers where accredited or sophisticated. If the latter,
outline the access to information given to them. See Item 701(d) of
Regulation.
52. For the unregistered sales of securities in March and April 2000 for $24
million, we note that you issued options to financial advisors who
participated in the transaction. Identify the financial advisors. Describe
in your response letter the financial advisors' roles in the transaction.
What are the financial advisors' businesses? To what extent have the
financial advisors engaged in transactions for the offer and sale of
securities previously? Have the financial advisors earned options or other
compensation in other issuances of securities? We may have further
questions.
10-Q for June 30, 2001
Note 8. Recent Accounting Pronouncements
53. Provides us the results of your fair value analysis performed for your
adoption of SFAS 142.
8-K
54. Tell us how you have considered Rule 3-05(b)(4)(i) of Regulation S-X for
your acquisition of Plus Integration. Provide us the tests of significance
to support your response. It appears that you should file Plus
Integration's financial statements before the registration statement's
effectiveness because of the purchase price's significance. Advise.
Xx. Xxxxxxxx X.X. Xxxx
October 26, 2001
Page 11
55. Provide pro forma financial statements specified by Article 11 of
Regulation S-X.
56. Tell us how your have considered SAB Topic 2.A.2 in your determination of
the acquiring company. Based on the number of shares that Vertex will issue
in the acquisition, it appears that Plus Integration is the acquiring
corporation.
Closing
File amendments to the S-3, the 10-K, and the 10-Qs in response to the
comments. To expedite our review, you may wish to provide us three marked
courtesy copies of the amendments. Include with the amendments any supplemental
information requested and a cover letter tagged as correspondence that keys the
responses to the comments. If you think that compliance with any of the comments
is inappropriate, provide the basis in the letter. We may have additional
comments after review of the amendments, your responses to the comments, and any
supplemental information.
You may direct questions on accounting comments to Xxxxxxx X. Xxx, Staff
Accountant, at (000) 000-0000 or Xxxxxx X. Xxxx, Senior Assistant Chief
Accountant, at (000) 000-0000. You may direct questions on other comments and
disclosure issues to Xxxxxx X. Xxxxx, Senior Counsel, at (000) 000-0000. If you
need further assistance, you may contact Xxxx X. Xxxxxx, Special Counsel, at
(000) 000-0000 or me at (000) 000-0000.
Very truly yours,
Xxxxxx X. Xxxxx
for Xxxxxxx X. Xxxxxx
Assistant Director
cc: Xxxxxxx X. Xxxxx, Esq.
Law Offices of Xxxxxxx X. Xxxxx, P.C.
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Schedule 4.13(a)
None
Schedule 4.13(d)
Conquest and eQuest Intellectual Property--Specifications and Documentation
1. Conquest/eQuest on-line user guide (2/25/02)
