<PAGE>
As filed with the Securities and Exchange Commission on June 24, 1997
Registration No. 333-27587
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
----------------
ROBOCOM SYSTEMS INC.
(Name of Small Business Issuer in its Charter)
<TABLE>
<CAPTION>
New York 7373 11-2617048
<S> <C> <C>
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
511 Ocean Avenue
Massapequa, New York 11758
(516) 795-5100
(Address and Telephone Number of Principal Executive Offices)
511 Ocean Avenue
Massapequa, New York 11758
(Address of Principal Place of Business or Intended Principal Place of Business)
IRWIN BALABAN, PRESIDENT
Robocom Systems Inc.
511 Ocean Avenue
Massapequa, New York 11758
(516) 795-5100
(Name, Address and Telephone Number of Agent for Service)
----------------
Copies to:
ERIC M. HELLIGE, Esq. ROBERT J. MITTMAN, Esq.
JOHN J. CROWE, Esq. Tenzer Greenblatt LLP
Pryor, Cashman, Sherman & Flynn 405 Lexington Avenue
410 Park Avenue New York, New York 10017
New York, New York 10022-4441 Telephone: (212) 885-5000
Telephone: (212) 421-4100 Facsimile: (212) 885-5001
Facsimile: (212) 326-0806
----------------
Approximate Date of Proposed Sale to the Public: As soon as practicable
after this Registration Statement becomes effective.
<PAGE>
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
ROBOCOM SYSTEMS INC.
Cross Reference Sheet Showing Location in Prospectus
of Information Required by Form SB-2
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<CAPTION>
Form SB-2 Item Prospectus Caption
- -------------------------------------------------------------- ----------------------------------------------
<S> <C> <C>
PART I
1. Front of Registration Statement and Outside
Front Cover of Prospectus ........................... Cover Page; Outside Front Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus .......................................... Inside Front and Outside Back Cover Pages of
Prospectus
3. Summary Information and Risk Factors ............... Prospectus Summary; Risk Factors
4. Use of Proceeds .................................... Use of Proceeds
5. Determination of Offering Price ..................... Risk Factors; Underwriting
6. Dilution ............................................. Dilution
7. Selling Security Holders ........................... Not Applicable
8. Plan of Distribution ................................. Underwriting
9. Legal Proceedings .................................... Business -- Legal Proceedings
10. Directors, Executive Officers, Promoters and
Control Persons .................................... Management
11. Security Ownership of Certain Beneficial Owners
and Management ....................................... Principal Shareholders
12. Description of Securities ........................... Description of Securities
13. Interest of Named Experts and Counsel ............... Legal Matters; Experts
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities ...... Not Applicable
15. Organization Within Last Five Years .................. Business
16. Description of Business .............................. Business
17. Management's Discussion and Analysis or Plan
of Operation ....................................... Management's Discussion and Analysis of
Financial Condition and Results of Operations
18. Description of Property .............................. Business -- Facilities
19. Certain Relationships and Related Transactions ...... Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters ................................. Not Applicable
21. Executive Compensation .............................. Management -- Executive Compensation
22. Financial Statements ................................. Financial Statements
23. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure ............... Not Applicable
PART II
24. Indemnification of Directors and Officers ............ Indemnification of Directors and Officers
25. Other Expenses of Issuance and Distribution ......... Other Expenses of Issuance and Distribution
26. Recent Sales of Unregistered Securities ............ Recent Sales of Unregistered Securities
27. Exhibits ............................................. Exhibits
28. Undertakings ....................................... Undertakings
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PRELIMINARY PROSPECTUS DATED JUNE 24, 1997
SUBJECT TO COMPLETION
1,500,000 Shares
[LOGO] ROBOCOM SYSTEMS INC.
Common Stock
Prior to this offering, there has been no public market for the Common
Stock and there can be no assurance that any such market will develop. It is
anticipated that the Common Stock will be quoted on the Nasdaq National Market
under the symbol "RIMS." It is currently estimated that the initial public
offering price of the Common Stock will be between $6.00 and $7.00 per share.
For a discussion of the factors considered in determining the initial public
offering price, see "Underwriting."
---------------------
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD NOT BE PURCHASED BY INVESTORS WHO
CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" COMMENCING
ON PAGE 8 AND "DILUTION" ON PAGE 16.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
================================================================================
Price Underwriting Proceeds
to Discounts and to
Public Commissions(1) Company(2)
- --------------------------------------------------------------------------------
Per Share ...... $ $ $
- --------------------------------------------------------------------------------
Total(3) ...... $ $ $
================================================================================
(1) Does not include additional compensation to be received by BlueStone Capital
Partners, L.P. ("BlueStone"), Coleman and Company Securities, Inc. and Oscar
Gruss & Son Incorporated, as representatives of the several Underwriters
(the "Representatives"), in the form of (i) an accountable expense allowance
of up to $180,000 payable to BlueStone and (ii) warrants to purchase up to
150,000 shares of Common Stock (the "Representatives' Warrants"). The
Company has also agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $500,000 (not
including BlueStone's accountable expense allowance).
(3) The Company has granted to the Representatives an option, exercisable within
45 days from the date of this Prospectus, to purchase up to 225,000
additional shares of Common Stock on the same terms set forth above, solely
for the purpose of covering over-allotments, if any. If the Representatives'
over-allotment option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$____________, $____________, and $___________, respectively. See
"Underwriting."
The shares of Common Stock are being offered, subject to prior sale, when,
as and if delivered to and accepted by the Underwriters and subject to approval
of certain legal matters by counsel and to certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify the offering and to
reject any order in whole or in part. It is expected that delivery of
certificates representing the shares of Common Stock will be made against
payment therefor at the offices of BlueStone Capital Partners, L.P., 575 Fifth
Avenue, New York, New York 10017, on or about , 1997.
BlueStone Capital Partners, L.P.
Coleman and Company Securities, Inc.
Oscar Gruss & Son Incorporated
The date of this Prospectus is , 1997.
<PAGE>
ROBOCOM
AUTOMATED WAREHOUSE MANAGEMENT SYSTEMS
[Four pictures of warehouse operations connected to a picture of a computer
keyboard.]
- --------------------------------------------------------------------------------
AVAILABLE INFORMATION
As of the date of this Prospectus, the Company will become subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, in accordance therewith, will file reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). The Company intends to furnish its shareholders with annual
reports containing audited financial statements and such other periodic reports
as the Company deems appropriate or as may be required by law.
-------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS,
ON NASDAQ, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE, WHICH STABILIZE,
MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE COMMON STOCK. SPECIFICALLY,
THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THIS OFFERING AND MAY BID FOR
AND PURCHASE SHARES OF COMMON STOCK IN THE OPEN MARKET. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements, including the notes thereto, contained elsewhere in this Prospectus.
Each prospective investor is urged to read this Prospectus in its entirety.
Unless otherwise indicated, the information contained in this Prospectus,
including per share data and information relating to the number of shares
outstanding, gives retroactive effect to the 1.88-for-one split of the Common
Stock effected on May 15, 1997 and assumes no exercise of the Representatives'
over-allotment option to purchase up to 225,000 additional shares of Common
Stock. See "Underwriting" and Note 8 of Notes to Financial Statements.
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."
The Company
Robocom Systems Inc. (the "Company") develops, markets and supports
advanced warehouse management software solutions that enable companies to
realize significant cost savings by automating their warehouse operations. The
Company's primary product, Robocom Inventory Management System ("RIMS"), is a
customer-configurable software solution that enables a company's warehouse to
respond to a customer order with greater accuracy and in a more timely manner,
thereby turning the warehouse into a competitive advantage. RIMS operates in an
open system environment and interfaces with an organization's existing
information systems infrastructure. In addition to providing RIMS software
licenses, the Company provides installation, design and maintenance services and
related hardware when required by the customer. The Company believes that
customers that have implemented the RIMS solution have realized increased
customer satisfaction directly related to timely and accurate receipt of
shipments.
Until recently, the warehouse has received little attention from corporate
management as an area in which greater efficiency could be introduced into a
business organization. However, in recent years, an increasingly competitive
global business environment has created pressure for companies to reduce costs,
enhance product quality and reduce customer response times. To enhance
performance, many companies are reviewing and investing in improvements to their
supply chain: the mission critical process of moving raw materials and finished
goods from initial material procurement to end-customer fulfillment. Further,
companies are finding increased competitive benefits by integrating supply chain
operations with enterprise resource planning ("ERP") systems.
Because the warehouse is often considered the "hub" of the supply chain,
housing both raw materials and finished goods, warehouse operations are often
the focal points of supply chain management and ERP solutions. According to
industry sources, the supply chain management / ERP software solutions market
was estimated to be in excess of $4.5 billion in 1996 and is projected to grow
at an annual compounded growth rate of 30% throughout the end of the decade.
Similarly, the warehouse management system market is large, yet remains
relatively untapped. Industry analysts estimate that there are 550,000
warehouses in the United States (with as many outside the United States), of
which only 10% are employing some level of automation. Given the increased
awareness of the benefits of improving warehouse operations, the Company
believes, based upon its recent experience with current and potential customers,
that manufacturers and suppliers are seeking a cost-effective solution for
automating and integrating the diversified processes of a warehouse.
Historically, warehouse management solutions were custom-developed by
internal management information system departments or outsourced to third-party
software developers and were not cost efficient to implement. In contrast,
RIMS.2001, an "off-the-shelf" solution first introduced in June 1994, requires
little, if any, modification in most warehouse environments. RIMS.2001 is
designed to be implemented in approximately four months, which is a
significantly shorter time period than that required to implement the customized
warehouse management systems that have historically been available.
3
<PAGE>
In addition, the full functionality, scalability and affordability (the average
RIMS.2001 solution is priced at $200,000) of RIMS.2001 enable the Company to
target small and mid-size companies as well as Fortune 500 companies with the
same product. The Company has experienced increasing bookings for RIMS.2001
evidenced by its sales of six and 12 RIMS.2001 systems for fiscal year 1995 and
for first nine months of fiscal 1997, respectively.
The Company's objective is to become the premier worldwide provider of
automated warehouse management solutions. To achieve this objective, the Company
intends to develop strategic alliances with complementary solution providers and
technology partners. The Company has entered into its first such alliance with
QAD, Inc. ("QAD"), a leading provider of global supply chain management and ERP
solutions. This relationship provides for co-marketing and technology-sharing
benefits and provides the Company access to QAD's large, worldwide customer base
and distributor network. In addition to strategic alliances, the Company will
continue to establish direct and indirect global sales channels. Currently, the
Company has established relationships with distributors in Canada, the United
Kingdom, Mexico, Brazil and Argentina. The Company intends to achieve market
differentiation through vertical market expertise and has targeted food
manufacturers and distributors with the first of its industry-specific RIMS
adaptations (known as RIMS.Food), which is pre-configured to address the unique
requirements of this market.
RIMS.2001 technology is the result of the Company's extensive experience in
commercial and military materials handling applications. Building on its 15
years of industry experience, the Company has developed a fully operational,
customer-configurable, standard software solution that captures best practice
methodologies used in warehouse operations. The RIMS.2001 solution reduces
costs, improves customer service and productivity by controlling and directing
activity and functions within the warehouse operating area, including receiving,
storage, order selection, packing, loading and shipping. RIMS.2001 utilizes
radio frequency communications and bar coding to provide real time management
validation and tracking of all warehouse activities. RIMS.2001 operates in an
open system environment allowing customers to use various operating systems,
operate on multiple hardware platforms and run with multiple relational database
management systems, such as Oracle and Progress.
The Company sells products through a direct sales force in the United
States and through distributors in other parts of the world. Sales and marketing
personnel are located at the Company's headquarters in Massapequa, New York and
in field offices in Pittsburgh, Pennsylvania, Cranston, Rhode Island, Atlanta,
Georgia and Ann Arbor, Michigan. The Company currently has over 30 customers,
including ConAgra Refrigerated Foods Companies, Inc., Consolidated Edison
Company of New York, Inc., Osram Sylvania Inc., Crown Equipment Corporation and
Moen Incorporated, of which several have installed the Company's warehouse
solutions in multiple sites.
The Company was incorporated in the State of New York on June 30, 1982. The
Company's executive offices are located at 511 Ocean Avenue, Massapequa, New
York 11758. The Company's telephone number at that address is (516) 795-5100.
Pending S Corporation Termination
Since June 1990, the Company has been treated for Federal and New York
state income tax purposes as an S Corporation under Subchapter S of the Internal
Revenue Code and New York law. As a result of the Company's status as an S
Corporation, the Company's existing shareholders, rather than the Company, were
taxed directly on the earnings of the Company for Federal and state corporate
income tax purposes during such period, whether or not such earnings were
distributed to them. As of the date of this Prospectus, however, the Company is
terminating its status as an S Corporation and will hereafter become subject to
federal and state income taxes at applicable C Corporation rates.
As of February 28, 1997, the Company's undistributed S Corporation earnings
totaled $4,110,593 (for financial statement purposes). In April and May 1997,
the Company distributed $382,500 and $517,500,
4
<PAGE>
respectively, of its previously undistributed S Corporation earnings to its
current shareholders. As of the date of this Prospectus, in connection with the
Company's conversion from an S Corporation to a C Corporation, the Company is
declaring a final distribution of $1,600,000 of its undistributed S Corporation
earnings to its current shareholders (the "Final S Corporation Distribution").
The Company intends to pay the Final S Corporation Distribution out of the
proceeds from, and on the consummation of, this offering. Purchasers in this
offering will not receive any portion of the Final S Corporation Distribution.
See "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 8 of Notes to Financial
Statements.
The Offering
<TABLE>
<S> <C>
Common Stock offered ........................ 1,500,000 shares
Common Stock to be outstanding after the
offering .................................... 3,467,984 shares (1)(2)
Use of proceeds .............................. For software development costs, to establish
and equip domestic and international sales
offices, for payment of the Final S
Corporation Distribution, for repayment of
bank indebtedness, and for working capital
and other general corporate purposes. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol ...... RIMS
</TABLE>
- ------------
(1) Includes 31,584 restricted shares of Common Stock issued to a consultant to
the Company on May 1, 1997 for various accounting and administrative
services (the "May 1997 Shares").
(2) Does not include (i) 210,000 shares of Common Stock reserved for issuance
upon the exercise of stock options granted on the date of this Prospectus,
and 115,000 shares of Common Stock reserved for issuance upon the exercise
of options available for future grant, under the Company's 1997 Stock Option
and Long-Term Incentive Compensation Plan (the "Option Plan") and (ii)
150,000 shares of Common Stock reserved for issuance upon the exercise of
the Representatives' Warrants. See "Management -- Option Plan" and
"Underwriting."
5
<PAGE>
Summary Financial Information
Set forth below is certain summary financial information for the periods
and as of the dates indicated. This information is derived from, and should be
read in conjunction with, the financial statements of the Company, including the
notes thereto, appearing elsewhere in this Prospectus.
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended May 31, ------------------------------
--------------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
----------- ----------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Statements of Operations Data: (unaudited)
Total revenues ..................... $ 4,130 $ 6,813 $ 6,964 $ 4,684 $ 5,085
Net income (loss) .................... (1,106) 744 1,125 134 958
Pro Forma Unaudited Statements of
Operations Data(1):
Pro forma provision (benefit) for
income taxes ..................... (465) 313 473 56 402
Pro forma net income(loss) ......... (641) 431 652 78 556
Pro forma net income (loss) per
share(2) ........................... $ (.28) $ .19 $ .28 $ .03 $ .24
Pro forma weighted average shares
outstanding(2) ..................... 2,296,199 2,296,199 2,310,299 2,296,199 2,352,599
</TABLE>
<TABLE>
<CAPTION>
February 28, 1997
----------------------------------------
May 31, Pro As
1996 Actual Forma(3) Adjusted(3) (4)
--------- -------- ---------- ----------------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents ............. $ 604 $ 66 $ 366 $ 5,506
Working capital (deficit) ............. 630 875 (25) 6,665
Total assets ........................ 4,637 5,418 5,718 10,858
Total current liabilities ............ 1,465 1,271 2,471 921
Total liabilities ..................... 1,465 1,271 3,709 2,159
Total shareholders' equity ............ 3,172 4,147 2,009 8,699
</TABLE>
- ------------
(1) Prior to the date of this Prospectus, the Company was an S Corporation and
was not subject to Federal or state corporate income taxes (other than
California, New Jersey and New York franchise taxes). The pro forma
statements of operations data reflects a pro forma provision for income
taxes as if the Company had been subject to Federal and state corporate
income taxes for all periods presented. The pro forma provision for income
taxes represents a combined Federal and state tax rate of 42%. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Notes 1 and 8 of Notes to Financial Statements.
(2) Includes the May 1997 Shares and assumes that 384,615 of the shares of
Common Stock being offered hereby were outstanding during the periods
indicated, which represents the approximate number of shares of Common
Stock being sold by the Company in this offering to fund the payment of S
Corporation distributions made in April and May 1997 of $382,500 and
$517,500, respectively, and the Final S Corporation Distribution of
$1,600,000 (based upon an assumed offering price of $6.50 per share, the
midpoint of the currently anticipated range of the initial public offering
price). See Note 1 of Notes to Financial Statements.
(3) Adjusted to give retroactive effect to (i) borrowings under the Company's
line of credit (the "Line of Credit" ) with The Bank of New York (the
"Bank") in the aggregate amount of $1,200,000 during the period commencing
on March 1, 1997 and ending as of the date of this Prospectus, (ii) the
issuance
6
<PAGE>
of the May 1997 Shares, (iii) the net deferred income tax liability
(reflecting the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amount used for income tax purposes) that will be recorded as a
result of the Company's termination, as of the date of this Prospectus, of
its S Corporation status (estimated at $1,238,000 as of February 28, 1997),
and (iv) S Corporation distributions effected in April and May 1997 in the
amount of $382,500 and $517,500, respectively, out of the Company's
undistributed S Corporation earnings (which earnings aggregated $4,110,593
as of February 28, 1997). Does not give effect to the as yet undetermined
additional S Corporation earnings generated by the Company during the period
commencing on March 1, 1997 and ending as of the date of this Prospectus.
See Notes 7 and 8 of Notes to Financial Statements.
(4) Adjusted to give retroactive effect to the sale of the 1,500,000 shares of
Common Stock offered hereby at an assumed offering price of $6.50 per share
(the midpoint of the currently anticipated range of the initial public
offering price) and the anticipated application of the estimated net
proceeds therefrom, including for (i) the repayment of all outstanding
borrowings under the Line of Credit, and (ii) the Company's distribution to
its current shareholders of the Final S Corporation Distribution. See "Use
of Proceeds."
7
<PAGE>
RISK FACTORS
In addition to the other information set forth in this Prospectus,
prospective investors should carefully consider the following risk factors
before purchasing the shares of Common Stock offered hereby.
Technological Changes; Need to Continue to Develop Software Enhancements
The markets for the Company's software are characterized by rapidly
changing technologies, evolving industry standards, changes in customer
requirements and frequent new product introductions, applications and
enhancements. The introduction by competitors of products embodying new
technologies and the emergence of new industry standards could adversely affect
the Company's ability to sell its software applications. While the Company has
competed favorably with its competitors by continually developing enhancements
for its RIMS.2001 product, one of the industry's first "off-the-shelf" warehouse
inventory management products, competitors have developed or are in the process
of developing products that offer similar features. Although historically the
timing of the introduction of upgrades or enhancements to the Company's software
applications has not had a material adverse effect on the business, results of
operations or financial condition of the Company, there can be no assurance that
these circumstances will continue in the future. The Company expects that the
continued development of competing software products by competitors will require
that the Company develop new and/or enhanced applications on an ongoing basis to
meet the competitive demands of these markets. The Company's sales and
profitability in the past have resulted to a significant extent from its ability
to anticipate or react quickly to its customers' needs and to develop and
introduce new and enhanced applications. The Company's continued ability to
adapt to customer needs and technological change will be a significant factor in
maintaining or improving its competitive position and its prospects for growth.
However, there can be no assurance that the Company will be able to continue to
develop and introduce new and/or enhanced products or to respond otherwise
appropriately to changing customer needs.
Product Concentration
The Company derives substantially all of its revenues from licenses of
RIMS.2001 software and from related system implementation, engineering and other
services, computer hardware sales and maintenance provided by the Company to its
RIMS.2001 customers. These licenses and related services, sales and maintenance
revenues are expected to continue to account for substantially all of the
Company's revenues for the foreseeable future. A decline in the demand or prices
for the Company's products or services, whether as a result of new product
introductions or price competition from competitors, technological change,
failure of the Company's products to address customer requirements or otherwise,
could have a material adverse affect on the Company's business, operating
results and financial condition. See "Business -- Products and Services," "--
Product Development" and "-- Competition".
Potential Fluctuations in Quarterly Results
The Company has experienced in the past, and may experience in the future,
significant quarter-to-quarter fluctuations in its operating results. Factors
such as the timing of the introduction of software enhancements and upgrades by
the Company or the Company's competitors, customer acceptance of software
applications, software development costs, announcements or changes in pricing
policies by competitors, the timing of orders, the length of the Company's sales
cycle, the mix of domestic versus international revenues, the existence of
product errors or "bugs", the unanticipated cancellation or delay of significant
license agreements, the hiring and training of additional staff and general
economic conditions could contribute to this variability of quarterly results.
In addition, quarterly revenues and operating results are highly dependent on
the volume and timing of new RIMS.2001 system installations during the quarter,
the extent of modifications required in connection with such installations and,
to a lesser extent, maintenance revenues. Because the Company's staffing and
operating expenses are based upon anticipated revenue levels and a high
percentage of the Company's costs are fixed in the short term, small variations
in the timing of recognition of specific revenues can cause significant
variations in operating results from quarter to quarter. As a result of these
and other factors, the Company believes that its quarterly operating results
will vary in the future and period-to-period comparisons of its financial
results may not be meaningful and should not be relied upon as indications of
future performance. The growth
8
<PAGE>
in revenues recently experienced by the Company is not necessarily indicative of
future results. In addition, fluctuations in operating results may result in
volatility in the price of the Common Stock as it is likely that, following the
consummation of this offering, in some future fiscal quarter, the Company's
operating results will be below the expectations of public market analysts and
investors. In such event, the price of the Common Stock may be adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Fluctuations in Operating Results."
Uncertainties Relating to Recent Financial Results
The Company has not yet completed its financial statements for the fiscal
year ended May 31, 1997. While the Company anticipates that revenues for the
fiscal year ended May 31, 1997 will equal or exceed revenues for the fiscal year
ended May 31, 1996, no assurance can be given that net income and pro forma net
income for fiscal 1997 will equal or exceed the results experienced for the
prior fiscal year.
Dependence Upon Principal Customers
Due to the size of most orders and the need for differing amounts of
customization for each installation, the Company historically has obtained
orders from a relatively small number of new customers each fiscal quarter. As a
result, individual customers have often accounted for more than 10% of total
revenues in a particular fiscal period. For the fiscal year ended May 31, 1995,
the Company had two customers that accounted for approximately 34% and 13% of
total revenues. For the fiscal year ended May 31, 1996, the Company had three
customers that accounted for approximately 15%, 14% and 12% of total revenues.
For the nine months ended February 28, 1997, the Company had two customers that
accounted for approximately 21% and 16% of total revenues. Because of the nature
of the Company's business operations, the Company anticipates that customers
that account for more than 10% of total revenues for a fiscal period will vary
from period to period depending on the status and timing of significant orders
by a particular customer or customers for any given fiscal period. The inability
to replace certain customers could cause the Company's revenues and operating
results to fluctuate from period to period and could have a material adverse
impact on the Company's business. See "Business -- Customers."
Dependence on Key Personnel
The Company's continued success will depend largely upon the continued
services of its executive officers, in particular Irwin Balaban, its Chairman,
President and Chief Executive Officer, Lawrence B. Klein, its Executive Vice
President - Marketing and Sales, Steven Kuhl, its Vice President - Product
Development, and Robert O'Connor, its Vice President - Systems Development, as
well as other key sales, marketing, financial, technical service and engineering
personnel. The loss of service of any one or more of these key employees could
have a material adverse effect on the Company's business, results of operations
and financial condition. Although the Company has applied for, and intends to
obtain prior to the consummation of this offering, key-man life insurance in the
amount of $1,500,000 on the life of each of Messrs. Balaban and Klein, the
proceeds of any such insurance may not be sufficient to compensate the Company
for the loss of their services. Furthermore, the Company does not have and does
not intend to obtain key-man life insurance on the life of Messrs. Kuhl or
O'Connor or any of its other personnel. The future success of the Company also
will depend upon its ability to attract and retain additional highly-skilled
personnel, particularly sales representatives and systems engineers. Because of
the technical sophistication of the Company's products and the computing
environments in which they operate, sales employees, field technical support and
other personnel who join the Company generally require advanced technical
knowledge and significant training to perform competently. Competition for such
personnel is intense, and there can be no assurance that the Company will be
successful in retaining its existing key personnel and in attracting and
retaining the personnel it requires in the future. See "Business -- Employees"
and "Management."
Risks Associated with Continued Growth
and Possible Acquisitions
In view of the recent historical and anticipated future expansion of its
business, the Company remains vulnerable to a variety of business risks
generally associated with rapidly growing companies. The Company's current
growth plans may place significant pressures on the Company's management,
working capital, financial and management control systems and staff as such
growth will require development and operation of a significantly larger business
over a broader geographical area. The failure to maintain or upgrade financial
and management control systems, to recruit additional staff or to respond
effectively to difficulties encountered during growth could have a material
adverse effect on the Company's business, results of operations or financial
condition. Although the Company has taken steps to ensure that its systems and
controls are adequate to address its cur-
9
<PAGE>
rent and anticipated needs, including the recent hiring of a Vice President -
Finance and Chief Financial Officer, and is attempting to recruit additional
staff, there can be no assurance that the Company will be able to achieve its
expansion goals or that, if it continues to grow, it will be able effectively to
manage its growth, anticipate and satisfy all of the changing demands and
requirements that such growth will impose upon it or achieve greater operating
income or profitability. In addition, although, as of the date of this
Prospectus, the Company has no agreements, understandings or commitments, and is
not engaged in any definitive negotiations, relating thereto, the Company could
also seek to expand its operations by entering into additional strategic
alliances with third-parties relating to the exploitation of the Company's
technologies and/or by acquiring other software companies or businesses, such as
freight determination systems and shipment manifest systems. In addition,
although the Company has no current intention to do so, it could in the future
consider and enter into such transactions with related parties if approved by a
majority of the independent, disinterested directors of the Company. While the
Board of Directors has adopted a policy providing that any transactions between
the Company and any of its officers, directors and/or 5% shareholders will be on
terms no less favorable to the Company than would be obtained from independent
third parties and will be approved by a majority of the independent directors,
under New York law, various forms of business combinations can be effected
without shareholder approval. Accordingly, investors in this offering will, in
all likelihood, neither receive nor otherwise have the opportunity to evaluate
any financial or other information that may be made available to the Company in
connection with any potential joint venture arrangement or business acquisition
and will be dependent upon the Company's management to select, structure and
consummate any such arrangements and/or acquisitions in a manner consistent with
the Company's business objectives. Although the Company will endeavor to
evaluate the risks inherent in a particular joint venture arrangement or
acquisition, there can be no assurance that the Company will properly ascertain
or assess all significant and pertinent risk factors prior to its consummation
of such a transaction. Moreover, to the extent the Company does effect a joint
venture or acquisition, there can be no assurance that the Company will be able
successfully to integrate into its operations any business that it may form or
acquire. Any inability to do so, particularly in instances in which the Company
has made significant capital investments, could have a material adverse effect
on the Company.
Risks Related to International Revenues and Operations
Prior to fiscal 1997, the Company did not have any international revenues
(revenues from outside the United States). During the first nine months of
fiscal 1997, international revenues represented approximately 1.9% of the
Company's total revenues. The Company is attempting to expand it presence in
European, Central American, South American, Asian and Australian markets and
expects that revenues from international licenses and related services, in total
dollar volume and as a percentage of the Company's total revenues, will increase
significantly. Since January 1996, the Company has entered into reseller
agreements with five foreign resellers, and the Company expects to open its
first two international sales and support offices in Europe and Australia within
the next 12 months. There are a number of risks inherent in the Company's
current and proposed international business activities, including unexpected
changes in regulatory requirements, tariffs and other trade barriers, costs and
risks of localizing products for foreign countries, longer accounts receivable
payment cycles, potentially adverse tax consequences, limits on repatriation of
earnings and the burdens of complying with a wide variety of foreign laws.
Additionally, the Company does not engage in hedging activities to protect
against the risk of currency fluctuations. Fluctuations in currency exchange
rates could cause sales denominated in U.S. dollars to become relatively more
expensive to customers in a particular country, leading to a reduction in sales
or profitability in that country. Also, such fluctuations could cause sales
denominated in foreign currencies to affect a reduction in the current U.S.
dollar revenues derived from sales in a particular country. Furthermore, future
international activity may result in increased foreign currency denominated
sales and, in such event, gains and losses on the conversion to U.S. dollars of
accounts receivable and accounts payable arising from international operations
may contribute significantly to fluctuations in the Company's results of
operations. The financial stability of foreign markets could also affect the
Company's international revenues. In addition, revenues of the Company earned in
various countries where the Company does business may be subject to taxation by
more than one jurisdiction, thereby adversely affecting the Company's earnings.
There can be no assurance that such factors will not have an adverse effect on
the revenues from the Company's future international sales and, consequently,
the Company's results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business -- Sales and
Marketing."
Competition
The market for warehouse management and distribution software and related
services is highly competitive, and the Company expects competition to increase
in the future. The Company believes that historically the market for warehouse
management and distribution software could be characterized primarily by the
size of the
10
<PAGE>
customer or the complexity of the customer's warehouse handling environment, and
that the Company's competitors tend to focus their products and marketing
efforts toward a limited number of these market segments. Over recent years,
however, the market for warehouse management systems increasingly has been
characterized by the industry in which the customer competes. The Company
initially focused its software development and marketing efforts on potential
customers that required large, complex systems with significant amounts of
customization. The Company has a large number of competitors and believes that
its primary competitors in the market for the larger, more complex systems are
McHugh Freeman and Associates, Manhattan Associates and Catalyst International,
Inc., each of which provides complete warehouse management and distribution
software. In addition, certain well-known computer manufacturers or software
developers, such as SAP, J.D. Edwards, BAAN and PeopleSoft, offer integrated
manufacturing or accounting software packages that include a warehouse
management component. With the introduction in June 1994 of RIMS.2001, the
Company believes that it was one of the first to offer a standard,
"off-the-shelf" system that requires little, if any, modification prior to
installation in most warehouse environments. Some of the Company's competitors
have greater name recognition, more extensive engineering, manufacturing and
marketing capabilities and significantly greater financial, technological and
personnel resources than the Company. The Company's future success will depend
to a significant degree upon its ability to remain competitive in the areas of
software development, technology, marketing and distribution, while operating
within the constraints imposed by its financial and other resources. Price has
not historically been a major factor in the market for the Company's RIMS.2001
solution, and increased competition could result in price reductions and loss of
market share, which would adversely affect the Company's business, results of
operations or financial condition. The Company believes that the principal
competitive factors affecting the market served by the Company include vendor
and product reputation, product functionability and features, vertical market
expertise, ease of use, quality of support, product quality, performance and
price. There can be no assurance that the Company will be able to compete
successfully in the future with existing or new competitors. See "Business --
Product Development" and "-- Competition."
Control by Current Management
Upon consummation of this offering, the officers and directors of the
Company as a group will beneficially own approximately 55.8% of the outstanding
shares of Common Stock. Accordingly, such persons, acting together, will
continue to be able to control the Company and direct its affairs, including the
election of all of the Company's directors, and cause an increase in the
Company's authorized capital or the dissolution, merger or sale of the Company
or substantially all of its assets. Furthermore, such control could preclude any
unsolicited acquisition of the Company and, consequently, adversely affect the
market price of the Common Stock. See "Principal Shareholders."
Security Interests Granted in Assets
As of the date of this Prospectus, the Company had approximately $1,550,000
outstanding under the Line of Credit, all of which is payable on a demand basis.
All of the Company's assets are pledged to the Bank as collateral. In the event
of a default by the Company on its obligations under the Line of Credit, the
Bank could declare the Company's indebtedness to be immediately due and payable
and foreclose on the Company's assets. Although the Company intends to use a
portion of the proceeds of this offering to repay all amounts outstanding under
the Line of Credit, the Company expects to continue to utilize borrowing
availability under the Line of Credit (or similar facilities obtained in the
future) in the ordinary course of business. There can be no assurance that the
Company will be able to continue to comply with the terms of its loan agreements
with the Bank. See "Use of Proceeds" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
Reliance Upon Certain Licensed Third-Party Software
Certain technology used in the Company's products is licensed from third
parties, generally on a nonexclusive basis. The Company believes that there are
alternative sources for each of the material components of technology licensed
by the Company from third parties. However, the termination of any such
licenses, or the failure of the third party licensors to adequately maintain or
update their products, could result in delay in the Company's ability to ship
certain of its software applications while it seeks to implement technology
offered by
11
<PAGE>
alternative sources. Any required replacement licenses could prove costly. Also,
any such delay, to the extent it becomes extended or occurs at or near the end
of a fiscal quarter, could result in a material adverse effect on the Company's
quarterly results of operations. While it may be necessary or desirable in the
future to obtain other licenses relating to one or more of the Company's
products or relating to current or future technologies, there can be no
assurance that the Company will be able to do so on commercially reasonable
terms or at all. See "Business -- Products."
Potential for Undetected Errors
The Company's software applications, like software products generally, may
contain undetected errors or "bugs" when introduced, or as new, enhanced or
industry-specific versions are released. While, to date, the Company's current
applications have not experienced any significant post-release software errors
or bugs, there can be no assurance that such problems will not occur in the
future, particularly as the Company expands its product offerings to meet the
needs of specific industries and its products or product enhancements become
more complex and sophisticated. Any such defective software may cause delays in
product introduction or shipments, require design modifications that could
adversely affect the Company's competitive position, result in a loss of or
delay in market acceptance of the Company's products or cause an increase in
maintenance costs, any of which could adversely affect the Company's operating
results. See "Business."
Risks Relating to Intellectual Property Protection
The Company's success and ability to compete is dependent in part upon its
proprietary technology. While the Company relies on trademark, trade secret and
copyright law to protect its technology, the Company believes that factors such
as the technological and creative skills of its personnel, new product
developments, frequent product enhancements, name recognition and reliable
product maintenance are more essential to establishing and maintaining a
technology leadership position. The Company presently has no patents or patent
applications pending. There can be no assurance that others will not develop
technologies that are similar or superior to the Company's technology. The
source code for the Company's proprietary software is protected both as a trade
secret and as a copyrighted work. Despite these precautions, it may be possible
for a third party to copy or otherwise obtain and use the Company's products or
technology without authorization, or to develop similar technology
independently. In addition, effective copyright and trade secret protection may
be unavailable or limited in certain foreign countries. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of the Company's products or to obtain and use information that the
Company regards as proprietary. Policing unauthorized use of the Company's
software applications is difficult. There can be no assurance that the steps
taken by the Company will prevent misappropriation of its technology or that
such agreements will be enforceable. In addition, the technology industry is
characterized by the existence of an increasing number of patents and frequent
litigation based on allegations of patent infringement. Consequently, although
the Company believes that its products and technology do not infringe upon the
rights of third parties, from time to time, third parties may claim exclusive
patent, copyright and other intellectual property rights to technologies or
trademarks that are important to the Company. There can be no assurance that
third parties will not assert infringement claims against the Company, that
assertions by such parties will not result in costly litigation, or that the
Company would prevail in any such litigation or be able to license any valid and
infringed patents or trademarks from third parties on commercially reasonable
terms. In addition, litigation may be necessary in the future to enforce the
Company's intellectual property rights, to protect the Company's trade secrets,
to determine the validity and scope of the proprietary rights of others, or to
defend against claims of infringement or invalidity. Such litigation could
result in substantial costs and diversion of resources and could have a material
adverse effect on the Company's business, operating results or financial
condition. See "Business -- Proprietary Rights, Licenses and Pricing."
Immediate and Substantial Dilution
Investors participating in this offering will experience immediate and
substantial dilution, and present shareholders will receive a material increase
in the net tangible book value of their shares of Common Stock. After giving
effect to this offering and the use of the net proceeds therefrom, and certain
other transactions effected by the Company after February 28, 1997, the
Company's net tangible book value as of February 28,
12
<PAGE>
1997 would have been $6,230,485, or $1.80 per share (based on an assumed
offering price of $7.00 per share, the high point of the currently anticipated
range of the initial public offering price.) This represents an immediate
dilution in net tangible book value of $5.20 (74%) per share to investors in
this offering. See "Dilution."
Effect of Certain Charter Provisions; Limitation of Liability of Directors;
Antitakeover Effects of New York Law
The Board of Directors has the authority to issue up to 1,000,000 shares of
Preferred Stock in one or more series, and to determine the prices, rights,
preferences, privileges and restrictions, including voting rights, of the shares
within each series without any further vote or action by shareholders. The
Company has no current plans to issue shares of Preferred Stock. However, the
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate activities, could have
the effect of making it more difficult for a third party to acquire control of
the Company. Further, certain anti-takeover provisions of New York law could
delay or make more difficult a change of control of the Company. While such
provisions are intended to enable the Board of Directors to maximize shareholder
value, they may have the effect of discouraging takeovers that could be in the
best interest of certain shareholders. There can be no assurance that such
provisions will not have an adverse effect on the market value of the Company's
stock in the future. In addition, the Company's charter provides that its
directors shall not be personally liable to the Company or its shareholders for
monetary damages in the event of a breach of fiduciary duty to the extent
permitted by New York law. See "Description of Securities."
No Dividends Anticipated
The Company intends to retain all future earnings for use in the
development of its business and does not anticipate paying any cash dividends in
the foreseeable future. See "Dividend Policy."
No Prior Underwritings
BlueStone was formed as a broker-dealer in March 1996. Although its
principals have had experience in the underwriting of securities in their
capacities with other broker-dealers, this offering constitutes the first public
offering for which BlueStone, the managing underwriter, has acted as a managing
underwriter. The Company has agreed, among other things, that for the 12-month
period following the date of this Prospectus, it will not without the prior
written consent of BlueStone, directly or indirectly, sell, offer for sale,
transfer, pledge or otherwise dispose of any securities of the Company, and that
for a period of two years following the date of this Prospectus, if so requested
by BlueStone, it will nominate and use its best efforts to elect a designee of
BlueStone as a director of the Company. See "Underwriting."
No Prior Market for Common Stock; Possible Volatility of Stock Price
Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or be sustained in the future or that the market price of the Common Stock will
not decline below the initial public offering price. The initial public offering
price of the Common Stock was determined by negotiations between the Company and
the representatives of the Underwriters and may not be indicative of the market
price of the Common Stock after this Offering. From time to time after this
offering, there may be significant volatility in the market price for the Common
Stock. Quarterly operating results of the Company or companies within the same
or similar industry segments, changes in general conditions in the economy, the
financial markets or the technology industry, adverse press or news
announcements, or other developments affecting the Company or its competitors,
could cause the market price of the Common Stock to fluctuate substantially. In
addition, in recent years, the stock market has experienced significant price
and volume fluctuations. This volatility has affected the market prices of
securities issued by many companies for reasons unrelated to their operating
performance. See "Underwriting."
Shares Eligible for Future Sale
Upon consummation of this offering, the Company will have outstanding
3,467,984 shares of Common Stock. Of these shares, the 1,500,000 shares sold in
this offering will be freely tradable without restriction or further
registration under the Securities Act, except for any of such shares held by
"affiliates" of the Company. The remaining 1,967,984 shares of Common Stock,
which are held by the existing shareholders, are "restricted securities" within
the meaning of Rule 144 promulgated under the Securities Act (the "Restricted
Shares") and may not be sold in the absence of registration under the Securities
Act unless an exemption from registration is
13
<PAGE>
available, including the exemption contained in Rule 144. All of the Restricted
Shares are subject to one-year lockup agreements with BlueStone. Upon expiration
of such lockup agreements, 1,880,000 of the Restricted Shares will be
immediately eligible for sale in the public market under Rule 144(k) by persons
other than "affiliates," without restriction, and an additional 87,984 shares
will become eligible for sale in the public market at various times in
accordance with Rule 144. Sales, or the possibility of sales, of substantial
amounts of Common Stock held by the Company's existing shareholders could have
an adverse impact on the market price of the Common Stock and could impair the
Company's ability to raise equity capital in the future. See "Principal
Shareholders" "Description of Securities," "Shares Eligible for Future Sale" and
"Underwriting."
14
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,500,000 shares of
Common Stock offered hereby are estimated to be approximately $8,290,000
($9,635,500 if the Representatives' over-allotment option is exercised in full),
assuming an initial public offering price of $6.50 per share (the midpoint of
the currently anticipated range of the initial public offering price), and after
deducting the underwriting discount and estimated offering expenses.
The Company intends to use approximately $2,500,000 of the net proceeds of
this offering to fund a portion of its software development costs over the next
24 months. Development projects currently in process or under consideration by
management include Internet/intranet interfaces and Windows NT porting for
RIMS.2001, a RIMS.2001 enhancement to manage the shipping process of products or
materials that have been picked by a RIMS.2001 system, and a trailer/trailer
yard management system. See "Business -- Product Development."
The Company intends to use approximately $2,500,000 of the net proceeds to
establish up to six additional domestic and four international sales and support
offices over the next 24 months, including payment of the costs of capital
improvements, capital equipment, management and support personnel and additional
regionally-focused advertising. The Company expects that it will open its first
additional domestic sales and support office in the first quarter of fiscal 1998
and that it will open one additional domestic and two international sales and
support offices by the end of fiscal 1998. See "Business -- Sales and
Marketing."
The Company will use $1,600,000 of the net proceeds to make the Final S
Corporation Distribution to its existing shareholders.
From the net proceeds of this offering, the Company also intends to repay
all amounts outstanding under the Line of Credit, of which approximately
$1,550,000 was outstanding as of the date of this Prospectus. The Line of Credit
currently bears interest at the prime rate per annum, is payable on demand and
expires on September 30, 1997, is secured by substantially all of the Company's
assets and is guaranteed by Messrs. Balaban, Klein and Goldman. As of the date
of this Prospectus, the Company had $300,000 available under the Line of Credit.
The Line of Credit has been used primarily for S Corporation distributions to
the Company's shareholders and for working capital purposes, including expenses
relating to this offering. Amounts repaid by the Company under the Line of
Credit with the proceeds of this offering may subsequently be reborrowed by the
Company. The Company intends to continue to maintain the Line of Credit or
similar credit facilities after the consummation of this offering. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 7 of Notes to Financial
Statements.
The Company intends to use the balance of the net proceeds and any proceeds
from the exercise of the Representatives' over-allotment option for working
capital and general corporate purposes. A portion of the proceeds may also be
used to acquire or invest in complementary businesses or products or otherwise
to obtain the right to use complementary technologies that broaden or enhance
the Company's current product offerings. There are no current agreements or
negotiations with respect to any potential acquisition, investment or other such
transaction. Pending such uses, the net proceeds to the Company from this
offering will be placed in interest-bearing bank accounts or invested in
short-term, interest-bearing, investment grade securities.
The Company believes that its existing capital resources and the net
proceeds of this offering will be sufficient to maintain its current and planned
operations through fiscal 1999.
DIVIDEND POLICY
From June 1, 1990 to the date of this Prospectus, the Company was an S
Corporation for Federal and New York state income tax purposes. As a result,
during and for such period, the net income of the Company for Federal and
certain state income tax purposes was reported by, and taxed directly to, the
Company's shareholders rather than the Company. As an S Corporation, the Company
made distributions in the form of cash dividends to its shareholders, including
$382,500 and $517,500 in April 1997 and May 1997, respectively, and will make
15
<PAGE>
the Final S Corporation Distribution to such shareholders in the amount of
$1,600,000 out of the proceeds of this offering. The Company currently intends
to retain all future available earnings, if any, for the development and growth
of its business and, therefore, does not anticipate paying any cash dividends in
the foreseeable future.
DILUTION
The difference between the initial public offering price per share of
Common Stock and the net tangible book value per share of Common Stock after
this offering constitutes the dilution to investors in this offering. Net
tangible book value per share on any given date is determined by dividing the
net tangible book value of the Company (total tangible assets less total
liabilities) on such date by the number of then outstanding shares of Common
Stock.
At February 28, 1997, net tangible book value of the Company was $928,485,
or $.48 per share. After giving retroactive effect to (i) borrowings under the
Line of Credit in the aggregate amount of $1,200,000 during the period
commencing on March 1, 1997 and ending as of the date of this Prospectus, (ii) S
Corporation distributions effected in April and May 1997 in the aggregate amount
of $900,000, (iii) the recording, as of the date of this Prospectus, of the
one-time net deferred income tax liability generated as a result of the
Company's termination of its S Corporation status (estimated at $1,238,000 as of
February 28, 1997), and (iv) the Company's issuance of the May 1997 Shares, the
pro forma net tangible book value (deficit) of the Company at February 28, 1997
would have been ($1,209,515), or ($.61) per share. After also giving effect to
the sale of the 1,500,000 shares of Common Stock offered hereby at an assumed
price of $7.00 per share (the high point of the currently anticipated range of
the initial public offering price) and the receipt and anticipated application
of the estimated net proceeds therefrom, including for the repayment of all
outstanding borrowings under the Line of Credit and the distribution of the
Final S Corporation Distribution, the as adjusted net tangible book value of the
Company at February 28, 1997 would have been $6,230,485, or $1.80 per share,
representing an immediate increase in net tangible book value of $2.41 per share
to existing shareholders and an immediate dilution of $5.20 (74%) per share to
investors in this offering.
The following table illustrates the foregoing information with respect to
dilution to new investors on a per share basis:
<TABLE>
<S> <C> <C>
Assumed initial public offering price ........................... $ 7.00
Net tangible book value before pro forma adjustments ......... $ .48
Decrease attributable to pro forma adjustments ............... (1.09)
-------
Pro Forma net tangible book value before this offering ...... (.61)
Increase attributable to investors in this offering ......... 2.41
-------
Adjusted net tangible book value after this offering ............ 1.80
-------
Dilution to investors in this offering ........................ $ 5.20
=======
</TABLE>
The following table sets forth, with respect to existing shareholders and
the investors in this offering, a comparison of the number of shares of Common
Stock purchased from the Company, the percentage ownership of such shares, the
aggregate consideration paid, the percentage of total consideration paid, and
the average price paid per share.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
-------------------------- --------------------------------- Average Price
Number Percentage Amount Percentage Per Share
----------- ------------ ------------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Existing Shareholders ...... 1,967,984 56.7% $ 269,712(1) 2.5% $ .14
New Investors ............... 1,500,000 43.3 10,500,000 97.5 $ 7.00(2)
---------- ------- ------------- ------- ----------
3,467,984 100.0% $10,769,712 100.0%
========== ======= ============= =======
</TABLE>
- ------------
(1) Includes an aggregate of $6,000 in cash paid by Messrs. Balaban, Klein and
Goldman and $263,712 for services rendered by a consultant for various
accounting and administrative services and by two key employees of the Company.
(2) Based on the high point of the currently anticipated range of the initial
public offering price.
16
<PAGE>
The foregoing table assumes no exercise of the Representatives'
over-allotment option. If such option is exercised in full, the new investors
will have paid $12,075,000 (based on an assumed price of $7.00 per share, the
high point of the currently anticipated range of the initial public offering
price) for 1,725,000 shares of Common Stock, representing approximately 97.8% of
the total consideration for 46.7% of the total number of shares outstanding. In
addition, computations set forth in the above table exclude an aggregate of
325,000 shares of Common Stock reserved for issuance upon the exercise of
options granted or available for future grant under the Option Plan and the
150,000 shares of Common Stock reserved for issuance upon the exercise of the
Representatives' Warrants. See "Management -- Option Plan" and "Underwriting."
17
<PAGE>
CAPITALIZATION
The following table sets forth as of February 28, 1997 (i) the actual
capitalization of the Company, (ii) the pro forma capitalization of the Company
after giving effect to certain transactions effected after February 28, 1997 and
(iii) the pro forma capitalization of the Company as adjusted to reflect the
sale of the 1,500,000 shares of Common Stock offered hereby and the anticipated
application of the estimated net proceeds therefrom.
<TABLE>
<CAPTION>
February 28, 1997
-----------------------------------------------
Pro As
Actual Forma(1) Adjusted(1)(2)
------------- ------------- ---------------
<S> <C> <C> <C>
Debt
Bank borrowings ................................. $ 350,000 $ 1,550,000 $ --
----------- ----------- ----------
Shareholders' Equity
Common Stock, $.01 par value; 10,000,000 shares
authorized; 1,936,400 shares issued and
outstanding (actual); 1,967,984 shares issued and
outstanding (pro forma); 3,467,984 shares
issued and outstanding as adjusted (3) ......... $ 19,364 $ 19,680 $ 34,680
Preferred Stock, $.01 par value; 1,000,000 shares
authorized; none issued or outstanding ......... -- -- --
Additional paid in capital ..................... 89,436 262,832 8,537,832
Retained earnings .............................. 4,110,593 1,972,593 372,593
Deferred compensation ........................... (72,000) (245,712) (245,712)
----------- ----------- -----------
Total shareholders' equity .................. 4,147,393 2,009,393 8,699,393
----------- ----------- -----------
Total capitalization ........................ $ 4,497,393 $ 3,309,393 $ 8,699,393
=========== =========== ===========
</TABLE>
- ------------
(1) Gives retroactive effect to (i) borrowings under the Line of Credit during
the period commencing on March 1, 1997 and ending as of the date of this
Prospectus in the aggregate amount of $1,200,000, (ii) the Company's
issuance of the May 1997 Shares, (iii) the recording, as of the date of this
Prospectus, of the net deferred income tax liability generated as a result
of the Company's termination of its S Corporation status (estimated at
$1,238,000 as of February 28, 1997), and (iv) S Corporation distributions
effected in April and May 1997 in the aggregate amount of $900,000. Does not
give effect to the as yet undetermined additional S Corporation earnings
generated by the Company during the period commencing as of March 1, 1997
and ending as of the date of this Prospectus. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Notes 7
and 8 of Notes to Financial Statements.
(2) Gives retroactive effect to the sale of the 1,500,000 shares of Common Stock
offered hereby at an assumed offering price of $6.50 per share (the midpoint
of the currently anticipated range of the initial public offering price) and
the anticipated application of the estimated net proceeds therefrom,
including for (i) the repayment of all outstanding borrowings under the Line
of Credit, and (ii) the Final S Corporation Distribution. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
(3) Does not include (i) 325,000 shares reserved for issuance upon exercise of
options granted or available for future grant under the Option Plan and (ii)
150,000 shares of Common Stock reserved for issuance upon exercise of the
Representatives' Warrants. See "Management -- Option Plan" and
"Underwriting."
18
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for each of the fiscal years in the
three-year period ended May 31, 1996, 1995 and 1994 as of the end of the fiscal
year ended May 31, 1996 and for and as of the end of the nine month period ended
February 28, 1997, is derived from the financial statements of the Company,
which statements have been audited by Ernst & Young LLP, independent auditors,
whose report thereon is included elsewhere herein. The selected financial data
presented for and as of the end of the nine month period ended February 29, 1996
are unaudited and were prepared by management of the Company on the same basis
as the audited financial statements of the Company included elsewhere herein
and, in the opinion of the Company, include all adjustments (consisting of
normal recurring adjustments) necessary to present fairly the information set
forth therein. The selected financial data for the nine month period ended
February 28, 1997 is not necessarily indicative of the results to be expected
for the full year. The selected financial data should be read in conjunction
with the financial statements of the Company and the related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended May 31, ------------------------------
---------------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
------------ ----------- ----------- -------------- -------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Total revenues ........................ $4,130 $6,813 $6,984 $4,684 $5,085
Gross margin ........................... 2 2,065 2,209 956 1,766
Selling, general and administrative
expenses .............................. 1,093 1,275 1,075 815 784
Net income (loss) .................... (1,106) 744 1,125 134 958
Pro forma Unaudited Statements of
Operations Data(1):
Pro forma provision (benefit) for income
taxes ................................. (465) 313 473 56 402
Pro forma net income(loss) ............ $ (641) $ 431 $ 652 $ 78 $ 556
Pro forma net income (loss) per share(2) $ (.28) $ .19 $ .28 $ .03 $ .24
Pro forma weighted average shares
outstanding(2) ........................ 2,296,199 2,296,199 2,310,299 2,296,199 2,352,599
</TABLE>
<TABLE>
<CAPTION>
May 31, 1996 February 28, 1997
-------------- ------------------
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents ............. $ 604 $ 66
Working capital ..................... 630 875
Total assets ........................ 4,637 5,418
Total current liabilities ............ 1,465 1,271
Total liabilities .................. 1,465 1,271
Total shareholders' equity ......... 3,172 4,147
</TABLE>
- ------------
(1) Prior to the date of this Prospectus, the Company was an S Corporation and
not subject to Federal or state corporate income taxes (other than
California, New Jersey and New York franchise taxes). The pro forma
statement of operations data reflects a pro forma provision for income taxes
as if the Company had been subject to Federal and state corporate income
taxes for all periods. The pro forma provision for income taxes represents a
combined Federal and state tax rate of 42%. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Notes 1 and 8
of Notes to Financial Statements.
(2) Includes the May 1997 Shares and assumes that 384,615 of the shares of
Common Stock being offered hereby were outstanding during the periods
indicated, which represents the approximate number of shares of Common
Stock being sold by the Company in this offering to fund the payment of S
Corporation distributions made in April and May 1997 of $382,500 and
$517,500, respectively, and the Final S Corporation Distribution of
$1,600,000 (based upon an assumed offering price of $6.50 per share, the
midpoint of the currently anticipated range of the initial public offering
price).
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company's principal activities include marketing and support of
comprehensive warehouse management software systems. In addition to its core
business, the Company also provides, to a limited extent, system integration
services in support of office client server systems. The Company licenses its
RIMS warehouse management systems and, in connection with its other system
integration services, certain third-party software products; it provides related
services (including customization and modification, project management, training
and implementation) and maintenance support; and it sells related third-party
hardware products. The Company has achieved annual increases in revenues in the
last three fiscal years due primarily to the development and deployment of its
standard RIMS.2001 product in fiscal 1995. Prior to such time, the Company's
revenues were principally derived from highly-customized RIMS warehouse systems
and adaptations that required substantial modifications to meet the
functionality required by customers. Over the past three fiscal years, the
Company's results of operations increased from a net loss of $1,105,686 in
fiscal 1994 to net income of $1,125,117 in fiscal 1996. In addition, since the
Company's introduction of the standard RIMS.2001 product in fiscal 1995, the
rate of RIMS.2001 installations has increased from a total of six installations
in the year ended May 31, 1995 to 12 installations in the nine months ended
February 28, 1997. The Company expects RIMS.2001 and related revenues to
continue to account for a substantial portion of the Company's revenue for the
remainder of fiscal 1997 and for the foreseeable future. As a result, the
Company's future operating results are significantly dependent upon continued
market acceptance of RIMS.2001 and enhancements thereto. In addition, since a
substantial portion of the Company's revenues in any fiscal period are derived
from relatively few sales of RIMS.2001, both the number of new sales of
RIMS.2001 and the timing of orders for, and installations of, new systems in any
fiscal period, has caused and is expected to continue to cause, significant
fluctuations in revenue from period to period.
The Company's revenues are derived from software license fees, fees for
services, sales of hardware and maintenance fees. Software license fees include
revenue from the licensing of the Company's proprietary RIMS.2001 software and
revenue from the sublicensing of certain third-party software. Software license
fee revenue is recorded when the software has been delivered, the license
agreement with the customer has been executed and collection of the resulting
receivable is deemed probable. Service revenues are derived from project
management, customization and modification of licensed software, training,
on-site support and implementation services. Service revenues are recorded using
the percentage of completion method of accounting. Hardware revenues are derived
from the Company's resale of a variety of third-party hardware products on
behalf of other manufacturers, including computer hardware, radio frequency
equipment, bar code printers and other peripherals. Such revenues are recognized
when the title to such hardware passes to the customer. Customers typically
enter into one-year maintenance agreements with the Company upon the completion
of the software installation and pay maintenance fees monthly. The Company
recognizes revenue from each maintenance agreement ratably over the period
covered by the agreement, but is only required to perform maintenance services
as and when they are requested by the customer. Historically, all of the
Company's customers have entered into, and substantially all of the Company's
customers have renewed, maintenance agreements with the Company. In all periods
presented, the Company recognized revenues in accordance with the American
Institute of Certified Public Accountants Statement of Position 91-1, "Software
Revenue Recognition."
The Company's total revenues in any period are substantially dependent upon
a relatively small number of large sales. Revenues from the Company's five
largest customers in each of fiscal 1994, 1995 and 1996 and the nine months
ended February 28, 1997 accounted for approximately 67%, 70%, 56% and 55% of
total revenues, respectively. The Company expects that this downward trend will
continue as the Company further penetrates the market with its RIMS.2001
products.
Costs of revenues have been derived from the cost of software modification,
system implementation and other services, hardware and maintenance support.
Costs of services and costs of maintenance consist primarily of labor costs for
customer support, including personnel costs, and costs relating to subcontracted
services and overhead. Typically, costs of maintenance associated with the
Company's standard maintenance contract decrease over the life of the
maintenance contract. The number of programmers and service and support
personnel employed by the Company was 32,
20
<PAGE>
25, 27 and 37 at May 31, 1994, 1995 and 1996 and February 28, 1997,
respectively. Substantially all programmers also function as engineers in the
development of software, as described below. The reduction in the number of
employees in fiscal 1995 from fiscal 1994 was due to the nonrenewal of
government contracts (which are typically awarded to the lowest bidder) relating
to several pre-RIMS.2001 warehouse management systems. Cost of hardware consists
primarily of the cost of hardware sold by the Company on behalf of other
manufacturers.
Amortization of software development costs consists of the amortization of
costs of engineering personnel and related development expenses, such as the
development of software tools and documentation, capitalized starting at the
point technological feasibility is demonstrated. The Company believes that a
significant level of investment in software development is essential to achieve
and maintain a market leadership position. The Company expended $844,244,
$464,477, $815,908 and $1,045,342 in fiscal 1994, 1995 and 1996 and the nine
months ended February 28, 1997, respectively, for software development costs.
The Company employed 17, 14, 15 and 18 software development employees at May 31,
1994, 1995 and 1996 and February 28, 1997, respectively, some of which also
functioned as programmers for the installation or modification of the Company's
software. The reduction in the number of such employees in fiscal 1995 from
fiscal 1994 was also due to the nonrenewal of government contracts for
nonstandard warehouse management systems, as described above. The increase in
the amortization of software development costs was due primarily to the
commencement of amortization of capitalized software development costs for
RIMS.2001 (Version 3.1) in January 1996, the month in which such version was
first available for sale. Statement of Financial Accounting Standard No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," requires capitalization of software development costs from the point
of technological feasibility to the point of a salable product. RIMS.2001 has
been technologically feasible since 1992 and salable since the beginning of
fiscal 1995. The Company's current and planned product development efforts are
directed at enhancing and improving RIMS.2001. The Company believes that a
significant level of investment for software development is required to remain
competitive. Accordingly, the Company anticipates that the dollar amount of the
amortization of software development expenses will increase. As a percentage of
total revenue, however, the Company anticipates that amortization of software
development expenses will decrease as revenues increase.
Selling, general and administrative expenses consist primarily of salaries
for sales, marketing, administrative, executive and financial personnel,
commissions paid to sales personnel and travel and promotional expenses. The
sales and marketing, general and administrative staff consisted of 15 employees
at each of May 31, 1994, 1995 and 1996 and February 28, 1997. The Company
believes that its selling, general and administrative expenses will increase in
dollar amounts in the future as the Company expands its sales and marketing
staff and as the Company experiences higher costs associated with being a public
company; however, the Company anticipates that such expense will decrease as a
percentage of total revenues as revenues increase.
21
<PAGE>
Results of Operations:
The following table sets forth, for the periods indicated, certain statement
of operations data:
(In thousands)
<TABLE>
<CAPTION>
Nine months ended
Year ended May 31, ------------------------------
-------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
----------- ------- -------- -------------- -------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenue:
Software license fees .......... $ 415 $ 505 $ 970 $ 321 $ 899
Services ......................... 2,299 3,382 3,195 2,375 1,621
Hardware ......................... 976 2,068 1,793 1,212 1,729
Maintenance ...................... 440 858 1,006 776 836
--------- ------ ------- ------ ------
Total revenues .................. 4,130 6,813 6,964 4,684 5,085
--------- ------ ------- ------ ------
Cost of revenue:
Cost of license fees .............. 34 34 63 18 96
Cost of services .................. 3,108 2,622 2,302 2,083 1,015
Cost of hardware .................. 771 1,534 1,399 926 1,329
Cost of maintenance ............... 215 261 680 473 554
--------- ------ ------- ------ ------
Total cost of revenues ......... 4,128 4,451 4,444 3,500 2,994
--------- ------ ------- ------ ------
Amortization of software development
costs ........................... -- 297 311 229 325
--------- ------ ------- ------ ------
Gross margin ..................... 2 2,065 2,209 955 1,766
Selling, general & administrative
expenses ........................ 1,093 1,275 1,076 815 784
--------- ------ ------- ------ ------
Income (loss) from operations ...... (1,091) 790 1,133 140 982
Interest expense, net ............ 15 46 8 6 24
--------- ------ ------- ------ ------
Net income (loss) .................. $ (1,106) $ 744 $1,125 $ 134 $ 958
========= ====== ======= ====== ======
</TABLE>
Comparison of Nine Months Ended February 29, 1996 and February 28, 1997
Revenue. Total revenue increased by approximately 9% from $4,684,412 in the
nine months ended February 29, 1996 to $5,084,852 in the nine months ended
February 28, 1997. Software license fees increased by approximately 180% during
the 1997 period as compared to the 1996 period, primarily due to the increase in
RIMS.2001 software licenses from five during the nine months ended February 29,
1996 to 12 during the nine months ended February 28, 1997 and the payment by one
customer during the latter period of a significant non-refundable master license
fee. Services revenues decreased by approximately 32% for the fiscal 1997 period
as compared to the 1996 period, primarily due to the decreasing level of
services required for the installation of highly-customized, pre-RIMS.2001
systems originally contracted for prior to fiscal 1995. Hardware revenues
increased by approximately 43% during the fiscal 1997 period as compared to the
1996 period, primarily due to increased sales of hardware by the Company in
connection with its system installations. Maintenance revenues increased by
approximately 8% for the fiscal 1997 period, primarily due to the larger number
of maintenence contracts in operation during such period.
Cost of Revenues. Total cost of revenues decreased by approximately 14%
from $3,499,782 in the nine months ended February 29, 1996 to $2,993,972 in the
nine months ended February 28, 1997. As a percentage of revenue, total cost of
revenues decreased from 75% in the 1996 period to approximately 59% in the
fiscal 1997 period. The decrease primarily related to higher license fee
revenues discussed above, which generally have minimal direct related costs and
new service charge practices.
Amortization of Software Development Costs. Amortization of software
development costs increased by approximately 42% from $228,750 in the nine
months ended February 29, 1996 to $324,769 in the nine months ended February 28,
1997. The increase was due to the commencement of amortization of capitalized
software development costs for RIMS.2001 (Version 3.1) in January 1996, the date
such version was first available for sale. As a percentage of revenue, the
amortization of software development costs were approximately 6% in the nine
months ended February 28, 1997 and 5% in the nine months ended February 29,
1996.
22
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by approximately 4% from $815,020 in the nine
months ended February 29, 1996 to $784,441 in the nine months ended February 28,
1997. As a percentage of revenue, selling, general and administrative expenses
decreased from approximately 17% for the 1996 period to approximately 15% for
the 1997 period. The decrease was primarily due to lower administrative salaries
resulting from the retirement of one of the Company's executive officers and
decreased selling expenses in the latter period.
Interest Expense, net. Interest expense was $42,367 in the nine months
ended February 28, 1997, an increase of $10,917 or approximately 35% from
$31,450 in the nine months ended February 29, 1996. The increase was primarily
due to higher interest rates on balances related to loans from officers in
fiscal 1997 as compared to fiscal 1996 and to interest on bank borrowings in
fiscal 1997.
Comparison of Fiscal Years Ended May 31, 1995 and May 31, 1996
Revenue. Total revenue increased by approximately 2% from $6,813,307 in the
year ended May 31, 1995 to approximately $6,964,097 in the year ended May 31,
1996. Software license fees increased by approximately 92% in fiscal 1996 as
compared to fiscal 1995, primarily due to the payment by one customer in fiscal
1996 of a significant non-refundable license fee. Services revenues decreased by
approximately 6% in fiscal 1996 as compared to fiscal 1995, primarily due to the
completion in fiscal 1995 of installations for two customers requiring
significant modifications. Hardware revenues decreased by approximately 13% in
fiscal 1996 as compared to fiscal 1995, primarily due to the completion in
fiscal 1995 of a large pre-RIMS.2001 system with a significant hardware
component. Maintenance revenues increased by approximately 17% in fiscal 1996 as
compared to fiscal 1995, due primarily to the commencement of additional
maintenance agreements.
Cost of Revenues. Total cost of revenues remained relatively constant at
$4,450,949 in fiscal 1995 to $4,444,119 in fiscal 1996. As a percentage of
revenue, total cost of revenues decreased from approximately 65% in fiscal 1995
to approximately 64% in fiscal 1996 primarily due to the significant
non-refundable license fee referred to above with minimal related costs, offset
by the expiration in late fiscal 1995 of three pre-RIMS.2001 customers'
maintenance contracts, all of which had relatively low related maintenance
costs.
Amortization of Software Development Costs. Amortization of software
development costs increased approximately 5% from $296,997 in fiscal 1995 to
$311,321 in fiscal 1996. The increase was due to the commencement of
amortization of capitalized software development costs for RIMS.2001 (Version
3.1) in January 1996, the date such version was first available for sale. As a
percentage of revenue, the amortization of software development costs remained
constant at approximately 4% in the years ended May 31, 1995 and 1996.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by approximately 16% from $1,275,134 in fiscal
1995 to $1,075,309 in fiscal 1996. As a percentage of revenue, selling, general
and administrative expenses decreased from approximately 19% in fiscal 1995 to
approximately 15% in fiscal 1996. The decrease is due to lower pension costs
reflected in fiscal 1996 as a result of the reduction in personnel and lower
administrative salaries and related expenses.
Interest Expense, net. Interest expense was $38,575 in fiscal 1996, a
decrease of $18,309 or approximately 32% from approximately $56,884 in fiscal
1995, primarily because outstanding bank borrowings in fiscal 1995 were entirely
repaid by the end of such period and there were no bank borrowings during fiscal
1996.
Comparison of Fiscal Years Ended May 31, 1994 and May 31, 1995
Revenue. Total revenue increased by approximately 65% from $4,129,838 in
fiscal 1994 to $6,813,307 in fiscal 1995. Software license fees increased by
approximately 22% from fiscal 1994 to fiscal 1995, primarily due to the
licensing of five RIMS.2001 systems in fiscal 1995 as compared to none in fiscal
1994, which increase was partially offset by lower non-RIMS.2001 license fees in
fiscal 1995. Services revenues increased by approximately 47% in fiscal 1995,
primarily due to significant modifications required by the one non-RIMS.2001 and
two RIMS.2001 systems installed during fiscal 1995 as compared to the
modifications required by the two non-RIMS.2001 systems installed during fiscal
1994, as well as to the fact that three additional RIMS.2001 systems were
installed in fiscal 1995 as compared to none in fiscal 1994. Hardware revenues
increased by approximately 112% in fiscal 1995, primarily due to the sale of a
significant amount of hardware to one non-RIMS.2001 system customer in fiscal
1995. Maintenance revenues increased by approximately 95% in fiscal 1995, due
primarily to the significant maintenance contract entered into with that same
customer upon completion of its system installation.
23
<PAGE>
Cost of Revenues. Total cost of revenues increased by approximately 8% from
$4,127,523 in fiscal 1994 to $4,450,949 in fiscal 1995. As a percentage of
revenue, total cost of revenues decreased from 100% in fiscal 1994 to
approximately 65% in fiscal 1995. During fiscal 1994, the contracts with the
Company's primary customer, the government, expired and were not renewed because
the award of such contracts was given to the lowest bidder. The higher costs of
revenue in fiscal 1994 relates to numerous modifications for the government
which the Company was unable to recover. In addition, in June 1994, the Company
released RIMS.2001 for sale which reflects a lower cost of revenue relative to
total revenue as compared with the cost of revenue relative to total revenue in
fiscal 1994, primarily related to the modification of software on government
contracts.
Amortization of Software Development Costs. The amortization of software
development costs began in June 1994 when RIMS.2001 was first available for
sale. Amortization of software development costs was $296,997, or approximately
4% of revenue, in fiscal 1995.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by approximately 17% from $1,092,713 in fiscal
1994 to $1,275,134 in fiscal 1995. The increase was primarily due to higher
advertising costs and other selling expenses in fiscal 1995. As a percentage of
revenue, selling, general and administrative expenses decreased from
approximately 26% in fiscal 1994 to approximately 19% in fiscal 1995.
Interest Expense, net. Interest expense was approximately $56,884 in fiscal
1995, an increase of $39,384 or approximately 225% from $17,500 in fiscal 1994,
primarily because bank borrowings and loans payable to officers were made in
mid-1994. The loans payable to officers were outstanding for all of fiscal 1995.
Fluctuations in Operating Results
The Company's quarterly revenues and operating results have varied
significantly in the past and are likely to vary substantially from quarter to
quarter in the future, depending upon a number of factors, such as the length of
the Company's sales cycle, the unanticipated cancellation of significant license
agreements, the timing of new version releases by the Company and its
competitors, budgeting cycles of the Company's customers, demand for the
Company's software, software life cycles, introduction and acceptance of new
software by the Company and its competitors, the size and timing of customer
orders, changes in the proportion of revenues attributable to software license
fees versus services, changes in the level of operating expenses and general
economic conditions. In addition, a significant portion of the Company's
revenues has been derived from relatively few sales of licenses for RIMS.2001,
and, consequently, the timing of such sales has caused material fluctuations in
the Company's operating results. Accordingly, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as an indication of future performance.
Because the Company recognizes a significant portion of revenues over the
installation period of the system (which, although designed to be completed in
approximately four months, generally ranges from four to eight months in
duration as a result of the customer's scheduling requirements) and because
installation commences promptly after execution of the related license
agreement, the Company does not maintain a significant backlog. Software license
fees for each quarter depend in part on orders for which implementation has
begun during that quarter and on license agreements under implementation that
were executed in prior quarters. The sales cycle for RIMS.2001 typically ranges
from four to six months, and contract signing may be delayed for a number of
reasons, including customer budgetary constraints and internal authorization
reviews. In addition, delays in the completion of a contract may require that
the revenues associated with such contract be recognized over a longer period.
Consequently, the Company's business, results of operations or financial
condition for a quarter could be materially adversely affected by implementation
delays.
The Company is in the initial stages of developing pre-configured,
industry-specific versions of RIMS.2001 for use in certain vertical markets. The
Company believes that if it is able to successfully introduce and obtain market
acceptance of pre-configured versions of RIMS.2001, such versions would reduce
its quarterly fluctuations in operating results because such products would
enable the Company to sell its systems to a greater number of customers. The
RIMS.Food product, which was introduced in May 1997, was the first of these
industry specific versions. There can be no assurance, however, that these
additional products will be successfully developed or that they will gain market
acceptance. See "Business --Product Development."
24
<PAGE>
Liquidity and Capital Resources
Over the last three years, the Company has funded its operations primarily
through cash generated from operations, bank borrowings and loans from officers.
The Company's Line of Credit, which expires on September 30, 1997, provides for
borrowings of up to $2,000,000. Amounts outstanding under the Line of Credit are
payable on demand and are collateralized by the assets of the Company.
Borrowings bear interest at the prime rate (8.5% at May 15, 1997). Repayment is
personally guaranteed by Messrs. Balaban, Klein and Goldman. The Line of Credit
has been used primarily for S Corporation distributions to the Company's
shareholders and for working capital purposes. Outstanding amounts under the
Line of Credit aggregated $350,000 and $1,550,000 at February 28, 1997 and June
15, 1997, respectively. The Company intends to repay the outstanding
indebtedness under the Line of Credit with a portion of the proceeds of this
offering. In the future, however, the Company intends to re-borrow against this
or a subsequent line of credit. The Company also has a $150,000 standby letter
of credit with the Bank, which is being utilized as collateral for a vendor and
expires on December 31, 1997. The letter of credit reduces the available portion
of the Line of Credit.
Net cash provided by operating activities was $657,150, $1,278,812 and
$847,064 in fiscal 1995 and 1996 and the nine months ended February 28, 1997,
respectively. Cash flows from operations increased in fiscal years 1995 and 1996
due primarily to the higher net income generated over the previous years. Cash
generated from operating activities in the nine months ended February 28, 1997
was generated primarily from higher net income offset by the increase in
accounts receivable. This increase in accounts receivable was due to a
significant delivery of equipment and related services for two customers in late
February 1997. Net cash used in operating activities was $429,301 in fiscal
1994. Cash flows from operations were lower in 1994 due to the net loss of
$1,105,686 offset by the decrease in accounts receivable and the increased costs
incurred and income recognized in excess of billings on uncompleted contracts.
The Company expended $844,244, $464,477, $815,908 and $1,045,342 in fiscal
1994, 1995, and 1996 and the nine months ended February 28, 1997, respectively,
for software development costs. The Company did not have any material
commitments for software development costs as of February 28, 1997. Any such
costs will be financed through working capital and proceeds received by the
Company from this offering.
As of February 28, 1997, the Company had $65,670 in cash and cash
equivalents, and working capital of $875,205.
Management believes that the net proceeds from the sale of Common Stock
in this offering, cash flow from operations, existing cash and
temporary investments, and amounts available under the Line of Credit will be
sufficient to meet the Company's currently anticipated working capital and
software development requirements through fiscal 1999. The Company's working
capital needs in fiscal 1998 include approximately $1,000,000 to establish
additional domestic and international sales and support offices and
approximately $1,000,000 for software development costs.
Termination of S Corporation Status
As a result of terminating the Company's S Corporation status as of the
date of this Prospectus, the Company will be required to record a one-time,
non-cash charge against earnings for deferred income taxes. This charge will
occur in the year ending May 31, 1998. If this charge had been recorded at
February 28, 1997, the amount would have been approximately $1,238,000. The
Company expects that, following the termination of its S Corporation status, its
combined Federal and state income tax rate will be 42%.
Inflation and Seasonality
The Company does not believe its operations have been materially affected
by inflation. The Company's business is not seasonal.
25
<PAGE>
BUSINESS
The Company develops, markets and supports advanced warehouse management
software solutions that enable companies to realize significant cost savings by
automating their warehouse operations. The Company's primary product, RIMS.2001,
is a customer-configurable software solution that enables a company's warehouse
to respond to a customer order with greater accuracy and in a more timely
manner, thereby turning the warehouse into a competitive advantage. RIMS.2001
operates in an open system environment and interfaces with an organization's
existing information systems infrastructure. In addition to providing RIMS.2001
software licenses, the Company provides installation, design and maintenance
services and related hardware when required by the customer. The Company
believes that customers that have implemented the RIMS.2001 solution have
realized increased customer satisfaction directly related to a timely and
accurate receipt of shipments.
Industry Background
In recent years, a number of business trends have converged to change the
historical relationships among retailers, manufacturers and suppliers, and
distributors. Increasing globalization of the marketplace has resulted in
greater geographic diversity of supply and production facilities and has
increased competition as more suppliers are offering a greater range of products
at multiple price levels. In addition, a number of trends in retailing,
including shorter product life cycles, a significant increase in the number and
variety of product offerings, an increase in buying power resulting from the
evolution of the retailer from the small local store to the large regional or
national department store chain, specialty store chain or "superstore" chain,
and the emergence of a more informed and price conscious consumer, have put
increased pressure on retailers to reduce expenses to remain competitive.
Consequently, retailers are seeking to reduce inventory management costs by
selecting suppliers that can respond to "just-in-time" purchasing and "quick
response" delivery techniques that enable the retailer to better match product
inventory to actual customer demand. Retailers and other vendors also are
increasingly demanding that their suppliers comply with standards for electronic
data interchange ("EDI"), electronic commerce and very specific labeling
requirements.
As a result of these trends, manufacturers and suppliers are experiencing
significant pressures to satisfy customer demands for improved product delivery
and reduced delivery times. Historically, manufacturers have organized their
businesses primarily to increase manufacturing efficiency and output. However,
as major customers shift the burden of inventory management to the manufacturer
or distributor, manufacturers and distributors have refocused their business
process re-engineering efforts to evaluate the service and value provided to
customers from existing operations and are seeking alternatives for streamlining
the warehousing and distribution process. The need to satisfy customer demand
for more effective and efficient order fulfillment has caused manufacturers to
seek greater control over the entire supply chain to minimize materials
inventories, ensure the timing of deliveries from suppliers, reduce
manufacturing cycle times, minimize finished goods inventories, maximize the
efficiency of warehousing and transportation systems and provide superior
response times to customers.
Retailers, manufacturers and suppliers, and distributors are increasingly
recognizing that significant cost savings can be achieved through warehouse
computerization and automation. An effective warehouse management system will
reduce costs and assist in improving customer service by achieving the following
objectives:
o Reduction of Errors. Receiving, stocking and picking errors are common in a
manual paper-based warehouse. An automated warehouse management system is
self-checking and ensures virtually 100% accuracy for every transaction.
o Improvement of Inventory Accuracy. The self-checking nature of an automated
warehouse management system ensures inventory accuracy and eliminates the
costly series of manual checks and backtracking that results when the
inventory on the books and the physical inventory in a warehouse do not
match. As a result of the poor accuracy in paper-based warehouses, costly
physical inventories need be taken to reconcile the system inventory to the
actual inventory. The inherent accuracy and cycle counting features of a
warehouse management system eliminate the need for a physical inventory.
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o Improved Space Utilization. A warehouse management system tracks all
warehouse locations and can direct where each product can best be stored
for maximum space utilization.
o Increased Productivity. A warehouse management system maximizes the time
operators spend adding value to the distribution process, filling orders
and receiving goods. System direction minimizes search time and dispatches
operators and pickers to the best task given the equipment and current
location. A warehouse management system also gives the warehouse control of
the workload and provides visibility into the entire range of tasks that
need be performed within a given time period.
o Improved Labor Management and Reporting. Paperwork in a warehouse for
picking and stocking drastically hampers productivity. Paperless warehouse
management system applications provide real-time information, reduce the
possibility for data entry errors and information delays and improve
productivity. In addition, a warehouse management system has vast reporting
capabilities because every transaction is recorded. In paper-based
warehouses, the only method available for tracking productivity and
performance is a manual log that is time consuming to keep, susceptible to
error and is only as good as the information each operator provides.
o Support of Customer EDI Requirements. Retailers and other vendors are
increasingly demanding that their suppliers comply with standards for EDI,
electronic commerce and specific labeling and packaging requirements. A
warehouse management system can provide special bar-code labeling and can
track any value-added packaging operations required.
o Integration. Manufacturers require warehouse activities to integrate with
their manufacturing and accounting systems. Such levels of data processing
and system integration require a capable, highly integrated warehouse
management system solution.
Initial warehouse automation software systems developed in the early 1980s
only produced "batch" picking, shipping, receiving and product movement reports
that detailed the expected merchandise handling operations for an entire day.
These systems provided initial improvements in warehouse efficiencies, but were
unable to respond quickly to unexpected circumstances, such as unscheduled
shipments or scheduled shipments that did not arrive, damaged goods that could
not be shipped when scheduled, and products stored in incorrect locations.
During the 1980s, automatic identification (primarily bar coding) became
widely accepted, and the cost of computer platforms supporting the initial
warehouse automation systems dropped as mini-computers and personal computers
were introduced and gained acceptance in the business workplace. In addition,
radio frequency hardware technology was introduced that first enabled software
designers to develop warehouse automation software that utilizes a local radio
network installed in the customer's warehouse to connect hand-held and
forklift-mounted mobile data terminals with the warehouse's central computer.
This development made possible software systems that manage a warehouse
dynamically in "real time" rather than batch mode. Real-time systems offer many
advantages over batch mode systems, including the ability to adapt to unexpected
circumstances, such as "rush" orders, late or unexpected in-bound shipments, and
incorrectly located merchandise; the ability to conduct partial inventory counts
while the warehouse remains fully operational; and the ability to improve
employee productivity by directing each worker to the next task to be performed
based upon the worker's current location and the location and priority of the
task.
Initially, warehouse management systems were custom-developed by internal
management information system (MIS) departments or third-party software
developers. These early custom-developed systems were often based on proprietary
operating systems, written in second and third generation programming languages
and very specific to the user's current methods of operation. As cost and time
overruns became commonplace, the finished system often exceeded budget, fell
behind schedule and was incapable of adapting to change as the business
developed. As computer hardware prices declined and less-costly minicomputers,
personal computers and computer networks replaced mainframes in the workplace,
it became desirable for computer applications to be written in a manner that
allowed the application to be transported from one computer to another. The
emergence of open system technology addressed this problem and evolved into the
preferred platform for many software applications, including warehouse
management systems, manufacturing supervisory control and many different data
collection applications. Open systems are based on industry standards, permit
the integration of multi-vendor hardware and software components and are
designed to accommodate new components and technology as they become available.
The Company believes that it was one of the first suppliers of an open system
warehouse management system.
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The proliferation of open system technologies in the early 1990s and the
availability of software development tool sets has led to the recent development
of custom configurable off-the-shelf products. Recent improvements in software
design, computer hardware, warehouse equipment and radio frequency technology
have enabled warehouse management software developers, such as the Company, to
design and install more affordable systems with increased functionality.
According to an industry analyst, at December 31, 1996 there were more than
550,000 domestic warehouses and distribution centers, of which no more than 10%
are employing some level of automation. The Company believes that the increasing
need of manufacturers and distributors to satisfy customer demand for more
effective and efficient order fulfillment will continue the trend of
manufacturers and distributors to seek the benefits of a state-of-the-art
warehouse management system.
Strategy
The Company's objective is to continue to be a leading provider of
warehouse management software solutions and services, and to expand its presence
worldwide. To achieve these objectives, the Company has adopted the following
strategies:
o Strategic Alliances. The Company intends to supplement its marketing
efforts by aligning itself with complementary solutions providers and
technology partners. Strategic alliances also will assist the Company in
keeping pace with technological developments of the major software and
hardware vendors and, in certain instances, provide the Company with
product development services. The Company has entered into a strategic
alliance with QAD, Inc., a leading provider of global supply chain
management and enterprise resource management solutions. This relationship
includes co-marketing and technology-sharing arrangements and provides the
Company access to a very large existing customer base. Through similar
alliances, the Company expects to gain greater exposure and acceptance of
its products and services. See "-- Sales and Marketing."
o New Product Development. The Company intends to continue to produce a
quality warehouse management system product that meets client expectations
in terms of functionality, flexibility, procurement cost, implementation
cost and ongoing maintenance cost. The Company believes that the RIMS
product line meets these expectations and will continue to do so as the
product evolves. The Company is committed to continuous product improvement
through a software development program that is driven by industry focus
groups and customer input. The Company intends to continue to utilize its
industry, customer and supplier relationships to keep abreast of emerging
standards, protocols and application programming interfaces as such trends
are introduced and gain market acceptance. The Company believes that
Internet-based applications will be the next significant technology change
in the warehouse management system industry. Development is currently
underway for RIMS.2001 enhancements that will utilize this technology. The
Company believes that a portable, open, Java(CR)-based, multi-tiered,
front-end application architecture will supplant the traditional
proprietary client/server technology employed by its competitors. See "--
Products and Service," "-- Third Party Hardware Products," and "-- Product
Development."
o Establish Vertical Market Concentration. By tailoring RIMS.2001 to support
the uniqueness of certain targeted markets, the Company believes it will
have a competitive advantage in selling to prospective customers in the
same industry in which similar functional and implementation issues arise.
The Company believes that the expertise developed in each of these vertical
markets also will further contribute to its standard RIMS.2001 product. In
the development of RIMS.Food, the Company established a focus group
consisting of current and potential clients in the food manufacturing and
distribution industry. This focus group provided direction, guidance and
partial funding for the development of RIMS.Food. The Company intends to
replicate this process to establish itself in other vertical markets and
has identified the following vertical markets as additional targets:
automotive, consumer products, petro chemical products, public utilities
and pharmaceutical products. See "-- Product Development."
o International Expansion. The Company intends to establish itself in the
international business market. In this regard, the Company has established
formal relationships with distributors in Canada, the United Kingdom,
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Mexico, Brazil and Argentina that are established systems integrators with
large customer bases in their respective regions. The Company intends to
establish additional international relationships and to strategically
locate sales and support offices worldwide to support its distributors as
the number of foreign distributors expands. See "-- Sales and Marketing."
o Training, Implementation and Support. A key to the success of a warehouse
management system supplier is its ability to provide the necessary services
and expertise required to effectively implement a complex warehouse
management system. The Company believes that the efficiency of its
implementation process will allow the Company to increase sales to
prospective customers seeking standard, configurable software solutions
and enable the Company to increase its market share with respect to its
competitors. The Company intends to continue to develop and improve its
services organization and its innovative conference room pilot program to
ensure a continued simple and efficient implementation process for its
customers. See "-- Service and Maintenance" and "-- Sales and Marketing."
Products
The Company's principal product, RIMS.2001, is a full-featured,
state-of-the-art warehouse management solution. The Company also markets
RIMS.Food, which is a modified version of RIMS.2001 that was recently developed
and is targeted at fresh and frozen food manufacturers and distributors. The
RIMS.2001 product line is a highly scaleable, highly configurable and flexible
product with baseline functionality and features sufficient for most warehouse
installations. The strength of RIMS.2001 is its adaptability to varied
environments without modification. RIMS.2001 is generally sold as an entire
turnkey solution that provides the Company's customers with both the software
and the hardware, if requested, necessary for a comprehensive warehouse
management system.
As a standard, "off-the-shelf," highly-configurable software system,
RIMS.2001 is designed to be deployed in only four months and to achieve
measurable cost savings for customers. The efficiency of implementing the
Company's software solutions results from the open systems architecture of
RIMS.2001, which runs on various operating platforms and uses either Oracle or
Progress database management system software, and the Company's extensive
experience in developing warehouse management systems. The Company believes that
its customers recognize cost savings throughout the warehousing and distribution
processes as a result of increases in worker productivity, efficiencies in space
utilization, increases in inventory accuracy, increases in lot number controls,
product expiration date controls and product serialization controls, and the
elimination of costly shipping errors through the use of bar code technology.
RIMS.2001
RIMS.2001 is a responsive software application designed to manage an entire
warehouse operation. As a user configurable solution, RIMS.2001 incorporates
numerous warehousing practices and strategies as standard capability. RIMS.2001
is an open systems solution that is not restricted to any particular equipment
or computer system. As such, the application software has been installed on
numerous hardware platforms and database management systems. RIMS.2001 can
interface with an organization's current materials handling equipment and
transactions-based systems and is easily integrated with customer or third party
purchasing, electronic data exchange, bar coding, accounting, manufacturing
resource planning ("MRP") and enterprise resource planning ("ERP") applications.
RIMS.2001 also utilizes radio frequency communications and bar coding to provide
real-time management, validation and tracking of all warehouse activities.
RIMS.2001 directs personnel and equipment and manages the inventory, space,
radio terminals, bar code scanners and printers in the warehouse in an efficient
and cost effective manner.
RIMS.2001 is a comprehensive application that manages the receiving, put
away, outbound order processes, and general warehouse operations. With each
warehouse process, RIMS.2001 provides a variety of tactical choices that can be
user defined to a customer's specific requirements and needs and that are
designed to maximize efficiency. Major system functions include:
o Receiving. The receiving process provides control over the receipt of
inventory through scanning the bar codes of incoming product to ensure
accuracy of inventory in the warehouse. This process facilitates the
receipt of purchase orders, transfer orders, advanced shipping notices and
customer returns. The receiving process supports pre-storage activities,
such as returned goods processing and quality assurance inspection.
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o Putaway Process. The putaway process ensures that all inventory is stored
in the most efficient location available based on pre-configured management
strategies. The Company or the customer will configure the system to
implement the customer's unique business demands, assigning locations based
on the customer's parameters with consideration given to product
characteristics, product velocity, demand codes, delivery and shipping
requirements, storage devices and cross-docking strategies.
o Picking and Shipping. The RIMS.2001 outbound order process analyzes each
order to determine the most efficient packing, loading and shipping
procedures. The order processing function is configured to match each
customer's management strategies. The outbound order process includes,
among other features, order selection, allocation, picking, loading and
shipping.
o Management. The general warehouse operations process manages the
availability of space and the movement of warehouse personnel, inventory
and material handling equipment through information shared by management
and warehouse employees. The real-time information and product flexibility
allows a customer to test or implement different strategies to maximize
productivity and efficiency. The system allows customers to combine
multiple tasks into a single job assignment, such as grouping a put-
away and picking assignment into one trip. RIMS.2001 facilitates cycle
counting, automatic replenishment, product moves, inventory control and
consolidation, labor tracking, system security, space utilization, vehicle
management and rewarehousing.
RIMS.Food
RIMS.Food is a specialized application of RIMS.2001 targeted at the food
industry. This product includes all of the basic features and benefits of the
base RIMS.2001 product, and is the first product created by the Company to focus
on a particular vertical market. RIMS.Food is pre-configured to address the
unique requirements of the food industry. Key features include: specialized
processing, such as date triggers (sell by date, cure date, use by date, freeze
date, etc.), enhanced lot tracking, and industry-specific bar coding.
Service and Maintenance
In addition to licensing of RIMS.2001, the Company offers certain services
and maintenance agreements to its customers. Services provided by the Company
include project management, product customization, configuration support,
training and implementation support.
Maintenance is not provided as part of the Company's license agreement;
however, the Company offers turnkey maintenance services for the RIMS.2001
software and certain hardware components of the system under a separate
maintenance agreement. Maintenance agreements are typically initiated at the
time of implementation, are renewable annually, and entitle the customer to
telephone support, software upgrades, installation assistance and priority
problem resolution. Maintenance fees are typically a percentage of the license
fees (excluding hardware), with additional fees for extended hours. If elected
by the customer, maintenance support is offered 24-hours per day, seven days per
week. In the event a customer does not enter into a maintenance agreement with
the Company, it would still be entitled to software fixes for reported problems
during the first year of its systems installation, pursuant to the one-year
warranty provided to the Company's customers by the Standard RIMS.2001 license
fee; however, to date, all RIMS.2001 customers have entered into a maintenance
agreement with the Company after system implementation.
The Company has several groups responsible for offering services and
maintenance to ensure customer satisfaction, including Software Engineering,
Product Support, Training and Customer Support. The Company's Software
Engineering Group offers a structured implementation program that typically
lasts two to three months and begins with the development of joint business
scenarios between the Company and the customer. This process consists of
training, business scenario development, configuration of the software, the
conference room pilot program, project management and implementation support
services. The conference room pilot program enables the Company and the customer
to model warehouse management operations and resolve operating issues prior to
live implementation. The Company's Product Support Group is responsible for
managing and installing operational systems, hardware, networks, communication
links and relational database management systems. Further, the Company offers
training to its customers for its RIMS products. Standard training for RIMS
includes three courses over three to four weeks. The Configuration course
explains basic RIMS terminology and methodology related to system configuration
and setup. The Supervisors course provides warehouse management the
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training necessary to effectively control and monitor the facility. The
Operators course is a hands-on training course for warehouse workers
concentrating in the execution of RIMS-related tasks. Customized courses are
also made available on request. A Train-the-Trainer course provides information
and materials to third-party trainers who will perform the future RIMS training.
A RIMS Internals course is designed to provide technical personnel with
knowledge of the software design and internal operations of the RIMS system. The
Company offers extensive customer support to its maintenance customers,
including a 24-hour help line.
In those cases in which the standard RIMS.2001 product cannot meet the
customers needs, the Company can enter into contracts to perform certain
modifications to the baseline product.
Third Party Hardware Products
The Company's RIMS.2001 products use an open architecture that enables
customers to use various operating systems, operate on multiple hardware
platforms and interoperate with many third party software applications and
legacy systems. This open system capability enables customers to continue using
their existing computer resources and to choose among a wide variety of existing
and emerging computer hardware and peripheral technologies.
In conjunction with virtually all sales of RIMS.2001, the Company resells a
variety of hardware products developed by third parties, including computer
hardware, radio frequency terminal networks, bar code printers and scanners, and
other peripherals. In addition, the Company resells computer hardware and
network devises in support of office client server systems. The Company resells
all third-party products pursuant to agreements with the products' manufacturers
or through distributor authorized reseller agreements pursuant to which the
Company is entitled to purchase products at discount prices and to receive
technical support in connection with product installations and subsequent
product malfunctions. The RIMS.2001 hardware-related agreements generally permit
the Company to resell the third-parties' products to any RIMS.2001 user in the
United States. The Company anticipates that its foreign distributors or other
third party vendors will sell any hardware or peripherals required in connection
with the sale of RIMS.2001 outside of the United States. The Company anticipates
that sales of third-party products will decrease in importance and as a
percentage of revenues over time as sales of the Company's software licenses and
services increase.
Other Sales and Services
In addition to its RIMS.2001 systems, the Company designs, implements,
installs and supports computer systems networks and office software on a limited
basis. Customers range from Fortune 100 companies with sophisticated
fault-tolerant, inter-networking, high connectivity needs, to medium- and
small-size companies requiring implementation and support of a workgroup local
area network. The Company provides entire turnkey software solutions,
consulting, systems analysis and custom training on almost any application to be
run on a network. The Company is fully equipped to support most "off-the-shelf"
software applications written for Novell, NT or UNIX, and offers its customers a
full range of support services, ranging from the resolution of a specific
application problem to a full software support contract encompassing any or all
of its customer applications. The Company is a single source provider due to its
ability to (i) install hardware and application software for local area
networks, (ii) configure, upgrade and maintain such systems, and (iii) provide
training relating to such systems to its customers.
Customers
The Company targets its marketing efforts primarily on manufacturers,
distributors, retailers and wholesalers in the food processing, consumer
products, petro chemical products, public utilities and pharmaceutical sectors,
as well as other high-volume wholesalers. As of May 31, 1997, the Company had
licensed RIMS.2001 to 22 customers operating a total of 29 warehouses.
Customer orders for the Company's RIMS.2001 products over the last two
fiscal years and the first nine months of fiscal 1997 have ranged from
approximately $50,000 to over $2 million. Due to the size of most orders and the
need for differing amounts of modification
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for each installation, the Company historically has obtained orders from a
relatively small number of new customers each fiscal quarter. As a result,
individual customers have often accounted for more than 10% of total revenues in
a particular fiscal period. For the fiscal year ended May 31, 1995, the Company
had two customers that accounted for approximately 34% and 13% of total
revenues. For the fiscal year ended May 31, 1996, the Company had three
customers that accounted for approximately 15%, 14% and 12% of total revenues.
For the nine months ended February 28, 1997, the Company had two customers that
accounted for approximately 21% and 16% of total revenues. Because of the nature
of the Company's business operations, the Company anticipates that customers
that account for more than 10% of total revenues for a fiscal period will vary
from period to period depending on the status and timing of significant orders
by a particular customer or customers in any given fiscal period. However, as
sales of the standard RIMS.2001 product increase and the average dollar amount
of system orders decreases, the Company expects that the number of customers
accounting for more than 10% of total revenues for a fiscal period will decline.
Sales and Marketing
The Company currently markets its products and services primarily through a
direct sales force in North America and directly and indirectly in other parts
of the world. The Company conducts comprehensive marketing programs that include
telemarketing, public relations, direct mail, advertising, seminars, trade shows
and ongoing customer communications programs. Sales and marketing personnel are
located at the Company's headquarters in Massapequa, New York and in field
offices located in Atlanta, Georgia, Ann Arbor, Michigan, Pittsburgh,
Pennsylvania and Cranston, Rhode Island. The Company expects to use a portion of
the proceeds of this offering to upgrade and expand its existing field offices
and to open two additional North American sales and support offices in fiscal
1998, which offices will likely be located in Chicago and Los Angeles. The
Company also expects to use a portion of the proceeds of this offering to open
in fiscal 1998 its first two international sales and support offices, which
offices will likely be located in Europe and Australia.
The Company obtains sales leads through advertising, seminars, trade shows
and relationships with industry consultants. A typical sales cycle begins with
the generation of a sales lead or the receipt of a request for proposal ("RFP")
from a prospective customer or his representative. After qualification of the
sales lead and analysis of the prospective customer's requirements, a formal
proposal in response to the RFP is prepared. The proposal generally describes
how RIMS.2001 is expected to meet the RFP requirements and associated costs.
Product demonstrations are often conducted at the prospective customer's
facilities using realistic data and scenarios. Site visits to other RIMS.2001
installations are also encouraged by the Company's sales staff. While the sales
cycle varies substantially from customer to customer, it typically ranges from
three to six months for a standard system and from six to 12 months for a system
requiring substantial modification The Company expects that the sales cycle for
the standard RIMS.2001 system will be reduced to 60 to 90 days as the system
becomes more widely known through increased advertising.
The Company often employs an innovative conference room pilot approach for
potential new customers. The potential customer is offered a fully-functioning
RIMS.2001 system for configuration, evaluation and analysis. The client executes
the RIMS.2001 application by working hands-on with a test machine in a
controlled environment at its own headquarters. The conference room pilot offers
a unique opportunity to confront issues that a customer might otherwise face in
the actual operation of its warehouse, and to work with the Company to solve
potential problems prior to full-scale system implementation. The Company
believes this program is instrumental in establishing client confidence and
promoting additional awareness of the broad functionality of the RIMS system.
The conference room pilot also enables potential customers to define additional
requirements for modification and provides mutual assurance to the Company and
the customer that any defined modifications are, in fact, needed. A client fee
and the costs of the necessary training services are charged to the potential
customer in connection with this program. At the conclusion of the pilot period,
the customer has the option to request a full refund of any license fees paid.
To date, no customer has requested a refund.
In addition, the Company has developed a standardized, comprehensive and
detailed implementation plan to guide new customers smoothly from contract
signing to system startup. Experienced project managers utilize this plan to
ensure that projects are completed effectively and within budget. Depending on
the experience level of the customer and the ease of host integration, a first
time customer will be placed on a plan that ranges from 16 to 24 weeks past
contract signing. Subsequent sites can typically be implemented four to eight
weeks apart.
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The Company intends to supplement its marketing efforts by aligning itself
with complimentary solutions providers and technology partners. Strategic
alliances also assist the Company in keeping pace with technological
developments of the major software and hardware vendors and, in certain
instances, provide the Company with product development services. The Company
has entered into a strategic alliance with QAD, Inc., the developer of the
MFG/PRO ERP system. This relationship includes co-marketing and
technology-sharing arrangements, and will provide the Company access to a very
large existing customer base. Purchasers of the MFG/PRO ERP system may be linked
to RIMS.2001 through an application program interface module that contains
software of the Company as an integral component. The integration of the
Company's software into the application program interface assures purchasers of
the MFG/PRO ERP system that any future upgrades to the system will also upgrade
the warehouse management system of such customer if such customer has RIMS.2001
in place. A purchaser of an MFG/PRO ERP system that is not linked to RIMS.2001
will not receive the benefit of this upgrade capability. Currently, RIMS.2001 is
the only available warehousing solution that conforms with the MFG/PRO ERP
system application program interface and provides upgrade capability. This
upgrade capability provides customers with a significant cost savings by
eliminating the customer's need to adjust interfaces to maintain the integrity
between MFG/PRO ERP system and RIMS.2001.
The Company intends to establish itself in the international business
market and currently markets RIMS.2001 through resellers located in Canada,
South America, Mexico and the United Kingdom. These resellers are established
systems integrators with large customer bases in their respective regions. The
Company's agreements with such resellers are not exclusive, except for the
Company's agreement with its United Kingdom reseller, which is exclusive in the
United Kingdom and Ireland and non-exclusive in Scandinavia and Germany. The
Company intends to establish additional non-exclusive international resellers in
Europe, Africa, the Middle East, Asia and Australia. As the number of foreign
resellers expands, the Company intends to strategically locate sales and support
offices throughout the world to support these distributors.
In the first nine months of fiscal 1997, approximately 1.9% of the
Company's revenues were generated outside the United States. The Company expects
that international sales will significantly increase as it adds additional
international resellers and opens Company-owned international sales and support
offices. There are a number of risks inherent in the Company's current and
proposed international business activities. There can be no assurance that such
factors will not have an adverse effect on the revenues from the Company's
future international sales and, consequently, on the Company's results of
operations.
Product Development
The Company seeks to offer an extensive, integrated product line that
provides complete warehouse management functionality to warehouses worldwide. To
effect this strategy, the Company intends to continue to introduce new modules,
upgraded functionality and enhancements to existing products.
The Company, through its development and support personnel, works closely
with its customers and prospective customers to determine their requirements and
to design enhancements and new products to meet customer needs. Using the focus
group approach and input from the user community, the Company's steering
committee will select suitable enhancements for inclusion in future releases of
RIMS.2001. Software development is funded by Company funds and, to a lesser
extent, customer funds. Product improvements are often initiated by customer
funding of modifications that can be incorporated into the standard package.
Customers benefit by funding enhancements that improve the baseline product
through lower maintenance costs and future ability to upgrade. All Company
product development is performed by its employees. The Company's capitalized
software development costs were $844,244, $464,477, $815,908 and $1,045,342 in
fiscal 1994, 1995 and 1996 and the first nine months of fiscal 1997,
respectively.
The original version of RIMS.2001 was introduced in June 1994 (Version
3.0). The Company plans to undertake continuous product improvement to ensure
competitiveness. New modules and features are being added and the Company's goal
is to release two new versions per year. In May, 1997, the Company released
Version 3.4, and Version 3.5 is scheduled for release in the third calendar
quarter of 1997.
Warehouses for different vertical markets often require different features
and functionality. In addition to modifying standard RIMS.2001 product, the
Company is in the initial stages of developing pre-configured ver-
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sions of RIMS.2001 that the Company anticipates will address the needs of
specific vertical markets. The Company believes that the expertise developed in
each of these vertical markets also will further contribute to its standard
RIMS.2001 product. The RIMS.Food product, which was introduced in May 1997, was
the first of these versions. In the development of RIMS.Food, the Company
established a focus group consisting of current and potential clients in the
food manufacturing and distribution industry. The focus group provided
direction, guidance and partial funding for the development of RIMS.Food. The
Company intends to replicate this process to establish itself in other vertical
markets and, upon development of each industry-specific version of RIMS.2001, to
hire a dedicated sales force to market such product within the applicable
vertical market. The Company has initially targeted the automotive, consumer
products, petro chemical products, public utilities and pharmaceutical products
industries as additional markets for an industry-specific RIMS.2001 product, and
intends to introduce its next industry-specific product in the fourth quarter of
fiscal 1998.
The Company is continuing its software development efforts by designing
enhancements to RIMS.2001 using Internet and intranet-based technology,
including enhancements based on a combination of the Java language and HTML
(hypertext markup language). By incorporating this technology into RIMS.2001,
authorized users on the World Wide Web will be able to access information in any
RIMS.2001 World Wide Web-enabled server, utilizing standard World Wide Web
browsers. For example, a RIMS.2001 customer will be able to permit its
authorized users to access its RIMS.2001 data repository via the World Wide Web,
which will reduce the burden on its customer service department because the
status of orders and the location of inventory for an order may be monitored
directly by the authorized user (i.e., a retail customer or plant manager). The
Company's development of an Intranet-based application (Java and HTML) will
permit warehouse management and related activity (e.g. customer service) to be
performed entirely through World Wide Web browsers within the confines of the
client organization. This architecture will permit access to data from
authorized users via a familiar browser interface. Scalability and ease of
maintenance are additional benefits of this architecture.
There can be no assurance that the development of these product
enhancements will be completed successfully or that they will include the
features required to achieve market acceptance. The introduction of each new
release of RIMS.2001 has resulted in enhancements of earlier releases as the new
releases offer improved features and functionality over prior versions. Since
the Company continues to offer earlier releases of RIMS.2001, to service,
support and provide maintenance on such earlier releases and to make new
releases of RIMS.2001 available to customers, the obsolescence of earlier
releases has not had and is not expected to have a material impact on the
Company's results of operations or financial condition. Delays or difficulties
associated with introductions of new features, modules and products could have a
material adverse effect on the Company's business, results of operations or
financial condition.
Competition
The market for warehouse management and distribution software and related
services is intensely competitive and is characterized by rapid changes in
technology and user needs and the frequent introduction of new products and
product enhancements. The Company's competitors and potential market entrants
range from small, privately-held firms to large national and international
organizations with more extensive technical staffs and technological resources,
larger marketing and sales organizations, and greater financial resources than
the Company. The Company also competes with software applications developed by
the internal management information system departments of its potential
customers. The Company, however, believes that potential customers increasingly
will purchase software applications from outside vendors, including the Company,
due to high development costs, poor support, the lack of comparable
functionality and inconsistent or delayed development schedules.
The Company believes that historically the market for warehouse management
and distribution software could be characterized by the size of the customer or
the complexity of the customer's warehouse handling environment. Competitors in
the high end of the market offered turnkey systems that typically integrated all
aspects of hardware, software and services related to the warehouse management
system, including real-time labor management functionality, labor planning,
tracking and management functionality, integrated host system communications,
modular software development, material handling device control, automated
storage equipment control, inbound/outbound traffic management, and full
receiving, putaway/storage, order processing, picking,
34
<PAGE>
shipping, inventory control and management reporting functionality. Middle
market competitors differ from high end competitors primarily by offering
systems with limited hardware flexibility, little or no management, labor and
storage reporting, little or no radio frequency functionality and reduced
hardware and software costs. Middle market systems generally provide excellent
tracking and control, but do not actively help to manage the warehouse
operation. At the lower end of the market, competitors tend to specialize in a
specific aspect of warehouse functionality, such as receipts tracking, warehouse
data collection tasks or carousel control, and have smaller technical and
development staffs.
The Company believes that, unlike most of its competitors, it can compete
effectively in both the high end and middle segments of the market due to the
scaleability, flexibility, configurability, functionality and price of
RIMS.2001. The Company has a large number of competitors in these markets and
believes that its primary competitors in these markets are McHugh Freeman and
Associates, Manhattan Associates and Catalyst International, Inc., each of which
provides complete warehouse management and distribution software. In addition,
certain well-known computer manufacturers and software developers, such as
SAP AG, J.D. Edwards & Co., BAAN Company N.V. and PeopleSoft Inc., offer
integrated manufacturing or accounting software packages that include a
warehouse management component. Many of the Company's competitors have greater
name recognition, more extensive engineering, management and marketing
capabilities and significantly greater financial, technological and personnel
resources that the Company.
Over the last few years, as software developers began to develop software
for more than one customer in the same industry, the market for warehouse
management systems has increasingly been characterized by the industry in which
the customer competes. By tailoring RIMS.2001 to support the unique features of
certain targeted markets, the Company believes it will have a competitive
advantage in selling prospective customers in the same industry where similar
functionality and implementation issues arise. The Company has identified the
foods, automotive, consumer products, petro chemical products, public utilities
and pharmaceutical products markets as its target markets, and has developed
RIMS.Food as a specialized application of RIMS.2001 targeted at the food
industry.
The Company believes that the competitive factors affecting its markets
include features such as openness, scalability, ability to integrate with third
party products, functionality, adaptability, ease of use, product reputation,
quality, performance, price, customer service and support, effectiveness of
sales and marketing efforts and company reputation. Although the Company
believes that it currently competes favorably with respect to such factors,
there can be no assurance that the Company can maintain its competitive position
against current and potential competitors, especially those with greater
financial, marketing, service, support, technical and other resources than the
Company.
Proprietary Rights, Licenses and Pricing
The Company relies on a combination of contract, copyright, trademark,
trade secret laws, and other measures to protect its proprietary information.
The Company does not have any software patents or patent applications. Trade
secret and copyright laws afford only limited protection. The Company believes
that, because of the rapid pace of technological change in the computer software
industry, trade secret and copyright protection are less significant in
affecting the Company's business, results of operations or financial condition
than factors such as the knowledge, ability and experience of the Company's
employees, frequent product enhancements and timeliness and quality of support
services.
The Company generally sells its products to its customers under a
non-transferable perpetual license. The Company generally licenses its products
solely for the customers' internal operations and only at designated sites. The
Company also makes available multi-site licenses and enterprise licenses.
Domestic multi-site licenses are discounted from the first license fee for the
second site and beyond. Enterprise licenses are structured as a one time fee
with unlimited usage, plus a nominal fee as additional sites are installed with
the software. Licensing of RIMS.2001 is concurrent user based. Discounts are
generally applied for multi-site licenses. International license fees tend to be
slightly higher and are structured by region.
The Company does not provide source code to the customer under its
licenses. The Company believes that providing source code increases the
likelihood of misappropriation or other misuse of the Company's intellec-
35
<PAGE>
tual property. The Company has, however, entered into source code escrow
agreements with certain customers whereby source code is made available to a
customer. This is a common practice in the software industry. Under the terms of
the Company's license agreements, the Company generally owns all modifications
to its software that are implemented for a customer.
The Company is not aware of any case in which its products, trademarks or
other proprietary rights infringe the property rights of third parties, but has
not performed any independent investigations to determine whether such
infringement exists. Accordingly, there can be no assurance that third parties
will not assert infringement claims against the Company in the future with
respect to current or future products or that any such assertion may not require
the Company to enter into royalty arrangements or result in litigation. As the
number of software products in the industry increases and the functionality of
these products further overlap, the Company believes that software developers
may become increasingly subject to infringement claims. Any such claims, with or
without merit, can be time consuming and expensive to defend.
Employees
As of June 15, 1997, the Company had 49 employees. The Company had five
employees primarily in management and administration, 18 in product development,
eight in software services, eight in customer support, and ten in sales and
marketing. The Company's employees are not represented by any collective
bargaining organization and the Company has never experienced a work stoppage.
The Company considers its relations with its employees to be satisfactory.
Facilities
The Company's headquarters are located in Massapequa, New York in
approximately 10,000 square feet of office space that is leased from Robocom
Properties, Inc., a corporation of which the shareholders are currently officers
or directors of the Company. The annual rental on the corporate headquarters is
$168,000 (excluding operating expenses, insurance, property taxes and
assessments), subject to increases based upon fluctuations in the prime rate, as
published in the Wall Street Journal. The lease expires on December 31, 2010.
See "Certain Transactions."
The Company also leases approximately 2,000 square feet in Teaneck, New
Jersey. The lease expires on January 1, 2002 and may be extended by the Company
for an additional five-year period. The lease has an annual rental rate of
$33,297 (excluding operating expenses, insurance, property taxes and
assessments).
The Company believes that its existing facilities are sufficient for its
operations, although it intends to open additional sales and support offices in
the future with a portion of the proceeds of this offering.
36
<PAGE>
MANAGEMENT
Directors and Executive Officers
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- -------------------------- ----- -------------------------------------------------------------------------
<S> <C> <C>
Irwin Balaban ............ 65 Chairman of the Board, President and Chief Executive Officer
Lawrence B. Klein ...... 63 Executive Vice President - Marketing and Sales, Secretary and a Director
Steven Kuhl ............ 38 Vice President - Product Development
Robert O'Connor ......... 38 Vice President - Systems Development
Elizabeth A. Burke ...... 37 Vice President - Finance, Chief Financial Officer and Treasurer
Herbert Goldman ......... 66 Director
Barry J. Gordon ......... 51 Director
</TABLE>
Irwin Balaban, a co-founder of the Company, has been Chairman of the Board,
President and Chief Executive Officer of the Company since 1983. Prior to
founding the Company, Mr. Balaban was the Manager of Logistics for the Systems
Management Division of Sperry Corporation.
Lawrence B. Klein, a co-founder of the Company, has been Executive Vice
President - Marketing and Sales and a director of the Company since October
1991. Prior thereto, Mr. Klein served as Vice President - Automated Factory
Systems and Sales of the Company from July 1987 to October 1991. Prior to
founding the Company, Mr. Klein was an Engineering Section Manager of Computer
Applications Equipment and Facilities at Sperry Corporation.
Steven Kuhl has been Vice President - Product Development of the Company
since October 1991. Prior thereto, Mr. Kuhl served as a Programming Manager of
the Company from 1983 to October 1991. Prior to joining the Company, Mr. Kuhl
was employed in various positions by Sperry Corporation, including systems
analyst, programming and programming group leader.
Robert O'Connor has been Vice President - Systems Development of the
Company since October 1991. Prior thereto, Mr. O'Connor served as a Programming
Manager of the Company from 1983 to October 1991. Prior to joining the Company,
Mr. O'Connor was employed as a programming group leader by Sperry Corporation.
Elizabeth A. Burke has been Vice President - Finance, Chief Financial
Officer and Treasurer of the Company since April 1997. From July 1994 to January
1996, Ms. Burke was Vice President of Finance/Controller of Marvel Comics Group,
a division of Marvel Entertainment Group, Inc. ("Marvel"). From November 1991 to
July 1994, Ms. Burke was Corporate Controller of Marvel. From 1981 to November
1991, Ms. Burke was employed at Arthur Andersen LLP.
Herbert Goldman, a co-founder of the Company, has been a director of the
Company since 1983 and a consultant to the Company since his retirement in July
1996. Prior to his retirement, Mr. Goldman had been Executive Vice President -
Operations of the Company since October 1991.
Barry J. Gordon has been a director of the Company since May 1997. Since
1980, Mr. Gordon has been President and a director of American Fund Advisors,
Inc., a money management firm, and has served as Chairman of the Board of that
company since 1987. In addition, Mr. Gordon is a director of Hain Pure Food
Corp., a publicly traded specialty foods product company, a director of Skylands
Park Management, Inc., a publicly traded owner of a minor league baseball
stadium, a director of Winfield Capital Corp., a publicly traded SBIC, and
President of the John Hancock Global Technology Fund, a mutual fund specializing
in telecommunications and technology securities. Mr. Gordon is also the Chairman
and Chief Executive Officer of the general partner
37
<PAGE>
of a limited partnership that owns the New Jersey Cardinals, a Class "A" minor
league affiliate of the St. Louis Cardinals. Mr. Gordon is also Chairman and
Chief Executive Officer of the general partner of the limited partnership that
owns the Norwich Navigators, a Class "AA" minor league affiliate of the New York
Yankees.
All directors hold office until the next annual meeting of shareholders and
until their successors have been duly elected and qualified. Executive officers
are elected by, and serve at the discretion of, the Board of Directors.
The Company has agreed, for a period of two years following the date of
this Prospectus, if so requested by BlueStone, to nominate and use its best
efforts to elect a designee of BlueStone as a director of the Company
or, at BlueStone's option, as a non-voting advisor to the Company's Board of
Directors. The Company's officers, directors and shareholders have agreed to
vote their shares of Common Stock in favor of such designee. BlueStone has not
yet exercised its right to designate such a person.
The Company has applied for and intends to obtain key man life insurance on
the life of each of Messrs. Balaban and Klein in the amount of $1,500,000.
Key Employees
Judy Frenkel has been Manager of Systems Analysis of the Company since
September 1992. Prior thereto, Ms. Frenkel was a Senior Systems Analyst at the
Company from October 1988 to September 1992 and a Systems Analyst at the Company
from April 1986 to October 1988.
Chung-Hsin Lee has been the Manager of Software Development of the Company
since November 1994. Prior thereto, Mr. Lee served as the technical leader in
the development of radio frequency (RF) subsystems for the Company's products
from September 1985 to November 1994.
Richard L. Wilkins has been Director of Sales of the Company since January
1994. From 1990 to January 1994, Mr. Wilkins was Director of New Product
Development and Marketing of Fairbanks Scales, Inc., a manufacturer of
commercial scales and weighing systems.
Martin Liebross has been Director of Network Systems Group of the Company
since September 1993. From August 1989 to September 1993, Mr. Liebross was
President of Soma Lan Technologies, Inc., a computer network integrator.
Committees of the Board of Directors
Upon the consummation of this offering, the Board of Directors intends to
establish an Audit Committee and a Compensation Committee. The Audit Committee
will recommend to the Board of Directors the engagement of independent certified
public accountants and review the audit engagement, including the scope and
results of the Company's accounting and control procedures and the accuracy of
its system of internal accounting and control procedures. The Compensation
Committee will review and make recommendations to the Company's Board of
Directors relating to the compensation of executives of the Company and
administer the Company's stock option and incentive plans. A majority of the
members of the Audit Committee and all of the members of the Compensation
Committee will be non-employee directors.
Directors' Compensation
Each non-employee director receives $500 for each Board meeting attended
and is reimbursed for all out-of-pocket expenses incurred in connection with
attendance at meetings of the Board or any committee thereof. In connection with
the adoption of the Option Plan in May 1997, the Board of Directors authorized
the grant on the date of this Prospectus to each non-employee director of
five-year options to purchase 5,000 shares of Common Stock at the initial public
offering price per share.
38
<PAGE>
Executive Compensation
The following table sets forth the cash compensation paid by the Company
for services rendered during the fiscal year ended May 31, 1997 to each
executive officer who received total compensation in excess of $100,000 (the
"Named Executive Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
----------------------- Other -------------
Name and Annual LTIP All Other
Principal Position Salary Bonus Compensation(1) Payouts($) Compensation(2)
- -------------------------- ------------- ------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Irwin Balaban ............ $146,250(3) -- $13,188 -- $2,925
President and Chief
Executive Officer
Lawrence B. Klein ...... $127,257(4) -- $12,216 -- $2,545
Executive Vice President
-- Marketing and Sales
</TABLE>
- ------------
(1) Represents amounts paid for automobile expenses and certain nonaccountable
expenses.
(2) Represents matching contributions made by the Company pursuant to the
Company's 401(k) Plan.
(3) Reflects a continuing voluntary reduction in salary from fiscal 1995 of
$48,750.
(4) Reflects a continuing voluntary reduction in salary from fiscal 1995 of
$42,419.
The Company did not grant any stock options to the Named Executive Officers
during the fiscal year ended May 31, 1997.
Compensation Committee Interlocks and Insider Participation
The Company did not have a compensation committee during the fiscal year
ended May 31, 1997. Messrs. Balaban, Klein and Goldman each participated in
deliberations concerning executive officer compensation. Upon the consummation
of this offering, the Board of Directors intends to establish a Compensation
Committee. All of the members of the Compensation Committee will be non-employee
directors. No executive officer of the Company serves as a member of the board
of directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Company's Board of Directors.
Employment and Consulting Agreements
The Company has entered into employment agreements with Messrs. Balaban,
Klein, Kuhl and O'Connor. Each employment agreement is effective as of May 15,
1997, and has a three-year term. Under each employment agreement, the employee
receives an annual base salary and is entitled to participate in all benefit
programs generally available to executive officers of the Company.
Pursuant to their respective employment agreements, Mr. Balaban serves as
President and Chief Executive Officer of the Company and receives an annual base
salary of $230,000; Mr. Klein serves as Vice President - Marketing and Sales of
the Company and receives an annual base salary of $195,000; Mr. Kuhl serves as
Vice President - Product Development of the Company and receives an annual base
salary of $120,000; and Mr. O'Connor serves as Vice President - Systems
Development of the Company and receives an annual base salary of $120,000. On
November 30 of each year, commencing November 30, 1998, each employee's base
salary will automatically increase by 10%.
Under the employment agreements, each employee was granted, as of the date
of this Prospectus, incentive stock options under the Option Plan to purchase
shares of Common Stock. Messrs. Balaban and Klein received options to purchase
50,000 and 45,000 shares, respectively, at 110% of the initial public offering
price per share and each of Messrs.
39
<PAGE>
Kuhl and O'Connor received options to purchase 30,000 shares at the initial
public offering price per share. The options granted to Messrs. Balaban and
Klein fully vest after one year and the options granted to Messrs. Kuhl and
O'Connor vest equally over three years. All options expire on the fifth
anniversary of the date of grant.
In their employment agreements, each of Messrs. Balaban, Klein, Kuhl and
O'Connor has agreed that during the term of his employment agreement and for a
period of one year thereafter (in the event of termination of employment for
other than "cause" or "good reason" ) or two years thereafter (in the event of
termination of employment for "cause"), he will not, without the prior written
consent of the Company, compete with the Company by engaging in any capacity in
any business which is competitive with the business of the Company.
On May 15, 1997, Herbert Goldman, a director of the Company, entered into a
three-year consulting agreement with the Company to provide consulting services
with respect to new product development and related technical matters. Pursuant
to this agreement, Mr. Goldman will be paid an annual retainer of $12,000 plus a
per diem of $1,000 for each day Mr. Goldman performs consulting services at the
Company's request. In addition, on the date of this Prospectus, Mr. Goldman will
be granted five-year stock options to purchase up to 15,000 shares of Common
Stock at a purchase price equal to 110% of the initial public offering price per
share. During the period from July 1, 1996 to May 15, 1997, Mr. Goldman received
compensation aggregating approximately $7,415 for providing his consulting
services under an informal consulting arrangement with the Company. See "Certain
Transactions."
Option Plan
Effective May 15, 1997, the Company adopted the 1997 Stock Option and
Long-Term Incentive Compensation Plan (the "Option Plan") for the purpose of
attracting, retaining and maximizing the performance of executive officers and
key employees and consultants. The Company has reserved 325,000 shares of Common
Stock for issuance under the Option Plan. The Option Plan has a term of ten
years. The Option Plan provides for the grant of "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, non-statutory stock options, stock appreciation rights and restricted
stock awards. It is contemplated that the Option Plan will eventually be
administered by a Compensation Committee of the Board of Directors (the
"Compensation Committee"), which Committee has not yet been created. The
exercise price for non-statutory stock options may be equal to or less than 100
percent of the fair market value of shares of Common Stock on the date of grant.
The exercise price for incentive stock options may not be less than 100 percent
of the fair market value of shares of Common Stock on the date of grant (110
percent of fair market value in the case of incentive stock options granted to
employees who hold more than ten percent of the voting power of the Company's
issued and outstanding shares of Common Stock).
Options granted under the Option Plan may not have a term of more than a
ten-year period (five years in the case of incentive stock options granted to
employees who hold more than ten percent of the voting power of the Company's
Common Stock) and generally vest over a three-year period. Options generally
terminate three months after the optionee's termination of employment by the
Company for any reason other than death, disability or retirement, and are not
transferable by the optionee other than by will or the laws of descent and
distribution.
The Option Plan also provides for grants of stock appreciation rights
("SARs"), which entitle a participant to receive a cash payment, equal to the
difference between the fair market value of a share of Common Stock on the
exercise date and the exercise price of SAR. The exercise price of any SAR
granted under the Option Plan will be determined by the Board of Directors in
its discretion at the time of the grant. SARs granted under the Option Plan may
not be exercisable for more than a ten year period. SARs generally terminate one
month after the grantee's termination of employment by the Company for any
reason other than death, disability or retirement. Although the Board of
Directors has authority to grant SARs, it does not have any present plans to do
so.
Restricted stock awards, which are grants of shares of Common Stock that
are subject to a restricted period during which such shares may not be sold,
assigned, transferred, made subject to a gift, or otherwise disposed of, or
mortgaged, pledged or otherwise encumbered, may also be made under the Option
Plan. At this time, the Board of Directors has not granted, and does not have
any plans to grant, restricted shares of Common Stock.
As of the date of this Prospectus, options to purchase 210,000 shares of
Common Stock have been granted under the Option Plan, including five-year
options to purchase 50,000, 45,000 and 15,000 shares at an exercise price equal
to 110% of initial public offering price per share, subject to adjustment,
granted to Messrs. Balaban, Klein and Goldman, respectively, and five-year
options to purchase 30,000, 30,000, 30,000, 5,000, and 5,000 shares at an
exercise price equal to the initial public offering price per share, subject to
adjustments, granted to Ms. Burke and Messrs. Kuhl, O'Connor, Goldman and
Gordon, respectively.
401(k) Plan
The Company maintains the Robocom Systems Inc. 401(k) Savings Plan (the
"401(k) Plan"). The 401(k) Plan is a tax-qualified plan covering Company
employees who, as of the enrollment eligibility dates under the
40
<PAGE>
401(k) Plan, have attained age 21 and completed at least six months of service
with the Company. Participants may make elective deferrals that are fully
vested at all times. The Company makes a matching contribution in an amount
equal to 50% of each participant's elective deferrals and may also make
additional discretionary contributions. Employer contributions are 20% vested
after two years of service, 40% vested after three years of service, 60% vested
after four years of service, 80% vested after five years of service and 100%
vested after six years of service. Matching contributions to the 401(k) Plan
have been made by the Company on behalf of the executive officers in 1996 as
indicated above in the Summary Compensation Table. Benefits will normally be
distributed to an employee upon (i) the employee's retirement, (ii) the
employee's death or disability, (iii) the termination of the employee's
employment with the Company, (iv) the termination of the 401(k) Plan or (v) a
requested in service withdrawal or withdrawal due to financial hardship.
Pension Plan
The Company maintains the Robocom System Inc. Pension Plan and Trust (the
"Pension Plan"). The Pension Plan covers all employees of the Company (other
than sales personnel) who have attained age 21 and completed at least one year
of service with the Company as of the enrollment eligibility dates under the
Pension Plan. The Company makes an annual contribution to the Pension Plan on
behalf of employees based upon the age of the employee at such time. The Pension
Plan targets a retirement benefit of approximately 25% of an employee's income
at age 65. The Pension Plan is fully funded by the Company. Benefits are 20%
vested after two years of service, 40% vested after three years of service, 60%
vested after four years of service, 80% vested after five years of service and
100% vested after six years of service. Vested benefits will normally be
distributed to an employee upon (i) the employee's retirement, (ii) the
employee's death or disability or (iii) the employee's termination of
employment.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of the date of this Prospectus, and as
adjusted to reflect the sale of the 1,500,000 shares offering hereby, certain
information known to the Company concerning the beneficial ownership of the
Common Stock by (i) each person known by the Company to own beneficially more
than 5% of the outstanding Common Stock, (ii) each director of the Company,
(iii) each Named Executive Officer and (iv) all directors and executive officers
of the Company as a group:
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percentage of Outstanding
Beneficial Owner (1) Beneficially Owned(2) Shares Beneficially Owned(2)
- ------------------------------------------------------------- ----------------------- -----------------------------------
Before Offering After Offering
----------------- ---------------
<S> <C> <C> <C>
Irwin Balaban ............................................. 564,000 28.7% 16.3%
Herbert Goldman(3) .......................................... 564,000 28.7 16.3
Lawrence B. Klein .......................................... 564,000 28.7 16.3
Barry J. Gordon ............................................. -- -- --
All executive officers and directors as a group (7 persons). 1,936,400 98.4 55.8
</TABLE>
- ------------
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
Robocom Systems Inc., 511 Ocean Avenue, Massapequa, New York 11758.
(2) Except as indicated in the footnotes to this table, the Company believes
that all persons named in the table have sole voting and investment power
with respect to all Common Stock shown as beneficially owned by them. In
accordance with the rules of the Commission, a person or entity is deemed to
be the beneficial owner of Common Stock that can be acquired by such person
or entity within 60 days upon the exercise of options or warrants or other
rights to acquire Common Stock. Each beneficial owner's percentage ownership
is determined by assuming that options and warrants that are held by such
person (but not those held by any other person) and which are exercisable
within 60 days have been exercised. The inclusion herein of such shares
listed as beneficially owned does not constitute an admission of beneficial
ownership. Percentages herein assume a base of 1,967,984 shares of Common
Stock outstanding as of the date of this Prospectus and a base of 3,467,984
shares of Common Stock outstanding immediately after the consummation of
this offering.
(3) Consists of 564,000 shares held by the Herbert & Naomi J. Goldman Living
Trust, Herbert and Naomi J. Goldman, trustees.
41
<PAGE>
CERTAIN TRANSACTIONS
The Company leases approximately 10,000 square feet of office space, which
functions as its corporate headquarters, in Massapequa, New York, pursuant to a
lease between the Company and Robocom Properties Inc. ("Robocom Properties")
that expires on December 31, 2010. The shareholders of Robocom Properties are
Messrs. Balaban, Goldman, Klein, Kuhl and O'Connor. The total rental expense
paid by the Company to Robocom Properties in each of the fiscal years ended May
31, 1994, 1995 and 1996 was $168,000, which amounts were paid in equal monthly
installments of $14,000. Since June 1, 1996, the Company has continued to pay,
and through December 1997 will pay, rent in monthly installments of $14,000 to
Robocom Properties. Commencing January 1, 1998, the annual base rental of
$168,000 payable under the lease will be adjusted each year by the ratio of the
prime rate as published in the Wall Street Journal on January 2 of such year to
the prime rate as published in the Wall Street Journal on January 2, 1997, which
was 8.25%. However, the parties have agreed that rent will not be less than
$14,000 per month. The Company believes that these rental terms are at least as
favorable to the Company as could be obtained from an unaffiliated third party.
Herbert Goldman, a director of the Company, has been acting as a consultant
to the Company since his retirement as Executive Vice President - Operations of
the Company effective July 1, 1996. During the period from July 1, 1996 to May
15, 1997, Mr. Goldman received compensation aggregating approximately $7,415 for
his consulting services. On May 15, 1997, the Company and Mr. Goldman entered
into a three-year agreement pursuant to which Mr. Goldman will continue to
provide consulting services to the Company on an as-needed basis. See
"Management -- Employment and Consulting Agreements."
The Company made distributions to its shareholders of $850,000 in fiscal
1993, did not make any such distributions in fiscal 1994, 1995 or 1996 and made
distributions to its shareholders aggregating $900,000 in the fourth quarter of
fiscal 1997. In addition, the Company will pay the Final S Corporation
Distribution of $1,600,000 using a portion of the net proceeds to be received by
the Company in this offering. In June 1997, the Company entered into an
indemnity agreement with its current shareholders pursuant to which the Company
will indemnify its current shareholders against additional income taxes
resulting from adjustments made (as a result of a final determination made by a
competent tax authority) to the taxable income reported by the Company as an S
Corporation for periods prior to this offering, but only to the extent those
adjustments result in a decrease in income taxes otherwise payable by the
Company.
Between November 1993 and January 1997, Irwin Balaban, Lawrence B. Klein
and Herbert Goldman made demand loans to the Company from time to time in the
aggregate amounts of $265,000, $115,000 and $265,000, respectively. Interest
rates on the loans ranged from 6% per annum to 8% per annum. All of such loans
were paid in full in January 1997.
Each of Messrs. Balaban, Klein and Goldman has personally guaranteed the
Company's Line of Credit.
Future transactions, if any, between the Company and any of its officers,
directors and/or 5% shareholders will be on terms no less favorable to the
Company than would be obtained from independent third parties and will be
approved by a majority of the independent, disinterested directors of the
Company.
DESCRIPTION OF SECURITIES
The following statements do not purport to be complete and are qualified in
their entirety by reference to the detailed provisions of the Company's Amended
and Restated Certificate of Incorporation and By-Laws, copies of which have been
filed as exhibits to the Registration Statement of which this Prospectus forms a
part.
General
The Company is authorized to issue 10,000,000 shares of Common Stock, par
value $.01 per share, and 1,000,000 shares of Preferred Stock, par value $.01
per share (the "Preferred Stock"). As of the date of this Prospectus, 1,967,984
shares of Common Stock are issued and outstanding and held of record by eight
shareholders (of which an aggregate of 87,984 shares held by three shareholders
are subject to forfeiture upon termination of their employment and/or
consulting services prior to specified dates), and no shares of Preferred Stock
are issued and outstanding. Upon the consummation of this offering, there will
be 3,467,984 shares of Common Stock outstanding and no shares of Preferred Stock
outstanding.
42
<PAGE>
Common Stock
The holders of Common Stock have the right to one vote per share on all
matters submitted to a vote of holders of Common Stock. The holders of Common
Stock do not have preemptive or cumulative voting rights and are entitled to
dividends when, as and if declared by the Board of Directors. In the event of
liquidation, dissolution or winding up of the Company, after payment has been
made to the holders of Preferred Stock, if any, for the full amount to which
they are entitled, each holder of Common Stock will be entitled to share ratably
in the assets of the Company legally available for distribution to the holders
of Common Stock. The outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable.
Preferred Stock
The Board of Directors of the Company, without further shareholder action,
may issue shares of Preferred Stock in any number of series and may establish as
to each series the designation and number of shares to be issued and the
relative rights and preferences of the shares of each series, including
provisions regarding voting powers, redemption, dividend rights, rights upon
liquidation and conversion rights, any or all of which may be greater than the
rights of the Common Stock. The issuance of shares of Preferred Stock by the
Board of Directors could adversely affect the rights of holders of Common Stock
by, among other matters, delaying or preventing a change in control of the
Company or making removal of management more difficult. Additionally, the
issuance of Preferred Stock may have the effect of decreasing the market price
of the Common Stock.
Limitations on Directors' and Officers' Liability
The Company's Amended and Restated Certificate of Incorporation limits the
liability to the Company of individual directors for certain breaches of their
fiduciary duty to the Company. The effect of this provision is to eliminate the
liability of directors for monetary damages arising out of their failure,
through negligent or grossly negligent conduct, to satisfy their duty of care,
which requires them to exercise informed business judgment. The liability of
directors under the federal securities laws is not affected. A director may be
liable for monetary damages only if a claimant can show a breach of the
individual director's duty of loyalty to the Company, a failure to act in good
faith, intentional misconduct, a knowing violation of the law, an improper
personal benefit or an illegal dividend or stock purchase.
The Company's Amended and Restated Certificate of Incorporation also
provides that each director or officer of the Company serving as a director or
officer shall be indemnified and held harmless by the Company to the fullest
extent authorized by the New York Business Corporation Law (the "NYBCL"),
against all expense, liability and loss (including attorney fees, judgments,
fines, Employee Retirement Income Security Act, excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith.
New York Anti-Takeover Law and Certain Charter and By-law Provisions
Subsequent to this offering, the Company, as a New York corporation, will
be subject to the provisions of Section 912 of the NYBCL if and for so long as
it has a class of securities registered under Section 12 of the Exchange Act, at
least 25% of its total employees are employed primarily within New York or at
least 250 employees are so employed and at least 10% of the Company's voting
stock is owned beneficially by residents of the State of New York. The Company
expects to meet these tests and, accordingly, to be subject to Section 912 of
the NYBCL following completion of this offering. Section 912 of the NYBCL
provides, with certain exceptions, that a New York corporation may not engage in
a "business combination" (e.g., a merger, consolidation, recapitalization or
disposition of stock) with any "interested shareholder" for a period of five
years from the date that such person first became an interested shareholder
unless: (a) the transaction resulting in a person becoming an interested
shareholder, or the business combination, was approved by the board of directors
of the corporation prior to that person becoming an interested shareholder, (b)
the business combination is approved by the holders of a majority of the
outstanding voting stock not beneficially owned by such interested shareholder,
or (c) the business combination meets certain valuation requirements for the
stock of the New York corporation. An "interested shareholder" is defined as any
person that (a) is the beneficial owner of 20% or more of the outstanding voting
stock of a New York corporation or (b) is an affiliate or associate of the
corporation that at any
43
<PAGE>
time during the prior five years was the beneficial owner, directly or
indirectly, of 20% or more of the corporation's then outstanding voting stock.
These provisions are likely to impose greater restrictions on an unaffiliated
shareholder than on the existing shareholders, who will continue to own a
majority of the Common Stock after this offering.
Transfer Agent and Registrar
The Company's transfer agent and registrar for the Common Stock is
Continental Stock Transfer & Trust Company, 2 Broadway, New York, New York
10004.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this offering, 3,467,984 shares of Common Stock
will be issued and outstanding, of which the 1,500,000 shares offered hereby
will be freely tradeable without restriction or further registration under the
Securities Act, except that any shares purchased by "affiliates" of the Company
(as defined in Rule 144 promulgated under the Securities Act) will be subject to
the resale limitations of Rule 144.
The remaining 1,967,984 shares of Common Stock outstanding are deemed
"restricted securities," as that term is defined under Rule 144, and may only be
sold pursuant to an effective registration statement under the Securities Act,
in compliance with the exemption provisions of Rule 144 or pursuant to another
exemption under the Securities Act. Such restricted shares of Common Stock will
become eligible for sale, under Rule 144, subject to certain volume and manner
of sale limitations prescribed by Rule 144 and to the contractual restrictions
described below, at various times commencing 90 days following the date of this
Prospectus. All of the Company's officers, directors and shareholders have
agreed with BlueStone that until 12 months after the date of this Prospectus,
they will not, without the prior written consent of BlueStone, directly or
indirectly, sell, offer for sale, transfer, pledge or otherwise dispose of, any
securities of the Company or exercise any registration rights relating to any
securities of the Company. In addition, 87,984 shares of Common Stock are
subject to contractual restrictions on transfer that terminate during the fiscal
year ended May 31, 2000.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including a person who may be deemed an
"affiliate" of the Company, who has beneficially owned restricted securities for
at least one year is entitled to sell, within any three-month period, a number
of shares that does not exceed the greater of (i) 1% of the then outstanding
shares of Common Stock or (ii) the average weekly trading volume of the Common
Stock during the four calendar weeks preceding the date on which notice of such
sale was filed under Rule 144. Sales under Rule 144 are also subject to certain
requirements as to the manner of sale, notice and the availability of current
public information about the Company. A person who is not deemed to have been an
affiliate of the Company at any time during the 90 days preceding a sale by such
person, and who has beneficially owned the restricted shares for at least two
years, is entitled to sell such shares under Rule 144 without regard to any of
the restrictions described above.
44
<PAGE>
UNDERWRITING
The underwriters named below (collectively, the "Underwriters"), for which
BlueStone Capital Partners, L.P. ("BlueStone"), Coleman and Company Securities,
Inc. and Oscar Gruss & Son Incorporated are acting as representatives (the
"Representatives"), have agreed severally, not jointly, subject to the terms and
conditions contained in the underwriting agreement between the Company and the
Underwriters (the "Underwriting Agreement"), to purchase from the Company, and
the Company has agreed to sell to the several Underwriters, the 1,500,000 shares
of Common Stock offered hereby. The number of shares of Common Stock that each
Underwriter has agreed to purchase is set forth opposite its name below:
Underwriter Number of Shares
- -------------------------------------------------- -----------------
BlueStone Capital Partners, L.P. ...............
Coleman and Company Securities, Inc. ............
Oscar Gruss & Son Incorporated . ...............
Total ........................................
----------
1,500,000
==========
The Underwriters are committed on a "firm commitment" basis to purchase and
pay for all of the shares of Common Stock offered hereby (other than shares
offered pursuant to the over-allotment option) if any shares are purchased. The
shares of Common Stock are being offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters and subject
to approval of certain legal matters by counsel and to certain other conditions.
Through the Representatives, the several Underwriters have advised the
Company that they propose to offer the shares of Common Stock to the public at
the public offering price set forth on the cover page of this Prospectus. The
Underwriters may allow to certain dealers who are members of the National
Association of Securities Dealers, Inc. ("NASD") concessions, not in excess of
$ per share, of which not in excess of $ per share may be reallowed to
other dealers who are members of the NASD. After the commencement of the
offering, the public offering price, concessions and reallowance may be changed.
The Company has granted the Representatives an option, exercisable for 45
days following the date of this Prospectus, to purchase up to 225,000 additional
shares of Common Stock at the public offering price set forth on the cover page
of this Prospectus, less the underwriting discounts and commissions. The
Representatives may exercise this option in whole or, from time to time, in
part, solely for the purpose of covering over-allotments, if any, made in
connection with the sale of the shares of Common Stock offered hereby.
The Company has agreed to pay to BlueStone individually, and not as a
representative of the Underwriters, an accountable expense allowance of up to
$180,000, $50,000 of which has been paid as of the date of this Prospectus. The
Company has also agreed to pay all expenses in connection with qualifying the
shares of Common Stock offered hereby for sale under the laws of such states as
the Representatives may designate, including expenses of counsel retained for
such purpose by the Representatives.
The Company has agreed to issue to the Representatives and their designees,
for an aggregate of $150, the Representatives' Warrants to purchase up to
150,000 shares of Common Stock, at an exercise price of $____ per share (120% of
the public offering price per share). The Representatives' Warrants may not be
transferred for one year following the date of this Prospectus, except to the
officers and partners of the Representatives or the Underwriters or members of
the selling group, and are exercisable at any time, and from time to time,
during the four-year period commencing one year following the date of this
Prospectus (the "Warrant Exercise Term"). During the Warrant Exercise Term, the
holders of the Representatives' Warrants are given, at nominal cost, the
opportunity to profit from a rise in the market price of the Common Stock. To
the extent that the Representatives' Warrants are exercised or exchanged,
dilution to the interests of the Company's shareholders will occur. Further, the
terms upon which the Company will be able to obtain additional equity capital
may be adversely affected since the holders of the Representatives' Warrants can
be expected to exercise them at a time when the Company would, in all
likelihood, be able to obtain any needed capital on terms more favorable to the
Company than those provided in the Representatives' Warrants. Any profit
realized by the Representatives on the sale of the Representatives' Warrants or
the underlying shares of Common Stock may be deemed additional underwriting
compensation. Subject to certain limitations and exclusions, the Company has
agreed to register, at the request of the holders of a majority of the
Representatives' Warrants and at the Company's expense, the Representatives'
Warrants and the shares of Common Stock underlying the Representatives' Warrants
under the Securities Act on one occasion during the Warrant Exercise Term and to
include such Representatives' Warrants and such underlying shares in any
appropriate registration statement that is filed by the Company during the seven
years following the date of this Prospectus.
45
<PAGE>
The Company has agreed, for a period of two years following the date of
this Prospectus, if so requested by BlueStone, to nominate and use its best
efforts to elect a designee of BlueStone as a director of the Company, or, at
BlueStone's option, as a non-voting advisor to the Company's Board of Directors.
The Company's officers, directors and shareholders have agreed to vote their
shares of Common Stock in favor of such designee. BlueStone has not yet
exercised its right to designate such a person.
All of the Company's officers, directors and shareholders have agreed that,
for the 12-month period following the date of this Prospectus, they will not,
without the prior written consent of BlueStone, directly or indirectly, sell,
offer for sale, transfer, pledge or otherwise dispose of, any securities of the
Company or exercise any registration rights relating to any securities of the
Company.
The Representatives have informed the Company that the Underwriters do not
intend to confirm sales in excess of 3% of the number of shares of Common Stock
offered hereby to discretionary accounts.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities in connection with the Registration Statement of which this
Prospectus forms a part, including liabilities under the Securities Act.
Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price of the shares of Common
Stock has been determined by negotiation between the Company and the
Representatives and is not necessarily related to the Company's asset value, net
worth or other established criteria of value. Among the factors considered in
determining the offering price are the Company's financial condition and
prospects, management, market prices of similar securities of comparable
publicly-traded companies, certain financial and operating information of
companies engaged in activities similar to those of the Company and the general
condition of the securities market.
In order to facilitate the offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Representatives may over-allot in connection
with the offering, creating a short position in the Common Stock for their own
accounts. In addition, to cover over-allotments or to stabilize the price of the
Common Stock, the Underwriters may bid for, and purchase, shares of Common Stock
in the open market. Underwriters may also reclaim selling concessions allowed to
a dealer for distributing the shares of Common Stock in the offering, if the
Underwriters repurchase previously distributed shares of Common Stock in
transactions to cover short positions, in stabilization transactions or
otherwise. Any of these activities may stabilize or maintain the market price of
the Common Stock above independent market levels. The Underwriters are not
required to engage in these activities, and may discontinue any of these
activities at any time.
BlueStone was formed as a broker-dealer in March 1996. Although its
principals have had experience in the underwriting of securities in their
capacities with other broker-dealers, this offering constitutes the first public
offering for which BlueStone, the managing underwriter, has acted as a managing
underwriter.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
Common Stock will be passed upon for the Company by Pryor, Cashman, Sherman &
Flynn, New York, New York. Certain legal matters will be passed upon for the
Underwriters by Tenzer Greenblatt LLP, New York, New York.
46
<PAGE>
EXPERTS
The financial statements of the Company at February 28, 1997 and May 31,
1994, 1995 and 1996, and for the nine-month period ended February 28, 1997 and
each of the three years ended May 31, 1996 included in this Prospectus and in
the Registration Statement of which this Prospectus forms a part have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon, appearing elsewhere herein, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 under the Securities Act
with respect to the shares of Common Stock offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the shares of Common Stock offered
hereby. Statements contained herein concerning the provisions of any documents
are not necessarily complete, and in each instance reference is made to the copy
of such document filed as an exhibit to the Registration Statement or previously
filed with the Commission. Each such statement is qualified in its entirety by
such reference. As of the date of this Prospectus, the Company will become
subject to the informational requirements of the Exchange Act and the rules and
regulations thereunder, and in accordance therewith, will file reports, proxy
and information statements, and other information with the Commission. The
Registration Statement, including exhibits and schedules filed therewith, and
the Company's reports, proxy and information statements, and other information
filed by the Company with the Commission may be inspected without charge at the
Public Reference Room of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549 or at its Regional Offices located at Room 1400, 500 West
Madison Street, Chicago, Illinois 60661 and 7 World Trade Center, 13th Floor,
New York, New York 10048, and copies of all or any part of the Registration
Statement may be obtained from such offices at prescribed rates. The Commission
maintains a Web site that will contain reports, proxy and information statements
and other information regarding the Company. The address of such Web site is
http://www.sec.gov.
47
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors............................................................ F-2
Balance Sheets as of May 31, 1994, 1995 and 1996 and February 28, 1997 (audited) ....... F-3
Statements of Operations for the years ended May 31, 1994, 1995 and 1996 (audited), and
for the nine-month periods ended February 29, 1996 (unaudited) and February 28, 1997
(audited) .............................................................................. F-4
Statements of Shareholders' Equity for the years ended May 31, 1994, 1995 and 1996, and
for the nine-month period ended February 28, 1997 (audited) ............................ F-5
Statements of Cash Flows for the years ended May 31, 1994, 1995 and 1996 (audited), and
for the nine-month periods ended February 29, 1996 (unaudited) and February 28, 1997
(audited) ........................................................................... F-6
Notes to Financial Statements ............................................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
Robocom Systems Inc.
We have audited the accompanying balance sheets of Robocom Systems Inc. as of
February 28, 1997, May 31, 1996, 1995 and 1994, and the related statements of
operations, shareholders' equity and cash flows for the nine month period ended
February 28, 1997 and for each of the three years in the period ended May 31,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robocom Systems Inc. at
February 28, 1997 and May 31, 1996, 1995 and 1994, and the results of its
operations, and its cash flows for the nine month period ended February 28, 1997
and each of the three years in the period ended May 31, 1996 in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Melville, New York
May 16, 1997
F-2
<PAGE>
ROBOCOM SYSTEMS INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
May 31,
----------------------------------------------- February 28,
1994 1995 1996 1997
------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents ..................... $ 183,371 $ 176,294 $ 603,948 $ 65,670
Accounts receivable, less allowance for
doubtful accounts of $0 in 1994, $27,000 in
1995, $47,064 in 1996 and $18,940 in 1997...... 716,464 546,299 665,500 1,203,047
Costs incurred and income recognized in
excess of billings on uncompleted con-
tracts ....................................... 353,313 553,242 823,357 873,410
Other current assets ........................... 34,811 5,685 1,300 3,913
------------ ------------ ------------ ------------
Total current assets ........................... 1,287,959 1,281,520 2,094,105 2,146,040
Property and equipment, net ..................... 52,258 32,218 13,818 47,730
Software development costs, net .................. 1,826,268 1,993,748 2,498,335 3,218,908
Other assets .................................... -- -- 30,250 5,550
------------ ------------ ------------ ------------
Total assets .................................... $ 3,166,485 $ 3,307,486 $ 4,636,508 $ 5,418,228
============ ============ ============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Bank notes payable ........................... $ 200,000 $ -- $ -- $ 350,000
Accounts payable .............................. 609,438 390,397 376,888 452,607
Accrued expenses .............................. 163,033 97,872 400,322 297,141
Billings on uncompleted contracts in
excess of related costs and income rec-
ognized ....................................... 211,409 92,114 42,328 171,087
Loans payable to officers ..................... 650,000 650,000 645,000
Due to Robocom Properties ..................... 30,000 30,250 -- --
------------ ------------ ------------ ------------
Total current liabilities ........................ 1,863,880 1,260,633 1,464,538 1,270,835
------------ ------------ ------------ ------------
Shareholders' equity:
Common stock, $.01 par value;
10,000,000 shares authorized; 1,880,000 shares
issued and outstanding at May 31, 1994 and May
31, 1995 and 1,936,400 at May 31, 1996 and
February 28, 1997 ............................. 18,800 18,800 19,364 19,364
Additional paid-in capital ..................... -- -- 89,436 89,436
Retained earnings .............................. 1,283,805 2,028,053 3,153,170 4,110,593
Deferred compensation ........................ -- -- (90,000) (72,000)
------------ ------------ ------------ ------------
Total shareholders' equity ..................... 1,302,605 2,046,853 3,171,970 4,147,393
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity ...... $ 3,166,485 $ 3,307,486 $ 4,636,508 $ 5,418,228
============ ============ ============ ============
See accompanying notes.
</TABLE>
F-3
<PAGE>
ROBOCOM SYSTEMS INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine month
Year ended period ended
May 31, ------------------------------
----------------------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
--------------- ------------- ------------- -------------- -------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Software license fees ........... $ 415,158 $ 504,929 $ 969,789 $ 321,409 $ 899,466
Services .......................... 2,299,081 3,382,470 3,194,817 2,375,354 1,620,786
Hardware .......................... 976,073 2,068,164 1,793,053 1,211,556 1,729,021
Maintenance ....................... 439,526 857,744 1,006,438 776,093 835,579
------------ ---------- ---------- ---------- ----------
Total revenues .................... 4,129,838 6,813,307 6,964,097 4,684,412 5,084,852
------------ ---------- ---------- ---------- ----------
Cost of Revenues:
Cost of license fees................ 34,073 34,073 63,403 17,535 96,236
Cost of services ................... 3,107,248 2,621,836 2,301,954 2,083,067 1,014,615
Cost of hardware ................... 770,935 1,533,585 1,398,786 926,088 1,329,495
Cost of maintenance ................ 215,267 261,455 679,976 473,092 553,626
------------ ---------- ---------- ---------- ----------
Total cost of revenues ............. 4,127,523 4,450,949 4,444,119 3,499,782 2,993,972
Amortization of software develop-
ment costs ........................ -- 296,997 311,321 228,750 324,769
------------ ---------- ---------- ---------- ----------
4,127,523 4,747,946 4,755,440 3,728,532 3,318,741
------------ ---------- ---------- ---------- ----------
Gross margin ..................... 2,315 2,065,361 2,208,657 955,880 1,766,111
Selling, general and administrative
expenses ........................ 1,092,713 1,275,134 1,075,309 815,020 784,441
------------ ---------- ---------- ---------- ----------
(1,090,398) 790,227 1,133,348 140,860 981,670
Interest and dividend income ...... 2,212 10,905 30,344 24,949 18,120
Interest expense .................. (17,500) (56,884) (38,575) (31,450) (42,367)
------------ ---------- ---------- ---------- ----------
Net income (loss) .................. (1,105,686) 744,248 1,125,117 134,359 957,423
Pro forma unaudited provision
(benefit) for income taxes ...... (464,388) 312,584 472,549 56,431 402,118
------------ ---------- ---------- ---------- ----------
Pro forma unaudited net income
(loss) ........................... $ (641,298) $ 431,664 $ 652,568 $ 77,928 $ 555,305
============ ========== ========== ========== ==========
Pro forma unaudited net income
(loss) per share .................. $ (.28) $ .19 $ .28 $ .03 $ .24
============ ========== ========== ========== ==========
Pro forma unaudited weighted
average shares outstanding ...... 2,296,199 2,296,199 2,310,299 2,296,199 2,352,599
============ ========== ========== ========== ==========
See accompanying notes.
</TABLE>
F-4
<PAGE>
ROBOCOM SYSTEMS INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
---------------------------------------
Par Value
Shares No Par $.01
----------- ----------- -----------
<S> <C> <C> <C>
Balance, May 31, 1993 ..................... 1,000,000 $ 6,000 $ --
Effect for stock split and recapitalization 880,000 (6,000) 18,800
--------- -------- --------
Net loss .................................... -- -- --
Balance, May 31, 1994 ..................... 1,880,000 -- 18,800
--------- -------- --------
Net income ................................. -- -- --
Balance, May 31, 1995 ..................... 1,880,000 -- 18,800
Net income ................................. -- -- --
Deferred compensation ..................... 56,400 -- 564
---------- -------- --------
Balance, May 31, 1996 ..................... 1,936,400 -- 19,364
Net income ................................. -- -- --
Amortization of deferred compensation......... -- -- --
--------- -------- --------
Balance, February 28, 1997 .................. 1,936,400 $ -- $19,364
========== ======== ========
<CAPTION>
Total
Additional Paid Retained Deferred Shareholders'
In Capital Earnings Compensation Equity
----------------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
Balance, May 31, 1993 ..................... $ -- $ 2,402,291 $ -- $ 2,408,291
Effect for stock split and recapitalization -- (12,800) -- --
Net loss .................................... -- (1,105,686) -- (1,105,686)
--------- ------------ --------- ------------
Balance, May 31, 1994 ..................... -- 1,283,805 -- 1,302,605
Net income ................................. -- 744,248 -- 744,248
--------- ------------ --------- ------------
Balance, May 31, 1995 ..................... -- 2,028,053 -- 2,046,853
Net income ................................. 1,125,117 -- 1,125,117
Deferred compensation ..................... 89,436 -- (90,000) --
--------- ------------ ---------- ------------
Balance, May 31, 1996 ..................... 89,436 3,153,170 (90,000) 3,171,970
Net income ................................. -- 957,423 -- 957,423
Amortization of deferred compensation ........ -- -- 18,000 18,000
--------- ------------ ---------- ------------
Balance, February 28, 1997 .................. $ 89,436 $ 4,110,593 $ (72,000) $ 4,147,393
========= ============ ========== ============
See accompanying notes.
</TABLE>
F-5
<PAGE>
ROBOCOM SYSTEMS INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine month
period ended
Year ended May 31, ---------------------------
--------------------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
-------------- -------------- -------------- ------------- -------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) .................................... $ (1,105,686) $ 744,248 $ 1,125,117 $ 134,359 $ 957,423
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation ....................................... 20,046 20,040 18,400 15,030 11,088
Amortization of software development costs ......... -- 296,997 311,321 228,750 324,769
Amortization of deferred compensation expense ..... -- -- -- -- 18,000
Provision (credit) for bad debts .................. -- 27,000 20,064 -- (28,124)
Changes in operating assets and liabilities:
Accounts receivable .............................. 275,074 143,165 (139,265) (344,626) (509,423)
Costs incurred and income recognized in excess
of billings on uncompleted contracts ............ 430,682 (199,929) (270,115) 264,024 (50,053)
Other current assets .............................. (19,358) 29,126 4,385 4,532 (2,613)
Accounts payable ................................. (91,262) (219,041) (13,509) 110,783 75,719
Accrued expenses ................................. (54,953) (65,161) 302,450 267,373 (103,181)
Billings on uncompleted contracts in excess of
related costs and income recognized ............ 116,156 (119,295) (49,786) 82,733 128,759
Other assets ....................................... -- -- (30,250) (30,250) 24,700
------------- ---------- ------------ ---------- ------------
Net cash provided by (used in) operating activities (429,301) 657,150 1,278,812 732,708 847,064
INVESTING ACTIVITIES ------------- ---------- ------------ ---------- ------------
Software development costs ........................... (844,244) (464,477) (815,908) (390,892) (1,045,342)
Capital expenditures .............................. -- -- -- -- (45,000)
Sale of investments ................................. 7,598 -- -- -- --
Refund of security deposit ........................... 30,000 -- -- -- --
------------- ---------- ------------ ---------- ------------
Net cash used in investing activities ............... (806,646) (464,477) (815,908) (390,892) (1,090,342)
------------- ---------- ------------ ---------- ------------
FINANCING ACTIVITIES
Net borrowings (payments) of bank note payable ...... 200,000 (200,000) -- -- 350,000
Net proceeds (repayments) of officer loans ......... 650,000 -- (5,000) (5,000) (645,000)
Net (payment to) proceeds from Robocom Properties .... 30,000 250 (30,250) (30,250) --
------------- ---------- ------------ ---------- ------------
Net cash used in provided by financing activities..... 880,000 (199,750) (35,250) (35,250) (295,000)
------------- ---------- ------------ ---------- ------------
(Decrease) increase in cash and cash equivalents ..... (355,947) (7,077) 427,654 306,566 (538,278)
Cash and cash equivalents at beginning of period ... 539,318 183,371 176,294 176,294 603,948
------------- ---------- ------------ ---------- ------------
Cash and cash equivalents at end of period ......... $ 183,371 $ 176,294 $ 603,948 $ 482,860 $ 65,670
============= ========== ============ ========== ============
Supplemental disclosures of cash flow information
Cash paid for interest .............................. $ 0 $ 58,134 $ 38,700 $ 38,700 $ 58,492
============= ========== ============ ========== ============
See accompanying notes.
</TABLE>
F-6
<PAGE>
ROBOCOM SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)
Robocom Systems Inc. (the "Company") was incorporated in June 1982 in the
State of New York. The Company is engaged in the development and marketing of
automated warehouse management systems and related software which is used by
various commercial enterprises primarily located in the United States. Since
June 1994, the Company licenses and installs its proprietary software product
RIMS.2001 which is an "off-the-
shelf" inventory management system. The Company also provides related services,
including modification, project management, training, implementation support,
maintenance and the sale of hardware and third party software.
1. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company's customer base is comprised of relatively few large customers
in diversified industries. Ongoing credit evaluations of its customers'
financial condition are made and generally no collateral is required. For the
year ended May 31, 1994, the Company had three customers that accounted for 19%,
19% and 18% of total revenues. For the year ended May 31, 1995, the Company had
two customers that accounted for 34% and 13% of total revenues. For the year
ended May 31, 1996, the Company had three customers that accounted for 15%, 14%
and 12% of total revenues. For the nine month period ended February 29, 1996,
the Company had three customers that accounted for 18%, 15% and 11% of total
revenues. For the nine month period ended February 28, 1997, the Company had two
customers that accounted for 21% and 16% of total revenues. Management does not
believe significant credit risk exists at February 28, 1997.
Carrying Value of Financial Instruments
The carrying value of the Company's financial instruments, such as cash and
temporary investments and bank notes payable approximate their fair values.
Revenue Recognition
The Company's revenues are derived from software license fees, fees for
services, sales of hardware and maintenance contracts. Software license fees
include revenue from the licensing of the Company's proprietary RIMS.2001
software and revenue from the sublicensing of certain third-party software.
Software license fee revenue is recorded when the software has been delivered,
the license agreement with the customer has been executed, and collection of the
resulting receivable is deemed probable. Service revenues are derived from
project management, customization and modification of licensed software,
training, on-site support and implementation services. Service revenues are
recorded using the percentage of completion method of accounting. Accordingly,
revenue is recognized in the ratio that costs incurred bears to estimated total
costs. Adjustments to cost estimates are made periodically, and losses expected
to be incurred on contracts in progress are charged to operations in the period
such losses are determined. The aggregate of costs incurred and income
recognized on uncompleted contracts in excess of related billings is shown as a
current asset, and the aggregate of billings on uncompleted contracts in excess
of related costs incurred and income recognized is shown as a current liability.
Hardware revenues are derived from the sale of products of other manufacturers,
including computer hardware, radio frequency equipment, bar code printers and
other peripherals. Such revenues are recognized when title to such hardware
passes to the customer. Customers typically enter into one-year maintenance
agreements with the Company upon the completion of the software installation and
pay maintenance fees monthly. The Company recognizes revenue from each
maintenance agreement ratably over the period covered by the agreement, but is
F-7
<PAGE>
ROBOCOM SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)
1. Significant Accounting Policies -- (Continued)
only required to perform maintenance services as and when they are requested by
the customer. The Company recognized revenues, in all periods presented, in
accordance with the American Institute of Certified Public Accountants Statement
of Position 91-1, "Software Revenue Recognition."
Software Development Costs
Software development costs have been capitalized in accordance with
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed". The capitalization
of these costs begins when a product's technological feasibility has been
established, and ends when the product is available for general release to
customers. The establishment of technological feasibility and the ongoing
assessment of recoverability of capitalized software development costs require
considerable judgment by management with respect to certain external factors,
including, but not limited to, technological feasibility, anticipated future
gross revenues, estimated economic life, and changes in software and hardware
technologies. The Company capitalizes software development costs associated with
each subsequent enhancement of its product upon the achievement of technological
feasibility. Software development costs, including enhancements, are amortized
using the straight-line method over five to seven years or the
expected life of the product, whichever is less. Research and development costs
incurred prior to the establishment of technological feasibility are expensed
as incurred. Such amounts for the periods presented are not significant.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents.
Property and Equipment
Property and equipment are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives (three to five years).
Pro Forma Net Income (Loss) Per Share
Pro forma net income (loss) per share is based on the weighted average
number of shares of common stock outstanding during the period. For purposes of
such computation, the common stock issuance subsequent to February 28, 1997 is
treated as outstanding for all periods presented. In addition, the weighted
average number of shares includes the portion of the shares being offered by the
Company that would be necessary to fund the distribution of undistributed S
Corporation earnings (an estimated $2,500,000 at February 28, 1997) based on an
assumed initial public offering price of $6.50 per share. See Note 8.
Income Taxes
Effective June 1, 1990, the Company elected to operate under Subchapter S
of the Internal Revenue Code and, consequently, is not subject to Federal and
certain state income taxes. The shareholders include their proportionate share
of the Company's taxable income (loss) in their personal tax returns for Federal
and certain state income tax purposes. Concurrent with the closing of the
Offering (see Note 8), the Company will terminate its status as an S Corporation
and will become subject to Federal and state income taxes. The pro forma
information presented on the statements of income reflects a provision (benefit)
for such income taxes at an effective rate of 42%.
Advertising Costs
Advertising costs are expensed as incurred, and for each of the years ended
May 31, 1994, 1995 and 1996 and for the nine month periods ended February 29,
1996 and February 28, 1997 amounted to approximately $13,000, $84,000, $146,000,
$111,000 and $41,000, respectively.
F-8
<PAGE>
ROBOCOM SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)
2. Capital Stock
Recapitalization
In fiscal 1995, the Company effected a recapitalization of its common stock
whereby the Company's 200 shares authorized, 100 shares outstanding, no par
value common stock was exchanged for 2,000,000 shares authorized, 1,000,000
shares outstanding, $.01 par value common stock, prior to giving effect to the
stock split described in Note 8.
Deferred Compensation
In February 1996, the Company issued 56,400 common shares to certain
employees under a restricted stock agreement. Compensation expense, representing
the fair value ($90,000) of the common shares issued to these employees, will be
recognized ratably over the five year vesting period.
3. Detail of Certain Balance Sheet Accounts
Property and Equipment, net
Property and equipment, net, consist of the following:
<TABLE>
<CAPTION>
May 31,
------------------------------------ February 28,
1994 1995 1996 1997
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Equipment ........................... $143,810 $130,028 $130,028 $167,028
Furniture and fixtures ............ 90,162 81,062 81,062 89,062
--------- --------- --------- ---------
233,972 211,090 211,090 256,090
Less accumulated depreciation ...... 181,714 178,872 197,272 208,360
--------- --------- --------- ---------
$ 52,258 $ 32,218 $ 13,818 $ 47,730
========= ========= ========= =========
</TABLE>
Software Development Costs, net
Software development costs, net, consist of the following:
<TABLE>
<CAPTION>
May 31,
------------------------------------------ February 28,
1994 1995 1996 1997
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Software development costs ......... $1,826,268 $2,290,745 $3,106,653 $ 4,151,995
Less accumulated amortization ...... -- 296,997 608,318 933,087
----------- ----------- ----------- ------------
$1,826,268 $1,993,748 $2,498,335 $ 3,218,908
=========== =========== =========== ============
</TABLE>
Accrued Expenses
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
May 31,
-------------------------------------- February 28,
1994 1995 1996 1997
----------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Payroll and related taxes ......... $ 145,533 $ 81,622 $ 141,197 $ 95,141
Customer deposits and other ...... 17,500 16,250 259,125 202,000
---------- --------- ---------- ----------
$ 163,033 $ 97,872 $ 400,322 $ 297,141
========== ========= ========== ==========
</TABLE>
F-9
<PAGE>
ROBOCOM SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)
4. Employee Benefit Plans
The Company has a noncontributory defined contribution pension plan and a
401(k) defined contribution plan. These plans cover virtually all full-time
employees subject to certain age and service requirements. It is the Company's
policy to fund the noncontributory plan to the extent of the maximum allowable
contribution, in accordance with IRS guidelines and other relevant legal
requirements. Under the terms of the 401(k) plan, the Company will match 50% of
an employee's contribution up to 4% of the participating employee's
compensation. Pension expense for each of the years ended May 31, 1994, 1995 and
1996 and for the nine month periods ended February 29, 1996 and February 28,
1997 amounted to approximately $146,000, $125,000, $16,000, $6,000 and $55,000,
respectively.
5. Related Party Transactions
The Company leases its principal facilities from Robocom Properties, Inc.
("Properties"). The shareholders of Properties are generally the same as those
of the Company. The Company has paid to Properties rent at a rate of $168,000
per year.
6. Lease Commitments
The Company is obligated, under noncancellable operating leases covering
its facilities (Note 5) and certain equipment and automobiles, to pay minimum
annual rentals of approximately:
Remainder of fiscal 1997 $ 59,000
1998 228,000
1999 213,000
2000 208,000
2001 206,000
2002 173,000
2003 and thereafter 1,484,000
-----------
$2,571,000
===========
Total rental expense for each of the years ended May 31, 1994, 1995 and 1996 and
for the nine month periods ended February 29, 1996 and February 28, 1997
amounted to approximately $175,000, $197,000, $174,000, $128,000 and $140,000,
respectively.
7. Bank Note Payable and Loans Payable to Officers
Bank Note Payable
At February 28, 1997, the Company had a line of credit facility with a bank
which provided for maximum borrowings of $1,000,000 and which was due to expire
on December 31, 1997. Amounts outstanding under the line of credit were
evidenced by a note payable to the bank, were collateralized by the Company's
assets and were personally guaranteed by the Company's principal shareholders.
Interest was payable at the bank's prime interest rate plus 1/2% (8.75% at
February 28, 1997). At February 28, 1997, borrowings outstanding under the line
of credit were $350,000. The Company made no borrowings under this agreement
during fiscal 1996. In fiscal 1995 and 1994, the Company had a $750,000 line of
credit facility with the bank. Interest was payable at the bank's prime rate
plus 1/2% (9.50% at May 31, 1995). The Company made no borrowings under this
agreement during fiscal 1995.
On March 14, 1997, the Company borrowed an additional $150,000 which was
combined with the outstanding balance of $350,000 into a note payable of
$500,000. Interest was payable at the bank's prime interest rate plus 1/2%. The
note was due on June 11, 1997.
F-10
<PAGE>
ROBOCOM SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)
7. Bank Note Payable and Loans Payable to Officers -- (Continued)
On April 11, 1997, the Company borrowed an additional $300,000 which was
combined with the outstanding balance of $500,000 into a note payable of
$800,000. Interest was payable at the prime interest rate plus 1/2%. The note
was due on August 11, 1997.
On May 15, 1997, the bank increased the Company's line of credit to
$2,000,000. The outstanding balance of $800,000 of the above facility was rolled
into this new line of credit, at which time the Company borrowed an additional
$500,000. Borrowings under the line of credit facility, which expires on
September 30, 1997, are due upon demand. Interest is payable at the prime
interest rate (8.50% at May 15, 1997). Amounts outstanding under the line of
credit are collateralized by the Company's assets and are personally guaranteed
by the Company's principal shareholders. The amount available under the line of
credit is reduced by a $150,000 standby letter of credit with the same bank,
which is being utilized as collateral for a vendor and which expires on December
31, 1997.
Loans Payable to Officers
During fiscal 1994, the Company borrowed $650,000, unsecured, from its
principal shareholders. In fiscal 1995, repayments of $5,000 were made. The
remaining loan balance of $645,000 was entirely repaid in January 1997. Such
loans bore interest at 6% in fiscal 1994, 1995 and 1996 and 8% in fiscal 1997.
Interest expense related to the loans payable to officers for each of the years
ended May 31, 1994, 1995 and 1996 and for the nine month periods ended February
29, 1996 and February 28, 1997 amounted to approximately $17,500, $39,000,
$39,000, $29,000 and $40,000, respectively.
8. Planned Events Subsequent to February 28, 1997
The Company is in the process of filing a Registration Statement with the
Securities and Exchange Commission in connection with the offering by the
Company of 1,500,000 shares of common stock for sale to the public (the
"Offering"). In contemplation of the Offering, subsequent to February 28, 1997,
the Company consummated the following:
Common Stock Split
Effective May 15, 1997, the Board of Directors and shareholders voted to
effect a 1.88-for-1 split of the Company's common stock in the form of a common
stock dividend. All share amounts have been restated to reflect the stock split.
Issuance of Common Shares
On May 1, 1997, 31,584 shares of common stock were issued to a consultant
of the Company who performs various accounting and administrative services.
These shares have certain restrictions as to transferability. The estimated fair
value of the stock (which management believes to be 85% of the initial offering
price in the Offering) will be accounted for as consulting expense and will be
recognized ratably over the three year restricted period.
Deferred Income Taxes
Upon termination of the Company's S Corporation status, the Company will be
required to record a one-time, non-cash charge against earnings for noncurrent
deferred income taxes. If this charge had been recorded at February 28, 1997,
the amount would have been approximately $1,238,000, which primarily relates to
temporary differences for software development costs.
Shareholder Distributions
The Company made distributions to its shareholders in the amount of
$382,500 and $517,500 on April 11, 1997 and May 16, 1997, respectively, and
contemplates an additional distribution of $1,600,000 after the closing of the
Offering. Prior to making the Final S Corporation Distribution, the Company will
enter into an indemnity agreement with its current shareholders pursuant to
which the Company will idemnify its current shareholders against additional
income taxes resulting from adjustments made (as a result of a final
determination made by a competent tax authority) to the taxable income reported
by the Company as an S Corporation for periods prior to the Offering, but only
to the extent those adjustments result in a decrease in income taxes otherwise
payable by the Company.
F-11
<PAGE>
ROBOCOM SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)
8. Planned Events Subsequent to February 28, 1997 -- (Continued)
The following table presents unaudited pro forma distribution payable and
shareholders' equity at February 28, 1997 which include adjustments for all of
the events (other than the pro forma effects of the offering itself) described
above:
<TABLE>
<CAPTION>
Pro Forma
Distribution Payable
and Shareholders'
Equity February 28,
February 28, 1997 1997
--------------------- ------------------
<S> <C> <C>
Distribution payable ............... $ -- $ 2,500,000
============ ============
Shareholders' equity:
Common stock ..................... $ 19,364 $ 19,680
Additional paid-in capital ...... 89,436 262,832
Retained Earnings ............... 4,110,593 372,593
Deferred Compensation ............ (72,000) (245,712)
------------ ------------
Total shareholders' equity ......... $ 4,147,393 $ 409,393
============ ============
</TABLE>
Capital Stock
Effective May 15, 1997, the Company's Board of Directors and shareholders
approved an amendment to the Company's Certificate of Incorporation to increase
the authorized shares from 2,000,000 to 10,000,000 and to authorize 1,000,000
shares of par value $.01 preferred stock. The terms and conditions of the
preferred stock, of which no shares have been issued, will be set by the Board
of Directors of the Company.
Stock Option Plan
Effective May 15, 1997, the Board of Directors and shareholders approved
the Company's Stock Option and Long-term Incentive Compensation Plan for the
issuance of up to 325,000 shares of the Company's common stock at an exercise
price equal to the prevailing market price on the grant date. These options will
contain a vesting schedule to be determined at the date of grant. The Company
contemplates granting options to purchase 210,000 shares of common stock in
connection with the offering.
F-12
<PAGE>
[CHART]
AUTOMATED WAREHOUSE MANAGEMENT
RECEIVING RIMS DIRECTED PICKING
DIRECTED PUTAWAY 2001 CYCLE COUNTING
REPLENISHMENT ROBOCOM'S LABOR MANAGEMENT
CROSS DOCKING INVENTORY SHIPPING
MANAGEMENT
SYSTEM
HOST CONVEYOR MULTI-VENDER
INTERFACE SORTATION RADIO FREQUENCY
SUPPORT SYSTEM SUPPORT
SUPPORT
- -- IMPLEMENTATION SUPPORT, 24 HR. HELP DESK
-- PROJECT MANAGEMENT
-- TRAINING
<PAGE>
==============================================================================
No dealer, sales representative, or other person has been authorized to
give any information or to make any representation in connection with this
offering not contained in this Prospectus, and if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or any Underwriter. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities other than the
securities offered by this Prospectus, or an offer to sell or a solicitation of
an offer to by any securities by anyone in any jurisdiction in which such offer
or solicitation is not authorized or would be unlawful. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that information contained herein is correct as of any
time subsequent to the date hereof.
-----------------
TABLE OF CONTENTS
Page
-----
Prospectus Summary ..................... 3
Risk Factors ........................... 8
Use of Proceeds ..................... 15
Dividend Policy ..................... 15
Dilution .............................. 16
Capitalization ........................ 18
Selected Financial Data ............... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ........................ 20
Business .............................. 26
Management ........................... 37
Principal Shareholders ............... 41
Certain Transactions .................. 42
Description of Securities ............ 42
Shares Eligible for Future Sale ...... 44
Underwriting ........................ 45
Legal Matters ........................ 46
Experts .............................. 47
Available Information ............... 47
Index to Financial Statements ......... F-1
-----------------
Until , 1997 (25 days after the date of this Prospectus), all dealers
effecting transactions in the Common Stock, whether or not participating in this
distribution, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
==============================================================================
<PAGE>
==============================================================================
1,500,000 Shares
Robocom Systems Inc.
Common Stock
----------
PROSPECTUS
----------
BlueStone Capital Partners, L.P.
Coleman and Company Securities, Inc.
Oscar Gruss & Son Incorporated
_____________ , 1997
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Reference is made to Sections 721 through 725 of the Business Corporation
Law of the State of New York (the "NYBCL"), which provides for indemnification
of directors and officers of New York corporations under certain circumstances.
Section 722 of the NYBCL provides that a corporation may indemnify
directors and officers as well as other employees and individuals against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees, in connection with actions or proceedings, whether civil or
criminal (other than an action by or in the right of the corporation, a
"derivation action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to amounts paid in settlement and reasonable expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
actions, and the statute does not apply in respect of a threatened action, or a
pending action that is settled or otherwise disposed of, and requires court
approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. Section 721 of the
NYBCL provides that Article 7 of the BCL is not exclusive of other
indemnification that may be granted by a corporation's certificate of
incorporation, disinterested director vote, shareholder vote, agreement or
otherwise.
Article 7 of the Company's Amended and Restated Certificate of
Incorporation requires the Company to indemnify its officers and directors to
the fullest extent permitted under the NYBCL. Furthermore, Article XII of the
Company's Amended and Restated By-laws provides that the Company, to the full
extent permitted and in the manner required by the laws of the State of New
York, may indemnify any officer or director (and the heirs and legal
representatives of such person) made, or threatened to be made, a party in an
action or proceeding (including, without limitation, one by or in the right of
the Company to procure a judgment in its favor), whether civil or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the Company
served in any capacity at the request of the Company, by reason of the fact that
such director or officer, or such director's or officer's testator or intestate,
was a director or officer of the Company or served such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity.
Section 402(b) of the NYBCL provides that a corporation's certificate of
incorporation may include a provision that eliminates or limits the personal
liability of the corporation's directors to the corporation or its shareholders
for damages for any breach of a director's duty, provided that such provision
does not eliminate or limit (1) the liability of any director if a judgment or
other final adjudication adverse to the director establishes that the director's
acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that the director personally gained a financial
profit or other advantage to which the director was not legally entitled or that
the director's acts violated Section 719 of the NYBCL, or (2) the liability of
any director for any act or omission prior to the adoption of a provision
authorized by Section 402(b) of the NYBCL. Article 7 of the Company's Amended
and Restated Certificate of Incorporation provides that a director of the
Company shall not be liable to the Company or its shareholders for any breach of
duty in such capacity except for liability in the event a judgment or other
final adjudication adverse to a director establishes that his or her acts or
omissions were in bad faith or involved intentional misconduct or a knowing
violation of law or that the director personally gained, in fact, a financial
profit or other advantage to which he or she was not legally entitled or that
such director's acts violated Section 719, or its successor, of the NYBCL.
Any amendment to or repeal of the Company's Certificate of Incorporation or
by-laws shall not adversely affect any right or protection of a director or
officer of the Company for or with respect to any acts or omissions of such
director or officer occurring prior to such amendment or repeal.
The Company maintains directors and officers insurance which, subject to
certain exclusions, insures the directors and officers of the Company against
certain losses which arise out of any neglect or breach of duty
II-1
<PAGE>
(including, but not limited to, any error, misstatement, act, or omission) by
the directors or officers in the discharge of their duties, and insures the
Company against amounts which it has paid or may become obligated to pay as
indemnification to its directors and/or officers to cover such losses.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing, the Company has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth the expenses, other than Underwriting
discounts and reimburseable expenses payable to Bluestone, expected to be
incurred by the Company in connection with the issuance and distribution of the
Common Stock registered hereby, all of which expenses, except for the Securities
and Exchange Commission registration fee, the National Association of Securities
Dealers, Inc. filing fee and the Nasdaq National Market System listing
application fee, are estimates:
<TABLE>
<CAPTION>
Description Amount
----------- ---------
<S> <C>
Securities and Exchange Commission registration fee .................. $ 3,659
National Association of Securities Dealers, Inc. filing fee ...... 1,708
Nasdaq National Market System listing application fee ............ 10,000
Accounting fees and expenses .................................... 110,000
Legal fees and expenses .......................................... 200,000
Printing and engraving fees and expenses ........................ 100,000
Blue Sky fees and expenses ....................................... 25,000
Transfer Agent fees and expenses ................................. 3,000
Miscellaneous fees and expenses ................................. 46,633
---------
Total ......................................................... $500,000
=========
</TABLE>
Item 26. Recent Sales of Unregistered Securities
In May 1997, the Company issued 31,584 shares of Common Stock to Max
Kurland. The shares were issued to Mr. Kurland as payment for various accounting
services and software and maintenance contract administration rendered to the
Company. Management believes the estimated fair value of the stock issued to Mr.
Kurland is 85% of the initial offering price in the Offering.
In February 1996, the Company issued 28,200 shares of Common Stock to each
of Judy Frenkel and Chung-Hsin Lee, employees of the Company. The shares were
issued to each as payment for services rendered to the Company. The number of
shares issued to Ms. Frenkel and Mr. Lee were based upon a negotiated percentage
of the outstanding shares of Common Stock at the time of issuance.
In February 1996, the Company issued 1,884 shares of Common Stock to Kevin
Donochie for services rendered to the Company, which shares were returned and
canceled in October 1996 in connection with the termination of Mr. Donochie's
employment by the Company.
The number of the shares referred to in the foregoing paragraphs give
effect to the 1.88-for-1 stock split of the Common Stock effected in May 1997.
All of the securities referred to in the foregoing paragraphs were issued by the
Company in reliance on the exemption from registration provided by Section 4(2)
of the Securities Act of 1933, as amended. No underwriter fees or commissions
were paid by the Company in connection with such issuances.
II-2
<PAGE>
Item 27. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------- -----------
<S> <C>
1 * Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Company.
3.2 * Amended and Restated By-laws of the Company.
4.1 * Form of Representatives' Warrant Agreement.
5 Opinion of Pryor, Cashman, Sherman & Flynn.
10.1 ** International Distributor Agreement, dated March 28, 1996, between the Company and C&C
Consultores, Argentina.
10.2 ** Distributor Agreement, dated April 1, 1996 and revised June 18, 1996, between the Company and
Prophet 21, Inc.
10.3 ** Distributor Agreement, dated January 30, 1996, between the Company and Minerva International
Holdings LTD.
10.4 ** International Distributor's Agreement, dated September 1, 1996, between the Company and
Trendsoft Comercio de Software e Hardware Ltda.
10.5 * Non-Exclusive Agreement, dated July 28, 1996, between QED Information Systems of San Diego and
the Company.
10.6 * Lease Agreement, dated December 19, 1996, between Carriage IV Office Center, L.L.C. and the
Company.
10.7 * Lease Agreement, dated December 21, 1989, between Robocom Properties, Inc. and the Company
relating to 511 Ocean Avenue, Massapequa, New York.
10.8 Consulting Agreement between the Company and Herbert Goldman dated May 15, 1997.
10.9 Employment Agreement between the Company and Lawrence B. Klein dated May 15, 1997.
10.10 Employment Agreement between the Company and Irwin Balaban dated May 15, 1997.
10.11 Employment Agreement between the Company and Steven Kuhl dated May 15, 1997.
10.12 Employment Agreement between the Company and Robert O'Connor dated May 15, 1997.
10.13* Master Promissory Note, dated May 15, 1997, from the Company to The Bank of New York.
10.14 1997 Stock Option and Long-Term Incentive Compensation Plan.
10.15* General Loan and Security Agreement, dated April 13, 1994, between the Company and The Bank
of New York.
10.16 Form of Tax Indemnification Agreement to be entered into between the Company and existing
shareholders of the Company.
10.17 Form of Lock-Up Agreement.
10.18** International Distribution Agreement, dated November 1996, between the Company and Sistemos
Integrados.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Pryor, Cashman, Sherman & Flynn, company counsel (included in their opinion filed
as Exhibit 5).
24 Powers of Attorney (included in the Signature Page of the Registration Statement).
27* Financial Data Schedule.
</TABLE>
- ------------
* Previously filed.
** Redacted pursuant to Rule 406 promulgated under the Securities Act. Filed
separately in unredacted form pursuant to a request for confidential
treatment pursuant to Rule 406 under the Securities Act.
Item 28. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
The undersigned registrant undertakes to provide to the Underwriters at the
closings specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, ROBOCOM SYSTEMS
INC., a New York corporation, has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, New York on June 23, 1997.
ROBOCOM SYSTEMS INC.
By: /s/ Irwin Balaban
------------------------------------
Irwin Balaban
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Irwin Balaban and Elizabeth A. Burke, and each of
them singly, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution and for him/her and in his/her name, place and
stead, in any and all capacities to sign any and all amendments (including
pre-effective and post-effective amendments) to this Registration Statement, as
well as any new registration statement filed to register additional securities
pursuant to Rule 462(b) under the Securities Act, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he/she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his/her substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Irwin Balaban Chairman of the Board, President and June 23, 1997
--------------------------- Chief Executive Officer (Principal
Irwin Balaban Executive Officer)
/s/ Elizabeth A. Burke Vice President -- Finance, Chief June 23, 1997
--------------------------- Financial Officer and Treasurer(Principal
Elizabeth A. Burke Financial Officer and Principal Accounting
Officer)
/s/ Herbert Goldman Director June 23, 1997
---------------------------
Herbert Goldman
/s/ Lawrence B. Klein Director June 23, 1997
---------------------------
Lawrence B. Klein
/s/ Barry J. Gordon Director June 23, 1997
- ----------------------------
Barry J. Gordon
</TABLE>
II-5
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
1 * Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Company.
3.2 * Amended and Restated By-laws of the Company.
4.1 * Form of Representatives' Warrant Agreement.
5 Opinion of Pryor, Cashman, Sherman & Flynn.
10.1 ** International Distributor Agreement, dated March 28, 1996, between the Company and C&C
Consultores, Argentina.
10.2 ** Distributor Agreement, dated April 1, 1996 and revised June 18, 1996, between the Company and
Prophet 21, Inc.
10.3 ** Distributor Agreement, dated January 30, 1996, between the Company and Minerva International
Holdings LTD.
10.4 ** International Distributor's Agreement, dated September 1, 1996, between the Company and
Trendsoft Comercio de Software e Hardware Ltda.
10.5 * Non-Exclusive Agreement, dated July 28, 1996, between QED Information Systems of San Diego
and the Company.
10.6 * Lease Agreement, dated December 19, 1996, between Carriage IV Office Center, L.L.C. and the
Company.
10.7 * Lease Agreement, dated December 21, 1989, between Robocom Properties, Inc. and the Company
relating to 511 Ocean Avenue, Massapequa, New York.
10.8 Consulting Agreement between the Company and Herbert Goldman dated May 15, 1997.
10.9 Employment Agreement between the Company and Lawrence B. Klein dated May 15, 1997.
10.10 Employment Agreement between the Company and Irwin Balaban dated May 15, 1997.
10.11 Employment Agreement between the Company and Steven Kuhl dated May 15, 1997.
10.12 Employment Agreement between the Company and Robert O'Connor dated May 15, 1997.
10.13* Master Promissory Note, dated May 15, 1997, from the Company to The Bank of New York.
10.14 1997 Stock Option and Long-Term Incentive Compensation Plan.
10.15* General Loan and Security Agreement, dated April 13, 1994, between the Company and The Bank
of New York.
10.16 Form of Tax Indemnification Agreement to be entered into between the Company and existing
shareholders of the Company.
10.17 Form of Lock-Up Agreement
10.18** International Distribution Agreement, dated November 1996, between the Company and Sistemos
Integrados.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Pryor, Cashman, Sherman & Flynn, company counsel (included in their opinion filed
as Exhibit 5).
24 Powers of Attorney (included in the Signature Page of the Registration Statement).
27* Financial Data Schedule.
</TABLE>
- ------------
* Previously filed.
** Redacted pursuant to Rule 406 promulgated under the Securities Act. Filed
separately in unredacted form pursuant to a request for confidential
treatment pursuant to Rule 406 under the Securities Act.
<PAGE>
RESTATED CERTFICIATE OF INCORPORATION
OF
ROBOCOM SYSTEMS INC.
Under Section 807 of the Business Corporation Law
of the State of New York
The undersigned, being the President and Secretary, respectively, of
Robocom Systems Inc., a New York corporation, hereby certify and sets forth as
follows:
FIRST: That the name of the corporation is Robocom Systems Inc. (the
"Corporation").
SECOND: That the Certificate of Incorporation of the Corporation was
filed with the Department of State of the State of New York on June 30, 1982 and
was amended on October 30, 1995.
THIRD: That the Certificate of Incorporation of the Corporation is
hereby amended as follows:
A. To change the Corporation's corporate purpose.
B. To increase the number of the shares of Common Stock of the
Corporation from 2,000,000 shares of Common Stock, $.01 value
per share, to 10,000,000 shares of Common Stock, par value
$.01 per share, and to add 1,000,000 shares of Preferred
Stock, par value $.01 per share.
C. To change the address to which the Secretary of State of
the State of New York shall mail a copy of any process against
the Corporation which may be served upon him or her.
D. To state that no holder of shares of the Corporation of any
class shall have preemptive rights to acquire shares or other
securities.
E. To limit the personal liability of directors to the extent
permitted by Section 402(b) of the Business Corporation Law of
the State of New York.
F. To indemnify directors and officers to the fullest extent
permitted by Article 7 of the Business Corporation Law of the
State of New York.
<PAGE>
Accordingly, the Certificate of Incorporation of the
Corporation is hereby restated to read as herein set forth in
full:
1. The name of the Corporation is Robocom Systems
Inc.
2. The purpose for which the Corporation is formed is
as follows:
To engage in any lawful act or activity
for which corporations may be formed under the
Business Corporation Law of the State of New
York (the "Business Corporation Law"), provided
that the Corporation is not formed to engage in
any act or activity which requires the consent
or approval of any state official, department,
board, agency or any other body, without such
approval or consent first being obtained. For
the accomplishment of the aforesaid purposes,
and in furtherance thereof, the Corporation
shall have and may exercise all of the powers
conferred by the Business Corporation Law upon
corporations formed thereunder, subject to any
limitations contained in Article 2 of said Law
or in accordance with the provisions of any
other statute of the State of New York.
3. The office of the Corporation is to be located in
the County of Nassau, State of New York.
4. The aggregate number of shares of capital stock of
the Corporation is 11,000,000, of which 10,000,000
shall be Common Stock, par value $.01 per share (the
"Common Stock"), and 1,000,000 shall be Preferred
Stock, par value $.01 per share (the "Preferred
Stock"). The Preferred Stock may be issued, from time
to time, in one or more series with such
designations, preferences and relative participating
optional or other special rights and qualifications,
limitations or restrictions thereof, as shall be
stated in the resolutions adopted by the Board of
Directors providing for the issuance of such
Preferred Stock or series thereof; and the Board of
Directors is hereby expressly vested with authority
to fix such designations, preferences and relative
participating options or other special rights or
qualifications, limitations or restrictions for each
series, including, but not by way of limitation, the
power to determine the redemption and liquidation
preferences, the rate of dividends payable and the
time for and the priority of payment thereof and to
determine whether such dividends shall be cumulative
or not and to provide for and determine the terms of
conversion of such Preferred Stock or any series
thereof into Common Stock of the Corporation and fix
the voting power, if any, of Preferred Stock or any
series thereof.
2
<PAGE>
5. The Secretary of State of the State of New York is
designated as agent of the Corporation upon whom
process against the Corporation may be served. The
address to which the Secretary of State shall mail a
copy of any such process so served is:
Robocom Systems Inc.
511 Ocean Avenue
Massapequa, New York, 11758
Attention: President
6. No holder of shares of the Corporation of any
class, now or hereafter authorized, shall have any
preferential or preemptive rights to subscribe for,
purchase or receive any shares of the Corporation of
any class, now or hereafter authorized, or any
options or warrants for such shares, or any rights to
subscribe to or purchase such shares, or any
securities convertible into or exchangeable for such
shares, which may at any time be issued, sold or
offered for sale by the Corporation.
7. A director of the Corporation shall not be liable
to the Corporation or its shareholders for damages
for any breach of duty in such capacity except for
liability in the event a judgment or other final
adjudication adverse to a director establishes that
his or her acts or omissions were in bad faith or
involved intentional misconduct or a knowing
violation of law or that the director personally
gained, in fact, a financial profit or other
advantage to which he or she was not legally entitled
or that such director's acts violated Section 719, or
its successor, of the Business Corporation Law; or
liability for any act or omission prior to the
adoption of this provision.
8. The Corporation shall indemnify any person to the
fullest extent permitted by the Business Corporation
Law, as amended from time to time, for all amounts
(including, without limitation, judgments, fines,
settlement payments, expenses and attorneys' fees)
incurred or paid in connection with any action, suit,
investigation or proceeding arising out of or
relating to the performance of services by such
person acting as a director or officer of the
Corporation, and shall to the fullest extent
permitted by the Business Corporation Law, as amended
from time to time, advance all expenses incurred or
paid by such person in connection with, and until
disposition of any action, suit, investigation or
proceeding arising out of or relating to the
performance of services by such person acting as a
director or officer of the Corporation, and shall, to
the fullest extent permitted by the Business
Corporation Law, as amended from time to time,
advance all expenses incurred in or paid by such
person in connection with, and until disposition of,
any action, suit, investigation of proceeding arising
out of or relating to the performance of services by
3
<PAGE>
such person acting as a director or officer of the
Corporation. The Corporation may, by action of its
Board of Directors, provide indemnification to
employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of
directors and officers.
FOURTH: This restatement of the Certificate of Incorporation of the
Corporation was authorized by (i) the unanimous approval of the Board of
Directors of the Corporation, followed by (ii) the unanimous approval of the
holders of all outstanding shares of the Corporation entitled to vote thereon.
IN WITNESS WHEREOF, the undersigned, President and Secretary of the
Corporation, have each executed this Restated Certificate of Incorporation on
June 6, 1997, and each hereby affirms, under penalties of perjury, that the
statements contained herein are true.
/s/ Irwin Balaban
--------------------------------
Irwin Balaban
President
/s/ Lawrence B. Klein
---------------------------------
Secretary
4
<PAGE>
(212) 326-0178
June 23, 1997
Robocom Systems Inc.
511 Ocean Avenue
Massapequa, New York 11758
Re: Robocom Systems Inc.
Registration on Form SB-2
--------------------------
Dear Sirs:
We refer to the Registration Statement on Form SB-2 (Registration No.
333-27587) (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), filed by Robocom Systems Inc., a New York
corporation (the "Company"), with the Securities and Exchange Commission (the
"Commission"). The Registration Statement covers the registration of a maximum
of 1,725,000 shares (the "Shares") of the Company's Common Stock, par value $.01
per share, to be sold by the Company to the underwriters (the "Underwriters")
named in the Underwriting Agreement (as defined below), for which BlueStone
Capital Partners, L.P., Coleman and Company Securities, Inc. and Oscar Gruss &
Son Incorporated are acting as representatives (the "Underwriters"), pursuant to
the Underwriting Agreement filed as Exhibit 1 to the Registration Statement (the
"Underwriting Agreement") for resale to the public.
We have examined the original, or a photostatic or certified copy, of
such records of the Company, certificates of officers of the Company and of
public officials and such other documents as we have deemed relevant and
necessary as the basis for the opinion set forth below. In such examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies.
<PAGE>
Robocom Systems Inc.
June 23, 1997
Page 2
Based upon our examination mentioned above, subject to the assumptions
stated and relying on statements of fact contained in the documents that we have
examined, we are of the opinion that the Shares proposed to be issued and sold
by the Company have been duly authorized for issuance and, when issued to and
paid for by the Underwriters in accordance with the terms of the Underwriting
Agreement, will have been validly issued and will be fully paid and
non-assessable.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm appearing under the
caption "Legal Matters" in the Prospectus that forms a part of the Registration
Statement. In giving this consent, we do not admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act or the General Rules and Regulations of the Commission.
Our opinion is limited to the laws of the State of New York and the
laws of the United States.
This opinion is rendered solely for your benefit in connection with the
transactions described above. This opinion may not be used or relied upon by any
other person and, except as provided in the preceding paragraphs, may not be
disclosed, quoted, filed with a governmental agency or otherwise referred to
without our prior written consent.
Very truly yours,
/s/ Pryor, Cashman, Sherman & Flynn
================================================================================
International Distributor Agreement
between
Robocom Systems, Inc.
and
C&C Consultores, Argentina
March 28, 1996
NOTE: SECTIONS MARKED WITH AN (*) HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE COMMISSION.
================================================================================
<PAGE>
<PAGE>
International Distribution Agreement
Robocom Systems. Inc. and C&C Consultores
- -------------------------------------------------------------------------------
This Agreement is made this 2 Day of April, 1996 between ROBOCOM Systems, Inc.,
a New York State Corporation having an office at 511 Ocean Avenue Massapequa, NY
11758 ("ROBOCOM"') and C&C Consultores an Argentinean Corporation having an
office at F.D. Roosevelt 2445-Piso 9, (1428) Buenos Aires, Argentina
("Distributor").
Non-Exclusive Territory: Argentina, Chile, Uruguay
WHEREAS:
ROBOCOM owns the right to license proprietary software products (consisting
of programs and related documentation); and
Distributor desires to market and sublicense software products of this
type; and
ROBOCOM and Distributor wish to enter into an agreement authorizing
Distributor to market directly and make copies of certain software products
available to End Users in the Territory through Distributor, with Distributor
making certain payments to ROBOCOM with respect thereto.
NOW IT IS HEREBY AGREED as follows:
1.0 DEFINITIONS.
1.1 "Programs" mean the actual ROBOCOM computer programs in
machine-readable object code or other form covered by this Agreement, including
all ROBOCOM provided modifications and enhancements thereto.
1.2 "Documentation" means ROBOCOM user manuals and other materials in
printed form which facilitate the use of the Programs by End Users.
1.3 "Software Products" mean any combination of a Program object code and
Documentation licensed by ROBOCOM under the terms of this Agreement. "Product"
means either a Program or documentation, without drawing a distinction.
1.4 "End User" means an entity authorized for productive use of Software
Products. "Productive Use" means any use of any of the Software Products in
their application purposes.
1.5 "Territory" means the Non-Exclusive Territory first identified above.
1.6 "Demonstration License" means a license to Distributor for distributor
use of Software Product object code for marketing demonstrations, copying for
distribution to End Users, maintenance and training, and for use of Software
Product source code solely for use in providing End-User support. Neither the
source code nor the object code shall be otherwise used or copied. The source
code shall be kept only at a single identified Distributor site and shall not be
disclosed to third parties.
- --------------------------------------------------------------------------------
ROBOCOM SYSTEMS, INC./ Name Page 2 Dated: March 28, 1996
<PAGE>
International Distribution Agreement
Robocom Systems. Inc. and C&C Consultores
- -------------------------------------------------------------------------------
1.7 "The Commencement Date" means the effective date of the Agreement first
written above.
2.0 APPOINTMENT OF DISTRIBUTOR
2.1 License Grant. During the term of this Agreement and subject to all
other conditions herein, ROBOCOM hereby grants to Distributor a nonexclusive
right to sublicense by itself to End Users in the territory in Distributor's
name from Distributor's Territory-resident offices copies of Software Products
upon distributor's own terms and conditions, such terms and conditions to be
approved by ROBOCOM. Certain Exhibit 1 Products may be identified as requiring
or including third party software which, if available from ROBOCOM shall be
licensed through ROBOCOM and may be required to be licensed under different or
additional terms and conditions.
2.2 Translations. Translation rights and covenants in this agreement relate
solely to the translation of information on RIMS screens and reports. During the
term of this Agreement and so long thereafter as distributor is furnishing
maintenance services to End Users in accordance with this agreement, and subject
to all other conditions herein, ROBOCOM grants to Distributor nonexclusive
translation and distribution rights in the Territory in RIMS screens and reports
and in all ROBOCOM-furnished modifications and updates thereto. All translations
shall be exact translations and shall meet ROBOCOM appearance standards.
Copyright in such translations shall vest in ROBOCOM immediately at all times
and Distributor agrees that all present and future copyright in every
translation is hereby assigned, including, but not limited to, rights to create
derivative work and any renewal rights and Distributor agrees to execute any
documents necessary to vest full copyright ownership in ROBOCOM including a
waiver of any distributor moral rights. Distributor agrees that it will provide
copies of such translations to ROBOCOM at no charge prior to any distribution,
and will provide ROBOCOM with reasonable assistance in securing and enforcing
the copyrights(s). Distributor is not permitted to translate or attempt to
translate the Programs.
2.3 Title in Products and Modifications. Title and all proprietary rights
in the Products, any permitted Distributor modifications in the Products, and
any translations thereof shall at all times remain the properties of ROBOCOM or
ROBOCOM's Licensor.
Inventions. Any modifications, changes, or improvements made by Distributor
to ROBOCOM'S Software will be the sole and exclusive property of ROBOCOM, and
will promptly be provided to ROBOCOM. ROBOCOM will have the right to review at
the functional design stage, and to review and test code to ensure compatibility
with RIMS. In the event the change is incorporated into RIMS as part of the
standard package, it will then be available for resale through all channels. In
the event it is not incorporated, then for so long as this Agreement is in
effect, Distributor will have the right to use and/or sell, subject to the terms
of this agreement, such modifications, changes, or improvements, without payment
of royalties to ROBOCOM. Maintenance will be the responsibility of Distributor
on all changes not incorporated into the standard RIMS product.
- --------------------------------------------------------------------------------
ROBOCOM SYSTEMS, INC./ Name Page 3 Dated: March 28, 1996
<PAGE>
International Distribution Agreement
Robocom Systems. Inc. and C&C Consultores
- -------------------------------------------------------------------------------
2.4 Trade Secret and Confidential Information. Distributor acknowledges that
ROBOCOM has advised it that the Software and related documentation are valuable
proprietary information and trade secrets of ROBOCOM and that the software
(including, but not limited to, the design, programming techniques, flow charts,
source code and documentation thereof) is confidential information disclosed to
Distributor to be used only as expressly permitted by the terms of this
Agreement, whether or not any portion thereof is or may be validly copyrighted
or patented. Distributor will take all reasonable steps to protect the software
on magnetic tape or disk or in any other form of disclosure by using the same
standard of care Distributor uses to protect its own confidential information of
a similar nature. Distributor agrees that it will require all those individuals
having access to the Software under this Agreement sign a Non-Disclosure
Statement. Exhibit 2 attached.
Distributor further acknowledges that, in the event of an actual or
threatened violation of the foregoing provision of which Distributor has actual
knowledge, Distributor will take immediate steps to stop such threatened
violation; that ROBOCOM may not have an adequate monetary remedy and will be
entitled to such injunctive relief as may be deemed proper by a court of
competent jurisdiction, in addition to any other available remedies. The
provisions of the Section 8 will survive the termination of this Agreement.
ROBOCOM agrees that Distributor's obligation to keep confidential any data
will not apply to any information or data which: (1) is or becomes publicly
known through no wrongful act of Distributor (2) is known to Distributor at the
time of disclosure; (3) is rightfully received by Distributor from a third party
without breach of this Agreement; (4) is furnished to a third party by ROBOCOM
without a similar restriction on the third party's rights; (5) is approved for
release by authorization from ROBOCOM; or (6) is disclosed pursuant to the
lawful requirement or request of a Governmental Agency or disclosure is
permitted by operation of law, provided that Distributor has given prior notice
to ROBOCOM and has made a reasonable attempt to obtain a protective order
limiting disclosure and use of the information so disclosed.
3.0 CERTAIN ROBOCOM OBLIGATIONS
3.1 Copies of Software Products. ROBOCOM will provide Distributor a single
current production UNIX runtime copy of its Software for demonstration and
training purposes only. ROBOCOM will also provide Distributor with three copies
of all of its User Documentation, for demonstration and training purposes only.
3.2 Maintenance Services. ROBOCOM will provide Distributor the maintenance
services as described in Exhibit 3. Distributor will promptly translate
documentation, as necessary, and distribute maintenance documentation and
unmodified code updates to its End Users.
3.3 Distributor Training. ROBOCOM will provide Distributor training as in
Exhibit 4.
3.4 Export Licenses. ROBOCOM will promptly apply for any licenses, if
required
- --------------------------------------------------------------------------------
ROBOCOM SYSTEMS, INC./ Name Page 4 Dated: March 28, 1996
<PAGE>
International Distribution Agreement
Robocom Systems. Inc. and C&C Consultores
- -------------------------------------------------------------------------------
from the Office of Export Administration, United States Department of Commerce
or any other United States Agency for shipment of ROBOCOM software.
3.5 Warranties. ROBOCOM warrants to Distributor that ROBOCOM's proprietary
software products as furnished to distributor (excluding those which are
categorized as third party software) will work substantially as described in the
applicable ROBOCOM published documentation. Distributor acknowledges and accepts
that software is inherently susceptible to error and that ROBOCOM's sole
obligation shall be to use reasonable efforts to remedy substantial malfunctions
of the software by correcting errors or developing a suitable work around. This
warranty is subject to ROBOCOM receiving notification in sufficient detail to
enable ROBOCOM to demonstrate the error and certify its rectification or the
devising of a suitable work around, ROBOCOM does not warrant that all errors are
correctable or avoidable.
This warranty shall not apply to software identified as third party
software or otherwise identified as being furnished in "AS IS" condition and
shall not apply to Distributor or End User modified portions of Software
Products or other portions of Software Products to the extent affected by such
modifications. ROBOCOM may charge Distributor at ROBOCOM's then-standard rates
for ROBOCOM attempts to diagnose and/or remedy problems attributable to
Distributor or Distributor's End User modifications or misuse.
3.6 New Versions, Enhancements. ROBOCOM may, from time-to-time, add to
Exhibit 'A' new authorized computer models or configurations or new or modified
ROBOCOM software and enhancements which, in ROBOCOM's judgment, are appropriate
for distribution in the Territory by Distributor.
3.7 Advertising Materials. ROBOCOM will provide Distributor with 500 copies
of its existing marketing literature initially, thereafter, copies of
advertising and promotional materials, as available and appropriate, at
ROBOCOM's cost plus 15 percent (15%). At no charge, ROBOCOM will provide
Distributor with a current example proposal for a US End User and the
accompanying general system description.
4.0 CERTAIN Distributor OBLIGATIONS
4.1 Compliance. Distributor agrees to comply fully with all of
Distributor's obligations under this Agreement.
4.2 Reporting; Copies of Agreements. Within fifteen (15) days of the end of
each calendar quarter beginning with the quarter ending ______, 1996, send
ROBOCOM a report for the quarter and cumulatively for the contract year a
detailed account of all fees due to ROBOCOM under this Agreement including:
identification of each sublicensee by name and specific End User site location;
specific Programs licensed to the End User and authorized type/model and number
of computers; date of sublicense; date of each Program installation; effective
dates of maintenance agreements; and ROBOCOM fees and charges (in US dollars)
accrued and paid.
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ROBOCOM SYSTEMS, INC./ Name Page 5 Dated: March 28, 1996
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Distributor represents and warrants that it has the expertise, experience,
knowledge of the regional market and financial resources to successfully market,
technically support and license the Software in the Territory and to achieve
significant market penetration in the Territory.
Distributor will designate one or more individuals to act as sales and
application specialist(s) in the area of warehouse and distribution matters, and
to professionally present ROBOCOM's Software to interested parties. At its own
expense, Distributor will have this specialist(s) spend at least two weeks per
year for formal and informal training at a location agreeable to both Robocom
and Distributor. The location may be changed by mutual written agreement.
Initial training will take place concurrently with the first install in the
territory.
Distributor will devote its best efforts to maximizing profitable sales of
ROBOCOM's Software in the Territory. This will include undertaking of formal
marketing and sales programs, including direct mailing, seminars, and individual
in person presentations to prospective customers. Within 90 days from the
signing of this agreement, Distributor will submit to ROBOCOM a detailed
marketing plan, describing how Distributor intends to market ROBOCOM's Software,
and the resources Distributor will devote to this effort.
Distributor will prepare its own price and technical proposals for
prospective customers. For customers requiring services other than or in
addition to ROBOCOM's standard Software, ROBOCOM will not be bound by the
provisions of Distributor's proposal except by prior written agreement.
Distributor will require that all customers for ROBOCOM's Software sign a
Software License Agreement identical to that shown in Exhibit 6, and that they
comply with other reasonable conditions to protect ROBOCOM's interests.
Distributor will provide initial technical support for its customers using
ROBOCOM software.
In addition, Distributor shall keep executed End User licenses, maintenance
agreements and disclosure agreements on file, and on request from ROBOCOM, will
provide at no charge copies of such licenses or agreements to ROBOCOM. If any
license or agreement is in a language other than English, an English translation
shall be made available by Distributor.
4.3 Examination of Records. Distributor will allow ROBOCOM representatives
to examine Distributor's records to confirm accurate and timely payment of
royalties by Distributor. Any such examination shall be conducted within fifteen
(15) days of Distributor's receipt of ROBOCOM's written request and shall be
performed during normal business hours, at a time mutually agreed upon by
ROBOCOM and Distributor. ROBOCOM's cost of such an examination shall be borne by
ROBOCOM unless late payment or a discrepancy in excess of two (2%) in payments
of royalties is discovered for any quarter, in which case ROBOCOM's cost of the
examination shall be born by Distributor. Any confidential information belonging
to Distributor will be kept confidential by ROBOCOM.
Distributor will maintain proper accounting records, and allow reasonable
inspection by
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ROBOCOM SYSTEMS, INC./ Name Page 6 Dated: March 28, 1996
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ROBOCOM, to verify amounts payable to ROBOCOM. ROBOCOM will have the right, at
any time, and at ROBOCOM's expense, to appoint an independent auditor to verify
the Distributor has not violated any portions of this agreement. If an
independent auditor is appointed by ROBOCOM for this purpose, Distributor will
provide said auditors with access to its records during normal business hours.
4.4 Proprietary Notices. Distributor agrees to reproduce on all permitted
copies ROBOCOM and/or ROBOCOM's licensor's copyright and other proprietary
notices and, according to ROBOCOM instruction, any trademark notices as included
in the Software Products and in any ROBOCOM-furnished marketing materials,
training aids and other ROBOCOM-furnished materials and on any permitted
translations thereof. Distributor recognizes and agrees that Distributor obtains
no rights in the Software Products and other ROBOCOM materials except for the
limited rights specifically granted under this Agreement.
4.5 Modifications; License Enforcement. Distributor agrees that it will not
modify software Products except for End User support, not duplicate software
Products otherwise than as expressly authorized herein and use its best efforts
to ensure that its End Users do not use Software Products in violation of the
agreement and the End User license agreement, including, but not limited to,
productive use on more than the authorized number of computers or on a model of
computer bearing a higher sublicense fee than paid by Distributor to ROBOCOM, or
use the software Products for the benefit of entities other than the End User.
Distributor shall promptly notify ROBOCOM and provide reasonable assistance to
ROBOCOM without charge to assist ROBOCOM in prosecution of any trade secret,
copyright or trademark infringements which come to Distributor's attention, and
shall be undertaken by ROBOCOM and at its expense.
4.6 Technical Support. Distributor agrees to provide all direct technical
support for the software Products to Distributor's end User licensees. Direct
technical support is defined as:
A. Providing all End User training and application support and answering
all End User operational and use questions;
B Reproducing reported problems and reporting them in writing to
ROBOCOM's technical support center;
C. Endeavoring to answer technical End User questions prior to requesting
assistance from the ROBOCOM support center, and documenting the
answers furnished to End Users;
D Using the Development License source code at Distributor's site solely
to understand and fix or develop a work around for reported software
problems. In each instance of modification of the source code for this
purpose or development of a work around, Distributor will coordinate
the change with ROBOCOM and will promptly provide ROBOCOM with a copy
of the commented source code modifications and identification of the
End User(s) to which the change relates; and
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ROBOCOM SYSTEMS, INC./ Name Page 7 Dated: March 28, 1996
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E. Providing weekly written reports to ROBOCOM support center of all
support activity and any new problems reported and solutions to
problems, if known.
4.7 Technical Staffing. Distributor agrees to establish and maintain at all
times a capable trained technical support staff sufficient to provide technical
support as defined in item 4.6 above, including, but not limited to, having two
senior systems analysts trained on the Software Products at all times.
4.8 End User Communications. Distributor agrees to ensure that each
supported End User CPU includes a 2400 baud modem available for support purposes
and communications adequate for the provision of support functions.
4.9 Distributor communications. Distributor agrees to provide ROBOCOM with
the telephone numbers on which Distributor provides voice and modem technical
support and with the End User telephone numbers on which each End User receives
voice and modem technical support.
4.10 Support Services. Distributor agrees that it will provide support
services only to End Users for whom all required royalties and maintenance fee
payments to ROBOCOM are current.
4.11 Warranties Solely on Behalf of Distributor. Distributor agrees that it
will make any warranties or other representations and maintenance commitments to
End Users solely for Distributor and not on behalf of ROBOCOM and will indemnify
and save ROBOCOM harmless from any claimed by Distributor End Users for
maintenance services, breach of warranty, performance failure or failure of any
Product to meet a description.
4.12 Translations. At its sole expense, Distributor will make any
translations of the RIMS screens and reports and all modifications and updates
thereto for itself and End Users in accordance with this Agreement Such
translations shall be subject to the provisions of Paragraphs 2.2 and 2.4 above
Any services requested by Distributor and furnished by ROBOCOM will be furnished
at ROBOCOM's then standard rates and reasonable expenses.
4.13 Source Code. Distributor agrees to hold all Program source code in
strict confidence and as valuable confidential information belonging to ROBOCOM
and not to disclose such code to any person except Distributor's employees on a
need to know basis.
4.14 Return of Materials upon Termination. Upon any termination of this
Agreement, Distributor will immediately return or certify destruction of the
Programs and documentation, including any copies, information or notes relating
thereto except to the extent temporary retention is reasonably necessary for not
more than one year from termination to fulfill End User maintenance commitments
made by Distributor in good faith and in accordance with this Agreement. ROBOCOM
agrees that it will offer software Product maintenance services to such End
Users following the termination of this Agreement for ROBOCOM supported
then-current versions of Software Products.
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ROBOCOM SYSTEMS, INC./ Name Page 8 Dated: March 28, 1996
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4.15 Payments. Distributor will make all payments in United States
currency at ROBOCOM's offices, first stated above, or as otherwise directed by
ROBOCOM and without deductions based on any currency control restrictions,
import duties, or sales, use, value-added or other taxes or withholdings.
Distributor will bear all taxes, however designated, imposed as a result of the
existence or operation of this Agreement, including, but not limited to, any tax
which Distributor is required to withhold or deduct from payment to ROBOCOM,
except, (a) any such tax imposed upon ROBOCOM by any governmental entity in the
United States and (b) any such tax imposed upon ROBOCOM in the country in which
the office of Distributor is located or in which the End User is located if such
tax is allowable as a credit against United States income taxes of ROBOCOM. To
assist ROBOCOM in obtaining such credit, Distributor shall furnish ROBOCOM with
such evidence as may be required by United States taxing authorities to
establish that such tax has been paid. Currency conversion shall be made as of
the exchange rate on the last business day before the day payment is due. All
monetary amounts in this Agreement are in US dollars.
4.16 Import and Export Controls. At Distributor expense, Distributor will
obtain any necessary import certificates or permissions and provide all
necessary assistance to ROBOCOM in obtaining any required export or other
licenses from United States governmental agencies, including, but not limited
to, certifications as to use and ultimate destination and/or written agreement
not to knowingly transmit directly or indirectly software Products to certain
named countries. Any such licenses or other documents shall become attachments
to this Agreement and part of Distributor's obligations hereunder. Concurrent
with signing this agreement Distributor will sign an Export Controls letter.
4.17 Competitive Products. Distributor agrees to permit termination of this
Agreement by ROBOCOM if Distributor sells and promotes products competitive with
ROBOCOM products permitted to be marketed under this Agreement. Prior to any
action being taken by ROBOCOM, a discussion would take place to allow
Distributor to explain the method of marketing and sale and demonstrate that
these products were not competitive to ROBOCOM's products.
4.18 Product Names; Trademarks. Distributor agrees to use ROBOCOM Product
names in association with the products and use any ROBOCOM trademarks as
instructed by ROBOCOM so as to protect ROBOCOM rights and continue
identification of the Products with ROBOCOM in the Territory.
4.19 Sales Projections. Provide ROBOCOM with quarterly sales projections
covering at least the next six quarters.
4.20 Fees and Payment; Maintenance Payments. Beginning with the first
system installed, for ROBOCOM Standard Software sold to Distributor customers
headquartered in the Territory, or elsewhere (as long as the right to distribute
ROBOCOM's Software has not been revoked), for which Distributor takes primary
installation and support responsibility, Distributor will charge customers the
list prices and pay ROBOCOM an amount equal to *% of the current list prices
(shown on the attached price list, Exhibit 5) or *% of a mutually agreed
discounted price which is commercially satisfactory to both ROBOCOM and
Distributor, for their modules purchased and
*OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. FILED SEPARATELY
WITH THE COMMISSION.
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ROBOCOM SYSTEMS, INC./ Name Page 9 Dated: March 28, 1996
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installed. Should Distributor for any reason decline to take primary
installation and/or support responsibility for any systems installed,
Distributor and ROBOCOM will negotiate in advance an equitable increase in the
amount due ROBOCOM.
Ongoing Annual Maintenance Plan fees, computed at *% of the first site list
price for Standard Application Software and all custom Software provided by
ROBOCOM, will be split equally between the two parties, as long as Distributor
continues to support the customer directly. If ROBOCOM provides direct customer
support, it will receive *% of the maintenance fee.
Amounts to ROBOCOM, except for annual maintenance fees, will be paid by
Distributor at the end of the month following the month in which the Software
was installed. Annual maintenance fees will be to ROBOCOM at the end of the
second month following the month in which the Software was installed.
All transactions between Distributor and ROBOCOM will be in U.S. dollars.
The attached price list may be modified by ROBOCOM at any time, with 90
days advance notice to Distributor. ROBOCOM agrees that, for the initial
three-year term of this agreement, the prices for its standard application
software in the Territory will be adjusted prorata to U.S. pricing.
By mutual written agreement, ROBOCOM and Distributor may modify the pricing
conditions on a case-by-case basis.
ROBOCOM agrees that, for the initial three year term of this Agreement,
customer maintenance charges will be contained with RPI *% of the maintenance
costs in the country of installation.
5.0 PATENT AND COPYRIGHT INDEMNIFICATION
5.1 ROBOCOM will defend any action brought against Distributor [or
Distributor's End Users] based on a claim that a software Product infringes any
copyright, trade secret or United States patent (including patents in Territory
countries based on the relevant United States patents.). ROBOCOM will hold
Distributor harmless from and pay any award against Distributor or Distributor's
End Users based on such infringement provided that Distributor and/or End Users
notify ROBOCOM promptly in writing of the claim and Distributor and/or End Users
provide ROBOCOM reasonable assistance and permit ROBOCOM to control the defense
and any settlement. ROBOCOM shall have no liability if the alleged infringement
arises from (1) the licensing of other than a current unaltered release of a
Program as provided under this Agreement, or (2) the combination of a Program
with non ROBOCOM programs or data. ROBOCOM makes no representations or
warranties and provides no indemnities regarding patent or copyright
infringement by any portion of a software Product not developed by ROBOCOM.
5.2 In the event of claimed infringement, ROBOCOM reserves the right to
replace the Software Product with a non-infringing product of equivalent
functionality, modify the Software.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. FILED
SEPARATELY WITH THE COMMISSION.
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ROBOCOM SYSTEMS, INC./ Name Page 10 Dated: March 28, 1996
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Product to make it non-infringing or, if neither alternative is reasonably
available, remove the Software Product and refund to Distributor license fees
paid to ROBOCOM with respect to the infringing copies of the Software Product on
a five-year End User use amortization schedule.
6.0 TERM AND TERMINATION
6.1 This Agreement shall enter into force on the Commencement Date and
shall continue for a period of two (2) years from the Commencement Date and
subject as herein provided shall thereupon automatically renew for an additional
one (1) year period and until terminated by one of the parties hereto giving
written notice thereof to the other at least one hundred eighty (180) days prior
to the end of the initial term or any following anniversary date of the
Agreement.
6.2 Notwithstanding Clause 6.1 of this Agreement, each party shall have the
right to terminate this Agreement at any time upon giving Distributor at least
ninety (90) days written notification if: (a) Distributor's performance under
this Agreement is unsatisfactory in ROBOCOM's reasonable judgement; (b)
Distributor promotes or markets a product competitive with the Software Products
in violation of Section 4.17; or (c) if Distributor shall undergo a change in
ownership or control with ROBOCOM's written consent, but approval of such change
shall be reasonably withheld by ROBOCOM, or (d) Distributor fails to provide
S200,000 (USD) in revenues from sales of ROBOCOM Software License Fees within
two (2) years of the Agreement date.
7.0 EVENTS OF DEFAULT
7.1 The occurrence of any of the following events shall constitute an event
of default entitling ROBOCOM to terminate this Agreement forthwith:
A Nonpayment by Distributor of any payment to ROBOCOM for a period of
fifteen (15) working days after sending of written notice to the
Distributor specifying such default in payment.
B If a petition or action shall be filed or taken by or against
Distributor under any law dealing with insolvency, bankruptcy or
suspension of payment and such petitions or action is not dismissed
within thirty (30) days.
C. If a Receiver is appointed over the assets or undertakings of
Distributor (or any part thereof).
D If Distributor enters into a deed of arrangement or makes an
assignment for the benefit of creditors.
E. If Distributor ceases to function as a going concern or an order is
made or a resolution passed for the winding up of Distributor
(otherwise than for the purposes of amalgamation or reconstitution).
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ROBOCOM SYSTEMS, INC./ Name Page 11 Dated: March 28, 1996
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F. If Distributor fails to promptly furnish ROBOCOM' upon request, with
the names and addresses of End Users with a full copy of the signed
End User agreement and, if such agreement is not in English, with an
English translation of the agreement.
This Agreement will terminate immediately if Distributor sells,
attempts to sell, agrees to sell, or attempts to develop any products
meaning Inventory and Warehouse Control Systems Software competing
with those provided by ROBOCOM.
G. If Distributor knowingly misrepresents the capabilities, functions or
functionalities of Software Products.
7.2 If either party fails to perform any other term, covenant or condition
of this Agreement and has not performed such term covenants or conditions within
thirty (30) days after a notice of default has been received, the non-defaulting
party has the right to forthwith terminate this Agreement by means of a written
notice without judicial intervention being required.
8.0 REMEDIES
8.1 Upon any termination of this Agreement, Distributor shall immediately
return or certify destruction of all Programs in accordance with paragraph 4.14
and ROBOCOM shall be entitled to recover from Distributor all accrued and unpaid
payments and other amounts then due and owing under the terms hereof and/or all
future payments and other amounts as and when becoming due hereunder.
No termination under this Paragraph 8.1 or otherwise under this Agreement
shall invalidate then existing Distributor End User licenses granted by
Distributor in accordance with this Agreement for which required fees and
charges have been credited or paid to ROBOCOM.
8.9 The rights of ROBOCOM pursuant to Paragraph 8.1 hereof are without
prejudice to any other rights or remedies which ROBOCOM may have. ROBOCOM
pursuit and enforcement of any one or more remedies shall not be deemed an
election waiver by ROBOCOM of any other remedy.
8.3 EXCEPT AS SET FORTH IN PARAGRAPH 3.5 AND PARAGRAPHS 5.1 AND 5.2,
ROBOCOM DISCLAIMS ALL WARRANTIES WITH REGARD TO THE ROBOCOM SERVICES AND
PRODUCTS SOLD OR LICENSED HEREUNDER INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ALL OBLIGATIONS OR
LIABILITIES ON THE PART OF ROBOCOM FOR DAMAGES, INCLUDING BUT NOT LIMITED TO,
DIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN
CONNECTION WITH THE DELIVERY, USE, OR PERFORMANCE OF THE SOFTWARE.
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ROBOCOM SYSTEMS, INC./ Name Page 12 Dated: March 28, 1996
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9.0 NOTICES
Service of all notices under this Agreement by either party to the other
shall be sufficient only if posted by certified or registered post, return
receipt requested or personally delivered and receipted for. Either party may
change its address for service of notice by written notice to the other.
10.0 UNFORESEEN EVENTS
Neither party shall be responsible for any delay nor failure to perform due
to causes beyond reasonable control of the party, including, but not limited to,
cause such as strikes, lockouts, or other labor disputes, riots, civil
disturbances, actions or inactions of governmental authorities or suppliers,
epidemics, war, embargoes, sever weather, fire, earthquakes, acts of God or the
public enemy, nuclear disasters, or default of a common carrier.
11.0 SEVERABILITY
In the event that any one or more of the provisions of this Agreement shall
for any reasons be held to be unenforceable in any respect under the laws of any
jurisdiction, such unenforceability shall not affect any other provision and
this Agreement shall then be construed as if such unenforceable provision or
provisions had never been contained herein.
12.0 GENERAL CONDITIONS
12.1 Applicable law; Dispute Resolution. The Agreement shall be construed
in accordance with and governed by the laws of the State of New York without
regard to that body of law known as conflict of laws and without reference to
the 1980 United Nations Convention on Contracts for the Sale of Goods and any
amendments thereto.
12.2 Headings. Headings and subheadings in this Agreement are for
convenience only and do not form part of this Agreement.
12.3 Assignment. Upon advance written notice, Distributor may assign this
Agreement to a parent, subsidiary, or successors in interest to the business of
Distributor provided that such assignees are located in the same country as
Distributor and is able to and does fulfill Distributor's obligations under this
Agreement. Distributor shall not otherwise assign this Agreement without the
written consent of ROBOCOM.
12.4 Non-Waiver. The failure of either party to enforce at any time any of
the provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce any such provisions.
12.5 Independent Businesses. The Distributor and ROBOCOM are independent
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ROBOCOM SYSTEMS, INC./ Name Page 13 Dated: March 28, 1996
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businesses ant will in no way claim otherwise or incur Liabilities except on
their own account. It is understood and agreed that ROBOCOM and the Distributor
will not in any event be liable for any obligations, expenses, or damages of any
nature whatsoever incurred by the other party or for any claim made against the
other party on account of any services performed by it or by those for whom the
other party may be in law responsible and that this Agreement supersedes all
previous Agreements and arrangements between ROBOCOM and the Distributor.
12.6 Indemnity Clause. ROBOCOM will protect and save harmless and defend at
its own expense the Distributor from and against any and all claims of
infringements of patents, trade marks or industrial designs copyrights or other
property rights affecting the Products. The Distributor agrees to give ROBOCOM
prompt notice of any such claim that is made against the Distributor and will
give ROBOCOM such assistance and information as ROBOCOM may reasonably require.
In the event that any such infringement occurs or may occur, ROBOCOM may:
A Procure for the Distributor the right to continue to use the Software
or infringing part thereof; or
B. Modify or amend the Software or infringing part thereof so that it
becomes non infringing; or
C. Replace the Software or infringing part thereof by other software of
similar acceptable capability; or
D Pay the Distributor compensation relating to the whole or infringing
part of the Software as appropriate so that it may reimburse and
settle any corresponding claims put upon it by third parties.
E. The conditions of the indemnity clause identified herein apply only to
ROBOCOM's supplied RIMS applications code.
12.7 Notices. All notices hereunder will be in writing and will be deemed
to have been given and received when delivered in person or by registered or
certified mail, return receipt requested, postage prepaid, as follows:
ENTIRE AGREEMENT
This Agreement and Exhibits constitute the entire Agreement governing the
relationship between the parties and supersede all proposals, oral or written,
and all negotiations, conversations, or discussions between the parties relating
to this Agreement. Distributor acknowledges that is has not been induced to
enter into this Agreement by representations or statements, oral or written, not
expressly contained herein. The terms and conditions of the Agreement shall
prevail, notwithstanding any variance from the terms and conditions of any order
or other instrument
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ROBOCOM SYSTEMS, INC./ Name Page 14 Dated: March 28, 1996
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submitted by Distributor. This Agreement may be modified only in writing signed
by duly authorized representative of each party.
If to Distributor:
C&C Consultores
F.D., Roosevelt 2445- Piso 9
(1428) Buenos Aires, Argentina
Attn: Mr. Carlos M. Criado
If to ROBOCOM:
ROBOCOM Systems, Inc.
511 Ocean Avenue
Massapequa, New York 11758
USA
Attn: Mr. Richard Wilkins
Forum for Dispute. The parties agree to seek to resolve any dispute arising
under this Agreement pursuant to good faith business negotiations. In the event
of a dispute, the aggrieved party will promptly identify in writing the nature
of the outstanding dispute in sufficient detail as to allow the other party to
respond to the dispute. Each party agrees to set times and places to meet and
communicate their concerns and to propose resolutions to their dispute. These
meetings may take place by telephone, by video conference, or face-to-face. The
parties agree to hold not fewer than two meetings, and to meet for at least a
total of four hours to discuss their respective positions and to explore a
business resolution of their dispute. The parties agree to exchange offers in
writing upon conclusion of their meetings. Such good-faith procedures will be a
condition precedent to any litigation of the dispute.
13.5 The following are part of this Agreement:
Exhibit 1 - Products Descriptions
Exhibit 2 - Non-Disclosure Statement
Exhibit 3 - Maintenance (Sample) Agreement
Exhibit 4 - Training
Exhibit 5 - International Pricing
Exhibit 6 - License (Sample) Agreement
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ROBOCOM SYSTEMS, INC./ Name Page 15 Dated: March 28, 1996
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EXECUTED BY BOTH PARTIES AS PROVIDED BELOW:
ROBOCOM Systems, Inc. C&C Consultores
By:/s/Richard Wilkins BY:/s/Carlos Criado
----------------------- -----------------------
Title: Dir Sales & Marketing Title: Partner
Date: April 2, 1996 Date: April 2, 1996
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ROBOCOM SYSTEMS, INC./ Name Page 16 Dated: March 28, 1996
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EXHIBITS TO
DISTRIBUTION AGREEMENT
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ROBOCOM SYSTEMS, INC./ Name Page 17 Dated: March 28, 1996
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EXHIBIT 1 Robocom Products:
RIMS(R). 2001 v3.2
MFG/PRO INTERFACE
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ROBOCOM SYSTEMS, INC./ Name Page 18 Dated: March 28, 1996
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Intentionally Blank, provided under separate cover.
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ROBOCOM SYSTEMS, INC./ Name Page 19 Dated: March 28, 1996
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EXHIBIT 2
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ROBOCOM SYSTEMS, INC./ Name Page 20 Dated: March 28, 1996
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CONFIDENTIALITY AGREEMENT
BETWEEN FIRMS
AGREEMENT and acknowledgment between ROBOCOM Systems Inc. (Company), and
Distributor
Whereas, the Company agrees to furnish the undersigned certain confidential
information relating to the affairs of the Company for purposes of: The
marketing of RIMS(R) .2001 v3.2 in _________________________.
Whereas, the undersigned agrees to review, examine, inspect or obtain such
information only for the purposes described above, and to otherwise hold such
information confidential pursuant to the terms of this agreement,
BE IT KNOWN that the Company has or shall furnish to the undersigned certain
confidential information, as set forth on an attached list, and may further
allow the undersigned the right to inspect the business of the Company and/or
interview employees or representatives of the Company, all on the following
conditions:
1. The undersigned agrees to hold all confidential or proprietary information
or trade secrets ("information") in trust and confidence and agrees that it
shall be used only for the contemplated purpose, and shall not be used for
any other purpose or disclosed to any third party.
2. No copies will be made or retained of any written information supplied.
3. At the conclusion of our discussions, or upon demand by the Companv, all
information, including written notes, photographs, memoranda, or notes
taken by you shall be returned to us.
4. This information shall not be disclosed to any employee or consultant
unless they agree to execute and be bound by the terms of this agreement.
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ROBOCOM SYSTEMS, INC./ Name Page 21 Dated: March 28, 1996
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5. It is understood that the undersigned shall have no obligation with respect
to any information known by the undersigned or generally known within the
industry prior to dates of this agreement, or becomes common knowledge
within the industry thereafter.
Agreed and Accepted: Agreed and Accepted:
ROBOCOM Systems Inc. C&C Consultores:
/s/Carlos Criado
------------------------ ----------------------------
Signature Signature
by by: Carlos Criado
---------------------- ------------------------
Title: Title: Partner
------------------ ---------------------
Date: Date: April 2, 1996
-------------------- ----------------------
* * *
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ROBOCOM SYSTEMS, INC./ Name Page 22 Dated: March 28, 1996
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EXHIBIT 3
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ROBOCOM SYSTEMS, INC./ Name Page 23 Dated: March 28, 1996
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ROBOCOM MAINTENANCE CONTRACT
96-2001
Contract No.
ROBOCOM SYSTEMS, INC. QUOTATION
Reference Date Terms
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ITEM NO. DESCRIPTION PRICE
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l Annual Software (Diagnostic & Maintenance)
Agreement
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2 Annual Hardware Maintenance Agreement
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3 Extended after Hour Support - Eight hours.
Weekdays, 5:00 P.M. - 1:00 A M., ET
Weekends & Holidavs - 8:00 AM. - 1:00 A.M.
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Contract includes software and hardware working hour response as listed under
Software and Equipment. Our working hours are Monday through Friday, 8:30 A.M.
to 5:00 P.M., Eastern Time (ET) excluding holidays. All software, labor, and
parts will be covered except those which are sundry consumable supplies such as
ribbons, paper, etc. The quoted price does not include travel and subsistence
costs except where noted. *
The system and equipment are subject to a Pre-Contract Inspection prior to
approval for contract unless continuous and uninterrupted service is maintained
with the prior agreement. If any repairs are necessary to get the unit up to
specifications, the repair costs will be charged against a billable service
call. This quotation is valid for ( ) days.
Order should be made out to: ROBOCOM Systems, Inc. by: (Customer name)
* Refer to Agreement for listing of Software and Equipment, with applicable
response times, and travel coverage.
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ROBOCOM SYSTEMS, INC./ Name Page 24 Dated: March 28, 1996
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AGREEMENT OR MAINTENANCE SERVICE
Company Name: (Customer Name)
Street:
City: State: Zip Code:
(Hereinafter referred to as Purchaser) agrees to purchase and ROBOCOM SYSTEMS
Inc. (hereinafter referred to as RSI) agrees to furnish at the below indicated
place of installation maintenance service on the equipment and software listed,
in accordance with the terms and conditions contained in this agreement.
SITE LOCATION
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===========================
Company Name
===========================
===========================
Street
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City State Zip Code
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Commencement Date Day of Month Year
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Renewal Date Day of Month Year
===========================
===========================
Contract #: RIMS,
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ROBOCOM SYSTEMS, INC./ Name Page 25 Dated: March 28, 1996
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SOFTWARE AND EQUIPMENT
COVERED UNDER THIS AGREEMENT
SAMPLE EQUIPMENT
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SOFTWARE/ MAINT. ** MODE TRAVEL
EQUIP. QTY. SERIAL RESPONSE TIME INCL. IN
DESCRIPTION MODEL NO(S)* BASIC
PRICE
YES/NO
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Processor
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Terminal
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Printer
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Printer
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Scanner
Dual Range
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Progress
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Software
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Converter
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Scanner
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Scanner
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* NOTE: Equipment serial numbers to be provided upon contract execution.
** 1 - On Site Repair - 8 Hrs.
2 - Sent to Repair Depot
3 - Immediate Modem Response
*** Does not cover thermal head replacements.
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ROBOCOM SYSTEMS, INC./ Name Page 26 Dated: March 28, 1996
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TERMS AND CONDITIONS
1. INITIAL INSPECTION AND REPAIR
Unless this agreement provides for maintenance service which is contiguous
with previous maintenance service, or contiguous with the warranty provided
by RSI, then RSI shall make a thorough inspection of the system and
equipment to be maintained hereunder. This inspection shall be at the
expense of the Purchaser. Any repairs and adjustments deemed necessary by
RSI to bring the system and equipment up to good operating condition and
normal repair level shall then be made. All costs of repairs, materials and
adjustments shall be at Purchaser's expense and shall be at the current
published RSI hourly rates, portal to portal.
2. TERMS OF AGREEMENT
This agreement shall become effective upon the date accepted by RSI and,
except as provided in Article 10, "Termination," shall continue for a term
of twelve (12) months from the commencement date which is noted herein or
if applicable, the date of completion of the initial inspection and repair
provided pursuant to Article 1 above, which date shall be set forth herein
or the commencement date. On an annual basis, this agreement will be
reviewed for price adjustment with an annual price increase cap of 5
percent (5%). Purchaser shall have the right to renew this Agreement from
year to year by giving RSI notice at least thirty (30) days prior to the
end of the contract term on any renewal item.
3. RESPONSIBILITIES OF RSI
RSI shall maintain the system and equipment in good operating condition.
Pursuant to the above, RSI shall provide the following:
a. Upon receiving a service request, ROBOCOM will access the computer
system via a modem for the purpose of diagnostic and corrective
analysis. This service will be rendered immediately upon calling
during the normal business day (8:30 AM. to 5:00 P.M. ET). This will
continue beyond the normal business day under the Extended Support
Option.
b. Should a service call to the facility be required, a qualified ROBOCOM
Service Technician will be on site no later than the next business day
after the determination that on-site service is required, which
determination shall promptly be made following RSI's diagnosis of
the problem.
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ROBOCOM SYSTEMS, INC./ Name Page 27 Dated: March 28, 1996
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c. The software diagnostic support services must be purchased to obtain
the Hardware Maintenance Support.
d. The software and hardware Maintenance Support was selected. The
Purchaser will be responsible for removing a defective depot repair
eligible device, where applicable. You will then ship the defective
unit to ROBOCOM (or as directed) for repair or replacement. Major
items will be repaired on site by a ROBOCOM authorized agency
following ROBOCOM's determination that the unit is indeed in need of
repair. All spare parts and equipment supplied under this contract
shall remain the property of ROBOCOM SYSTEMS, Inc., except those spare
parts which ROBOCOM permanently installs in Customer's equipment and
hardware to effect repairs pursuant to the maintenance service
agreement.
e. RSI will bear all costs (except as noted) of maintaining the equipment
in good operating condition which costs are required because of the
normal use of the equipment. Maintenance service does not include the
furnishing of accessories of any nature, except such items of
equipment as may be necessary to the maintenance of the components
being serviced.
f. If Purchaser causes modifications to be made or accessories or devices
not covered by this Agreement to be added to the software or equipment
being maintained by RSI, then maintenance service will be supplied
therefore only upon mutual agreement between Purchaser and RSI. If the
modifications or additions increase the maintenance costs of system
and equipment covered hereby, then the maintenance charges specified
on page one (1) hereof shall be accordingly adjusted by RSI and
Purchaser shall pay such charges.
g. ROBOCOM has delivered certain source files to (Customer Name)as
customized software under the development contract. (Customer Name)may
modify and/or use these files as required. (Customer Name)may not
modify or otherwise change Procedure Library files now maintained by
ROBOCOM. (Customer Name) modified code must be compiled by (Customer
Name)and located in the bin directory as PROGRESS *.r files only.
Under no circumstances shall ROBOCOM be responsible for (Customer
Name) modified code.
h. ROBOCOM will provide problem determination and assistance for
operating system and database problem events and configuration issues.
ROBOCOM will serve as the central point of contact for the client and
will coordinate problem resolution with any third party vendors where
necessary.
i. ROBOCOM will perform in an advisory role to ensure that any
configuration
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ROBOCOM SYSTEMS, INC./ Name Page 28 Dated: March 28, 1996
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changes will not adversely affect the RIMS application. Any
configuration, file system, or other changes made by the client must
be provided to ROBOCOM for impact review and concurrence.
j. During the course of normal maintenance, should ROBOCOM detect a
potential problem situation, the client will be notified. A suitable
corrective action will be recommended and, if necessary, carried out
by ROBOCOM.
4. RESPONSIBILITIES OF PURCHASER
Purchaser shall provide, free of charge and with ready access, adequate
working space, adequate light, heat, ventilation, electrical current, and
outlets for the use of RSI maintenance personnel.
Purchaser shall not misuse, neglect or attempt any software modification,
repairs or maintenance of the equipment covered hereby. Any added costs to
RSI for maintaining the system or equipment because of violation of this
provision shall be charged to the Purchaser. Likewise, all costs of
maintenance not attributable to normal wear and tear, normal malfunction,
or RSI negligence, shall be charged to the Purchaser at the RSI published
hourly rate and published list price for parts.
Purchaser shall always allow RSI full and free access to the equipment
subject to Purchaser's industrial security rules.
Unless otherwise specified in the agreement, the client is responsible for
all day to day maintenance and administration tasks as required by a
typical computer system furnished by ROBOCOM with the RIMS application.
Customer Administrative tasks include but are not limited to:
User and Group Administration
Kernel Tuning
User Accounting
Monitor disk usage
Install/configure Peripherals
Printer Scheduler Administration
File System Administration
Network File System Administration
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ROBOCOM SYSTEMS, INC./ Name Page 29 Dated: March 28, 1996
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Progress Database Administration
Periodic BI File Truncation
Periodic Dump and Reload
Develop Backup Strategy
Perform Daily Backups
Perform Quarterly Backups
UUCP Administration
CRON Administration
EMAIL Administration
5. SERVICE HOURS
For the charges set forth on page one hereof, RSI will furnish "on call"
maintenance service from 8:30 A.M. to 5:00 P.M. ET Monday through Friday,
excluding holidays.
The extended after hour support provides for service from 5:00 P.M. - 1:00
A.M. ET on weekdays and 8:00 AM. - 1:00 AM. on weekends and holidays.
6. MOVEMENT OF EQUIPMENT
In the event that the equipment covered by this Agreement is moved to a new
location with the prior written consent of RSI, service under this
Agreement will terminate at the time the disassembly of the system is
begun. Service under this Agreement will commence again at the new location
at the time the system has been certified as operational as a result of an
inspection as provided in Article 17 "Initial inspection and Repair."
Charges for any services rendered of "RSI to effect the disassembly,
movement, reassembly, or checkout of the system being moved shall be at the
current published RSI hourly rates computed to the nearest one-half (1/2)
hour with a minimum charge of eight (8) hours per call.
7. EXCLUSIONS
The maintenance charge does not include service calls or additional service
time arising from abuse, misuse, modification, mishandling, of the
equipment, or damage due to forces external to the machine including, but
not limited to, the following acts of God, flood, power surges or failures,
defective electrical work, transportation, foreign equipment/attachments,
accident, disaster, neglect, alterations, service work performed
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ROBOCOM SYSTEMS, INC./ Name Page 30 Dated: March 28, 1996
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by unauthorized parties or any other cause beyond the control of RSI. This
service contract does not guarantee uninterrupted operation of the system
or of the equipment. This service contract excludes all responsibility for
repairs necessitated by or damage caused to equipment by any accessories
other than those authorized by the manufacturer (i.e., ribbons, disc packs,
etc.). "Also this contract does not include painting or refinishing of
equipment or furnishing materials for this purpose.
8. INVOICES AND PAYMENTS
a Charges for maintenance service shall begin on the commencement date
as specified in Article 2 and shall be invoiced as set forth in the
maintenance schedule, in advance with payment due within thirty (30)
days of the invoice date. A time price charge of 1-1/2% per month
(Annual rate equals 18%) will be charged on all accounts not paid
within said thirty-day period.
b. Charges for maintenance services of less than one (1) months' duration
shall be prorated at 1/20th of the monthly charges for each calendar
day (based on RSI June to May fiscal year).
c. Payment Terms - Fixed price - 1/12 of the annual amount each month, in
advance Travel and subsistence - where applicable, will be charged at
ROBOCOM cost plus 15% (administrative cost) - as incurred, provided
such charges are reasonable and documented.
9. LIABILITIES
Since Purchaser will have exclusive control over the use of the equipment
being maintained hereunder, Purchaser shall be solely responsible for the
proper use, protection and supervision thereof. RSI shall not be liable for
any personal injury or property damage even if loss or damage is caused by
negligence of RSI, and such liability shall not include incidental or
consequential damages. Except as provided in this Agreement, RSI shall have
no other responsibility or liability with respect to the system or
equipment being maintained or any of the maintenance service supplied
hereunder.
10. TERMINATION
Unless mutually agreed by both the Purchaser and RSI, this Agreement shall
not be subject to termination by either party, except if Purchaser defaults
in payment of any monies due hereunder, or should move the equipment
without prior written consent of RSI. RSI shall then, with notice, have
the right to terminate this Agreement, and if RSI
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ROBOCOM SYSTEMS, INC./ Name Page 31 Dated: March 28, 1996
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defaults in any material obligation under this Agreement, Purchaser shall
then, with notice, have the right to terminate this Agreement. In addition,
if after three (3) years from date of original equipment delivery, any item
being maintained under this Agreement, is, in RSI's reasonable opinion, in
need of factory refurbishment, repair, or overhaul, RSI will submit to
Purchaser a description of the necessary refurbishment and an estimate of
the reconditioning charges, which shall be in addition to those charges set
forth on reconditioning, RSI shall then, with notice, have the right to
terminate this Agreement. In the event that this Agreement is rightfully
terminated by RSI pursuant to this Section 19, as RSI's sole and exclusive
remedy, the Purchaser shall be liable for termination payment to RSI of 20%
of the monthly charge for the months remaining (not to exceed four months)
subsequent to date of termination by RSI. In the event that this Agreement
is rightfully terminated by Purchaser pursuant to this Section 10, RSI
shall return all funds Purchaser had paid in advance to RSI for which no
service had been rendered and Purchaser shall retain all other rights and
remedies.
11 GOVERNING LAW
This Agreement will be governed by and construed in accordance with the
laws of the State of New York.
12. ATTORNEYS' FEES
Purchaser will pay reasonable attorneys' fees to RSI in the event RSI shall
engage an attorney to enforce collection or to preserve and protect its
rights under this service agreement.
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ROBOCOM SYSTEMS, INC./ Name Page 32 Dated: March 28, 1996
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13. GENERAL PROVISIONS
This agreement constitutes the entire agreement for maintenance service
between the Purchaser and RSI. THE FOREGOING TERMS AND CONDITIONS SHALL
PREVAIL NOTWITHSTANDrNG ANY VARIANCE WITH THE TERMS AND CONDITIONS OF ANY
ORDER SUBMITTED BY THE PURCHASER
AGREED TO By:
-----------------------
(Signature)
Customer:
-----------------------
(Print Name)
-----------------------
(Date)
-----------------------
(Title)
ACCEPTED By:
-----------------------
(Signature)
ROBOCOM
Systems Inc.
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(Print Name)
-----------------------
(Date)
-----------------------
(Title)
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ROBOCOM SYSTEMS, INC./ Name Page 33 Dated: March 28, 1996
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EXHIBIT 4
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ROBOCOM SYSTEMS, INC./ Name Page 34 Dated: March 28, 1996
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ROBOCOM TRAINING PROGRAM
The ROBOCOM training is instructor-led yet participant-centered instruction that
focuses on predefined customer requirements. Our Training Department consists of
an experienced staff of professionals who tailor the curriculum to specifically
meet those requirements. To that end ROBOCOM training consists of a preset
curriculum which includes a comprehensive series of courses that can be
customized
As part of the ROBOCOM training, we offer the following curriculums:
-- RIMS Warehouse Configuration (generally one week at ROBOCOM)
-- RIMS Supervisor Training (generally one week at ROBOCOM)
-- RIMS Worker Training (generally one week on site)
The actual course content of that training varies, depending on the needs of our
customer. Our course offerings include overviews as well as in-depth,
step-by-step procedures. Most often we use a combination of both:
-- Personnel who learn to setup the warehouse are given a system overview
and then are more heavily exposed to configuration issues with less
depth given to operations.
-- Supervisors are given a deeper overview that includes an understanding
of Video Display Terminal (VDT) and Radio Data Terminal (RDT)
functionality and only briefly touch upon system configurations.
-- Warehouse operators (workers) first attend VDT and/or RDT Overview(s)
and then learn each RDT and/or VDT step necessary to perform their
job.
As we present each course, careful attention is paid to use language
understandable to each student in the class. Again and again we are told by
non-computer-literate students that our presentations are non-threatening
because we are clear and easy to understand. Because our training is
interactive, we find that trainees are not afraid to ask questions for further
explanations.
Our experienced staff is also able to silently identify slower learners and
inconspicuously reinforce concepts/procedures for these people without causing
any embarrassment. Each Lab session (hands-on exercises) has been designed in
two parts: that which is required and that which is for "Extra Credit!" While
most of the class proceeds to the "Extra Credit" exercises, our staff can
provide extra support to the slow learner with the original, structured
exercises. In the rare event that the trainee still cannot grasp the lesson,
that student can come back for additional instruction during the time scheduled
for "Review/Supplemental /As Needed Instruction."
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ROBOCOM SYSTEMS, INC./ Name Page 35 Dated: March 28, 1996
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Our training approach is varied. The methodology used depends on the audience
size and type, the physical layout of the training facility, the availability of
equipment, and the subject matter being presented. Methods most commonly used in
our sessions include:
Lecture Questions and Answers
Demonstration Buzz Groups
Discussions Structured Hands-on Practice Exercises
Self Discovery Hands-On Practice Exercises
ROBOCOM trainers initiate student review after each major topic is covered.
Continual creative review or material not only reinforces learning, it also
makes learning fun. Such techniques add variety to what is often perceived to be
repetitive, computer drills.
Our training material varies depending on the curriculum. We have configuration
material and worksheets for our Warehouse Configuration class. We have user
training material for our Supervisor and Worker user classes. All training
material includes our User Documentation. This allows our students to relate to
our Management Manual and User's Guides from their first exposure to the system.
Even in training we encourage students to check the appropriate section of the
Management Manual or User's Guide before asking for help. We find that if such
practices are in place from the beginning, there will be fewer calls and thus
lower maintenance costs later on.
Our goal is to work with our customers to establish RIMS training to best meet
their needs. Together we can emphasize learner discovery, learner participation
and learner involvement. Together we can make our training effective. Together
we can deliver results
ROBOCOM's philosophy is that the most important ingredient in the process of
developing User Documentation is the user. If the RIMS user is afraid of the
system or does not understand the system, the system cannot achieve its intended
purpose. The best system is worthless if it is not properly used.
In short, our documentation makes the "magic" of RIMS understandable to people
who know nothing or very little about computers.
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ROBOCOM SYSTEMS, INC./ Name Page 36 Dated: March 28, 1996
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Each piece of ROBOCOM User Documentation adheres to our in-house User's
Documentation Standards Manual. These standards were created to assure the
consistency in overall display and structure of all our user documentation. Our
standards address three specific areas:
- General Document Format (Headers/Footers, Margins/Indents, etc.)
- Chapter/Section Format (Options/Sub-Options, Frames, etc.)
- Style/Grammar (Diction/Appearance, Numbering/Capitalization etc.)
We have found that consistency in presentation and style is the key to
simplifying our documentation for user acceptance and user comprehension.
ROBOCOM's User Documentation includes the following:
RIMS Configuration Material
- RIMS Management Manual
- RIMS Video Display Terminal (VDT) User's Guide
- RIMS Radio Data Terminal (RDT) User's Guide
- RIMS Training Material
Our five volumes of User Documentation complement each other. The Configuration
Material and Management Manual includes setup information necessary for the
implementation and maintenance of a RIMS system. Our two User's Guides provide
detailed steps used in daily RIMS processing, while our Training Materials
explain RIMS procedures and processes in a general sense
The RIMS Configuration Material complements the RIMS Management Manual. This
material includes a brief explanation of each database element that needs to be
addressed when configuring a warehouse for a new RIMS installation. Included in
this material are diagrams that explain putaway and picking logic used by RIMS.
This allows you to understand exactly how your warehouse configuration will
affect your warehouse operations. A complete explanation of each configuration
task is explained in full in the RIMS Management Manual.
The RIMS Management Manual provides detailed information to be considered as a
customer prepares to implement RIMS. This manual is intended to be used in the
planning stages of the RIMS implementation process. It is also intended as a
reference for someone who needs to update any settings that follow the RIMS
implementation. The manual is intended for someone with a very limited knowledge
of the RIMS system.
The Management Manual describes in detail the database elements that will be
incorporated into RIMS. All of the information detailed in this guide is
required in order for RIMS to achieve
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ROBOCOM SYSTEMS, INC./ Name Page 37 Dated: March 28, 1996
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optimal efficiency and accuracy as it manages your warehouse operations.
We recommend that our customers study the RIMS Management Manual prior to the
installation of the RIMS software. This will enable customers to expedite the
implementation process, and to determine the need, if any, for further
customization.
The Management Manual divides the components of RIMS into four basic categories:
- Warehouse Configuration
- File Information
- System Administration (including only the setup functions, the
processing options are covered in the VDT User's Guide)
- System Issues (including backups, restores, etc.)
Each RIMS topic covered in the Management Manual includes a real-life example
with a RIMS solution. Included too, are blank worksheets to simplify customer
planning and a Field-Frame Cross Reference Chart that shows you in an instant
which fields are on which frames.
Our customers have found the RIMS Management Manual invaluable as they prepare
their facilities for a RIMS installation.
The VDT User's Guide follows the menu structure of the VDT system and steps you
through each VDT process; the RDT User's Guide follows the menu structure of the
RDT system and steps you through each RDT process. Each manual includes sample
frames from the real system. The RDT User's Guide displays both the
vehicle-mount and hand-held frames.
The VDT User's Guide contains chapters that begin with "VDT" (e.g., VDT
Receiving) or "RIMS" (e.g., RIMS Warehouse Configuration). Those that are called
VDT... contain information that is specific to the VDT system. Those that are
called RIMS.. contain setup, parameter or general RIMS information or
information that is established on the VDT system but affects the RDT system as
well. The RDT User's Guide chapters begin with RDT....
Each major menu option is a separate chapter. Each chapter is numbered
separately; for example, chapter one may consist of pages 1-1 through 1-30,
chapter two might be 2-1 through 2-25, etc. This allows you to tailor your
User's Guides to match your RIMS system. If a facility is not using the Quality
Assurance module, not only can you easily remove Quality Assurance from your
RIMS system menu, you can also easily remove that chapter from the user
documentation.
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ROBOCOM SYSTEMS, INC./ Name Page 38 Dated: March 28, 1996
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Each page in each User's Guide chapter contains a Header indicating the
appropriate chapter option/section. Each page also contains a Footer that
indicates the current release date of the page and the chapter name.
The last chapter of both user's guides is an alphabetized glossary where each
term that relates to RIMS is defined for the user.
Each time the User's Guides are updated, the new release date appears in the
Footer of each page. In addition, gray shading on the page highlights any
changes that have occurred in this update.
The RIMS Training Material varies in format and content depending on the
specified audience. Supervisors usually receive an actual Training Manual that
contains schedules as well as separate chapters for supervisor functions and/or
warehouse processing.
All training materials complement the Management Manual and User's Guides.
Training materials explain procedures and processes in a general sense; the
Management Manual and User's Guides provide detailed step-by-step instructions.
Each chapter of the supervisor Training Manual also provides a listing of the
relevant RIMS reports that are available for that segment of RIMS. For example,
the Receiving Training Material alerts the user to the availability of the
"Expected PO Status Report" and the "Pending Returns Report."
Warehouse workers as a rule do not receive a Training Manual. They do, however,
receive less threatening "hand-outs" or "cheat-sheets" that capsulize the tasks
at hand. The content of this material depends on many variables:
- Do workers have any typing/computer experience?
- How much does the RIMS system differ from the current method of
operation?
- Will workers be performing the same types of tasks as before or is the
company using the installation of RIMS as a springboard to change
people's job assignments?
- Do the workers have to learn the VDT and the RDT systems?
Our training staff relies on customer interaction to determine the scope of the
warehouse training. Accordingly we then design the appropriate warehouse worker
training material.
ROBOCOM also provides a VDT Menu Map as a component of our training material.
This consists of a diagram that displays each menu option. These Menu Maps help
supervisors become familiar with the RIMS system as a whole. The Menu Maps can
also be used as a road
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ROBOCOM SYSTEMS, INC./ Name Page 39 Dated: March 28, 1996
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map for supervisors/workers who need to know how to access a specific frame on
the VDT system It is very easy to provide a colored trail (via high lighter) to
lead someone to a module (Receiving) or even to a frame (Purchase Order
Receiving).
All of the ROBOCOM RIMS User Documentation is used as part of the RIMS training
process. During training, users are exposed to the Management Manual and User's
Guides so that they not only become familiar with the documentation, they also
learn where to find answers to potential questions or problems.
Our goal is to work with our customers to establish concise RIMS User
Documentation to best meet their needs. Together we can help users overcome
apprehension, build confidence and grasp easy-to-follow instructions. Together
we can make our documentation effective. Together we can deliver results.
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ROBOCOM SYSTEMS, INC./ Name Page 40 Dated: March 28, 1996
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EXHIBIT 5
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ROBOCOM SYSTEMS, INC./ Name Page 41 Dated: March 28, 1996
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International RIMS (C) Pricing, 1996
RIMS.2001(C)
USERS SITE ONE (1) SITE TWO(2) and up
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16 $* $*
24 * *
32 * *
64 * *
64+ * *
Users defined as the total number of Fixed Terminals and RF Terminals.
Client Server to be announced.
*
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. FILED SEPARATELY WITH THE COMMISSION.
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ROBOCOM SYSTEMS, INC./ Name Page 42 Dated: March 28, 1996
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EXHIBIT 6
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Agreement Between: Page 43
Distributor and ROBOCOM Systems, Inc.
Dated: __________
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Date:_________________
COMPUTER PROGRAM END-USER
LICENSE AGREEMENT
(Nonexclusive; Object Code Only)
between
ROBOCOM SYSTEMS INC. (Licensor) of 511 Ocean Avenue, Massapequa, NY 11758, and
Distributor
LICENSOR'S PROGRAM IS COPYRIGHTED AND LICENSED (NOT SOLD). LICENSOR DOES NOT
SELL OR TRANSFER TITLE TO THE LICENSED PROGRAM TO YOU. YOUR LICENSE OF THE
LICENSED PROGRAM WILL COMMENCE UPON EXECUTION OF THIS AGREEMENT BY BOTH PARTIES
AS EVIDENCED BY AUTHORIZED SIGNATURES BEING AFFIXED.
1. License.
In consideration of the payment of the license fees set forth herein,
Licensor grants you a nonexclusive license to use the package of computer
programs and data in machine-readable form and related materials, including
documentation and listings, identified in Appendix A, Paragraph 1 which
together constitute the "Licensed Program," subject to the following terms
and conditions.
2. Scope of Rights.
You may:
a. Install the Licensed Program in your own facility at the location
specified in Appendix A;
b. Use and execute the Licensed Program on the computer specified by
type/model and serial (or plant number) in Appendix A for purposes of
serving the internal needs of your business;
c. In support of your authorized use of the Licensed Program, store the
Licensed Program's machine-readable instructions or data in, transmit
it through, and display
- --------------------------------------------------------------------------------
Agreement Between: Page 44
Distributor and ROBOCOM Systems, Inc.
Dated: __________
<PAGE>
International Distribution Agreement
Robocom Systems. Inc. and C&C Consultores
- -------------------------------------------------------------------------------
it on machines associated with the specified computer, and
d. Make copies of the Program in machine-readable, object code form, for
nonproductive backup purposes only, provided that Licensor's
proprietary legend is included.
3. Fees and Payments.
The license fee for the Licensed Program is specified in Appendix A Total
contract value including hardware, Software and terms of payment are
specified in Appendix B.
- --------------------------------------------------------------------------------
Incomplete, for sample purposes only. Page 45
Agreement Between:
Distributor and ROBOCOM Systems, Inc.
Dated: __________
================================================================================
Distributor Agreement
Prophet 21 Inc.
April 1, 1996
Revised: June 18, 1996
NOTE: SECTIONS MARKED WITH AN (*) HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.
================================================================================
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
This Agreement is made this _____________ Day of ____________, 19___ between
ROBOCOM Systems, Inc., a New York State Corporation having an office at 511
Ocean Avenue, Massapequa, NY 11758 ("ROBOCOM") and Prophet 21, Inc., a
Pennsylvania Corporation having an office at 19 West College Avenue, Yardley, PA
19067, ("Prophet").
Non-Exclusive Territory: U.S.A. & Canada
Exclusive: Prophet 21, Inc. Users effective the date of this Agreement.
WHEREAS:
ROBOCOM owns the right to license proprietary software products (consisting
of programs and related documentation); and
Prophet desires to market and sublicense software products of this type;
and
ROBOCOM and Prophet wish to enter into an agreement authorizing Prophet to
market directly and make copies of certain software products available to End
Users in the Territory through Prophet, with Prophet making certain payments to
ROBOCOM with respect thereto.
NOW IT IS HEREBY AGREED as follows:
1.0 DEFINITIONS
1.1 "Programs" mean the actual ROBOCOM computer programs in
machine-readable object code or other form covered by this Agreement, including
all ROBOCOM provided modifications and enhancements thereto.
1.2 "Documentation" means ROBOCOM user manuals and other materials in
printed form which facilitate the use of the Programs by End Users.
1.3 "Software Products" mean any combination of a Program object code and
Documentation licensed by ROBOCOM under the terms of this Agreement. "Product"
means either a Program or documentation, without drawing a distinction.
1.4 "End User" means an entity authorized for productive use of Software
Products. "Productive Use" means any use of any of the Software Products in
their application purposes.
1.5 "Territory" means the Non-Exclusive Territory first identified above.
1.6 "Demonstration License" means a license to Prophet, for Prophet use at
its sales offices, of Software Product object code for marketing demonstrations,
maintenance and training, and for use in providing End-User support. The object
code shall not be otherwise used
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ROBOCOM SYSTEMS, INC. Page 1 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
or copied.
1.7 "The Commencement Date" means the effective date of the Agreement first
written above.
2.0 APPOINTMENT OF PROPHET.
2.1 License Grant. During the term of this Agreement and subject to all
other conditions herein, ROBOCOM hereby grants to Prophet a nonexclusive right
to sublicense by itself to End Users in the territory in Prophet's name from
Prophet's Territory-resident offices copies of Software Products upon Prophet's
own terms and conditions, such terms and conditions to be approved by ROBOCOM.
Certain Exhibit 1 Products may be identified as requiring or including third
party software which, if available from ROBOCOM, shall be licensed through
ROBOCOM and may be required to be licensed under different or additional terms
and conditions.
2.2 Title in Products and Modifications. Title and all proprietary rights
in the Products, any permitted Prophet modifications in the Products, and any
translations thereof shall at all times remain the properties of ROBOCOM or
ROBOCOM's Licensor. Prophet shall be the sole owner of the interface code, which
they have designed and written to transfer data between both software packages.
Inventions. Prophet agrees not to modify, change, or improve ROBOCOM's
Software.
2.3 Trade Secret and Confidential Information. Prophet acknowledges that
ROBOCOM has advised it that the Software and related documentation are valuable
proprietary information and trade secrets of ROBOCOM and that the Software is
confidential information disclosed to Prophet to be used only as expressly
permitted by the terms of this Agreement, whether or not any portion thereof is
or may be validly copyrighted or patented. Prophet will take all reasonable
steps to protect the software on magnetic tape or disk or in any other form of
disclosure by using the same standard of care Prophet uses to protect its own
confidential information of a similar nature.
Prophet further acknowledges that, in the event of an actual or threatened
violation of the foregoing provision of which Prophet has actual knowledge,
Prophet will take immediate steps to stop such threatened violation; that
ROBOCOM may not have an adequate monetary remedy and will be entitled to such
injunctive relief as may be deemed proper by a court of competent jurisdiction,
in addition to any other available remedies. The provisions of the Section 8
will survive the termination of this Agreement.
ROBOCOM agrees that Prophet's obligation to keep confidential any data will
not apply to any information or data which: (1) is or becomes publicly known
through no wrongful act of Prophet (2) is known to Prophet at the time of
disclosure; (3) is rightfully received by Prophet
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ROBOCOM SYSTEMS, INC. Page 2 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
from a third party without breach of this Agreement; (4) is furnished to a third
party by ROBOCOM without a similar restriction on the third party's rights; or
(5) is approved for release by authorization from ROBOCOM.
3.0 CERTAIN ROBOCOM OBLIGATIONS
3.1 Copies of Software Products. ROBOCOM will provide Prophet a single
current production UNIX runtime copy of its Software for demonstration and
training purposes only. Prophet may copy this UNIX runtime version, at no charge
to either party and for the purposes of having demonstration copies at their
sales offices. ROBOCOM will also provide Prophet with three copies of all of its
User Documentation, for demonstration and training purposes only. For the
purposes of developing the interface between the two products, Prophet shall
have full access to appropriate Robocom software.
3.2 Maintenance Services. ROBOCOM will maintain RIMS after installation in
accordance with Exhibit 2. If ROBOCOM requires the support services of Prophet
21, Inc. a charge of $200.00 per hour will be paid to Prophet 21, Inc. by
ROBOCOM. Any programming errors associated with software provided by Prophet 21,
Inc. will be corrected at no charge to ROBOCOM.
3.3 Prophet Training. ROBOCOM will provide Prophet training as in Exhibit
3.
3.4 Warranties. ROBOCOM warrants to Prophet that ROBOCOM's proprietary
software products as furnished to Prophet (excluding those which are categorized
as third party software) will work substantially as described in the applicable
ROBOCOM published documentation. Prophet acknowledges and accepts that software
is inherently susceptible to error and that ROBOCOM's sole obligation shall be
to use reasonable efforts to remedy substantial malfunctions of the software by
correcting errors or developing a suitable work around. This warranty is subject
to ROBOCOM receiving notification in sufficient detail to enable ROBOCOM to
demonstrate the error and certify its rectification or the devising of a
suitable work around, ROBOCOM does not warrant that all errors are correctable
or avoidable.
This warranty shall not apply to software identified as third party
software or otherwise identified as being furnished in "AS IS" condition and
shall not apply to Prophet or End User modified portions of Software Products or
other portions of Software Products to the extent affected by such
modifications.
3.5 New Versions, Enhancements. ROBOCOM may, from time-to-time, add to
Exhibit 1 new authorized computer models or configurations or new or modified
ROBOCOM software and enhancements which, in ROBOCOM's judgement, are appropriate
for distribution in the Territory by Prophet.
3.6 Price and Product Changes. ROBOCOM reserves the right to adjust Exhibit
Prices and descriptions and to add or remove Software Products upon ninety (90)
days written notice.
3.7 Advertising Materials. ROBOCOM will provide Prophet with 250 copies per
year
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ROBOCOM SYSTEMS, INC. Page 3 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
of its existing marketing literature. Thereafter, copies of advertising and
promotional materials, as available and appropriate, at ROBOCOM's cost plus 15
percent (15%). At no charge, ROBOCOM will provide Prophet with a current example
proposal for a US End User and the accompanying general system description
3.8 Technical Support. Robocom agrees to provide all direct technical
support for the software Products to Prophet's end User licensees. Direct
technical support is defined as:
A. Providing all End User training and application support and answering
all End User operational and use questions;
B. Answer technical End User questions and documenting the answers
furnished to End Users;
4.0 CERTAIN PROPHET OBLIGATIONS
4.1 Compliance. Prophet agrees to comply fully with all of Prophet's
obligations under this Agreement.
4.2 Reporting; Copies of Agreements. At the time of payment for the sale of
Robocom software, send ROBOCOM a report detailing all fees due to ROBOCOM under
this Agreement including: identification of each sublicensee by name and
specific End User site location; specific Programs licensed to the End User and
authorized type/model and number of computers; date of sublicense; date of each
Program installation; and ROBOCOM fees and charges accrued and paid.
Prophet represents and warrants that it has the expertise, experience,
knowledge of the regional market and financial resources to successfully market,
technically support and license the Software in the Territory and to achieve
significant market penetration in the Territory.
Prophet will designate such individuals as is necessary to act as sales and
application specialist(s) in the area of warehouse and distribution matters, and
to professionally present ROBOCOM's Software to interested parties. Prophet will
have these specialists spend at least four days per year at Robocom's office
office for informal training. The location may be changed by mutual written
agreement. Initial training will take place within 90 days of the completion of
the interface.
Prophet will devote its best efforts to maximizing profitable sales of
ROBOCOM's Software in the Territory. Within 90 days from the completion of the
interface, Prophet and Robocom will develop a marketing plan, describing how
both companies will support each other to market ROBOCOM's Software, and the
resources each will devote to this effort.
Prophet will prepare its own price and technical proposals for prospective
customers. For customers requiring services other than or in addition to
ROBOCOM's standard Software,
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ROBOCOM SYSTEMS, INC. Page 4 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
ROBOCOM will not be bound by the provisions of Prophet's proposal except by
prior written agreement. Robocom shall supply to all customers purchasing
Robocom's software from Prophet a license agreement upon receipt of information
required in paragraph 4.2. In addition, Robocom shall contract separately with
such customers for a maintenance agreement.
4.3 Examination of Records. Prophet will allow ROBOCOM representatives to
examine Prophet's records to confirm accurate and timely payment of royalties by
Prophet. Any such examination shall be conducted within fifteen (15) days of
Prophet's receipt of ROBOCOM's written request and shall be performed during
normal business hours, at a time mutually agreed upon by ROBOCOM and Prophet.
ROBOCOM's cost of such an examination shall be borne by ROBOCOM. Any
confidential information, belonging to Prophet will be kept confidential by
ROBOCOM.
Prophet will maintain proper accounting records, and allow reasonable
inspection by ROBOCOM, to verify amounts payable to ROBOCOM. ROBOCOM will have
the right, at any time, and at ROBOCOM's expense, to appoint an independent
auditor to verify the Prophet has not violated any portions of this agreement.
If an independent auditor is appointed by ROBOCOM for this purpose, Prophet will
provide said auditors with access to its records during normal business hours.
4.4 Proprietary Notices. Prophet agrees to reproduce on all permitted
copies ROBOCOM and/or ROBOCOM's liicensor's copyright and other proprietary
notices and, according to ROBOCOM instruction, any trademark notices as included
in the Software Products and in any ROBOCOM-furnished marketing materials,
training aids and other ROBOCOM-furnished materials and on any permitted
translations thereof. Prophet recognizes and agrees that Prophet obtains no
rights in the Software Products and other ROBOCOM materials except for the
limited rights specifically granted under this Agreement.
4.5 Modifications; License Enforcement. Prophet agrees that it will not
modify software Products, not duplicate software Products otherwise than as
expressly authorized herein and use its best efforts to ensure that its End
Users do not use Software Products in violation of the agreement and the End
User license agreement, including, but not limited to, productive use on more
than the authorized number of computers or on a model of computer bearing a
higher sublicense fee than paid by Prophet to ROBOCOM, or use the software
Products for the benefit of entities other than the End User. Prophet shall
promptly notify ROBOCOM and provide reasonable assistance to ROBOCOM without
charge to assist ROBOCOM in prosecution of any trade secret, copyright or
trademark infringements which come to Prophet's attention, and shall be
undertaken by ROBOCOM and at its expense.
4.12 Return of Materials upon Termination. Upon any termination of this
Agreement, Prophet will immediately return or certify destruction of the
Programs and documentation, including any copies, information or notes relating
thereto except to the extent temporary retention is
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ROBOCOM SYSTEMS, INC. Page 5 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
reasonably necessary for not more than one year from termination to fulfill End
User maintenance commitments made by Prophet in good faith and in accordance
with this Agreement. ROBOCOM agrees that it will offer software Product
maintenance services to such End Users following the termination of this
Agreement for ROBOCOM supported then-current versions of Software Products.
4.13 Payments. Prophet will make all payments to ROBOCOM's offices, first
stated above, or as otherwise directed by ROBOCOM and without deductions based
on any currency control restrictions, import duties, or sales, use, value-added
or other taxes or withholdings. Prophet will bear all taxes, however designated,
imposed as a result of the existence or operation of this Agreement, including,
but not limited to, any tax which Prophet is required to withhold or deduct from
payment to ROBOCOM, except, (a) any such tax imposed upon ROBOCOM by any
governmental entity in the United States and (b) any such tax imposed upon
ROBOCOM in the country in which the office of Prophet is located or in which the
End User is located if such tax is allowable as a credit against United States
income taxes of ROBOCOM. To assist ROBOCOM in obtaining such credit, Prophet
shall furnish ROBOCOM with such evidence as may be required by United States
taxing authorities to establish that such tax has been paid.
4.15 Competitive Products. Should Prophet sell and promote products
competitive with ROBOCOM, Robocom, may at its option, sell its products directly
to Prophet customers.
4.16 Product Names; Trademarks. Prophet agrees to use ROBOCOM Product names
in association with the products and use any ROBOCOM trademarks as instructed by
ROBOCOM so as to protect ROBOCOM rights and continue identification of the
Products with ROBOCOM in the Territory.
4.18 Fees and Payment; Beginning with the first system installed, for
ROBOCOM Standard Software sold to Prophet customers headquartered in the
Territory, or elsewhere (as long as the right to distribute ROBOCOM's Software
has not been revoked), for which Prophet takes primary sales responsibility,
Prophet will charge customers the list prices and pay ROBOCOM an amount equal to
*% of the current list prices (shown on the attached price list, Exhibit 5) or
*% of a mutually agreed discounted price which is commercially satisfactory to
both ROBOCOM and Prophet, for their modules purchased and installed.
The attached price list may be modified by ROBOCOM at any time, with 90
days advance notice to Prophet.
5.0 PATENT AND COPYRIGHT INDEMNIFICATION
5.1 ROBOCOM will defend any action brought against Prophet [or Prophet's
End Users] based on a claim that a software Product infringes any copyright,
trade secret or United States patent (including patents in Territory countries
based on the relevant United States patents.). ROBOCOM will hold Prophet
harmless from and pay any award against Prophet or Prophet's End Users based
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. FILED
SEPARATELY WITH THE COMMISSION.
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ROBOCOM SYSTEMS, INC. Page 6 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
on such infringement provided that Prophet and/or End Users notify ROBOCOM
promptly in writing of the claim and Prophet and/or End Users provide ROBOCOM
reasonable assistance and permit ROBOCOM to control the defense and any
settlement. ROBOCOM shall have no liability if the alleged infringement arises
from (1) the licensing of other than a current unaltered release of a Program as
provided under this Agreement, or (2) the combination of a Program with non
ROBOCOM programs or data. ROBOCOM makes no representations or warranties and
provides no indemnities regarding patent or copyright infringement by any
portion of a software Product not developed by ROBOCOM.
5.2 In the event of claimed infringement, ROBOCOM reserves the right to
replace the Software Product with a non-infringing product of equivalent
functionality, modify the Software Product to make it non-infringing or, if
neither alternative is reasonably available, remove the Software Product and
refund to Prophet license fees paid to ROBOCOM with respect to the infringing
copies of the Software Product on a five-year End User use amortization
schedule.
6.0 TERM AND TERMINATION
6.1 This Agreement shall enter into force on the Commencement Date and
shall continue for a period of two (2) years from the Commencement Date and
subject as herein provided shall thereupon automatically renew for an additional
one (1) year period and until terminated by one of the parties hereto giving
written notice within 30 days.
6.2 Notwithstanding Clause 6.1 of this Agreement, each party shall have the
right to terminate this Agreement at any time upon giving the other party at
least thirty (30) days written notification if either party's performance under
this Agreement is unsatisfactory to the other in the first party's reasonable
judgement.
7.0 EVENTS OF DEFAULT
If either party fails to perform any other term, covenant or condition of
this Agreement and has not performed such term covenants or conditions within
thirty (30) days after a notice of default has been received, the non-defaulting
party has the right to forthwith terminate this Agreement by means of a written
notice without judicial intervention being required.
8.0 REMEDIES
8.1 Upon any termination of this Agreement, Prophet shall immediately
return or certify destruction of all Programs in accordance with paragraph 4.14
and ROBOCOM shall be entitled to recover from Prophet all accrued and unpaid
payments and other amounts then due and owing under the terms hereof and/or all
future payments and other amounts as and when becoming due hereunder.
No termination under this Paragraph 8.1 or otherwise under this Agreement
shall invalidate then existing Prophet End User licenses granted by Prophet in
accordance with this Agreement for
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ROBOCOM SYSTEMS, INC. Page 7 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
which required fees and charges have been credited or paid to ROBOCOM.
8.2 The rights of ROBOCOM pursuant to Paragraph 8.1 hereof are without
prejudice to any other rights or remedies which ROBOCOM may have. ROBOCOM
pursuit and enforcement of any one or more remedies shall not be deemed an
election waiver by ROBOCOM of any other remedy.
8.3 EXCEPT AS SET FORTH IN PARAGRAPH 3.5 AND PARAGRAPHS 5.1 AND 5.2,
ROBOCOM DISCLAIMS ALL WARRANTIES WITH REGARD TO THE ROBOCOM SERVICES AND
PRODUCTS SOLD OR LICENSED HEREUNDER INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ALL OBLIGATIONS OR
LIABILITIES ON THE PART OF ROBOCOM FOR DAMAGES, INCLUDlNG BUT NOT LIMITED TO,
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN
CONNECTION WITH THE DELIVERY, USE, OR PERFORMANCE OF THE SOFTWARE.
9.0 NOTICES
Service of all notices under this Agreement by either party to the other
shall be sufficient only if posted by certified or registered post, return
receipt requested or personally delivered and receipted for. Either party may
change its address for service of notice by written notice to the other.
10.0 UNFORESEEN EVENTS
Neither party shall be responsible for any delay nor failure to perform due
to causes beyond reasonable control of the party, including, but not limited to,
cause such as strikes, lockouts, or other labor disputes, riots, civil
disturbances, actions or inactions of governmental authorities or suppliers,
epidemics, war, embargoes, sever weather, fire, earthquakes, acts of God or the
public enemy, nuclear disasters, or default of a common carrier.
11.0 SEVERABILITY
In the event that any one or more of the provisions of this Agreement shall
for any reasons be held to be unenforceable in any respect under the laws of any
jurisdiction, such unenforceability shall not affect any other provision and
this Agreement shall then be construed as if such unenforceable provision or
provisions had never been contained herein.
12.0 GENERAL CONDITIONS
12.1 Applicable law; Dispute Resolution. The Agreement shall be construed
in accordance with and governed by the laws of the State of New York without
regard to that body of law known as conflict of laws and without reference to
the 1980 United Nations Convention on
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ROBOCOM SYSTEMS, INC. Page 8 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
Contracts for the Sale of Goods and any amendments thereto.
12.2 Headings. Headings and subheadings in this Agreement are for
convenience only and do not form part of this Agreement.
12.3 Assignment. Upon advance written notice, Prophet may assign this
Agreement to a parent, subsidiary, or successors in interest to the business of
Prophet provided that such assignees are located in the same country as Prophet
and is able to and does fulfill Prophet's obligations under this Agreement.
Prophet shall not otherwise assign this Agreement without the written consent of
ROBOCOM.
12.4 Non-Waiver. The failure of either party to enforce at any time any of
the provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce any such provisions.
12.5 Independent Businesses. The Prophet and ROBOCOM are independent
businesses and will in no way claim otherwise or incur liabilities except on
their own account. It is understood and agreed that ROBOCOM and the Prophet will
not in any event be liable for any obligations, expenses, or damages of any
nature whatsoever incurred by the other party or for any claim made against the
other party on account of any services performed by it or by those for whom the
other party may be in law responsible and that this Agreement supersedes all
previous Agreements and arrangements between ROBOCOM and the Prophet.
12.6 Indemnity Clause. ROBOCOM will protect and save harmless and defend at
its own expense the Prophet from and against any and all claims of infringements
of patents, trade marks or industrial designs copyrights or other property
rights affecting the Products. The Prophet agrees to give ROBOCOM prompt notice
of any such claim that is made against the Prophet and will give ROBOCOM such
assistance and information as ROBOCOM may reasonably require. In the event that
any such infringement occurs or may occur, ROBOCOM may:
A. Procure for the Prophet the right to continue to use the Software or
infringing part thereof; or
B. Modify or amend the Software or infringing part thereof so that it
becomes non infringing; or
C. Replace the Software or infringing part thereof by other software of
similar acceptable capability; or
D. Pay the Prophet compensation relating to the whole or infringing part
of the Software as appropriate so that it may reimburse and settle any
corresponding claims put upon it by third parties.
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ROBOCOM SYSTEMS, INC. Page 9 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
E. The conditions of the indemnity clause identified herein apply only to
ROBOCOM's supplied RIMS applications code.
12.7 Notices. All notices hereunder will be in writing and will be deemed
to have been given and received when delivered in person or by registered or
certified mail, return receipt requested, postage prepaid, as follows:
ENTIRE AGREEMENT
This Agreement and Exhibits constitute the entire Agreement governing the
relationship between the parties and supersede all proposals, oral or written,
and all negotiations, conversations, or discussions between the parties relating
to this Agreement. Prophet acknowledges that is has not been induced to enter
into this Agreement by representations or statements, oral or written, not
expressly contained herein. The terms and conditions of the Agreement shall
prevail, notwithstanding any variance from the terms and conditions of any order
or other instrument submitted by Prophet. This Agreement may be modified only in
writing signed by duly authorized representative of each party.
If to Prophet:
Prophet 21, Inc.
19 West College Avenue
Yardley, Pennsylvania
19067
USA
Attn: Dr. John E. Meggitt, President
If to ROBOCOM:
ROBOCOM Systems, Inc.
511 Ocean Avenue
Massapequa, New York
11758
USA
Attn: Mr. Richard L. Wilkins, Director of Sales and Marketing
Forum for Dispute. The parties agree to seek to resolve any dispute arising
under this Agreement pursuant to good faith business negotiations. In the event
of a dispute, the aggrieved party will promptly identify in writing the nature
of the outstanding dispute in sufficient detail as to allow the other party to
respond to the dispute. Each party agrees to set times and places to meet and
communicate their concerns and to propose resolutions to their dispute. These
meetings may take place by telephone, by video conference, or face-to-face. The
parties agree to hold not fewer than
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ROBOCOM SYSTEMS, INC. Page 10 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
two meetings, and to meet for at least a total of four hours to discuss their
respective positions and to explore a business resolution of their dispute. The
parties agree to exchange offers in writing upon conclusion of their meetings.
Such good-faith procedures will be a condition precedent to any litigation of
the dispute.
The following are part of this Agreement:
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
EXECUTED BY BOTH PARTIES AS PROVIDED BELOW:
ROBOCOM Systems, Inc. Prophet 21, Inc.
By: /s/ Irwin Balaban By: /s/ [Illegible]
Title: President Title: Executive Vice President
Date: 7/10/96 Date: 6/21/96
* * *
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ROBOCOM SYSTEMS, INC. Page 11 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
EXHIBITS TO
DISTRIBUTION AGREEMENT
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ROBOCOM SYSTEMS, INC. Page 12 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
EXHIBIT 1
Robocom Products:
RIMS(R). 2001 v3.2
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ROBOCOM SYSTEMS, INC. Page 13 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
This page intentionally blank.
Referenced documents under separate cover.
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ROBOCOM SYSTEMS, INC. Page 14 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
EXHIBIT 2
Maintenance Contract
- --------------------------------------------------------------------------------
ROBOCOM SYSTEMS, INC. Page 15 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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ROBOCOM MAINTENANCE CONTRACT
96-2001
-------
Contract No.
ROBOCOM SYSTEMS, INC. QUOTATION
Reference Date Terms
- --------- ---- -----
================================================================================
ITEM NO. DESCRIPTION PRICE
================================================================================
1 Annual Software (Diagnostic & Maintenance)
Agreement
- --------------------------------------------------------------------------------
2 Annual Hardware Maintenance Agreement
- --------------------------------------------------------------------------------
3 Extended after Hour Support - Eight hours.
Weekdays, 5:00 P.M. - 1:00 A.M., ET
Weekends & Holidays - 8:00 A.M. - 1:00 A.M.
================================================================================
Contract includes software and hardware working hour response as listed under
Software and Equipment. Our working hours are Monday through Friday, 8:30 A.M.
to 5:00 P.M., Eastern Time (ET) excluding holidays. All software, labor, and
parts will be covered except those which are sundry consumable supplies such as
ribbons, paper, etc. The quoted price does not include travel and subsistence
costs except where noted. *
The system and equipment are subject to a Pre-Contract Inspection prior to
approval for contract unless continuous and uninterrupted service is maintained
with the prior agreement. If any repairs are necessary to get the unit up to
specifications, the repair costs will be charged against a billable service
call. This quotation is valid for ( ) days.
Order should be made out to: ROBOCOM Systems, Inc.
by: (Customer name)
* Refer to Agreement for listing of Software and Equipment, with applicable
response times, and travel coverage.
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ROBOCOM SYSTEMS, INC. Page 16 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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AGREEMENT OR MAINTENANCE SERVICE
Company Name: (Customer Name)
Street:
City: State: Zip Code:
(Hereinafter referred to as Purchaser) agrees to purchase and ROBOCOM SYSTEMS
Inc. (hereinafter referred to as RSI) agrees to furnish at the below indicated
place of installation maintenance service on the equipment and software listed,
in accordance with the terms and conditions contained in this agreement.
SITE LOCATION
===========================
===========================
Company Name
===========================
===========================
Street
================================================================================
================================================================================
City State Zip Code
================================================================================
================================================================================
Commencement Date Day of Month Year
================================================================================
================================================================================
Renewal Date Day of Month Year
===========================
===========================
Contract #: RIMS,
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ROBOCOM SYSTEMS, INC. Page 17 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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SOFTWARE AND EQUIPMENT
COVERED UNDER THIS AGREEMENT
================================================================================
SOFTWARE/ MAINT. ** MODE TRAVEL
EQUIP. QTY. SERIAL RESPONSE TIME INCL. IN
DESCRIPTION MODEL NO(S)* BASIC
PRICE
YES/NO
================================================================================
Processor
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Terminal
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Printer
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Printer
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Scanner
Dual Range
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Progress
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Software
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Converter
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Scanner
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Scanner
================================================================================
* NOTE: Equipment serial numbers to be provided upon contract execution.
** 1 - On Site Repair - 8 Hrs.
2 - Sent to Repair Depot
3 - Immediate Modem Response
*** Does not cover thermal head replacements.
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ROBOCOM SYSTEMS, INC. Page 18 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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TERMS AND CONDITIONS
1. INITIAL INSPECTION AND REPAIR
Unless this agreement provides for maintenance service which is contiguous
with previous maintenance service, or contiguous with the warranty provided
by RSI, then RSI shall make a thorough inspection of the system and
equipment to be maintained hereunder. This inspection shall be at the
expense of the Purchaser. Any repairs and adjustments deemed necessary by
RSI to bring the system and equipment up to good operating condition and
normal repair level shall then be made. All costs of repairs, materials and
adjustments shall be at Purchaser's expense and shall be at the current
published RSI hourly rates, portal to portal.
2. TERMS OF AGREEMENT
This agreement shall become effective upon the date accepted by RSI and,
except as provided in Article 10, "Termination," shall continue for a term
of twelve (12) months from the commencement date which is noted herein or
if applicable, the date of completion of the initial inspection and repair
provided pursuant to Article 1 above, which date shall be set forth herein
or the commencement date. On an annual basis, this agreement will be
reviewed for price adjustment with an annual price increase cap of 5
percent (5%). Purchaser shall have the right to renew this Agreement from
year to year by giving RSI notice at least thirty (30) days prior to the
end of the contract term on any renewal item.
3. RESPONSIBILITIES OF RSI
RSI shall maintain the system and equipment in good operating condition.
Pursuant to the above, RSI shall provide the following:
A. Upon receiving a service request, ROBOCOM will access the computer
system via a modem for the purpose of diagnostic and corrective
analysis. This service will be rendered immediately upon calling
during the normal business day (8:30 A.M. to 5:00 P.M. ET). This will
continue beyond the normal business day under the Extended Support
Option.
B. Should a service call to the facility be required, a qualified ROBOCOM
Service Technician will be on site no later than the next business day
after the determination that on-site service is required, which
determination shall promptly
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ROBOCOM SYSTEMS, INC. Page 19 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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be made following RSI's diagnosis of the problem.
C. The software diagnostic support services must be purchased to obtain
the Hardware Maintenance Support.
D. The software and hardware Maintenance Support was selected. The
Purchaser will be responsible for removing a defective depot repair
eligible device, where applicable. You will then ship the defective
unit to ROBOCOM (or as directed) for repair or replacement. Major
items will be repaired on site by a ROBOCOM authorized agency
following ROBOCOM's determination that the unit is indeed in need of
repair. All spare parts and equipment supplied under this contract
shall remain the property of ROBOCOM SYSTEMS, Inc., except those spare
parts which ROBOCOM permanently installs in Customer's equipment and
hardware to effect repairs pursuant to the maintenance service
agreement.
E. RSI will bear all costs (except as noted) of maintaining the equipment
in good operating condition which costs are required because of the
normal use of the equipment. Maintenance service does not include the
furnishing of accessories of any nature, except such items of
equipment as may be necessary to the maintenance of the components
being serviced.
F. If Purchaser causes modifications to be made or accessories or devices
not covered by this Agreement to be added to the software or equipment
being maintained by RSI, then maintenance service will be supplied
therefore only upon mutual agreement between Purchaser and RSI. If the
modifications or additions increase the maintenance costs of system
and equipment covered hereby, then the maintenance charges specified
on page one (1) hereof shall be accordingly adjusted by RSI and
Purchaser shall pay such charges.
G. ROBOCOM has delivered certain source files to (Customer Name) as
customized software under the development contract. (Customer Name)
may modify and/or use these files as required. (Customer Name)may not
modify or otherwise change Procedure Library files now maintained by
ROBOCOM. (Customer Name) modified code must be compiled by (Customer
Name)and located in the bin directory as PROGRESS *.r files only.
Under no circumstances shall ROBOCOM be responsible for (Customer
Name) modified code.
H. ROBOCOM will provide problem determination and assistance for
operating system and database problem events and configuration issues.
ROBOCOM will
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ROBOCOM SYSTEMS, INC. Page 20 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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serve as the central point of contact for the client and will
coordinate problem resolution with any third party vendors where
necessary.
I. ROBOCOM will perform in an advisory role to ensure that any
configuration changes will not adversely affect the RIMS application.
Any configuration, file system, or other changes made by the client
must be provided to ROBOCOM for impact review and concurrence.
J. During the course of normal maintenance, should ROBOCOM detect a
potential problem situation, the client will be notified. A suitable
corrective action will be recommended and, if necessary, carried out
by ROBOCOM.
4. RESPONSIBILITIES OF PURCHASER
Purchaser shall provide, free of charge and with ready access, adequate
working space, adequate light, heat, ventilation, electrical current, and
outlets for the use of RSI maintenance personnel.
Purchaser shall not misuse, neglect or attempt any software modification,
repairs or maintenance of the equipment covered hereby. Any added costs to
RSI for maintaining the system or equipment because of violation of this
provision shall be charged to the Purchaser. Likewise, all costs of
maintenance not attributable to normal wear and tear, normal malfunction,
or RSI negligence, shall be charged to the Purchaser at the RSI published
hourly rate and published list price for parts.
Purchaser shall always allow RSI full and free access to the equipment
subject to Purchaser's industrial security rules.
Unless otherwise specified in the agreement, the client is responsible for
all day to day maintenance and administration tasks as required by a
typical computer system furnished by ROBOCOM with the RIMS application.
Customer Administrative tasks include but are not limited to:
User and Group Administration
Kernel Tuning
User Accounting
Monitor disk usage
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ROBOCOM SYSTEMS, INC. Page 21 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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Install/configure Peripherals
Printer Scheduler Administration
File System Administration
Network File System Administration
Progress Database Administration
Periodic BI File Truncation
Periodic Dump and Reload
Develop Backup Strategy
Perform Daily Backups
Perform Quarterly Backups
UUCP Administration
CRON Administration
EMAIL Administration
5. SERVICE HOURS
For the charges set forth on page one hereof, RSI will furnish "on call"
maintenance service from 8:30 A.M. to 5:00 P.M. ET Monday through Friday,
excluding holidays.
The extended after hour support provides for service from 5:00 P.M. - 1:00
A.M. ET on weekdays and 8:00 A.M. - 1:00 A.M. on weekends and holidays.
6. MOVEMENT OF EQUIPMENT
In the event that the equipment covered by this Agreement is moved to a new
location with the prior written consent of RSI, service under this
Agreement will terminate at the time the disassembly of the system is
begun. Service under this Agreement will commence again at the new location
at the time the system has been certified as operational as a result of an
inspection as provided in Article 1, "Initial inspection and Repair."
Charges for any services rendered of "RSI to effect the disassembly,
movement, reassembly, or checkout of the system being moved shall be at the
current published RSI hourly rates computed to the nearest one-half (1/2)
hour with a minimum charge of eight (8) hours per call.
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ROBOCOM SYSTEMS, INC. Page 22 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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7. EXCLUSIONS
The maintenance charge does not include service calls or additional service
time arising from abuse, misuse, modification, mishandling, of the
equipment, or damage due to forces external to the machine including, but
not limited to, the following acts of God, flood, power surges or failures,
defective electrical work, transportation, foreign equipment/attachments,
accident, disaster, neglect, alterations, service work performed by
unauthorized parties or any other cause beyond the control of RSI. This
service contract does not guarantee uninterrupted operation of the system
or of the equipment. This service contract excludes all responsibility for
repairs necessitated by or damage caused to equipment by any accessories
other than those authorized by the manufacturer (i.e., ribbons, disc packs,
etc.). "Also this contract does not include painting or refinishing of
equipment or furnishing materials for this purpose.
8. INVOICES AND PAYMENTS
A. Charges for maintenance service shall begin on the commencement date
as specified in Article 2 and shall be invoiced as set forth in the
maintenance schedule, in advance with payment due within thirty (30)
days of the invoice date. A time price charge of 1-1/2% per month
(Annual rate equals 18%) will be charged on all accounts not paid
within said thirty-day period.
B. Charges for maintenance services of less than one (1) months' duration
shall be prorated at 1/20th of the monthly charges for each calendar
day (based on RSI June to May fiscal year).
C. Payment Terms -
Fixed price - 1/12 of the annual amount each month, in advance
Travel and subsistence - where applicable, will be charged at ROBOCOM
cost plus 15% (administrative cost) - as incurred, provided such
charges are reasonable and documented.
9. LIABILITIES
Since Purchaser will have exclusive control over the use of the equipment
being maintained hereunder, Purchaser shall be solely responsible for the
proper use, protection and supervision thereof. RSI shall not be liable for
any personal injury or property damage even if loss or damage is caused by
negligence of RSI, and such liability shall not include incidental or
consequential damages. Except as provided in this
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ROBOCOM SYSTEMS, INC. Page 23 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
Agreement, RSI shall have no other responsibility or liability with respect
to the system or equipment being maintained or any of the maintenance
service supplied hereunder.
10. TERMINATION
Unless mutually agreed by both the Purchaser and RSI, this Agreement shall
not be subject to termination by either party, except if Purchaser defaults
in payment of any monies due hereunder, or should move the equipment
without prior written consent of RSI. RSI shall then, with notice, have the
right to terminate this Agreement, and if RSI defaults in any material
obligation under this Agreement, Purchaser shall then, with notice, have
the right to terminate this Agreement. In addition, if after three (3)
years from date of original equipment delivery, any item being maintained
under this Agreement, is, in RSI's reasonable opinion, in need of factory
refurbishment, repair, or overhaul, RSI will submit to Purchaser a
description of the necessary refurbishment and an estimate of the
reconditioning charges, which shall be in addition to those charges set
forth on reconditioning, RSI shall then, with notice, have the right to
terminate this Agreement. In the event that this Agreement is rightfully
terminated by RSI pursuant to this Section 19, as RSI's sole and exclusive
remedy, the Purchaser shall be liable for termination payment to RSI of 20%
of the monthly charge for the months remaining (not to exceed four months)
subsequent to date of termination by RSI. In the event that this Agreement
is rightfully terminated by Purchaser pursuant to this Section 10, RSI
shall return all funds Purchaser had paid in advance to RSI for which no
service had been rendered and Purchaser shall retain all other rights and
remedies
11. GOVERNING LAW
This Agreement will be governed by and construed in accordance with the
laws of the State of New York.
12. ATTORNEYS' FEES
Purchaser will pay reasonable attorneys' fees to RSI in the event RSI shall
engage an attorney to enforce collection or to preserve and protect its
rights under this service agreement.
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ROBOCOM SYSTEMS, INC. Page 24 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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13. GENERAL PROVISIONS
This agreement constitutes the entire agreement for maintenance service
between the Purchaser and RSI. THE FOREGOING TERMS AND CONDITIONS SHALL
PREVAIL NOTWITHSTANDING ANY VARIANCE WITH THE TERMS AND CONDITIONS OF ANY
ORDER SUBMITTED BY THE PURCHASER
AGREED TO By: _____________________________
(Signature)
Customer: _____________________________
(Print Name)
_____________________________
(Date)
_____________________________
(Title)
ACCEPTED By: _____________________________
(Signature)
ROBOCOM
Systems Inc. _____________________________
(Print Name)
_____________________________
(Date)
_____________________________
(Title)
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ROBOCOM SYSTEMS, INC. Page 25 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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EXHIBIT 3
Training
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ROBOCOM SYSTEMS, INC. Page 26 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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The ROBOCOM Pilot Training for Prophet of RIMS(R) 2001 v3.2, is instructor-led
yet participant-centered instruction. Our Training Department consists of an
experienced staff of professionals who tailor the curriculum to specifically
meet the requirements of each RIMS Prophet. To that end ROBOCOM training
consists of a curriculum which includes a series of courses that can be
customized.
As part of the ROBOCOM pilot training, we offer the following two day session
(generally held at ROBOCOM) presenting the following five-part curriculum:
-- RIMS OVERVIEW
-- RIMS WAREHOUSE CONFIGURATION
-- RIMS FILE INFORMATION
-- RIMS SYSTEM ADMINISTRATION
-- RIMS PROCESSES
1. We begin the Pilot Training with a brief RIMS OVERVIEW that covers the
entire scope of our RIMS system. This section of our training is always
very interactive since this is often the first detailed exposure to RIMS
that our Prophets face. The Overview sessions introduce the following
topics:
-- Flow of Product Within the Warehouse
-- Warehouse Layout
-- RIMS File Information
-- RIMS System Administration
-- RIMS Processes
2. The Overview is followed by intensive RIMS WAREHOUSE CONFIGURATION
sessions, where our Prophets learn the intricacies of setting up a RIMS
warehouse. These sessions offer an overview for Prophets on the logic and
rationale behind the functionality necessary to establish a new or existing
warehouse while using the actual RIMS software. These sessions include a
review of:
-- RIMS Locations (for Staging, Storing, Consolidation, Loading)
-- Rules (priorities) for Storing Product
-- Rules (priorities) for Picking Product
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ROBOCOM SYSTEMS, INC. Page 27 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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3. The third session in our Sales/Application Training Curriculum consists of
FILE INFORMATION sessions, where our Prophets learn the type of information
that can be included in each of our data files. These sessions include
classes about:
-- Items and Item Replenishment
-- Customers and Vendors
-- Carriers and Freight Classes
4. Our fourth session in our Pilot Training Curriculum consists of SYSTEM
ADMINISTRATION sessions, where our Prophets are exposed to various topics.
In these classes some of our topics include:
-- System Security
-- Optional RF Sub-System
-- RIMS System Parameters
-- Printers and RIMS
-- RIMS/Host Interface
5. Our last session deals with RIMS PROCESSES. These sessions vary in
approach, depending on the needs of the Prophet. Each session can include
the process from a Video Display Terminal (VDT) and from an RF terminal.
This is an entry level description of what is included in the base functionality
and the key benefits and differentiations within the market. We include a review
of:
-- Receiving
-- Putaway
-- Picking
-- Shipping
-- Counting
-- Rewarehousing
-- Quality Assurance
-- Reports
The actual course content of each of our five components of Pilot Training
varies, depending on the background of our Prophet.
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ROBOCOM SYSTEMS, INC. Page 28 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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Exhibit 4
License Agreement
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ROBOCOM SYSTEMS, INC. Page 29 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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RIMS.2001 COMPUTER PROGRAM END-USER
LICENSE
(Nonexclusive; Object Code Only)
between
ROBOCOM SYSTEMS INC. (Licensor) of 511 Ocean Avenue, Massapequa, NY 11758, and
_______________________, of ________________________________________ LICENSOR'S
PROGRAM IS COPYRIGHTED AND LICENSED (NOT SOLD). LICENSOR DOES NOT SELL OR
TRANSFER TITLE TO THE LICENSED PROGRAM TO YOU. YOUR LICENSE OF THE LICENSED
PROGRAM WILL COMMENCE UPON EXECUTION OF THIS AGREEMENT BY BOTH PARTIES AS
EVIDENCED BY AUTHORIZED SIGNATURES BEING AFFIXED.
1. License.
In consideration of the payment of the license fees set forth, Licensor grants
you a nonexclusive license to use the RIMS.2001 computer program and data in
machine-readable form.
2. Scope of Rights. You may:
1. Install the Single Site Licensed Program in your own facility for the
number of users specified in the License and Purchase Agreement
2. Use and execute the Licensed Program for purposes of serving the internal
needs of your business at the single site;
3. In support of your authorized use of the Licensed Program, store the
Licensed Program's machine-readable instructions or data in, transmit it
through, and display it on machines associated with the specified computer;
and
4. Make copies of the Program in machine-readable, object code form, for
nonproductive backup purposes only, provided that Licensor's proprietary
legend is included.
4. Support.
Licensor will support the Licensed Program for a one year Limited Warrantee.
Additional software maintenance is as specified in Maintenance Agreement if
purchased. However, Licensor offers support only for the two most current
versions of the Licensed Program issued by Licensor from time to time, so you
must make sure to obtain and substitute or incorporate all
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ROBOCOM SYSTEMS, INC. Page 30 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
new releases or fixes issued by Licensor pursuant to its warranty and support
programs.
5. Your Responsibilities.
You are responsible for selecting an operator who is qualified to operate the
Licensed Program on your own equipment and is familiar with the information,
calculations, and reports that serve as input and output of the Licensed
Program. Licensor reserves the right to refuse assistance or to charge
additional fees if an operator seeks assistance with respect to such basic
background information or any other matters not directly relating to the
operation of the Licensed Program.
The Licensed Program is designed for use with the peripheral equipment and
accessories. You are also responsible for ensuring a proper environment and
proper utilities for the computer system on which the Licensed Program will
operate, including an uninterrupted power supply.
6. Proprietary Protection and Restrictions.
Licensor will have sole and exclusive ownership of all right, title, and
interest in and to the Licensed Program and all modifications and enhancements
thereof (including ownership of all trade secrets and copyrights pertaining
thereto), subject only to the rights and privileges expressly granted to you
herein by Licensor. This Agreement does not provide you with title or ownership
of the Licensed Program, but only a right of limited use. You must keep the
Licensed Program free and clear of all claims, liens, and encumbrances.
You may not use, copy, modify, or distribute the Licensed Program
(electronically or otherwise), or any copy, adaptation, transcription, or merged
portion thereof, except as expressly authorized by Licensor. You may not reverse
assemble, reverse compile, or otherwise translate the Licensed Program. Your
rights may not be transferred, leased, assigned, or sublicensed except for a
transfer of the Licensed Program in its entirety to (1) a successor in interest
of your entire business who assumes the obligations of this Agreement or (2) any
other party who is reasonably acceptable to Licensor, enters into a substitute
version of this Agreement, and pays an administrative fee intended to cover
attendant costs. No service bureau work, multiple-user license, or timeshareing
arrangement is permitted, except as expressly authorized by Licensor. You may
not install the Licensed Program in any other computer system or use it at any
other location without Licensor's express authorization obtained in advance
(which will not be unreasonably withheld); provided that you may transfer the
Licensed Program to another computer temporarily if the computer specified is
inoperable.
If you use, copy, or modify the Licensed Program or if you transfer possession
of any copy, adaptation, transcription, or merged portion of the Licensed
Program to any other party in any way not expressly authorized by Licensor, your
license is automatically terminated.
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ROBOCOM SYSTEMS, INC. Page 31 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
You hereby authorize Licensor to enter your premises in order to inspect the
Licensed Program in any reasonable manner during regular business hours to
verify your compliance with the terms hereof
You acknowledge that, in the event of your breach of any of the foregoing
provisions, Licensor will not have an adequate remedy in money or damages.
Licensor will therefore be entitled to obtain an injunction against such breach
from any court of competent jurisdiction immediately upon request. Licensor's
right to obtain injunctive relief will not limit its right to seek further
remedies.
If some third party claims that the Licensed Program infringes its patent,
copyright, or trade secret, or any similar intellectual property right, Licensor
will defend you against that claim at Licensor's expense and pay all damages
that a court finally awards, provided that you promptly notify Licensor in
writing of the claim, and allow Licensor to control, and cooperate with Licensor
in, the defense or any related settlement negotiations. If such a claim is made
or appears possible, you agree to permit Licensor to enable you to continue to
use the Licensed Programs, or to modify or replace them. If Licensor determines
that none of these alternatives is reasonably available, you agree to return the
Licensed Program on Licensor's written request, and you will then receive a
credit equal to your net book value for the Licensed Program determined in
accordance with generally accepted accounting principles. However, Licensor has
no obligation for any claim based on your modification of the Licensed Program
or its combination, operation, or use with any product, data, or apparatus not
specified or provided by Licensor, provided that such claim solely and
necessarily is based on such combination, operation, or use and such claim would
be avoided by combination, operation, or use with products, data, or apparatus
specified or provided by Licensor. THIS PARAGRAPH STATES LICENSOR'S ENTIRE
OBLIGATION TO YOU WITH RESPECT TO ANY CLAIM OF INFRINGEMENT.
7. Limited Warranty and Limitation of Liability.
Licensor warrants, for your benefit alone, that the Licensed Program conforms in
all material respects to the USER MANUALS for the current version of the
Licensed Program set forth. This warranty is expressly conditioned on your
observance of the operating, security, and data-control procedures set forth in
the User's Manual included with the Licensed Program. This warrantee is granted
by the Licensor to the Licensee for a period of One Year (1) after acceptance by
the Licensee.
Licensor is not responsible for obsolescence of the Licensed Program that may
result from changes in your requirements. The foregoing warranty will apply only
to the most current version of the Licensed Program issued by Licensor from time
to time. Licensor assumes no responsibility for the use of superseded, outdated,
or uncorrected versions of the Licensed
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ROBOCOM SYSTEMS, INC. Page 32 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
Program.
As your exclusive remedy for any material defect in the Licensed Program for
which Licensor is responsible, Licensor will attempt through reasonable effort
to correct or cure any reproducible defect by issuing corrected instructions, a
restriction, or a bypass. Licensor will not be obligated to correct, cure, or
otherwise remedy any nonconformity or defect in the Licensed Program if you have
made any changes whatsoever to the Licensed Program, if the Licensed Program has
been misused or damaged in any respect, or if you have not reported to Licensor
the existence and nature of such nonconformity or defect promptly upon discovery
thereof.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR DISCLAIMS ANY AND ALL
PROMISES, REPRESENTATIONS, AND WARRANTIES WITH RESPECT TO THE LICENSED PROGRAM,
INCLUDING ITS CONDITION, ITS CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION,
THE EXISTENCE OF ANY LATENT OR PATENT DEFECTS, ANY NEGLIGENCE, AND ITS
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE.
The cumulative liability of Licensor to you for all claims relating to the
Licensed Program and this Agreement, including any cause of action sounding in
contract, tort, or strict liability, will not exceed the total amount of all
license fees paid to Licensor hereunder. This limitation of liability is
intended to apply without regard to whether other provisions of this Agreement
have been breached or have proven ineffective. This limitation of liability will
not apply to the indemnification provided in Section 6 hereof Licensor will have
no liability for loss of data or documentation, it being understood that you are
responsible for reasonable backup precautions.
In no event will Licensor be liable for any loss of profits; any incidental,
special, exemplary, or consequential damages; or any claims or demands brought
against you, even if Licensor has been advised of the possibility of such claims
or demands. This limitation upon damages and claims is intended to apply without
regard to whether other provisions of this Agreement have been breached or have
proven ineffective.
8. Term of Agreement; Termination.
Your license of the Licensed Program will become effective upon delivery of the
Licensed Program to you and will continue indefinitely, unless sooner terminated
as provided herein.
Upon termination of this Agreement, all rights granted to you will terminate and
revert to Licensor. Promptly upon termination of this Agreement for any reason
or upon discontinuance or abandonment of your possession or use of the Licensed
Program, you must return or destroy, as requested by Licensor, all copies of the
Licensed Program in your possession (whether
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ROBOCOM SYSTEMS, INC. Page 33 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
modified or unmodified), and all other materials pertaining to the Licensed
Program (including all copies thereof). You agree to certify your compliance
with such restriction upon Licensor's request.
9. Miscellaneous.
This Agreement will be governed by and construed in accordance with the laws of
the State of New York.
No modification of this Agreement will be binding unless it is in writing and is
signed by an authorized representative of the party against whom enforcement of
the modification is sought.
Any notices required or permitted under this Agreement will be in writing and
delivered in person or sent by registered or certified mail, return receipt
requested, with proper postage affixed.
In the event that any of the terms of this Agreement is or becomes or is
declared to be invalid or void by any court or tribunal of competent
jurisdiction, such term or terms will be null and void and will be deemed
severed from this Agreement and all the remaining terms of this Agreement will
remain in full force and effect.
THIS AGREEMENT IS THE COMPLETE AND EXCLUSIVE STATEMENT OF LICENSOR'S OBLIGATIONS
AND RESPONSIBILITES TO YOU AND SUPERSEDES ANY OTHER PROPOSAL, REPRESENTATION, OR
OTHER COMMUNICATION BY OR ON BEHALF OF LICENSOR RELATING TO THE SUBJECT MATTER
HEREOF.
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ROBOCOM SYSTEMS, INC. Page 34 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
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APPENDIX A
1. Licensed Programs are defined as follows:
a) RIMS 2001 v 3.1 Machine readable form as defined in Appendix 1.
b) Documentation
o VDT User's Guide 3 copies
o RDT User's Guide 3 copies
o Management Manuals 3 copies
2. Location of the Site:
3. Specification and Serial Number of computer system on which licensed
program will execute:
To be determined.
4. License fee for 36 User System: $ * one time payment.
5. Support terms:
Warranty as provided in Section 11 (f) of the Master Agreement.
Additional software maintenance is as specified in Maintenance Agreement if
purchased.
6. Delivery date for Licensed Program:
No later than
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. FILED
SEPARATELY WITH THE COMMISSION.
- --------------------------------------------------------------------------------
ROBOCOM SYSTEMS, INC. Page 35 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
EXHIBIT 5
Domestic Pricing
- --------------------------------------------------------------------------------
ROBOCOM SYSTEMS, INC. Page 36 PROPHET 21 INC.
<PAGE>
Distribution Agreement Dated: April 1, 1996
Revised: June 18 1996
- --------------------------------------------------------------------------------
Domestic RIMS(C) Pricing
1996
RIMS.2001
USERS SITE ONE SITE TWO AND UP
================================================================================
less than 8 $* $*
16 * *
24 * *
32 * *
64 * *
more than 64 * *
- --------------------------------------------------------------------------------
1. RIMS users defined as the total number of fixed terminals and RF terminals.
- --------------------------------------------------------------------------------
2. Client server to be announced.
- --------------------------------------------------------------------------------
3. *
- --------------------------------------------------------------------------------
................................................................................
Progress Fees Per User
================================================================================
Query Workgroup
Users Results Personal Server Enterprise Server Total
1-4 $* $* $*
5-9 * $* *
10-24 * * *
24-49 * * *
50-99 * $* *
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. FILED
SEPARATELY WITH THE COMMISSION.
- --------------------------------------------------------------------------------
ROBOCOM SYSTEMS, INC. Page 37 PROPHET 21 INC.
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
Robocom Systems, Inc. ("ROBOCOM" ), 511 Ocean Avenue, Massapequa, New York
11755, USA and Minerva International Holding LTD and its subsidiaries
("Minerva"), Bovis House, Lansdown Road, Cheltenham, GL5O 2JA, United Kingdom,
wish to enter into an Agreement whereby Minerva will distribute in the United
Kingdom, Ireland, and in other countries as provided for below, Inventory &
Warehouse Control Systems Software ("Software") developed by ROBOCOM. This
Software is more fully defined in the attached price list, Exhibit l.
Now, therefore, ROBOCOM and Minerva agree this 30 day January of 1996 as
follows:
1. Objective
Both ROBOCOM and Minerva desire to develop and maintain a profitable
long-term, mutually beneficial business relationship whereby Minerva
distributes and supports, in the U.K., Ireland, Sweden, Denmark, Norway and
Germany. Inventory and Warehouse control Systems Software developed by
ROBOCOM.
2. Terms
For a period of three years beginning with the date shown below (the
"initial period"), Minerva will be the exclusive distributor, on a
non-transferable basis, of ROBOCOM Software in the United Kingdom and
Ireland, Sweden, Denmark, Norway and Germany, subject to other provisions
contained herein. At least one year prior to the end of the initial period,
Minerva and ROBOCOM will review the relationship and by mutual agreement
identify the conditions under which the relationship will be continued or
expanded. If mutual written agreement is not reached, this agreement will
automatically terminate upon completion of the initial period. Both parties
agree to devote all reasonable efforts to maximize profitable sales during
this period.
2.1 In the event Minerva fails to produce $* (USD) in revenues in sales of
RIMS.2001 License fees within * years of the Agreement date, Robocom will
at its option, be permitted to cancel this Agreement.
3. Territory
During the initial period, Minerva will be the exclusive distributor for
ROBOCOM in the United Kingdom and Ireland, Sweden, Denmark, Norway and
Germany, (the "territory"), subject to exclusions identified herein.
Minerva may have access to sell into another distributor territories if the
headquarters of the purchasing entity is located in the Territory. In the
event another distributor sells to a purchasing entity with headquarters
in its exclusive terrirory but with locations in the Territory. such sales
will be permitted. On a nonexclusive basis during the initial period, or
until such time that a distributer is established in Europe, Minerva may
also distribute ROBOCOM's Software elsewhere in Europe. ROBOCOM may agree
in the future to grant Minerva long-term rights to distribute ROBOCOM's
Software elsewhere in Europe. Orders placed with Minerva from companies
headquartered in the Territory may be installed by Minerva at any location
in the world.
NOTE: SECTIONS MARKED WITH AN (*) HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 1
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
4. ROBOCOM Obligations
ROBOCOM will provide standard Software to meet Minerva's customer
requirements, as mutually agreed upon in advance by Minerva and
ROBOCOM. ROBOCOM will provide application specific custom software, as
mutually agreed upon in advance by Minerva and ROBOCOM.
ROBOCOM will provide to Minerva and its customers error correction support
for ROBOCOM software as part of its maintenance program. This service will
be provided in a prompt, professional manner. ROBOCOM warrants that the
Software works in compliance with Manuals and other ROBOCOM supplied
documentation, when the Software is operated in its intended environment
and for its intended use.
ROBOCOM will provide Minerva a single current production DOS and UNIX
runtime copy of its Software for demonstration and training purposes only.
ROBOCOM will also provide Minerva with three copies of all of its User
Documentation, for demonstration and training purposes only.
ROBOCOM will provide Minerva with up to 2,000 copies (300 initially) of its
existing marketing literature initially. After this, additional copies of
existing or new literature will be provided at a cost of $1.00 U.S. per
set, excluding shipping.
ROBOCOM will provide new releases of Software in a timely manner and,
working with Minerva, will ensure that the Software evolves to meet market
needs.
5. Minerva Obligations
Minerva represents and warrants that it has the expertise, experience,
knowledge of the regional market and financial resources to successfully
market, technically support and license the Software in the Territory and
to achieve significant market penetration in the Territory.
Minerva will designate one or more individuals to act as sales and
application specialist(s) in the area of warehouse and distribution
matters, and to professionally present ROBOCOM's Software to interested
parties. At its own expense, Minerva will have this specialist(s) spend at
least two weeks per year at ROBOCOM's United States office for formal and
informal training. The location may be changed by mutual written agreement.
Initial training will take place within 90 days of the signing of this
agreement.
Minerva will devote its best efforts to maximizing profitable sales of
ROBOCOM's Software in the Territory. This will include undertaking of
formal marketing and sales programs, including direct mailing, seminars,
and individual, in person presentations to prospective customers. Within 90
days from the signing of this agreement, Minerva will submit to ROBOCOM a
detailed marketing plan, describing how Minerva intends to market ROBOCOM's
Software, and the resources Minerva will devote to this effort.
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 2
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
Minerva will prepare its own price and technical proposals for prospective
customers. For customers requiring services other than or in addition to
ROBOCOM's standard Software, ROBOCOM will not be bound by the provisions of
Minerva's proposal except by prior written agreement. Minerva will require
that all customers for R080COM's Software sign a Software License Agreement
identical to that shown in Exhibit 2, and that they comply with other
reasonable conditions to protect ROBOCOM'S interests.
Minerva will provide initial technical support for its customers using
ROBOCOM software.
Minerva will maintain proper accounting records, and allow reasonable
inspection by ROBOCOM, to verify amounts payable to ROBOCOM. ROBOCOM will
have the right, at any time, and at ROBOCOM'S expense, to appoint an
independent auditor to verify that Minerva has not violated any portions of
this agreement. If an independent auditor is appointed by ROBOCOM for this
purpose, Minerva will provide said auditor with access to its records
during normal business hours.
6. Joint Obligations
ROBOCOM and Minerva will work together to make sure ROBOCOM's software
evolves to meet market needs in the Territory, and so that both parties
keep current on market development activities in these areas.
7. Source Code/Confidential Information
ROBOCOM will supply source Code to Minerva only after the following
training has been successfully completed:
a. At Minerva's expense, at least one (1) Technical Consultant from
Minerva will undergo formal training on ROBOCOM's products for an
appropriate period. This training will be repeated for one or more
Minerva employees should the individual(s) previously trained leave
the employ of Minerva.
b. At Minerva's expense, at least one (1) Technical Specialist from
Minerva (experienced PROGRESS Programmers with extensive UNIX and DOS
knowledge) will undergo formal training on ROBOCOM's products. This
training will be repeated for one or more Minerva employees should the
individual(s) previously trained leave the employ of Minerva.
Minerva acknowledges that ROBOCOM has advised it that the Software and
related documentation are valuable proprietary information and trade
secrets of ROBOCOM and that the Software (including, but not limited to,
the design, programming techniques, flow charts, source code and
documentation thereof) is confidential information disclosed to Minerva to
be used only as expressly permitted by the terms of this Agreement, whether
or not any portion thereof is or may be validly copyrighted or patented.
Minerva will take all reasonable steps to protect the software on magnetic
tape or disk or in any other form of disclosure by using the same standard
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 3
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
of care Minerva uses to protect its own confidential information of a
similar nature. Minerva agrees that it Will require all those individuals
having access to the Software under this Agreement to execute a written
Confidentiality Agreement identical to that shown in Exhibit 3.
Minerva further acknowledges that, in the event of an actual or threatened
violation of the foregoing provision of which Minerva has actual knowledge,
Minerva will take immediate steps to stop such threatened violation; that
ROBOCOM may not have an adequate monetary remedy and will be entitled to
such injunctive relief as may be deemed proper by a court of competent
jurisdiction, in addition to any other available remedies. The provisions
of the Section 8 will survive the termination of this Agreement.
ROBOCOM agrees that Minerva's obligation to keep confidential any data will
not apply to any information or data which: (1) is or becomes publicly
known through no wrongful act of Minerva (2) is known to Minerva at the
time of disclosure; (3) is rightfully received by Minerva from a third
party without breach of this Agreement; (4) is furnished to a third parry
by ROBOCOM without a similar restriction on the third party's rights; (5)
is approved for release by authorization from ROBOCOM; or (6) is disclosed
pursuant to the lawful requirement or request of a Governmental Agency or
disclosure is permitted by operation of law, provided that Minerva has
given prior notice to ROBOCOM and has made a reasonable attempt to obtain a
protective order limiting disclosure and use of the information so
disclosed.
8. Inventions
Any modifications, changes, or improvements made by Minerva to ROBOCOM's
Software will be the sole and exclusive property of ROBOCOM, and will
promptly be provided to ROBOCOM. ROBOCOM will have the right to review at
functional design stage: and to review and test code to ensure
compatibility with RIMS. In the event the change is incorporated into RIMS
as part of the standard package, it will then be available for resale
through all channels. In the event it is not incorporated, then for so long
as this Agreement is in effect, Minerva will have the right to use and/or
sell, subject to the terms of this agreement, such modifications, changes,
or improvements, without payment of royalties to ROBOCOM. Maintenance will
be the responsibility of Minerva on all changes not incorporated into the
standard RIMS product.
9. Termination
This Agreement will automatically terminate three years from the date
shown below unless extended in its current or modified form by mutual
written agreement or subject to the conditions established in Paragraph
2.1.
This Agreement may be terminated at any time by mutual written Agreement.
This agreement will terminate if either party defaults in its obligations
and fails to cure such default within 30 days after receiving written
notice from the other party identifying the default.
This Agreement will terminate immediately if Minerva sells, attempts to
sell, agrees to sell, or
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 4
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
attempts to develop any products meaning Inventory and Warehouse Control
Systems Software competing with those provided by ROBOCOM
If termination is a result of a default by Minerva, Minerva will
immediately return to ROBOCOM all Software, Manuals, and other
documentation, and all copies of same, provided to it by ROBOCOM, otherwise
Minerva may keep all software, manuals and other documentation in its
possession for a period of 36 months with the sole purpose of supporting
its existing customers or until such a time as alternative support
arrangements can be made satisfactory to both parties.
10. Fees and Payment: Maintenance Payment
Beginning with the first system installed, for ROBOCOM Standard Software
sold to Minerva customers headquartered in the Territory, or elsewhere in
Europe (as long as the right to distribute ROBOCOM's Software in Europe has
not been revoked), for which Minerva takes primary installation and support
responsibility, Minerva will charge customers the list prices and pay
ROBOCOM an amount equal to *% of the current list prices (shown on the
attached price list, Exhibit 1) or *% of a mutually agreed discounted price
which is commercially satisfactory to both ROBOCOM and Minerva, for their
modules purchased and installed. Should Minerva for any reason decline to
take primary installation and/or support responsibility for any systems
installed, Minerva and ROBOCOM will negotiate in advance an equitable
increase in the amount due ROBOCOM.
For ROBOCOM Standard Application Software sold to Minerva customers
headquartered in the Territory, or elsewhere in Europe (as long as the
right to distribute ROBOCOM's Software in Europe has not been revoked), but
installed in the United States, Canada, or Mexico, ROBOCOM will retain
responsibility for installation and support. For these installations,
Minerva will pay an amount equal to *% of the then current list prices.
Ongoing Annual Maintenance Plan fees, computed at *% of the first site list
price for Standard Application Software and all custom Software provided by
ROBOCOM, will be split equally between the two parties, as long as Minerva
continues to support the customer directly. If ROBOCOM provides direct
customer support, it will receive *% of the maintenance fee.
Amounts to ROBOCOM, except for annual maintenance fees, will be paid by
Minerva at the end of the month following the month in which the Software
was installed. Annual maintenance fees will be to ROBOCOM at the end of the
second month following the month in which the Software was installed.
All transactions between Minerva and ROBOCOM will be in US dollars.
The attached price list may be modified by ROBOCOM at any time, with 90
days advance notice to Minerva. ROBOCOM agrees that, for the initial
three-year term of this agreement, the prices for its standard application
software in the Territory will be adjusted prorata to U.S. pricing.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. FILED
SEPARATELY WITH THE COMMISSION.
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 5
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
By mutual written agreement, ROBOCOM and Minerva may modify the pricing
conditions on a case-by-case basis.
ROBOCOM agrees that, for the initial three year terms of this Agreement,
customer maintenance charges will be contained with RPI + 5% of the
maintenance costs in the country of installation.
11. Governing Law
This Agreement will be governed exclusively by, and construed in accordance
with, the laws of the State of New York USA.
12. Independent Businesses
Minerva and ROBOCOM are independent businesses and will in no way claim
otherwise or incur liabilities except on their own account. It is
understood and agreed that ROBOCOM and Minerva will not in any event be
liable for any obligations, expenses, or damages of any nature whatsoever
incurred by the other party or for any claim made against the other party
on account of any services performed by it or by those for whom the other
party may be in law responsible and that this Agreement supersedes all
previous Agreements and arrangements between ROBOCOM and Minerva.
13. Modifications
No revision or modification hereof will be effective unless it is in
writing and signed by both parties.
14. Indemnity Clause
ROBOCOM will protect and save harmless and defend at its own expense
Minerva from and against any and all claims of infringements of patents,
trade marks or industrial designs copyrights or other property rights
affecting the Products. Minerva agrees to give ROBOCOM prompt notice of any
such claim that is made against Minerva and will give ROBOCOM such
assistance and information as ROBOCOM may reasonably require. In the event
that any such infringement occurs or may occur, ROBOCOM may:
1. Procure for Minerva the right to continue to use the Software or
infringing part thereof; or
2. Modify or amend the Software or infringing part thereof so that it
becomes non-infringing; or
3. Replace the Software or infringing part thereof by other software of
similar acceptable capability; or
4. Pay Minerva compensation relating to the whole or infringing part of
the Software as appropriate so that it may reimburse and settle any
corresponding claims put upon it by
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 6
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
third parties.
5. The conditions of the indemnity clause identified herein apply only to
ROBOCOM's supplied RIMS applications code.
15. Notices
All notices hereunder will be in writing and will be deemed to have been
given and received when delivered in person or by registered or certified
mail, return receipt requested, postage prepaid, as follows:
If to Minerva:
Minerva International Holding LTD
Bovis House
Lansdown Road
Cheltenham
Gloucestershire
GL502JA
England
Attention: Company Secretary
If to ROBOCOM:
ROBOCOM Systems, Inc.
511 Ocean Avenue
Massapequa
New York
11758
USA
Attn: Company Secretary
16. No Assignment
Minerva may not assign any rights or delegate any duties under this
Agreement without ROBOCOM's prior written consent, and any attempt to do so
without consent will be void.
17. Forum for Dispute
The parties agree to seek to resolve any dispute arising under this
Agreement pursuant to good faith business negotiations. In the event of a
dispute, the aggrieved party will promptly identify in writing the nature
of the outstanding dispute in sufficient detail as to allow the other party
to respond to the dispute. Each party agrees to set times and places to
meet and communicate their concerns and to propose resolutions to their
dispute. These meetings may take place by
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 7
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
telephone, by video conference, or face-to-face. The parties agree to hold
not fewer than two meetings, and to meet for at least a total of four hours
to discuss their respective positions and to explore a business resolution
of their dispute. The parties agree to exchange offers in writing upon
conclusion of their meetings. Such good-faith procedures will be a
condition precedent to any litigation of the dispute.
18. Force Majeure
Neither party will be liable to the other or be deemed in breach of any
obligation hereunder if its performance is prevented or delayed by any
strike, labor difficulty, riot, storm, act of government, fire, act of God,
material shortage, or any other cause, whether similar or dissimilar,
beyond the reasonable control of such party or its supplier, provided that
such party gives the other party prompt written notice of such condition
and uses its best efforts to resume performance as soon as the condition
has abated.
IN WITNESS WHEREOF, the parties hereunto have signed this Agreement this 30 day
of January 1996.
Minerva International Holdings LTD ROBOCOM Systems, Inc.
/s/ D. WHITFIELD /s/ LARRY KLEIN
- ---------------------------------- -----------------------------------
Signature Signature
David Whitfield Larry Klein
- ---------------------------------- -----------------------------------
Typed Name Typed Name
Director Executive Vice President
- ---------------------------------- -----------------------------------
Title Title
* * *
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 8
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
EXHIBIT ONE
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 9
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
International RIMS(C) Pricing, 1996
RIMS.2001(C)
International RIMS Pricing, 1996
RIMS.2001(C)
USERS SITE ONE (1) SITE TWO (2) and up
- ----- ------------ -------------------
16 $* $*
24 * *
32 * *
64 * *
64+ * *
Users defined as the total number of Fixed Terminals and RF Terminals.
Client Server to be announced.
*
All License Fee Transactions will be at 1.5 Dollars ($) per Pound ((pound))
Sterling, until such time the exchange rates vary (plus or minus) by ten percent
(10%). At such time a new transaction rate will be established.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. FILED SEPARATELY
WITH THE COMMISSION.
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 10
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
EXHIBIT TWO
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 11
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
Date: December 21, 1995
COMPUTER PROGRAM END-USER
LICENSE AGREEMENT
(Nonexclusive; Object Code Only)
between
ROBOCOM SYSTEMS INC. (Licensor) of 511 Ocean Avenue, Massapequa, NY 11758 and
Minerva International Holding LTD (Licensee) of Bovis House, Lansdown Road,
Cheltenham, Gl502JA, England.
LICENSOR'S PROGRAM IS COPYRIGHTED AND LICENSED (NOT SOLD). LICENSOR DOES NOT
SELL OR TRANSFER TITLE TO THE LICENSED PROGRAM TO YOU. YOUR LICENSE OF THE
LICENSED PROGRAM WILL COMMENCE UPON EXECUTION OF THIS AGREEMENT BY BOTH PARTIES
AS EVIDENCED BY AUTHORIZED SIGNATURES BEING AFFIXED.
1. License.
In consideration of the payment of the license fees set forth herein,
Licensor grants you a nonexclusive license to use the package of computer
programs and data in machine-readable form and related materials, including
documentation and listings, identified in Appendix A, Paragraph 1 which
together constitute the "Licensed Program," subject to the following terms
and conditions.
2. Scope of Rights.
You may:
a. Install the Licensed Program in your own facility at the location
specified in Appendix A;
b. Use and execute the Licensed Program on the computer specified by
type/model and serial (or plant number) in Appendix A for purposes of
serving the internal needs of your business:
c. In support of your authorized use of the Licensed Program, store the
Licensed Program's machine-readable instructions or data in, transmit
it through, and display it on machines associated with the specified
computer; and
d. Make copies of the Program in machine-readable, object code form, for
nonproductive backup purposes only, provided that Licensors
proprietary legend is included.
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 12
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
3. Fees and Payments.
The license fee for the Licensed Program is specified in Appendix A. Total
contract value including hardware, software and terms of payment are
specified in Appendix B.
You are solely responsible for payment of any taxes (including sales or use
taxes, intangible taxes, and property taxes) resulting from your acceptance
of this license and your possession and use of the Licensed Program,
exclusive of taxes based on Licensor's income. Licensor reserves the right
to have you pay any such taxes as they fall due to Licensor for remittance
to the appropriate authority. You agree to hold harmless Licensor from all
claims and liability arising from your failure to report or pay such taxes,
exclusive of both taxes based on Licensor's income and any occupational and
business license taxes imposed by Delaware law on the Licensor.
4. Support.
Licensor shall support the Licensed Program in the manner specified in
Appendix A. However, Licensor offers support only for the two most current
version of the Licensed Program issued by Licensor from time to time, so
you must make sure to obtain and substitute or incorporate all new releases
or fixes issued by Licensor pursuant to its warranty and support programs.
5. Your Responsibilities.
You are responsible for selecting an operator who is qualified to operate
the Licensed Program on your own equipment and is familiar with the
information, calculations, and reports that serve as input and output of
the Licensed Program. Licensor reserves the right to refuse assistance or
to charge additional fees if an operator seeks assistance with respect to
such basic background information or any other matters not directly
relating to the operation of the Licensed Program.
The Licensed Program is designed for use with the peripheral equipment and
accessories. Except as agreed otherwise in writing, Licensor assumes no
responsibility under this Agreement for obtaining or providing such
equipment. You are also responsible for ensuring a proper environment and
proper utilities for the computer system on which the Licensed Program will
operate, including an uninterrupted power supply.
Except as agreed otherwise in writing, Licensor assumes no responsibility
under this Agreement for converting your data files for use with the
Licensed Program.
6. Proprietary Protection and Restrictions.
Licensor shall have sole and exclusive ownership of all right, title, and
interest in and to the Licensed Program and all modifications and
enhancements thereof (including ownership of all trade secrets and
copyrights pertaining thereto), subject only to the rights and privileges
expressly granted to you herein by Licensor. This Agreement does not
provide you with title or ownership of the Licensed Program, but only a
right of limited use. You must keep the Licensed Program free and clear of
all claims, liens, and encumbrances.
You may not use, copy, modify, or distribute the Licensed Program
(electronically or otherwise), or any copy, adaptation, transcription, or
merged portion thereof, except as expressly authorized by Licensor. You may
not reverse assemble, reverse compile, or otherwise translate the Licensed
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 13
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
Program. Your rights may not be transferred, leased, assigned, or
sublicensed except for a transfer of the Licensed Program in its entirety
to (1) a successor in interest of your entire business who assumes the
obligations of this Agreement or (2) any other party who is reasonably
acceptable to Licensor, enters into a substitute version of this Agreement,
and pays an administrative fee intended to cover attendant costs. No
service bureau work multiple-user license, or time-sharing arrangement is
permitted, except as expressly authorized by Licensor. You may not install
the Licensed Program in any other computer system or use it at any other
location without Licensors express authorization obtained in advance (which
will not be unreasonably withheld); provided that you may transfer the
Licensed Program, to another computer temporarily if the computer specified
is inoperable.
If you use, copy, or modify the Licensed Program or if you transfer
possession of any copy, adaptation, transcription, or merged portion of the
Licensed Program to any other party in any way not expressly authorized by
Licensor, your license is automatically terminated.
You hereby authorize Licensor to enter your premises in order to inspect
the Licensed Program in any reasonable manner during regular business hours
to verify your compliance with the terms hereof.
You acknowledge that, in the event of your breach of any of the foregoing
provisions, Licensor will not have an adequate remedy in money or damages.
Licensor shall therefore be entitled to obtain an injunction against such
breach from any court of competent jurisdiction immediately upon request.
Licensor's right to obtain injunctive relief shall not limit its right to
seek further remedies.
If a third party claims that the Licensed Program infringes its patent,
copyright, or trade secret, or any similar intellectual property right,
Licensor will defend you against that claim at Licensor's expense and pay
all damages that a court finally awards, provided that you promptly notify
Licensor in writing of the claim, and allow Licensor to control, and
cooperate with Licensor in, the defense or any related settlement
negotiations. If such a claim is made or appears possible, you agree to
permit Licensor to enable you to continue to use the Licensed Programs, or
to modify or replace them. If Licensor determines that none of these
alternatives is reasonably available, you agree to return the Licensed
Program on Licensor's written request, and you will then receive a credit
equal to your net book value for the Licensed Program determined in
accordance with generally accepted accounting principles. However, Licensor
has no obligation for any claim based on your modification of the Licensed
Program or its combination, operation, or use with any product, data, or
apparatus not specified or provided by Licensor, provided that such claim
solely and necessarily is based on such combination, operation, or use
and such claim would be avoided by combination, operation, or use with
products, data, or apparatus specified or provided by Licensor. THIS
PARAGRAPH STATES LICENSOR'S ENTIRE OBLIGATION TO YOU WITH RESPECT TO ANY
CLAIM OF INFRINGEMENT.
7. Limited Warranty and Limitation of Liability.
Licensor warrants, for your benefit alone, that the Licensed Program
conforms in all material respects to the USER MANUALS for the current
version of the Licensed Program set forth.
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 14
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
This warranty is expressly conditioned on your observance of the operating,
security, and data-control procedures set forth in the User's Manual
included with the Licensed Program. This warrantee is granted by the
Licensor to the Licensee for a period of ninety (90) days after acceptance
by the Licensee.
Licensor is not responsible for obsolescence of the Licensed Program that
may result from changes in your requirements. The foregoing warranty shall
apply only to the most current version of the Licensed Program issued by
Licensor from time to time. Licensor assumes no responsibility for the use
of superseded, outdated, or uncorrected versions of the Licensed Program.
As your exclusive remedy for any material defect in the Licensed Program
for which Licensor is responsible, Licensor shall attempt through
reasonable effort to correct or cure any reproducible defect by issuing
corrected instructions, a restriction, or a bypass. Licensor shall not be
obligated to correct, cure, or otherwise remedy any nonconformity or defect
in the Licensed Program if you have made any changes whatsoever to the
Licensed Program, if the Licensed Program has been misused or damaged in
any respect, or if you have not reported to Licensor the existence and
nature of such nonconformity or defect promptly upon discovery thereof.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR DISCLAIMS ANY AND ALL
PROMISES, REPRESENTATIONS, AND WARRANTIES WITH RESPECT TO THE LICENSED PROGRAM,
INCLUDING ITS CONDITION, ITS CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION,
THE EXISTENCE OF ANY LATENT OR PATENT DEFECTS, ANY NEGLIGENCE, AND ITS
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE.
The cumulative liability of Licensor to you for all claims relating to the
Licensed Program and this Agreement, including any cause of action sounding in
contract, tort, or strict liability, shall not exceed the total amount of all
license fees paid to Licensor hereunder. This limitation of liability is
intended to apply without regard to whether other provisions of this Agreement
have been breached or have proven ineffective. This limitation of liability
shall not apply to the indemnification provided in Section 6 hereof. Licensor
shall have no liability for loss of data or documentation, it being understood
that you are responsible for reasonable backup precautions.
In no event shall Licensor be liable for any loss of profits; any incidental,
special, exemplary, or consequential damages; or any claims or demands brought
against you, even if Licensor has been advised of the possibility of such claims
or demands. This limitation upon damages and claims is intended to apply without
regard to whether other provisions of this Agreement have been breached or have
proven ineffective.
8. Term of Agreement; Termination.
Your license of the Licensed Program shall become effective upon delivery
of the Licensed Program to you and shall continue indefinitely, unless
sooner terminated as provided herein.
Upon termination of this Agreement, all rights granted to you will
terminate and revert to Licensor. Promptly upon termination of this
Agreement for any reason or upon discontinuance or
- --------------------------------------------------------------------------------
Robocom Systems Inc. & Minerva International Holdings LTD Page 15
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
abandonment of your possession or use of the Licensed Program, you must
return or destroy, as requested by Licensor, all copies of the Licensed
Program in your possession (whether modified or unmodified), and all other
materials pertaining to the Licensed Program (including all copies
thereof). You agree to certify your compliance with such restriction upon
Licensor's request.
9. Miscellaneous.
This Agreement shall be governed by ant construed in accordance with the
laws of the State of New York.
No modification of this Agreement shall be binding unless it is in writing
and is signed by an authorized representative of the party against whom
enforcement of the modification is sought.
Any notices required or permitted under this Agreement shall be in writing
and delivered in person or sent by registered or certified mail, return
receipt requested, with proper postage affixed.
In the event that any of the terms of this Agreement is or becomes or is
declared to be invalid or void by any court or tribunal of competent
jurisdiction, such term or terms shall be null and void and shall be deemed
severed from this Agreement and all the remaining terms of this Agreement
shall remain in full force and effect.
THIS AGREEMENT IS THE COMPLETE AND EXCLUSIVE STATEMENT OF LICENSOR'S OBLIGATIONS
AND RESPONSIBILITIES TO YOU AND SUPERSEDES ANY OTHER PROPOSAL, REPRESENTATION,
OR OTHER COMMUNICATION BY OR ON BEHALF OF LICENSOR RELATING TO THE SUBJECT
MATTER HEREOF.
Accepted and Approved:
Robocom Systems Inc. Minerva International Holding, LTD
By: _____________________________ By: _____________________________
Title: __________________________ Title ___________________________
Date: ___________________________ Date: ___________________________
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Robocom Systems Inc. & Minerva International Holdings LTD Page 16
<PAGE>
Distributor Agreement December, 1995
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EXHIBIT THREE
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Robocom Systems Inc. & Minerva International Holdings LTD Page 17
<PAGE>
Distributor Agreement December, 1995
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CONFIDENTIALITY AGREEMENT
BETWEEN FIRMS
AGREEMENT and acknowledgment between ROBOCOM Systems Inc. (Company), and
Minerva International Holdings LTD.
Whereas, the Company agrees to furnish the undersigned certain confidential
information relating to the affairs of the Company for purposes of: The
marketing of RIMS(R) in the United Kingdom, Ireland, Sweden, Denmark, Norway and
Germany.
Whereas, the undersigned agrees to review, examine, inspect or obtain such
information only for the purposes described above, and to otherwise hold such
information confidential pursuant to the terms of this agreement,
BE IT KNOWN, that the Company has or shall furnish to the undersigned
certain confidential information, as set forth on attached list, and may further
allow the undersigned the right to inspect the business of the Company and/or
interview employees or representatives of the Company, all on the following
conditions:
1. The undersigned agrees to hold all confidential or proprietary information
or trade secrets ("information") in trust and confidence and agrees that it
shall be used only for the contemplated purpose, and shall not be used for
any other purpose or disclosed to any third party.
2. No copies will be made or retained of any written information supplied.
3. At the conclusion of our discussions, or upon demand by the Company, all
information, including written notes, photographs, memoranda, or notes
taken by you shall be returned to us.
4. This information shall not be disclosed to any employee or consultant
unless they agree to execute and be bound by the terms of this agreement.
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Agreement Between: Page 18
Minerva International Holdings LTD and ROBOCOM Systems, Inc.
December, 1995
<PAGE>
Distributor Agreement December, 1995
- --------------------------------------------------------------------------------
5. It is understood that the undersigned shall have no obligation with respect
to any information known by the undersigned or generally known within the
industry prior to date of this agreement, or becomes common knowledge
within the industry thereafter.
Agreed and Accepted: Agreed and Accepted:
ROBOCOM Systems Inc. Minerva International Holdings LTD
_______________________________ __________________________________
Signature Signature
by: Lawrence Klein by: David Whitfield
Title :Executive Vice President Title: ___________________________
Date: _________________________ Date: ____________________________
***********
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Agreement Between: Page 19
Minerva International Holdings LTD and ROBOCOM Systems, Inc.
December, 1995
================================================================================
International Distributor Agreement
September 1, 1996
Between
ROBOCOM Systems, Inc.
and
Trendsoft Comercio de Software e Hardware Ltda
Note: Sections marked with an (*) have been omitted pursuant to a request for
confidential treatment and have been filed separately with the Commission.
================================================================================
<PAGE>
Distribution Agreement Dated: September 0l, 1996
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This Agreement is made this 1st day of September, 1996 between ROBOCOM Systems,
Inc., a New York State Corporation having an office at 511 Ocean Avenue,
Massapequa, NY 11758 ("ROBOCOM") and Trendsoft Comercio de Software e Hardware
Ltda., a Brazilian corporation having an office at (Av. Dr. Chucre Zaidan, No.80
- - Bloco "C" - 60 Andar - Brooklin - Cep: 04583-110- Sao Paulo, Brazil,
("Distributor").
Non-Exclusive Territory: Brazil
WHEREAS:
ROBOCOM owns the right to license proprietary software products (consisting
of programs and related documentation); and
Distributor desires to market and sublicense software products of this
type; and
ROBOCOM and Distributor wish to enter into an agreement authorizing
Distributor to market directly and make copies of certain soft~ware
products available to End Users in the Territory through Distributor, with
Distributor making certain payments to ROBOCOM with respect thereto.
NOW IT IS HEREBY AGREED as follows:
1.0 DEFINITIONS.
1.1 "Programs" mean the actual ROBOCOM computer programs in
machine-readable object code or other form covered by this Agreement,
including all ROBOCOM provided modifications and enhancements thereto.
1. "Documentation" means ROBOCOM user manuals and other materials in
printed form which facilitate the use of the Programs by End Users.
1.3 "Software Products" mean any combination of a Program object code and
Documentation licensed by ROBOCOM under the terms of this Agreement.
"Product" means either a Program or documentation. without drawing a
distinction.
1.4 "End User" means an entity authorized for productive use of Software
Products. "Productive Use ' means any use of any of the Software
Products in their application purposes.
1.5 "Territory" means the Non-Exclusive Territory first identified above.
1.6 "Demonstration License" means a license to Distributor for distributor
use of Software Product object code for marketing demonstrations,
copying for distribution to End Users, maintenance and training, and
for use of Software Product source code
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ROBOCOM SYSTEMS, INC./ Page 2 Dated: September 01, 1996
Trendsoft Comercio de Software e Hardware
<PAGE>
Distribution Agreement Dated: September 0l, 1996
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solely for use in providing End-User support. Neither the source code nor the
object code shall be otherwise used or copied. The source code shall be kept
only at a single identified Distributor site and shall not be disclosed to third
parties.
1.7 "The Commencement Date" means the effective date of the Agreement
first written above.
2.0 APPOINTMENT OF DISTRIBUTOR.
2.1 License Grant. During the term of this Agreement and subject to all
other conditions herein, ROBOCOM hereby grants to Distributor a
nonexclusive right to sublicense by itself to End Users in the
territory in Distributor's name from Distributor's Territory-resident
offices copies of Software Products upon distributor's own terms and
conditions, such terms and conditions to be approved by ROBOCOM.
Certain Exhibit 1 Products may be identified as requiring or
including third party software which, if available from ROBOCOM, shall
be licensed through ROBOCOM and may be required to be licensed under
different or additional terms and conditions.
2.2 Translations. During the term of this Agreement and so long thereafter
as distributor is furnishing maintenance services to End Users in
accordance with this agreement, and subject to all other conditions
herein, ROBOCOM grants to Distributor nonexclusive translation and
distribution rights in the Territory in the documentation and in all
ROBOCOM-furnished modifications and updates thereto. All translations
shall be exact translations and shall meet ROBOCOM appearance
standards. Copyright in such translations shall vest in ROBOCOM
immediately at all times and Distributor agrees that all present and
future copyright in every translation is hereby assigned, including,
but not limited to, rights to create derivative work and any renewal
rights and Distributor agrees to execute any documents necessary to
vest full copyright ownership in ROBOCOM including a waiver of any
distributor moral rights. Distributor agrees that it will provide
copies of such translations to ROBOCOM at no charge prior to any
distribution, and will provide ROBOCOM with reasonable assistance in
securing and enforcing the copyrights(s). Distributor is not permitted
to translate or attempt to translate the Programs. In return for
translations, Trendsoft shall have Brazil as an exclusive territory
for two (2) years from the signing of this agreement provided that one
(1) RIMS(R) license is sold in the first year and three (3) RIMS(R)
licenses are sold in the second year.
2.3 Title in Products and Modifications. Title and all proprietary rights
in the Products, any permitted Distributor modifications in the
Products, and any translations thereof shall at all times remain the
properties of ROBOCOM or ROBOCOM's Licensor.
Inventions. Any modifications, changes, or improvements made by Distributor
to ROBOCOM's
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ROBOCOM SYSTEMS, INC./ Page 3 Dated: September 01, 1996
Trendsoft Comercio de Software e Hardware
<PAGE>
Distribution Agreement Dated: September 0l, 1996
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Software will be the sole and exclusive property of ROBOCOM, and will promptly
be provided to ROBOCOM. ROBOCOM will have the right to review at the functional
design stage, and to review and test code to ensure compatibility with RIMS. In
the event the change is incorporated into RIMS as part of the standard package,
it will then be available for resale through all channels. In the event it is
not incorporated, then for so long as this Agreement is in effect, Distributor
will have the right to use and/or sell, subject to the terms of this agreement,
such modifications, changes, or improvements without payment of royalties to
ROBOCOM. Maintenance will be the responsibility of Distributor on all changes
not incorporated into the standard RIMS product.
2.4 Trade Secret and Confidential Information. Distributor acknowledges that
ROBOCOM has advised it that the Software and related documentation are valuable
proprietary information and trade secrets of ROBOCOM and that the software
(including, but not limited to, the design, programming techniques, flow charts,
source code and documentation thereof) is confidential information disclosed to
Distributor to be used only as expressly permitted by the terms of this
Agreement, whether or not any portion thereof is or may be validly copyrighted
or patented. Distributor will take all reasonable steps to protect the software
on magnetic tape or disk or in any other form of disclosure by using the same
standard of care Distributor uses to protect its own confidential information of
a similar nature. Distributor agrees that it will require all those individuals
having access to the Software under this Agreement sign a Non-Disclosure
Statement, Exhibit 2 attached.
Distributor further acknowledges that, in the event of an actual or
threatened violation of the foregoing provision of which Distributor has actual
knowledge, Distributor will take immediate steps to stop such threatened
violation; that ROBOCOM may not have an adequate monetary remedy and will be
entitled to such injunctive relief as may be deemed proper by a court of
competent jurisdiction, in addition to any other available remedies. The
provisions of the Section 8 will survive the termination of this Agreement.
ROBOCOM agrees that Distributor's obligation to keep confidential any data
will not apply to any information or data which: (1) is or becomes publicly
known through no wrongful act of Distributor (2) is known to Distributor at the
time of disclosure; (3) is rightfully received by Distributor from a third party
without breach of this Agreement; (4) is furnished to a third party by ROBOCOM
without a similar restriction on the third party's rights; (5) is approved for
release by authorization from ROBOCOM; or (6) is disclosed pursuant to the
lawful requirement or request of a Governmental Agency or disclosure is
permitted by operation of law, provided that Distributor has given prior notice
to ROBOCOM and has made a reasonable attempt to obtain a protective order
limiting disclosure and use of the information so disclosed.
3.0 CERTAIN ROBOCOM OBLIGATIONS
3.1 Copies of Software Products. ROBOCOM will provide Distributor a single
current production UNIX runtime copy of its Software for demonstration and
training purposes only. ROBOCOM will also provide Distributor with three copies
of all of its User Documentation, for
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ROBOCOM SYSTEMS, INC./ Page 4 Dated: September 01, 1996
Trendsoft Comercio de Software e Hardware
<PAGE>
Distribution Agreement Dated: September 0l, 1996
- --------------------------------------------------------------------------------
demonstration and training purposes only.
3.2 Maintenance Services. ROBOCOM will provide Distributor the maintenance
services as described in Exhibit 3. Distributor will promptly translate
documentation, as necessary, and distribute maintenance documentation and
unmodified code updates to its End Users. In return for translations, Trendsoft
shall have Brazil as an exclusive territory for two (2) years from the signing
of this agreement provided that one (1) RIMS(R) license is sold in the first
year and three (3) RIMS(R) licenses are sold in the second year.
3.3 Distributor Training. ROBOCOM will provide Distributor training as in
Exhibit 4.
3.4 Export Licenses. ROBOCOM will promptly apply for any licenses, if
required from the Office of Export Administration, United States Department of
Commerce or any other United States Agency for shipment of ROBOCOM software.
3.5 Warranties. ROBOCOM warrants to Distributor that ROBOCOM's proprietary
software products as furnished to distributor (excluding those which are
categorized as third party software) will work substantially as described in the
applicable ROBOCOM published documentation. Distributor acknowledges and accepts
that software is inherently susceptible to error and that ROBOCOM's sole
obligation shall be to use reasonable efforts to remedy substantial malfunctions
of the software by correcting errors or developing a suitable work around. This
warranty is subject to ROBOCOM receiving notification in sufficient detail to
enable ROBOCOM to demonstrate the error and certify its rectification or the
devising of a suitable work around, ROBOCOM does not warrant that all errors are
correctable or avoidable.
This warranty shall not apply to software identified as third party
software or otherwise identified as being furnished in "AS IS" condition and
shall not apply to Distributor or End User modified portions of Software
Products or other portions of Software Products to the extent affected by such
modifications. ROBOCOM may charge Distributor at ROBOCOM's then-standard rates
for ROBOCOM attempts to diagnose and/or remedy problems attributable to
Distributor or Distributor's End User modifications or misuse.
3.6 New Versions, Enhancements. ROBOCOM may, from time-to-time, add to
Exhibit 'A' new authorized computer models or configurations or new or modified
ROBOCOM software and enhancements which in ROBOCOM's judgement, are appropriate
for distribution in the Territory by Distributor.
3.7 Advertising Materials. ROBOCOM will provide Distributor with 500 copies
of its existing marketing literature initially, thereafter, copies of
advertising and promotional materials, as available and appropriate, at
ROBOCOM's cost plus 15 percent (15%). At no charge, ROBOCOM will provide
Distributor with a current example proposal for a US End User and the
accompanying general system description.
- --------------------------------------------------------------------------------
ROBOCOM SYSTEMS, INC./ Page 5 Dated: September 01, 1996
Trendsoft Comercio de Software e Hardware
<PAGE>
Distribution Agreement Dated: September 0l, 1996
- --------------------------------------------------------------------------------
4.0 CERTAIN Distributor OBLIGATIONS
4.1 Compliance. Distributor agrees to comply fully with all of
Distributor's obligations under this Agreement.
4.2 Reporting; Copies of Agreements. Within fifteen (15) days of the end of
each calendar quarter beginning with the quarter ending _______, 1996, send
ROBOCOM a report for the quarter and cumulatively for the contract year a
detailed account of all fees due to ROBOCOM under this Agreement including:
identification of each sublicensee by name and specific End User site location;
specific Programs licensed to the End User and authorized type/model and number
of computers; date of sublicense; date of each Program installation; effective
dates of maintenance agreements; and ROBOCOM fees and charges (in US dollars)
accrued and paid.
Distributor represents and warrants that it has the expertise, experience,
knowledge of the regional market and financial resources to successfully market,
technically support and license the Software in the Territory and to achieve
significant market penetration in the Territory.
Distributor will designate one or more individuals to act as sales and
application specialist(s) in the area of warehouse and distribution matters, and
to professionally present ROBOCOM's Software to interested parties. At its own
expense, Distributor will have this specialist(s) spend at least two weeks per
year at ROBOCOM's United States office for formal and informal training. The
location may be changed by mutual written agreement. Initial training will take
place within 90 days of the signing of this agreement.
Distributor will devote its best efforts to maximizing profitable sales of
ROBOCOM's Software in the Territory. This will include undertaking of formal
marketing and sales programs, including direct mailing, seminars, and individual
in person presentations to prospective customers. Within 90 days from the
signing of this agreement, Distributor will submit to ROBOCOM a detailed
marketing plan, describing how Distributor intends to market ROBOCOM's Software,
and the resources Distributor will devote to this effort.
Distributor will prepare its own price and technical proposals for
prospective customers. For customers requiring services other than or in
addition to ROBOCOM's standard Software, ROBOCOM will not be bound by the
provisions of Distributor's proposal except by prior written agreement.
Distributor will require that all customers for ROBOCOM's Software sign a
Software License Agreement identical to that shown in Exhibit 5, and that they
comply with other reasonable conditions to protect ROBOCOM's interests.
Distributor will provide initial technical support for its customers
using ROBOCOM software.
In addition, Distributor shall keep executed End User licenses, maintenance
agreements and disclosure agreements on file, and on request from ROBOCOM, will
provide at no charge copies of such licenses or agreements to ROBOCOM. If any
license or agreement is in a language other
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ROBOCOM SYSTEMS, INC./ Page 6 Dated: September 01, 1996
Trendsoft Comercio de Software e Hardware
<PAGE>
Distribution Agreement Dated: September 0l, 1996
- --------------------------------------------------------------------------------
than English, an English translation shall be made available by Distributor.
4.3 Examination of Records. Distributor will allow ROBOCOM representatives
to examine Distributor's records to confirm accurate and timely payment of
royalties by Distributor. Any such examination shall be conducted within fifteen
(15) days of Distributor's receipt of ROBOCOM's written request and shall be
performed during normal business hours, at a time mutually agreed upon by
ROBOCOM and Distributor. ROBOCOM's cost of such an examination shall be borne by
ROBOCOM unless late payment or a discrepancy in excess of two (2%) in payments
of royalties is discovered for any quarter, in which case ROBOCOM's cost of the
examination shall be born by Distributor. Any confidential information belonging
to Distributor will be kept confidential by ROBOCOM.
Distributor will maintain proper accounting records, and allow reasonable
inspection by ROBOCOM, to verify amounts payable to ROBOCOM. ROBOCOM will have
the right, at any time, and at ROBOCOM's expense, to appoint an independent
auditor to verify the Distributor has not violated any portions of this
agreement. If an independent auditor is appointed by ROBOCOM for this purpose,
Distributor will provide said auditors with access to its records during normal
business hours.
4.4 Proprietary Notices. Distributor agrees to reproduce on all permitted
copies ROBOCOM and/or ROBOCOM's licensor's copyright and other proprietary
notices and, according to ROBOCOM instruction, any trademark notices as included
in the Software Products and in any ROBOCOM-furnished marketing materials,
training aids and other ROBOCOM-furnished materials and on any permitted
translations thereof Distributor recognizes and agrees that Distributor obtains
no rights in the Software Products and other ROBOCOM materials except for the
limited rights specifically granted under this Agreement.
4.5 Modifications; License Enforcement. Distributor agrees that it will not
modify software Products except for End User support, not duplicate software
Products otherwise than as expressly authorized herein and use its best efforts
to ensure that its End Users do not use Software Products in violation of the
agreement and the End User license agreement, including, but not limited to,
productive use on more than the authorized number of computers or on a model of
computer bearing a higher sublicense fee than paid by Distributor to ROBOCOM, or
use the Software Products for the benefit of entities other than the End User.
Distributor shall promptly notify ROBOCOM and provide reasonable assistance to
ROBOCOM without charge to assist ROBOCOM in prosecution of any trade secret,
copyright or trademark infringements which come to Distributor's attention, and
shall be undertaken by ROBOCOM and at its expense.
4.6 Technical support Distributor agrees to provide all direct technical
support for the software Products to Distributor's end User licensees. Direct
technical support is defined as:
A. Providing all End User training and application support and answering
all End User operational and use questions;
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ROBOCOM SYSTEMS, INC./ Page 7 Dated: September 01, 1996
Trendsoft Comercio de Software e Hardware
<PAGE>
Distribution Agreement Dated: September 0l, 1996
- --------------------------------------------------------------------------------
B. Reproducing reported problems and reporting them in writing to
ROBOCOM's technical support center;
C. Endeavoring to answer technical End User questions prior to requesting
assistance from the ROBOCOM support center, and documenting the
answers furnished to End Users;
D. Using the Development License source code at Distributor's site solely
to understand and fix or develop a work around for reported software
problems. In each instance of modification of the source code for this
purpose or development of a work around, Distributor will coordinate
the change with ROBOCOM and will promptly provide ROBOCOM with a copy
of the commented source code modifications and identification of the
End User(s) to which the change relates; and
E. Providing weekly written reports to ROBOCOM support center of all
support activity and any new problems reported and solutions to
problems, if known.
4.7 Technical staffing. Distributor agrees to establish and maintain at
all times a capable trained technical support staff sufficient to
provide technical support as defined in item 4.6 above, including, but
not limited to, having two senior systems analysts trained on the
Software Products at all times.
4.8 End User Communications. Distributor agrees to ensure that each
supported End User CPU includes a 2400 baud modem available for support purposes
and communications adequate for the provision of support functions.
4.9 Distributor communications. Distributor agrees to provide ROBOCOM with
the telephone numbers on which Distributor provides voice and modem technical
support and with the End User telephone numbers on which each End User receives
voice and modem technical support.
4.10 Support Services. Distributor agrees that it will provide support
services only to End Users for whom all required royalties and maintenance fee
payments to ROBOCOM are current.
4.11 Warranties Solely on Behalf of Distributor. Distributor agrees that it
will make any warranties or other representations and maintenance commitments to
End Users solely for Distributor and not on behalf of ROBOCOM and will indemnify
and save ROBOCOM harmless from any claimed by Distributor End Users for
maintenance services, breach of warranty, performance failure or failure of any
Product to meet a description.
4.12 Translations. At its sole expense, Distributor will make any
translations of the documentation and all modifications and updates thereto and
package and produce sufficient copies for itself and End Users in accordance
with this Agreement. Such translations shall be subject to the provisions of
Paragraphs 2.2 and 2.4 above. Any services requested by Distributor and
furnished
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ROBOCOM SYSTEMS, INC./ Page 8 Dated: September 01, 1996
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<PAGE>
Distribution Agreement Dated: September 0l, 1996
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by ROBOCOM will be furnished at ROBOCOM's then standard rates and reasonable
expenses. All packaging, printing, binding and other expenses will be born by
Distributor. In return for translations, Trendsoft shall have Brazil as an
exclusive territory for two (2) years from the signing of this agreement
provided that one (1) RIMS(R) license is sold in the first year and three (3)
RIMS(R) licenses are sold in the second year.
4.13 Source Code. Distributor agrees to hold all Program source code in
strict confidence and as valuable confidential information belonging to ROBOCOM
and not to disclose such code to any person except Distributor's employees on a
need to know basis.
4.14 Return of Materials upon Termination. Upon any termination of this
Agreement, Distributor will immediately return or certify destruction of the
Programs and documentation, including any copies, information or notes relating
thereto except to the extent temporary retention is reasonably necessary for not
more than one year from termination to fulfill End User maintenance commitments
made by Distributor in good faith and in accordance with this Agreement. ROBOCOM
agrees that it will offer software Product maintenance services to such End
Users following the termination of this Agreement for ROBOCOM supported
then-current versions of Software Products.
4.15 Payments. Distributor will make all payments in United States currency
at ROBOCOM's offices, first stated above, or as otherwise directed by ROBOCOM
and without deductions based on any currency control restrictions, import
duties, or sales, use, value-added or other taxes or withholdings. Distributor
will bear all taxes, however designated, imposed as a result of the existence or
operation of this Agreement, including, but not limited to, any tax which
Distributor is required to withhold or deduct from payment to ROBOCOM, except,
(a) any such tax imposed upon ROBOCOM by any governmental entity in the United
States and (b) any such tax imposed upon ROBOCOM in the country in which the
office of Distributor is located or in which the End User is located if such tax
is allowable as a credit against United States income taxes of ROBOCOM. To
assist ROBOCOM in obtaining such credit. Distributor shall furnish ROBOCOM with
such evidence as may be required by United States taxing authorities to
establish that such tax has been paid. Currency conversion shall be made as of
the exchange rate on the last business day before the day payment is due. All
monetary amounts in this Agreement are in US dollars.
4.16 Import and Export Controls. At Distributor expense, Distributor will
obtain any necessary import certificates or permissions and provide all
necessary assistance to ROBOCOM in obtaining any required export or other
licenses from United States governmental agencies, including, but not limited
to, certifications as to use and ultimate destination and/or written agreement
not to knowingly transmit directly or indirectly software Products to certain
named countries. Any such licenses or other documents shall become attachments
to this Agreement and part of Distributor's obligations hereunder. Concurrent
with signing this agreement Distributor will sign an Export Controls letter.
4.17 Competitive Products. Distributor agrees to permit termination of this
Agreement by ROBOCOM if Distributor sells and promotes products competitive with
ROBOCOM products
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<PAGE>
Distribution Agreement Dated: September 0l, 1996
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permitted to be marketed under this Agreement. Prior to any action being taken
by ROBOCOM a discussion would take place to allow Distributor to explain the
method of marketing and sale and demonstrate that these products were not
competitive to ROBOCOM's products.
4.18 Product Names; Trademarks. Distributor agrees to use ROBOCOM Product
names in association with the products and use any ROBOCOM trademarks as
instructed by ROBOCOM so as to protect ROBOCOM rights and continue
identification of the Products with ROBOCOM in the Territory.
4.19 Sales Projections. Provide ROBOCOM with quarterly sales projections
covering at least the next six quarters.
4.20 Fees and Payment; Maintenance Payments. Beginning with the first
system installed, for ROBOCOM Standard Software sold to Distributor customers
headquartered in the Territory, or elsewhere (as long as the right to distribute
ROBOCOM's Software has not been revoked), for which Distributor takes primary
installation and support responsibility, Distributor will charge customers the
list prices and pay ROBOCOM an amount equal to *% of the current list prices
(shown on the attached price list, Exhibit 1) or *% of a mutually agreed
discounted price which is commercially satisfactory to both ROBOCOM and
Distributor, for their modules purchased and installed. Should Distributor for
any reason decline to take primary installation and/or support responsibility
for any systems installed, Distributor and ROBOCOM will negotiate in advance an
equitable increase in the amount due ROBOCOM.
Ongoing Annual Maintenance Plan fees, computed at *% of the first site list
price for Standard Application Software and all custom Software provided by
ROBOCOM, will be split equally between the two parties, as long as Distributor
continues to support the customer directly. If ROBOCOM provides direct customer
support, it will receive *% of the maintenance fee.
Amounts to ROBOCOM, except for annual maintenance fees, will be paid by
Distributor at the end of the month following the month in which the Software
was installed. Annual maintenance fees will be to ROBOCOM at the end of the
second month following the month in which the Software was installed.
All transactions between Distributor and ROBOCOM will be in U.S. dollars.
The attached price list may be modified by ROBOCOM at any time, with 90
days advance notice to Distributor. ROBOCOM agrees that, for the initial
three-year term of this agreement, the prices for its standard application
software in the Territory will be adjusted prorata to U.S. pricing.
By mutual written agreement, ROBOCOM and Distributor may modify the pricing
conditions on a case-by-case basis.
ROBOCOM agrees that, for the initial three year term of this Agreement,
customer maintenance charges will be contained with RPI *% of the maintenance
costs in the country of
*OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
FILED SEPARATELY WITH THE COMMISSION.
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installation.
5.0 PATENT AND COPYRIGHT INDEMNIFICATION
5.1 ROBOCOM will defend any action brought against Distributor [or
Distributor's End Users] based on a claim that a software Product infringes any
copyright, trade secret or United States patent (including patents in Territory
countries based on the relevant United States patents.). ROBOCOM will hold
Distributor harmless from and pay any award against Distributor or Distributor's
End Users based on such infringement provided that Distributor and/or End Users
notify ROBOCOM promptly in writing of the claim and Distributor and/or End Users
provide ROBOCOM reasonable assistance and permit ROBOCOM to control the defense
and any settlement. ROBOCOM shall have no liability if the alleged infringement
arises from (1) the licensing of other than a current unaltered release of a
Program as provided under this Agreement, or (2) the combination of a Program
with non ROBOCOM programs or data. ROBOCOM makes no representations or
warranties and provides no indemnities regarding patent or copyright
infringement by any portion of a software Product not developed by ROBOCOM.
5.2 In the event of claimed infringement, ROBOCOM reserves the right to
replace the Software Product with a non-infringing product of equivalent
functionality, modify the Software Product to make it non-infringing or, if
neither alternative is reasonably available, remove the Software Product and
refund to Distributor license fees paid to ROBOCOM with respect to the
infringing copies of the Software Product on a five-year End User use
amortization schedule.
6.0 TERM AND TERMINATION
6.1 This Agreement shall enter into force on the Commencement Date and
shall continue for a period of two (2) years from the Commencement Date and
subject as herein provided shall thereupon automatically renew for an additional
one (l) year period and until terminated by one of the parties hereto giving
written notice thereof to the other at least one hundred eighty (180) days prior
to the end of the initial term or any following anniversary date of the
Agreement.
6.2 Notwithstanding Clause 6.1 of this Agreement, each party shall have the
right to terminate this Agreement at any time upon giving Distributor at least
ninety (90) days written notification if: (a) Distributor's performance under
this Agreement is unsatisfactory in ROBOCOM's reasonable judgement; (b)
Distributor promotes or markets a product competitive with the Software Products
in violation of Section 4.17; or (c) if Distributor shall undergo a change in
ownership or control with ROBOCOM's written consent, but approval of such change
shall be reasonably withheld by ROBOCOM.
7.0 EVENTS OF DEFAULT
7.1 The occurrence of any of the following events shall constitute an event
of default entitling ROBOCOM to terminate this Agreement forthwith:
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A. Nonpayment by Distributor of any payment to ROBOCOM for a period of
fifteen (15) working days after sending of written notice to the
Distributor specifying such default in payment.
B If a petition or action shall be filed or taken by or against
Distributor under any law dealing with insolvency, bankruptcy or
suspension of payment and such petitions or action is not dismissed
within thirty (30) days.
C. If a Receiver is appointed over the assets or undertakings of
Distributor (or any part thereof).
D. If Distributor enters into a deed of arrangement or makes an
assignment for the benefit of creditors.
E. If Distributor ceases to function as a going concern or an order is
made or a resolution passed for the winding up of Distributor
(otherwise than for the purposes of amalgamation or reconstitution).
F. If Distributor fails to promptly furnish ROBOCOM, upon request, with
the names and addresses of End Users with a full copy of the signed
End User agreement and, if such agreement is not in English, with an
English translation of the agreement.
This Agreement will terminate immediately if Distributor sells,
attempts to sell, agrees to sell, or attempts to develop any products
meaning Inventory and Warehouse Control Systems Software competing
with those provided by ROBOCOM.
G. If Distributor knowingly misrepresents the capabilities, functions or
functionalities of Software Products.
7.2 If either party fails to perform any other term, covenant or condition
of this Agreement and has not performed such term covenants or conditions within
thirty (30) days after a notice of default has been received, the non-defaulting
party has the right to forthwith terminate this Agreement by means of a written
notice without judicial intervention being required.
8.0 REMEDIES
8.1 Upon any terminal of this Agreement, Distributor shall immediately
return or certify destruction of all Programs in accordance with paragraph 4.14
and ROBOCOM shall be entitled to recover from Distributor all accrued and unpaid
payments and other amounts then due and owing under the terms hereof and/or all
future payments and other amounts as and when becoming due hereunder.
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No termination under this Paragraph 8.1 or otherwise under this Agreement
shall invalidate then existing Distributor End User licenses granted by
Distributor in accordance with this Agreement for which required fees and
charges have been credited or paid to ROBOCOM.
8.2 The rights of ROBOCOM pursuant to Paragraph 8 1 hereof are without
prejudice to any other rights or remedies which ROBOCOM may have ROBOCOM pursuit
and enforcement of any one or more remedies shall not be deemed an election
waiver by ROBOCOM of any other remedy
8.3 EXCEPT AS SET FORTH IN PARAGRAPH 3.5 AND PARAGRAPHS 5.1 AND 5.2,
ROBOCOM DISCLAIMS ALL WARRANTIES WITH REGARD TO THE ROBOCOM SERVICES AND
PRODUCTS SOLD OR LICENSED HEREUNDER INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ALL OBLIGATIONS OR
LIABILITIES ON THE PART OF ROBOCOM FOR DAMAGES, INCLUDING BUT NOT LIMITED TO,
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN
CONNECTION WITH THE DELIVERY, USE, OR PERFORMANCE OF THE SOFTWARE.
9.0 NOTICES
Service of all notices under this Agreement by either party to the other
shall be sufficient only if posted by certified or registered post, return
receipt requested or personally delivered and receipted for. Either party may
change its address for service of notice by written notice to the other
10.0 UNFORESEEN EVENTS
Neither party shall be responsible for any delay nor failure to perform due
to causes beyond reasonable control of the party, including, but not limited to,
cause such as strikes, lockouts, or other labor disputes, riots, civil
disturbances, actions or inactions of governmental authorities or suppliers,
epidemics, war, embargoes, sever weather, fire, earthquakes, acts of God or the
public enemy, nuclear disasters, or default of a common carrier.
11.0 SEVERABILITY
In the event that any one or more of the provisions of this Agreement shall
for any reasons be held to be unenforceable in any respect under the laws of any
jurisdiction, such unenforceability shall not affect any other provision and
this Agreement shall then be construed as if such unenforceable provision or
provisions had never been contained herein.
12.0 GENERAL CONDITIONS
12.1 Applicable law; Dispute Resolution. The Agreement shall be construed
in
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accordance with and governed by the laws of the State of New York without regard
to that body of law known as conflict of laws and without reference to the 1980
United Nations Convention on Contracts for the Sale of Goods and any amendments
thereto.
12.2 Headings. Headings and subheadings in this Agreement are for
convenience only and do not form part of this Agreement.
12.3 Assignment. Upon advance written notice, Distributor may assign this
Agreement to a parent, subsidiary, or successors in interest to the business of
Distributor provided that such assignees are located in the same country as
Distributor and is able to and does fulfill Distributor's obligations under this
Agreement. Distributor shall not otherwise assign this Agreement without the
written consent of ROBOCOM.
12.4 Non-Waiver. The failure of either party to enforce at any time any of
the provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce any such provisions.
12.5 Independent Businesses. The Distributor and ROBOCOM are independent
businesses and will in no way claim otherwise or incur liabilities except on
their own account. It is understood and agreed that ROBOCOM and the Distributor
will not in any event be liable for any obligations, expenses, or damages of any
nature whatsoever incurred by the other party or for any claim made against the
other party on account of any services performed by it or by those for whom the
other party may be in law responsible and that this Agreement supersedes all
previous Agreements and arrangements between ROBOCOM and the Distributor.
12.6 Indemnity Clause. ROBOCOM will protect and save harmless and defend at
its own expense the Distributor from and against any and all claims of
infringements of patents, trade marks or industrial designs copyrights or other
property rights affecting the Products. The Distributor agrees to give ROBOCOM
prompt notice of any such claim that is made against the Distributor and will
give ROBOCOM such assistance and information as ROBOCOM may reasonably require.
In the event that any such infringement occurs or may occur, ROBOCOM may:
A. Procure for the Distributor the right to continue to use the Software
or infringing part thereof; or
B Modify or amend the Software or infringing part thereof so that it
becomes non infringing; or
C. Replace the Software or infringing part thereof by other software of
similar acceptable capability; or
D. Pay the Distributor compensation relating to the whole or infringing
part of the Software as appropriate so that it may reimburse and
settle any corresponding claims put upon it by third parties.
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E. The conditions of the indemnity clause identified herein apply only to
ROBOCOM's supplied RIMS applications code.
12.7 Notices. All notices hereunder will be in writing and will be deemed
to have been given and received when delivered in person or by registered or
certified mail, return receipt requested, postage prepaid, as follows:
ENTIRE AGREEMENT
This Agreement and Exhibits constitute the entire Agreement governing the
relationship between the parties and supersede all proposals, oral or written,
and all negotiations, conversations, or discussions between the parties relating
to this Agreement. Distributor acknowledges that is has not been induced to
enter into this Agreement by representations or statements, oral or written, not
expressly contained herein. The terms and conditions of the Agreement shall
prevail, notwithstanding any variance from the terms and conditions of any order
or other instrument submitted by Distributor. This Agreement may be modified
only in writing signed by duly authorized representative of each party.
If to Distributor:
Trendsoft Comercio de Software e Hardware Ltda
Av. Dr. Chucri Zaidan, No. 80 - Bloco "C"- 60 Andar
Brooklin - Sao Paulo
Brazil
Cep.: 04583-110
Attn: Luis Alfredo Bardi
If to ROBOCOM:
ROBOCOM Systems, Inc.
511 Ocean Avenue
Massapequa
New York
11758
USA
Attn: Richard L. Wilkins
Forum for Dispute. The parties agree to seek to resolve any dispute arising
under this Agreement pursuant to good faith business negotiations in the event
of a dispute, the aggrieved party will promptly identify in writing the nature
of the outstanding dispute in sufficient detail as to allow the other party to
respond to the dispute. Each party agrees to set times and places to meet and
communicate their concerns and to propose resolutions to their dispute. These
meetings may take
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place by telephone, by video conference, or face-to-face. The parties agree to
hold not fewer than two meetings, and to meet for at least a total of four hours
to discuss their respective positions and to explore a business resolution of
their dispute. The parties agree to exchange offers in writing upon conclusion
of their meetings. Such good-faith procedures will be a condition precedent to
any litigation of the dispute.
13.5 The following are part of this Agreement:
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
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EXECUTED BY BOTH PARTIES AS PROVIDED BELOW:
ROBOCOM Systems, Inc. Trendsoft Comercio de Software e Hardware
Ltda.
/s/ R. L. Wilkins /s/ Luis Alfredo Gardi
By: R. L. Wilkins By: Luis Alfredo Gardi
--------------------------------- --------------------------------------
Title: Director Sales & Underwriting Title: Director
Date: 9/4/96 Date: 8/27/96
* * *
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EXHIBITS TO
DISTRIBUTION AGREEMENT
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EXHIBIT 1
Robocom Products:
RIMS(R) 2001 v3.2
MFG/PRO INTERFACE
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EXHIBIT 2
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CONFIDENTIALITY AGREEMENT
BETWEEN FIRMS
AGREEMENT and acknowledgment between ROBOCOM Systems Inc. (Company), and
Distributor
Whereas, the Company agrees to furnish the undersigned certain confidential
information relating to the affairs of the Company for purposes of: The
marketing of RIMS(R) 2001 V3.2 in Brazil.
Whereas, the undersigned agrees to review, examine, inspect or obtain such
information only for the purposes described above, and to otherwise hold such
information confidential pursuant to the terms of this agreement,
BE IT KNOWN that the Company has or shall furnish to the undersigned certain
confidential information, as set forth on an attached list, and may further
allow the undersigned the right to inspect the business of the Company and/or
interview employees or representatives of the Company, all on the following
conditions:
1. The undersigned agrees to hold all confidential or proprietary information
or trade secrets ("information") in trust and confidence and agrees that it
shall be used only for the contemplated purpose, and shall not be used for
any other purpose or disclosed to any third party.
2. No copies will be made or retained of any written information supplied.
3. At the conclusion of our discussions, or upon demand by the Company, all
information, including written notes, photographs, memoranda, or notes
taken by you shall be returned to us.
4. This information shall not be disclosed to any employee or consultant
unless they agree to execute and be bound by the terms of this agreement.
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5. It is understood that the undersigned shall have no obligation with respect
to any information known by the undersigned or generally known within the
industry prior to dates of this agreement, or becomes common knowledge
within the industry thereafter.
Agreed and Accepted: Agreed and Accepted:
ROBOCOM Systems Inc. Distributor
/s/ Richard L. Wilkins /s/ Luis Alfredo Gardi
by: Richard L. Wilkins by: Luis Alfredo Gardi
Title: Dir. Sales & Marketing Title: Director
Date: 9/4/96 Date: 08/27/96
***********
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EXHIBIT 3
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ROBOCOM MAINTENANCE CONTRACT
96-2001
Contract No.
ROBOCOM SYSTEMS, Inc. QUOTATION
Reference Date Terms
================================================================================
ITEM NO. DESCRIPTION PRICE
================================================================================
1 Annual Software (Diagnostic & Maintenance)
Agreement
- --------------------------------------------------------------------------------
2 Annual Hardware Maintenance Agreement
- --------------------------------------------------------------------------------
3 Extended after Hour Support - Eight hours.
Weekdays, 5:00 P.M. - 1:00 A.M., ET
Weekends & Holidays - 8:00 A.M. - 1:00 A.M.
================================================================================
Contract includes software and hardware working hour response as listed under
Software and Equipment. Our working hours are Monday through Friday, 8:30 A.M.
to 5:00 P.M., Eastern Time (ET) excluding holidays. All software, labor, and
parts will be covered except those which are sundry consumable supplies such as
ribbons, paper, etc. The quoted price does not include travel and subsistence
costs except where noted. *
The system and equipment are subject to a Pre-Contract Inspection prior to
approval for contract unless continuous and uninterrupted service is maintained
with the prior agreement. If any repairs are necessary to get the unit up to
specifications, the repair costs will be charged against a billable service
call. This quotation is valid for ( ) days.
- --------------------------------------------------------------------------------
Order should be made out to: ROBOCOM Systems. Inc.
by: (Customer name)
* Refer to Agreement for listing of Software and Equipment, with applicable
response times, and travel coverage.
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AGREEMENT FOR MAINTENANCE SERVICE
Company Name: (Customer Name)
Street:
City: State: Zip Code:
(Hereinafter referred to as Purchaser) agrees to purchase and ROBOCOM SYSTEMS
Inc. (hereinafter referred to as RSI) agrees to furnish at the below indicated
place of installation maintenance service on the equipment and software listed,
in accordance with the terms and conditions contained in this agreement.
SITE LOCATION
==================================
==================================
Company Name
==================================
==================================
Street
================================================================================
================================================================================
City State Zip Code
================================================================================
================================================================================
Commencement Date Day of Month Year
================================================================================
================================================================================
Renewal Date Day of Month Year
==================================
==================================
Contract #: RIMS,
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ROBOCOM SYSTEMS, INC./ Page 25 Dated: September 01, 1996
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SOFTWARE AND EQUIPMENT
COVERED UNDER THIS AGREEMENT
<TABLE>
<CAPTION>
==========================================================================================================================
SOFTWARE/ MAINT. ** MODE TRAVEL
EQUIP. QTY. SERLAL RESPONSE TIME INCL. IN
DESCRIPTION MODEL NO(S)* BASIC
PRICE
YES/NO
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Processor
- --------------------------------------------------------------------------------------------------------------------------
Terminal
- --------------------------------------------------------------------------------------------------------------------------
Printer
- --------------------------------------------------------------------------------------------------------------------------
Printer
- --------------------------------------------------------------------------------------------------------------------------
Scanner
Dual Range
- --------------------------------------------------------------------------------------------------------------------------
Progress
- --------------------------------------------------------------------------------------------------------------------------
Software
- --------------------------------------------------------------------------------------------------------------------------
Converter
- --------------------------------------------------------------------------------------------------------------------------
Scanner
- --------------------------------------------------------------------------------------------------------------------------
Scanner
==========================================================================================================================
</TABLE>
* NOTE: Equipment serial numbers to be provided upon contract execution.
** 1 - On Site Repair - 8 Hrs.
2 - Sent to Repair Depot
3 - Immediate Modem Response
*** Does not cover thermal head replacements.
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TERMS AND CONDITIONS
1. INITIAL INSPECTION AND REPAIR
Unless this agreement provides for maintenance service which is contiguous
with previous maintenance service or contiguous with the warranty provided
by RSI, then RSI shall make a thorough inspection of the system and
equipment to be maintained hereunder. This inspection shall be at the
expense of the Purchaser. Any repairs and adjustments deemed necessary by
RSI to bring the system and equipment up to good operating condition and
normal repair level shall then be made. All costs of repairs, materials and
adjustments shall be at Purchaser's expense and shall be at the current
published RSI hourly rates, portal to portal.
2. TERMS OF AGREEMENT
This agreement shall become effective upon the date accepted by RSI and,
except as provided in Article 10, "Termination," shall continue for a term
of twelve (12) months from the commencement date which is noted herein or
if applicable, the date of completion of the initial inspection and repair
provided pursuant to Article I above, which date shall be set forth herein
or the commencement date. On an annual basis, this agreement will be
reviewed for price adjustment with an annual price increase cap of 5
percent (5%). Purchaser shall have the right to renew this Agreement from
year to year by giving RSI notice at least thirty (30) days prior to the
end of the contract term on any renewal item.
3. RESPONSIBLITES OF RSI
RSI shall maintain the system and equipment in good operating condition.
Pursuant to the above, RSI shall provide the following:
a. Upon receiving a service request, ROBOCOM will access the computer
system via a modem for the purpose of diagnostic and corrective
analysis. This service will be rendered immediately upon calling
during the normal business day (8:30 A.M. to 5:00 P.M. ET). This will
continue beyond the normal business day under the Extended Support
Option.
b. Should a service call to the facility be required, a qualified ROBOCOM
Service Technician will be on site no later than the next business day
after the determination that on-site service is required, which
determination shall promptly be made following RSI's diagnosis of the
problem.
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c. The software diagnostic support services must be purchased to obtain
the Hardware Maintenance Support.
d. The software and hardware Maintenance Support was selected. The
Purchaser will be responsible for removing a defective depot repair
eligible device, where applicable. You will then ship the defective
unit to ROBOCOM (or as directed) for repair or replacement. Major
items will be repaired on site by a ROBOCOM authorized agency
following ROBOCOM's determination that the unit is indeed in need of
repair. All spare parts and equipment supplied under this contract
shall remain the property of ROBOCOM SYSTEMS, Inc., except those spare
parts which ROBOCOM permanently installs in Customer's equipment and
hardware to effect repairs pursuant to the maintenance service
agreement.
e. RSI will bear all costs (except as noted) of maintaining the equipment
in good operating condition which costs are required because of the
normal use of the equipment. Maintenance service does not include the
furnishing of accessories of any nature, except such items of
equipment as may be necessary to the maintenance of the components
being serviced.
f. If Purchaser causes modifications to be made or accessories or devices
not covered by this Agreement to be added to the software or equipment
being maintained by RSI, then maintenance service will be supplied
therefore only upon mutual agreement between Purchaser and RSI. If the
modifications or additions increase the maintenance costs of system
and equipment covered hereby, then the maintenance charges specified
on page one (1) hereof shall be accordingly adjusted by RSI and
Purchaser shall pay such charges.
g. ROBOCOM has delivered certain source files to (Customer Name)as
customized software under the development contract. (Customer Name)
may modify and/or use these files as required. (Customer Name) may not
modify or otherwise change Procedure Library files now maintained by
ROBOCOM. (Customer Name) modified code must be compiled by (Customer
Name)and located in the bin directory as PROGRESS *.r files only.
Under no circumstances shall ROBOCOM be responsible for (Customer
Name) modified code.
h. ROBOCOM will provide problem determination and assistance for
operating system and database problem events and configuration issues.
ROBOCOM will serve as the central point of contact for the client and
will coordinate problem resolution with any third party vendors where
necessary.
i. ROBOCOM will perform in an advisory role to ensure that any
configuration
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changes will not adversely affect the RIMS application. Any
configuration, file system, or other changes made by the client must
be provided to ROBOCOM for impact review and concurrence.
j. During the course of normal maintenance, should ROBOCOM detect a
potential problem situation, the client will be notified. A suitable
corrective action will be recommended and, if necessary, carried out
by ROBOCOM.
4. RESPONSIBILITIES OF PURCHASER
Purchaser shall provide, free of charge and with ready access, adequate
working space, adequate light, heat, ventilation, electrical current, and
outlets for the use of RSI maintenance personnel.
Purchaser shall not misuse, neglect or attempt any software modification,
repairs or maintenance of the equipment covered hereby. Any added costs to
RSI for maintaining the system or equipment because of violation of this
provision shall be charged to the Purchaser. Likewise, all costs of
maintenance not attributable to normal wear and tear, normal malfunction,
or RSI negligence, shall be charged to the Purchaser at the RSI published
hourly rate and published list price for parts.
Purchaser shall always allow RSI full and free access to the equipment
subject to Purchaser's industrial security rules.
Unless otherwise specified in the agreement, the client is responsible for
all day to day maintenance and administration tasks as required by a
typical computer system furnished by ROBOCOM with the RIMS application.
Customer Administrative tasks include but are not limited to:
User and Group Administration
Kernel Tuning
User Accounting
Monitor disk usage
Install/configure Peripherals
Printer Scheduler Administration
File System Administration
Network File System Administration
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Progress Database Administration
Periodic BI File Truncation
Periodic Dump and Reload
Develop Backup Strategy
Perform Daily Backups
Perform Quarterly Backups
UUCP Administration
CRON Administration
EMAIL Administration
5. SERVICE HOURS
For the charges set forth on page one hereof, RSI will furnish "on call"
maintenance service from 8:30 A.M. to 5:00 P.M. ET Monday through Friday,
excluding holidays.
The extended after hour support provides for service from 5:00 P.M. - 1:00
A.M. ET on weekdays and 8:00 A.M. - 1:00 A.M. on weekends and holidays.
6. MOVEMENT OF EQUIPMENT
In the event that the equipment covered by this Agreement is moved to a new
location with the prior written consent of RSI, service under this
Agreement will terminate at the time the disassembly of the system is
begun. Service under this Agreement will commence again at the new location
at the time the system has been certified as operational as a result of an
inspection as provided in Article 1, "Initial inspection and Repair."
Charges for any services rendered of RSI to effect the disassembly,
movement, reassembly, or checkout of the system being moved shall be at the
current published RSI hourly rates computed to the nearest one-half (1/2)
hour with a minimum charge of eight (8) hours per call.
7. EXCLUSIONS
The maintenance charge does not include service calls or additional service
time arising from abuse, misuse, modification, mishandling, of the
equipment, or damage due to forces external to the machine including, but
not limited to, the following acts of God, flood, power surges or failures,
defective electrical work, transportation, foreign equipment/attachments,
accident, disaster, neglect, alterations, service work performed
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by unauthorized parties or any other cause beyond the control of RSI. This
service contract does not guarantee uninterrupted operation of the system
or of the equipment. This service contract excludes all responsibility for
repairs necessitated by or damage caused to equipment by any accessories
other than those authorized by the manufacturer (i.e., ribbons, disc packs,
etc.). "Also this contract does not include painting or refinishing of
equipment or furnishing materials for this purpose.
8. INVOICES AND PAYMENTS
a. Charges for maintenance service shall begin on the commencement date
as specified in Article 2 and shall be invoiced as set forth in the
maintenance schedule, in advance with payment due within thirty (30)
days of the invoice date. A time price charge of 1-1/2% per month
(Annual rate equals 18%) will be charged on all accounts not paid
within said thirty-day period.
b. Charges for maintenance services of less than one (1) months' duration
shall be prorated at 1/20th of the monthly charges for each calendar
day (based on RSI June to May fiscal year).
c. Payment Terms -
Fixed price - 1/12 of the annual amount each month, in advance Travel
and subsistence - where applicable, will be charged at ROBOCOM cost
plus 15% (administrative cost) - as incurred, provided such charges
are reasonable and documented.
9. LIABILITES
Since Purchaser will have exclusive control over the use of the equipment
being maintained hereunder, Purchaser shall be solely responsible for the
proper use, protection and supervision thereof. RSI shall not be liable for
any personal injury or property damage even if loss or damage is caused by
negligence of RSI, and such liability shall not include incidental or
consequential damages. Except as provided in this Agreement, RSI shall have
no other responsibility or liability with respect to the system or
equipment being maintained or any of the maintenance service supplied
hereunder.
1O. TERMINATION
Unless mutually agreed by both the Purchaser and RSI, this Agreement shall
not be subject to termination by either party, except if Purchaser defaults
in payment of any monies due hereunder, or should move the equipment
without prior written consent of RSI. RSI shall then, with notice, have the
right to terminate this Agreement, and if RSI
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defaults in any material obligation under this Agreement, Purchaser shall
then, with notice, have the right to terminate this Agreement. In addition,
if after three (3) years from date of original equipment delivery, any item
being maintained under this Agreement, is, in RSI's reasonable opinion, in
need of factory refurbishment, repair, or overhaul, RSI will submit to
Purchaser a description of the necessary refurbishment and an estimate of
the reconditioning charges, which shall be in addition to those charges set
forth on reconditioning, RSI shall then, with notice have the right to
terminate this Agreement. In the event that this Agreement is rightfully
terminated by RSI pursuant to this Section 19, as RSI's sole and exclusive
remedy, the Purchaser shall be liable for termination payment to RSI of 20%
of the monthly charge for the months remaining (not to exceed four months)
subsequent to date of termination by RSI. In the event that this Agreement
is rightfully terminated by Purchaser pursuant to this Section 10, RSI
shall return all funds Purchaser had paid in advance to RSI for which no
service had been rendered and Purchaser shall retain all other rights and
remedies.
11. GOVERNING LAW
This Agreement will be governed by and construed in accordance with the
laws of the State of New York.
12. ATTORNEYS' FEES
Purchaser will pay reasonable attorneys' fees to RSI in the event RSI shall
engage an attorney to enforce collection or to preserve and protect its
rights under this service agreement.
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13. GENERAL PROVISIONS
This agreement constitutes the entire agreement for maintenance service between
the Purchaser and RSI. THE FOREGOING TERMS AND CONDITIONS SHALL PREVAIL
NOTWITHSTANDING ANY VARIANCE WITH THE TERMS AND CONDITIONS OF ANY ORDER
SUBMITTED BY THE PURCHASER.
AGREED TO By:_________________________
(Signature)
Customer: ____________________________
(Print Name)
________________________
(Date)
________________________
(Title)
ACCEPTED By: ________________________
(Signature)
ROBOCOM
Systems Inc. ________________________
(Print Name)
________________________
(Date)
________________________
(Title)
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EXHIBIT 4
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ROBOCOM TRAINING PROGRAM
The ROBOCOM training is instructor-led yet participant-centered instruction that
focuses on predefined customer requirements. Our Training Department consists of
an experienced staff of professionals who tailor the curriculum to specifically
meet those requirements. To that end ROBOCOM training consists of a preset
curriculum which includes a comprehensive series of courses that can be
customized.
As part of the ROBOCOM training, we offer the following curriculums:
-- RIMS Warehouse Configuration (generally one week at ROBOCOM)
-- RIMS Supervisor Training (generally one week at ROBOCOM)
-- RIMS Worker Training (generally one week on site)
The actual course content of that training varies, depending on the needs of our
customer. Our course offerings include overviews as well as in-depth,
step-by-step procedures. Most often we use a combination of both:
-- Personnel who learn to setup the warehouse are given a system overview
and then are more heavily exposed to configuration issues with less
depth given to operations.
-- Supervisors are given a deeper overview that includes an understanding
of Video Display Terminal (VDT) and Radio Data Terminal (RDT)
functionality and only briefly touch upon system configurations.
-- Warehouse operators (workers) first attend VDT and/or RDT Overview(s)
and then learn each RDT and/or VDT step necessary to perform their
job.
As we present each course, careful attention is paid to use language
understandable to each student in the class. Again and again we are told by
non-computer-literate students that our presentations are non-threatening
because we are clear and easy to understand. Because our training is
interactive, we find that trainees are not afraid to ask questions for further
explanations.
Our experienced staff is also able to silently identify slower learners and
inconspicuously reinforce concepts/procedures for these people without causing
any embarrassment. Each Lab session (hands-on exercises) has been designed in
two parts: that which is required and that which is for "Extra Credit!" While
most of the class proceeds to the "Extra Credit" exercises, our staff can
provide extra support to the slow learner with the original, structured
exercises. In the rare event that the trainee still cannot grasp the lesson,
that student can come back for additional instruction during the time scheduled
for "Review/Supplemental/As Needed Instruction."
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Our training approach is varied. The methodology used depends on the audience
size and type, the physical layout of the training facility, the availability of
equipment, and the subject matter being presented. Methods most commonly used in
our sessions include:
Lecture Questions and Answers
Demonstration Buzz Groups
Discussions Structured Hands-on Practice Exercises
Self Discovery Hands-On Practice Exercises
ROBOCOM trainers initiate student review after each major topic is covered.
Continual creative review of material not only reinforces learning, it also
makes learning fun. Such techniques add variety to what is often perceived to be
repetitive, computer drills.
Our training material varies depending on the curriculum. We have configuration
material and worksheets for our Warehouse Configuration class. We have user
training material for our Supervisor and Worker user classes. All training
material includes our User Documentation. This allows our students to relate to
our Management Manual and User's Guides from their first exposure to the system.
Even in training we encourage students to check the appropriate section of the
Management Manual or User's Guide before asking for help. We find that if such
practices are in place from the beginning, there will be fewer calls and thus
lower maintenance costs later on.
Our goal is to work with our customers to establish RIMS training to best meet
their needs. Together we can emphasize learner discovery, learner participation
and learner involvement. Together we can make our training effective. Together
we can deliver results.
ROBOCOM's philosophy is that the most important ingredient in the process of
developing User Documentation is the user. If the RIMS user is afraid of the
system or does not understand the system, the system cannot achieve its intended
purpose. The best system is worthless if it is not properly used.
In short, our documentation makes the "magic" of RIMS understandable to people
who know nothing or very little about computers.
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Each piece of ROBOCOM User Documentation adheres to our in-house User's
Documentation Standards Manual. These standards were created to assure the
consistency in overall display and structure of all our user documentation. Our
standards address three specific areas
- General Document Format (Headers/Footers, Margins/lndents, etc.)
- Chapter/Section Format (Options/Sub-Options, Frames, etc.)
- Style/Grammar (Diction/Appearance. Numbering/Capitalization etc.)
We have found that consistency in presentation and style is the key to
simplifying our documentation for user acceptance and user comprehension.
ROBOCOM's User Documentation includes the following:
- RIMS Configuration Material
- RIMS Management Manual
- RIMS Video Display Terminal (VDT) User's Guide
- RIMS Radio Data Terminal (RDT) User's Guide
- RIMS Training Material
Our five volumes of User Documentation complement each other. The Configuration
Material and Management Manual includes setup information necessary for the
implementation and maintenance of a RIMS system. Our two User's Guides provide
detailed steps used in daily RIMS processing, while our Training Materials
explain RIMS procedures and processes in a general sense.
The RIMS Configuration Material complements the RIMS Management Manual. This
material includes a brief explanation of each database element that needs to be
addressed when configuring a warehouse for a new RIMS installation. Included in
this material are diagrams that explain putaway and picking logic used by RIMS.
This allows you to understand exactly how your warehouse configuration will
affect your warehouse operations. A complete explanation of each configuration
task is explained in full in the RIMS Management Manual.
The RIMS Management Manual provides detailed information to be considered as a
customer prepares to implement RIMS. This manual is intended to be used in the
planning stages of the RIMS implementation process. It is also intended as a
reference for someone who needs to update any settings that follow the RIMS
implementation. The manual is intended for someone with a very limited knowledge
of the RIMS system.
The Management Manual describes in detail the database elements that will be
incorporated into RIMS. All of the information detailed in this guide is
required in order for RIMS to achieve
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optimal efficiency and accuracy as it manages your warehouse operations.
We recommend that our customers study the RIMS Management Manual prior to the
installation of the RIMS software. This will enable customers to expedite the
implementation process, and to determine the need, if any, for further
customization.
The Management Manual divides the components of RIMS into four basic categories:
- Warehouse Configuration
- File Information
- System Administration (including only the setup functions, the
processing options are covered in the VDT User's Guide)
- System Issues (including backups, restores, etc.)
Each RIMS topic covered in the Management Manual includes a real-life example
with a RIMS solution. Included too, are blank worksheets to simplify customer
planning and a Field-Frame Cross Reference Chart that shows you in an instant
which fields are on which frames.
Our customers have found the RIMS Management Manual invaluable as they prepare
their facilities for a RIMS installation.
The VDT User's Guide follows the menu structure of the VDT system and steps you
through each VDT process; the RDT User's Guide follows the menu structure of the
RDT system and steps you through each RDT process. Each manual includes sample
frames from the real system. The RDT User's Guide displays both the
vehicle-mount and hand-held frames.
The VDT User's Guide contains chapters that begin with "VDT" (e.g., VDT
Receiving) or "RIMS" (e.g.. RIMS Warehouse Configuration). Those that are called
VDT... contain information that is specific to the VDT system. Those that are
called RIMS... contain setup, parameter or general RIMS information or
information that is established on the VDT system but affects the RDT system as
well. The RDT User's Guide chapters begin with RDT....
Each major menu option is a separate chapter. Each chapter is numbered
separately; for example, chapter one may consist of pages 1-1 through 1-30,
chapter two might be 2-1 through 2-25, etc. This allows you to tailor your
User's Guides to match your RIMS system. If a facility is not using the Quality
Assurance module, not only can you easily remove Quality Assurance from your
RIMS system menu, you can also easily remove that chapter from the user
documentation.
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Each page in each User's Guide chapter contains a Header indicating the
appropriate chapter option/section. Each page also contains a Footer that
indicates the current release date of the page and the chapter name.
The last chapter of both user's guides is an alphabetized glossary where each
term that relates to RIMS is defined for the user.
Each time the User's Guides are updated, the new release date appears in the
Footer of each page. In addition, gray shading on the page highlights any
changes that have occurred in this update.
The RIMS Training Material varies in format and content depending on the
specified audience. Supervisors usually receive an actual Training Manual that
contains schedules as well as separate chapters for supervisor functions and/or
warehouse processing.
All training materials complement the Management Manual and User's Guides.
Training materials explain procedures and processes in a general sense, the
Management Manual and User's Guides provide detailed step-by-step instructions.
Each chapter of the supervisor Training Manual also provides a listing of the
relevant RIMS reports that are available for that segment of RIMS. For example,
the Receiving Training Material alerts the user to the availability of the
"Expected PO Status Report" and the "Pending Returns Report."
Warehouse workers as a rule do not receive a Training Manual. They do, however,
receive less threatening "hand-outs" or "cheat-sheets" that capsulize the tasks
at hand. The content of this material depends on many variables:
- Do workers have any typing/computer experience?
- How much does the RIMS system differ from the current method of
operation?
- Will workers be performing the same types of tasks as before or is the
company using the installation of RIMS as a springboard to change
people's job assignments?
- Do the workers have to learn the VDT and the RDT systems?
Our training staff relies on customer interaction to determine the scope of the
warehouse training. Accordingly we then design the appropriate warehouse worker
training material.
ROBOCOM also provides a VDT Menu Map as a component of our training material.
This consists of a diagram that displays each menu option. These Menu Maps help
supervisors become familiar with the RIMS system as a whole. The Menu Maps can
also be used as a road
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map for supervisors/workers who need to know how to access a specific frame on
the VDT system. It is very easy to provide a colored trail (via high lighter) to
lead someone to a module (Receiving) or even to a frame (Purchase Order
Receiving).
All of the ROBOCOM RIMS User Documentation is used as part of the RIMS training
process. During training, users are exposed to the Management Manual and User's
Guides so that they not only become familiar with the documentation, they also
learn where to find answers to potential questions or problems.
Our goal is to work with our customers to establish concise RIMS User
Documentation to best meet their needs. Together we can help users overcome
apprehension, build confidence and grasp easy-to-follow instructions. Together
we can make our documentation effective. Together we can deliver results.
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EXHIBIT 5
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International RIMS(c) Pricing, 1996
RIMS.2001(c)
USERS SITE ONE (l) SITE TW0(2) and up
----- ------------ ------------------
16 $* $*
24 * *
32 * *
64 * *
64- * *
Users defined as the total number of Fixed Terminals and RF Terminals.
Client Server to be announced.
*
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. FILED
SEPARATELY WITH THE COMMISSION.
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Date: _____________
COMPUTER PROGRAM END-USER
LICENSE AGREEMENT
(Nonexclusive; Object Code Only)
between
ROBOCOM SYSTEMS INC (Licensor) of 511 Ocean Avenue, Massapequa, NY 11758, and
Distributor
LICENSOR'S PROGRAM IS COPYRIGHTED AND LICENSED (NOT SOLD). LICENSOR DOES NOT
SELL OR TRANSFER TITLE TO THE LICENSED PROGRAM TO YOU. YOUR LICENSE OF THE
LICENSED PROGRAM WILL COMMENCE UPON EXECUTION OF THIS AGREEMENT BY BOTH PARTIES
AS EVIDENCED BY AUTHORIZED SIGNATURES BEING AFFIXED.
1. License.
In consideration of the payment of the license fees set forth herein,
Licensor grants you a nonexclusive license to use the package of computer
programs and data in machine-readable form and related materials, including
documentation and listings, identified in Appendix A, Paragraph I which
together constitute the "Licensed Program," subject to the following terms
and conditions.
9. Scope of Rights.
You may:
a. Install the Licensed Program in your own facility at the location
specified in Appendix A;
b. Use and execute the Licensed Program on the computer specified by
type/model and serial (or plant number) in Appendix A for purposes of
serving the internal needs of your business;
c. In support of your authorized use of the Licensed Program, store the
Licensed Program's machine-readable instructions or data in, transmit
it through, and display
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Agreement Between: Page 44
ROBOCOM Systems, Inc.
Dated: September 1, 1996
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it on machines associated with the specified computer; and
d. Make copies of the Program in machine-readable, object code form, for
nonproductive backup purposes only, provided that Licensor's
proprietary legend is included.
3. Fees and Payments.
The license fee for the Licensed Program is specified in Appendix A. Total
contract value including hardware, Software and terms of payment are
specified in Appendix B.
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Agreement Between: Page 45
Distributor and ROBOCOM Systems, Inc.
Dated: September 1, 1996
<PAGE>
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of May 15, l997 by and between ROBOCOM
SYSTEMS INC., a New York corporation (the "Company"), and HERBERT GOLDMAN, an
individual residing at 68 Beaumont Drive, Plainview, New York 11803
("Consultant").
W I T N E S S E T H:
WHEREAS, Consultant has previously served as Executive Vice President -
Operations of the Company and is currently a director of the Company; and
WHEREAS, the Company desires to obtain the consulting services of
Consultant for a three-year period of time on the terms and conditions
hereinafter stated, and Consultant is willing to furnish his consulting services
on such terms and conditions;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the parties hereto agree as follows:
Section 1. Consultancy.
(a) The Company hereby engages Consultant to perform
consulting services and Consultant hereby accepts such engagement on the terms
provided herein. Consultant agrees that he will use his skills and abilities
faithfully to promote the interests of the Company and to provide management of
the Company such consulting services on an as needed basis as requested by the
Company subject to the reasonable availability of Consultant as determined by
the Consultant in his sole discretion. Such consulting services may, from time
to time, be rendered by telephone and shall be performed in such manner and at
such times as shall be convenient to Consultant in light of Consultant's other
commitments and activities. Notwithstanding the foregoing, it is expressly
understood and agreed that nothing herein shall constitute Consultant an
employee or agent of the Company, except to the extent as might hereafter be
agreed upon for a particular purpose, and that without the prior written consent
of the Board of Directors or the President of the Company, Consultant shall not
have the authority to obligate or commit the Company nor shall Consultant enter
into any negotiations, contract or agreement with any third party which shall in
any way bind, obligate or commit the Company.
(b) It is understood and agreed that Consultant shall not be
required to provide any specified number of hours or days of service to the
Company and the amount and timing of services Consultant provides, if any, is
subject to Consultant's sole discretion.
<PAGE>
Section 2. Term. The term of Consultant's engagement hereunder shall be
three (3) years commencing on the date hereof and ending on May 15, 2000 (the
"Term").
Section 3. Compensation. For the agreements contained herein and for
all services to be rendered by Consultant under this Agreement, the Company
shall pay Consultant a retainer at the annual rate of $12,000, payable monthly.
In addition to the above, the Company shall pay Consultant a per diem payment of
$1,000 for each day the Consultant performs services for the Company at the
request of the Company.
Section 4. Reimbursement of Expenses. In addition to the fees payable
under Section 3, the Company shall reimburse Consultant for all of his expenses
incurred in connection with services rendered hereunder including, without
limitation, expenses for travel, meals, entertainment and other miscellaneous
business expenses. Consultant shall submit to the Company written, itemized
expense accounts.
Section 5. Benefits.
(a) The Company agrees that for the term of this Agreement,
Consultant shall be entitled to receive all perquisites he was entitled to
receive as a full-time employee of the Company in his capacity as Executive Vice
President - Operations.
(b) Consultant is entitled to participate in any retirement
plan maintained by the Company for its employees (including, without limitation,
pension, annuity, profit-sharing and deferred compensation plans), on the terms
enjoyed by him as a full-time employee of the Company in his capacity as
Executive Vice President - Operations.
(c) The Company will provide Consultant with the use of a
full-size automobile comparable to the automobile the Company provides for
Consultant as of the date hereof at no expense to Consultant, and will pay all
costs attributable to that automobile, including leasing fees and the costs of
repair, servicing, insurance, fuel and oil.
Section 6. Option Grants. Upon the execution by the Company of an
underwriting agreement in connection with a firm commitment underwritten public
offering of the common stock, par value $0.01 per share, of the Company (the
"Common Stock"), on or prior to September 30, 1997, the Company shall grant to
the Consultant, pursuant to and subject to the terms of the Company's 1997 Stock
Option and Long-Term Incentive Compensation Plan, non-qualified stock options to
purchase 15,000 shares of Common Stock at an exercise price equal to 110% of the
price per share at which the Common Stock is sold to the public in such public
offering. Such options shall vest on the first anniversary of the date of grant
and shall expire on the fifth anniversary of the date of grant.
2
<PAGE>
Section 7. Noncompetition.
(a) Consultant expressly covenants and agrees that Consultant
will not, during the Term and for a period of one (1) year thereafter, directly
or indirectly, as owner, partner, joint venturer, stockholder, employee, broker,
agent, principal, trustee, corporate officer or director, licensor or in any
capacity whatsoever engage in, become financially interested in, be employed by,
render consulting services to, or have any connection with, any business engaged
in the design, development, marketing, installation or support of warehouse
management systems or other computer integrated or turnkey systems or any
business which provides products or services which are directly competitive with
the Company's products or services as they exist on the date of this Agreement
in the United States; provided, however, that Consultant may own any securities
of any corporation which is engaged in such business and is publicly owned and
traded but in an amount not to exceed at any one time three percent (3%) of any
class of stock or securities of such company.
(b) If any portion of the restrictions set forth in paragraph
(a) should, for any reason whatsoever, be declared invalid by a court of
competent jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(c) Consultant declares that the foregoing time limitations
are reasonable and properly required for the adequate protection of the business
of the Company. In the event any such territorial or time limitation is deemed
to be unreasonable by a court of competent jurisdiction, Consultant agrees to
the reduction of either said territorial or time limitation to such area or
period which said court shall have deemed reasonable.
(d) The existence of any claim or cause of action by
Consultant against the Company or any subsidiary of the Company other than under
this Agreement shall not constitute a defense to the enforcement by the Company
or any such subsidiary of the foregoing restrictive covenants, but such claim or
cause of action shall be litigated separately.
(e) Subject to the foregoing, nothing in this Agreement shall
prevent Consultant from accepting any employment or consulting engagements of
any kind or from otherwise accepting any business opportunity.
Section 8. Death of Consultant. In the event of the death of Consultant
during the term of this Agreement, the Company shall pay to Consultant's estate
in lieu of any other amounts due and owing to Consultant pursuant to Section 3 a
benefit to be paid within sixty (60) days of the death of Consultant equal the
entire amount payable by the Company pursuant to Section 3 for the remaining
term of this Agreement.
3
<PAGE>
Section 9. Termination
(a) Consultant's consultancy may be terminated for Cause at
any time by the Company effective immediately upon written notice of such
termination to Consultant (which notice shall contain the reason for such
termination); provided that, with respect to (iii) below, written notice of
termination shall be given only after advance written warning by the Company and
a ten (10) day period to cease the event constituting Cause and such Cause
continues after the end of such ten (10) day period. "Cause" for termination of
consultancy shall mean only the occurrence of any of the following events:
(i) Willful misfeasance or nonfeasance of duty by
Consultant; or
(ii) Conviction of a crime of Consultant by a court
of competent jurisdiction, punishable by
imprisonment; or
(iii) Consultant's failure to perform consulting
services as reasonably requested in writing
by the Company with respect to material
matters or failure of Consultant to comply
with any material term of this Agreement.
(b) In the event the Company terminates Consultant's
engagement as set forth in this Section 8, all compensation hereunder shall
terminate, except for the payment to Consultant of such portion of Consultant's
compensation payable under Section 3 as is accrued and unpaid during the period
prior to termination.
Section 10. Confidentiality. Except as may be required by law,
Consultant will not, during the term of this Agreement, use directly or
indirectly, for his own account or for the account of any person, or disclose to
any person, the Company's proprietary information disclosed or entrusted to him
or developed or generated by him in the performance of his duties hereunder,
including but not limited to information relating to the Company's
organizational structure, operations, business plans, technical projects,
pricing data, production costs, research data or results, inventions, trade
secrets, customer lists or other work product developed by or for the Company
whether on the premises of the Company or elsewhere. The provisions of this
Section 9 shall not apply to any proprietary, confidential or secret information
which is, at the commencement of the term of this Agreement or at some later
date, publicly known under circumstances involving no breach of this Agreement
or is lawfully and in good faith made available to Consultant without
restrictions as to disclosure by a third party.
4
<PAGE>
Section 11. Indemnification. The Company agrees to defend and shall
indemnify and hold Consultant harmless from any and all liability, costs and
expenses which may be assessed against Consultant by reason of the performance
of his responsibilities and duties under the terms of this Agreement.
Section 12. Representations and Warranties of Consultant. Consultant
represents and warrants that the entering into by Consultant of this Agreement
and the performance by Consultant hereunder will not conflict with, violate or
constitute a breach of, or require any consent or approval under, any agreement,
license, arrangement or understanding, whether written or oral, or any law,
judgment, decree, order, rule or regulation to which Consultant is a party or by
which he is bound.
Section 13. Representations and Warranties of the Company. The Company
represents and warrants that:
(a) The Company has all necessary power and authority to
execute and deliver, and to perform all of its obligations under, this
Agreement. This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms.
(b) The entering into by the Company of this Agreement and the
performance by the Company hereunder will not conflict with, violate or
constitute a breach of, or require any consent or approval under, the terms of
its certificate of incorporation or by-laws, or any agreement, license,
arrangement or understanding, whether written or oral, or any law, judgment,
decree, order, rule or regulation to which the Company is a party or by which it
is bound.
Section 14. Severability. If any provision of this Agreement is invalid
and unenforceable in any jurisdiction, then, to the fullest extent permitted by
law: (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction; and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
Section 15. Entire Agreement. This Agreement contains the entire
understanding and agreement between the Company (and its subsidiaries and
affiliates) and Consultant with respect to the subject matter hereof and cannot
be amended, modified or supplemented in any respect, except by subsequent
written agreement entered into by both parties.
5
<PAGE>
Section 16. Successors. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, including any
person, partnership or corporation which may acquire all or substantially all of
the Company's assets and business, or with or into which the Company may be
consolidated or merged, and this provision shall apply in the event of any
subsequent merger, consolidation or transfer. In every respect, this Agreement
shall inure to the benefit of and be binding upon Consultant and his heirs,
executors and personal representatives and, being personal in nature, shall not
be assignable by Consultant.
Section 17. Effect of Waiver. The waiver by either party of a breach of
any provision of this Agreement shall not operate as or be construed as a waiver
of any subsequent breach.
Section 18. Notices. Any notice, request, demand or other communication
in connection with this Agreement must be in writing and shall be deemed to have
been given and received five (5) days after a certified or registered letter
containing such notice, properly addressed with postage prepaid, is deposited in
the United States mail; and if given otherwise than by registered or by
certified mail, it shall not be deemed to have been given until actually
delivered to and received by the party to whom it is addressed.
A. Notice to the Company shall be given at its principal
mailing address, which at the time of execution of this Agreement is 511 Ocean
Avenue, Massapequa, New York 11758, Attention: President, or at such other
address as it may designate, with a copy to Pryor, Cashman, Sherman & Flynn, 410
Park Avenue, New York, New York 10022, Attention: Eric M. Hellige, Esq.
B. Notice to Consultant shall be given at his home address,
which at the time of execution of this Agreement is 68 Beaumont Drive,
Plainview, New York 11803, or at such other address as he may designate.
Section 19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 20. Survival. Each of the terms and provisions of this
Agreement which are expressly or impliedly so intended shall survive the
termination of this Agreement.
Section 21. Applicable Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in such state.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first stated above.
ROBOCOM SYSTEMS INC.
By: /s/ Irwin Balaban
--------------------------------------
IRWIN BALABAN
President
/s/ Herbert Goldman
--------------------------------------
HERBERT GOLDMAN
7
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 15, 1997, by and between Robocom
Systems Inc., a New York corporation (the "Company"), and Lawrence B. Klein (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee as Executive Vice
President - Marketing and Sales and wishes to acquire and be assured of
Employee's continued services on the terms and conditions hereinafter set forth;
WHEREAS, the Employee desires to be employed by the Company as
Executive Vice President - Marketing and Sales and to perform and to serve the
Company on the terms and conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the mutual terms, covenants,
agreements and conditions hereinafter set forth, the Company and the Employee
hereby agree as follows:
1. Employment. The Company hereby employs the Employee to serve as a
full time employee of the Company, and the Employee hereby accepts such
employment with the Company, for the period set forth in Section 2 hereof. The
Employee's principal place of employment shall be at the Company's offices in
Massapequa, New York, or at such other location as shall be mutually acceptable
to the Employee and the Company.
2. Term. Unless earlier terminated as provided in this Agreement, the
term of the Employee's employment under this Agreement shall be for a period
beginning on the date hereof and ending on May 15, 2000 (such period or, if the
Employee's employment hereunder is earlier terminated, such shorter period,
being hereinafter called the "Employment Term").
3. Duties and Authority.
(a) Duties. The Employee shall be employed as Executive Vice
President - Marketing and Sales of the Company, shall faithfully and competently
perform such duties at such times and places and in such manner as the Board of
Directors of the Company may from time to time reasonably direct or such other
duties appropriate to a senior executive managerial position as the Board of
Directors shall from time to time determine. Except as otherwise may be approved
in advance by the Board of Directors of the Company, and except during vacation
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<PAGE>
periods and reasonable periods of absence due to sickness, personal injury or
other disability, the Employee shall devote Employee's full time throughout the
Employment Term to the services required of Employee hereunder. Except as
otherwise provided in Section 3(d) below, the Employee shall render Employee's
services exclusively to the Company during the Employment Term and shall use
Employee's best efforts, judgment and energy to improve and advance the business
and interests of the Company in a manner consistent with the duties of
Employee's position.
(b) Authority. The Employee shall have all the usual and necessary
authority, duties and responsibilities of an Executive Vice President -
Marketing and Sales, in the operation of the Company's business, including but
not limited to responsibility for administrative, marketing and business
development matters. The Company shall not reduce or remove any perquisites,
emoluments of office and title or benefits enjoyed by the Employee on the date
hereof.
(c) Board Membership. The Company will use its best efforts to cause
the Board of Directors to nominate the Employee for re-election as a management
nominee of the Board of Directors of the Company, and to cause the Employee to
be elected a member of any executive or management committee of the Board, as
long as Employee is employed by the Company.
(d) Outside Activities. The Company agrees that the Employee has
various investments and business interests which he may pursue if such pursuits
do not materially interfere with his duties hereunder. Further, provided such
activities are not in conflict or in competition with the Company's interests,
and the Company's trade secrets are not jeopardized in any manner, and the time
and energy the Employee devotes to such activities do not significantly impair
his ability to act satisfactorily as Employer's Executive Vice President
Marketing and Sales, the Employee shall be permitted to act in such other
capacities outside his employment with the Company as may be agreed from time to
time between the Board of Directors and the Employee. It is expressly agreed
that the Employee may retain his ownership interest in, and may continue to
pursue, consistent with past practices, his management responsibilities with
respect to, Robocom Properties, Inc.
4. Salary and Stock Options.
(a) Salary. In consideration for the services of the Employee
rendered to the Company hereunder, the Company shall pay the Employee a base
salary at an annual rate of $195,000 during the Employment Term, payable in
regular intervals in accordance with the Company's payroll practices. The
Employee's base salary shall be increased by 10% (or such greater amount as the
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<PAGE>
Board of Directors or a compensation committee of the Board shall determine) on
each November 30 during the Employment Term, commencing on November 30, 1998.
(b) Stock Options. Upon the execution by the Company of an
underwriting agreement in connection with a firm commitment underwritten public
offering of the common stock, par value $0.01 per share, of the Company (the
"Common Stock"), on or prior to September 30, 1997, the Company shall grant to
the Employee, pursuant to and subject to the terms of the 1997 Stock Option and
Long-Term Incentive Compensation Plan, incentive stock options to purchase
45,000 shares of Common Stock at an exercise price equal to 110% of the price
per share at which the Common Stock is sold to the public in such public
offering. Such options shall vest on the first anniversary of the date of grant
and shall expire on the fifth anniversary of the date of grant.
(c) Withholding, Etc. The payment of any amounts hereunder shall be
subject to income tax, social security and other applicable withholdings, as
well as such deductions as may be required under the Company's employee benefit
plans.
5. Benefits.
(a) During the Employment Term, the Employee shall be:
(i) eligible to participate in all employee fringe benefits and
any pension and/or profit sharing plans that may be provided by the Company for
its key executive employees in accordance with the provisions of any such plans,
as the same may be in effect on and after the date hereof;
(ii) eligible to participate in any medical and health plans or
other employee welfare benefit plans that may be provided by the Company for its
key executive employees in accordance with the provisions of any such plans, as
the same may be in effect on and after the date hereof;
(iii) entitled to annual paid vacation in accordance with the
Company policy that may be applicable on and after the date hereof to key
executive employees;
(iv) entitled to sick leave, sick pay and disability benefits in
accordance with any Company policy that may be applicable on and after the date
hereof to key executive employees; and
(v) entitled to reimbursement for all reasonable and necessary
out-of-pocket business expenses incurred by the Employee in the performance of
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<PAGE>
Employee's duties hereunder in accordance with the Company's policies applicable
(on and after the date hereof) thereto.
(b) The Company acknowledges and agrees that, to fulfill his duties
hereunder, the Employee will need, and the Company will provide the Employee
with, the use of a late model, full size automobile of Employee's choice for
business use at the headquarters of the Company in Massapequa, New York, at no
expense to Employee, and to pay all costs attributable to that automobile,
including leasing fees and the costs of repair, servicing, insurance, fuel and
oil.
6. Inventions and Confidential Information. The Employee hereby
covenants, agrees and acknowledges as follows:
(a) The Company is engaged in a continuous program of research,
design, development, production, marketing and servicing with respect to its
business.
(b) The Employee's employment hereunder creates a relationship of
confidence and trust between the Employee and the Company with respect to
certain information pertaining to the business of the Company and its Affiliates
(as hereinafter defined) or pertaining to the business of any client or customer
of the Company or its Affiliates which may be made known to the Employee by the
Company or any of its Affiliates or by any client or customer of the Company or
any of its Affiliates or learned by the Employee during the period of Employee's
employment by the Company.
(c) The Company possesses and will continue to possess information
that has been created, discovered or developed by, or otherwise become known to
it (including, without limitation, information created, discovered or developed
by, or made known to, the Employee during the period of Employee's employment or
arising out of Employee's employment) or in which property rights have been or
may be assigned or otherwise conveyed to the Company, which information has
commercial value in the business in which the Company is engaged and is treated
by the Company as confidential.
(d) Any and all inventions, products, discoveries, improvements,
processes, manufacturing, marketing and services methods or techniques,
formulae, designs, styles, specifications, data bases, computer programs
(whether in source code or object code), know-how, strategies and data, whether
or not patentable or registrable under copyright or similar statutes, made,
developed or created by the Employee (whether at the request or suggestion of
the Company, any of its Affiliates, or otherwise, whether alone or in
conjunction with others, and whether during regular hours of work or otherwise)
- 4 -
<PAGE>
during the period of Employee's employment by the Company which may pertain to
the business, products, or processes of the Company or any of its Affiliates
(collectively hereinafter referred to as "Inventions"), will be promptly and
fully disclosed by the Employee to an appropriate executive officer of the
Company (other than the Employee) without any additional compensation therefor,
all papers, drawings, models, data, documents and other material pertaining to
or in any way relating to any Inventions made, developed or created by Employee
as aforesaid. For the purposes of this Agreement, the term "Affiliate" or
"Affiliates" shall mean any person, corporation or other entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company. For the purposes of this definition, "control" when
used with respect to any person, corporation or other entity means the power to
direct the management and policies of such person or entity, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
(e) The Employee will keep confidential and will hold for the
Company's sole benefit any Invention which is to be the exclusive property of
the Company under this Section 6 for which no patent, copyright, trademark or
other right or protection is issued.
(f) The Employee also agrees that the Employee will not without the
prior approval of the Board of Directors of the Company (i) use for Employee's
benefit or disclose at any time during Employee's employment by the Company, or
thereafter, except to the extent required by the performance by Employee of
Employee's duties as an employee of the Company, any information obtained or
developed by Employee while in the employ of the Company with respect to any
Inventions or with respect to any customers, clients, suppliers, products,
employees, financial affairs, or methods of design, distribution, marketing,
service, procurement or manufacture of the Company or any of its Affiliates, or
any confidential matter, except information which at the time is generally known
to the public other than as a result of disclosure by Employee not permitted
hereunder, or (ii) take with Employee upon leaving the employ of the Company any
document or paper relating to any of the foregoing or any physical property of
the Company or any of its Affiliates.
(g) The Employee acknowledges and agrees that a remedy at law for
any breach or threatened breach of the provisions of this Section 6 would be
inadequate and, therefore, agrees that the Company and its Affiliates shall be
entitled to injunctive relief in addition to any other available rights and
remedies in case of any such breach or threatened breach; provided, however,
that nothing contained herein shall be construed as prohibiting the Company or
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<PAGE>
any of its Affiliates from pursuing any other rights and remedies available for
any such breach or threatened breach.
(h) The Employee agrees that upon termination of Employee's
employment by the Company for any reason, the Employee shall forthwith return to
the Company all documents and other property in Employee's possession belonging
to the Company or any of its Affiliates.
(i) Without limiting the generality of Section 9 hereof, the
Employee hereby expressly agrees that the foregoing provisions of this Section 6
shall be binding upon the Employee's heirs, successors and legal
representatives.
7. Termination. (a) The Employee's employment hereunder shall be
terminated upon the occurrence of any of the following:
(i) death of the Employee;
(ii) termination of the Employee's employment hereunder by the
Employee at any time for any reason whatsoever (including, without limitation,
resignation or retirement) other than for "good reason" as contemplated by
clause (v)(B) below;
(iii) termination of the Employee's employment hereunder by the
Company because of the Employee's inability to perform Employee's duties on
account of disability or incapacity for a period of one hundred eighty (180) or
more days, whether or not consecutive, occurring within any period of twelve
(12) consecutive months;
(iv) termination of the Employee's employment hereunder by the
Company at any time for "cause" (as hereinafter defined), such termination to
take effect immediately upon written notice from the Company to the Employee;
and
(v) termination of the Employee's employment hereunder (A) by
the Company at any time, other than termination by reason of disability or
incapacity as contemplated by clause (iii) above or termination by the Company
for "cause" as contemplated by clause (iv) above and (B) by the Employee for
"good reason" (as hereinafter defined).
The following actions, failures or events shall constitute "cause"
for termination within the meaning of clause (iv) above: (1) conviction of
having committed a felony, (2) acts of dishonesty or moral turpitude which are
materially detrimental to the Company and/or its Affiliates, (3) failure by the
Employee to obey the reasonable and lawful orders of the Board of Directors of
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<PAGE>
the Company or (4) negligence by the Employee in the performance of, or willful
disregard by the Employee of, Employee's obligations hereunder.
The following actions, failures or events shall constitute "good
reason" within the meaning of clause (v)(B) above: (1) a material breach by the
Company of its obligations under this Agreement, (2) a material diminution of
the Employee's responsibilities or authority hereunder or (3) the failure of the
shareholders of the Company to elect the Employee as a director of the Company
or the removal of the Employee from the Board of Directors.
(b) In the event that the Company has terminated the Employee's
employment without cause, then (i) this Agreement shall nonetheless be deemed
terminated, except that the Company shall pay the Employee his base salary under
Section 4(a) and his reimbursement of automobile expenses pursuant to Section
5(b) through the term of this Agreement, (ii) the Employee shall be entitled to
the continuation of medical and health benefits through the term of this
Agreement comparable to those benefits furnished by the Company to the Employee
on the date of termination and (iii) the Employee shall not be required to
mitigate his damages by finding alternative employment or otherwise. The Company
and the Employee agree that the payments made pursuant to this paragraph (b)
shall be paid to the Employee as consideration for the non-competition
provisions set forth in Section 8(a)(x) hereof and that if the Employee is no
longer employed by the Company and the non-competition provisions set forth in
Section 8(a)(x) extend beyond the term of this Agreement, the payments made
pursuant to this paragraph (b) shall be paid to the Employee through the date of
termination of his agreement not to compete.
(c) Notwithstanding anything to the contrary expressed or implied
herein, except as required by applicable law and except as set forth in
paragraph (b) above, the Company (and its Affiliates) shall not be obligated to
make any payments to the Employee or on Employee's behalf of whatever kind or
nature by reason of the Employee's cessation of employment (including, without
limitation, by reason of termination of the Employee's employment by the Company
for "cause"), other than (i) such amounts, if any, of Employee's salary and
bonus as shall have accrued and remained unpaid as of the date of said cessation
and (ii) such other amounts which may be then otherwise payable to the Employee
from the Company's benefits plans or reimbursement policies, if any.
(d) No interest shall accrue on or be paid with respect to any
portion of any payments hereunder.
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<PAGE>
8. Non-Competition. (a) The term "Non-Compete Term" shall mean the
period during which Employee is employed hereunder and (x) in the event
Employee's employment is terminated by the Company for any reason other than
"cause" or by Employee for "good reason," the one-year period following such
termination, (y) in the event Employee's employment is terminated by the Company
for "cause" or by Employee for any reason other than "good reason," the two-year
period following such termination. During the Non-Compete Term:
(i) the Employee will not make any statement or perform any act
intended to advance an interest of any existing or prospective competitor of the
Company or any of its Affiliates in any way that will or may injure an interest
of the Company or any of its Affiliates in its relationship and dealings with
existing or potential customers or clients, or solicit or encourage any other
employee of the Company or any of its Affiliates to do any act that is disloyal
to the Company or any of its Affiliates or inconsistent with the interest of the
Company or any of its Affiliate's interests or in violation of any provision of
this Agreement;
(ii) the Employee will not discuss with any existing or
potential customers or clients of the Company or any of its Affiliates the
present or future availability of services or products of a business, if the
Employee has or expects to acquire a proprietary interest in such business or is
or expects to be an employee, officer or director of such business, where such
services or products are competitive with services or products which the Company
or any of its Affiliates provides;
(iii) the Employee will not directly or indirectly (as a
director, stockholder, officer, employee, manager, consultant, independent
contractor, advisor or otherwise) engage in competition with, or own any
interest in, perform any services for, participate in or be connected with (i)
any business or organization which engages in competition with the Company or
any of its Affiliates in any geographical area where any business is presently
carried on by the Company or any of its Affiliates, or (ii) any business or
organization which engages in competition with the Company or any of its
Affiliates in any geographical area where any business shall be hereafter,
during the period of the Employee's employment by the Company, carried on by the
Company or any of its Affiliates, if such business is then being carried on by
the Company or any of its Affiliates in such geographical area; and
(iv) the Employee will not directly or indirectly solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of the Company or any of its Affiliates;
and
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<PAGE>
provided, however, that the provisions of this Section 8(a) shall not be deemed
to prohibit the Employee's ownership of not more than five percent (5%) of the
total shares of all classes of stock outstanding of any publicly held company.
(b) (i) For purposes of this Section 8, a person or entity
(including, without limitation, the Employee) shall be deemed to be a competitor
of the Company or any of its Affiliates, or a person or entity (including,
without limitation, the Employee) shall be deemed to be engaging in competition
with the Company or any of its Affiliates, only if such person or entity in any
way conducts, operates, carries out or engages in the design, development,
marketing, installation or support of warehouse management systems or other
computer integrated or turnkey warehouse management systems in the United States
or such other business or businesses as the Company may in the future conduct in
such geographical area or areas as such business or businesses are conducted by
the Company.
(ii) The Employee further agrees that the limitations set forth
in this Section 8 (including, without limitation, any time or territorial
limitations) are reasonable and properly required for the adequate protection of
the businesses of the Company and its Affiliates. It is understood and agreed
that the covenants made by the Employee in this Section 8 (and in Section 6
hereof) shall survive the expiration or termination of this Agreement.
(iii) The Employee acknowledges and agrees that a remedy at law
for any breach or threatened breach of the provisions of this Section 8 would be
inadequate and, therefore, agrees that the Company and any of its Affiliates
shall be entitled to injunctive relief in addition to any other available rights
and remedies in cases of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company or any of its Affiliates from pursuing any other rights and remedies
available for any such breach or threatened breach.
9. Non-Assignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee, Employee's beneficiaries, or
legal representatives without the Company's prior written consent; provided,
however, that nothing in this Section 9 shall preclude the Employee from
designating a beneficiary to receive any benefit payable hereunder upon
Employee's death or incapacity.
10. Binding Effect. Without limiting or diminishing the effect of
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
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<PAGE>
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Employee,
at Employee's home address set forth on the signature page hereto, or to such
other address or addresses as either party shall have designated in writing to
the other party hereto.
12. Severability. The Employee agrees that in the event that any court
of competent jurisdiction shall finally hold that any provision of Section 6 or
8 hereof is void or constitutes an unreasonable restriction against the
Employee, such provision shall not be rendered void but shall apply with respect
to such extent as such court may judicially determine constitutes a reasonable
restriction under the circumstances. If any part of this Agreement other than
Section 6 or 8 is held by a court of competent jurisdiction to be invalid,
illegible or incapable of being enforced in whole or in part by reason of any
rule of law or public policy, such part shall be deemed to be severed from the
remainder of this Agreement for the purpose only of the particular legal
proceedings in question and all other covenants and provisions of this Agreement
shall in every other respect continue in full force and effect and no covenant
or provision shall be deemed dependent upon any other covenant or provision.
13. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
14. Entire Agreement; Modifications. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
15. Relevant Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of New York without regard to the
conflicts of law principles thereof.
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<PAGE>
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature Page to Follow]
IN WITNESS WHEREOF, the Company and the Employee have duly executed and
delivered this Agreement as of the day and year first above written.
ROBOCOM SYSTEMS INC.
By: /s/ Irwin Balaban
-------------------------------------
Name: Irwin Balaban
Title: President
EMPLOYEE:
/s/ Lawrence B. Klein
------------------------------------------
LAWRENCE B. KLEIN
Address: 511 Ocean Avenue
----------------------------------
Massapequa, NY 11758
----------------------------------
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 15, 1997, by and between Robocom
Systems Inc., a New York corporation (the "Company"), and Irwin Balaban (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee as President and
Chief Executive Officer and wishes to acquire and be assured of Employee's
continued services on the terms and conditions hereinafter set forth;
WHEREAS, the Employee desires to be employed by the Company as
President and Chief Executive Officer and to perform and to serve the Company on
the terms and conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the mutual terms, covenants,
agreements and conditions hereinafter set forth, the Company and the Employee
hereby agree as follows:
1. Employment. The Company hereby employs the Employee to serve as a
full time employee of the Company, and the Employee hereby accepts such
employment with the Company, for the period set forth in Section 2 hereof. The
Employee's principal place of employment shall be at the Company's offices in
Massapequa, New York, or at such other location as shall be mutually acceptable
to the Employee and the Company.
2. Term. Unless earlier terminated as provided in this Agreement, the
term of the Employee's employment under this Agreement shall be for a period
beginning on the date hereof and ending on May 15, 2000 (such period or, if the
Employee's employment hereunder is earlier terminated, such shorter period,
being hereinafter called the "Employment Term").
3. Duties and Authority.
(a) Duties. The Employee shall be employed as President and Chief
Executive Officer of the Company, shall faithfully and competently perform such
duties at such times and places and in such manner as the Board of Directors of
the Company may from time to time reasonably direct or such other duties
appropriate to a senior executive managerial position as the Board of Directors
shall from time to time determine. Except as otherwise may be approved in
advance by the Board of Directors of the Company, and except during vacation
periods and reasonable periods of absence due to sickness, personal injury or
other disability, the Employee shall devote Employee's full time throughout the
<PAGE>
Employment Term to the services required of Employee hereunder. Except as
otherwise provided in Section 3(d) below, the Employee shall render Employee's
services exclusively to the Company during the Employment Term and shall use
Employee's best efforts, judgment and energy to improve and advance the business
and interests of the Company in a manner consistent with the duties of
Employee's position.
(b) Authority. The Employee shall have all the usual and necessary
authority, duties and responsibilities of a President and Chief Executive
Officer, in the operation of the Company's business, including but not limited
to responsibility for administrative, operations, marketing, production and
business development matters. The Company shall not reduce or remove any
perquisites, emoluments of office and title or benefits enjoyed by the Employee
on the date hereof.
(c) Board Membership. The Company will use its best efforts to cause
the Board of Directors to nominate the Employee for re-election as a management
nominee of the Board of Directors of the Company, and to cause the Employee to
be elected Chairman of the Board of Directors and a member of any executive or
management committee of the Board, as long as Employee is employed by the
Company. While the Employee's ability to hold the office of Chairman of the
Board is necessarily subject to Employee's election to the Board of Directors of
the Company and the provisions of the By-laws of the Company, if, by action of
the Board of Directors or the shareholders, the Employee should no longer hold
the office of Chairman of the Board (except for any termination pursuant to
Section 7(a)(iv) below), the Employee will be entitled to treat such change as a
termination for "good reason" under the 7(a) below.
(d) Outside Activities. The Company agrees that the Employee has
various investments and business interests which he may pursue if such pursuits
do not materially interfere with his duties hereunder. Further, provided such
activities are not in conflict or in competition with the Company's interests,
and the Company's trade secrets are not jeopardized in any manner, and the time
and energy the Employee devotes to such activities do not significantly impair
his ability to act satisfactorily as Employer's President and Chief Executive
Officer, the Employee shall be permitted to act in such other capacities outside
his employment with the Company as may be agreed from time to time between the
Board of Directors and the Employee. It is expressly agreed that the Employee
may retain his ownership interest in, and may continue to pursue, consistent
with past practices, his management responsibilities with respect to, Robocom
Properties, Inc.
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<PAGE>
4. Salary and Stock Options.
(a) Salary. In consideration for the services of the Employee
rendered to the Company hereunder, the Company shall pay the Employee a base
salary at an annual rate of $230,000 during the Employment Term, payable in
regular intervals in accordance with the Company's payroll practices. The
Employee's base salary shall be increased by 10% (or such greater amount as the
Board of Directors or a compensation committee of the Board shall determine) on
each November 30 during the Employment Term, commencing on November 30, 1998.
(b) Stock Options. Upon the execution by the Company of an
underwriting agreement in connection with a firm commitment underwritten public
offering of the common stock, par value $0.01 per share, of the Company (the
"Common Stock"), on or prior to September 30, 1997, the Company shall grant to
the Employee, pursuant to and subject to the terms of the Company's 1997 Stock
Option and Long-Term Incentive Compensation Plan, incentive stock options to
purchase 50,000 of shares Common Stock at an exercise price equal to 110% of the
price per share at which the Common Stock is sold to the public in such public
offering. Such options shall vest on the first anniversary of the date of grant
and shall expire on the fifth anniversary of the date of grant.
(c) Withholding, Etc. The payment of any amounts hereunder shall be
subject to income tax, social security and other applicable withholdings, as
well as such deductions as may be required under the Company's employee benefit
plans.
5. Benefits.
(a) During the Employment Term, the Employee shall be:
(i) eligible to participate in all employee fringe benefits and
any pension and/or profit sharing plans that may be provided by the Company for
its key executive employees in accordance with the provisions of any such plans,
as the same may be in effect on and after the date hereof;
(ii) eligible to participate in any medical and health plans or
other employee welfare benefit plans that may be provided by the Company for its
key executive employees in accordance with the provisions of any such plans, as
the same may be in effect on and after the date hereof;
(iii) entitled to annual paid vacation in accordance with the
Company policy that may be applicable on and after the date hereof to key
executive employees;
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<PAGE>
(iv) entitled to sick leave, sick pay and disability benefits in
accordance with any Company policy that may be applicable on and after the date
hereof to key executive employees; and
(v) entitled to reimbursement for all reasonable and necessary
out-of-pocket business expenses incurred by the Employee in the performance of
Employee's duties hereunder in accordance with the Company's policies applicable
(on and after the date hereof) thereto.
(b) The Company acknowledges and agrees that, to fulfill his duties
hereunder, the Employee will need, and the Company will provide the Employee
with, the use of a late model, full size automobile of Employee's choice for
business use at the headquarters of the Company in Massapequa, New York, at no
expense to Employee, and to pay all costs attributable to that automobile,
including leasing fees and the costs of repair, servicing, insurance, fuel and
oil.
6. Inventions and Confidential Information. The Employee hereby
covenants, agrees and acknowledges as follows:
(a) The Company is engaged in a continuous program of research,
design, development, production, marketing and servicing with respect to its
business.
(b) The Employee's employment hereunder creates a relationship of
confidence and trust between the Employee and the Company with respect to
certain information pertaining to the business of the Company and its Affiliates
(as hereinafter defined) or pertaining to the business of any client or customer
of the Company or its Affiliates which may be made known to the Employee by the
Company or any of its Affiliates or by any client or customer of the Company or
any of its Affiliates or learned by the Employee during the period of Employee's
employment by the Company.
(c) The Company possesses and will continue to possess information
that has been created, discovered or developed by, or otherwise become known to
it (including, without limitation, information created, discovered or developed
by, or made known to, the Employee during the period of Employee's employment or
arising out of Employee's employment) or in which property rights have been or
may be assigned or otherwise conveyed to the Company, which information has
commercial value in the business in which the Company is engaged and is treated
by the Company as confidential.
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<PAGE>
(d) Any and all inventions, products, discoveries, improvements,
processes, manufacturing, marketing and services methods or techniques,
formulae, designs, styles, specifications, data bases, computer programs
(whether in source code or object code), know-how, strategies and data, whether
or not patentable or registrable under copyright or similar statutes, made,
developed or created by the Employee (whether at the request or suggestion of
the Company, any of its Affiliates, or otherwise, whether alone or in
conjunction with others, and whether during regular hours of work or otherwise)
during the period of Employee's employment by the Company which may pertain to
the business, products, or processes of the Company or any of its Affiliates
(collectively hereinafter referred to as "Inventions"), will be promptly and
fully disclosed by the Employee to an appropriate executive officer of the
Company (other than the Employee) without any additional compensation therefor,
all papers, drawings, models, data, documents and other material pertaining to
or in any way relating to any Inventions made, developed or created by Employee
as aforesaid. For the purposes of this Agreement, the term "Affiliate" or
"Affiliates" shall mean any person, corporation or other entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company. For the purposes of this definition, "control" when
used with respect to any person, corporation or other entity means the power to
direct the management and policies of such person or entity, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
(e) The Employee will keep confidential and will hold for the
Company's sole benefit any Invention which is to be the exclusive property of
the Company under this Section 6 for which no patent, copyright, trademark or
other right or protection is issued.
(f) The Employee also agrees that the Employee will not without the
prior approval of the Board of Directors of the Company (i) use for Employee's
benefit or disclose at any time during Employee's employment by the Company, or
thereafter, except to the extent required by the performance by Employee of
Employee's duties as an employee of the Company, any information obtained or
developed by Employee while in the employ of the Company with respect to any
Inventions or with respect to any customers, clients, suppliers, products,
employees, financial affairs, or methods of design, distribution, marketing,
service, procurement or manufacture of the Company or any of its Affiliates, or
any confidential matter, except information which at the time is generally known
to the public other than as a result of disclosure by Employee not permitted
hereunder, or (ii) take with Employee upon leaving the employ of the Company any
document or paper relating to any of the foregoing or any physical property of
the Company or any of its Affiliates.
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<PAGE>
(g) The Employee acknowledges and agrees that a remedy at law for
any breach or threatened breach of the provisions of this Section 6 would be
inadequate and, therefore, agrees that the Company and its Affiliates shall be
entitled to injunctive relief in addition to any other available rights and
remedies in case of any such breach or threatened breach; provided, however,
that nothing contained herein shall be construed as prohibiting the Company or
any of its Affiliates from pursuing any other rights and remedies available for
any such breach or threatened breach.
(h) The Employee agrees that upon termination of Employee's
employment by the Company for any reason, the Employee shall forthwith return to
the Company all documents and other property in Employee's possession belonging
to the Company or any of its Affiliates.
(i) Without limiting the generality of Section 9 hereof, the
Employee hereby expressly agrees that the foregoing provisions of this Section 6
shall be binding upon the Employee's heirs, successors and legal
representatives.
7. Termination. (a) The Employee's employment hereunder shall be
terminated upon the occurrence of any of the following:
(i) death of the Employee;
(ii) termination of the Employee's employment hereunder by the
Employee at any time for any reason whatsoever (including, without limitation,
resignation or retirement) other than for "good reason" as contemplated by
clause (v)(B) below;
(iii) termination of the Employee's employment hereunder by the
Company because of the Employee's inability to perform Employee's duties on
account of disability or incapacity for a period of one hundred eighty (180) or
more days, whether or not consecutive, occurring within any period of twelve
(12) consecutive months;
(iv) termination of the Employee's employment hereunder by the
Company at any time for "cause" (as hereinafter defined), such termination to
take effect immediately upon written notice from the Company to the Employee;
and
(v) termination of the Employee's employment hereunder (A) by
the Company at any time, other than termination by reason of disability or
incapacity as contemplated by clause (iii) above or termination by the Company
for "cause" as contemplated by clause (iv) above and (B) by the Employee for
"good reason" (as hereinafter defined).
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<PAGE>
The following actions, failures or events shall constitute "cause"
for termination within the meaning of clause (iv) above: (1) conviction of
having committed a felony, (2) acts of dishonesty or moral turpitude which are
materially detrimental to the Company and/or its Affiliates, (3) failure by the
Employee to obey the reasonable and lawful orders of the Board of Directors of
the Company or (4) negligence by the Employee in the performance of, or willful
disregard by the Employee of, Employee's obligations hereunder.
The following actions, failures or events shall constitute "good
reason" within the meaning of clause (v)(B) above: (1) a material breach by the
Company of its obligations under this Agreement, (2) a material diminution of
the Employee's responsibilities or authority hereunder or (3) the failure of the
shareholders of the Company to elect the Employee as a director of the Company,
or the failure of the Board of Directors to elect and continue the Employee as
the Chairman of the Board, or the removal of the Employee from the Board of
Directors.
(b) In the event that the Company has terminated the Employee's
employment without cause, then (i) this Agreement shall nonetheless be deemed
terminated, except that the Company shall pay the Employee his base salary under
Section 4(a) and his reimbursement of automobile expenses pursuant to Section
5(b) through the term of this Agreement, (ii) the Employee shall be entitled to
the continuation of medical and health benefits through the term of this
Agreement comparable to those benefits furnished by the Company to the Employee
on the date of termination and (iii) the Employee shall not be required to
mitigate his damages by finding alternative employment or otherwise. The Company
and the Employee agree that the payments made pursuant to this paragraph (b)
shall be paid to the Employee as consideration for the non-competition
provisions set forth in Section 8(a)(x) hereof and that if the Employee is no
longer employed by the Company and the non-competition provisions set forth in
Section 8(a)(x) extend beyond the term of this Agreement, the payments made
pursuant to this paragraph (b) shall be paid to the Employee through the date of
termination of his agreement not to compete.
(c) Notwithstanding anything to the contrary expressed or implied
herein, except as required by applicable law and except as set forth in
paragraph (b) above, the Company (and its Affiliates) shall not be obligated to
make any payments to the Employee or on Employee's behalf of whatever kind or
nature by reason of the Employee's cessation of employment (including, without
limitation, by reason of termination of the Employee's employment by the Company
for "cause"), other than (i) such amounts, if any, of Employee's salary and
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<PAGE>
bonus as shall have accrued and remained unpaid as of the date of said cessation
and (ii) such other amounts which may be then otherwise payable to the Employee
from the Company's benefits plans or reimbursement policies, if any.
(d) No interest shall accrue on or be paid with respect to any
portion of any payments hereunder.
8. Non-Competition. (a) The term "Non-Compete Term" shall mean the
period during which Employee is employed hereunder and (x) in the event
Employee's employment is terminated by the Company for any reason other than
"cause" or by Employee for "good reason," the one-year period following such
termination, (y) in the event Employee's employment is terminated by the Company
for "cause" or by Employee for any reason other than "good reason," the two-year
period following such termination. During the Non-Compete Term:
(i) the Employee will not make any statement or perform any act
intended to advance an interest of any existing or prospective competitor of the
Company or any of its Affiliates in any way that will or may injure an interest
of the Company or any of its Affiliates in its relationship and dealings with
existing or potential customers or clients, or solicit or encourage any other
employee of the Company or any of its Affiliates to do any act that is disloyal
to the Company or any of its Affiliates or inconsistent with the interest of the
Company or any of its Affiliate's interests or in violation of any provision of
this Agreement;
(ii) the Employee will not discuss with any existing or
potential customers or clients of the Company or any of its Affiliates the
present or future availability of services or products of a business, if the
Employee has or expects to acquire a proprietary interest in such business or is
or expects to be an employee, officer or director of such business, where such
services or products are competitive with services or products which the Company
or any of its Affiliates provides;
(iii) the Employee will not directly or indirectly (as a
director, stockholder, officer, employee, manager, consultant, independent
contractor, advisor or otherwise) engage in competition with, or own any
interest in, perform any services for, participate in or be connected with (i)
any business or organization which engages in competition with the Company or
any of its Affiliates in any geographical area where any business is presently
carried on by the Company or any of its Affiliates, or (ii) any business or
organization which engages in competition with the Company or any of its
Affiliates in any geographical area where any business shall be hereafter,
during the period of the Employee's employment by the Company, carried on by the
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<PAGE>
Company or any of its Affiliates, if such business is then being carried on by
the Company or any of its Affiliates in such geographical area; and
(iv) the Employee will not directly or indirectly solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of the Company or any of its Affiliates;
and
provided, however, that the provisions of this Section 8(a) shall not be deemed
to prohibit the Employee's ownership of not more than five percent (5%) of the
total shares of all classes of stock outstanding of any publicly held company.
(b) (i) For purposes of this Section 8, a person or entity
(including, without limitation, the Employee) shall be deemed to be a competitor
of the Company or any of its Affiliates, or a person or entity (including,
without limitation, the Employee) shall be deemed to be engaging in competition
with the Company or any of its Affiliates, only if such person or entity in any
way conducts, operates, carries out or engages in the design, development,
marketing, installation or support of warehouse management systems or other
computer integrated or turnkey warehouse management systems in the United States
or such other business or businesses as the Company may in the future conduct in
such geographical area or areas as such business or businesses are conducted by
the Company.
(ii) The Employee further agrees that the limitations set forth
in this Section 8 (including, without limitation, any time or territorial
limitations) are reasonable and properly required for the adequate protection of
the businesses of the Company and its Affiliates. It is understood and agreed
that the covenants made by the Employee in this Section 8 (and in Section 6
hereof) shall survive the expiration or termination of this Agreement.
(iii) The Employee acknowledges and agrees that a remedy at law
for any breach or threatened breach of the provisions of this Section 8 would be
inadequate and, therefore, agrees that the Company and any of its Affiliates
shall be entitled to injunctive relief in addition to any other available rights
and remedies in cases of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company or any of its Affiliates from pursuing any other rights and remedies
available for any such breach or threatened breach.
9. Non-Assignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee, Employee's beneficiaries, or
legal representatives without the Company's prior written consent; provided,
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<PAGE>
however, that nothing in this Section 9 shall preclude the Employee from
designating a beneficiary to receive any benefit payable hereunder upon
Employee's death or incapacity.
10. Binding Effect. Without limiting or diminishing the effect of
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Employee,
at Employee's home address set forth on the signature page hereto, or to such
other address or addresses as either party shall have designated in writing to
the other party hereto.
12. Severability. The Employee agrees that in the event that any court
of competent jurisdiction shall finally hold that any provision of Section 6 or
8 hereof is void or constitutes an unreasonable restriction against the
Employee, such provision shall not be rendered void but shall apply with respect
to such extent as such court may judicially determine constitutes a reasonable
restriction under the circumstances. If any part of this Agreement other than
Section 6 or 8 is held by a court of competent jurisdiction to be invalid,
illegible or incapable of being enforced in whole or in part by reason of any
rule of law or public policy, such part shall be deemed to be severed from the
remainder of this Agreement for the purpose only of the particular legal
proceedings in question and all other covenants and provisions of this Agreement
shall in every other respect continue in full force and effect and no covenant
or provision shall be deemed dependent upon any other covenant or provision.
13. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
14. Entire Agreement; Modifications. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
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<PAGE>
15. Relevant Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of New York without regard to the
conflicts of law principles thereof.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature Page to Follow]
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<PAGE>
IN WITNESS WHEREOF, the Company and the Employee have duly executed and
delivered this Agreement as of the day and year first above written.
ROBOCOM SYSTEMS INC.
By: /s/ Lawrence B. Klein
------------------------------------
Name: Lawrence B. Klein
Title: Executive Vice President
EMPLOYEE:
/s/ Irwin Balaban
-----------------------------------------
IRWIN BALABAN
Address: 511 Ocean Avenue
---------------------------------
Massapequa, NY 11758
---------------------------------
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<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 15, 1997, by and between Robocom
Systems Inc., a New York corporation (the "Company"), and Steven Kuhl (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee as Vice President -
Product Development and wishes to acquire and be assured of Employee's continued
services on the terms and conditions hereinafter set forth;
WHEREAS, the Employee desires to be employed by the Company as Vice
President - Product Development and to perform and to serve the Company on the
terms and conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the mutual terms, covenants, agreements
and conditions hereinafter set forth, the Company and the Employee hereby agree
as follows:
1. Employment. The Company hereby employs the Employee to serve as a
full time employee of the Company, and the Employee hereby accepts such
employment with the Company, for the period set forth in Section 2 hereof. The
Employee's principal place of employment shall be at the Company's offices in
Massapequa, New York, or at such other location as shall be mutually acceptable
to the Employee and the Company.
2. Term. Unless earlier terminated as provided in this Agreement, the
term of the Employee's employment under this Agreement shall be for a period
beginning on the date hereof and ending on May 15, 2000 (such period or, if the
Employee's employment hereunder is earlier terminated, such shorter period,
being hereinafter called the "Employment Term").
3. Duties. The Employee shall be employed as Vice President - Product
Development of the Company, shall faithfully and competently perform such duties
at such times and places and in such manner as the Board of Directors of the
Company or the President and Chief Executive Officer of the Company may from
time to time reasonably direct or such other duties appropriate to a senior
executive managerial position as the Board of Directors shall from time to time
determine. Except as otherwise may be approved in advance by the Board of
Directors of the Company, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other disability, the
Employee shall devote Employee's full time throughout the Employment Term to the
services required of Employee hereunder. The Employee shall render Employee's
services exclusively to the Company during the Employment Term and shall use
Employee's best efforts, judgment and energy to improve and advance the business
and interests of the Company in a manner consistent with the duties of
Employee's position.
<PAGE>
4. Salary and Stock Options.
(a) Salary. In consideration for the services of the Employee
rendered to the Company hereunder, the Company shall pay the Employee a base
salary at an annual rate of $120,000 during the Employment Term, payable in
regular intervals in accordance with the Company's payroll practices. The
Employee's base salary shall be increased by 10% (or such greater amount as the
Board of Directors or a compensation committee of the Board shall determine) on
each November 30 during the Employment Term, commencing on November 30, 1998.
(b) Stock Options. Upon the execution by the Company of an
underwriting agreement in connection with a firm commitment underwritten public
offering of the common stock, par value $0.01 per share, of the Company (the
"Common Stock"), on or prior to September 30, 1997, the Company shall grant to
the Employee, pursuant to and subject to the terms of the Company's 1997 Stock
Option and Long-Term Incentive Compensation Plan, incentive stock options to
purchase 30,000 shares of Common Stock at an exercise price equal to the price
per share at which the Common Stock is sold to the public in such public
offering. Such options shall vest in three equal annual installment on the
first, second and third anniversaries of the date of grant and shall expire on
the fifth anniversary of the date of grant.
(c) Withholding, Etc. The payment of any amounts hereunder
shall be subject to income tax, social security and other applicable
withholdings, as well as such deductions as may be required under the Company's
employee benefit plans.
5. Benefits.
(a) During the Employment Term, the Employee shall be:
(i) eligible to participate in all employee fringe
benefits and any pension and/or profit sharing plans that may be provided by the
Company for its key executive employees in accordance with the provisions of any
such plans, as the same may be in effect on and after the date hereof;
(ii) eligible to participate in any medical and
health plans or other employee welfare benefit plans that may be provided by the
Company for its key executive employees in accordance with the provisions of any
such plans, as the same may be in effect on and after the date hereof;
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<PAGE>
(iii) entitled to annual paid vacation in accordance
with the Company policy that may be applicable on and after the date hereof to
key executive employees;
(iv) entitled to sick leave, sick pay and disability
benefits in accordance with any Company policy that may be applicable on and
after the date hereof to key executive employees; and
(v) entitled to reimbursement for all reasonable and
necessary out-of-pocket business expenses incurred by the Employee in the
performance of Employee's duties hereunder in accordance with the Company's
policies applicable (on and after the date hereof) thereto.
(b) During the Employment Term, the Company shall reimburse
Employee for Employee's automobile lease, insurance and maintenance expenses up
to an amount equal to $600 per month.
6. Inventions and Confidential Information. The Employee hereby
covenants, agrees and acknowledges as follows:
(a) The Company is engaged in a continuous program of
research, design, development, production, marketing and servicing with respect
to its business.
(b) The Employee's employment hereunder creates a relationship
of confidence and trust between the Employee and the Company with respect to
certain information pertaining to the business of the Company and its Affiliates
(as hereinafter defined) or pertaining to the business of any client or customer
of the Company or its Affiliates which may be made known to the Employee by the
Company or any of its Affiliates or by any client or customer of the Company or
any of its Affiliates or learned by the Employee during the period of Employee's
employment by the Company.
(c) The Company possesses and will continue to possess
information that has been created, discovered or developed by, or otherwise
become known to it (including, without limitation, information created,
discovered or developed by, or made known to, the Employee during the period of
Employee's employment or arising out of Employee's employment) or in which
property rights have been or may be assigned or otherwise conveyed to the
Company, which information has commercial value in the business in which the
Company is engaged and is treated by the Company as confidential.
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<PAGE>
(d) Any and all inventions, products, discoveries,
improvements, processes, manufacturing, marketing and services methods or
techniques, formulae, designs, styles, specifications, data bases, computer
programs (whether in source code or object code), know-how, strategies and data,
whether or not patentable or registrable under copyright or similar statutes,
made, developed or created by the Employee (whether at the request or suggestion
of the Company, any of its Affiliates, or otherwise, whether alone or in
conjunction with others, and whether during regular hours of work or otherwise)
during the period of Employee's employment by the Company which may pertain to
the business, products, or processes of the Company or any of its Affiliates
(collectively hereinafter referred to as "Inventions"), will be promptly and
fully disclosed by the Employee to an appropriate executive officer of the
Company (other than the Employee) without any additional compensation therefor,
all papers, drawings, models, data, documents and other material pertaining to
or in any way relating to any Inventions made, developed or created by Employee
as aforesaid. For the purposes of this Agreement, the term "Affiliate" or
"Affiliates" shall mean any person, corporation or other entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company. For the purposes of this definition, "control" when
used with respect to any person, corporation or other entity means the power to
direct the management and policies of such person or entity, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
(e) The Employee will keep confidential and will hold for the
Company's sole benefit any Invention which is to be the exclusive property of
the Company under this Section 6 for which no patent, copyright, trademark or
other right or protection is issued.
(f) The Employee also agrees that Employee will not without
the prior written consent of the President and Chief Executive Officer or the
Executive Vice President - Marketing and Sales of the Company (i) use for
Employee's benefit or disclose at any time during Employee's employment by the
Company, or thereafter, except to the extent required by the performance by
Employee of Employee's duties as an employee of the Company, any information
obtained or developed by Employee while in the employ of the Company with
respect to any Inventions or with respect to any customers, clients, suppliers,
products, employees, financial affairs, or methods of design, distribution,
marketing, service, procurement or manufacture of the Company or any of its
Affiliates, or any confidential matter, except information which at the time is
generally known to the public other than as a result of disclosure by Employee
not permitted hereunder, or (ii) take with Employee upon leaving the employ of
the Company any document or paper relating to any of the foregoing or any
physical property of the Company or any of its Affiliates.
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<PAGE>
(g) The Employee acknowledges and agrees that a remedy at law
for any breach or threatened breach of the provisions of this Section 6 would be
inadequate and, therefore, agrees that the Company and its Affiliates shall be
entitled to injunctive relief in addition to any other available rights and
remedies in case of any such breach or threatened breach; provided, however,
that nothing contained herein shall be construed as prohibiting the Company or
any of its Affiliates from pursuing any other rights and remedies available for
any such breach or threatened breach.
(h) The Employee agrees that upon termination of Employee's
employment by the Company for any reason, the Employee shall forthwith return to
the Company all documents and other property in Employee's possession belonging
to the Company or any of its Affiliates.
(i) Without limiting the generality of Section 9 hereof, the
Employee hereby expressly agrees that the foregoing provisions of this Section 6
shall be binding upon the Employee's heirs, successors and legal
representatives.
7. Termination. (a) The Employee's employment hereunder shall be
terminated upon the occurrence of any of the following:
(i) death of the Employee;
(ii) termination of the Employee's employment
hereunder by the Employee at any time for any reason whatsoever (including,
without limitation, resignation or retirement) other than for "good reason" as
contemplated by clause (v)(B) below;
(iii) termination of the Employee's employment
hereunder by the Company because of the Employee's inability to perform
Employee's duties on account of disability or incapacity for a period of one
hundred eighty (180) or more days, whether or not consecutive, occurring within
any period of twelve (12) consecutive months;
(iv) termination of the Employee's employment
hereunder by the Company at any time for "cause" (as hereinafter defined), such
termination to take effect immediately upon written notice from the Company to
the Employee; and
(v) termination of the Employee's employment
hereunder (A) by the Company at any time, other than termination by reason of
disability or incapacity as contemplated by clause (iii) above or termination by
the Company for "cause" as contemplated by clause (iv) above and (B) by the
Employee for "good reason" (as hereinafter defined).
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<PAGE>
The following actions, failures or events shall constitute
"cause" for termination within the meaning of clause (iv) above: (1) conviction
of having committed a felony, (2) acts of dishonesty or moral turpitude which
are materially detrimental to the Company and/or its Affiliates, (3) failure by
the Employee to obey the reasonable and lawful orders of the Board of Directors,
the President and Chief Executive Officer or any Executive Vice President of the
Company or (4) negligence by the Employee in the performance of, or willful
disregard by the Employee of, Employee's obligations hereunder.
The following actions, failures or events shall constitute
"good reason" within the meaning of clause (v)(B) above: (1) a material breach
by the Company of its obligations under this Agreement or (2) a material
diminution of the Employee's responsibilities or authority hereunder.
(b) In the event that the Company has terminated the
Employee's employment without cause, then (i) this Agreement shall nonetheless
be deemed terminated, except that the Company shall pay the Employee his base
salary under Section 4(a) and his reimbursement of automobile expenses pursuant
to Section 5(b) through the term of this Agreement and (ii) the Employee shall
be entitled to the continuation of medical and health benefits through the term
of this Agreement comparable to those benefits furnished by the Company to the
Employee on the date of termination. The Company and the Employee agree that the
payments made pursuant to this paragraph (b) shall be paid to the Employee as
consideration for the non-competition provisions set forth in Section 8(a)(x)
hereof and that if the Employee is no longer employed by the Company and the
non-competition provisions set forth in Section 8(a)(x) extend beyond the term
of this Agreement, the payments made pursuant to this paragraph (b) shall be
paid to the Employee through the date of termination of his agreement not to
compete.
(c) Notwithstanding anything to the contrary expressed or
implied herein, except as required by applicable law and except as set forth in
paragraph (b) above, the Company (and its Affiliates) shall not be obligated to
make any payments to the Employee or on Employee's behalf of whatever kind or
nature by reason of the Employee's cessation of employment (including, without
limitation, by reason of termination of the Employee's employment by the Company
for "cause"), other than (i) such amounts, if any, of Employee's salary and
bonus as shall have accrued and remained unpaid as of the date of said cessation
and (ii) such other amounts which may be then otherwise payable to the Employee
from the Company's benefits plans or reimbursement policies, if any.
- 6 -
<PAGE>
(d) No interest shall accrue on or be paid with respect to any
portion of any payments hereunder.
8. Non-Competition. (a) The term "Non-Compete Term" shall mean the
period during which Employee is employed hereunder and (x) in the event
Employee's employment is terminated by the Company for any reason other than
"cause" or by Employee for "good reason," the one-year period following such
termination, (y) in the event Employee's employment is terminated by the Company
for "cause" or by Employee for any reason other than "good reason," the two-year
period following such termination. During the Non-Compete Term:
(i) the Employee will not make any statement or
perform any act intended to advance an interest of any existing or prospective
competitor of the Company or any of its Affiliates in any way that will or may
injure an interest of the Company or any of its Affiliates in its relationship
and dealings with existing or potential customers or clients, or solicit or
encourage any other employee of the Company or any of its Affiliates to do any
act that is disloyal to the Company or any of its Affiliates or inconsistent
with the interest of the Company or any of its Affiliate's interests or in
violation of any provision of this Agreement;
(ii) the Employee will not discuss with any existing
or potential customers or clients of the Company or any of its Affiliates the
present or future availability of services or products of a business, if the
Employee has or expects to acquire a proprietary interest in such business or is
or expects to be an employee, officer or director of such business, where such
services or products are competitive with services or products which the Company
or any of its Affiliates provides;
(iii) the Employee will not directly or indirectly
(as a director, stockholder, officer, employee, manager, consultant, independent
contractor, advisor or otherwise) engage in competition with, or own any
interest in, perform any services for, participate in or be connected with (i)
any business or organization which engages in competition with the Company or
any of its Affiliates in any geographical area where any business is presently
carried on by the Company or any of its Affiliates, or (ii) any business or
organization which engages in competition with the Company or any of its
Affiliates in any geographical area where any business shall be hereafter,
during the period of the Employee's employment by the Company, carried on by the
Company or any of its Affiliates, if such business is then being carried on by
the Company or any of its Affiliates in such geographical area; and
- 7 -
<PAGE>
(iv) the Employee will not directly or indirectly
solicit for employment, or advise or recommend to any other person that they
employ or solicit for employment, any employee of the Company or any of its
Affiliates; and
provided, however, that the provisions of this Section 8(a) shall not be deemed
to prohibit the Employee's ownership of not more than five percent (5%) of the
total shares of all classes of stock outstanding of any publicly held company.
(b) (i) For purposes of this Section 8, a person or entity
(including, without limitation, the Employee) shall be deemed to be a competitor
of the Company or any of its Affiliates, or a person or entity (including,
without limitation, the Employee) shall be deemed to be engaging in competition
with the Company or any of its Affiliates, only if such person or entity in any
way conducts, operates, carries out or engages in the design, development,
marketing, installation or support of warehouse management systems or other
computer integrated or turnkey warehouse management systems in the United States
or such other business or businesses as the Company may in the future conduct in
such geographical area or areas as such business or businesses are conducted by
the Company.
(ii) The Employee further agrees that the limitations
set forth in this Section 8 (including, without limitation, any time or
territorial limitations) are reasonable and properly required for the adequate
protection of the businesses of the Company and its Affiliates. It is understood
and agreed that the covenants made by the Employee in this Section 8 (and in
Section 6 hereof) shall survive the expiration or termination of this Agreement.
(iii) The Employee acknowledges and agrees that a
remedy at law for any breach or threatened breach of the provisions of this
Section 8 would be inadequate and, therefore, agrees that the Company and any of
its Affiliates shall be entitled to injunctive relief in addition to any other
available rights and remedies in cases of any such breach or threatened breach;
provided, however, that nothing contained herein shall be construed as
prohibiting the Company or any of its Affiliates from pursuing any other rights
and remedies available for any such breach or threatened breach.
9. Non-Assignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee, Employee's beneficiaries, or
legal representatives without the Company's prior written consent; provided,
however, that nothing in this Section 9 shall preclude the Employee from
designating a beneficiary to receive any benefit payable hereunder upon
Employee's death or incapacity.
- 8 -
<PAGE>
10. Binding Effect. Without limiting or diminishing the effect of
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Employee,
at Employee's home address set forth on the signature page hereto, or to such
other address or addresses as either party shall have designated in writing to
the other party hereto.
12. Severability. The Employee agrees that in the event that any court
of competent jurisdiction shall finally hold that any provision of Section 6 or
8 hereof is void or constitutes an unreasonable restriction against the
Employee, such provision shall not be rendered void but shall apply with respect
to such extent as such court may judicially determine constitutes a reasonable
restriction under the circumstances. If any part of this Agreement other than
Section 6 or 8 is held by a court of competent jurisdiction to be invalid,
illegible or incapable of being enforced in whole or in part by reason of any
rule of law or public policy, such part shall be deemed to be severed from the
remainder of this Agreement for the purpose only of the particular legal
proceedings in question and all other covenants and provisions of this Agreement
shall in every other respect continue in full force and effect and no covenant
or provision shall be deemed dependent upon any other covenant or provision.
13. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
14. Entire Agreement; Modifications. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
- 9 -
<PAGE>
15. Relevant Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of New York without regard to the
conflicts of law principles thereof.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature Page to Follow]
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<PAGE>
IN WITNESS WHEREOF, the Company and the Employee have duly executed and
delivered this Agreement as of the day and year first above written.
ROBOCOM SYSTEMS INC.
By: /s/ Lawrence B. Klein
-------------------------------------
Name: Lawrence B. Klein
Title: Executive Vice President
EMPLOYEE:
/s/ Steven Kuhl
-----------------------------------------
STEVEN KUHL
Address: 511 Ocean Avenue
---------------------------------
Massapequa, NY 11758
---------------------------------
- 11 -
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 15, 1997, by and between Robocom
Systems Inc., a New York corporation (the "Company"), and Robert O'Connor (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee as Vice President -
Systems Development and wishes to acquire and be assured of Employee's continued
services on the terms and conditions hereinafter set forth;
WHEREAS, the Employee desires to be employed by the Company as Vice
President - Systems Development and to perform and to serve the Company on the
terms and conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the mutual terms, covenants,
agreements and conditions hereinafter set forth, the Company and the Employee
hereby agree as follows:
1. Employment. The Company hereby employs the Employee to serve as a
full time employee of the Company, and the Employee hereby accepts such
employment with the Company, for the period set forth in Section 2 hereof. The
Employee's principal place of employment shall be at the Company's offices in
Massapequa, New York, or at such other location as shall be mutually acceptable
to the Employee and the Company.
2. Term. Unless earlier terminated as provided in this Agreement, the
term of the Employee's employment under this Agreement shall be for a period
beginning on the date hereof and ending on May 15, 2000 (such period or, if the
Employee's employment hereunder is earlier terminated, such shorter period,
being hereinafter called the "Employment Term").
3. Duties. The Employee shall be employed as Vice President - Systems
Development of the Company, shall faithfully and competently perform such duties
at such times and places and in such manner as the Board of Directors of the
Company or the President and Chief Executive Officer of the Company may from
time to time reasonably direct or such other duties appropriate to a senior
executive managerial position as the Board of Directors shall from time to time
determine. Except as otherwise may be approved in advance by the Board of
Directors of the Company, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other disability, the
<PAGE>
Employee shall devote Employee's full time throughout the Employment Term to the
services required of Employee hereunder. The Employee shall render Employee's
services exclusively to the Company during the Employment Term and shall use
Employee's best efforts, judgment and energy to improve and advance the business
and interests of the Company in a manner consistent with the duties of
Employee's position.
4. Salary and Stock Options.
(a) Salary. In consideration for the services of the Employee
rendered to the Company hereunder, the Company shall pay the Employee a base
salary at an annual rate of $120,000 during the Employment Term, payable in
regular intervals in accordance with the Company's payroll practices. The
Employee's base salary shall be increased by 10% (or such greater amount as the
Board of Directors or a compensation committee of the Board shall determine) on
each November 30 during the Employment Term, commencing on November 30, 1998.
(b) Stock Options. Upon the execution by the Company of an
underwriting agreement in connection with a firm commitment underwritten public
offering of the common stock, par value $0.01 per share, of the Company (the
"Common Stock"), on or prior to September 30, 1997, the Company shall grant to
the Employee, pursuant to and subject to the terms of the Company's 1997 Stock
Option and Long-Term Incentive Compensation Plan, incentive stock options to
purchase 30,000 shares of Common Stock at an exercise price equal to the price
per share at which the Common Stock is sold to the public in such public
offering. Such options shall vest in three equal annual installment on the
first, second and third anniversaries of the date of grant and shall expire on
the fifth anniversary of the date of grant.
(c) Withholding, Etc. The payment of any amounts hereunder shall be
subject to income tax, social security and other applicable withholdings, as
well as such deductions as may be required under the Company's employee benefit
plans.
5. Benefits.
(a) During the Employment Term, the Employee shall be:
(i) eligible to participate in all employee fringe benefits and
any pension and/or profit sharing plans that may be provided by the Company for
its key executive employees in accordance with the provisions of any such plans,
as the same may be in effect on and after the date hereof;
(ii) eligible to participate in any medical and health plans or
other employee welfare benefit plans that may be provided by the Company for its
key executive employees in accordance with the provisions of any such plans, as
the same may be in effect on and after the date hereof;
- 2 -
<PAGE>
(iii) entitled to annual paid vacation in accordance with the
Company policy that may be applicable on and after the date hereof to key
executive employees;
(iv) entitled to sick leave, sick pay and disability benefits in
accordance with any Company policy that may be applicable on and after the date
hereof to key executive employees; and
(v) entitled to reimbursement for all reasonable and necessary
out-of-pocket business expenses incurred by the Employee in the performance of
Employee's duties hereunder in accordance with the Company's policies applicable
(on and after the date hereof) thereto.
(b) During the Employment Term, the Company shall reimburse Employee
for Employee's automobile lease, insurance and maintenance expenses up to an
amount equal to $600 per month.
6. Inventions and Confidential Information. The Employee hereby
covenants, agrees and acknowledges as follows:
(a) The Company is engaged in a continuous program of research,
design, development, production, marketing and servicing with respect to its
business.
(b) The Employee's employment hereunder creates a relationship of
confidence and trust between the Employee and the Company with respect to
certain information pertaining to the business of the Company and its Affiliates
(as hereinafter defined) or pertaining to the business of any client or customer
of the Company or its Affiliates which may be made known to the Employee by the
Company or any of its Affiliates or by any client or customer of the Company or
any of its Affiliates or learned by the Employee during the period of Employee's
employment by the Company.
(c) The Company possesses and will continue to possess information
that has been created, discovered or developed by, or otherwise become known to
it (including, without limitation, information created, discovered or developed
by, or made known to, the Employee during the period of Employee's employment or
arising out of Employee's employment) or in which property rights have been or
may be assigned or otherwise conveyed to the Company, which information has
commercial value in the business in which the Company is engaged and is treated
by the Company as confidential.
- 3 -
<PAGE>
(d) Any and all inventions, products, discoveries, improvements,
processes, manufacturing, marketing and services methods or techniques,
formulae, designs, styles, specifications, data bases, computer programs
(whether in source code or object code), know-how, strategies and data, whether
or not patentable or registrable under copyright or similar statutes, made,
developed or created by the Employee (whether at the request or suggestion of
the Company, any of its Affiliates, or otherwise, whether alone or in
conjunction with others, and whether during regular hours of work or otherwise)
during the period of Employee's employment by the Company which may pertain to
the business, products, or processes of the Company or any of its Affiliates
(collectively hereinafter referred to as "Inventions"), will be promptly and
fully disclosed by the Employee to an appropriate executive officer of the
Company (other than the Employee) without any additional compensation therefor,
all papers, drawings, models, data, documents and other material pertaining to
or in any way relating to any Inventions made, developed or created by Employee
as aforesaid. For the purposes of this Agreement, the term "Affiliate" or
"Affiliates" shall mean any person, corporation or other entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company. For the purposes of this definition, "control" when
used with respect to any person, corporation or other entity means the power to
direct the management and policies of such person or entity, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
(e) The Employee will keep confidential and will hold for the
Company's sole benefit any Invention which is to be the exclusive property of
the Company under this Section 6 for which no patent, copyright, trademark or
other right or protection is issued.
(f) The Employee also agrees that Employee will not without the
prior written consent of the President and Chief Executive Officer or the
Executive Vice President - Marketing and Sales of the Company (i) use for
Employee's benefit or disclose at any time during Employee's employment by the
Company, or thereafter, except to the extent required by the performance by
Employee of Employee's duties as an employee of the Company, any information
obtained or developed by Employee while in the employ of the Company with
respect to any Inventions or with respect to any customers, clients, suppliers,
products, employees, financial affairs, or methods of design, distribution,
marketing, service, procurement or manufacture of the Company or any of its
Affiliates, or any confidential matter, except information which at the time is
generally known to the public other than as a result of disclosure by Employee
- 4 -
<PAGE>
not permitted hereunder, or (ii) take with Employee upon leaving the employ of
the Company any document or paper relating to any of the foregoing or any
physical property of the Company or any of its Affiliates.
(g) The Employee acknowledges and agrees that a remedy at law for
any breach or threatened breach of the provisions of this Section 6 would be
inadequate and, therefore, agrees that the Company and its Affiliates shall be
entitled to injunctive relief in addition to any other available rights and
remedies in case of any such breach or threatened breach; provided, however,
that nothing contained herein shall be construed as prohibiting the Company or
any of its Affiliates from pursuing any other rights and remedies available for
any such breach or threatened breach.
(h) The Employee agrees that upon termination of Employee's
employment by the Company for any reason, the Employee shall forthwith return to
the Company all documents and other property in Employee's possession belonging
to the Company or any of its Affiliates.
(i) Without limiting the generality of Section 9 hereof, the
Employee hereby expressly agrees that the foregoing provisions of this Section 6
shall be binding upon the Employee's heirs, successors and legal
representatives.
7. Termination. (a) The Employee's employment hereunder shall be
terminated upon the occurrence of any of the following:
(i) death of the Employee;
(ii) termination of the Employee's employment hereunder by the
Employee at any time for any reason whatsoever (including, without limitation,
resignation or retirement) other than for "good reason" as contemplated by
clause (v)(B) below;
(iii) termination of the Employee's employment hereunder by the
Company because of the Employee's inability to perform Employee's duties on
account of disability or incapacity for a period of one hundred eighty (180) or
more days, whether or not consecutive, occurring within any period of twelve
(12) consecutive months;
(iv) termination of the Employee's employment hereunder by the
Company at any time for "cause" (as hereinafter defined), such termination to
take effect immediately upon written notice from the Company to the Employee;
and
(v) termination of the Employee's employment hereunder (A) by
the Company at any time, other than termination by reason of disability or
- 5 -
<PAGE>
incapacity as contemplated by clause (iii) above or termination by the Company
for "cause" as contemplated by clause (iv) above and (B) by the Employee for
"good reason" (as hereinafter defined).
The following actions, failures or events shall constitute "cause"
for termination within the meaning of clause (iv) above: (1) conviction of
having committed a felony, (2) acts of dishonesty or moral turpitude which are
materially detrimental to the Company and/or its Affiliates, (3) failure by the
Employee to obey the reasonable and lawful orders of the Board of Directors, the
President and Chief Executive Officer or any Executive Vice President of the
Company or (4) negligence by the Employee in the performance of, or willful
disregard by the Employee of, Employee's obligations hereunder.
The following actions, failures or events shall constitute "good
reason" within the meaning of clause (v)(B) above: (1) a material breach by the
Company of its obligations under this Agreement or (2) a material diminution of
the Employee's responsibilities or authority hereunder.
(b) In the event that the Company has terminated the Employee's
employment without cause, then (i) this Agreement shall nonetheless be deemed
terminated, except that the Company shall pay the Employee his base salary under
Section 4(a) and his reimbursement of automobile expenses pursuant to Section
5(b) through the term of this Agreement and (ii) the Employee shall be entitled
to the continuation of medical and health benefits through the term of this
Agreement comparable to those benefits furnished by the Company to the Employee
on the date of termination. The Company and the Employee agree that the payments
made pursuant to this paragraph (b) shall be paid to the Employee as
consideration for the non-competition provisions set forth in Section 8(a)(x)
hereof and that if the Employee is no longer employed by the Company and the
non-competition provisions set forth in Section 8(a)(x) extend beyond the term
of this Agreement, the payments made pursuant to this paragraph (b) shall be
paid to the Employee through the date of termination of his agreement not to
compete.
(c) Notwithstanding anything to the contrary expressed or implied
herein, except as required by applicable law and except as set forth in
paragraph (b) above, the Company (and its Affiliates) shall not be obligated to
make any payments to the Employee or on Employee's behalf of whatever kind or
nature by reason of the Employee's cessation of employment (including, without
limitation, by reason of termination of the Employee's employment by the Company
for "cause"), other than (i) such amounts, if any, of Employee's salary and
bonus as shall have accrued and remained unpaid as of the date of said cessation
- 6 -
<PAGE>
and (ii) such other amounts which may be then otherwise payable to the Employee
from the Company's benefits plans or reimbursement policies, if any.
(d) No interest shall accrue on or be paid with respect to any
portion of any payments hereunder.
8. Non-Competition. (a) The term "Non-Compete Term" shall mean the
period during which Employee is employed hereunder and (x) in the event
Employee's employment is terminated by the Company for any reason other than
"cause" or by Employee for "good reason," the one-year period following such
termination, (y) in the event Employee's employment is terminated by the Company
for "cause" or by Employee for any reason other than "good reason," the two-year
period following such termination. During the Non-Compete Term:
(i) the Employee will not make any statement or perform any act
intended to advance an interest of any existing or prospective competitor of the
Company or any of its Affiliates in any way that will or may injure an interest
of the Company or any of its Affiliates in its relationship and dealings with
existing or potential customers or clients, or solicit or encourage any other
employee of the Company or any of its Affiliates to do any act that is disloyal
to the Company or any of its Affiliates or inconsistent with the interest of the
Company or any of its Affiliate's interests or in violation of any provision of
this Agreement;
(ii) the Employee will not discuss with any existing or
potential customers or clients of the Company or any of its Affiliates the
present or future availability of services or products of a business, if the
Employee has or expects to acquire a proprietary interest in such business or is
or expects to be an employee, officer or director of such business, where such
services or products are competitive with services or products which the Company
or any of its Affiliates provides;
(iii) the Employee will not directly or indirectly (as a
director, stockholder, officer, employee, manager, consultant, independent
contractor, advisor or otherwise) engage in competition with, or own any
interest in, perform any services for, participate in or be connected with (i)
any business or organization which engages in competition with the Company or
any of its Affiliates in any geographical area where any business is presently
carried on by the Company or any of its Affiliates, or (ii) any business or
organization which engages in competition with the Company or any of its
Affiliates in any geographical area where any business shall be hereafter,
during the period of the Employee's employment by the Company, carried on by the
- 7 -
<PAGE>
Company or any of its Affiliates, if such business is then being carried on by
the Company or any of its Affiliates in such geographical area; and
(iv) the Employee will not directly or indirectly solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of the Company or any of its Affiliates;
and
provided, however, that the provisions of this Section 8(a) shall not be deemed
to prohibit the Employee's ownership of not more than five percent (5%) of the
total shares of all classes of stock outstanding of any publicly held company.
(b) (i) For purposes of this Section 8, a person or entity
(including, without limitation, the Employee) shall be deemed to be a competitor
of the Company or any of its Affiliates, or a person or entity (including,
without limitation, the Employee) shall be deemed to be engaging in competition
with the Company or any of its Affiliates, only if such person or entity in any
way conducts, operates, carries out or engages in the design, development,
marketing, installation or support of warehouse management systems or other
computer integrated or turnkey warehouse management systems in the United States
or such other business or businesses as the Company may in the future conduct in
such geographical area or areas as such business or businesses are conducted by
the Company.
(ii) The Employee further agrees that the limitations set forth
in this Section 8 (including, without limitation, any time or territorial
limitations) are reasonable and properly required for the adequate protection of
the businesses of the Company and its Affiliates. It is understood and agreed
that the covenants made by the Employee in this Section 8 (and in Section 6
hereof) shall survive the expiration or termination of this Agreement.
(iii) The Employee acknowledges and agrees that a remedy at law
for any breach or threatened breach of the provisions of this Section 8 would be
inadequate and, therefore, agrees that the Company and any of its Affiliates
shall be entitled to injunctive relief in addition to any other available rights
and remedies in cases of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company or any of its Affiliates from pursuing any other rights and remedies
available for any such breach or threatened breach.
9. Non-Assignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee, Employee's beneficiaries, or
legal representatives without the Company's prior written consent; provided,
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<PAGE>
however, that nothing in this Section 9 shall preclude the Employee from
designating a beneficiary to receive any benefit payable hereunder upon
Employee's death or incapacity.
10. Binding Effect. Without limiting or diminishing the effect of
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Employee,
at Employee's home address set forth on the signature page hereto, or to such
other address or addresses as either party shall have designated in writing to
the other party hereto.
12. Severability. The Employee agrees that in the event that any court
of competent jurisdiction shall finally hold that any provision of Section 6 or
8 hereof is void or constitutes an unreasonable restriction against the
Employee, such provision shall not be rendered void but shall apply with respect
to such extent as such court may judicially determine constitutes a reasonable
restriction under the circumstances. If any part of this Agreement other than
Section 6 or 8 is held by a court of competent jurisdiction to be invalid,
illegible or incapable of being enforced in whole or in part by reason of any
rule of law or public policy, such part shall be deemed to be severed from the
remainder of this Agreement for the purpose only of the particular legal
proceedings in question and all other covenants and provisions of this Agreement
shall in every other respect continue in full force and effect and no covenant
or provision shall be deemed dependent upon any other covenant or provision.
13. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
14. Entire Agreement; Modifications. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
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<PAGE>
15. Relevant Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of New York without regard to the
conflicts of law principles thereof.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature Page to Follow]
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<PAGE>
IN WITNESS WHEREOF, the Company and the Employee have duly executed and
delivered this Agreement as of the day and year first above written.
ROBOCOM SYSTEMS INC.
By: /s/ Lawrence B. Klein
-----------------------------------
Name: Lawrence B. Klein
Title: Executive Vice President
EMPLOYEE:
/s/ Robert O'Connor
---------------------------------------
ROBERT O'CONNOR
Address: 511 Ocean Avenue
-------------------------------
Massapequa, NY 11758
-------------------------------
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<PAGE>
ROBOCOM SYSTEMS INC.
STOCK OPTION AND
LONG-TERM INCENTIVE COMPENSATION PLAN
Adopted and Effective as of May 15, 1997
<PAGE>
ROBOCOM SYTEMS INC. 1997 STOCK OPTION AND
LONG-TERM INCENTIVE COMPENSATION PLAN
1. Purpose of the Plan.
This Robocom Systems Inc. 1997 Stock Option and Long-Term Incentive
Compensation Plan is intended to promote the interests of the Company and its
shareholders by providing the Company's key employees, on whose judgment,
initiative, and efforts the successful conduct of the business of the Company
depends, and who are responsible for the management, growth, and protection of
the business, with appropriate incentives and rewards to encourage them to
continue in the employ of the Company and to maximize their performance.
2. Definitions.
As used in the Plan, the following definitions apply to the terms indicated
below:
(a) "Board of Directors" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean, when used in connection with the termination of a
Participant's employment, the termination of the Participant's employment on
account of: (i) the willful and continued failure by the Participant
substantially to perform his or her duties and obligations to the Company (other
than any such failure resulting from incapacity due to physical or mental
illness), (ii) the willful violation by the Participant of (A) any federal or
state law or (B) any rule of the Company, which violation would materially
reflect on the Participant's character, competence, or integrity, (iii) a breach
by a Participant of the Participant's duty of loyalty to the Company such as
Participant's solicitation of customers or employees of the Company on behalf of
any other person, (iv) the Participant's unauthorized removal from the Company's
premises of any document (in any medium or form) relating to the Company, its
business, or its customers, provided, however, that no such removal shall be
deemed "unauthorized" if it is in furtherance of an individual's duties and
obligations to the Company and such removal is a common practice at the Company,
(v) the Participant's unauthorized disclosure to any person of any confidential
information regarding the Company, (vi) the willful engaging by the Participant
in any other misconduct which is materially injurious to the Company or (vii)
any event that constitutes "cause" (or any similar term that constitutes the
basis on which the Company may terminate the employee's employment with the
Company) for the purposes of an employment agreement between the Participant and
the Company. For purposes of this Section 2(b), no act, or failure to act, on a
Participant's part shall be considered "willful" unless done, or omitted to be
done, by the Participant in bad faith and without reasonable belief that the
action or omission was in the best interests of the Company. Any rights the
Company may have hereunder in respect of the events giving rise to Cause shall
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be in addition to the rights the Company may have under any other agreement with
the Participant or at law or in equity. If, subsequent to the termination of a
Participant's employment without Cause, it is determined by the Board of
Directors that the Participant's employment could have been terminated for
Cause, such Participant's employment shall, at the election of the Committee in
its sole discretion, be deemed to have been terminated for Cause.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the Compensation Committee of the Board;
provided, however, the Compensation Committee shall not take any action under
the Plan unless it is at all times composed solely of not less than three
"Non-Employee Directors" within the meaning of Rule 16b-3, as promulgated under
the Securities Exchange Act of 1934, as amended. In the event the Compensation
Committee is not composed of three Non-Employee Directors when the Company is
subject to the Securities Act, or, in the event the Committee is unable to act,
the Board shall take any and all actions required or permitted to be taken by
the Committee under the Plan and shall serve as the Committee.
(e) "Company" shall mean Robocom Systems Inc., a New York corporation.
(f) "Company Stock" shall mean the common stock, par value $.01 per share,
of the Company.
(g) "Disability" shall mean any physical or mental condition as a result of
which a Participant is disabled within the meaning of Section 422(c)(6) of the
Code.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" with respect to a share of Company Stock on any
relevant date shall be determined in accordance with the following provisions:
(1) If the Company Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per share
of Company Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no closing selling price for the Company Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
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(2) If the Company Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Company Stock on the date in question on the stock exchange determined by the
Committee to be the primary market for the Company Stock, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Company Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(3) For purposes of any option grants made on the Underwriting Date, the
Fair Market Value shall be deemed to be equal to the price per share at which
the Company Stock is sold in the initial public offering pursuant to the
underwriting agreement.
(4) For purposes of any option grants made prior to the Underwriting
Date, the Fair Market Value shall be determined by the Committee after taking
into account such factors as the Committee may deem appropriate.
(j) "Incentive Award" shall mean an Option, a SAR, a Restricted Stock, or
Stock Bonus Award granted pursuant to the terms of the Plan.
(k) "Incentive Stock Option" shall mean an Option that is an "incentive
stock option" within the meaning of Section 422 of the Code and that is
identified as an Incentive Stock Option in the agreement by which it is
evidenced.
(l) "Issue Date" shall mean the date established by the Committee on which
certificates representing shares of Restricted Stock shall be issued by the
Company pursuant to the terms of Section 8(d) hereof.
(m) "Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(n) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof. Each Option, or portion thereof, shall be
identified as either an Incentive Stock Option or a Non-Qualified Stock Option
in the agreement by which such Option is evidenced.
(o) "Participant" shall mean an employee, officer, director or outside
director of the Company or any subsidiary of the Company or a consultant to the
Company or any subsidiary of the Company selected to participate in the Plan and
to whom an Incentive Award is granted pursuant to the Plan, and, upon his or her
death, that person's successors, heirs, executors, and administrators, as the
case may be.
(p) "Person" shall mean a "person," such as term is used in Sections 13(d)
and 14(d) of the Exchange Act.
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(q) "Plan" shall mean this Robocom Systems Inc. Stock Option and Long-Term
Incentive Compensation Plan, as it may be amended from time to time.
(r) "Restricted Stock" shall mean a share of Company Stock that is granted
pursuant to the terms of Section 8 hereof and that is subject to the
restrictions set forth in Section 8(c) hereof for as long as such restrictions
continue to apply to such share.
(s) "Retirement" shall mean a Participant's termination of employment (other
than by reason of death or Disability and other than a termination that is (or
is deemed to have been) for Cause) on or after the later of (i) the date the
Participant attains age 65 and (ii) the date the Participant has completed five
years of service with the Company.
(t) "Securities Act" shall mean the Securities Act of 1933, as amended.
(u) "SAR" shall mean a stock appreciation right granted pursuant to Section
7 hereof.
(v) "Stock Bonus" shall mean a grant of a bonus payable in shares of Company
Stock pursuant to Section 9 hereof.
(w) "Underwriting Date" shall mean the date on which the underwriting
agreement for the Company's initial public offering is executed and the initial
public offering price of the Company Stock is established.
(x) "Vesting Date" shall mean the date and/or dates established by the
Committee on which an Incentive Award may vest. In the absence of provisions in
an individual grant agreement to the contrary, Options shall vest ratably over a
three (3) year period, at thirty-three and one-third (33 1/3%) percent per year.
3. Stock Subject to the Plan.
(a) Plan Awards.
Under the Plan, the Committee may, in its sole and absolute
discretion, grant any or all of the following types of Incentive Awards to a
Participant: an Option, a SAR, a Restricted Stock, or Stock Bonus Award.
(b) Individual Awards.
Incentive Awards granted under the Plan may be made up entirely of one
type of Incentive Award or any combination of types of Incentive Awards
available under the Plan, in the Committee's sole discretion.
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(c) Aggregate Plan Share Reserve.
The total number of shares of Company Stock available for grants of
Incentive Awards under the Plan shall be 325,000 subject to adjustment in
accordance with Section 10 of the Plan. These shares may be either authorized
but unissued, newly issued shares, or reacquired shares of Company Stock. If an
Incentive Award or portion thereof shall expire or terminate for any reason
without having been exercised in full, the unexercised shares covered by such
Incentive Award shall be available for future grants of Incentive Awards under
the Plan.
4. Administration of the Plan.
The Plan shall be administered by the Committee. The Committee shall from
time to time designate the employees, officers, directors and outside directors
of the Company or any subsidiary of the Company or consultants to the Company or
any subsidiary of the Company who shall be granted Incentive Awards and the
amount and type of such Incentive Awards.
The Committee shall have the full authority and discretion to administer the
Plan, including authority to interpret and construe any provision of the Plan
and the terms of any Incentive Award issued under the Plan. The Committee may
also adopt any rules and regulations for administering the Plan as it may deem
necessary or appropriate. Decisions of the Committee shall be final and binding
on all parties.
The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Option or SAR granted under the Plan
becomes exercisable or otherwise adjust any of the terms of such Option or SAR
(except that no such adjustment shall, without the consent of a Participant,
reduce the Participant's rights under any previously granted and outstanding
Incentive Award), (ii) accelerate the Vesting Date or Issue Date of any share of
Restricted Stock issued under the Plan, or waive any condition imposed
thereunder, and (iii) otherwise adjust or waive any condition imposed on any
Incentive Award made hereunder.
In addition, the Committee may, in its absolute discretion and without
amendment to the Plan, grant Incentive Awards of any type to Participants on the
condition that such Participants surrender to the Committee for cancellation
such other Incentive Awards of the same or any other type (including, without
limitation, Incentive Awards with higher exercise prices or values) as the
Committee specifies. Notwithstanding Section 3(c) herein, prior to the surrender
of such other Incentive Awards, Incentive Awards granted pursuant to the
preceding sentence of this Section 4 shall not count against the limit set forth
in such Section 3(c).
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Whether an authorized leave of absence, or absence in military or government
service, shall constitute termination of employment shall be determined by the
Committee, subject to applicable laws.
No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company (and any affiliate that may
adopt the Plan), jointly and severally, shall indemnify and hold harmless each
member of the Committee and each other director or employee of the Company (or
affiliate) to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination unless such action, omission or determination was taken or made by
such member, director or employee in bad faith and without reasonable belief
that it was in the best interests of the Company and its affiliates, as the case
may be.
5. Eligibility.
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be those employees, officers, directors and outside directors of
the Company or consultants to the Company who are responsible for the
management, growth, and protection of the business of the Company; provided,
however, that only employees of the Company shall be eligible to receive
Incentive Awards consisting of Incentive Stock Options.
6. Stock Option Awards.
The Committee may grant Options pursuant to the Plan. Such Options shall be
evidenced by agreements in such form as the Committee shall from time to time
approve. Options shall comply with and be subject to the following terms and
conditions:
(a) Identification of Options.
All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options or a combination of both.
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(b) Exercise Price.
The exercise price of any Non-Qualified Stock Option granted under the
Plan shall be such price as the Committee shall determine, which may be equal to
or less than the Fair Market Value of a share of Company Stock on the date such
Non-Qualified Stock Option is granted; provided, that such price may not be less
than the minimum price required by law. The exercise price of any Incentive
Stock Option granted under the Plan shall be not less than 100% of the Fair
Market Value of a share of Company Stock on the date on which such Incentive
Stock Option is granted.
(c) Term and Exercise of Options.
(i) Each Option shall be exercisable on such date or dates, during such
period, and for such number of shares of Company Stock as shall be determined by
the Committee on the day on which such Option is granted and set forth in the
Option agreement with respect to such Option; provided, however that no Option
shall be exercisable after the expiration of ten years from the date such Option
was granted; and, provided, further, that each Option shall be subject to
earlier termination, expiration or cancellation as provided in the Plan.
(ii) Each Option shall be exercisable in whole or in part. The partial
exercise of an Option shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial exercise of an
Option, the agreement evidencing such Option, marked with such notations as the
Committee may deem appropriate to evidence such partial exercise, shall be
returned to the Participant exercising such Option together with the delivery of
the certificates described in Section 6(e) hereof.
(iii) An Option shall be exercised by delivering a written notice to the
Company's principal office to the attention of its Secretary. Such notice shall
specify the number of shares of Company Stock with respect to which the Option
is being exercised, shall be signed by the Participant, and shall be accompanied
by the agreement (or agreements) evidencing the Option and payment in full of
the applicable exercise price for shares of Company Stock purchased in any
combination of the forms specified below:
(A) in cash, by certified check, bank cashier's check, or wire
transfer,
(B) subject to the approval of the Committee, in shares of Company
Stock owned by the Participant and valued at their Fair Market Value on the date
of such exercise,
(C) subject to the approval of the Committee, pursuant to a
"cashless exercise" pursuant to procedures adopted by the Committee whereby the
Participant, by a properly written notice, directs (a) an immediate market sale
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<PAGE>
or margin loan respecting all or a part of the shares of Company Stock to which
the Participant is entitled upon exercise pursuant to an extension of credit by
the Company to the Participant of the exercise price, (b) the delivery of the
shares of the Company Stock from the Company directly to the brokerage firm, and
(c) the delivery of the exercise price from the sale or margin loan proceeds
from the brokerage firm directly to the Company, or
(D) such other methods as the Committee may approve, from time to
time.
Any payments in shares of Company Stock shall be effected by the delivery of
such shares to the Secretary of the Company, duly endorsed in blank or
accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require from time
to time
(d) Nonassignability.
During the lifetime of a Participant, each Option granted to him or her
shall be exercisable only by him or her. No Option shall be assignable or
transferable otherwise than by will or by the laws of descent and distribution.
(e) Issuance of Certificates.
Certificates for shares of Company Stock purchased upon the exercise of
an Option shall be issued in the name of the Participant or his or her
beneficiary, as the case may be, and delivered to the Participant or his or her
beneficiary, as the case may be, as soon as practicable following the date on
which the Option is exercised.
(f) Limitations on Grant of Incentive Stock Options.
(i) The aggregate Fair Market Value of shares of Company Stock with
respect to which Incentive Stock Options granted hereunder are exercisable for
the first time by a Participant during any calendar year under the Plan and any
other stock option plan of the Company (or any "subsidiary corporation" of the
Company within the meaning of Section 424 of the Code) shall not exceed
$100,000. Such Fair Market Value shall be determined as of the date on which
each such Incentive Stock Option is granted. In the event that the aggregate
Fair Market Value of shares of Company Stock with respect to such Incentive
Stock Options exceeds $100,000, then Incentive Stock Options granted hereunder
to such Participant shall, to the extent and in the order in which they were
granted, automatically be deemed to be Non-Qualified Stock Options, but all
other terms and provisions of such Incentive Stock Options shall remain
unchanged.
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(ii) No Incentive Stock Option may be granted to an individual if, at
the time of the proposed grant, such individual owns stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or
any of its "subsidiary corporations" (within the meaning of Section 424 of the
Code), unless (I) the exercise price of such Incentive Stock Option is at least
110% of the Fair Market Value of a share of Company Stock at the time such
Incentive Stock Option is granted and (II) such Incentive Stock Option is not
exercisable after the expiration of five years from the date such Incentive
Stock Option is granted.
(iii) No Incentive Stock Option may be granted to an individual if, at
the time of the proposed grant, such individual is not an employee of the
Company.
(g) Effect of Termination of Employment.
(i) In the event the employment of a Participant with the Company shall
terminate (as determined by the Committee in its sole discretion) for any reason
other than Retirement, Disability, death or for Cause, (A) Options granted to
such Participant, to the extent that they were exercisable at the time of such
termination, shall remain exercisable until 90 days after the date of such
termination, on which date they shall expire, and (B) Options granted to such
Participant, to the extent that they were not exercisable at the time of such
termination, shall expire at the close of business on the date of such
termination; provided, however, that no Option shall be exercisable after the
expiration of its term.
(ii) In the event that the employment of a Participant with the Company
shall terminate on account of the Retirement, Disability or death of the
Participant, (A) Options granted to such Participant, to the extent that they
were exercisable at the time of such termination, shall remain exercisable until
the expiration of their term and (B) Options granted to such Participant, to the
extent that they were not exercisable at the time of such termination, shall
expire at the close of business on the date of such termination. The effect of
exercising any Incentive Stock Option on a day that is more than 90 days after
the date of such termination (or, in the case of a termination of employment on
account of Disability, on a day that is more than one year after the date of
such termination) will be to cause such Incentive Stock Option to be treated as
a Non-Qualified Stock Option.
(iii) In the event of the termination of a Participant's employment for
Cause, all outstanding Options granted to such Participant shall automatically
expire at the commencement of business as of the date of such termination.
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7. SARs.
The Committee may grant SARs pursuant to the Plan, which SARs shall be
evidenced by agreements in such form as the Committee shall from time to time
approve. SARs shall comply with and be subject to the following terms and
conditions:
(a) Exercise Price.
The exercise price of any SAR granted under the Plan shall be determined
by the Committee in its discretion at the time of the grant of such SAR.
(b) Benefit Upon Exercise.
(i) The exercise of a SAR with respect to any number of shares of
Company Stock shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (A) the Fair Market Value of a share of Company
Stock on the exercise date over (B) the exercise price of the SAR (subject to
applicable withholding payment requirements).
(ii) All payments under this Section 7(b) shall be made as soon as
practicable, but in no event later than five business days, after the date of
the exercise.
(c) Term and Exercise of SARs.
(i) Each SAR shall be exercisable on such date or dates, during such
period, and for such number of shares of Company Stock as shall be determined by
the Committee and set forth in the SAR agreement with respect to such SAR;
provided, however, that no SAR shall be exercisable after the expiration of ten
years from the date such SAR was granted; and provided, further, however, that
each SAR shall be subject to earlier termination, expiration or cancellation as
provided in the Plan.
(ii) Each SAR may be exercised in whole or in part. The partial exercise
of a SAR shall not cause the expiration, termination or cancellation of the
remaining portion thereof. Upon the partial exercise of a SAR, the agreement
evidencing such SAR, marked with such notations as the Committee may deem
appropriate to evidence such partial exercise, shall be returned to the
Participant exercising such SAR together with the payment described in Section
7(b) or 7(b)(ii) hereof.
(iii) A SAR shall be exercised by delivering written notice to the
Company's principal office, to the attention of its Secretary. Such notice shall
be accompanied by the applicable agreement (or agreements) evidencing the SAR,
shall specify the number of shares of Company Stock with respect to which the
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SAR is being exercised, and shall be signed by the Participant. The date upon
which such written notice is received by the Company shall be the exercise date
for the SAR.
(iv) During the lifetime of a Participant, each SAR granted to him or
her shall be exercisable only by him or her. No SAR shall be assignable or
transferable otherwise than by will or by the laws of descent and distribution.
(d) Termination of Employment.
(i) In the event that the employment of a Participant with the Company
shall terminate (as determined by the Committee in its sole discretion) for any
reason other than Retirement, Disability, death or for Cause, (A) SARs granted
to such Participant, to the extent that they were exercisable at the time of
such termination, shall remain exercisable until the 30th day after such
termination, on which date they shall expire and (B) SARs granted to such
Participant, to the extent that they were not exercisable at the time of such
termination, shall expire at the close of business on the date of such
termination; provided, however, that no SAR shall be exercisable after the
expiration of its term.
(ii) In the event that the employment of a Participant with the Company
shall terminate on account of the Retirement, Disability or death of the
Participant, (A) SARs granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain exercisable until the
expiration of their term and (B) SARs granted to such Participant, to the extent
that they were not exercisable at the time of such termination, shall expire at
the close of business on the date of such termination.
(iii) In the event of the termination of the Participant's employment
for Cause, all outstanding SARs granted to such Participant shall automatically
expire at the commencement of business as of the date of such termination.
(e) Tandem SARs.
SARs may be granted in tandem with Options (or on a stand-alone basis).
To the extent SARs are granted in tandem with Options and SARs are exercised,
the related Options shall be cancelled. Similarly, if the Options are exercised,
the related SARs shall be cancelled.
8. Restricted Stock.
The Committee may grant shares of Restricted Stock pursuant to the Plan.
Each grant of shares of Restricted Stock shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of shares
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of Restricted Stock shall comply with and be subject to the following terms and
conditions:
(a) Issue Date and Vesting Date.
At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates
with respect to such shares. The Committee may divide such shares into classes
and assign a different Issue Date and/or Vesting Date for each class. Except as
provided in Sections 8(c) and 8(f) hereof, upon the occurrence of the Issue Date
with respect to a share of Restricted Stock, a share of Restricted Stock shall
be issued in accordance with the provisions of Section 8(d) hereof. Provided
that all conditions to the vesting of a share of Restricted Stock imposed
pursuant to Section 8(b) hereof are satisfied, and except as provided in
Sections 8(c) and 8(f) hereof, upon the occurrence of the Vesting Date with
respect to a share of Restricted Stock, such share shall vest and the
restrictions of Section 8(c) hereof shall cease to apply to such share.
(b) Conditions to Vesting.
At the time of the grant of shares of Restricted Stock, the Committee
may impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it, in its absolute discretion, deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the vesting of any shares of Restricted Stock, that
the Participant or the Company achieve such performance criteria as the
Committee may specify at the time of the grant of such shares.
(c) Restrictions on Transfer Prior to Vesting.
Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights to such share, whether voluntary or involuntary, by
operation of law or otherwise, shall vest the transferee with any interest, or
right in, or with respect to, such share, but immediately upon any attempt to
transfer such rights, such share, and all the rights related thereto, shall be
forfeited by the Participant and the transfer shall be of no force or effect.
(d) Issuance of Certificates.
(i) Except as provided in Sections 8(c) or 8(f) hereof, reasonably
promptly after the Issue Date with respect to shares of Restricted Stock, the
Company shall cause to be issued a stock certificate, registered in the name of
the Participant to whom such shares were granted, evidencing such shares,
provided, that the Company shall not cause to be issued such stock certificate
unless it has received a stock power duly endorsed in blank with respect to such
shares. Each such stock certificate shall bear the following legend:
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THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS, AND
CONDITIONS (INCLUDING FORFEITURE PROVISIONS AND RESTRICTIONS AGAINST
TRANSFER) CONTAINED IN THE ROBOCOM SYTEMS INC. STOCK OPTION AND
LONG-TERM INCENTIVE COMPENSATION PLAN AND INCENTIVE AWARD AGREEMENT
ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND ROBOCOM
SYSTEMS INC. A COPY OF THE PLAN AND AGREEMENT IS ON FILE IN THE OFFICE
OF THE SECRETARY OF ROBOCOM SYSTEMS INC., 511 OCEAN AVENUE, MASSAPEQUA,
NEW YORK 11758.
Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.
(ii) Each certificate issued pursuant to Section 8(d)(i) hereof,
together with the stock powers relating to the shares of Restricted Stock
evidenced by such certificate, shall be deposited by the Company with a
custodian designed by the Company. The Company shall cause such custodian to
issue to the Participant a receipt evidencing the certificates held by it which
are registered in the name of the Participant.
(e) Consequences Upon Vesting.
Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section 8(c) hereof shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests pursuant to
the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Section 8(d)(i) hereof, together with any
other property of the Participant held by the custodian pursuant to Section
8(d)(ii) hereof.
(f) Effect of Termination of Employment.
(i) In the event that the employment of a Participant with the Company
shall terminate for any reason other than Cause prior to the vesting of shares
of Restricted Stock granted to such Participant, shall be forfeited on the date
of such termination, provided however, that the Committee may, in its sole and
absolute discretion, vest the Participant in all or any portion of shares of
Restricted Stock which would otherwise be forfeited pursuant to the provisions
of this Section.
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(ii) In the event of the termination of a Participant's employment for
Cause, all shares of Restricted Stock granted to such Participant which have not
vested as of the date of such termination shall immediately be forfeited.
9. Stock Bonuses.
The Committee may grant Stock Bonuses in such amounts as it shall determine
from time to time. A Stock Bonus shall be paid at such time and subject to such
conditions as the Committee shall determine at the time of the grant of such
Stock Bonus. Certificates for shares of Company Stock granted as a Stock Bonus
shall be issued in the name of the Participant to whom such grant was made and
delivered to such Participant as soon as practicable after the date on which
such Stock Bonus is required to be paid.
10. Adjustment Upon Changes in Company Stock.
(a) Shares Available for Grants.
In the event of any change in the number of shares of Company Stock
outstanding by reason of any stock dividend or split, reverse stock split,
recapitalization, merger, consolidation, combination or exchange of shares or
similar corporate change, the maximum number of shares of Company Stock with
respect to which the Committee may grant Options, SARs, shares of Restricted
Stock, and Stock Bonuses under Section 3 hereof shall be appropriately adjusted
by the Committee. In the event of any change in the number of shares of Company
Stock outstanding by reason of any other event or transaction, the Committee
may, but need not, make such adjustments in the number of shares of Company
Stock with respect to which Options, SARs, shares of Restricted Stock, and Stock
Bonuses may be granted under Section 3 hereof as the Committee may deem
appropriate.
(b) Outstanding Restricted Stock.
Unless the Committee in its absolute discretion otherwise determines,
any securities or other property (including dividends paid in cash) received by
a Participant with respect to a share of Restricted Stock, the Issue Date with
respect to which occurs prior to such event, but which has not vested as of the
date of such event, as a result of any dividend, stock split, reverse stock
split, recapitalization, merger, consolidation, combination, exchange of shares
or similar corporate exchange will not vest until such share of Restricted Stock
vests and shall be promptly deposited with the custodian designated pursuant to
Section 8(d)(ii) hereof.
15
<PAGE>
The Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events, to
reflect any dividend, stock split, reverse stock split, recapitalization,
merger, consolidation, combination, exchange of shares or similar corporate
change as the Committee may deem appropriate to prevent the enlargement or
dilution of rights of Participants under the grant.
(c) Outstanding Options and SARs - Increase or Decrease in Issued Shares
Without Consideration.
Subject to any required action by the shareholders of the Company, in
the event of any increase or decrease in the number of issued shares of Company
Stock resulting from a subdivision or consolidations of shares of Company Stock
or the payment of a stock dividend on the shares of Company Stock, or any other
increase or decrease in the number of such shares effected without receipt of
consideration by the Company, the Company shall proportionally adjust the number
of shares of Company Stock subject to each outstanding Option and SAR, and the
exercise price per share of Company Stock of each such Option and SAR.
(d) Outstanding Options and SARs - Certain Mergers.
Subject to any required action by the shareholders of the Company, in
the event that the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Company Stock receive securities of another corporation), each
Option and SAR outstanding on the date of such merger or consolidation shall
pertain to and apply to the securities which a holder of the number of shares of
Company Stock subject to such Option or SAR would have received in such merger
or consolidation.
(e) Outstanding Options, SARs - Certain Other Transactions.
In the event of a dissolution or liquidation of the Company; a sale of
substantially all of the Company's assets, a merger or consolidation involving
the Company in which the Company is not the surviving corporation; or a merger
or consolidation involving the Company in which the Company is the surviving
corporation but the holders of shares of Company Stock receive securities of
another corporation and/or other property, including cash, the Committee shall,
in its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of such event,
each Option and SAR outstanding immediately prior to such event (whether or not
then exercisable), and, in full consideration of such cancellation, pay to the
Participant to whom such Option or SAR was granted an amount in cash, for each
16
<PAGE>
share of Company Stock subject to such Option or SAR, respectively, equal to the
excess of (A) the value, as determined by the Committee in its absolute
discretion, of the property (including cash) received by the holder of a share
of Company Stock as a result of such event over (B) the exercise price of such
Option or SAR (subject to applicable withholding payment requirements); or
(ii) provide for the exchange of each Option and SAR outstanding
immediately prior to such event (whether or not then exercisable) for an option
on or stock appreciation right with respect to, as appropriate, some or all of
the property for which such Option or SAR is exchanged and, incident thereto,
make an equitable adjustment as determined by the Committee in its absolute
discretion in the exercise price of the option or stock appreciation right, or,
if appropriate, provide for a cash payment to the Participant to whom such
Option or SAR was granted in partial consideration for the exchange of the
Option or SAR.
(f) Outstanding Options and SARs - Other Changes.
In the event of any change in the capitalization of the Company or a
corporate change other than those specifically referred to in Section 10(c),(d)
or (e) hereof, the Committee may in its absolute discretion, make such
adjustments in the number of shares subject to Options or SARs outstanding on
the date on which such change occurs and in the per share exercise price of each
such Option and SAR as the Committee may consider appropriate to prevent
dilution or enlargement or rights.
(g) No Other Rights.
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of Company Stock, the
payment of any dividend, any increase or decrease in the number of shares of
Company Stock or any dissolution, liquidation, merger or consolidation of the
Company or any other corporation. Except as expressly provided in the Plan, no
issuance by the Company of Company Stock, or securities convertible into shares
of Company Stock, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Company Stock subject to an
Incentive Award or the exercise price of any Option or SAR.
17
<PAGE>
11. Rights as a Stockholder.
(a) No Rights as a Stockholder.
No person shall have any rights as a stockholder with respect to any
shares of Company Stock covered by or relating to any Incentive Award granted
pursuant to the Plan until the date the person becomes the owner of record with
respect to such shares. Except as otherwise expressly provided in Section 10
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
(b) Accrual of Dividends.
Whenever Restricted Shares are paid to a Participant or beneficiary
under the Plan, such Participant or beneficiary shall also be entitled to
receive, with respect to each Restricted Share paid, an amount equal to any cash
dividends, and number of shares of Company Stock equal to any stock dividends,
declared and paid with respect to a share of Company Stock between the date the
relevant Restricted Share award was granted and the date the Restricted Shares
are being distributed. At the discretion of the Committee, interest may be paid
on the amount of cash dividends withheld, including cash dividends on stock
dividends, at a rate and subject to such terms as determined by the Committee.
12. No Special Employment Rights; No Rights to Incentive Award.
(a) No Special Employment Rights.
Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his or her
employment by or service with the Company or any subsidiary of the Company or
interfere in any way with the right of the Company, subject to the terms of any
separate employment or consulting agreement to the contrary, at any time to
terminate such employment or service or to increase or decrease the compensation
of the Participant from the rate in existence at the time of the grant of an
Incentive Award.
(b) No Rights to Incentive Awards.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
18
<PAGE>
13. Securities Matters.
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any shares of
Company Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be issued or delivered any certificates evidencing
shares of Company Stock pursuant to the Plan unless and until the Company is
advised by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority, and
the requirements of NASDAQ and any other securities exchange on which shares of
Company Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Company Stock
pursuant to the terms hereof, that the recipient of such shares make such
covenants, agreements, and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall be effective only at
such time as counsel to the Company shall have determined that the issuance and
delivery of shares of Company Stock pursuant to such exercise is in compliance
with all applicable laws, regulations of governmental authority, and the
requirements of NASDAQ and any other securities exchange on which shares of
Company Stock are traded. The Committee may, in its sole discretion, defer the
effectiveness of any exercise of an Option granted hereunder in order to allow
the issuance of shares of Company Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws. The Committee shall inform the
Participant in writing of its decision to defer the effectiveness of the
exercise of an Option granted hereunder. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain a refund of any amount
paid with respect thereto.
(c) All Company Stock issued pursuant to the terms of the Plan shall
constitute "restricted securities," as that term is defined in Rule 144
promulgated pursuant to the Securities Act, and may not be transferred except in
compliance with the registration requirements of the Securities Act or an
exemption therefrom.
(d) Certificates for shares of Company Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERD FOR SALE, SOLD, PLEDGED,
19
<PAGE>
TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE STATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE
ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER)
THAT SUCH OFFER SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICATE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Company Stock issued pursuant to
an effective registration statement under the Securities Act and in accordance
with applicable state securities laws.
14. Withholding Taxes.
(a) Cash Remittance.
Whenever shares of Company Stock are to be issued upon the exercise of
an Option, the occurrence of the Issue Date or Vesting Date with respect to a
share of Restricted Stock or the payment of a Stock Bonus, the Company shall
have the right to require the Participant to remit to the Company in cash an
amount sufficient to satisfy federal, state, and local withholding tax
requirements, if any, attributable to such exercise, occurrence or payment prior
to the delivery of any certificate or certificates for such shares. In addition,
upon the exercise of an SAR, the Company shall have the right to withhold from
any cash payment required to be made pursuant thereto an amount sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise or grant.
(b) Stock Remittance.
Subject to Section 14(c) hereof, at the election of the Participant,
subject to the approval of the Committee, when shares of Company Stock are to be
issued upon the exercise of an Option, the occurrence of the Issue Date or the
Vesting Date with respect to a share of Restricted Stock, or the grant of a
Stock Bonus, in lieu of the remittance required by Section 14(a) hereof, the
Participant may tender to the Company a number of shares of Company Stock
determined by such Participant, the Fair Market Value of which at the tender
date the Committee determines to be sufficient to satisfy the minimum federal,
state and local withholding tax requirements, if any, attributable to such
exercise, occurrence or grant and not greater than the Participant's estimated
total federal, state and local tax obligations associated with such exercise,
occurrence or grant.
20
<PAGE>
(c) Stock Withholding.
The Company shall have the right, when shares of Company Stock are to be
issued upon the exercise of an Option, the occurrence of the Issue Date or the
Vesting Date with respect to a share of Restricted Stock or the grant of a Stock
Bonus, in lieu of requiring the remittance required by Section 14(a) hereof, to
withhold a number of such shares, the Fair Market Value of which at the exercise
date the Committee determines to be sufficient to satisfy the federal, state and
local withholding tax requirements, if any, attributable to such exercise,
occurrence or grant and is not greater than the Participant's estimated total,
federal, state and local tax obligations associated with such exercise,
occurrence or grant.
15. Amendment or Termination of the Plan.
The Board may at any time, or from time to time, suspend or terminate the
Plan in whole or in part, or amend it in such respects as the Board may deem
appropriate. No amendment, suspension or termination of the Plan shall, without
the Participant's consent, alter or impair any of the rights or obligations
under any Option theretofore granted to an Participant under the Plan. The Board
may amend the Plan, subject to the limitations cited above, in such manner as it
deems necessary to permit the granting of Incentive Awards meeting the
requirements of future amendments or issued regulations, if any, to the Code or
to the Exchange Act.
16. No Obligation to Exercise.
The grant to a Participant of an Option or a SAR shall impose no obligation
upon such Participant to exercise such Option or SAR.
17. Transfers Upon Death.
Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind the
Company unless the Committee shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such evidence as the Committee may
deem necessary to establish the validity of the transfer and (b) an agreement by
the transferee to comply with all the terms and conditions of the Incentive
Award that are or would have been applicable to the Participant and to be bound
by the acknowledgments made by the Participant in connection with the grant of
the Incentive Award. Except as provided in this Section 17, no Incentive Award
shall be transferable, and shall be exercisable only by a Participant during the
Participant's lifetime.
21
<PAGE>
18. Expenses and Receipts.
The expenses of the Plan shall be paid by the Company. Any proceeds received
by the Company in connection with any Incentive Award will be used for general
purposes.
19. Failure to Comply.
In addition to the remedies of the Company elsewhere provided for herein, a
failure by a Participant (or beneficiary) to comply with any of the terms and
conditions of the Plan or the agreement executed by such Participant (or
beneficiary) evidencing an Incentive Award, unless such failure is remedied by
such Participant (or beneficiary) within ten days after having been notified of
such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part, as the Committee, in
its absolute discretion may determine.
20. Adoption and Effective Date of Plan.
The Plan was adopted by unanimous written consent of the Board of Directors
of the Company, in lieu of a meeting of the Board, effective as of May 15, 1997
and the Plan was subsequently ratified and approved through action taken by the
written consent of a majority of the shareholders of the Company dated effective
as of May 15, 1997, in lieu of a meeting of such shareholders, all as permitted
under New York law.
21. Term of the Plan.
The right to grant Incentive Awards under the Plan will terminate upon the
expiration of ten years from the date the Plan was initially adopted.
22. Applicable Law.
Except to the extent preempted by an applicable federal law, the Plan will
be construed and administered in accordance with the laws of the State of New
York, without reference to the principles of conflicts of law.
22
<PAGE>
TAX INDEMNIFICATION AGREEMENT
AGREEMENT made this 6th day of June, 1997, by and between Robocom
Systems Inc., a New York corporation (the "Company"), and the shareholders of
the Company named on the signature page hereto (each, a "Shareholder" and
collectively, the "Shareholders").
W I T N E S S E T H
WHEREAS, since June 1990, the Company has elected to be taxed as an "S"
corporation under subchapter S of the Internal Revenue Code of 1986, as amended
(the "Code"), and under similar provisions of state and local tax laws;
WHEREAS, the Company's election will be terminated on the date (the
"Termination Date") of its execution and delivery of an underwriting agreement
for the public offering and sale of its common stock;
WHEREAS, for periods prior to the Termination Date (the "S Corporation
Period"), the Company's items of income, gain, loss, deduction and credit were
passed through to and reported on the individual tax returns of the Company's
shareholders;
WHEREAS, in contemplation of the public offering and sale of the
Company's stock, the parties to this Agreement desire to set forth their rights
and obligations with respect to certain taxes and related liabilities that may
be imposed upon the Shareholders as a result of the conduct of the Company's
business during the S Corporation Period;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties hereto
agree as follows:
1. Indemnification. The Company agrees to indemnify, defend and hold
harmless each Shareholder from and against any and all losses, liabilities,
obligations, damages, impositions, assessments, fines, deficiencies, costs and
expenses, including without limitation reasonable attorneys' and accountants'
<PAGE>
fees and expenses (a "Loss") with respect to any and all Federal, state or local
taxes of any kind whatsoever, including interest, penalties and additions to
taxes ("Taxes") imposed upon a Shareholder as a result of (i) any change which
results in an increase in an item of the Company's income or gain with respect
to one of the taxable years in the S Corporation Period and a corresponding
decrease in an item of the Company's income or gain with respect to another
taxable year that is not in the S Corporation Period, or (ii) any change which
results in a decrease in an item of the Company's loss, deduction or credit with
respect to one of the taxable years in the S Corporation Period and a
corresponding increase in an item of or loss, deduction or credit with respect
to another taxable year that is not in the S Corporation Period.
2. Notification of Proposed Adjustment. Each Shareholder shall notify
the Company within fifteen (15) days after receiving any notice of an intention
of a taxing authority to audit any return of such Shareholder that includes any
item of income, gain, loss, deduction or credit reported by the Company with
respect to the S Corporation Period. Each Shareholder shall notify the Company
within fifteen (15) days after receiving any notice from a taxing authority of
any proposed adjustment for which the Company may be required to indemnify such
Shareholder under this Agreement (a "Proposed Adjustment").
3. Contest of Proposed Adjustment. Upon receipt of a notice of a
Proposed Adjustment, the Company may (i) decide not to contest the Proposed
Adjustment, (ii) require the affected Shareholder(s) to contest the Proposed
Adjustment at the Company's expense, or (iii) require the affected
Shareholder(s) to permit the Company and its representatives to contest the
Proposed Adjustment at the Company's expense. All costs of contesting the
Proposed Adjustment in any forum, including all administrative and judicial
appeals, shall be borne by the Company. If the Company requires any Shareholder
to contest a Proposed Adjustment, the Company shall pay to such Shareholder on
demand all costs and expenses (including attorneys' and accounting fees) that
such Shareholder may incur in contesting the Proposed Adjustment. No Shareholder
shall make, accept or enter into a settlement or other compromise with respect
to any Proposed Adjustment without the written consent of the Company, which
consent shall not be unreasonably withheld.
2
<PAGE>
4. Payment; Refund. Upon the final resolution of any proceeding to
contest a Proposed Adjustment, or if the Company decides not to contest or
decides to abandon its contest of a Proposed Adjustment, the Company shall pay
to each affected Shareholder, in cash, the amount of the Loss for Taxes with
respect to the Proposed Adjustment no later than 10 days prior to the due date
of any payment required to be made by such Shareholder with respect thereto. If
any portion of any Loss for Taxes paid to any Shareholder by the Company is
thereafter refunded or repaid to such Shareholder by any taxing authority, such
Shareholder shall repay to the Company the amount of such refund or repayment,
less any unreimbursed costs incurred by such Shareholder with respect to the
refund or repayment.
5. Gross-up. If any Shareholder notifies the Company that such
Shareholder is required to include any payment received pursuant to this
Agreement in computing such Shareholder's gross income in a tax return, other
than (i) any payment received prior to the expiration of the "post-termination
transition period" defined in section 1377(b) of the Code, or (ii) any payment
for which such Shareholder failed to give the Company timely notice to allow the
Company to make such payment prior to the expiration of the post-termination
transition period, then, in addition to all other payments made under this
Agreement, the Company shall also pay to such Shareholder an amount which, when
added to the payment so included, will place such Shareholder in the same net
after-tax position that such Shareholder would have been in if the payment had
not been so included.
6. Tax Matters. Each Shareholder agrees to prepare all tax returns
consistent with the manner in which each item of income, gain, loss, deduction
and credit of the Company is reported to such Shareholder. Irwin Balaban is the
"tax matters person" of the Company for the S Corporation Period.
7. Notices. Any notice requested or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to a Shareholder,
at such Shareholder's address set forth on the signature page hereto, or to such
other address or addresses as any party shall have designated in writing to the
other parties hereto.
3
<PAGE>
8. Survivability. The covenants and agreements of the parties set forth
in this Agreement shall survive indefinitely, and shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns.
9. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, between the parties with respect
to the subject matter hereof.
10. Modification. No provision of this Agreement may be amended,
waived, or otherwise modified without the written consent of the parties.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
ROBOCOM SYSTEMS INC.
By: /s/ Irwin Balaban
-------------------------------------
Irwin Balaban
President and Chief
Executive Officer
SHAREHOLDERS:
/s/ Irwin Balaban
----------------------------------------
Irwin Balaban
Address:
--------------------------------
--------------------------------
/s/ Herbert Goldman
----------------------------------------
Herbert Goldman
Address:
--------------------------------
--------------------------------
4
<PAGE>
/s/ Lawrence Klein
----------------------------------------
Lawrence Klein
Address:
--------------------------------
--------------------------------
/s/ Steven Kuhl
----------------------------------------
Steven Kuhl
Address:
--------------------------------
--------------------------------
/s/ Robert O'Connor
----------------------------------------
Robert O'Connor
Address:
--------------------------------
--------------------------------
/s/ Chung-Hsin Lee
----------------------------------------
Chung-Hsin Lee
Address:
--------------------------------
--------------------------------
/s/ Judy Frenkel
----------------------------------------
Judy Frenkel
Address:
--------------------------------
--------------------------------
/s/ Max Kurland
----------------------------------------
Max Kurland
Address:
--------------------------------
--------------------------------
5
<PAGE>
May 15, 1997
BlueStone Capital Partners, L.P.
575 Fifth Avenue
New York, New York 10017
Re: Robocom Systems Inc.
Dear Sir and Madam:
In order to induce BlueStone Capital Partners, L.P. (the "Underwriter")
to enter into an underwriting agreement with Robocom Systems Inc. (the
"Company") in connection with the proposed public offering of shares of common
stock of the Company resulting in gross proceeds of approximately $10,000,000
contemplated by that certain letter of intent between the Company and the
Underwriter, dated March 10, 1997 (the "Proposed Offering"), and as will be
described in a registration statement filed with the Securities and Exchange
Commission (the "SEC") (such registration statement, including as it may
subsequently be amended, referred to herein as the "Registration Statement"),
and as consideration for the Underwriter participating in the Proposed Offering,
the undersigned hereby agrees with the Underwriter that:
1. Until twelve months after the date the Registration Statement is
declared effective by the SEC (the "Effective Date") the undersigned
securityholder will not, without the prior written consent of the Underwriter:
(i) directly or indirectly, sell, offer for sale, transfer, pledge
or otherwise dispose of, any securities of the Company owned by the undersigned,
pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Act"), or otherwise; provided, however, that gifts or sales or other
dispositions exempt from registration pursuant to Section 4(2) of the Act of
securities may be made upon the condition that the transferees thereof agree in
<PAGE>
writing to be bound by the foregoing restriction with respect to the securities
covered by such gifts or sales or other dispositions in like manner as it
applies to the undersigned; or
(ii) exercise any registration rights relating to any securities of
the Company; and
2. For a period of two years following the Effective Date, the
undersigned securityholder will vote all of the voting securities of the Company
owned by the undersigned securityholder in favor of the election of a designee,
if any, of the Underwriter (which designee may change from time to time) to the
Company's Board of Directors.
Very truly yours,
SECURITYHOLDER:
-----------------------------
-----------------------------
Address:
---------------------
---------------------
Date:
------------------------
================================================================================
[GRAPHIC OF WORLD MAP]
International Distribution Agreement
Between: ROBOCOM Systems, Inc.
And: Sistemas Integrados, Mexico
November 1996
Note: SECTIONS MARKED WITH AN (*) HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND HAVE BEEN FILED SEPARATELY
WITH THE COMMISSION.
================================================================================
<PAGE>
International Distribution Agreement November 1996
- --------------------------------------------------------------------------------
This Agreement is made this _____ Day of _____, 19 __ between ROBOCOM Systems,
Inc., a New York State Corporation having an office at 511 Ocean Avenue,
Massapequa, NY 11158 ("ROBOCOM") and Sistemas Integrados, a (Mexican)
corporation having an office at Newton 97, Col Polanco, Mexico 11560,
("Distributor").
Non-Exclusive Territory: Mexico and Central America
WHEREAS:
ROBOCOM owns the right to license proprietary software products (consisting
of programs and related documentation); and
Distributor desires to market and sublicense software products of this
type; and
ROBOCOM and Distributor wish to enter into an agreement authorizing
Distributor to market directly and make copies of certain software products
available to End Users in the Territory through Distributor, with Distributor
making certain payments to ROBOCOM with respect thereto.
NOW IT IS HEREBY AGREED as follows:
1.0 DEFINITIONS.
1.1 "Programs" mean the actual ROBOCOM computer programs in
machine-readable object code or other form covered by this Agreement, including
all ROBOCOM provided modifications and enhancements thereto.
1.2 "Documentation" means ROBOCOM user manuals and other materials in
printed form which facilitate the use of the Programs by End Users.
1.3 "Software Products" mean any combination of a Program object code and
Documentation licensed by ROBOCOM under the terms of this Agreement. "Product"
means either a Program or documentation, without drawing a distinction.
1.4 "End User" means an entry authorized for productive use of Software
Products. "Productive Use" means any use of any of the Software Products in
their application purposes.
1.5 "Territory" means the non-exclusive Territory first identified above.
1.6 "Demonstration License" means a license to Distributor for distributor
use of Software Product object code for marketing demonstrations, copying for
distribution to End Users, maintenance and training, and for use of Software
Product source code solely for use in providing End-User support. Neither the
source code nor the object code shall be otherwise used
- --------------------------------------------------------------------------------
Between: ROBOCOM SYSTEMS, INC.
And: Sistemas Integrados, Mexico Page 1
<PAGE>
International Distribution Agreement November 1996
- --------------------------------------------------------------------------------
or copied. The source code shall be kept only at a single identified Distributor
site and shall nor be disclosed to third parties.
1.7 "The Commencement Date" means the effective date of the Agreement first
written above.
2.0 APPOINTMENT OF DISTRIBUTOR
2.1 License Grant. During the term of this Agreement and subject to all
other conditions herein, ROBOCOM hereby grants to Distributor a nonexclusive
right to relicense Software Products to End Users in the territory in
Distributor's name upon Distributor's own terms and conditions, such terms and
conditions to be approved by ROBOCOM. Certain Exhibit 1 Products may be
identified as requiring or including third party software which, if available
from ROBOCOM shall be licensed through ROBOCOM and may be required to be
licensed under different or additional terms and conditions.
2.2 Translations. During the term of this Agreement and so long thereafter
as distributor is furnishing maintenance services to End Users in accordance
with this agreement, and subject to all other conditions herein, ROBOCOM grants
to Distributor nonexclusive translation and distribution rights in the Territory
in the documentation and in all ROBOCOM-furnished modifications and updates
thereto. All translations shall be exact translations and shall meet ROBOCOM
appearance standards. Copyright in such translations shall vest in ROBOCOM
immediately at all times and Distributor agrees that all present and future
copyright in every translation is hereby assigned, including, but not limited
to, rights to create derivative work and any renewal rights and Distributor
agrees to execute any documents necessary to vest full copyright ownership in
ROBOCOM including a waiver of any distributor moral rights. Distributor agrees
that it will provide copies of such translations to ROBOCOM at no charge prior
to any distribution, and will provide ROBOCOM with reasonable assistance in
securing and enforcing the copyrights(s). Distributor is not permitted to
translate or attempt to translate the Programs.
2.3 Title in Products and Modifications. Title and all proprietary rights
in the Products, any permitted Distributor modifications in the Products, and
any translations thereof shall at all times remain the properties of ROBOCOM or
ROBOCOM's Licensor.
Inventions. Any modifications, changes, or improvements made by Distributor to
ROBOCOM's Software will be the sole and exclusive property of ROBOCOM, and will
promptly be provided to ROBOCOM. ROBOCOM will have the right to review at the
functional design stage, and to review and test code to ensure compatibility
with RIMS. In the event the change is incorporated into RIMS as part of the
standard package, it will then be available for resale through all channels. In
the event it is not incorporated, then for so long as this Agreement is in
effect, Distributor will have the right to use and/or sell, subject to the terms
of this agreement, such modifications, changes, or improvements, without payment
of royalties
- --------------------------------------------------------------------------------
Between: ROBOCOM SYSTEMS, INC.
And: Sistemas Integrados, Mexico Page 2
<PAGE>
International Distribution Agreement November 1996
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to ROBOCOM. Maintenance will be the responsibility of Distributor on all changes
not incorporated into the standard RIMS product.
2.4 Trade Secret and Confidential Information. Distributor acknowledges
that ROBOCOM has advised it that the Software and related documentation are
valuable proprietary information and trade secrets of ROBOCOM and that the
software (including, but not limited to the design, programming techniques, flow
charts, source code and documentation thereof) is confidential information
disclosed to Distributor to be used only as expressly permitted by the terms of
this Agreement, whether or not any portion thereof is or may be validly
copyrighted or patented. Distributor will take all reasonable steps to protect
the software on magnetic tape or disk or in any other form of disclosure by
using the same standard of care Distributor uses to protect its own confidential
information of a similar nature. Distributor agrees that it will require all
those individuals having access to the Software under this Agreement sign a
Non-Disclosure Statement, Exhibit 2 attached.
Distributor further acknowledges that, in the event of an actual or
threatened violation of the foregoing provision of which Distributor has actual
knowledge, Distributor will take immediate steps to stop such threatened
violation; that ROBOCOM may not have an adequate monetary remedy and will be
entitled to such injunctive relief as may be deemed proper by a court of
competent jurisdiction, in addition to any other available remedies. The
provisions of the Section 8 will survive the termination of this Agreement.
ROBOCOM agrees that Distributor's obligation to keep confidential any data
will not apply to any information or data which: (1) is or becomes publicly
known through no wrongful act of Distributor (2) is known to Distributor at the
time of disclosure; (3) is rightfully received by Distributor from a third party
without breach of this Agreement; (4) is furnished to a third party by ROBOCOM
without a similar restriction on the third party's rights; (5) is approved for
release by authorization from ROBOCOM; or (6) is disclosed pursuant to the
lawful requirement or request of a Governmental Agency or disclosure is
permitted by operation of law, provided that Distributor has given prior notice
to ROBOCOM and has made a reasonable attempt to obtain a protective order
limiting disclosure and use of the information so disclosed.
3.0 CERTAIN ROBOCOM OBLIGATIONS
3.1 Copies of Software Products. ROBOCOM will provide Distributor a single
current production UNIX runtime copy of its Software for demonstration and
training purposes only. ROBOCOM will also provide Distributor with three copies
of all of its User Documentation, for demonstration and training purposes only.
3.2 Maintenance Services. ROBOCOM will provide Distributor the maintenance
services as described in Exhibit 3. If a client company using software products
requires the documentation to be translated, then Distributor will promptly
translate documentation, as
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necessary, and distribute maintenance documentation and unmodified code updates
to its End Users.
3.3 Distributor Training. ROBOCOM will provide Distributor training as in
Exhibit 4.
3.4 Export Licenses. ROBOCOM will promptly apply for any licenses, if
required, from the Office of Export Administration, United States Department of
Commerce or any other United States Agency for shipment of ROBOCOM software.
3.5 Copies of RIMS License. ROBOCOM shall provide the then current version
of RIMS to Distributor in fulfillment of a specific relicensing of RIMS to
Distributor's End User upon receipt of a copy of an executed relicense agreement
between Distributor and its End User. Copies of the then current version of RIMS
will be provided on tape.
3.6 Warranties. ROBOCOM warrants to Distributor that ROBOCOM's proprietary
software products as furnished to distributor (excluding those which are
categorized as third party software) will work substantially as described in the
applicable ROBOCOM published documentation. Distributor acknowledges and accepts
that software is inherently susceptible to error and that ROBOCOM's sole
obligation shall be to use reasonable efforts to remedy substantial malfunctions
of the software by correcting errors or developing a suitable work around. This
warranty is subject to ROBOCOM receiving notification in sufficient detail to
enable ROBOCOM to demonstrate the error and certify its rectification or the
desiring of a suitable work around, ROBOCOM does not warrant that all errors are
correctable or avoidable.
This warranty shall not apply to software identified as third party
software or otherwise identified as being furnished in "AS IS" condition and
shall not apply to Distributor or End User modified portions of Software
Products or other portions of Software Products to the extent affected by such
modifications. ROBOCOM may charge Distributor at ROBOCOM's then-standard rates
for ROBOCOM attempts to diagnose and/or remedy problems attributable to
Distributor or Distributor's End User modifications or misuse.
3.7 New Versions, Enhancements. ROBOCOM may, from time-to-time, add to
Exhibit 'A' new authorized computer models or configurations or new or modified
ROBOCOM software and enhancements which, in ROBOCOM's judgment, are appropriate
for distribution in the Territory by Distributor.
3.7 Advertising Materials. ROBOCOM will provide Distributor with 500 copies
of its existing marketing literature initially, thereafter, copies of
advertising and promotional materials, as available and appropriate, at
ROBOCOM's cost plus twenty percent (20%). At no charge, ROBOCOM will provide
Distributor with a current example proposal for a US End User and the
accompanying general system description.
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4.0 CERTAIN Distributor OBLIGATION'S
4.1 Compliance. Distributor agrees to comply fully with all of
Distributor's obligations under this Agreement.
4.2 Re-Licensing Responsibilities. Distributor shall accept responsibility
for Software Products upon receipt from ROBOCOM and ensure Software Products are
of mercantile condition and quality. Distributor shall be responsible for
successfully compiling Software Products with stipulated version of Progress and
deliver the product to its end User, unless End User wishes Software products to
co-reside on its existing processor. In this case, Distributor shall take
responsibility for installing software products onto the selected processor.
Distributor may, at its option, contract ROBOCOM for support services. In no
case shall distributor guarantee performance on the End User's processor without
ROBOCOM's approval. Software Products shall otherwise be installed on a
computing platform that complies with the specifications provided by ROBOCOM.
Distributor shall pay for the Software Products in accordance with the
terms of this Agreement, (paragraph 4.20).
Distributor represents and warrants that it has the expertise, experience,
knowledge of the regional market and financial resources to successfully market,
deliver, technically support and relicense the Software in the Territory and to
achieve significant market penetration in the Territory.
Distributor will designate one or more individuals to act as sales and
application specialist(s) in the area of warehouse and distribution matters, and
to professionally present ROBOCOM's Software to interested parties. At its own
expense, Distributor will have this specialist(s) spend at least two weeks per
year at ROBOCOM's United States office for formal and informal training. The
location may be changed by mutual written agreement. Initial training will take
place within 90 days of the signing of this agreement.
Distributor will devote its best efforts to maximizing profitable sales of
ROBOCOM's Software in the Territory. This will include undertaking of formal
marketing and sales programs, including direct mailing, seminars, and individual
in person presentations to prospective customers. Within 90 days from the
signing of this agreement, Distributor will submit to ROBOCOM a detailed
marketing plan, describing how Distributor intends to market ROBOCOM's Software,
and the resources Distributor will devote to this effort.
Distributor will prepare its own price and technical proposals for
prospective customers. For customers requiring services other than or in
addition to ROBOCOM's standard Software, ROBOCOM will not be bound by the
provisions of Distributor's proposal except by prior written agreement.
Distributor will require that all customers for ROBOCOM's Software sign a
Software License Agreement identical to that shown in Exhibit 5, and that they
comply with
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other reasonable conditions to protect ROBOCOM's interests.
Distributor will provide initial technical support for its customers using
ROBOCOM software.
In addition, Distributor shall keep executed End User licenses, maintenance
agreements and disclosure agreements on file, and on request from ROBOCOM, will
provide at no charge copies of such licenses or agreements to ROBOCOM. If any
license or agreement is in a language other than English, an English translation
shall be made available by Distributor.
4.3 Examination of Records. Distributor will allow ROBOCOM representatives
to examine Distributor's records to confirm accurate and timely payment of
royalties by Distributor. Any such examination shall be conducted within fifteen
(15) days of Distributor's receipt of ROBOCOM's written request and shall be
performed during normal business hours, at a time mutually agreed upon by
ROBOCOM and Distributor. ROBOCOM's cost of such an examination shall be borne by
ROBOCOM unless a discrepancy in excess of two (2%) in payments of royalties is
discovered for any quarter, in which case 50% of ROBOCOM's cost of the
examination shall be born by Distributor. Any confidential information belonging
to Distributor will be kept confidential by ROBOCOM.
Distributor will maintain proper accounting records, and allow reasonable
inspection by ROBOCOM to verify amounts payable to ROBOCOM. ROBOCOM will have
the right, at any time, and at ROBOCOM's expense, to appoint an independent
auditor to verify the Distributor has not violated any portions of this
agreement. If an independent auditor is appointed by ROBOCOM for this purpose,
Distributor will provide said auditors with access to its records during normal
business hours.
4.4 Proprietary Notices. Distributor agrees to reproduce on all permitted
copies ROBOCOM and/or ROBOCOM's licenser's copyright and other proprietary
notices and, according to ROBOCOM instruction, any trademark notices as included
in the Software Products and in any ROBOCOM-furnished marketing materials,
training aids and other ROBOCOM-furnished materials and on any permitted
translations thereof Distributor recognizes and agrees that Distributor obtains
no rights in the Software Products and other ROBOCOM materials except for the
limited rights specifically granted under this Agreement.
4.5 Modifications; License Enforcement. Distributor agrees that it will not
modify software Products except for End User support, not duplicate software
Products otherwise than as expressly authorized herein and use its best efforts
to ensure that its End Users do not use Software Products in violation of the
agreement and the End User license agreement, including, but not limited to,
productive use on more than the authorized number of computers or on a model of
computer bearing a higher sublicense fee than paid by Distributor to ROBOCOM, or
use the software Products for the benefit of entities other than the End User.
Distributor shall promptly notify ROBOCOM and provide reasonable assistance to
ROBOCOM without charge to
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assist ROBOCOM in prosecution of any trade secret, copyright or trademark
infringements which come to Distributor's attention, and shall be undertaken by
ROBOCOM and at its expense.
4.6 Technical Support. Distributor agrees to provide all direct technical
support for the software Products to Distributor's end User licensees. Direct
technical support is defined as:
A. Providing all End User training and application support and answering
all End User operational and use questions;
B. Reproducing reported problems and reporting them in writing to
ROBOCOM's technical support center;
C. Endeavoring to answer technical End User questions prior to requesting
assistance from the ROBOCOM support center, and documenting the
answers furnished to End Users;
D. Using the Development License source code at Distributor's site solely
to understand and fix or develop a work around for reported software
problems. In each instance of modification of the source code for this
purpose or development of a work around, Distributor will coordinate
the change with ROBOCOM and will promptly provide ROBOCOM with a copy
of the commented source code modifications and identification of the
End User(s) to which the change relates; and
E. Providing weekly written reports to ROBOCOM support center of all
support activity and any new problems reported and solutions to
problems, if known.
4.7 Technical Staffing. Distributor agrees to establish and maintain at all
times a capable trained technical support staff sufficient to provide technical
support as defined in item 4.6 above, including, but not limited to, having two
senior systems analysts trained on the Software Products at all times.
4.8 End User Communications. Distributor agrees to ensure that each
supported End User CPU includes a 9400 baud modem available for support purposes
and communications adequate for the provision of support functions.
4.9 Distributor communications. Distributor agrees to provide ROBOCOM with
the telephone numbers on which Distributor provides voice and modem technical
support and with the End User telephone numbers on which each End User receives
voice and modem technical support.
4.10 Support Services. Distributor agrees that it will provide support
services only to
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End Users for whom all required royalties and maintenance fee payments to
ROBOCOM are current.
4.11 Warranties Solely on Behalf of Distributor. Distributor agrees that it
will make any warranties or other representations and maintenance commitments to
End Users solely for Distributor and not on behalf of ROBOCOM and will indemnify
and save ROBOCOM harmless from any claimed by Distributor End Users for
maintenance services, breach of warranty, performance failure or failure of any
Product to meet a description.
4.12 Translations. At its sole expense, Distributor will provide
translations to the literals in RIMS, and ROBOCOM shall enter those translation
into RIMS current version to provide screens in the languages(s) provided by
Distributor. Distributor may translate all documentation and updates thereto and
package and produce sufficient copies for itself and End Users in accordance
with this Agreement. Such translations shall be subject to the provisions of
Paragraphs 2.2 and 2.4 above. Any services requested by Distributor and
furnished by ROBOCOM will be furnished at ROBOCOM's then standard rates and
reasonable expenses. All packaging, printing, binding and other expenses will be
born by Distributor.
4.13 Source Code. Distributor agrees to hold all Program source code in
strict confidence and as valuable confidential information belonging to ROBOCOM
and not to disclose such code to any person except Distributor's employees on a
need to know basis.
4.14 Return of Materials upon Termination. Upon any termination of this
Agreement, Distributor will immediately return or certify destruction of the
Programs and documentation, including any copies, information or notes relating
thereto except to the extent temporary retention is reasonably necessary for not
more than one year from termination to fulfill End User maintenance commitments
made by Distributor in good faith and in accordance with this Agreement. ROBOCOM
agrees that it will offer software Product maintenance services to such End
Users following the determination of this Agreement for ROBOCOM supported
then-current versions of Software Products.
4.15 Payments. Distributor will make all payments in United States
currency at ROBOCOM's offices, first stated above, or as otherwise directed by
ROBOCOM and without deductions based on any currency control restrictions,
import duties, or sales, use, value-added or other taxes or withholdings.
Distributor will bear all taxes, however designated, imposed as a result of the
existence or operation of this Agreement, including, but not limited to, any tax
which Distributor is required to withhold or deduct from payment to ROBOCOM,
except, (a) any such tax imposed upon ROBOCOM by any governmental entity in the
United States and (b) any such tax imposed upon ROBOCOM in the country in which
the office of Distributor is located or in which the End User is located if such
tax is allowable as a credit against United States income taxes of ROBOCOM. To
assist ROBOCOM in obtaining such credit, Distributor shall furnish ROBOCOM with
such evidence as may be required by United States taxing authorities to
establish that such tax has been paid. Currency conversion shall be made as of
the
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exchange rate on the last business day before the day payment is due. All
monetary amounts in this Agreement are in US dollars.
4.16 Import and Export Controls. At Distributor expense, Distributor will
obtain any necessary import certificates or permissions and provide all
necessary assistance to ROBOCOM in obtaining any required export or other
licenses from United States governmental agencies, including, but not limited
to, certifications as to use and ultimate destination and/or written agreement
not to knowingly transmit directly or indirectly software Products to certain
named countries. Any such licenses or other documents shall become attachments
to this Agreement and part of Distributor's obligations hereunder. Concurrent
with signing this agreement Distributor will sign an Export Controls letter.
4.17 Competitive Products. Distributor agrees to permit termination of this
Agreement by ROBOCOM if Distributor sells and promotes products competitive with
ROBOCOM products permitted to be marketed under this Agreement. Prior to any
action being taken by ROBOCOM, a discussion would take place to allow
Distributor to explain the method of marketing and sale and demonstrate that
these products were not competitive to ROBOCOM's products.
4.18 Product Names; Trademarks. Distributor agrees to use ROBOCOM Product
names in association with the products and use any ROBOCOM trademarks as
instructed by ROBOCOM so as to protect ROBOCOM rights and continue
identification of the Products with ROBOCOM in the Territory.
4.19 Sales Projections. Provide ROBOCOM with quarterly sales projections
covering at least the next six quarters.
4.20 Fees and Payment; Maintenance Payments. Beginning with the first
system installed, for ROBOCOM Standard Software sold to Distributor customers
headquartered in the Territory, or elsewhere (as long as the right to distribute
ROBOCOM's Software has not been revoked), for which Distributor takes primary
installation and support responsibility, Distributor will charge customers the
list prices and pay ROBOCOM an amount equal to *% of the current list prices
(shown on the attached price list, Exhibit 1) or *% of a mutually agreed
discounted price which is commercially satisfactory to both ROBOCOM and
Distributor, for their modules purchased and installed. Should Distributor for
any reason decline to take primary installation and/or support responsibility
for any systems installed, Distributor and ROBOCOM will negotiate in advance an
equitable increase in the amount due ROBOCOM.
Ongoing Annual Maintenance Plan fees, computed at *% of the first site list
price for Standard Application Software and all custom Software provided by
ROBOCOM, will be split equally between the two parties, as long as Distributor
continues to support the customer directly. If ROBOCOM provides direct customer
support, it will receive *% of the maintenance fee.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. FILED
SEPARATELY WITH THE COMMISSION.
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Amounts to ROBOCOM, except for annual maintenance fees, will be paid by
Distributor at the end of the month following the month in which the Software
was installed. Annual maintenance fees will be to ROBOCOM at the end of the
second month following the month in which the Software was installed.
All transactions between Distributor and ROBOCOM will be in U.S. dollars.
All invoices are due withing sixty days of the date of the invoice.
The attached price list may be modified by ROBOCOM at any time, with 90
days advance notice to Distributor. ROBOCOM agrees that, for the initial
three-year term of this agreement, the prices for its standard application
software in the Territory will be adjusted pro rata to U.S. pricing.
By mutual written agreement, ROBOCOM and Distributor may modify the pricing
conditions on a case-by-case basis.
ROBOCOM agrees that, for the initial three year term of this Agreement,
customer maintenance charges will be contained with *% of the maintenance costs
in the country of installation.
5.0 PATENT AND COPYRIGHT INDEMNIFICATION
5.1 ROBOCOM will defend any action brought against Distributor [or
Distributor's End Users] based on a claim that a software Product infringes any
copyright, trade secret or United States patent (including patents in Territory
countries based on the relevant United States patents.). ROBOCOM will hold
Distributor harmless from and pay any award against Distributor or Distributor's
End Users based on such infringement provided that Distributor and/or End Users
notify ROBOCOM promptly in writing of the claim and Distributor and/or End Users
provide ROBOCOM reasonable assistance and permit ROBOCOM to control the defense
and any settlement. ROBOCOM shall have no liability if the alleged infringement
arises from (1) the licensing of other than a current unaltered release of a
Program as provided under this Agreement, or (2) the combination of a Program
with non ROBOCOM programs or data. ROBOCOM makes no representations or
warranties and provides no indemnities regarding patent or copyright
infringement by any portion of a software Product not developed by ROBOCOM.
5.2 In the event of claimed infringement, ROBOCOM reserves the right to
replace the Software Product with a non-infringing product of equivalent
functionality, modify the Software Product to make it non-infringing or, if
neither alternative is reasonably available, remove the Software Product and
refund to Distributor license fees paid to ROBOCOM with respect to the
infringing copies of the Software Product on a five-year End User use
amortization schedule.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
FILED SEPARATELY WITH THE COMMISSION.
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6.0 TERM AND TERMINATION
6.1 This Agreement shall enter into force on the Commencement Date and
shall continue for a period of two (2) years from the Commencement Date and
subject as herein provided shall thereupon automatically renew for an additional
one (1) year period and until terminated by one of the parties hereto giving
written notice thereof to the other at least one hundred eighty (180) days prior
to the end of the initial term or any following anniversary date of the
Agreement.
6.2 Notwithstanding Clause 6.1 of this Agreement, each party shall have the
right to terminate this Agreement at any time upon giving Distributor at least
ninety (90) days written notification if: (a) Distributor's performance under
this Agreement is unsatisfactory in ROBOCOM's reasonable judgement; (b)
Distributor promotes or markets a product competitive with the Software Products
in violation of Section 4.17; or (c) if Distributor shall undergo a change in
ownership or control with ROBOCOM's written consent, but approval of such change
shall be reasonably withheld by ROBOCOM.
6.3 Distributor and ROBOCOM agree that Distributor shall sell at least two
(2) sites during calendar year 1997 and at least five (5) sites during calendar
year 1998.
7.0 EVENTS OF DEFAULT
7.1 The occurrence of any of the following events shall constitute an event
of default entitling ROBOCOM to terminate this Agreement forthwith:
A. Nonpayment by Distributor of any payment to ROBOCOM for a period of
fifteen (15) working days after sending of written notice to the
Distributor specifying such default in payment.
B. If a petition or action shall be filed or taken by or against
Distributor under any law dealing with insolvency, bankruptcy or
suspension of payment and such petitions or action is not dismissed
within thirty (30) days.
C. If a Receiver is appointed over the assets or undertakings of
Distributor (or any part thereof).
D. If Distributor enters into a deed of arrangement or makes an
assignment for the benefit of creditors.
E. If Distributor ceases to function as a going concern or an order is
made or a resolution passed for the winding up of Distributor
(otherwise than for the purposes of amalgamation or reconstitution).
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F. If Distributor fails to promptly furnish ROBOCOM upon request, with
the names and addresses of End Users with a full copy of the signed
End User agreement and, if such agreement is not in English, with an
English translation of the agreement. This Agreement will terminate
immediately if Distributor sells, attempts to sell, agrees to sell, or
attempts to develop any products meaning Inventory and Warehouse
Control Systems Software competing with those provided by ROBOCOM.
G. If Distributor knowingly misrepresents the capabilities, functions or
functionalities of Software Products.
7.2 If either party fails to perform any other term, covenant or condition
of this Agreement and has not performed such term covenants or conditions within
thirty (30) days after a notice of default has been received, the non-defaulting
party has the right to forthwith terminate this Agreement by means of a written
notice without judicial intervention being required.
8.0 REMEDIES
8.1 Upon any termination of this Agreement, Distributor shall immediately
return or certify destruction of all Programs in accordance with paragraph 4.14
and ROBOCOM shall be entitled to recover from Distributor all accrued and unpaid
payments and other amounts then due and owing under the terms hereof and/or all
future payments and other amounts as and when becoming due hereunder.
No termination under this Paragraph 8.1 or otherwise under this Agreement
shall invalidate then existing Distributor End User licenses granted by
Distributor in accordance with this Agreement for which required fees and
charges have been credited or paid to ROBOCOM.
8.2 The rights of ROBOCOM pursuant to Paragraph 8.1 hereof are without
prejudice to any other rights or remedies which ROBOCOM may have. ROBOCOM
pursuit and enforcement of any one or more remedies shall not be deemed an
election waiver by ROBOCOM of any other remedy.
8.3 EXCEPT AS SET FORTH IN PARAGRAPH 3.5 AND PARAGRAPHS 5.1 AND 5.2,
ROBOCOM DISCLAIMS ALL WARRANTIES WITH REGARD TO THE ROBOCOM SERVICES AND
PRODUCTS SOLD OR LICENSED HEREUNDER INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ALL OBLIGATIONS OR
LIABILITIES ON THE PART OF ROBOCOM FOR DAMAGES, INCLUDING BUT NOT LIMITED TO,
INDIRECT,
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INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION
WITH THE DELIVERY, USE, OR PERFORMANCE OF THE SOFTWARE.
9.0 NOTICES
Service of all notices under this Agreement by either party to the other
shall be sufficient only if posted by certified or registered post, return
receipt requested or personally delivered and receipted for. Either party may
change its address for service of notice by written notice to the other.
10.0 UNFORESEEN EVENTS
Neither party shall be responsible for any delay nor failure to perform due
to causes beyond reasonable control of the party, including, but not limited to,
cause such as strikes, lockouts, or other labor disputes, riots, civil
disturbances, actions or inactions of governmental authorities or suppliers,
epidemics, war, embargoes, sever weather, fire, earthquakes, acts of God or the
public enemy, nuclear disasters, or default of a common carrier.
11.0 SEVERABILITY
In the event that any one or more of the provisions of this Agreement shall
for any reasons be held to be unenforceable in any respect under the laws of any
jurisdiction, such unenforceability shall not affect any other provision and
this Agreement shall then be construed as if such unenforceable provision or
provisions had never been contained herein.
12.0 GENERAL CONDITIONS
12.1 Applicable law; Dispute Resolution. The Agreement shall be construed
in accordance with and governed by the laws of the State of New York without
regard to that body of law known as conflict of laws and without reference to
the 1980 United Nations Convention on Contracts for the Sale of Goods and any
amendments thereto.
12.2 Headings. Headings and subheadings in this Agreement are for
convenience only and do not form part of this Agreement.
12.3 Assignment. Upon advance written notice, Distributor may assign this
Agreement to a parent, subsidiary, or successors in interest to the business of
Distributor provided that such assignees are located in the same country as
Distributor and is able to and does fulfill Distributor's obligations under this
Agreement. Distributor shall not otherwise assign this Agreement without the
written consent of ROBOCOM.
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12.4 Non-Waiver. The failure of either party to enforce at any time any of
the provisions hereof shall not be construed to be a waiver of the right or such
party thereafter to enforce any such provisions.
12.5 Independent Businesses. The Distributor and ROBOCOM are independent
businesses and will in no way claim otherwise or incur liabilities except on
their own account. It is understood and agreed that ROBOCOM and the Distributor
will not in any event be liable for any obligations, expenses, or damages of any
nature whatsoever incurred by the other party or for any claim made against the
other party on account of any services performed by it or by those for whom the
other party may be in law responsible and that this Agreement supersedes all
previous Agreements and arrangements between ROBOCOM and the Distributor.
12.6 Indemnity Clause. ROBOCOM will protect and save harmless and defend at
its own expense the Distributor from and against any and all claims of
infringements of patents, trade marks or industrial designs copyrights or other
property rights affecting the Products. The Distributor agrees to give ROBOCOM
prompt notice of any such claim that is made against the Distributor and will
give ROBOCOM such assistance and information as ROBOCOM may reasonably require.
In the event that any such infringement occurs or may occur, ROBOCOM may:
A. Procure for the Distributor the right to continue to use the Software
or infringing part thereof; or
B. Modify or amend the Software or infringing part thereof so that it
becomes non infringing; or
C. Replace the Software or infringing part thereof by other software of
similar acceptable capability; or
D. Pay the Distributor compensation relating to the whole or infringing
part of the Software as appropriate so that it may reimburse and
settle any corresponding claims put upon it by third parties.
E. The conditions of the indemnify clause identified herein apply only to
ROBOCOM's supplied RIMS applications code.
12.7 Notices. All notices hereunder will be in writing and will be deemed
to have been given and received when delivered in person or by registered or
certified mail, return receipt requested, postage prepaid, as follows:
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ENTIRE AGREEMENT
This Agreement and Exhibits constitute the entire Agreement governing the
relationship between the parties and supersede all proposals, oral or written,
and all negotiations, conversations, or discussions between the parties relating
to this Agreement. Distributor acknowledges that is has not been induced to
enter into this Agreement by representations or statements, oral or written, not
expressly contained herein. The terms and conditions of the Agreement shall
prevail, notwithstanding any variance from the terms and conditions of any order
or other instrument submitted by Distributor. This Agreement may be modified
only in writing signed by duly authorized representative of each party.
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If to Distributor:
Sistemas Integrados
Newton 27
Col Polanco
Mexico
11560
Attn: Eugenio Riveroll
If to ROBOCOM:
ROBOCOM Systems, Inc.
511 Ocean Avenue
Massapequa
New York
11758
USA
Attn: Richard Wilkins
Forum for Dispute. The parties agree to seek to resolve any dispute arising
under this Agreement pursuant to good faith business negotiations. In the event
of a dispute, the aggrieved party will promptly identify in writing the nature
of the outstanding dispute in sufficient detail as to allow the other party to
respond to the dispute. Each party agrees to set times and places to meet and
communicate their concerns and to propose resolutions to their dispute. These
meetings may take place by telephone, by video conference, or face-to-face. The
parties agree to hold not fewer than two meetings, and to meet for at least a
total of four hours to discuss their respective positions and to explore a
business resolution of their dispute. The parties agree to exchange offers in
writing upon conclusion of their meetings. Such good-faith procedures will be a
condition precedent to any litigation of the dispute.
13.5 The following are part of this Agreement:
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
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EXECUTED BY BOTH PARTIES, AS PROVIDED BELOW:
ROBOCOM Systems, Inc. Sistemas Integrados
By: By:
/s/ Illegible /s/ Gabriel Brovo
Title: DIR SALES & MARKETING Title: Partner Director
Date: JAN 12 1997 Date: JAN 1997
***
/s/ Illegible
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EXHIBITS TO
DISTRIBUTION AGREEMENT
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EXHIBIT 1
Robocom Products:
RIMS(R).2001 v3.3
MFG/PRO INTERFACE
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Intentionally blank. Provided under separate cover.
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EXHIBIT 2
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CONFIDENTIALITY AGREEMENT
BETWEEN FIRMS
AGREEMENT and acknowledgment between ROBOCOM Systems Inc. (Company), and
Sistemas Integrados.
Whereas, the Company agrees to furnish the undersigned certain confidential
information relating to the affairs of the Company for purposes of: The
marketing of RIMS(R) .0001 v3.3 in Mexico.
Whereas, the undersigned agrees to review, examine, inspect or obtain such
information only for the purposes described above, and to otherwise hold such
information confidential pursuant to the terms of this agreement,
BE IT KNOWN that the Company has or shall furnish to the undersigned certain
confidential information, as set forth on an attached list, and may further
allow the undersigned the right to inspect the business of the Company and/or
interview employees or representatives of the Company, all on the following
conditions:
1. The undersigned agrees to hold all confidential or proprietary information
or trade secrets ("information") in trust and confidence and agrees that it
shall be used only for the contemplated purpose, and shall not be used for
any other purpose or disclosed to any third party.
2. No copies will be made or retained of any written information supplied.
3. At the conclusion of our discussions, or upon demand by the Company, all
information, including written notes, photographs, memoranda, or notes
taken by you shall be returned to us.
4. This information shall not be disclosed to any employee or consultant
unless they agree to execute and be bound by the terms of this agreement.
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5. It is understood that the undersigned shall have no obligation with respect
to any information known by the undersigned or generally known within the
industry prior to dates of this agreement, or becomes common knowledge
within the industry thereafter.
Agreed and Accepted: Agreed and Accepted:
ROBOCOM Systems Inc. Sistemas Integrados
- -------------------- -------------------
/s/ Illegible /s/ Gabriel Bravo
- -------------------------- ---------------------------
Signature Signature
by: /s/ Illegible by: /s/ Gabriel Bravo
----------------------- ------------------------
Title: DIR. SALES & MKTG Title: Partner Director
-------------------- ---------------------
Date: June 12, 1997 Date: Jan 1997
--------------------- ----------------------
************
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EXHIBIT 3
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Maintenance Contract Terms and Conditions
1. (I) ROBOCOM will provide periodic MAINTENANCE releases to RIMS products.
These releases will be made available to authorized Distributors and
subsequently to all customers covered by Software Maintenance
Agreements.
Problem Correction. ROBOCOM shall use commercially reasonable efforts
to correct verified software problems on a timely basis. The response
to a problem may be any of the following:
- Avoidance Procedure. Provides a temporary measure to
operationally avoid an identified software problem.
- Documentation Correction. Resolves errors or ambiguities in the
supporting documentation for software.
- Product Release. Incorporates problem resolutions, enhancements,
and functional changes in both the software and documentation.
Remote Support: ROBOCOM shall maintain telephone hotline services to
provide telephone consultation on software problems. Such support
shall be available to Distributors, Monday through Friday, excluding
ROBOCOM holidays, between 9:00 A.M. And 5:00 P.M. US Eastern time.
Standard RIMS: In the case where a customer has purchased a standard
version of a RIMS product (without customization), maintenance
releases will be provided as they become available. Software bugs
corrected in the standard product line are automatically included in
future releases.
Customized RIMS: In the case where a customer has purchased a
customized version of a RIMS product, releases will be generated on a
periodic basis depending upon the bugs reported by the customer and
the priorities assigned by the customer. Bugs reported in standard
versions of RIMS will be applied to customized versions of RIMS only
if they can be localized to standard modules within the customized
version (e.g. modules which have not been customized).
(II) ROBOCOM will provide periodic UPGRADE releases to RIMS products for
customers who have purchased a standard RIMS product. Upgrade releases
are defined as releases which add new features, improve existing
features, or improve performance/usability.
(III) ROBOCOM has no obligation to support the following:
- Altered, mishandled, abused, or modified software.
- Software that has been superseded by a major or enhancement
release for
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more than two (2) years.
- Software problems resulting from hardware malfunction,
third-party software, and/or causes beyond the control of
ROBOCOM.
ROBOCOM may refuse to provide or may suspend support services on any
software for which a valid license or sublicense is not in effect or
for which such licenses have been breached.
2. RESPONSIBILITIES OF PURCHASER
Purchaser will provide, free of charge and with ready access, adequate
working space, adequate light, heat, ventilation, electrical current, and
outlets for the use of RSI maintenance personnel.
Purchaser will not misuse, neglect or attempt any RIMS Software
modification, repairs or maintenance of the equipment covered hereby. Any
added costs to RSI for maintaining the system or equipment because of
violation of this provision will be charged to the Purchaser. Likewise, all
costs of maintenance not attributable to normal wear and tear, normal
malfunction, or RSI negligence, will be charged to the Purchaser at the RSI
published hourly rate and published list price for parts.
Purchaser will always allow RSI full and free access to the equipment
subject to Purchaser's industrial security rules.
Unless otherwise specified in the agreement, the client is responsible for
all day to day maintenance and administration tasks as required by a
typical computer system furnished by ROBOCOM with the RIMS application.
Customer Administrative tasks include but are not limited to:
User and Group Administration
User Accounting
Monitor disk usage
Install/configure Peripherals
Printer Scheduler Administration
File System Administration
Network File System Administration
Progress Database Administration
Periodic BI File Truncation
Periodic Dump and Reload
Develop Backup Strategy
Perform Daily Backups
Perform Quarterly Backups
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UUCP Administration
CRON Administration
EMAIL Administration
Kernel Tuning
3. GENERAL PROVISIONS
This agreement constitutes the entire agreement for maintenance service
between the Purchaser and RSI THE FOREGOING TERMS AND CONDITIONS WILL
PREVAIL NOTWITHSTANDING ANY VARIANCE WITH THE TERMS AND CONDITIONS OF ANY
ORDER SUBMITTED BY THE PURCHASER.
Customer Name
AGREED TO By:
------------------------------
(Signature)
------------------------------
(Print Name)
------------------------------
(Date)
------------------------------
(Title)
ROBOCOM Systems, Inc.
ACCEPTED By:
------------------------------
(Signature)
------------------------------
(Print Name)
------------------------------
(Date)
------------------------------
(Title)
***
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EXHIBIT 4
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ROBOCOM TRAINING PROGRAM
The ROBOCOM training is instructor-led yet participant-centered instruction that
focuses on predefined customer requirements. Our Training Department consists of
an experienced staff of professionals who tailor the curriculum to specifically
meet those requirements. To that end ROBOCOM training consists of a preset
curriculum which includes a comprehensive series of courses that can be
customized.
As part of the ROBOCOM training, we offer the following curriculums:
-- RIMS Warehouse Configuration (generally one week at ROBOCOM)
-- RIMS Supervisor Training (generally one week at ROBOCOM)
-- RIMS Worker Training (generally one week on site)
The actual course content of that training varies, depending on the needs of our
customer. Our course offerings include overviews as well as in-depth,
step-by-step procedures. Most often we use a combination of both:
-- Personnel who learn to setup the warehouse are given a system overview
and then are more heavily exposed to configuration issues with less
depth given to operations.
-- Supervisors are given a deeper overview that includes an understanding
of Video Display Terminal (VDT) and Radio Data Terminal (RDT)
functionality and only briefly touch upon system configurations.
-- Warehouse operators (workers) first attend VDT and/or RDT Overview(s)
and then learn each RDT and/or VDT step necessary to perform their
job.
As we present each course, careful attention is paid to use language
understandable to each student in the class. Again and again we are told by
non-computer-literate students that our presentations are non-threatening
because we are clear and easy to understand. Because our training is
interactive, we find that trainees are not afraid to ask questions for further
explanations.
Our experienced staff is also able to silently identify slower learners and
inconspicuously reinforce concepts/procedures for these people without causing
any embarrassment. Each Lab session (hands-on exercises) has been designed in
two parts: that which is required and that which is for "Extra Credit!" While
most of the class proceeds to the "Extra Credit" exercises, our staff can
provide extra support to the slow learner with the original, structured
exercises. In the rare event that the trainee still cannot grasp the lesson,
that student can come back for additional instruction during the time scheduled
for "Review/supplemental/As Needed Instruction."
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Our training approach is varied. The methodology used depends on the audience
size and type, the physical layout of the training facility, the availability of
equipment, and the subject matter being presented. Methods most commonly used in
our sessions include:
Lecture Questions and Answers
Demonstration Buzz Groups
Discussions Structured Hands-on Practice Exercises
Self Discovery hands-on Practice Exercises
ROBOCOM trainers initiate student review after each major topic is covered.
Continual creative review of material not only reinforces learning, it also
makes learning fun. Such techniques add variety to what is often perceived to be
repetitive, computer drills.
Our training material varies depending on the curriculum. We have configuration
material and worksheets for our Warehouse Configuration class. We have user
training material for our Supervisor and Worker user classes. All training
material includes our User Documentation. This allows our students to relate to
our Management Manual and User's Guides from their first exposure to the system.
Even in training we encourage students to check the appropriate section of the
Management Manual or User's Guide before asking for help. We find that if such
practices are in place from the beginning, there will be fewer calls and thus
lower maintenance costs later on.
Our goal is to work with our customers to establish RIMS training to best meet
their needs. Together we can emphasize learner discovery, learner participation
and learner involvement. Together we can make our training effective. Together
we can deliver results.
ROBOCOM's philosophy is that the most important ingredient in the process of
developing User Documentation is the user. If the RIMS user is afraid of the
system or does not understand the system, the system cannot achieve its intended
purpose. The best system is worthless if it is not properly used.
In short, our documentation makes the "magic" of RIMS understandable to people
who know nothing or very little about computers.
Each piece of ROBOCOM User Documentation adheres to our in-house User's
Documentation Standards Manual. These standards were created to assure the
consistency in overall display and structure of all our user documentation. Our
standards address three specific areas:
- General Document Format (Headers/Footers, Margins/Indents, etc.)
- Chapter/Section Format (Options/Sub-Options, Frames, etc.)
- Style/Grammar (Diction/Appearance, Numbering/Capitalization etc. )
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We have found that consistency in presentation and style is the key to
simplifying our documentation for user acceptance and user comprehension.
ROBOCOM's User Documentation includes the following:
- RIMS Configuration Material
- RIMS Management Manual
- RIMS Video Display Terminal (VDT) User's Guide
- RIMS Radio Data Terminal (RDT) User's Guide
- RIMS Training Material
Our five volumes of User Documentation complement each other. The Configuration
Material and Management Manual includes setup information necessary for the
implementation and maintenance of a RIMS system. Our two User's Guides provide
detailed steps used in daily RIMS processing, while our Training Materials
explain RIMS procedures and processes in a general sense.
The RIMS Configuration Material complements the RIMS Management Manual. This
material includes a brief explanation of each database element that needs to be
addressed when configuring a warehouse for a new RIMS installation. Included in
this material are diagrams that explain putaway and picking logic used by RIMS.
This allows you to understand exactly how your warehouse configuration will
affect your warehouse operations. A complete explanation of each configuration
task is explained in full in the RIMS Management Manual.
The RIMS Management Manual provides detailed information to be considered as a
customer prepares to implement RIMS. This manual is intended to be used in the
planning stages of the RIMS implementation process. It is also intended as a
reference for someone who needs to update any settings that follow the RIMS
implementation. The manual is intended for someone with a very limited knowledge
of the RIMS system.
The Management Manual describes in detail the database elements that will be
incorporated into RIMS. All of the information detailed in this guide is
required in order for RIMS to achieve optimal efficiency and accuracy as it
manages your warehouse operations.
We recommend that our customers study the RIMS Management Manual prior to the
installation of the RIMS software. This will enable customers to expedite the
implementation process, and to determine the need, if any, for further
customization.
The Management Manual divides the components of RIMS into four basic categories:
- Warehouse Configuration
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- File Information
- System Administration (including only the setup functions, the
processing options are covered in the VDT User's Guide)
- System Issues (including backups, restores, etc.)
Each RIMS topic covered in the Management Manual includes a real-life example
with a RIMS solution. Included too, are blank worksheets to simplify customer
planning and a Field-Frame Cross Reference Chart that shows you in an instant
which fields are on which frames.
Our customers have found the RIMS Management Manual invaluable as they prepare
their facilities for a RIMS installation.
The VDT User's Guide follows the menu structure of the VDT system and steps you
through each VDT process; the RDT User's Guide follows the menu structure of the
RDT system and steps you through each RDT process. Each manual includes sample
frames from the real system. The RDT User's Guide displays both the
vehicle-mount and hand-held frames.
The VDT User's Guide contains chapters that begin with "VDT" (e.g., VDT
Receiving) or "RIMS" (e.g., RIMS Warehouse Configuration). Those that are called
VDT... contain information that is specific to the VDT system. Those that are
called RIMS... contain setup, parameter or general RIMS information or
information that is established on the VDT system but affects the RDT system as
well. The RDT User's Guide chapters begin with RDT....
Each major menu option is a separate chapter. Each chapter is numbered
separately; for example, chapter one may consist of pages 1-1 through 1-30,
chapter two might be 2-1 through 2-25, etc. This allows you to tailor your
User's Guides to match your RIMS system. If a facility is not using the Quality
Assurance module, not only can you easily remove Quality Assurance from your
RIMS system menu, you can also easily remove that chapter from the user
documentation.
Each page in each User's Guide chapter contains a Header indicating the
appropriate chapter option/section. Each page also contains a Footer that
indicates the current release date of the page and the chapter name.
The last chapter of both user's guides is an alphabetized glossary where each
term that relates to RIMS is defined for the user.
Each time the User's Guides are updated, the new release date appears in the
Footer of each page. In addition, gray shading on the page highlights any
changes that have occurred in this update.
The RIMS Training Material varies in format and content depending on the
specified audience.
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Supervisors usually receive an actual Training Manual that contains schedules as
well as separate chapters for supervisor functions and/or warehouse processing.
All training materials complement the Management Manual and User's Guides.
Training materials explain procedures and processes in a general sense; the
Management Manual and User's Guides provide detailed step-by-step instructions.
Each chapter of the supervisor Training Manual also provides a listing of the
relevant RIMS reports that are available for that segment of RIMS. For example,
the Receiving Training Material alerts the user to the availability of the
"Expected PO Status Report" and the "Pending Returns Report."
Warehouse workers as a rule do not receive a Training Manual. They do, however,
receive less threatening "hand-outs" or "cheat-sheets" that capsulize the tasks
at hand. The content of this material depends on many variables:
- Do workers have any typing/computer experience?
- How much does the RIMS system differ from the current method of
operation?
- Will workers be performing the same types of tasks as before or is the
company using the installation of RIMS as a springboard to change
people's job assignments?
- Do the workers have to learn the VDT and the RDT systems?
Our training staff relies on customer interaction to determine the scope of the
warehouse training. Accordingly we then design the appropriate warehouse worker
training material.
ROBOCOM also provides a VDT Menu Map as a component of our training material.
This consists of a diagram that displays each menu option. These Menu Maps help
supervisors become familiar with the RIMS system as a whole. The Menu Maps can
also be used as a road map for supervisors/workers who need to know how to
access a specific frame on the VDT system. It is very easy to provide a colored
trail (via high lighter) to lead someone to a module (Receiving) or even to a
frame (Purchase Order Receiving).
All of the ROBOCOM RIMS User Documentation is used as part of the RIMS training
process. During training, users are exposed to the Management Manual and User's
Guides so that they not only become familiar with the documentation, they also
learn where to find answers to potential questions or problems.
Our goal is to work with our customers to establish concise RIMS User
Documentation to best meet their needs. Together we can help users overcome
apprehension, build confidence and grasp easy-to-follow instructions. Together
we can make our documentation effective. Together we can deliver results.
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EXHIBIT 5
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International RIMS(C) Pricing, 1996
RIMS.2001(C)
USERS SITE ONE (1) SITE TWO (2) and up
- ----- ------------ -------------------
16 $* $*
24 * *
32 * *
64 * *
64+ * *
Users defined as the total number of Fixed Terminals and RF Terminals.
Client Server to be announced.
*
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
FILED SEPARATELY WITH THE COMMISSION.
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EXHIBIT 6
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RIMS.2001 COMPUTER PROGRAM END-USER
LICENSE
(Nonexclusive; Object Code Only)
between
ROBOCOM SYSTEMS INC. (Licensor) of 511 Ocean Avenue, Massapequa, NY 11758, and
___________________________,of _________________________
LICENSOR'S PROGRAM IS COPYRIGHTED AND LICENSED (NOT SOLD). LICENSOR DOES NOT
SELL OR TRANSFER TITLE TO THE LICENSED PROGRAM TO YOU. YOUR LICENSE OF THE
LICENSED PROGRAM WILL COMMENCE UPON EXECUTION OF THIS AGREEMENT BY BOTH PARTIES
AS EVIDENCED BY AUTHORIZED SIGNATURES BEING AFFIXED.
1. License.
In consideration of the payment of the license fees set forth Licensor
grants you a nonexclusive license to use the RIMS.2001 computer program and
data in machine-readable form.
2. Scope of Rights. You may:
1. Install the Single Site Licensed Program in your own facility for the
number of users specified in the License and Purchase Agreement
2. Use and execute the Licensed Program for purposes of serving the
internal needs of your business at the single site;
3. In support of your authorized use of the Licensed Program, store the
Licensed Program's machine-readable instructions or data in, transmit
it through, and display it on machines associated with the specified
computer; and
4. Make copies of the Program in machine-readable, object code form, for
nonproductive back-up purposes only, provided that Licensor's
proprietary legend is included.
4. Support.
Licensor will support the Licensed Program for a one year Limited
Warrantee. Additional software maintenance is as specified in Maintenance
Agreement if purchased. However, Licensor offers support only for the two
most current versions of the Licensed Program issued by Licensor from time
to time, so you must make sure to obtain and substitute or incorporate all
new releases or fixes issued by Licensor pursuant to its warranty and
support programs.
5. Your Responsibilities.
You are responsible for selecting an operator who is qualified to operate
the Licensed Program on your own equipment and is familiar with the
information, calculations, and reports that serve as input and output of
the Licensed Program. Licensor reserves the right to refuse assistance or
to charge additional fees if an operator seeks assistance with respect to
such basic background information or
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any other matters not directly relating to the operation of the Licensed
Program.
The Licensed Program is designed for use with the peripheral equipment and
accessories. You are also responsible for ensuring a proper environment and
proper utilities for the computer system on which the Licensed Program will
operate, including an uninterrupted power supply.
6. Proprietary Protection and Restrictions.
Licensor will have sole and exclusive ownership of all right, title, and
interest in and to the Licensed Program and all modifications and
enhancements thereof (including ownership of all trade secrets and
copyrights pertaining thereto), subject only to the rights and privileges
expressly granted to you herein by Licensor. This Agreement does not
provide you with title or ownership of the Licensed Program, but only a
right of limited use. You must keep the Licensed Program free and clear of
all claims, liens, and encumbrances.
You may not use, copy, modify, or distribute the Licensed Program
(electronically or otherwise), or any copy, adaptation, transcription, or
merged portion thereof, except as expressly authorized by Licensor. You may
not reverse assemble, reverse compile, or otherwise translate the Licensed
Program. Your rights may not be transferred, leased, assigned, or
sublicensed except for a transfer of the Licensed Program in its entirety
to (1) a successor in interest of our entire business who assumes the
obligations of this Agreement or (2) any other party who is reasonably
acceptable to Licensor, enters into a substitute version of this Agreement,
and pays an administrative fee intended to cover attendant costs. No
service bureau work, multiple-user license, or timesharing arrangement is
permitted, except as expressly authorized by Licensor. You may not install
the Licensed Program in any other computer system or use it at any other
location without Licensor's express authorization obtained in advance
(which will not be unreasonably withheld); provided that you may transfer
the Licensed Program to another computer temporarily if the computer
specified is inoperable.
If you use, copy, or modify the Licensed Program or if you transfer
possession of any copy, adaptation, transcription, or merged portion of the
Licensed Program to any other party in any way not expressly authorized by
Licensor, your license is automatically terminated.
You hereby authorize Licensor to enter your premises in order to inspect
the Licensed Program in any reasonable manner during regular business hours
to verify your compliance with the terms hereof.
You acknowledge that, in the event of your breach of any of the foregoing
provisions, Licensor will not have an adequate remedy in money or damages.
Licensor will therefore be entitled to obtain an injunction against such
breach from any court of competent jurisdiction immediately upon request.
Licensor's right to obtain injunctive relief will not limit its right to
seek further remedies.
If some third party claims that the Licensed Program infringes its patent,
copyright, or trade secret, or any similar intellectual property right,
Licensor will defend you against that claim at Licensor's expense and pay
all damages that a court finally awards, provided that you promptly notify
Licensor in writing of the claim, and allow Licensor to control, and
cooperate with Licensor in, the defense or any related settlement
negotiations. If such a claim is made or appears possible, you agree to
permit Licensor to enable you to continue to use the Licensed Programs, or
to modify or replace them. If Licensor determines that none of these
alternatives is reasonably available, you agree to return the Licensed
Program on Licensor's written request, and you will then receive a credit
equal
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to your net book value for the Licensed Program determined in accordance
with generally accepted accounting principles. However, Licensor has no
obligation for any claim based on your modification of the Licensed Program
or its combination, operation or use with any product, data or apparatus
not specified or provided by Licensor, provided that such claim solely and
necessarily is based on such combination, operation, or use and such claim
would be avoided by combination, operation, or use with products, data or
apparatus specified or provided by Licensor. THIS PARAGRAPH STATES
LICENSOR'S ENTIRE OBLIGATION TO YOU WITH RESPECT TO ANY CLAIM OF
INFRINGEMENT.
7. Limited Warranty and Limitation of Liability.
Licensor warrants, for your benefit alone, that the Licensed Program
conforms in all material respects to the USER MANUALS for the current
version of the Licensed Program set forth. This warranty is expressly
conditioned on your observance of the operating, security, and data-control
procedures set forth in the User's Manual included with the Licensed
Program. This warrantee is granted by the Licensor to the Licensee for a
period of One Year (1) after acceptance by the Licensee.
Licensor is not responsible for obsolescence of the Licensed Program that
may result from changes in your requirements. The foregoing warranty will
apply only to the most recent version of the Licensed Program issued by
Licensor from time to time. Licensor assumes no responsibility for the use
of superseded, outdated, or uncorrected versions of the Licensed Program.
As your exclusive remedy for any material defect in the Licensed Program
for which Licensor is responsible, Licensor will attempt through reasonable
effort to correct or cure any reproducible defect by issuing corrected
instructions, a restriction, or a bypass. Licensor will not be obligated to
correct, cure, or otherwise remedy any nonconformity or defect in the
Licensed Program if you have made any changes whatsoever to the Licensed
Program, if the Licensed Program has been misused or damaged in any
respect, or if you have not reported to Licensor the existence and nature
of such nonconformity or defect promptly upon discovery thereof.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR DISCLAIMS ANY
AND ALL PROMISES, REPRESENTATIONS, AND WARRANTIES WITH RESPECT TO THE
LICENSED PROGRAM, INCLUDING ITS CONDITION, ITS CONFORMITY TO ANY
REPRESENTATION OR DESCRIPTION, THE EXISTENCE OF ANY LATENT OR PATENT
DEFECTS, ANY NEGLIGENCE, AND ITS MERCHANTABLITY OR FITNESS FOR A PARTICULAR
USE.
The cumulative liability of Licensor to you for all claims relating to the
Licensed Program and this Agreement, including any cause of action sounding
in contract, tort, or strict liability, will not exceed the total amount of
all license fees paid to Licensor hereunder. This limitation of liability
is intended to apply without regard to whether other provisions of this
Agreement have been breached or have proven ineffective. This limitation of
liability will not apply to the indemnification provided in Section 6
hereof. Licensor will have no liability for loss of data or documentation,
it being understood that you are responsible for reasonable backup
precautions.
In no event will Licensor be liable for any loss of profits; any
incidental, special, exemplary, or consequential damages; or any claims or
demands brought against you, even if Licensor has been advised of the
possibility of such claims or demands. This limitation upon damages and
claims is intended to apply without regard to whether other provisions of
this Agreement have been breached
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RIMS.2001 Computer End User License Page 39
<PAGE>
International Distribution Agreement November 1996
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or have proven ineffective.
8. Term of Agreement; Termination.
Your license of the Licensed Program will become effective upon delivery of
the Licensed Program to you and will continue indefinitely, unless sooner
terminated as provided herein.
Upon termination of this Agreement, all rights granted to you will
terminate and revert to Licensor. Promptly upon termination of this
Agreement for any reason or upon discontinuance or abandonment of your
possession or use of the Licensed Program, you must return or destroy, as
requested by Licensor, all copies of the Licensed Program in our possession
(whether modified or unmodified), and all other materials pertaining to the
Licensed Program (including all copies thereof). You agree to certify your
compliance with such restriction upon Licensor's request.
9. Miscellaneous.
This Agreement will be governed by and construed in accordance with the
laws of the State of New York.
No modification of this Agreement will be binding unless it is in writing
and is signed by an authorized representative of the party against whom
enforcement of the modification is sought.
Any notices required or permitted under this Agreement will be in writing
and delivered in person or sent by registered or certified mail, return
receipt requested, with proper postage affixed.
In the event that any of the terms of this Agreement is or becomes or is
declared to be invalid or void by any court or tribunal of competent
jurisdiction, such term or terms will be null and void and will be deemed
severed from this Agreement and all the remaining terms of this Agreement
will remain in full force and effect.
THIS AGREEMENT IS THE COMPLETE AND EXCLUSIVE STATEMENT OF LICENSOR'S
OBLIGATIONS AND RESPONSIBILITIES TO YOU AND SUPERSEDES ANY OTHER PROPOSAL,
REPRESENTATION, OR OTHER COMMUNICATION BY OR ON BEHALF OF LICENSOR RELATING TO
THE SUBJECT MATTER HEREOF.
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RIMS.2001 Computer End User License Page 40
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated May 16, 1997 in the Registration Statement (Form
SB-2) and related Prospectus of Robocom Systems Inc. for the registration of up
to 1,725,000 shares of its common stock.
Ernst & Young LLP
Melville, New York
June 23, 1997
