FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1997
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File No. 0-28274
SYKES ENTERPRISES, INCORPORATED
(Exact name of Registrant as specified in its charter)
Florida 56-1383460
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 North Tampa Street, Suite 3900, Tampa, FL 33602
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 813-274-1000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for at least the past ninety days.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common Stock, $0.01 Par Value, 34,929,874 shares as of July 30, 1997
<PAGE>
PART I
Item 1 - Financial Statements
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, June 29,
1996 1997
ASSETS
Current assets
Cash and cash equivalents . . . . . . $89,651,848 $83,211,456
Receivables, including unbilled . . . 40,547,601 45,864,758
Prepaid expenses and other current
assets . . . . . . . . . . . . . . 2,241,213 3,475,730
----------- -----------
Total current assets . . . . . . . . 132,440,662 132,551,944
Property and equipment, net . . . . . . 40,598,225 42,234,407
Marketable securities . . . . . . . . . - 11,200,000
Deferred charges and other assets . . . 929,223 2,329,413
----------- -----------
$173,968,110 $188,315,764
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current installments of long-term debt $1,514,199 $246,662
Accounts payable . . . . . . . . . . . 5,696,603 8,472,972
Accrued employee compensation and
benefits . . . . . . . . . . . . . 9,523,951 9,794,756
Other accrued expenses and current
liabilities . . . . . . . . . . . 4,488,417 3,698,462
----------- -----------
Total current liabilities . . . . . . 21,223,170 22,212,852
Long-term debt . . . . . . . . . . . . 1,251,079 602,321
Deferred income taxes . . . . . . . . . 3,910,000 5,523,357
Deferred grants . . . . . . . . . . . . 11,669,273 11,483,870
Commitments and contingencies (Note 1)
Shareholders' equity
Preferred stock, $0.01 par value,
10,000,000 shares authorized; no
shares issued and outstanding . . - -
Common stock, $0.01 par value;
200,000,000 shares authorized;
34,740,392 and 34,929,874 issued
and outstanding . . . . . . . . . 347,404 349,299
Additional paid-in capital . . . . . . 124,829,417 127,004,905
Retained earnings . . . . . . . . . . 10,769,679 19,731,485
Accumulated foreign currency
translation adjustments . . . . . (31,912) (552,325)
Unrealized gain on securities, net of
taxes . . . . . . . . . . . . . . - 1,960,000
----------- -----------
Total shareholders' equity . . . . . 135,914,588 148,493,364
----------- -----------
$173,968,110 $188,315,764
=========== ===========
See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Six and Three Months Ended June 30, 1996 and June 29, 1997
(Unaudited)
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 29, June 30, June 29,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . $66,723,824 $95,134,724 $33,846,602 $48,492,158
---------- ---------- ---------- ----------
Operating expenses
Direct salaries and related costs 39,837,206 55,052,489 20,351,301 27,855,487
General and administrative . . . . 21,166,667 27,803,156 10,564,077 14,046,901
---------- ---------- ---------- ----------
Total operating expenses . . . . 61,003,873 82,855,645 30,915,378 41,902,388
---------- ---------- ---------- ----------
Income from operations . . . . . . 5,719,951 12,279,079 2,931,224 6,589,770
Other income (expense)
Interest . . . . . . . . . . . . . (387,610) 1,474,637 (27,363) 826,486
Other . . . . . . . . . . . . . . 101,725 74,090 94,544 50,345
---------- ---------- ---------- ----------
Total other income (expense) . . (285,885) 1,548,727 67,181 876,831
---------- ---------- ---------- ----------
Income before income taxes . . . . 5,434,066 13,827,806 2,998,405 7,466,601
Provision for income taxes . . . . 2,020,027 4,866,000 1,138,691 2,573,000
---------- ---------- ---------- ----------
Net income before dividends . . . . 3,414,039 8,961,806 1,859,714 4,893,601
Preferred stock dividends . . . . . 47,342 - 23,671 -
---------- ---------- ---------- ----------
Net income applicable to common
shareholders . . . . . . . . . $3,366,697 $8,961,806 $1,836,043 $4,893,601
---------- ---------- ---------- ----------
Pro forma income data:
Income before income taxes . . . . $5,434,066 $2,998,405
Pro forma provision for income taxes
relating to S corporation . . 67,000 24,000
Actual provision for income taxes . 2,020,027 1,138,691
----------
Total provision and pro forma
provision for income taxes . . 2,087,027 1,162,691
---------- ----------
Pro forma net income applicable to
common shareholders . . . . . 3,347,039 1,835,714
Preferred stock dividends . . . . . 47,342 23,671
---------- ----------
Pro forma net income applicable to
common shareholders . . . . . $3,299,697 $1,812,043
=========== ===========
Pro forma net income per share
(actual for 1997) . . . . . . $0.11 $0.25 $0.06 $0.14
===== ===== ===== =====
Pro forma weighted average common
and common equivalent shares
outstanding . . . . . . . . . 29,359,472 35,898,086 31,508,304 35,979,530
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1996 and June 29, 1997
(Unaudited)
1996 1997
Cash flows from operating activities
Net income . . . . . . . . . . . . . . . . . . $3,366,697 $8,961,806
Depreciation and amortization . . . . . . . . 2,687,947 4,440,223
Deferred income taxes . . . . . . . . . . . . - (49,000)
Gain on disposal of property and equipment . . (6,590) (88,972)
Changes in assets and liabilities
Receivables, including unbilled . . . . . . . (5,513,372) (4,889,045)
Prepaid expenses and other current assets . . (179,950) (1,234,516)
Deferred charges and other assets . . . . . . (439,712) (9,320)
Accounts payable . . . . . . . . . . . . . . (2,537,863) 2,776,369
Accrued employee compensation and benefits . 341,447 270,805
Other accrued expenses and current
liabilities . . . . . . . . . . . . . . . 2,191,421 (789,956)
--------- ---------
Net cash provided by (used for) operating
activities . . . . . . . . . . . . . . . . (89,975) 9,388,394
--------- ---------
Cash flows from investing activities
Capital expenditures . . . . . . . . . . . . . (6,993,604) (6,084,958)
Investment in marketable securities . . . . . - (8,000,000)
Acquisition of business . . . . . . . . . . . - (1,800,000)
Proceeds from sale of property and equipment . 146,590 161,727
---------- -----------
Net cash used for investing activities . . . (6,847,014) (15,723,231)
---------- -----------
Cash flows from financing activities
Paydowns under revolving line of credit (83,486,569) (72,441,000)
agreements . . . . . . . . . . . . . . . .
Borrowings under revolving line of credit 84,063,833 72,441,000
agreements . . . . . . . . . . . . . . . .
Proceeds from issuance of stock . . . . . . . 39,338,944 2,127,710
Proceeds from grants . . . . . . . . . . . . . 1,957,376 201,613
Payment of long-term debt . . . . . . . . . . (9,379,061) (1,916,295)
Dividends paid . . . . . . . . . . . . . . . . (306,364) -
---------- ----------
Net cash provided by financing activities . 32,188,159 413,028
---------- ----------
Adjustment for foreign currency translation . . (85,559) (518,583)
---------- ----------
Net increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . 25,165,611 (6,440,392)
Cash and cash equivalents - beginning . . . . . 2,631,136 89,651,848
---------- ----------
Cash and cash equivalents - ending . . . . . . $27,796,747 $83,211,456
========== ==========
See accompanying notes to consolidated financial statements
<PAGE>
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 1996 and June 29, 1997
(Unaudited)
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six month
period ended June 29, 1997 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997. For further
information, refer to the consolidated financial statements and notes
thereto as of and for the year ended December 31, 1996 included in the
Company's Form 10-K dated December 31, 1996 as filed with the United
States Securities and Exchange Commission on March 31, 1997.
Sykes Enterprises, Incorporated and consolidated subsidiaries (the
"Company") provide comprehensive information technology outsourcing
services including information technology support services, consisting of
technical product support, help desk services and diagnostic software
tools, and information technology development services and solutions,
consisting of software design, development, integration and implementation
and documentation, foreign language translation and localization services.
The Company's services are provided to a wide variety of industries.
Unless otherwise noted, all information in this Form 10-Q has been
adjusted to retroactively reflect the three-for-two stock split in the
form of a 50% stock dividend to shareholders of record on May 19, 1997,
which was reflected on the Nasdaq National Market on May 29, 1997.
Note 1 - Commitments and Contingencies
The Company from time to time is involved in legal actions arising in the
ordinary course of business. With respect to these matters, management
believes that it has adequate legal defenses and/or provided adequate
accruals for related costs such that the ultimate outcome will not have a
material adverse effect on the Company's future financial position.
Note 2 - Earnings Per Share
Primary earnings per share are based on the weighted average number of
common shares and common share equivalents outstanding during the periods
and assumes, (i) that the redeemable preferred stock was converted at the
beginning of the 1996 period, or date of issuance, if later, and (ii) that
earnings were increased for preferred dividends that would not have been
incurred had conversion taken place. Common share equivalents include,
when applicable, dilutive stock options using the treasury stock method.
Fully diluted earnings per share assumes, in addition to the above, the
additional dilutive effect of stock options.
The numbers of shares used in the earnings per share computation are as
follows:
Six Months Ended Three Months Ended
June 30, June 29, June 30, June 29,
1996 1997 1996 1997
Primary
Weighted
average common
outstanding....... 27,807,687 34,791,338 29,787,981 34,842,285
Conversion of
preferred stock... 1,025,988 - 236,559 -
Stock options...... 454,302 1,091,450 1,340,774 1,106,649
---------- ---------- ---------- ----------
Total primary....... 29,287,977 35,882,788 31,365,314 35,948,934
Fully Diluted
Additional
dilution of
stock options...... 71,495 15,298 142,990 30,596
---------- ---------- ---------- ----------
Total fully
diluted............ 29,359,472 35,898,086 31,508,304 35,979,530
========== ========== ========== ==========
The Company is required to adopt Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share" for periods ending after
December 15, 1997. The Company has not calculated the impact, if any, SFAS
No. 128 will have on the earnings per share calculation contained in the
Company's consolidated financial statements.
Note 3 - Acquisitions and Mergers
On March 31, 1997, the Company acquired Info Systems of North Carolina,
Inc. ("Info Systems") in exchange for approximately 1.1 million shares of
the Company's common stock as adjusted for the three-for-two stock split.
The Company accounted for the acquisition utilizing the pooling-of-
interests method of accounting. Info Systems is engaged in the design,
development, licensing and support of information management solutions to
the retail, manufacturing and distribution industries. Info Systems
employs 160 employees and had 1996 revenues of approximately $25.2 million
and an after-tax loss of approximately $2.0 million.
On June 16, 1997 the Company acquired all of the stock of Telcare
Gesellschaft fur Telekommunikations-Mehrwertdieste mbH ("Telcare") of
Wilhelmshaven, Germany, in exchange for 750,000 shares of the Company's
common stock. The Company accounted for the acquisition utilizing the
pooling-of-interests method of accounting. Telcare operates an
information technology call center and provides technical product support
and service to numerous industries in Germany, and expands the Company's
presence in Europe. Telcare employs 160 employees and had 1996 revenues
of approximately $6.4 million and after-tax earnings of approximately
$282,000.
The above transactions have been accounted for as pooling-of-interests
and, accordingly, the consolidated financial statements for the periods
presented have been restated to include the accounts of Info Systems and
Telcare.
Separate results of operations for the periods prior to the acquisition of
Telcare and Info Systems are outlined below:
Three Months Ended
March 31, March 30,
1996 1997
Net sales
Sykes Enterprises,
Incorporated . . . . . . . . . 25,955,230 38,245,569
Telcare . . . . . . . . . . . . 1,649,397 1,404,904
Info Systems . . . . . . . . . . 5,272,375 7,022,451
--------- ----------
Combined . . . . . . . . . . . 32,877,002 46,672,924
--------- ----------
Net income
Sykes Enterprises, Incorporated 1,598,693 4,021,527
Telcare . . . . . . . . . . . . 253,279 42,589
Info Systems . . . . . . . . . . (254,466) 46,186
--------- ----------
Combined . . . . . . . . . . . 1,597,506 4,110,302
--------- ----------
Other changes in shareholders'
equity
Sykes Enterprises, Incorporated 156,989 296,639
Telcare . . . . . . . . . . . . - -
Info Systems . . . . . . . . . . 110,892 -
--------- ----------
Combined . . . . . . . . . . . . 267,881 296,639
========= ==========
Note 4 - Purchase of Marketable Securities
On May 8, 1997, the Company purchased approximately 1.066 million shares
of SystemSoft Corp. common stock in conjunction with a strategic
technology exchange agreement between the parties. In accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", the investment is
classified as available-for-sale securities and is carried at market value
of $11.2 million as of June 29, 1997. The cost basis in the investment is
$8 million, and the unrealized gain of $3.2 million, net of deferred
income taxes of approximately $1.2 million, is reported as a separate
component of shareholders' equity.
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following should be read in conjunction with the Sykes Enterprises,
Incorporated Consolidated Financial Statements, including the notes
thereto. The following discussion and analysis contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934 that involve risks
and uncertainties. Future events and the Company's actual results could
differ materially from the results reflected in these forward-looking
statements as a result of certain of the factors set forth below and
elsewhere herein.
Financial Condition
Management considers liquidity to be the Company's ability to generate
adequate cash to meet its short and long-term business needs. The
principal internal source of such cash is the Company's operations while
the primary external source is the issuance of equity securities and
credit borrowings.
During the six month period ended June 29, 1997, the Company generated
approximately $9.4 million in cash, net, from operations, and
approximately $2.1 million from the exercise of stock options which
primarily funded the purchase of approximately $6.1 million of capital
equipment, $8 million associated with the technology exchange agreement
further detailed below, and $3.7 million used for the purchase price and
debt repayment associated with acquisitions completed during this time
period. The capital expenditures, which were comprised primarily of
computer and telephone equipment and furniture, were purchased pursuant to
the continued growth within the technical support business and the
associated increase in call volume capacity within the United States and
Europe. Subsequent to the end of the second quarter, the Company
completed construction of its eighth domestic call center (twelfth total)
which will become operational during the third quarter of 1997. Pursuant
to contractual terms, the Company will receive a package of incentives
associated with this center consistent with those previously obtained. As
a continued result of the increased demand for the Company's services, it
is estimated that 1997 capital expenditures will approximate $19 million.
During the second quarter of 1997, the Company enhanced its sophisticated
information technology capabilities and further increased its European
technical support service capabilities through the acquisitions of Info
Systems of N. C., Inc. ("Info Systems") and Telcare Gesellschaft fur
Telekommunikations-Mehrwertdieste mbh ("Telcare"), ("the acquisitions").
The purchase price for the acquisitions was approximately 1.9 million
shares of common stock (adjusted to reflect the retroactive effect of the
three-for-two stock split in the form of a 50% stock dividend to
shareholders of record on May 19, 1997), and was accounted for using the
pooling-of-interests method of accounting. Info Systems is engaged in the
design, development, licensing and support of information management
solutions for the retail, manufacturing and distribution sectors, and
provides further expansion of the industries and customer base in which
the Company markets and leverages its technical support services.
Telcare provides value-added technical support and service capacity
through its call center located in Germany highlighting the Company's
continued focus on key strategic objectives, specifically to pursue
additional expansion within Europe. The Company anticipates the
integration of the acquisitions will require additional financial
resources, including the potential for additional capital expenditures for
the 1997 year. However, the Company does not believe the resources
required will be significant to the overall operations of the consolidated
organization.
In addition, during the period ended June 29, 1997, the Company entered
into a technology exchange agreement with SystemSoft Corp. ("SystemSoft")
to integrate SystemSoft's connectivity, software diagnostic, communication
and remote control technologies to its hardware diagnostic and
sophisticated telephone support capabilities, which will bring the
Company's remote access solution to the marketplace sooner than originally
anticipated. Pursuant to this agreement, the Company also purchased in
excess of one million newly issued shares of SystemSoft common stock for
$8 million. It is the Company's intention to hold the stock for
investment and the agreement contains certain restrictions, including a
holding period existing to September 5, 1997 before a request can be made
for registration under the Securities Act, associated with its sale.
The Company believes that its cash position, combined with cash flows from
current and future operations and available funds under its credit
facilities, will be adequate to meet its capital requirements for the
foreseeable future.
Results of Operations
For the six and three months ended June 29, 1997, the Company posted
consolidated revenues of $95.1 and $48.5 million, respectively, an
increase of $28.4 and $14.6 million, respectively, from the comparable
periods of the previous year. The 1997 results represent increases of 43%
from the 1996 comparable period information. This growth in revenues for
each period was primarily the result of a $19.8 and $9.2 million,
respectively, or 54% and 49%, respectively, increase in revenues within
technical support services, and occurred primarily from the continued
investment in call centers and capital equipment the Company has made and
the resultant increase in call volumes from clients. During calendar
1996, the Company opened three new call centers that were fully
operational throughout the 1997 periods. In addition, during the six and
three months of 1997, the Company recognized an additional revenue
increase of $8.4 and $5.2 million, respectively, or 29% and 33%,
respectively, from information services and solutions when compared to the
same periods of 1996. This growth was primarily the result of increased
hours at an increased average bill rate, and increased revenues provided
through its retail services.
Direct salaries and related costs increased $15.2 and $7.5 million,
respectively, to $55.1 and $27.9 million, respectively, for the six and
three month periods in 1997 from the comparable periods in 1996. This
represents an increase of 38% and 37%, respectively, however, as a
percentage of revenues, direct salaries and related costs decreased to 58%
and 57%, respectively, for the six and three month periods in 1997 from
60% during the comparable periods in 1996. The increase in the amount of
direct salaries and related costs was attributable to the addition of
personnel to support revenue growth. The decrease as a percentage of
revenues resulted from economies of scale associated with spreading costs
over a larger revenue base.
General and administrative expenses increased $6.6 million and $3.5
million, or 31% and 33%, respectively, to $27.8 and $14.0 million,
respectively, for the six and three month periods in 1997 from the
comparable periods in 1996. However, as a percentage of revenues, general
and administrative expenses decreased to 29% for the 1997 periods from 32%
and 31%, respectively, for the six and three month comparable periods in
1996. The increase in the amount of general and administrative expenses
was primarily attributable to the addition of management, sales and
administrative personnel to support the Company's growth, and the increase
in depreciation expense associated with facility and capital equipment
expenditures incurred primarily in connection with the technical support
call centers.
Interest and other income increased to $1.5 and $0.9 million,
respectively, during the six and three month periods in 1997, from
interest and other expense of $0.3 million for the six month comparable
1996 period and interest and other income of $0.1 million for the three
month comparable 1996 period. As a percentage of revenues, interest and
other income was 2% for the 1997 periods from interest and other expense
or income of less than 1% during the 1996 periods. The increase was
attributable to growth in the Company's cash position as a result of
public offerings completed during 1996 and cash flows from operations
during 1997. During 1996, the Company repaid all amounts outstanding
under bank borrowing arrangements and subsequently has invested the
remaining net proceeds of the offerings in short term investment grade
securities and money market instruments.
The provision for income taxes increased $2.8 and $1.4 million,
respectively, to $4.9 and $2.6 million, respectively, for the six and
three month periods in 1997 from the comparable periods in 1996. As a
percentage of income before income taxes, the provision for income taxes
decreased to 35% during the 1997 periods when contrasted to 38% and 39%,
respectively, for the comparable 1996 periods. This reduction in the
Company's effective tax rate is due to the recognition of tax-exempt
interest income earned, the tax benefit realized from operating loss
carryforwards from a foreign subsidiary and nondeductible expenses as a
lower percentage of a larger income before income tax base in 1997 as
compared to 1996.
<PAGE>
Part II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
The following document is filed as an exhibit to this Report:
2.7 Common Stock Purchase Agreement dated May 6, 1997 by and
between Sykes Enterprises, Incorporated and SystemSoft
Corporation
2.8 Joint Integration, Marketing and Distribution Agreement
dated April 30, 1997 by and between Sykes Enterprises,
Incorporated and SystemSoft Corporation
2.9 Merger Agreement dated as of January 10, 1997 among Sykes
Enterprises, Incorporated, InfoSystems of North Carolina,
Inc. and ISNC Acquisition Co. (incorporated by reference
to Appendix A to Sykes Enterprises, Incorporated's
Registration Statement on S-4 (Reg. No. 333-20465))
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
quarter ended June 29, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYKES ENTERPRISES, INCORPORATED
(Registrant)
Date: August 13, 1997 By: /s/Scott J. Bendert
Scott J. Bendert
Vice President-Finance
and Treasurer (Principal
Financial and Accounting
Officer)
<PAGE>
SYKES ENTERPRISES, INCORPORATED
FORM 10-Q
(For the Three Months Ended March 30, 1997)
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER NUMBER
2.7 Common Stock Purchase Agreement dated May 6, 1997 by
and between Sykes Enterprises, Incorporated and
SystemSoft Corporation . . . . . . . . . . . . . . .
2.8 Joint Integration, Marketing and Distribution Agreement
dated April 30, 1997 by and between Sykes Enterprises,
Incorporated and SystemSoft Corporation. . . . . . .
2.9 Merger Agreement dated as of January 10, 1997 among
Sykes Enterprises, Incorporated, InfoSystems of North
Carolina, Inc. and ISNC Acquisition Co. (incorporated
by reference to Appendix A to Sykes Enterprises,
Incorporated's Registration Statement on S-4 (Reg. No.
333-20465)). . . . . . . . . . . . . . . . . . . . .
27.1 Financial Data Schedule. . . . . . . . . . . . . . .
Exhibit 2.7
STOCK PURCHASE AGREEMENT
BETWEEN
SYSTEMSOFT CORPORATION
AND
SYKES ENTERPRISES, INCORPORATED
THIS COMMON STOCK PURCHASE AGREEMENT ("Agreement") is made and
entered as of this 6th day of May, 1997, by and between SYSTEMSOFT
CORPORATION, a Delaware corporation with its principal offices at 2 Vision
Drive, Natick, Massachusetts 01760-2059 (the "Company"), and SYKES
ENTERPRISES, INCORPORATED, a Florida corporation with its principal
offices at 100 North Tampa Street, Suite 3900, Tampa, Florida 33602 (the
"Purchaser").
ARTICLE I
AUTHORIZATION AND SUBSCRIPTION
1.1 Authorization. Subject to the terms of this Agreement, the
Company has authorized the sale and issuance to the Purchaser of One
Million Sixty-Six Thousand Six Hundred Sixty-Six (1,066,666) shares of
Common Stock, $.01 par value (the "Purchased Shares"), having the rights,
privileges and preferences as set forth in the Company's Certificate of
Incorporation.
1.2 Subscription. The Purchaser hereby subscribes for and purchases
from the Company and the Company hereby sells to the Purchaser the
Purchased Shares for a purchase price of $7.50 per share and an aggregate
price of Eight Million and 00/100 Dollars ($8,000,000) (the "Purchase
Price"). The foregoing subscription is hereby accepted by the Company.
1.3 Delivery.
(a) The parties acknowledge that (i) the Company shall deliver
to the Purchaser a certificate or certificates, registered in the
Purchaser's name, representing the Purchased Shares, and (ii) the
Purchaser shall deliver to the Company the Purchase Price by wire transfer
of immediately available funds.
(b) The following deliveries shall be made immediately upon the
execution herewith, for or on behalf of the Company in connection with the
transactions required pursuant to, or contemporaneously with, this
Agreement:
(i) all certificates representing the Purchased Shares;
(ii) any consents or approvals required pursuant to this
Agreement;
(iii) such other documents as any Purchaser may reasonably
request, in form and substance reasonably satisfactory
to the Purchaser's counsel.
(c) The Purchaser is, contemporaneously with the execution
hereof, delivering to the Company the Purchase Price as set forth in
Section 1.2 hereof.
(d) All transactions contemplated by this Agreement shall be
deemed to be simultaneous and the execution, delivery and closing of each
such transaction shall be a condition of the obligations of the parties to
execute, deliver and to close all other contemplated transactions.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce the Purchaser to enter into this Agreement, the Company
hereby represents and warrants to the Purchaser, as of the date hereof, as
follows:
2.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the
State of Delaware and is in good standing under such laws. The Company
has the requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted
and as proposed to be conducted. The Company is currently qualified to do
business as a foreign corporation in any jurisdiction in which such
qualification is required, except where the failure to be so qualified
will not have a material adverse effect on the Company's business or
financial condition or results of operations (a "Material Adverse
Effect").
2.2 Corporate Power. The Company has all requisite legal and
corporate power and authority (i) to execute and deliver this Agreement
and any other agreement required or desirable to effectuate the
transactions described herein; (ii) to sell and issue the Purchased
Shares; and (iii) to carry out and perform its obligations under the terms
of this Agreement and any other agreement required to effectuate the
transactions described herein.
2.3 Authorized Capital Stock. As of May 1, 1997, the authorized
capital stock of the Company consists of (i) 1,000,000 shares of Preferred
Stock, par value $.01 per share, none of which were issued and outstanding
or held in the treasury of the Company and (ii) 90,000,000 shares of
Common Stock, of which 25,087,668 shares were issued and outstanding and
159,246 shares were held in the treasury of the Company. As of May 1,
1997, there were reserved for issuance under the Company's various stock
plans and outstanding warrants an aggregate of up to 6,221,986 shares of
Common Stock. Except as provided in the immediately preceding sentence of
this Section 2.3, as of May 1, 1997, there were no outstanding options,
warrants, calls, rights, commitments or agreements to which the Company is
a party or by which the Company is bound obligating the Company to (x)
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of the company or (y) grant, execute or
enter into any such option, warrant, call, right, commitment or agreement.
When issued and delivered to the Purchaser by the Company against payment
of the consideration set forth herein, the Purchased Shares will be
validly issued, fully paid and non-assessable.
2.4 Authorization and Enforceability. All corporate action on the
part of the Company, its directors and shareholders necessary for: (i) the
authorization, execution, delivery and performance of this Agreement by
the Company; (ii) the authorization, sale, issuance and delivery of the
Purchased Shares; and (iii) the performance of all of the Company's
obligations under this Agreement has been duly and validly taken. This
Agreement, when executed and delivered by the Company, shall constitute a
valid and binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except
as enforceability may be subject to the general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law) and except as the indemnification agreements of the
Company in this Agreement may be legally unenforceable. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby shall not violate any order, writ, injunction, decree,
statute, regulation or rule applicable to the Company.
2.5 SEC Reporting; No Material Adverse Change. The Company has
filed in a timely manner all documents that the Company was required to
file under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") during the 12 months preceding the date of this Agreement. The
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1997, complied in all material respects with the requirements of the
Exchange Act as of its filing date, and the information contained therein
as of the date thereof did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Since January
31, 1997, there has not been any material adverse change in the assets,
liabilities, financial condition or operations of the Company from that
reflected in the financial statements included in the Company's Annual
Report on Form 10-K, except changes in the ordinary course of business.
2.6 Proprietary Technology. The Company owns, currently licenses,
or otherwise has the legal right to use, all computer software that is
material to the conduct of the business of the Company, and all such
computer software is being used by the Company in compliance, in all
material respects, with any applicable licenses. To the best knowledge
and belief of the Company, there are no claims pending or threatened
against the Company that assert that any of the patents, technology, know-
how or trade-secrets owned by or licensed by the Company infringe the
intellectual property rights of any third parties.
2.7 Warranty Claims. The Company has adequately reserved in
accordance with generally accepted accounting principals against any and
all liabilities under any warranty or extended warranty relating to the
products manufactured, sold, installed or serviced by it.
2.8 Licenses, Permits, Compliance, Etc. The Company has all
material licenses, franchises, permits and government authorizations
(collectively, the "Permits") reasonably necessary for the conduct of the
Company's business as presently conducted, none of which will be
terminated or otherwise materially adversely affected by the consummation
of the transactions contemplated by this Agreement. The Company currently
complies and has complied in all material respects with all laws,
regulations and orders applicable to it and to the Company's business.
2.9 Consents and Approvals. The Company has obtained, in form and
substance acceptable to the Purchaser, the waiver, consent and approval
(i) of all persons or entities whose waiver, consent or approval is
required for the Company to consummate its obligations with respect to the
transactions contemplated by this Agreement; (ii) of any person or entity
that is required by any material agreement, lease, instrument,
arrangement, judgment, decree, order or license to which the Company is a
party or subject as of the date hereof, and that would prohibit or
materially adversely affect such transactions, or require the waiver,
consent or approval of any person to such transactions; or (iii) under any
material agreement, lease, instrument, arrangement, judgment, decree,
order or license under which, without such waiver, consent or approval,
such transactions would constitute an occurrence of a breach or a default,
result in the acceleration of any material obligation thereunder, or give
rise to a right of any party thereto to terminate its obligations
thereunder.
2.10 Compliance with Other Instruments, None Burdensome, etc. The
Company is not in violation of any term of its Certificate of
Incorporation or Bylaws, or, in any material respect, of any term or
provision of any material mortgage, indebtedness, indenture, contract,
agreement, instrument, judgment or decree, and is not in violation of any
order, statute, rule or regulation applicable to the Company where such
violation would have a Material Adverse Effect on the Company. The
execution, delivery and performance of and compliance with this Agreement
has not resulted and will not result in any violation of, or conflict
with, or constitute a default under, the Company's Certificate or Bylaws
or, in any material respect, any of its material agreements or result in
the creation of any mortgage, pledge, lien, encumbrance or charge upon any
of the properties or assets of the Company.
2.11 Litigation, etc. There are no actions, claims, suits,
proceedings or investigations pending against the Company or its
properties before any court, governmental agency, arbitration board or
other tribunal, nor, to the best of the Company's knowledge, is there any
threat thereof which would have a Material Adverse Effect on the Company.
2.12 Offering. Assuming the truth of the Purchasers' representations
in Section 3.2 hereof, the offer, sale and issuance of the Purchased
Shares to be issued in conformity with the terms of this Agreement
constitutes a transaction exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the "Securities
Act"), and from the qualification requirements of any applicable state
securities or "blue sky" laws.
2.13 Previous Sales of Securities. Since August 1, 1994, all offers
and sales of securities by the Company have been made in compliance with
the requirements of the Securities Act and applicable state securities
laws.
2.14 Investment Company. The Company is not an "investment company",
or an "affiliated person" of an "investment company", or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, and the Company is not an
"investment advisor" or an "affiliated person" of an "investment adviser"
as such terms are defined in the Investment Advisers Act of 1940, as
amended.
2.15 Brokers or Finders. The Company has not incurred, and will not
incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or
the Transaction Documents.
2.16 Use of Proceeds. The proceeds of the Purchase Price will be
used for working capital and general corporate purposes.
2.17 Knowledge and Belief. In the case of any representation or
warranty set forth in this Section 2 that is stated to be "to the best
knowledge and belief", "to the knowledge and belief", "to the knowledge"
or "to the actual knowledge" of the Company, the Company acknowledges
that, unless otherwise expressly provided herein with respect to the
applicable representation or warranty, the Company shall have made all
reasonable inquiries necessary to determine the truth or falsity of the
representation or warranty so qualified.
2.18 Listing. As soon as practicable after the date hereof, the
Company shall comply with all requirements of the National Association of
Securities Dealers, Inc. with respect to the issuance of the Purchased
Shares and the listing thereof on the NASDAQ National Market.
2.19 Observation Rights. The Company covenants and agrees that as
long as the Purchaser is the record or beneficial holder of at least
250,000 shares of the Purchased Shares (as adjusted for any stock split,
subdivision, reclassification or similar event), it shall permit the
Purchaser to have one representative, who shall be John Sykes unless
otherwise agreed to by the Company (the "Representative"), to attend each
meeting of the Board of Directors of the Company and to participate in all
discussions during each such meeting. The Purchaser shall bear the
expenses of the Representative traveling to and attending such meetings.
The Purchaser agrees that such Representative shall be bound by the
confidentiality, non-disclosure and limitations on use provision contained
in that certain Mutual Non-Disclosure Agreement dated April 30, 1997, by
and between the Company and the Purchaser with respect to any information
received at such meetings and that the Purchaser and the Representative
shall be bound by the Company's insider trading policy to the same extent
as if such Representative were a director of the Company. Specifically,
the Purchaser acknowledges that the Company is currently in a black-out
period which will not expire until forty-eight (48) hours after the
release of financial results for the Company's quarter ended April 30,
1997. The Company reserves the right to exclude the Representative from
any meeting or portion thereof if a determination has been made by legal
counsel to the Company that attendance by such Representative could
adversely affect the attorney-client privilege between the Company and its
counsel. The Company shall send to the Representative the notice of the
time and place of such meetings in the same manner and at the same time as
it shall send such notice to its directors.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company with
respect to its purchase of the Purchased Shares, as follows:
3.1 No Conflict. The execution, delivery and performance of and
compliance with this Agreement by the Purchaser (i) will not result in any
violation of, or conflict with, or constitute a default, in any material
respects, of any of the Purchaser's material agreements or instruments to
which it is a party, and (ii) will not violate any order, writ,
injunction, decree, statute, regulation or rule applicable to the
Purchaser.
3.2 Representations, Warranties and Covenants of the Purchaser. The
Purchaser represents and warrants to, and covenants with, the Company
that: (i) the Purchaser is an "accredited investor" as defined in
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act") and the Purchaser is also knowledgeable, sophisticated and
experienced in making, and is qualified to make decisions with respect to
investments in shares presenting an investment decision like that involved
in the purchase of the Stock, including investments in securities issued
by the Company and investments in comparable companies, and has requested,
received, reviewed and considered all information it deemed relevant in
making an informed decision to purchase the Purchase Shares; (ii) the
Purchaser is acquiring the Purchased Shares in the ordinary course of its
business and for its own account for investments only and with no present
intention of distributing any of such shares of Purchase Shares or any
arrangement or understanding with any other persons regarding the
distribution of such shares of Purchased Shares; (iii) the Purchaser will
not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or
take a pledge of) any of the shares of Purchased Shares except in
compliance with the Securities Act, applicable state securities laws and
the respective rules and regulations promulgated thereunder; (iv) the
Purchaser has, in connection with its decision to purchase the Purchased
Shares set forth herein, relied only upon the representations and
warranties of the Company contained herein and in Reports filed pursuant
to the Securities Exchange Act of 1934, as well as the terms of that
certain Joint Integration, Marketing and Distribution Agreement dated May
5, 1997 by and between the Company and the Purchaser; and (v) the Investor
understands that the certificate representing the Purchased Shares will
bear a legend to ensure compliance with the Securities Act and the
Purchaser agrees to comply with the requirements of such legend.
3.3 Authority; Binding Effect. The Purchaser further represents and
warrants to, and covenants with, the Company that (i) the Purchaser has
full right, power, authority and capacity to enter into this Agreement and
to consummate the transactions contemplated hereby and has taken all
necessary action to authorize the execution, delivery and performance of
this Agreement, and (ii) upon the execution and delivery of this
Agreement, this Agreement shall constitute a valid and binding obligation
of the Purchaser enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and
except as the indemnification agreement of the Purchaser herein may be
legally unenforceable.
ARTICLE IV
AFFIRMATIVE AND NEGATIVE COVENANTS OF THE COMPANY
So long as the Purchaser shall own any shares of Common Stock, the
Company shall comply with the following covenants and agreements:
4.1 Compliance. The Company shall comply with all applicable
statutes and governmental regulations, including, but not limited to,
applicable federal and state securities laws, and shall pay and discharge,
before any penalty attaches thereto for non-payment thereof, all taxes,
assessments and governmental charges of any kind levied upon or assessed
against the Company; provided, however, that the Company shall not be
required to pay any such taxes, assessments or other governmental charges
so long as it shall be in good faith contesting the validity thereof, and
shall have reserved for the payment of the taxes, assessments or other
governmental in a manner satisfactory to the Purchaser.
4.2 Cooperation. The Company shall cooperate with the Purchaser,
take such actions, and execute such documents and provide such information
as the Purchaser may from time to time reasonably request to effect the
transactions contemplated by, and the purposes of, this Agreement and any
agreements executed pursuant to or in connection with this Agreement.
4.3 Rule 144 Reporting. With a view to making available to the
Purchaser the benefits of certain rules and regulations of the Securities
and Exchange Commission which may permit the sale of the Purchased Shares
to the public without registration, the Company agrees to use its best
efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) Use its best efforts to file with the Securities and
Exchange Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) So long as the Purchaser owns any Restricted Securities (as
defined in Section 5.1 hereof), cooperate with the Purchaser in providing
information necessary to effect a sale, including furnishing to the
Purchaser forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company filed with the Securities and Exchange
Commission.
ARTICLE V
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH
SECURITIES ACT; REGISTRATION RIGHTS
5.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
(b) "Holder" shall mean any person who holds Registrable
Securities and any person holding Registrable Securities to whom the
rights under this Section 5 have been transferred in accordance with
Section 5.13 hereof.
(c) "Initiating Holder" shall mean the Purchaser or any persons
who in the aggregate are Holders of at least forty percent (40%) of the
Registrable Securities.
(d) "Register," "registered" and "registration" refer to a
registration effected by preparing and filing with the Commission a
registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration
statement.
(e) "Registrable Securities" means (i) the Purchased Shares and
(ii) any other securities issued or issuable in connection with the
Purchased Shares, upon any stock split, stock dividend, recapitalization,
or similar event, provided, however, that any such shares of stock that as
of the date of the determination (i) have previously been sold,
transferred or assigned by the Investor or (ii) may be sold either without
limitation pursuant to Rule 144(k) under the Securities Act or within the
volume limitations of Rule 144 under the Securities Act, shall not be
deemed Registrable Shares or entitled to benefits of the registration
rights granted hereunder.
(f) "Registration Expenses" shall mean all expenses, except
Selling Expenses as defined below, incurred by the Company in complying
with Sections 5.5 and 5.6 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company) and the
reasonable fees and disbursements of one counsel for all Holders.
(g) "Restricted Securities" shall mean the securities of the
Company required to bear the legend set forth in Section 5.3 hereof.
(h) "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth in the definition of
Registration Expenses, all reasonable fees and disbursements of counsel
for any Holder.
5.2 Restrictions on Transferability. Any shares of Common Stock
purchased under the terms hereof shall not be sold, assigned, pledged or
in any way transferred except (i) upon satisfaction of the conditions
specified in this Section 5, which conditions are intended to ensure
compliance with the provisions of the Securities Act or (ii) otherwise in
accordance with the Securities Act. The Purchaser will cause any proposed
purchaser, assignee, pledgee or transferee of the Purchased Shares held by
the Purchaser to agree to take and hold such securities subject to the
provisions and conditions of this Section 5.
5.3 Restrictive Legend. Each certificate representing (i) the
Purchased Shares and (ii) any other securities issued in respect of the
shares of Purchased Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 5.4 below) be stamped or
otherwise imprinted with a legend substantially in the form described in
Section 6 hereof.
5.4 Reserved.
5.5 Requested Registration.
(a) Request for Registration. In the event the Company shall
receive within two (2) years from the date of this Agreement from
Initiating Holders a written request that the Company effect a
registration under the Securities Act with respect to at least twenty
percent (20%) (or any lesser percentage if the anticipated aggregate
offering price would exceed Eight Million Dollars ($8,000,000) of the
Registrable Securities), the Company shall:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all
Holders; and
(ii) as soon as practicable, but not later than sixty (60)
days from receipt of request, file such registration
and use its best efforts to have the same declared
effective (including, without limitation, appropriate
qualification under applicable blue sky or other state
securities laws and appropriate compliance with
applicable regulations issued under the Securities Act
and any other governmental requirements or
regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are
specified in such request, together with all or such
portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a
written request received by the Company within twenty
(20) days after receipt of such written notice from
the Company; and
provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance
pursuant to this Section 5.5:
(A) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of
process in effecting such registration, qualification or
compliance unless the Company is already subject to service
in such jurisdiction and except as may be required by the
Securities Act; or
(B) Until a date which is One Hundred and Twenty (120) days
following the date hereof; or
(C) After the Company has effected one (1) such registration
pursuant to this Section 5.5(a), and such registration has
been declared or ordered effective.
(b) If at the time of any request to register Registrable
Shares pursuant to this Section 5.5 (i) the Company is engaged or has
fixed plans to engage within sixty (60) days of the time of the request in
a registered public offering of its securities, (ii) the Company is in
possession of material information that it deems advisable not to disclose
in a registration statement, (iii) the Company shall have delivered to the
Purchaser a certificate of an officer of the Company to the effect that,
on the advice of counsel, the Company believes such delay is necessary to
comply with Regulation M under the Exchange Act, (iv) the Company is
prohibited (pursuant to the terms of an underwriting agreement in
connection with a public offering of its securities or otherwise) from
filing such registration statement or (v) the Company is engaged in any
other activity which, in the good faith determination of the Company's
Board of Directors, would be adversely affected by the requested
registration to the material detriment of the Company, then the Company
may at its option direct that such request be delayed for a reasonable
period not in excess of sixty (60) days from the time such event,
situation or activity no longer exists.
(c) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by its request by means of
an underwriting, they shall so advise the Company as a part of their
request made pursuant to Section 5.5(a) hereof and the Company shall
include such information in the written notice to Holders referred to in
Section 5.5(a) hereof. In such event, any Holder desiring to exercise its
right to registration pursuant to this Section 5.5 shall include within
its registration request a statement as to whether such Holder desires to
(i) participate in such underwriting and include such Holder's Registrable
Securities in such underwriting or (ii) register such Holder's Registrable
Securities without participating in such underwriting (in which event the
Holder shall inform the Company, as part of such request, of the method by
which the Holder intends to distribute such Registrable Securities). All
Holders proposing to distribute their Registrable Securities through such
underwriting shall (together with the Company and any other shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter(s)
selected for such underwriting by a majority in interest of the Initiating
Holders but subject to the Company's reasonable approval. If any Holder
disapproves of the terms of the underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company, the managing
underwriter and the Initiating Holder, in which event the Registrable
Securities so withdrawn from the underwriting may nonetheless, at the
option of the Holder, be included in the registration. All Holders
proposing to distribute their Registrable Securities other than through
such underwriting shall, if the managing underwriter determines that
marketing factors so require and so advises the Company in writing, agree
to refrain from distributing such Registrable Securities for One Hundred
Twenty (120) days after the effective date of the applicable registration
statement, on the condition that all other shareholders proposing to
distribute shares of their Common Stock other than through such
underwriting who own or have rights to acquire a number of shares of
Common Stock equal to five percent (5%) or more of the outstanding shares
of Common Stock also agree to so refrain.
Notwithstanding any other provision of this Section 5.5, if the
managing underwriter determines that marketing factors require a
limitation on the number of shares to be underwritten and so advises the
Company in writing, and if, as a result of such limitation, the number of
Registrable Securities included in the underwriting must be limited, the
Holders' right to participate in the underwriting shall be limited in
proportion to the number of Registrable Securities required to be
registered by each Holder. Any Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation may
nonetheless, at the option of the Holder, be included in the registration.
All Holders of Registrable Securities included in the registration but not
included in such underwriting pursuant to this Section 6.5(b) shall notify
the Company of the intended method of distribution of such shares and
shall, if the managing underwriter determines that marketing factors so
require and so advises the Company in writing, agree to refrain from
distributing such shares for One Hundred Twenty (120) days after the
effective date of the applicable registration statement, on the condition
that all other shareholders proposing to distribute shares of their Common
Stock other than through such underwriting who own or have rights to
acquire a number of shares of Common Stock equal to five percent (5%) or
more of the outstanding shares of Common Stock also agree to so refrain.
To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest one hundred (100) shares.
Notwithstanding any other provision of this Section 5.5, if the
managing underwriter determines that marketing factors require that the
registration be limited to shares included in the underwriting and so
advises the Company in writing, the Holders will have no right to register
their Registrable Securities without participating in the underwriting.
In such event, (i) any Registrable Securities excluded from the
underwriting by reason of Section 5.5(b) hereof shall also be excluded
from the registration, and (ii) any Registrable Securities withdrawn from
the underwriting as provided in Section 5.5(b) hereof shall also be
withdrawn from the registration.
(d) Inclusion of Company and Other Shares. The Company may
include shares of Common Stock for its own account in any registration and
underwriting pursuant to Sections 5.5 and 5.6; provided, however, that the
Company may include shares for its own account in an underwritten offering
only if the managing underwriter so agrees and if the amount of
Registrable Securities which would otherwise have been included in the
underwriting will not thereby be diminished. The Company may include
shares of Common Stock held by shareholders other than Holders in a
registration statement pursuant to Section 5.5 or 5.6 if, and to the
extent that, the amount of Registrable Securities otherwise includable in
such registration statement would not thereby be diminished.
5.6 Company Registration.
(a) Notice of Registration. If at any time or from time to
time the Company shall determine to register any of its securities, either
for its own account or for the account of a security holder or holders,
other than (1) a registration relating solely to employee benefit plans on
Form S-8 (or any successor form to Form S-8); (2) a registration relating
solely to a business combination transaction on Form S-4 (or any successor
form to Form S-4); or (3) any other registration which is not appropriate
for the registration for the Registrable Securities for sale to the
public, then the Company will:
(i) promptly give to each Holder thirty (30) days written
notice thereof (which notice shall include, to the
extent available, a list of jurisdictions in which the
Company intends to attempt to qualify such securities
under applicable blue sky or other state securities
laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other
compliance), and in any underwriting involved therein,
all the Registrable Securities specified in written
request or requests, made within twenty (20) days
after receipt of such written notice from the Company,
by any Holder.
(b) Underwriting. If the registration of which the Company
gives notice is for a public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 5.6(a)(i) hereof. In such event, any Holder desiring
to exercise its right to registration pursuant to this Section 5.6 shall
include within its registration request a statement as to whether such
Holder desires to (i) participate in such underwriting or (ii) register
their Registrable Securities without participating in such underwriting
(in which event the Holder shall inform the Company, as part of such
request, of the method by which the Holder intends to distribute such
shares). All Holders proposing to distribute their Registrable Securities
through such underwriting shall (together with the Company and the other
shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the managing
underwriter, in which event Registrable Securities so withdrawn from the
underwriting may, nonetheless, at the option of the Holder, be included in
the registration. All Holders proposing to distribute their Registrable
Securities other than through such underwriting shall, if the managing
underwriter determines that marketing factors so require and so advises
the Company in writing, agree to refrain from distributing such
Registrable Shares for One Hundred Twenty (120) days after the effective
date of the applicable registration statement, on the condition that all
other shareholders proposing to distribute shares of their Common Stock
other than through such underwriting who own or have rights to acquire a
number of shares of Common Stock equal to five percent (5%) or more of the
outstanding shares of Common Stock also agree to so refrain.
Notwithstanding any other provision of this Section 5.6, if the
managing underwriter determines that marketing factors require a
limitation on the number of outstanding shares to be underwritten and so
advises the Company in writing, the number of Registrable Securities
included in the underwriting may be limited, in which case the Holders'
rights to participate in the underwriting and the rights of all other
shareholders of the Company desiring to participate in the underwriting
(other than, if the registration was demanded by another shareholder
pursuant to such other shareholder's right to a demand registration) shall
be limited in proportion to the number of Registrable Securities requested
to be registered by each such Holder. To facilitate the allocation of
shares in accordance with the above provisions, the Company may round the
number of shares allocated to any Holder or other shareholder to the
nearest One Hundred (100) shares. Any Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation
may nonetheless, at the option of the Holder, be included in the
registration. All Holders of Registrable Securities included in the
registration but excluded from such underwriting pursuant to this Section
5.6(b) shall inform the Company of the intended method of distribution of
such Registrable Securities and shall, if the managing underwriter
determines that marketing factors so require and so advises the Company in
writing, agree to refrain from distributing such Registrable Securities
for One Hundred Twenty (120) days after the effective date of the
applicable registration statement, on the condition that all other
shareholders proposing to distribute shares of their Common Stock other
than through such underwriting who own or have rights to acquire a number
of shares of Common Stock equal to five percent (5%) or more of the
outstanding shares of Common Stock also agree to so refrain.
Notwithstanding any other provision of this Section 5.6, if the
managing underwriter determines that marketing factors require that the
registration be limited to shares included in the underwriting and so
advises the Company in writing, the Holders will have no right to register
Registrable Securities without participating in the underwriting. In such
event, (i) any Registrable Securities excluded from the underwriting by
reason of Section 5.6(b) hereof shall also be excluded from the
registration, and (ii) any Registrable Securities withdrawn from the
underwriting as provided in Section 5.6(b) hereof shall also be withdrawn
from the registration.
The Company may include shares of Common Stock held by shareholders
other than Holders in a registration statement pursuant to Section 5.5 or
5.6 if, and to the extent that, the amount of Registrable Securities
otherwise includable in such registration statement would not thereby be
diminished.
(c) No Requirement to File and Right to Terminate Registration.
The Company shall not be required by this Section 5.6 to file a
registration statement at any time or to prosecute a filing to
effectiveness. The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 5.6 prior to the
effectiveness of such registration whether or not any Holder has elected
to include securities in such registration.
5.7 Reserved.
5.8 Limitations on Subsequent Registration Rights. The Company
shall not enter into any agreement granting any holder or prospective
holder of any securities of the Company registration rights with respect
to such securities unless such rights are fully subordinate to the rights
of the Purchaser contained in this Section 5, or are approved by the
Purchaser, which approval shall not be unreasonably withheld or delayed.
5.9 Expenses of Registration. All Registration Expenses incurred in
connection with registration(s) pursuant to Sections 5.5 and 5.6 shall be
borne by the Company. Unless otherwise stated, all Selling Expenses
relating to securities registered on behalf of the Holders shall be borne
by the Holders of such securities pro rata on the basis of the number of
shares so registered.
5.10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Section 5, the Company will keep each Holder advised in writing as to the
initiation of each registration, qualification and compliance and as to
the completion thereof. At its expense the Company shall:
(a) Keep such registration, qualification or compliance
pursuant to this Section 5 effective until May 6, 1999 or until the Holder
or Holders have completed the distribution described in the registration
statement relating thereto, whichever occurs first; provided, however,
that, notwithstanding anything to the contrary in this Agreement, if at
any time and from time to time after the first date of effectiveness of
the registration of Registrable Shares pursuant to Section 5.5 the Company
notifies the Purchaser in writing of the existence of a Potential Material
Event, the Purchaser and any other persons who hold shares of stock
registered pursuant to this Section 5.5 shall not offer or sell any of
their shares of stock from the time of the giving of such notice to the
earliest to occur of (a) the public disclosure by the Company of the
Potential Material Event, (b) receipt of written notice from the Company
that such Potential Material Event no longer exists, or (c) the date
twenty (20) days after the date of the notice of such Potential Material
Event. The Company may exercise its right to notify the Investor of the
existence of a Potential Material Event only twice. The term, "Potential
Material Event" shall mean any of the following: (i) the possession by the
Company of material information not ripe for disclosure in a registration
statement, which shall be evidenced by determinations in good faith by the
Board of Directors of the Company that disclosure of such information
would be detrimental to the business and affairs of the Company and that
the registration statement would be materially misleading absent the
inclusion of such information; or (ii) any material engagement or activity
by the Company which would, in the good faith, determination of the Board
of Directors of the Company, be adversely affected by disclosure in a
registration by the Board of Directors of the Company that the
registration statement would be materially misleading absent the inclusion
of such information; and
(b) Furnish such number of prospectuses and such other
documents incident thereto as the Holder from time to time may reasonably
request.
5.11 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall promptly furnish the Company
such information regarding such Holder or Holders, the Registrable
Securities held by them and the distribution proposed by such Holder or
Holders as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to
in this Section 5.
5.12 Indemnification.
(a) The Company will indemnify and hold harmless each Holder,
each of its officers, directors and partners, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, with
respect to which registration, qualification or compliance has been
effected pursuant to this Section 5, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15
of the Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading, or any violation by the Company
of the Securities Act or any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse
each such Holder, each of its officers and directors, and each person
controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that
the Company will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based
on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use
therein. Such indemnification and reimbursement of expenses shall remain
in full force and effect regardless of any investigation made by or on
behalf of such Holder, its directors or officers, such underwriter, its
directors or officers, or such controlling person, and shall survive the
transfer of any or all Registrable Securities by such Holder.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify and hold harmless
the Company, each of its directors and officers, each underwriter, if any,
of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of its
officers and directors and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or action in respect thereof) arising out of or
based on (i) any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers, persons,
underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance
upon and in conformity with written information furnished to the Company
by an instrument duly executed by such Holder and stated to be
specifically for use therein; or (ii) any violation by such Holder of the
Securities Act or any rule or regulation promulgated under the Securities
Act applicable to Holder in connection with any such registration,
qualification or compliance. Notwithstanding the foregoing, (i) the
liability of each Holder under this subsection (b) shall be limited to an
amount equal to the public offering price of the shares sold by such
Holder, unless such liability arises out of or is based on willful conduct
by such Holder; and (ii) the indemnity agreement contained in this
subsection (b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of such Holder. Such indemnification and
reimbursement of expenses shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company, its officers or
directors, any such other Holder, its officers or directors, or any such
controlling person, and shall survive the transfer of any or all
Registrable Securities by any such other Holder.
(c) Each party entitled to indemnification under this Section
5.12 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party's expense, and
provided further that the failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 5 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such
action and provided further, that the Indemnifying Party shall not assume
the defense for matters as to which there is a conflict of interest or
separate and different defenses. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation.
5.13 Transfer of Registration Rights. The rights granted to the
Holders under this Section 5 may be assigned at any time without the prior
written consent of the Company to a transferee or assignee in connection
with any transfer or assignment of Registrable Securities by the Holders;
provided that such transferee or assignee is an affiliate of the Holders,
without any requirement as to minimum holding by such transferee or
assignee. In addition to the foregoing, such rights may be assigned to
any other transferee or assignee with the written consent of the Company,
which consent shall not be unreasonably delayed or withheld, in connection
with any transfer or assignment of Registrable Securities by the Holders;
provided that such transfer may otherwise be effected in accordance with
applicable securities laws.
ARTICLE VI
LEGEND
Each certificate representing the Purchased Shares shall be endorsed
as soon as reasonably possible with a legend in substantially the
following form (in addition to any legends required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE
COMPANY RECEIVES AN OPINION OF COUNSEL STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.
The above legend may be removed, and the Company shall issue a share
or shares of Common Stock, without a securities legend to the holder of
such share or shares of capital stock of the Company (i) if such stock is
registered under the Securities Act and a prospectus meeting the
requirements of Section 10 of the Securities Act is available for use by
such holder, or (ii) if such holder provides the Company with an opinion
of counsel experienced in Securities Act matters for such holder, to the
effect that the proposed sale, transfer or assignment of such stock may be
made without registration under the Securities Act or any state securities
law.
ARTICLE VII
SURVIVAL
Any implication in this Agreement to the contrary notwithstanding,
all written statements contained in any document, certificate, memorandum
or other instrument delivered by or on behalf of the Company, pursuant
hereto, or in connection with the transactions contemplated hereby, shall
be deemed representations and warranties hereunder by the Company. The
representations, warranties, covenants and agreements made herein by the
parties hereto shall survive any investigation made by the Purchaser and
the consummation of the transactions contemplated hereby for a period of
two years from the date hereof.
ARTICLE VIII
MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed in all respects
by the internal laws of the State of Delaware (excluding its conflict of
law provisions).
8.2 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon
the successors, assigns, heirs, executors and administrators of the
parties hereto, provided, however, that the rights of the Purchaser to
purchase the Purchased Shares shall not be assignable without the written
consent of the Company.
8.3 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto at the closing, Agreement constitute
the full and entire understanding and agreement between the parties with
regard to the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties, representations
or covenants except as specifically set forth herein or therein. Except
as expressly provided herein, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
8.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by hand delivery, by
facsimile or telex or by overnight delivery service of a reputable
delivery company to the respective parties addressed as provided below or
shall be deemed to have been duly given four (4) business days after being
mailed by registered or certified mail (return receipt requested) to the
respective parties addressed as follows:
If to the Purchaser:
Sykes Enterprises, Incorporated
100 North Tampa Street, Suite 3900
Tampa, Florida 33602
Attention: David Garner, Senior Vice President
John Crites, Vice President, General Counsel
Fax Number: (813) 273-0148
With a copy to:
Foley & Lardner
100 North Tampa, Suite 2700
Tampa, Florida 33602-3391
Attention: Martin A. Traber, Esq.
Fax Number: (813) 221-4210
If to the Company, at such address as set forth opposite or below its
name as it appears on the signature page hereof:
SystemSoft Corporation
2 Vision Drive
Natick, Massachusetts 01760-2059
Attention: David P. Sommers, Chief Financial Officer
Fax Number: (508) 652-2211
With a copy to:
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, Massachusetts 02110
Attention: Mitchell S. Bloom, Esq.
Fax No.: (617) 248-7100
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
8.5 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any
holder of any Purchased Shares, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy of such
holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or a waiver of or acquiescence in any
similar breach or default thereafter occurring; nor shall any wavier of
any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent
or approval of any kind or character on the part of any holder of
Purchased Shares of any breach or default under this Agreement, or any
waiver on the part of any holder of Purchased Shares of any provisions or
conditions of this agreement, must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies,
either under this Agreement or by law or otherwise afforded to any holder
of Purchased Shares, shall be cumulative and not alternative.
8.6 Expenses. The Company and the Purchaser shall each bear its own
expenses in connection with negotiation, due diligence and entering into
of this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the
parties, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute
one instrument.
8.8 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and
effect without said provisions; provided that no such severability shall
be effective if it materially changes the economic benefit of this
Agreement to any party.
8.9 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in
construing or interpreting this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
SYSTEMSOFT CORPORATION
By:
Robert F. Angelo, President,
Chief Executive Officer
<PAGE>
PURCHASER SIGNATURE PAGE
The undersigned Purchaser hereby executes the Stock Purchase
Agreement with SystemSoft Corporation (the "Company") and hereby
authorizes this signature page to be attached to a counterpart of such
document executed by a duly authorized officer of the Company.
No. of Shares to be
Purchased: 1,066,667 SYKES ENTERPRISES, INCORPORATED
By:___________________
John L. Crites, Jr., Vice
President and General Counsel
Name in which Shares of Stock
are to be registered: SYKES ENTERPRISES, INCORPORATED
Address of registered holder: 100 North Tampa Street, Suite 3900
Tampa, Florida 33602
Social Security or Tax ID No. of 56-1383460
registered holder:
_________________________
John L. Crites, Jr., Vice President
Contact name and and General Counsel
telephone number (813) 274-1000
regarding settlement
and registration:
Exhibit 2.8
JOINT INTEGRATION, MARKETING AND
DISTRIBUTION AGREEMENT
This Joint INTEGRATION Marketing and Distribution Agreement (this
"Agreement") is entered into to be effective as of April 30, 1997 (the
"Effective Date") by and between Sykes Enterprises, Incorporated ("Sykes")
and SystemSoft Corporation ("SystemSoft").
Recitals
Sykes is a diversified information technology company which provides
a variety of computer-related outsourcing services to hardware and
software suppliers and is the owner and developer of "Diagsoft Hardware
Diagnostics" and "Sentinel" computer software products (the "Sykes
Software"). SystemSoft is the owner, developer and publisher of
SystemWizard, a family of computer software products (the "SystemSoft
Software"). SystemSoft wishes to integrate the Sykes Software and
SystemWizard Client (as such term is defined below) into a new integrated
software product to be called "SystemWizard Premiere Software" and to
market and distribute SystemWizard Premiere Software under the terms of
this Agreement. Sykes wishes to integrate the VoiceView technology
portion of SystemWizard Client into ETSC (as such term is defined below)
and to integrate SystemWizard Technician (as such term is defined below)
into ETSC (as such term is defined below) under the terms of this
Agreement. The SystemWizard Premiere Software to be created hereunder
will not include "Diagsoft Hardware Diagnostics" or "Sentinel" on a stand-
alone basis, and will not include the System Wizard family of computer
software products on a stand-alone basis.
Definitions
"Diagsoft Hardware Diagnostics" comprises Sykes QA and QA Plus
hardware diagnostic and software testing programs.
"ETSC" comprises ETSC Client and ETSC Server, Sentinel and QA Plus
hardware diagnostic and software testing programs.
"Remote Control" is that portion of the SystemSoft Software which
allows one personal computer to control another personal computer.
"Sentinel" is a Sykes software program that tracks and records
changes to software programs and files.
"Service Offering" is a computer-related outsourcing service which
uses Sykes Computer Support Programs.
"Sykes Computer Support Programs" comprises those products and
services which Sykes offers to manufacturers, publishers, corporate
entities and other end-users
in support of their use of their technology products.
"Sykes Software" comprises Diagsoft Hardware Diagnostics and Sentinel
and modifications and upgrades thereto.
"SystemWizard Builder" is a software application that provides the
means and facilitates the process of adding diagnostic knowledge
information to SystemWizard Client and SystemWizard Server, and includes a
script editor, a pre-defined database of basic scripts that perform
multiple functions and a full set of database management tools.
"SystemWizard Client" is an integrated end-user application which
resides on the personal computer containing an expert system engine that
automatically diagnoses and resolves problems, and includes a core
knowledge base of generic system, software, and hardware solutions,
including the client portion of VoiceView technology.
"SystemSoft Software" comprises SystemWizard Builder, SystemBuilder
Client, SystemBuilder Server and SystemBuilder Technician and
modifications and upgrades thereto.
"SystemWizard Premiere Software" is the combined product of
SystemSoft Software and Sykes Software.
"SystemWizard Server" is a complete set of FTP software programs for
dial-up or internet connection including the Distribution Packager
software utility for creating knowledge bases for the SystemWizard Client
expert system, the File Maintenance Utility for taking SystemWizard
Builder knowledge bases and distributing them to the SystemWizard Servers.
"SystemWizard Technician" is a software application which resides on
the Technical Support Representative's machine and utilizes the VoiceView
protocol which integrates voice and data over a single telephone line.
SystemWizard Technician can connect to the client machine in Rapid
Alternating Data Mode (RAD), Modem Data Mode (MDM) and Digital
Simultaneous Voice and Data Mode (DSVD) (machine dependent). Once
connected, the agent can diagnose system problems and repair software by
means of Remote Control.
"Total Service Solution" is the service/product combination comprised
of Service Offering and SystemWizard Premiere Software.
"VoiceView" is that portion of SystemSoft which integrates voice and
data over a single telephone line and which Sykes will use as its voice
and data communication technology in its diagnostic and ETSC products.
FOR GOOD AND VALUABLE CONSIDERATION, and in consideration of the
foregoing recitals and the mutual covenants set forth below, Sykes and
SystemSoft, intending to be legally bound, hereby agree as follows:
1. Integration.
1.1 Integration. On the terms and conditions set forth in this
Agreement, SystemSoft agrees to perform development services to integrate
Sykes Software with SystemSoft Software to create "SystemWizard Premiere
Software." On the terms and conditions set forth in this Agreement, Sykes
agrees to perform development services to integrate SystemWizard Premiere
Software with Sykes Computer Support Programs to create "Service
Offering." Each party agrees that its respective contributions to the
products and services to be developed hereunder will conform both to each
party's respective specifications therefore and the specifications for the
products and services to be developed hereunder (the"Specifications") and
to the delivery schedule (the "Schedule") both as set forth on Exhibit A
hereto which shall be completed and attached as mutually agreed upon by
the parties hereto within thirty (30) days of the Effective Date, which
Exhibit A may be modified from time to time in accordance with Section 1.2
hereof. Each party will be responsible for obtaining all of the
technology, labor, materials, tooling and facilities necessary to provide
its respective development services hereunder.
1.2 Changes to Specifications, Modifications and Upgrades. Sykes
and SystemSoft agree to cooperate with each other in connection with
reasonable requests for modifications to the Specifications, modifications
and upgrades to SystemWizard Premiere Software and the Service Offering.
If either party requests a modification of the Specifications, or a
modification or upgrade to the SystemWizard Premiere Software or the
Service Offering that requires substantially more time and/or expense from
the developing party than that required of the requesting party, then the
developing party will notify the requesting party in writing of the
additional time and/or expense that such change requires and the
requesting party shall be permitted to withdraw such request. Any
modification of the Specifications, any modification or any upgrade to
System Wizard Premiere Software or Service Offering must be consented to
by both parties, which consent shall not be unreasonably withheld.
2. Grant of License.
A. Sykes hereby grants to SystemSoft a worldwide non-exclusive
license in all intellectual property for Sykes Software, including a
worldwide non-exclusive copyright license to use, execute, reproduce,
display, perform, transfer, transmit, and distribute, use on-line, and
make derivative works of Sykes Software solely for purposes of
integrating, marketing, distributing and licensing Sykes Software as part
of SystemWizard Premiere Software, and the right to authorize a third
party to do any of the foregoing solely for the benefit of SystemSoft, all
in accordance with the terms of this Agreement. Sykes Software may not be
sublicensed, sold or otherwise distributed separately. SystemSoft agrees
not to reverse assemble, reverse compile or otherwise translate Sykes
Software, by itself, or as a part of SystemWizard Premiere Software.
SystemSoft agrees not to use, execute or perform the Sykes Software either
alone or with other software, to provide services.
B. SystemSoft hereby grants to Sykes a worldwide non-exclusive
license in all intellectual property for SystemSoft Software, including a
worldwide non-exclusive copyright license to use, execute, reproduce,
display, perform, transfer, distribute, transmit, use on-line, and make
derivative works of SystemSoft Software for the purposes of marketing,
distributing and licensing SystemWizard Premiere Software and integrating
it into Total Service Solution and for purposes of providing services,
including telephone and on-line services using the Total Service Solution,
and the right to authorize a third party to do any of the foregoing solely
for the benefit of Sykes, all in accordance with the terms of this
Agreement. SystemSoft agrees to grant to Sykes a nonexclusive license
with respect to SystemWizard Client, SystemWizard Builder, SystemWizard
Server and SystemWizard Technician on an as-needed basis with the same
license rights as granted for SystemSoft Software, and on the most
favorable royalty on which SystemSoft has licensed such products, to be
used as a part of Total Service Solution. Neither SystemSoft Software,
SystemWizard Technician nor SystemWizard Premiere Software may be
sublicensed, sold or otherwise distributed separately.
C. SystemSoft hereby grants to Sykes a worldwide non-exclusive
license in all intellectual property for the human readable source code
for SystemWizard Technician and VoiceView (and Remote Control, to the
extent SystemSoft is legally authorized to do so) and other documentation
associated with such source code (the "Source Code"), including a
copyright license to use, execute, reproduce, display, perform and prepare
derivative works of the Source Code in exchange for the payment of
$2,000,000 upon the execution of this Agreement. Such license shall not
be interpreted as granting Sykes any ownership interest in the Source Code
or any portion thereof. In the event SystemSoft is unable to deliver
Source Code for Remote Control, SystemSoft shall, at its sole cost and
expense, modify and create derivative works from such Source Code in
accordance with Sykes' specifications and deliver object code
functionality that enables Sykes to achieve its Remote Control objectives
as specified in Exhibit A hereto. Any resulting intellectual property and
derivative works shall be licensed on a world-wide basis, to Sykes for all
purposes including the license to use, execute, reproduce, display,
perform, transfer, distribute, transmit, use on-line, and make derivative
works.
D. Neither Sykes nor any employee or agent of Sykes shall disclose
or cause, suffer or permit to be disclosed the code, documentation or
other information contained in the Source Code to any third party without
the prior written consent of SystemSoft. Sykes shall preserve the code,
documentation or other information contained in the Source Code with the
same degree of care and security with which Sykes preserves its own
confidential information, but in no event less than a reasonable degree of
care and security, and any physical copy or form of the code,
documentation or other information contained in the Source Code shall be
maintained in a secure, locked facility. Sykes shall not sell, assign,
license, distribute, sublicense or otherwise transfer the Source Code.
E. Sykes shall not, directly or indirectly, use or copy the Source
Code to obtain, derive or create the structure, methods or techniques
contained in the SystemSoft Software to create a product which performs
the functions of the SystemSoft Software or which otherwise competes with
the SystemSoft Software.
F. SystemSoft shall not, directly or indirectly, use or copy Sykes
Software to obtain, derive or create the structure, methods or techniques
contained in the Sykes Software to create a product which performs the
functions of Sykes Software or which otherwise competes with Sykes
Software.
G. Sykes agrees that the Source Code is licensed to Sykes for the
sole purpose of integration into ETSC and Service Offering and shall not,
directly or indirectly, use (or permit or direct anyone else to use) the
Source Code, or any information contained or derived from the Source Code,
for the purpose of designing, developing, creating, modifying or upgrading
any non-Sykes Software product of any type or description (other than
integrating Source Code into Service Offering).
H. SystemSoft agrees that Sykes Software is licensed to SystemSoft
for the sole purpose of being integrated into SystemWizard Premiere
Software and shall not, directly or indirectly, use (or permit or direct
anyone else to use) Sykes Software, or any information contained or
derived from Sykes Software, for the purpose of designing, developing,
creating, modifying or upgrading any software product of any type or
description (other than integrating Sykes Software and SystemWizard
Client into SystemWizard Premiere Software.)
3. Exclusive Marketing.
The SystemWizard Premiere Software shall be marketed as "SystemWizard
Premiere Software" and SystemSoft and Sykes shall be the exclusive
distributors of SystemWizard Premiere Software.
Sykes and SystemSoft will each issue press releases to announce the
strategic relationship arising under this Agreement; provided, that each
party will have the right to approve the form and content of the other
party's press release prior to distribution.
Each party agrees to promote each other's software products and
technology services. Each party agrees to support actively the other
party's sales and marketing efforts.
SystemSoft agrees, during the term hereof, to promote actively Sykes
computer-related outsourcing services. SystemSoft further agrees that,
during the term hereof, it will not promote or recommend any computer-
related outsourcing service or create its own outsourcing service which
competes with Sykes. SystemSoft shall add messaging in the SystemWizard
Premiere Software that distinctively highlights and encourages customers
to use Sykes as the service provider for out-of-warranty product and
service support. This messaging shall include contact information such as
e-mail, phone numbers, and other access means. SystemSoft agrees that
such messaging shall be removed from SystemWizard Premiere Software only
upon the written request of an OEM.
Sykes agrees that, during the term hereof, it will not promote,
utilize or recommend any call avoidance software (other than knowledge
systems, artificial intelligence or bulletin boards) that competes
directly with SystemSoft Software. Sykes further agrees not to license
Sykes Software for distribution as part of any call avoidance software
that competes with SystemWizard.
4. Royalties.
4.1 Royalties.
A. SystemSoft will pay Sykes a royalty equal to 25% of the Net
Revenues attributable to SystemWizard Premiere Software.
B. Sykes will pay SystemSoft a royalty equal to 25% of the Net
Revenues attributable to any Sykes Software product utilizing SystemSoft
technology.
C. Sykes will pay SystemSoft a royalty in connection with the
product portion of Total Service Solution which shall be calculated as
follows:
(i) If Total Service Solution uses a SystemSoft Software
product, the royalty to be paid to SystemSoft shall be 75% of the Net
Revenues attributable to the product portion.
(ii) If Total Service Solution uses a Sykes Software product,
the royalty to be paid to SystemSoft shall be 25% of the Net Revenues
attributable to the product portion.
(iii) In the event that the parties can not agree on the
respective values of the technology or services included in the Total
Service Solution, the royalty to be paid to SystemSoft shall be based on
the most favorable prices charged by each party for such component
contributions during the previous calendar year.
The following example illustrates the operation of Section 4.1.C
hereof:
Total Service Solution (price) $50.00
Service component (100% Sykes) $45.00
Product component (allocated) $5.00
Allocation: Sykes SystemSoft
If Section 4.1.A applies: $1.25 $3.75
If Section 4.1.B applies: $3.75 $1.25
If Section 4.1.C applies: Most favorable pricing
"Net Revenues" means the actual gross receipts derived from all
sources whatsoever, less any sales, use, excise or other taxes (other than
taxes on income), allowances for returns, defects, replacements or other
rebillable items. If SystemWizard Premiere Software is distributed in a
single package with other software products that do not contain
SystemWizard Premiere Software for a single price (including, without
limitation, SystemSoft Software), the Net Revenue attributable to
SystemWizard Premiere Software will be determined by prorating the
receipts from the sale or license of the single package according to the
suggested price of the software, or if no suggested price is announced,
the values mutually established for SystemWizard Premiere Software and
such other products, whether or not such products are distributed
separately, provided that such values are reasonably related to the values
or cost of the separate products. Net Revenues will not include any
receipts from copies of SystemWizard Premiere Software supplied for
promotional purposes to the press, trade, sales representatives or
potential customers for SystemWizard Premiere Software. Amounts received
as deposits or advances will not be deemed to have been received until
shipment of SystemWizard Premiere Software to the party making the
deposits or advances have been made against such deposits or advances.
Partial payments of an invoice will be prorated over all products included
in the invoice. Amounts received in foreign currencies will be deemed
converted into U.S. Dollars.
4.2 Commission. Sykes agrees to pay to SystemSoft 3% of the first
year Net Revenues of each contract derived from any Sykes Service Offering
which SystemSoft actively assists Sykes in selling. Such fee will be paid
by Sykes upon the commencement of each such Sykes contract based on
estimated Net Revenues to be paid to Sykes during the first full year
thereof. Notwithstanding anything else in this Agreement to the contrary,
(i) commissions under this Section 4.2 shall accrue and be payable to
SystemSoft only after the first $70,000,000 of Net Revenue is received by
Sykes in connection with Service Offering, (ii) no commissions shall
accrue or be payable and no Net Revenue shall be attributable to contracts
under this Section 4.2 with entities with which Sykes has a pre-existing
contractual relationship or written proposal or which SystemSoft did not
actively assist Sykes in the sales function, as determined by Sykes in its
sole discretion, and (iii) at the end of the first full year of each
contract under this Section 4.2, Sykes and SystemSoft shall calculate the
commissions to be paid hereunder based on actual Net Revenues paid to
Sykes and shall make appropriate compensating payments. Under no
circumstances shall any commissions accrue or be payable to SystemSoft for
periods other than the first full year of each such contract hereunder.
4.3 Quarterly Payments: All royalty and commission payments owed by
one party to the other under this Agreement will be payable in U.S.
Dollars on a SystemSoft fiscal-quarterly basis within thirty (30) days
after the end of each such quarter based on Net Revenues received during
such quarter.
4.4 Reports of Royalty Payments. Each party shall deliver to the
other, along with its payment of royalties due for each SystemSoft fiscal
quarter, a written report showing, in reasonable detail, its calculation
of royalties payable with respect to such quarter. The parties shall
maintain such books and records as are necessary to properly calculate the
amounts of royalties to be paid pursuant to this Agreement. An
independent certified public accountant selected by one party and
reasonably acceptable to the other (the paying party) may, upon reasonable
notice and during normal business hours, but no more often than once each
quarter, inspect the records of the paying party on which such reports are
based. Any information revealed in such inspection shall be kept
confidential and not disclosed to anyone, except to the extent necessary
to identify to the parties or any fact finder in any action instituted to
enforce the terms of this Agreement. The paying party's determination of
the payments due under this Agreement will be deemed final and conclusive
unless, within twelve (12) months from the date of payment thereof, the
receiving party notifies the paying party in writing of any error in such
payments. The fees and expenses of the independent certified public
accountant shall be paid by the party initiating the inspection, unless
the inspection uncovers an underpayment for the SystemSoft fiscal quarter
in question in excess of 5% of the amount actually paid for such quarter,
in which case the fees and expenses of such accountant shall be borne by
the party liable for such underpayment.
4.5 Review Meetings. At a minimum, each SystemSoft fiscal quarter,
Sykes and SystemSoft will conduct a joint meeting during which revenue
forecasts, account status, implementation, share call reports and other
relevant information regarding SystemWizard Premiere Software shall be
discussed. At the request of either party, such meetings shall be held
more frequently. The location of the joint meeting shall be mutually
agreeable to the parties, or may be conducted by telephone.
4.6 Credit for Development Work. Each party shall be entitled (pro
rata in accordance with amounts actually expended) to a credit against 10%
of each royalty payment due under Section 4.1 for amounts actually
expended by such party for providing technology, labor, materials, tooling
and facilities necessary to provide development services pursuant to
Section 1.1 hereof. Any personnel charges shall be based on the burdened
cost of providing such services and shall be agreed to by both parties.
4.7 No Refunds. No amounts paid hereunder are refundable unless
specifically provided for in this Agreement.
5. Support. Each party will be responsible for providing all reasonably
requested support with respect to sales and marketing of System Wizard
Premiere Software and Service Offering hereunder.
6. Upgrades. The technology licenses granted under this Agreement
shall be deemed to include and cover all upgrades, modifications and
enhancements of such licensed technology which SystemSoft or Sykes
generally makes available to any of its customers. Royalties will be paid
on such upgrades, modifications and enhancements in accordance with the
provisions of Section 4.1.
7. Viruses. Sykes and SystemSoft shall execute a mutually agreed-
upon "virus scanning" software prior to releasing or delivering any
software to each other. The party receiving such software shall undertake
to verify the absence of viruses immediately upon receipt of such
software.
8. Ownership. Sykes is and shall be the owner of all right, title and
interest in and to Sykes Software and any and all upgrades and
improvements thereto and derivative works thereof made by either party and
all Sykes trademarks, trade names and copyrights. SystemSoft is and shall
be the owner of all right, title and interest in and to SystemSoft
Software and any and all upgrades and improvements thereto and derivative
works thereof made by either party and all SystemSoft trademarks, trade
names, and copyrights. Each party hereto shall retain sole and exclusive
ownership of its respective contribution to SystemWizard Premiere Software
and Total Service Solution. Except as expressly set forth herein, nothing
contained in this Agreement shall be deemed to transfer either party's
ownership, licensing or any other interest in their software to the other
party.
9. Warranties. Each party warrants to the other that (a) it has the
right to enter into and perform its obligations under this Agreement, (b)
its respective software is, and any modifications and upgrades will be,
the original creation of such party, and such party is the sole and
exclusive owner of such software and will be the sole and exclusive owner
of any modifications and upgrades to such software, or such party has the
rights to grant licenses for such software as granted to the other party
under this Agreement, (c) the grant to and exercise of any and all of the
rights set forth in this Agreement do not and will not violate the patent
rights, copyrights, trade secret rights, trademark rights or other
proprietary, contractual or other rights of any third party, (d) there are
no claims pending or threatened with respect to such software and there is
no reasonable basis for any such claims, and (e) it has the full power
and authority to enter into this Agreement and to grant the rights and
fulfill the obligations set forth herein.
EXCEPT AS PROVIDED ABOVE, SYKES AND SYSTEMSOFT HEREBY DISCLAIM ALL EXPRESS
AND IMPLIED WARRANTIES WITH RESPECT TO THE THEIR RESPECTIVE SOFTWARE,
INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. REGARDLESS OF THE TYPE OF CLAIM,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ECONOMIC CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS OR SAVINGS) OR INCIDENTAL DAMAGES, EVEN IF
INFORMED THAT THEY MAY OCCUR.
10. Indemnification. Each party (the "Indemnifying Party") will
indemnify and hold the other (the "Indemnified Party") harmless, and at
the Indemnified Party's request, defend it and its directors, officers,
employees, and agents from any claims, liabilities, damages, costs and
expenses (including reasonable attorney's fees and costs of suit) to the
extent they arise out of a breach of any of the warranties set forth in
Section 9 hereof. The Indemnified Party must give prompt written notice
of any indemnified claim, liability, damage, cost or expense to the
Indemnifying Party and the Indemnified Party must cooperate fully with the
Indemnifying Party in any defense. Neither party will be liable for any
settlement that it has not approved in writing. If a party is not
controlling the defense, it has the right to participate in the defense
and be represented by its own counsel. The amount of any indemnification
may be offset against any amounts owed to the other party hereunder. If a
claim, demand or suit alleging infringement with respect to SystemWizard
Premiere Software, Sykes Software, or SystemSoft Software is brought,
the party licensing that software shall have the option at its expense to
(a) modify the affected software to avoid the allegation of infringement,
(b) obtain a license to continue use of the affected software, or (c) if
neither (a) nor (b) are reasonably practical in the licensing party's
discretion, terminate this Agreement, subject to the indemnity granted
pursuant to this Section 10.
11. Term and Termination.
11.1 Term. The initial term of this Agreement shall commence on the
Effective Date hereof and shall terminate upon the expiration of three
(3) years. At the end of such initial term and each successive term
thereafter, this Agreement will automatically renew for successive one-
year terms, unless either party terminates this Agreement in writing at
least four (4) months prior to the next anniversary of the Effective Date.
11.2 Termination. Notwithstanding Section 11.1, this Agreement may
be terminated immediately by either party upon written notice to the other
party after the occurrence of any of the following events:
(a) if the other party is dissolved, liquidated, files for
bankruptcy, makes an assignment for the benefit of its creditors, or
otherwise ceases to do business in the ordinary course as contemplated by
this Agreement, or
(b) if the other party fails to perform or observe any material
term, covenant or provision contained in this Agreement to be performed or
observed by that party and such failure remains unremedied for the
applicable cure period (which shall be fifteen (15) calendar days, in the
case of a failure to make a required payment or deliver conforming
deliverables, or thirty (30) calendar days for other breaches) after
written notice to the breaching party, which notice shall provide in
reasonable detail, a description of the alleged breach and the requested
cure for such breach.
11.3 License After Termination. Following termination or expiration
of this Agreement, each party, provided there is no uncured breach of this
Agreement, may continue to enjoy the benefits of a license of the other
party's software pursuant to the terms of this Agreement, subject to the
payment of royalties as set forth in Section 4.1.
12. Confidentiality. Each party acknowledges that (a) Sykes Software
and SystemSoft Software are confidential and (b) in the course of the
relationship contemplated by this Agreement, it may receive information
that is confidential and proprietary to the other. Each party agrees not
to use such information except as permitted in this Agreement and not to
disclose such information to third parties. Such confidential and
proprietary information consists of the terms of this Agreement, the
parties' current and future business plans, information that is stamped or
marked as confidential by such party and any other information disclosed
by such party if, within thirty (30) days of disclosure, whether orally or
by way of written documents, such party identifies by written notice to
the other the confidential nature of such information. The foregoing
restrictions will not apply to information that (a) has been independently
developed other than pursuant to this Agreement, (b) has become publicly
known through no wrongful act of the party wishing to make use of such
information, (c) has been rightfully received from a third party
authorized to make such disclosure without restriction, (d) has been
approved for release in writing, or (e) is required to be disclosed by
law, provided that the party required to make such disclosure shall be
required to make reasonable efforts, consistent with applicable law, to
limit the scope and nature of such required disclosure and to provide the
other party with prompt notice of such required disclosure and to afford
that party the opportunity to seek an appropriate protective order.
Sykes and SystemSoft each hereby acknowledge that the software of the
other, including the object code version of the software, the source code
and the terms and conditions of this Agreement contain valuable
information belonging to the other party, that is confidential in nature.
Sykes and SystemSoft also acknowledge that unauthorized disclosure of this
information would cause irreparable damage. Sykes and SystemSoft agree
not to release, disclose or otherwise permit access to such confidential
information or to use the information in such a way that other parties can
gain unauthorized access to such confidential information.
12. Notices. Notices to either party shall be in writing and shall be
deemed delivered when served in person or three business days after being
deposited in the United Sates Mail, first class, certified mail, postage
prepaid, return receipt requested or one business day after being
dispatched by a nationally recognized one-day express courier service
addressed as follows:
To Sykes: Sykes Enterprises, Incorporated
100 North Tampa Street
Suite 3900
Tampa, FL 33602
Attention: General Counsel
Additional Copy to: David Garner, Senior Vice President
To SystemSoft: SystemSoft Corporation
2 Vision Drive
Natick, Massachusetts 01760
Attention: General Counsel
Additional Copy to: Robert F. Angelo, CEO, President and
Chairman
14. No Agency. This Agreement does not constitute and shall not be
construed as constituting any agency relationship, partnership or joint
venture between Sykes and SystemSoft. Neither party shall have any right
to obligate or bind the other party in any manner whatsoever, and nothing
herein contained shall give, or is intended to give, any rights of any
kind to third persons.
15. Non-Assignability. This Agreement shall bind and inure to the
benefit of both parties, and neither party shall have the right to assign
this Agreement, in whole or in part, without the prior written consent of
the other party, which consent shall not be unreasonably withheld, except
either party may assign this Agreement without the prior written consent
of the other party in the event of a merger or other reorganization of the
assigning party, or sale of all or substantially all of the assigning
party's assets, provided, however, that any such transaction involving a
direct competitor of the non-assigning party shall require the non-
assigning party's prior written consent, which may be withheld in its sole
discretion.
16. Governing Law. This Agreement will be governed and interpreted in
accordance with the substantive laws of the State of Florida, without
regard to conflict of law rules.
17. Venue and Jurisdiction.
(a) SystemSoft hereby irrevocably and unconditionally agrees
that any suit, action, or other legal proceeding arising out of or in
connection with this Agreement which is instituted by SystemSoft against
Sykes and/or any Sykes representative shall be brought in the courts of
record located in Hillsborough County, Florida or the courts of the United
States located in said county, consents to the jurisdiction of each such
court in any such suit, action, proceeding, and waives any objection to
the venue of any such suit, action or proceeding in any of such courts.
(b) Sykes hereby irrevocably and unconditionally agree that any
suit, action, or other legal proceeding arising out of or in connection
with this Agreement which is instituted by Sykes against SystemSoft and/or
any SystemSoft representative shall be brought in the courts of record
located in Suffolk County, Massachusetts or the courts of the United
States located in said county, consents to the jurisdiction of such court
in any such suit, action or proceeding, and waives any objection to the
venue of any such suit, action, or proceeding in any of such courts.
18. Export Regulations. Sykes and SystemSoft acknowledge that the Export
Administration Regulations of the Department of Commerce of the United
States may prohibit the export of specific software to certain countries
and agree to conform to these regulations. Each party shall indemnify the
other against any loss related to such party's failure to conform to such
regulations.
19. Entire Agreement; Amendment. This Agreement is the entire and only
agreement between the parties concerning the subject matter hereof and
supersedes all prior and contemporaneous oral or written proposals, term
sheets, negotiations, conversations and other communications between the
parties. Any waiver, variation or amendment of any term or condition of
this Agreement shall be effective only if signed by authorized
representatives of both parties.
20. Attorneys' Fees. In the event of any litigation under this
Agreement, the prevailing party shall be paid all costs and attorneys'
fees for all proceedings, trials and appeals.
21. Severability. If any one or more of the provisions of this Agreement
or any part or parts thereof shall be declared or adjudged to be illegal,
invalid, or unenforceable under any applicable law, such illegality,
invalidity, or unenforceability shall not void or otherwise affect the
remainder of this Agreement, and this Agreement shall be construed as if
such illegal, invalid or unenforceable provisions were omitted.
22. Waiver. The failure of either party hereto to enforce any provision
contained herein shall not be deemed as waiving a default, or as waiving
any of the rights or remedies of such party. Any action by either party
hereto to enforce this Agreement shall not be deemed as waiving any other
rights or remedies of such party.
23. Construction. Section headings are for the purpose of identification
only and are not considered a substantive part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first set forth above.
SYKES ENTERPRISES, INCORPORATED SYSTEMSOFT CORPORATION
By: /s/ John L. Crites, Jr. By: /s/ Paul J. Pedevillano
John L. Crites, Jr. Paul J. Pedevillano
Vice President and General Counsel Vice President
<PAGE>
Exhibit A
Specifications
and
Delivery Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY CONSOLIDATED FINANCIAL INFORMATION EXTRACTED FROM
FROM FORM 10-Q FOR THE SIX MONTH PERIOD ENDED JUNE 29, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-29-1997
<CASH> 1,990,482
<SECURITIES> 81,220,974
<RECEIVABLES> 45,438,566
<ALLOWANCES> 426,192
<INVENTORY> 0
<CURRENT-ASSETS> 132,551,944
<PP&E> 60,699,393
<DEPRECIATION> 18,464,986
<TOTAL-ASSETS> 188,315,764
<CURRENT-LIABILITIES> 22,212,852
<BONDS> 0
0
0
<COMMON> 349,299
<OTHER-SE> 148,144,065
<TOTAL-LIABILITY-AND-EQUITY> 188,315,764
<SALES> 0
<TOTAL-REVENUES> 95,134,724
<CGS> 0
<TOTAL-COSTS> 55,052,489
<OTHER-EXPENSES> 27,803,156
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,474,637)
<INCOME-PRETAX> 13,827,806
<INCOME-TAX> 4,866,000
<INCOME-CONTINUING> 8,961,806
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,961,806
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
