FORM 10-SB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SYNERGY 2000, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 64-0872630
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(State of incorporation or organization) (IRS Employer Identification No.)
601 Pennsylvania Avenue, N. W., Suite 900; Washington, D. C. 20004
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(Address of principal executive offices)
(202) 434-8349
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(Telephone)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
- ----------------------------- ------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, par $.001
(Title of Class)
This form was prepared on July 23, 1998.
<PAGE>
For purposes of qualification under Regulation S-B, Synergy 2000:
(a) had total revenues for 1997 of $477,111.00,
(b) is a Delaware corporation,
(c) is not an investment company,
(d) is not a subsidiary of another company,
(e) had a public float valued at $8,250,000 on April 30, 1998.
INFORMATION REQUIRED
Item 1. Description of Business.
Synergy 2000 Inc. is an information systems management consulting firm
that provides technology and management solutions for companies to
prepare them for the Year 2000 and beyond. The company was formed in
February of 1996 and began operations in 1997. It has not experienced
a consolidation, merger, bankruptcy or other material reclassification
prior to this date.
In January 1997, Synergy 2000 began offering a suite of products and
services to business computer users and information system managers.
The services offered are intended to solve systems problems related to
the Year 2000 and the inability of many computer software applications
to process computer code containing date-related fields. The primary
thrust of the business is to provide automated tools and support
services to those in need of solving the century date change problem
associated with re-programming computer languages to recognize the
year 2000. (Some computer languages recognized any year ending in "00"
as "1900". Additionally, many computers were manufactured with
built-in programs or chips which recognize 19th century dates only.)
Synergy 2000 provides consulting services, contract personnel and
automated tools to convert the old code to be Year 2000 complaint.
Banks, insurance companies, finance companies and large system users
are the target customers. (For example, a credit card used today, but
expiring in the year 2000, might be considered "expired" by any system
which perceives the digits "00" as the year 1900. Many such systems
are in use today.)
Nature of Company's Products or Services Offered.
-------------------------------------------------
Synergy 2000's solutions to the Year 2000 dilemma include automated
tools developed specifically for the Year 2000 problem, specially
skilled project managers and trained staff,
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and applications maintenance outsourcing options, all of which work
together to eliminate "dead" code and to reduce the need to freeze
systems over the duration of the conversion project.
The major operating systems supported by the company are Microsoft
Windows 3.1, 95 and 97, MVS/ESA, OS/390, AS/400, and other related
systems. Language support includes COBOL, RPG/400, PL/1, Natural,
Assembler, Visual Basic and some 4GLs. Major databases supported
include Oracle, Sybase, DB2/400, Informix, Ingres, and Access.
Synergy 2000 offers the latest hardware and software resources
pertaining to client/server, open systems and proprietary hardware
environments to meet our client's programming needs. These include
Pentium PC's, SUN, Hewlett-Packard, NCR, and IBM platforms.
Synergy 2000 offers the newly introduced "DESKTOPS Unlimited" service
which, thorough the use of an automated tool, scans the hard drive of
desktop computers for recognizable software programs which are known
to be vulnerable to date dependencies. The system provides an
on-screen display of the risks identified, compiles lists of programs
which need fixes and suggests remedial action. The company can also
provide the staff needed to implement the corrections.
Revenue Generation and Staffing.
--------------------------------
Synergy 2000 earns fees from hourly or long term contracts for
technical or administrative consulting services. Additionally, the
company offers problem-solution packages that earn fees for assisting
clients with correcting Year-2000 issues in software products used by
personal computers, local area networks and mainframe systems. The
company has a management consulting operation underway also. In the
industry, Year 2000 bugs are known as the "Y2K" problem.
The company does not promote a universal solution to Y2K problems;
instead, the company contracts for services on a case by case basis
depending on the needs of the client. Regional commission sales agents
promote the services of the company, and management arranges for
projects to be completed by recruiting trained contract personnel. The
Y2K services offered by Synergy 2000 are primarily supplied by
programming personnel hired by the company as independent contractors
on a "per contract" or "task order" basis; whereby, the scope of work
given and payment made to each person is based upon the work
assignment in Synergy's project scope of work.
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The limited availability of trained personnel is a restraining factor
upon the company's potential growth from solving clients' Y2K
problems; however, demand for services is currently strong.
Identifying prospects and engaging clients is a very significant step
in the service delivery system; however, providing trained personnel
is a more critical step. Synergy 2000 has been able to deliver high
quality service during its first year of operation. The company has
four full time employees and 24 independent contractors. Of the 24
contractors, nine are regional marketing and sales agents.
Competition and Market Factors, Including Government Regulation.
----------------------------------------------------------------
Synergy 2000 provides services to several firms including ARCO,
RISCORP, International Paper, Jefferson-Pilot Insurance, Chubb
Insurance Company, Guy Carpenter Insurance, Swiss Re (an insurer),
Burlington Insurance, Keystone and Transamerica Insurance. The company
is not dependent upon any one or two individual customers for its
continued viability. Several clients have expressed the possibility of
expanding their needs to encompass services other than Y2K issues.
Competition among technology firms is spirited, but price competition
is minimized by an increasing need for services as the year 2000
approaches. Generally, prices for technical services and Year 2000
conversion have been trending upward for the past two years.
The company and the industry in general is vulnerable to the
introduction of a technological innovation in Y2K "bug-fixing" which,
theoretically, could render the services of the company less
desirable. No such innovation is known to exist, but many companies
are competing to develop such an innovation.
No trademarks, patents, licenses, franchises, royalties or
governmental approvals are needed to complete the exercise of updating
aging software which shows date dependencies. Labor contracts are
required; however, no union organization of Y2K programmers appears
likely due to the fact that the languages being re-programmed are
older languages.
Government regulation appears to be helping the market significantly.
The Federal Reserve is now requiring banks to address their Year 2000
requirements to maintain an orderly system of transaction records. The
Securities and Exchange Commission now requires publicly reporting
companies to address Year 2000 issues. No adverse impact of government
regulation is envisioned.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Synergy 2000 offers automated tools and support services to those in
need of solving the century date change problem associated with
converting their computer languages to recognize the year 2000. The
impact is heavily felt in any industry that processes data that is
date impacted and is especially significant in the banking, insurance,
health care, and municipal, state and federal governments. Synergy
2000 provides services to several firms including International Paper,
ARCO Petroleum, Jefferson-Pilot Insurance, Chubb Insurance Company,
Guy Carpenter Insurance, Swiss Re (an insurer), Transamerica
Insurance, Burlington Insurance, Zenith Insurance, Marsh and McLennan
and RISCORP.
The company delivers its services to the market by direct sales calls
upon the user of the services, often targeting the insurance industry.
Services contracted for by industry typically include "bug-fix"
programming to correct the Year 2000 (Y2K) problem associated with
many programming languages. Services are rendered by contract
employees or subcontract independents who provide services on a task
order basis. At this time, the company has two employees who work
primarily on servicing customer accounts.
Synergy 2000's management and human resources consulting services are
handled by the officers of the company. These consulting services
provide practical, value-added services and business solutions for
complex workforce-related issues in preparation for the Year 2000 and
beyond. Client services include: Employee Relations Strategies,
Audits, and Solutions; Management and Employee Development for the
Year 2000 Workforce; Organizational Development and Change; Management
for Companies in Transition (Mergers and Acquisitions, Consolidations,
Growth); Customer Focused Quality Improvement Strategies; Large scale
recruiting; Technological Solutions for User-Friendly Communications;
Human Resources Outsourcing and Staff Augmentation; and Company
Relocations.
The plan of development of the company includes product development
for the insurance industry and intentions to leverage the Year 2000
assignments into long term outsourcing, systems development and
consulting relationships.
The company began operations in January of 1997. Most of the company's
billing of $477,111 were issued in the later half of the year. Sources
of income included approximately 10 different clients with no one
client accounting for more than 35% of total revenue. Billings for
contract personnel and
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management consulting accounted for the vast majority of revenue.
Salaries of $222,300 represented 47% of total operating expenses of
$473,519. Operating expenses included $92,225 in travel expense (19%
of operating expense), a requirement of the business, because clients
may be located in any area of the country. The company should continue
to see labor and salaries as the largest expense.
Net income of $2,155 was recorded for the year. Although earnings are
indicated for the year, the company is still in the development stage.
Management does not represent that Synergy 2000 has passed the
breakeven point for operating revenue to exceed expenses. Additional
future developmental costs could result in unexpected losses.
Cash flow from operations was negative at ($47,149), but the company
ended the year with a cash balance of $137,612. Sales of common stock
during 1997 netted $176,800 in cash which offset other cash
depletions. Accounts receivable collections have been satisfactory
with <11% extending over 60 days past due.
Management is not aware of any negative trends or uncertainties which
would likely have material impact on short-term or long-term
liquidity. Synergy 2000 anticipates meaningful growth in revenue and
income in 1998. The company's business is not seasonal in nature.
Item 3. Description of Property.
The Company rents executive office space in Washington, D.C. and
Pasadena, CA on a month-to-month basis. The officers also operate
offices from their homes. No property is owned directly by the
company.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Shareholders owning more than 5% of the common stock of the
corporation and the number and percent of outstanding shares owned as
of December 31, 1997 are as follows:
Percentage
Number of of Company
Name of Shareholder Shares Owned* Owned
---------------------------------------------------------------------
Eli Dabich, Jr. 3,780,000 36%
601 Pennsylvania Avenue NW # 900
Washington, D.C. 20004
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Jeanette T. Smith 2,520,000 24%
225 South Lake Avenue, M129
Pasadena, CA 91101
Michael York 2,200,000 21%
160 Cypress Avenue
Hermosa Beach, CA 90254
(For purposes of calculation of beneficial ownership, no persons other
than those listed own 5% or more of the securities issued and
outstanding. If multiple members of the William E. Tabor immediate and
extended family and recipients of charitable stock gifts made by Tabor
are added, the collective group associated with Tabor owns
approximately 652,500 common shares representing 6.1% ownership of
common stock.)
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Eli Dabich, Jr. - President and Director
Jeanette Tebrich Smith - Exec. Vice President, Secretary and Director
Virgil Pittman - Director
ELI DABICH, JR. is President and a Director of Synergy 2000. He
oversees operations and participates in sales and marketing
activities. A 1963 graduate of the U. S. Naval Academy, Dabich earned
his B.S. in Engineering and served in the Navy, initially as a naval
aviator. He earned the M. S. degree in Administration from George
Washington University in 1970, and during the period from 1968-1970,
he taught chemistry and computer science at the Naval Academy.
From 1970-74, Dabich served as a marketing representative with IBM.
From 1974-82, he worked as senior vice president of Sun Life Insurance
Company in Baltimore, where he was responsible for data processing and
administrative services. From 1982-88, Dabich served as executive vice
president for administration and finance for Maryland Casualty
Company. There, he was responsible for over 600 people and a budget of
$50 million. Responsibilities included information systems, human
resources, agency automation, software development, and systems and
administration. From 1988-90, he served as National Director of
Insurance Consulting for Coopers & Lybrand.
From 1990-93, Dabich was senior vice president of Nationale
Nederlanden, North American Corporation, in Washington, DC. There, he
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was responsible for the operations of thirteen property and casualty
insurance companies in the US and Canada having $2.5 billion in
premium revenue. From 1993-95, Dabich served as senior vice president
and Chief Administrative Officer for TIG Insurance Company (a
TransAmerica Insurance company), where he was responsible for
administrative services, human resources, information systems and
other related duties. In 1996 in Baltimore, Dabich started a personal
consulting practice in the field of information processing, which
ultimately led into the development of a network of professional
information systems practitioners and the development of Synergy 2000.
JEANETTE TEBRICH SMITH, Executive Vice President, Secretary and a
Director of Synergy 2000 serves the company in operations and
administration. She earned the B.A. degree in History/Education at
UCLA and worked for Greyhound Personnel Services from 1977-80, where
she served as regional manager. From 1980-86, Smith served as Vice
President Human Resources & Administration for Bekins Moving and
Storage in Glendale, CA. There, she directed human resources for
headquarters and field locations. From 1986-95, Smith served as
Assistant Vice President, Human Resources, for TransAmerica Insurance
Company in Los Angeles, CA, where she provided support to field human
resource managers nationally. Her key responsibilities included
enhancement of employee relations, training, salary and benefits
administration, organization development and employment.
In 1995, Jeanette Tebrich Smith formed a personal consulting practice
and network in association with Eli Dabich and others. She consulted
in the areas of corporate restructures and relocation, human
resources, team building, recruiting, resolution of employee
conflicts, and other related topics. The consulting practice led to
recruiting of computer programming specialists needed by customers to
resolve computer date-change program problems. In 1997, she joined
Synergy 2000.
VIRGIL L. PITTMAN, JR. is a director of Synergy 2000. He received his
B. S. degree in Physics and Math from Northwestern Louisiana State
University in Natchitoches, LA in 1964. He joined the Navy and worked
in data gathering and systems development. He has held several
management positions in the insurance field including vice
presidential posts with USAA, Equitable, and Nationwide Insurance. In
1987, he joined Fireman's Fund Insurance where he serves today as
Senior Vice President. There, he is responsible for management of
billing and collection of $3 billion in annual premiums for the
company. He is widely known for his experience and capability in the
information management field. He became a director of Synergy 2000 in
1997.
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Item 6. Executive Compensation.
The President and Executive Vice President have signed employment
agreements with the Company. Copies of these agreements are included
the in Exhibit 4. At this writing, the Company has not entered into
agreements with these two officers for any compensation other than
direct salary and cash bonuses to be determined by the Board of
Directors on a case by case basis, consistent with company financial
performance. Accordingly, no deferred compensation plans, stock
options, formulae-based bonus plans, restricted stock awards, stock
appreciation rights (SARs), or long-term incentive plan (LTIP) payouts
are in effect. No officers, directors or executives other than the
President and the Executive Vice President currently have compensation
agreements with the company.
Eli Dabich, Jr., President of Synergy 2000, receives an annualized
salary of $110,000, and Jeanette T. Smith, Executive Vice President,
receives an annualized salary of $106,000. No agreement is in effect
which would require increases in the compensation paid.
In 1997, both executive officers received restricted stock as an
incentive and in consideration of their willingness to delay
implementation of a more structured compensation plan.
Compensation of non-executive directors has not been
established.
Item 7. Certain Relationships and Related Transactions.
Disclosure as to relationships existing among officers, directors and
----------------------------------------------------------------------
shareholders:
-------------
On the date of incorporation, February 21, 1996, five million
(5,000,000) shares were issued to the initial officer, director, and
founder of the corporation, William E. Tabor. On October 1, 1996, four
million shares (4,000,000) were issued to Corporate Service Group
(controlled by Tabor) for corporate development and management
support.
On January 17, 1997, current management joined the company and
obtained control of the company from Corporate Service Group and
Tabor. Of the 9,000,000 shares owned by Corporate Service Group and
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William E. Tabor, a total of 8,500,000 shares were returned to the
treasury and cancelled. New management acquired 6,300,000 shares. Eli
Dabich, Jr., current President and Director, received 3,780,000 shares
of common stock at par value totalling $3,780, and Jeanette T. Smith,
current Executive Vice President, received 2,520,000 shares of common
stock at par value totalling $2,520.
Business relationships exist between the officers and directors.
Dabich, Smith and Pittman (a Director) had prior business
relationships. Other shareholders had a prior association with Dabich.
Numerous family ties and personal relationships exist among and
between the non-management shareholders associated with the company's
initial incorporator, William E. Tabor. Non-management shareholders,
including Tabor, do not have a voice in the operations of the company;
however, Corporate Service Group (a Tabor affiliate) performs services
for Synergy 2000 for a fee. Total fees earned by Corporate Service
Group from Synergy 2000 in 1997 were $77,451. An additional $8,500 was
paid for redemption and cancellation of shares. No accurate projection
of 1998 fees can be made at this time; however, fees to Corporate
Service Group are expected to be less than $35,000.
Item 8. Legal Proceedings.
No legal proceedings are currently on-going, contemplated or
threatened.
Item 9. Market for Common Equity and Related Stockholder Matters.
The common stock of Synergy 2000 began trading in October of 1997 on
the Over-the-Counter stock market known as the Nasdaq Bulletin Board.
On March 28, 1998, the closing price of the common stock was $5.25
bid, $5.75 asked. The quarterly range between closing bid and closing
ask prices for the quarter recently ended provided by National
Quotation Bureau is shown below based upon data first available as of
October 2, 1997:
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1997 1998
4th Quarter 1st Quarter
High Low High Low
---- --- ---- ---
BID 4.437 2.125 5.50 4.375
ASK 4.625 4.125 6.25 4.875
These Over-The-Counter market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
Item 10. Recent Sales of Unregistered Securities.
On the date of incorporation, February 21, 1996, five million
(5,000,000) restricted common shares were issued to the initial
officer, director, and founder of the corporation, William E. Tabor
III. On October 1, 1996, four million restricted common shares
(4,000,000) were issued to Corporate Service Group (Tabor is a
beneficial owner of Corporate Service Group) for corporate development
and management support. Total consideration for the sale was $4,500.
A total of 1,500,000 (post-split) shares were issued pursuant to a
stock offering and sale in New York, Florida, Canada and Greece,
pursuant to *504 (D). These shares are not restricted. Total
consideration paid was $7,500.
On January 17, 1997, current management joined the company and
obtained control of the company from Corporate Service Group and the
initial officer and director. Of the 9,000,000 shares owned by
Corporate Service Group and William E. Tabor, a total of 8,500,000
shares were returned to the treasury and cancelled. New management
acquired 6,300,000 shares for $6,300 and sold 2,200,000 shares for
$90,000 to Michael York.
In September of 1997, the company sold 125,000 restricted common
shares to George Stephanopoulos for $125,000. An additional sale of
12,500 restricted common shares was made to Ron Huffman in return for
$12,500. Huffman subscribed to an additional 112,500 shares totalling
$112,500, but these shares have not yet been issued or paid for.
As of December 31, 1997, there were 10,637,500 common shares
outstanding, of which 9,137,500 were restricted shares and 1,500,000
were free-trading. Current management owns 6,300,000 of the issued and
outstanding shares.
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(NOTE: On December 31, 1996, the company implemented a 2-for-1 forward
stock split without change in the par value of the stock. All
references to stock amounts have been adjusted to reflect the 2-for-1
stock split.)
Item 11. Description of Securities (Common Stock to be Registered).
The Company is authorized to issue 25,000,000 shares of Common Stock,
par value $0.001 per share. At the close of business on December 31,
1997, there were 10,637,500 shares of Common Stock outstanding. Of the
outstanding shares, a total of 1,500,000 were held by the general
public.
Holders of Common Stock are entitled to one vote per share on all
matters concerning which shareholders are entitled to vote. Cumulative
voting in the election of directors is not permitted. As a result, the
holders of more than 50% of the outstanding shares have the power to
elect all directors. The quorum required at a shareholders' meeting is
a majority of the shares entitled to vote, represented in person or by
proxy. If a quorum is present, the affirmative vote of a majority of
the shares represented at the meeting and entitled to vote on a matter
is required for shareholder approval.
Holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors out of
funds legally available thereof and after payment of dividends, if
any, due on any outstanding shares of Preferred Stock. Upon
liquidation of the Company, such holders would share ratably in the
assets, if any, remaining after payment of all debts and liabilities
and after satisfaction of the liquidation preference of any
outstanding shares of Preferred Stock. Holders of Common Stock do not
have preemptive, conversion or redemption rights.
Transfer Agent
The transfer agent and registrar for the Company's Common and
Preferred Stock is Securities Transfer Corporation, P. O. Box 701629,
Dallas, TX 75370.
Paying Agent
The Company will act as the Paying Agent for any dividends.
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No Other Classes of Shares Authorized or Issued
No preferred shares are to be registered. The Company has not
authorized or issued any classes of Preferred Stock and none are being
registered hereby.
Item 12. Indemnification of Directors and Officers.
As permitted by Delaware law, the Company's Articles and Certificate of
Incorporation provide that the Company will indemnify its directors and officers
against expenses and liabilities they incur to defend, settle or satisfy any
civil or criminal action brought against them on account of their being or
having been directors or officers unless, in any such action, they are adjudged
to have acted with gross negligence or willful misconduct.
Item 13. Financial Statements and Exhibits.
(1) 1996 and 1997 Audited Financial Statement including Income
Statement, Cash Flows and Changes in Shareholder Equity,
including 1998 Interim Unaudited Financial Statement including
Balance Sheet and Statements of Income, Cash Flows and Changes in
shareholder Equity.
Item 14. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure.
No change in accountants has occurred and no disagreements have
occurred.
Item 15. Financial Statements and Exhibits.
1. Articles of Incorporation and By-Laws
2. Instrument defining rights of holders.
3. Statement Regarding Computation of Earnings per Share.
4. Employment Agreements of Eli Dabich, Jr. and Jeanette T. Smith.
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5. Company Contract with International Paper.
6. Company Contract with Marsh and McLennan.
7. Company Contract with Zenith Insurance Company.
8. License Agreement of Argos 2000, a majority-owned subsidiary.
F-1. Audit Report for 1996 and 1997, including Interim Unaudited
Financial Statements for the first and second quarter of 1998.
Item 2. Description to Exhibits (reciting exhibit numbers
specified by Regulation S-B).
2. No Plan of Reorganization has been approved and
no exhibit is included.
3. Articles of Incorporation and By-laws.
4. Instrument defining rights of holders.
9. No voting trust agreement has been made and no exhibit is
included.
10. Material Contracts.
11. Statement: regarding computation of earnings per share.
16. Letter on change in certifying accountant is not required,
because no change has occurred; therefore, no exhibit is
included.
21. The company has no subsidiaries; therefore, no exhibit is
provided.
24. A power of attorney was not used, and no exhibit is provided.
27. Financial Data Schedule. No exhibit is included for this item
which is for electronic filers only.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereto duly authorized.
(Registrant) SYNERGY 2000, Inc.
-------------------------------------------
Date July 23, 1998
-------------------------------------------
By /S/ Eli Dabich, Jr.
-------------------------------------------
Eli Dabich, Jr. as President
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SYNERGY 2000, INC.
Financial Statements
December 31, 1997 and 1996
<PAGE>
SYNERGY 2000, INC.
Financial Statements
Contents Page No.
Report of Independent Auditors F-1
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
Notes to Financial Statements (Continued) F-7
Consolidated Balance Sheets F-8
Consolidated Statements of Operations F-9
Consolidated Statements of Stockholders' Equity F-10
Consolidated Statements of Cash Flows F-11
Consolidated Notes to Financial Statements F-12
Consolidated Notes to Financial statements (Continued) F-13
<PAGE>
Milner, Bales and company Stephen D. Milner, CPA
Certified Public Accountants G. Marvin Bales, CPA, CFP
17 Toy street
Greenville, South Carolina 29601
(864) 233-5984
Fax (864) 233-7751
REPORT OF INDEPENDENT AUDITORS
------------------------------
Board of Directors
Synergy 2000, Inc.
We have audited the accompanying balance sheets of Synergy 2000, Inc. (a
development stage company through December 31, 1996) as of December 31, 1997
and 1996, and the related statements of operations, stockholders' equity and
cash flows for the year ended December 31, 1997 and the period of inception to
December 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 audit.
We conducted our audit 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 audit provides a reasonable basis
our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Synergy 2000, Inc., at
December 31, 1997 and 1996, and the results of its operations and its cash
flows for the year ended December 31, 1997 and the period of inception to
December 31, 1996, in conformity with generally accepted accounting
principles.
MILNER, BALES AND COMPANY
Greenville, South Carolina
April 30, 1998
F-1
MEMBER AMERICAN INSTITUE OF CERTIFIED PUBLIC ACCOUNTANTS & SOUTH CAROLINA
ASSOCIATION OF CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
<TABLE>
<CAPTION>
SYNERGY 2000, INC.
Balance Sheets
December 31, 1997 and 1996
1997 1996
--------- ---------
<S> <C>
ASSETS
Current Assets:
Cash $ 137,612 $ 12,000
Accounts Receivable 64,024 ---
--------- ---------
Common Stock Subscriptions Receivable 112,500 250,000
--------- ---------
Total Current Assets 314,136 262,000
Equipment, Net 3,635 ---
--------- ---------
Organization Costs, Net
136 179
--------- ---------
Total Assets $ 317,907 $ 262,179
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 5,273 $ 600
Accrued Payroll Taxes 10,395 ---
--------- ---------
Total Current Liabilities 15,668 600
Deferred Income Taxes 1,007 ---
Stockholders' Equity:
Common Stock, Par Value $.001;
Authorized 25,000,000 Shares;
Issued and Outstanding 10,637,500 Shares at
December 31, 1997 and 10,500,000 Shares
at December 31, 1996 10,637 10,500
Common Stock Subscribed, 112,500 Shares at
December 31, 1997 and 250,000 shares at
December 31, 1996 112,500 250,000
Capital in Excess of Par Value of Common Stock 236,663
1,500
Retained (Deficit) (58,568)
(421)
--------- ---------
Total Stockholders' Equity 301,232 261,579
--------- ---------
Total Liabilities and Stockholders' Equity $ 317,907 $ 262,179
========= =========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
SYNERGY 2000, INC.
Statements of Operations
For the Year Ended December 31, 1997 and
the date of Inception to December 31, 1996
1997 1996
-------- --------
Fees Billed $480,335 $ ---
Operating Expenses:
Salaries 222,391 ---
Contract Services 37,451 ---
Taxes and Licenses 12,044 ---
Auto and Truck 7,661 ---
Travel and Business 92,225 ---
Meals and Entertainment 7,748 ---
Advertising 28,177 ---
Professional Fees 15,279 ---
Rent 5,778 ---
Repairs and maintenance 260 ---
Telephone 11,607 ---
Supplies 11,343 ---
Insurance 11,163 ---
Postage 2,449 ---
Dues and Subscriptions 2,079 ---
Investor Relations 5,125 ---
Filing Fees 5,260 ---
Miscellaneous 935 421
-------- --------
478,975 421
-------- --------
Net Income (Loss) Before Income Taxes 1,360 (421)
Provision for Income Taxes 1,007 --
-------- --------
Net Income (Loss) $ 353 $ (421)
======== ========
See accompanying notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
SYNERGY 2000, INC.
Statements of Stockholder's Equity
For the Date of Inception to December 31, 1997
Capital Total
Common In Excess Stock-
Common Stock of Par Retained holders'
Stock Subscribed Value (Deficit) Equity
---------- ----------- ---------- --------- ----------
<S> <C>
Balance -
Date of Inception $ -- $ -- $ -- $ -- $ --
Shares Sold 5,250 -- 6,750 -- 12,000
Shares Subscribed -- 250,000 -- -- 250,000
Shares Split 5,250 -- (5,250) -- --
Net Loss -- -- -- (421) (421)
--------- --------- --------- --------- ---------
Balance -
December 31, 1996 10,500 250,000 1,500 (421) 261,579
Shares Sold 9,380 -- 104,420 -- 113,800
Subscriptions
Received 137 (137,500) 137,363 -- --
Shares Redeemed (9,380) -- (6,620) (58,500) (74,500)
Net Income -- -- -- 353 353
--------- --------- --------- --------- ---------
Balance -
December 31, 1997 $ 10,637 $ 112,500 $ 236,663 $ (58,568) $ 301,232
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
SYNERGY 2000, INC.
Statements of Cash Flows
For the Year Ended December 31, 1997 and
the date of Inception to December 31, 1996
1997 1996
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 353 $ (421)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by (Used) in Operating Activities:
Depreciation 404 --
Amortization 43 36
Increase in Accounts Receivable (64,024) --
Increase in Accounts Payable 4,673 600
Increase in Accrued Payroll Taxes 10,395 --
Increase in Deferred Income Taxes 1,007 --
--------- ---------
Net Cash Provided by (Used) in Operating Activities (47,149) 215
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Equipment (4,039) --
Organization Costs -- (215)
--------- ---------
Net Cash Used in Investing Activities (4,039) (215)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Stock 251,300 12,000
Redemption of Stock (74,500) --
--------- ---------
Net Cash Provided by Financing Activities 176,800 12,000
--------- ---------
NET INCREASE IN CASH 125,612 12,000
CASH - BEGINNING 12,000 --
--------- ---------
CASH - ENDING $ 137,612 $ 12,000
========= =========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
SYNERGY 2000, INC.
Notes to Financial Statements
December 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Synergy 2000, Inc. (the
Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
Nature of Operations - The Company was incorporated on February 20, 1996 in the
state of Delaware and was a development stage company through December 31, 1996.
It began operations in 1997 as an information systems integrator and management
consulting firm providing value added technology and management solutions for
companies to prepare them tactically and strategically for the Year 2000 and
beyond. The Company offers a suite of products and services for solving systems'
problems related to the Year 2000 and the inability to process computer
application code with date-related fields. The Company provides services to
clients throughout the nation, as well as some foreign markets. Since the
Company's clients include all industries, its ability to collect amounts due
from them as a result of extending them credit, is not affected by economic
fluctuations in any particular industry.
Depreciation - The Company's equipment is depreciated using the straight-line
method. Depreciation expense totalled $404 for the year ended December 31, 1997
and $0 for the period of inception to December 31, 1996.
Organization Costs - Organization costs ($215) are being amortized using the
straight-line method over 60 months. Amortization expense charged to operations
amounted to $43 for the year ended December 31, 1997 and $36 for the date of
inception to December 31, 1996. Accumulated amortization was $79 at December 31,
1997 and $36 at December 31, 1996.
Deferred Income Taxes - For income tax reporting, the Company uses accounting
methods that recognizes depreciation sooner than for financial statement
reporting and does not recognize income and certain expenses until received or
paid. As a result, the basis of equipment, accounts receivable, and certain
accrued expenses for financial reporting exceeds its tax basis. Deferred income
taxes have been recorded for the excess, which will be taxable in future periods
through reduced depreciation deductions, and increased income for tax purposes.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
F-6
<PAGE>
<TABLE>
<CAPTION>
SYNERGY 2000, INC.
Notes to Financial Statements (Continued)
December 31, 1997
NOTE 2 - EQUIPMENT
---------
Equipment consists of the following:
1997 1996
------------- -------------
<S> <C>
Computer Equipment $ 4,039 $ ---
Accumulated Depreciation (404) ---
============= =============
$ 3,635 ---
============= =============
NOTE 3 - INCOME TAXES
------------
The provision for income taxes consists of the following:
1997 1996
------------- -------------
Current $ --- $ ---
Deferred 1,007 ---
============= =============
$ 1,007 $ ---
============= =============
</TABLE>
The tax provision differs from the expense that would result from applying
statutory rates to income before income taxes because of nondeductible meals and
entertainment of $3,874.
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock - For the year ended December 31, 1997, the Company sold 9,380,000
shares of its $.001 par value common stock for a total price of $113,800.
Additionally, the Company redeemed 9,380,000 shares for a total price of
$74,500.
On September 9, 1996, the Company sold 750,000 shares of its $.001 per value
common stock in the state of New York, pursuant to a registration with the New
York Department of Law and pursuant to a Section 504 (D) exemption with the
United States Securities and Exchange Commission, for a total price of $7,500.
Common Stock Split - On December 31, 1996, the Company approved a 2-for-1 common
stock split.
Common Stock Subscribed - On December 31, 1996, 250,000 shares of the Company's
$.001 par value common stock was subscribed to for a total price of $250,000.
For the year ended December 31, 1997, $137,500 of the subscriptions were
received. The remaining $112,500 was outstanding at December 31, 1997.
Net Income (Loss) Per Share - Net income (loss) per common share has not been
computed since it is not significant.
F-7
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Balance Sheets (Unaudited)
June 30, March 31,
1998 1998
---------- ----------
ASSETS
Current Assets:
Cash $ 118,721 $ 13,276
Accounts Receivable 523,083 93,705
Common Stock Subscriptions Receivable 112,500 112,500
---------- ----------
Total Current Assets 754,304 219,481
Equipment, Net 4,054 4,280
Other Assets:
Intangible Asset, Net 960,784 --
Organization Costs, Net 115 125
---------- ----------
Total Other Assets 960,899 125
---------- ----------
Total Assets $1,719,257 $ 223,886
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 180,473 $ 5,273
Accrued Payroll Taxes 11,726 14,681
Accrued Income Taxes 95,171 --
---------- ----------
Total Current Liabilities 287,370 19,954
Minority Interest in Consolidated Subsidiary 471,445 --
Stockholders' Equity:
Common Stock, Par Value $.001;
Authorized 25,000,000 Shares;
Issued and Outstanding 10,637,500 Shares 10,637 10,637
Common Stock Subscribed, 112,500 Shares 112,500 112,500
Capital in Excess of Par Value of Common Stock 726,663 236,663
Retained Earnings (Deficit) 110,642 (155,868)
---------- ----------
Total Stockholders' Equity 960,442 203,932
---------- ----------
Total Liabilities and Stockholders' Equity $1,719,257 $ 223,886
========== ==========
See accompanying notes to financial statements.
F-8
<PAGE>
<TABLE>
<CAPTION>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Statements of Operations (Unaudited)
Six Months Three Months Three Months
Ended Ended Ended
June 30, June 30, March 31,
1998 1998 1998
------------ ------------ ------------
<S> <C>
Fees Billed $ 999,669 $ 926,447 $ 73,222
Operating Expenses:
Salaries 121,520 60,760 60,760
Contract Services 447,928 438,058 9,870
Taxes and Licenses 10,590 5,892 4,698
Auto and Truck 1,395 -- 1,395
Travel and Business 26,784 15,227 11,557
Meals and Entertainment 1,277 442 835
Advertising 58,260 9,935 48,325
Professional Fees 14,248 4,500 9,748
Rent 5,914 2,985 2,929
Telephone 10,575 5,140 5,435
Supplies 9,291 3,029 6,262
Insurance 20,118 16,435 3,683
Postage 1,802 697 1,105
Dues and Subscriptions 652 120 532
Investor Relations 4,416 326 4,090
Miscellaneous 864 559 305
--------- --------- ---------
735,634 564,105 171,529
--------- --------- ---------
Net Income (Loss) Before Income Taxes 264,035 362,342 (98,307)
Income Tax (Expense) Benefit (94,164) (95,171) 1,007
--------- --------- ---------
Net Income (Loss) Before Minority Interest 169,871 267,171 (97,300)
Minority Interest in Net Income (Loss) (661) (661) --
--------- --------- ---------
Consolidated Net Income (Loss) $ 169,210 $ 266,510 $ (97,300)
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-9
<PAGE>
<TABLE>
<CAPTION>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Unaudited)
Capital Total
Common In Excess Retained Stock-
Common Stock of Par Earnings holders'
Stock Subscribed Value (Deficit) Equity
---------- ---------- --------- -------- -------
<S> <C>
Balance -
December 31, 1997 $ 10,637 $ 112,500 $ 236,663 $ (58,568) $ 301,232
Net Loss -- -- -- (97,300) (97,300)
--------- --------- --------- --------- ---------
Balance -
March 31, 1998 10,637 112,500 236,663 (155,868) 203,932
Sale of Subsidiary
Common Stock -- -- 490,000 -- 490,000
Net Income
-- -- -- 266,510 266,510
--------- --------- --------- --------- ---------
Balance -
June 30, 1998 $ 10,637 $ 112,500 $ 726,663 $ 110,642 $ 960,442
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-10
<PAGE>
<TABLE>
<CAPTION>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
Six Months Three Months Three Months
Ended Ended Ended
June 30, June 30, March 31,
1998 1998 1998
---------- ------------ -------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 169,871 $ 267,171 $ (97,300)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by (Used) in Operating
Activities:
Depreciation 444 226 218
Amortization 21 10 11
Increase in Accounts Receivable (459,059) (429,378) (29,681)
Increase in Accounts Payable 175,200 175,200 --
Increase (Decrease) in Accrued Payroll
Taxes 1,331 (2,955) 4,286
Decrease in Deferred Income Taxes (1,007) -- (1,007)
Increase in Accrued Income Taxes 95,171 95,171 --
--------- --------- ---------
Net Cash Provided by (Used) in
Operating Activities (18,028) 105,445 (123,473)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Equipment (863) -- (863)
--------- --------- ---------
Net Cash Used in Investing Activities (863) -- (863)
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH (18,891) 105,445 (124,336)
CASH - BEGINNING 137,612 13,276 137,612
--------- --------- ---------
CASH - ENDING $ 118,721 $ 118,721 $ 13,276
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-11
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Notes to Financial Statements (Unaudited)
June 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Synergy 2000, Inc. and
subsidiary (the Company) is presented to assist in understanding the Company's
financial statements. The financial statements and notes are representations of
the Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its 51% owned subsidiary, Argos 2000, Inc. All
significant intercompany transactions and balances have been eliminated.
Nature of Operations - The Company is an information systems integrator and
management consulting firm providing value added technology and management
solutions for companies to prepare them tactically and strategically for the
Year 2000 and beyond. The Company offers a suite of products and services for
solving systems' problems related to the Year 2000 and the inability to process
computer application code with date-related fields. The Company provides
services to clients throughout the nation, as well as some foreign markets.
Since the Company's clients include all industries, its ability to collect
amounts due from them as a result of extending them credit, is not affected by
economic fluctuations in any particular industry.
Depreciation - The Company's equipment is depreciated using the straight-line
method. Depreciation expense totalled $444 for the six months ended June 30,
1998.
Intangible Asset - In June 1998, Argos 2000, Inc. acquired an exclusive,
non-transferable, license, throughout the world, to market a fully automated,
year 2000 compatible, policy administration system designed for the auto
insurance industry. This intangible asset will be amortized using the
straight-line method over 10 years.
Organization Costs - Organization costs ($215) are being amortized using the
straight-line method over 60 months. Amortization expense charged to operations
amounted to $21 for the six months ended June 30, 1998.
Accumulated amortization was $100 at June 30, 1998.
Deferred Income Taxes - For income tax reporting, the Company uses accounting
methods that recognizes depreciation sooner than for financial statement
reporting and does not recognize income and certain expenses until received or
paid. As a result, the basis of equipment, accounts receivable, and certain
accrued expenses for financial reporting exceeds its tax basis. Deferred income
taxes have been recorded for the excess, which will be taxable in future periods
through reduced depreciation deductions, and increased income for tax purposes.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
F-12
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Notes to Financial Statements (Unaudited)
(Continued)
June 30, 1998
NOTE 2 - ACQUISITION
During the second quarter of 1998, the Company acquired 51% of Argos 2000, Inc.
(a start-up corporation), which was incorporated under the laws of the state of
Delaware for the purpose of marketing year 2000 compatible policy administration
software to the auto insurance industry. The Company issued 200,000 shares of
its $.001 par value common stock for its 51% interest. The investment was
recorded at the estimated fair value, at the date of acquisition, of the common
stock issued by the Company since it was more clearly evident.
NOTE 3 - EQUIPMENT Equipment consists of the following:
[OBJECT OMITTED]
NOTE 4 - INCOME TAXES
The income tax provision consists of the following:
[OBJECT OMITTED]
The income tax provision differs from the expense that would result from
applying statutory rates to income before income tax because of nondeductible
meals and entertainment of $639.
NOTE 5 - STOCKHOLDERS' EQUITY
Common Stock Subscribed - On December 31, 1996, 250,000 shares of the Company's
$.001 par value common stock was subscribed to for a total price of $250,000.
For the year ended December 31, 1997, $137,500 of the subscriptions were
received. The remaining $112,500 was outstanding at June 30, 1998.
Net Income (Loss) Per Share - Net income (loss) per common share has not been
computed since it is not significant.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the second quarter of 1998, the Company paid Argos 2000, Inc. $37,664 for
services provided to the Company.
F-13
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "VIRTUAL PULSE, INC.", CHANGING ITS NAME FROM "VIRTUAL PULSE, INC.", "TO
"SYNERGY 2000, INC.", FILED IN THIS OFFICE ON THE TWENTY-FIRST DAY OF JANUARY,
A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
[GRAPHIC OF THE STATE SEAL OF DELAWARE OMITTED]
[Graphic of the /s/ Edward J. Freel
seal of the -----------------------------------
secretary's office Edward J. Freel, Secretary of State
omitted]
AUTHENTICATION:
DATE:
82922444
01-21-97
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION OF
VIRTUAL PULSE, INC.
A Delaware corporation
Pursuant to section 242
Pursuant to the provisions of the General Corporation Law of Delaware.
VIRTUAL PULSE, INC. adopts the following certificate of Amendment to its
Certificate of Incorporation, as amended:
FIRST: The name of the corporation is VIRTUAL PULSE, INC.
SECOND: The following amendment to the Certificate of Incorporation, as
amended of the Corporation was adopted by resolution provided by a majority of
the shareholders on the 31st day of December, 1996, in the manner prescribed by
Sect. 242 of the General Corporation Law of Delaware.
Article FIRST of the Certificate of Incorporation of VIRTUAL PULSE, INC. is
hereby repealed and amended by substitution of the following Article:
"FIRST: the name of the Corporation is SYNERGY 2000, INC."
THIRD: The date of adoption of the amendments by a majority of the
shareholders was December 31, 1996 and the date of adoption of the amendments by
all of the members of the Board of Directors was December 31, 1996.
FOURTH: The number of shares voting for the amendment by the holders of the
outstanding shares of common stock was sufficient for the approval of the
amendment.
FIFTH: The manner in which any exchange, reclassification of cancellation
of issued shares provided for in the amendments herein shall be affected as
follows: NONE.
IN WITNESS WHEREOF the Corporation has caused this Certificate of Amendment
to the Certificate of Incorporation to be executed this 31st day of December,
1996.
VIRTUAL PULSE, INC.
a Delaware corporation
By: /s/ William E. Tabor
--------------------
William E. Tabor, President
ATTEST:
/s/ Richard Hunt
- ---------------------------
/s/ Richard Hunt, Secretary
BY-LAWS
OF
Synergy 2000 Inc.
ARTICLE I - OFFICES
-------------------
The office of the Corporation shall be located in the City and State designated
in the Articles of Incorporation. The Corporation may also maintain offices at
such other places within or without the United States as the Board of Directors
may, from time to time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
------------------------------------
Section 1-Annual Meetings:
- --------------------------
The annua1 meeting of the shareholders of the Corporation shall be held within
five months after the close of the fiscal year of the Corporation, for the
purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2- Special Meetings:
- ----------------------------
Special meetings of the shareholders may be called at any time by the Board of
Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of ten per cent (10%) of the
shares then outstanding and entitled to vote thereat, or as otherwise required
under the provisions of the Business Corporation Act.
Section 3 - Place of Meetings:
- ----------------------------
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.
By-Laws - 1
<PAGE>
Section 4 - Notice of Meetings:
- -------------------------------
(a) Except as otherwise provided by Statute, written notice of each meeting of
shareholders, whether annual or special, stating the time when and place where
it is to be held, shall be served either personally or by mail, not less than
ten or more than fifty days before the meeting, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. Notice of a special meeting shall also
state the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle shareholders to receive payment for their shares
pursuant to Statute, the notice of such meeting shall include a statement of
that purpose and to that effect. If mailed, such notice shall be directed to
each such shareholder at his address, as it appears on the records of the
shareholders of the Corporation, unless he shall have previously filed with the
Secretary of the Corporation a written request that notices intended for him be
mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
shareholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of shareholders
need not be given, unless otherwise required by statute.
Section 5 - Ouorum:
- -------------------
(a) Except as otherwise provided herein, or by statute, or in the Certificate of
Incorporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and
By-Laws - 2
<PAGE>
sufficient to constitute a quorum for the transaction of any business. The
withdrawal of any shareholder after the commencement of a meeting shall have no
effect on the existence of a quorum, after a quorum has been established at such
meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
at the meeting as originally called if a quorum had been present.
Section 6 - Voting:
- -------------------
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors to be
taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so by proxy; provided, however, that the instrument authorizing
such proxy to act shall have been executed in writing by the shareholder
himself, or by his attorney-in-fact thereunto duly authorized in writing. No
proxy shall be valid after the expiration of eleven months from the date of its
execution, unless the persons executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.
By-Laws - 3
<PAGE>
(d) Any resolution in writing, signed by all of the shareholders entitled to
vote thereon, shall be and constitute action by such shareholders to the effect
therein expressed, with the same force and effect as if the same had been duly
passed by unanimous vote at a duly called meeting of shareholders and such
resolution so signed shall be inserted in the Minute Book of the Corporation
under its proper date.
ARTICLE III - BOARD OF DIRECTORS
Section 1 - Number. Election and Term of Office:
- -----------------------------------------------
(a) The number of the directors of the Corporation shall be ( ), unless and
until otherwise determnined by vote of a majority of the entire Board of
Directors. The number of Directors shall not be less than three, unless all of
the outstanding, shares are owned beneficially and of record by less than three
shareholders, in which event the number of directors shall not be less than the
number of shareholders permitted by statute.
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares, present in person or by
proxy, entitled to vote in the election.
(c) Each director shall hold office until the annual meeting of the shareholders
next succeeding his election, and until his successor is elected and qualified,
or until his prior death, resignation or removal.
Section 2 - Duties and Powers:
- ------------------
The Board of Directors shall be responsible for the control and management of
the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the shareholders.
Section 3 - Annual and Regular Meetings: Notice:
- ------------------------------------------------
(a) A regular annual meeting of the Board of Directors shall be held immediately
following the annual meeting of the shareholders, at the place of such annual
meeting of shareholders.
By-Laws - 4
<PAGE>
(b) The Board of Directors, from time to time, may provide by resolution for the
holding of other regular meetings of the Board of Directors, and may fix the
time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such
action was taken within the time limited, and in the manner set forth in
paragraph (b) of Section 4 of this Article III, with respect to special
meetings, unless such notice shall be waived in the manner set for~ in
paragraph (c) of such Section 4.
Section 4 - Special Meetings: Notice:
- ------------------------------------
(a) Special meetings of the Board of Directors shall be held whenever called by
the President or by one of the directors, at such time and place as may be
specified in the respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meeting shall be
mailed directly to each director, addressed to him at his residence or usual
place of business, at least two (2) days before the day on which the meeting is
to be held, or shall be sent to him at such place by telegram, radio or cable,
or shall be delivered to him personally or given to him orally, not later than
the day before the day on which the meeting is to be held. A notice, or waiver
of notice, except as required by Section 8 of this Article III, need not specify
the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 - Chairman:
- ---------------------
At all meetings of the Board of Directors the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall preside.
By-Laws - 5
<PAGE>
Section 6 - Ouorum and Adjournments:
- ------------------------------------
(a) At all meetings of the Board of Directors, the presence of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these By-Laws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, until a quorum shall be present.
Section 7 - Manner of Acting:
- -----------------------------
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b)Except as otherwise provided by statute, by the Certificate of Incorporation,
or these By-Laws, the action of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board of Directors.
Any action authorized in writing, by al1 of the directors entitled to vote
thereon and filed with the minutes of the corporation shall be the act of the
Board of Directors with the same force and effect as if the same had been passed
by unanimous vote at a duly called meeting of the Board.
Section 8 - Vacancies:
- ----------------------
Any vacancy in the Board of Directors occurring by reason of an increase in the
number of directors, or by reason of the death, resignation, disqualification,
remova1 (unless a vacancy created by the removal of a director by the
shareholders shall be filled by the shareholders at the meeting at which the
removal was effected) or inability to act of any director, or otherwise, shall
be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Section 9 - Resignation:
- ------------------------
Any director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or such officer, and the acceptance of
such resignation shall not be necessary to make it effective.
By-Laws - 6
<PAGE>
Section 10 - Removal:
- ---------------------
Any director may be removed with or without cause at any time by the affirmative
vote of shareholders holding of record in the aggregate at least a majority of
the outstanding shares of the Corporation at a special meeting of the
shareholders called for that purpose, and may be removed for caused by action of
the Board.
Section 11 - Salary:
- --------------------
No stated salary shall be paid to directors, as such, for their services, but by
resolution of the Board of Directors a fixed sum and expenses of attendance, if
any, may be allowed for attendance at each regular or special meeting of the
Board; provided, however, that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 12 - Contracts:
- -----------------------
(a) No contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way by reason of the fact that any one or more of the directors
of this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other Corporation, provided that such facts are
disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the Board of Directors, and provided
that the Board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. This Section shall not
By-Laws - 7
<PAGE>
be construed to impair or invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law (common, statutory or
otherwise) applicable thereto.
Section 13 - Committees:
- ------------------------
The Board of Directors, by resolution adopted by a majority of the entire Board,
may from time to time designate from among its members an executive committee
and such other committees, and alternate members thereof, as they deem
desirable, each consisting, of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election
- --------------------------------------------
and Term of Office:
-------------------
(a) The officers of the Corporation shall consist of a President, a Secretary, a
Treasurer, and such other officers, including a Chairman of the Board of
Directors, and one or more Vice Presidents, as the Board of Directors may from
time to time deem advisable. Any officer other than the Chairman of the Board of
Directors may be, but is not required to be, a director of the Corporation. Any
two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, or until his death, resignation or removal.
Section 2 - Resignation:
- ------------------------
Any officer may resign at any time by giving written notice of such resignation
to the Board of Directors, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors or
by such officer, and the acceptance of such resignation shall not be necessary
to make it effective.
By-Laws - 8
<PAGE>
Section 3 - Removal:
- --------------------
Any officer may be removed, either with or without cause, and a successor
elected by a majority of the Board of Directors at any time.
Section 4 - Vacancies:
- ----------------------
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board of Directors.
Section 5 - Duties of Officers:
- -------------------------------
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these By-laws, or may from time to tune be specifically conferred or imposed by
the Board of Directors. The President shall be the chief executive officer of
the Corporation.
Section 6 - Sureties and Bonds:
- -------------------------------
In case the Board of Directors shall so require, any officer, employee or agent
of the Corporation shall execute to the Corporation a bond in such sum, and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
Section 7 - Shares of Other Corporations:
- -----------------------------------------
Whenever the Corporation is the holder of shares of any other Corporation, any
right or power of the Corporation as such shareholder (including the attendance,
acting and voting at shareholders' meetings and execution of waivers, consents,
proxies or other instruments) may be exercised on behalf of the Corporation by
the President, any Vice President, or such other person as the Board of
Directors may authorize.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificate of Stock:
- ---------------------------------
(a) The certificates representing shares of the Corporation shall be in such
form as shall
By-Laws - 9
<PAGE>
be adopted by the Board of Directors, and shall be numbered and registered in
the order issued. They shall bear the holder's name and the number of shares,
and shall be signed by (i) the Chairman of the Board or the President or a vice
President, and (ii) the Secretary or Treasurer, or any Assistant Secretary or
Assistant Treasurer, and shall bear the corporate seal.
(b) No certificate representing shares shall be issued until the full amount of
consideration therefor has been paid, except as otherwise permitted by law.
(c) To the extent permitted by law, the Board of Directors may authorize the
issuance of certificates for fractions of a share which shall entitle the holder
to exercise voting rights, receive dividends and participate in liquidating
distributions, in proportion to the fractional holdings; or it may authorize the
payment in cash of the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the signature of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but such scrip
shall not. entitle the holder to any rights of a shareholder, except as therein
provided.
Section 2 - Lost or Destroyed Certificates:
- -------------------------------------------
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the
certificate representing the same. The Corporation may issue a new certificate
in the place of any certificate theretofore issued by it, alleged to have been
lost or destroyed. On production of such evidence of loss or destruction as the
Board of Directors in its discretion may require, the Board of Directors may, in
its discretion, require the owner of the lost or destroyed certificate, or his
legal representatives, to give the Corporation a bond in such sum as the Board
may direct, and with such surety or sureties as may be satisfactory to the
Board, to indemnify the Corporation against any claims, loss, liability or
damage it may suffer on account of the issuance of the new certificate. A new
certificate may be issued without requiring any such evidence or bond when, in
the judgment of the Board of Directors, it is proper so to do.
By-Laws - 10
<PAGE>
Section 3 - Transfers of Shares:
- -------------------------------
(a) Transfers of shares of the Corporation shall be made on the share records of
the Corporation only by the holder of record thereof, in person or by his duly
authorized attorney, upon surrender for cancel1ation of the certificate or
certificates representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature and of authority to transfer and of payment of
transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 - Record Date:
- ------------------------
In lieu of closing the share records of the Corporation, the Board of Directors
may fix, in advance, a date not exceeding fifty days, nor less than ten days, as
the record date for the determination of shareholders entitled to receive notice
of, or to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the directors relating thereto is adopted. When a determination of shareholders
of record entitled to notice of or to vote at any meeting of shareholders has
been made as provided for herein, such determination shall apply to any
adjournment thereof, unless the directors fix a new record date for the
adjourned meeting.
By-Laws - 11
<PAGE>
ARTICLE VI - DIVIDENDS
----------------------
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as the
Board of Directors may determine.
ARTICLE VII - FISCAL YEAR
-------------------------
The fiscal year of the Corporation shall be fixed by the Board of Directors from
time to time, subject to applicable law.
ARTICLE VIII- CORPORATE SEAL
----------------------------
The corporate seal, if any, shall be in such form as shall be approved from time
to time by the Board of Directors.
ARTICLE IX - AMENDMENTS
-----------------------
Section 1 - By Shareholders:
- ----------------------------
All by-laws of the Corporation shall be subject to alteration or repeal, and new
by-laws may be made, by the affirmative vote of shareholders holding of record
in the aggregate at least a majority of the outstanding shares entitled to vote
in the election of directors at any annual or special meeting of shareholders,
provided that the notice or waiver of notice of such meeting shall have
summarized or set forth in full therein, the proposed amendment.
Section 2 - By Directors:
- ------------------------
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, by-laws of the Corporation; provided, however, that the
shareholders entitled to vote with respect thereto as in this Article IX
above-provided may alter, amend or repeal by-laws made by the Board of
Directors, except that the Board of Directors shall have no power to change the
quorum for meetings of shareholders or of the Board of Directors, or to change
any provisions of the by-laws with respect to the removal of directors or the
filling of vacancies in the Board resulting from the removal by the
shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shal1 be set forth
in the notice of the next meeting of shareholders for the election of directors,
the by-law so adopted, amended or repealed, together with a concise statement of
the changes made.
By-Laws - 12
<PAGE>
ARTICLE X - INDEMNITY
---------------------
(a) Any person made a party to any action, suit or proceeding, by reason of the
fact that he, his testator or intestate representative is or was a director,
officer or employee of the Corporation, or of any Corporation in which he served
as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein that such
officer, director or employee is liable for negligence or misconduct in the
performance of his duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of any
other rights to which any officer or director or employee may be entitled apart
from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be entitled
shall be fixed by the Board of Directors, except that in any case where there is
no disinterested majority of the Board available, the amount shall be fixed by
arbitration pursuant to then existing rules of the American Arbitration
Association.
The undersigned Incorporator certifies that he has adopted the foregoing
by-laws as the first by-laws of the Corporation.
Dated: 2-19-96
-----------------
/s/ William E. Tabor
------------------------------
Incorporator
By-Laws - 13
INSTRUMENT DEFINING THE RIGHTS OF SHAREHOLDERS
The following two paragraphs define the rights of shareholders of common
stock registered herein:
Holders of Common Stock are entitled to one vote per share on all matters
concerning which shareholders are entitled to vote. Cumulative voting in the
election of directors is not permitted. As a result, the holders of more than
50% of the outstanding shares have the power to elect all directors. The quorum
required at a shareholders' meeting is a majority of the shares entitled to
vote, represented in person or by proxy. If a quorum is present, the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on a matter is required for shareholder approval.
Holders of Common Stock are entitled to receive ratably such dividends,
if any, as may be declared by the Board of Directors out of funds legally
available thereof and after payment of dividends, if any, due on any outstanding
shares of Preferred Stock. Upon liquidation of the Company, such holders would
share ratably in the assets, if any, remaining after payment of all debts and
liabilities and after satisfaction of the liquidation preference of any
outstanding shares of Preferred Stock. Holders of Common Stock do not have
preemptive, conversion or redemption rights.
STATE OF DELAWARE )
) EMPLOYMENT AGREEMENT
COUNTY OF KENT )
AGREEMENT made as of this 31st day of March, 1998, between SYNERGY 2000,
Inc., a Delaware corporation, hereinafter called the Company and ELI DABICH,
JR., a resident of the state of Maryland, hereinafter called the Employee.
W I T N E S S E T H :
Whereas, the Company wishes to employ the Employee on the terms and
conditions hereinafter set forth; Whereas, the Employee is willing to accept
such employment, and NOW, THEREFORE, the parties hereto, in consideration of the
premises and the mutual covenants and promises hereinafter contained, do hereby
agree as follows:
1. Employment. The Company agrees to employ Employee and Employee agrees to
be employed by the Company subject to the terms and provisions of this
Agreement.
2. Terms. The employment of Employee by the Company as provided by Section
1 hereof will be for a period of one (1) year commencing on the date hereof.
3. Duties. Employee shall serve as the President of the Company and shall
have such powers and duties as may be from time to time prescribed by the
Company's Board of Directors, provided that the nature of Employee's powers and
duties shall at all times be those of a person serving as the President of a
corporation of a size and conducting operations comparable to the Company.
During his employment hereunder Employee shall devote time to the business and
affairs of the Company and shall use his best efforts to advance the best
interests of the Company at all times.
4. Place of Performance. Employee shall perform his duties hereunder at the
principal executive offices of the Company, provided, however, that he may be
reasonably required to travel and render services in different locations from
time to time incident to the performance of duties.
5. Compensation. The Employee shall receive remuneration from the Company
for his services hereunder at such rate and in such manner as may from time to
time be mutually agreed between the Company and the Employee; provided, however,
that:
(a) the aggregate remuneration to the Employee from the Company for
any fiscal year of the Company shall not be less than One Hundred Ten
Thousand ($110,000) Dollars, payable in Twelve (12) monthly installments at
the end of each month during the term of this Agreement. If the Company
Page 1
<PAGE>
does not have adequate funds from operations to pay the full salary, any
monthly salary payment may be deferred for up to six months until funds are
available to make such payment. Any deferred salary payments shall not
accrue interest; however, such payments may at the employee's election be
used to exercise stock options and may be converted to common stock.
(b) the Company shall also pay such additional salaries and other
compensation as may, from time to time, be approved by the Board of
Directors.
6. Expenses. During the term of Employee's employment hereunder, the
Company shall pay the reasonable expenses incurred by Employee (within limits
that may be established by the Board of Directors of the Company) in the
performance of his duties hereunder (or shall reimburse Employee on account of
such expenses paid directly by Employee) promptly upon the submission to the
Company by Employee of appropriate vouchers prepared in accordance with
applicable regulations of the Internal Revenue Service. Should any travel and
entertainment expenses as drawn by Employee be held nondeductible as travel and
entertainment expenses to Company by the Internal Revenue Service, then such
nondeductible travel and entertainment expenses shall be considered additional
compensation to Employee.
7. Termination. Either party hereto may terminate this agreement upon
thirty days prior written notice to the other.
8. Vacation. Employee shall be entitled to a certain number of paid
vacation days in each calendar year in accordance with the vacation policies and
practices of the Company as determined by the Board of Directors of the Company,
but not less than twenty-one (21) business days in any calendar year, prorated
appropriately on account of any calendar year during which Employee renders
services hereunder for less than the entire such year. In the event this
Agreement is terminated for any reason Employee shall be entitled to be paid for
vacation accrued but not taken. Such payment shall be made in a lump sum upon
the date of termination.
9. Meetings. The Company may require the Employee to attend such business
meetings and seminars each year, as shall in the Company's opinion serve to
improve and maintain Employee's competence, to the Company's advantage and
benefit; provided, however, that the Company shall bear the expense of attending
such meetings.
10. Insurance. The Company may in its discretion at any time after the
execution of this Agreement apply for and procure, as owner and for its own
benefit, life and/or disability insurance on the Employee in such amounts and in
such form or forms as the Company may choose. The Employee, at the request of
the Company, shall submit to such medical examinations, supply such information,
and execute such documents as may be required by the insurance company or
companies to whom the Company has applied for such insurance.
11. Notices. All notices hereunder shall be in writing and shall be deemed
to have been given at the time when mailed in any general or branch United
States Post Office enclosed in a registered postpaid envelope addressed to the
last known address of the respective parties.
12. Non-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 time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
Page 2
<PAGE>
13. Validity. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
14. Default. Employee and the Company recognize that Employee's services to
be performed hereunder are of a unique, special, and extraordinary character,
and that in the event of any conduct by Employee violating any provision of this
Agreement, the Company shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either at law or
in equity, to obtain damages for such conduct, to enforce specific performance
of such provision, to enjoin Employee from such conduct, or to obtain any other
relief, or any combination of the foregoing that the Company may elect to
pursue.
15. Attorney' Fees. If any suit or action shall be instituted to enforce or
interpret this Agreement, the prevailing party shall be entitled to recover from
the losing party, in addition to statutory costs, such sums as all courts may
adjudge as reasonable for the prevailing party's attorneys' fees in such suit,
action or any appeal thereof.
16. Counterparts. This Agreement is executed in two counterparts, each of
which shall be deemed an original and together shall constitute one and the same
agreement, with one counterpart being delivered to each party hereto.
17. Succession. Except as otherwise herein expressly provided, this
Agreement shall inure to the benefit of and be binding upon the Company, its
successors and assigns, (including but not limited to any 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 Employee, his heirs,
executors, administrator, and legal representatives, provided that the
obligations of Employee hereunder may not be delegated.
18. Gender. The use of masculine pronouns in this agreement shall not
construed in such a manner as to alter the intent of this agreement when applied
to female employees.
19. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware.
The parties hereto have executed this Agreement the day and year first
above written.
SYNERGY 2000 INC.
By: CONFORMED SIGNATURE
Title: President
CONFORMED SIGNATURE
/S/ ELI DABICH, JR.
Page 3
STATE OF DELAWARE )
) EMPLOYMENT AGREEMENT
COUNTY OF KENT )
AGREEMENT made as of this 31st day of March, 1998, between SYNERGY 2000,
Inc., a Delaware corporation, hereinafter called the Company and JEANETTE
TEBRICH SMITH, a resident of the state of California, hereinafter called the
Employee.
W I T N E S S E T H :
Whereas, the Company wishes to employ the Employee on the terms and
conditions hereinafter set forth;
Whereas, the Employee is willing to accept
such employment, and
NOW, THEREFORE, the parties hereto, in consideration of the
premises and the mutual covenants and promises hereinafter contained, do hereby
agree as follows:
1. Employment. The Company agrees to employ Employee and Employee agrees to
be employed by the Company subject to the terms and provisions of this
Agreement.
2. Terms. The employment of Employee by the Company as provided by Section
1 hereof will be for a period of one (1) year commencing on the date hereof.
3. Duties. Employee shall serve as the Executive Vice President of the
Company and shall have such powers and duties as may be from time to time
prescribed by the Company's Board of Directors, provided that the nature of
Employee's powers and duties shall at all times be those of a person serving as
the Executive Vice President of a corporation of a size and conducting
operations comparable to the Company. During her employment hereunder Employee
shall devote time to the business and affairs of the Company and shall use her
best efforts to advance the best interests of the Company at all times.
4. Place of Performance. Employee shall perform her duties hereunder at the
principal executive offices of the Company, provided, however, that he may be
reasonably required to travel and render services in different locations from
time to time incident to the performance of duties.
5. Compensation. The Employee shall receive remuneration from the Company
for her services hereunder at such rate and in such manner as may from time to
time be mutually agreed between the Company and the Employee; provided, however,
that:
(a) the aggregate remuneration to the Employee from the Company for
any fiscal year of the Company shall not be less than One Hundred Six
Thousand ($106,000) Dollars, payable in Twelve (12) monthly installments at
Page 1
<PAGE>
the end of each month during the term of this Agreement. If the Company
does not have adequate funds from operations to pay the full salary, any
monthly salary payment may be deferred for up to six months until funds are
available to make such payment. Any deferred salary payments shall not
accrue interest; however, such payments may at the employee's election be
used to exercise stock options and may be converted to common stock.
(b) the Company shall also pay such additional salaries and other
compensation as may, from time to time, be approved by the Board of
Directors.
6. Expenses. During the term of Employee's employment hereunder, the
Company shall pay the reasonable expenses incurred by Employee (within limits
that may be established by the Board of Directors of the Company) in the
performance of her duties hereunder (or shall reimburse Employee on account of
such expenses paid directly by Employee) promptly upon the submission to the
Company by Employee of appropriate vouchers prepared in accordance with
applicable regulations of the Internal Revenue Service. Should any travel and
entertainment expenses as drawn by Employee be held nondeductible as travel and
entertainment expenses to Company by the Internal Revenue Service, then such
nondeductible travel and entertainment expenses shall be considered additional
compensation to Employee.
7. Termination. Either party hereto may terminate this agreement upon
thirty days prior written notice to the other.
8. Vacation. Employee shall be entitled to a certain number of paid
vacation days in each calendar year in accordance with the vacation policies and
practices of the Company as determined by the Board of Directors of the Company,
but not less than twenty-one (21) business days in any calendar year, prorated
appropriately on account of any calendar year during which Employee renders
services hereunder for less than the entire such year. In the event this
Agreement is terminated for any reason Employee shall be entitled to be paid for
vacation accrued but not taken. Such payment shall be made in a lump sum upon
the date of termination.
9. Meetings. The Company may require the Employee to attend such business
meetings and seminars each year, as shall in the Company's opinion serve to
improve and maintain Employee's competence, to the Company's advantage and
benefit; provided, however, that the Company shall bear the expense of attending
such meetings.
10. Insurance. The Company may in its discretion at any time after the
execution of this Agreement apply for and procure, as owner and for its own
benefit, life and/or disability insurance on the Employee in such amounts and in
such form or forms as the Company may choose. The Employee, at the request of
the Company, shall submit to such medical examinations, supply such information,
and execute such documents as may be required by the insurance company or
companies to whom the Company has applied for such insurance.
11. Notices. All notices hereunder shall be in writing and shall be deemed
to have been given at the time when mailed in any general or branch United
States Post Office enclosed in a registered postpaid envelope addressed to the
last known address of the respective parties.
12. Non-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 time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
Page 2
<PAGE>
13. Validity. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
14. Default. Employee and the Company recognize that Employee's services to
be performed hereunder are of a unique, special, and extraordinary character,
and that in the event of any conduct by Employee violating any provision of this
Agreement, the Company shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either at law or
in equity, to obtain damages for such conduct, to enforce specific performance
of such provision, to enjoin Employee from such conduct, or to obtain any other
relief, or any combination of the foregoing that the Company may elect to
pursue.
15. Attorney' Fees. If any suit or action shall be instituted to enforce or
interpret this Agreement, the prevailing party shall be entitled to recover from
the losing party, in addition to statutory costs, such sums as all courts may
adjudge as reasonable for the prevailing party's attorneys' fees in such suit,
action or any appeal thereof.
16. Counterparts. This Agreement is executed in two counterparts, each of
which shall be deemed an original and together shall constitute one and the same
agreement, with one counterpart being delivered to each party hereto.
17. Succession. Except as otherwise herein expressly provided, this
Agreement shall inure to the benefit of and be binding upon the Company, its
successors and assigns, (including but not limited to any 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 Employee, her heirs,
executors, administrator, and legal representatives, provided that the
obligations of Employee hereunder may not be delegated.
18. Gender. The use of masculine pronouns in this agreement shall not
construed in such a manner as to alter the intent of this agreement when applied
to female employees.
19. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware.
The parties hereto have executed this Agreement the day and year first
above written.
SYNERGY 2000 INC.
By: /S/ Eli Dabich, Jr.
Title: President
CONFORMED SIGNATURE
JEANETTE TEBRICH SMITH
Page 3
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") made this 19th day of June, 1998,by
and between Synergy 2000, Inc., a Delaware corporation ("S2K", IST Development,
Inc. ("IST"), a corporation, and Marsh & McLennan Companies, Inc., a Delaware
corporation ("MMC").
Witnesseth:
Whereas, S2K is an authorized reseller of certain software (the "Software")
developed and owned by IST; and
Whereas, the parties entered into a letter agreement dated May 22, 1998,
pursuant to which MMC purchased two hundred fifty (250) copies of the Software
(thee "Letter Agreement");
Whereas, MMC desires to purchase an additional two hundred fifty (250)
copies of She Software for use by MMC's controlled subsidiaries, on the terms
and conditions set forth in this Agreement.
Now, Therefore, the parties agree as follows.
Section 1. Software. A description of the Software is contained in Schedule A
attached hereto.
Section 2. Sale of Licenses in Software. S2K hereby agrees to sell to MMC an
additional two hundred fifty (250) copies the Software for five hundred dollars
($500) per copy. After payment has been made for the two hundred fifty (250)
copies, MMC may purchase further copies for one thousand dollars ($1,000) per
copy. MMC acknowledges and agrees to abide by the terms of the license agreement
provided by 1ST with each copy of the Software. MMC also acknowledges that its
use of each copy of the Software is for MMC's internal business purposes only.
Section 3. Payment.
Upon execution of this Agreement, S2K will invoice MMC: for the purchase
price of One Hundred Twenty Five Thousand Dollars ($125,000), and S2K will
process the shipment and delivery of the 250 copies to MMC in New York. Upon
delivery of the two hundred fifty (250) copies, the invoice shal1 become payable
in full, with the outstanding amount due ten (10) days after delivery of the
Software copies to MMC. Any additional copies of the Software purchased pursuant
to Section 2 after payment of the initial purchase price shal1 also be invoiced
upon shipment and payable in full ten (10) days after delivery. MMC shal1 pay
all applicable federal and state taxes, assessments, charges and other taxes
which are imposed by any governmental authority by virtue of this Agreement
including but not limited to any applicable state or local sales or use tax,
exclusive of taxes based upon revenues or gross income of 32K or IST. All
invoices not paid within ten (10) days of Software delivery will incur interest
at the rate of one
<PAGE>
and one half percent (1.5%) per month or the maximum rate allowed by law,
whichever is less.
Section 4. Delivery, and Shipping. MMC acknowledges that, in most instances,
each copy of the Software will be delivered directly by IST. Al1 shipments will
be in accordance with the standard commercial practices of IST and/or S2K. IST
or S2K put the Software in possession of a carrier, contract with the carrier
for the shipment of the Software to the destination designated by MMC and
promptly deliver to MMC any documents necessary to obtain possession of the
Software. Title and risk of loss will pass to MMC upon delivery to MMC's loading
dock. MMC shall bear all expenses of transportation, including, without
limitation, loading and unloading, storage, and freight. S2K shall have the
right, but not the obligation, to prepay such charges in which event MMC shall
promptly reimburse S2K the amount thereof.
Section 5. Warranties.
5.1 S2K's Warranty. S2K warrants that the media upon which the Software is
provided shall be free of all defects. The program and accompanying
documentation are sold "AS IS" and without warranties as to performance or
merchantability. Any liability of S2K due to a breach of this Section 5.1 will
be 1imited exclusively to replacement of defective media.
5.2 Third Party Warranties. S2K makes no warranties either expressed or
implied with respect to such software provided by third party vendors (including
IST), except that S2K has the right to license such Software to MMC. To S2K's
knowledge and belief, currently available third party vendor's software
warranties are set forth in the license agreement provided by IST with each copy
of the Software. S2K shall give MMC the benefits of such warranties. S2K's
warranties are the only warranties made by S2K and will not be enlarged,
diminished or affected by, and no obligation or liability will arise out of,
S2K's renderings of technical, programming or ether advice or service in
connection with the Software licensed to MMC hereunder.
5.3 Disclaimer. S2K UNDERTAKES TO TRANSFER TO MMC ONLY SUCH RIGHT, TITLE
AND INTEREST IN THE SOFTWARE AS 1T MAY HAVE AND S2K DISCLAIMS ANY OBLIGATIONS
WITH RESPECT TO TITLE TO THE SOFTWARE BEYOND THIS UNDERTAKING. THE WARRANTIES
STATED IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO ANY WARRANTY
OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE.
5.4 Limitation of liability. IT IS AGREED THAT IN THE EVENT OF BREACH OF
ANY WARRANTY, THE LIABILITY OF S2K SHALL BE LIMITED TO REPAIRING OR REPLACING
THE DEFECTIVE MEDIA. S2K's LIABILITY FOR ALL OTHER CLAIMS, WHETHER UNDER THIS
SECTION 5 OR ANY OTHER SECTION OF THIS AGREEMENT AND WHETHER BASED IN CONTRACT,
TORT, OR OTHERWISE, SHALL BE LIMITED TO THE PURCHASE PRICE OF THE SOFTWARE. S2K
SHALL NOT, UNDER ANY
2
<PAGE>
CIRCUMSTANCES, BE LIABLE TO MMC, REGARDLESS OF THE THEORY OF LIABILITY UNDER
WHICH ANY CLAIM IS MADE, FOR PUNITIVE OR CONSEQUENTIAL DAMAGES, LOSS OF PROFIT,
LOSS OF CONTRACTS, LOSS OF OPERATION TIME, OR LOSS OF USE OF ANY EQUIPMENT.
Section 6. Intellectual property. Without limitation, S2K and/or IST retains al1
intellectual property rights in any data, sketches, drawings, notebooks,
inventions, and program upgrades and/or patches arising out of the performance
of this Agreement. Any MMC application(s) or data shall remain the sole
intellectual property of MMC. MMC shall not, under any circumstances, either
gain or lose any intellectual property rights through the performance of this
Agreement or its use of the Software.
Section 7. Limitations.
(a) At no time may the Software or any of the various components thereof be
disclosed to third parties sold, assigned, leased, or otherwise made available
or disposed of, or commercially exploited or marketed in any way with or without
charge without the prior written consent of S2K and/or IST. MMC, its employees
and agents shall use commercially reasonable efforts to keep confidential the
Software and will take all reasonable precautions, but not less than those
employed to protect MMCs own proprietary information, to prevent the Software
from being copied or reproduced, in whole or in part, by any person, firm or
corporation at any time without the prior written consent of S2K.
(b) Violation of any provision in this Section 7 not cured by MMC within
five (5) business days after written notice from S2K will entitle S2K at its
discretion to terminate this Agreement. In such event, MMC shal1 within ten (l0)
days of written notice from S2K return or destroy copies of the Software for
which MMC has knowledge and certify in writing that the copies of the Software
have been destroyed. In addition, S2K and IST shall be entitled to preliminary
injunctive relief and other injunctive relief against any continued use of the
Software. Such injunctive relief shall be in addition to and in no way in
limitation of any and all remedies or rights to recover damages S2K and/or IST
may have at law or equity for the enforcement of the above. In no event shall
MMC be liable for punitive or consequential damages, loss of profit, loss of
contracts, loss of operation time or loss of any equipment.
Section 8. Product Support and Training.
(a) The Software is simp1e to use and understand. MMC's staff who use the
Software are expected to be familiar with computers, typical software
installations, and general software operating principles. As such, MMC should
need little, if any. training to install and operate the Software.
(b) Product support shall be provided to five (5) 1ocations designated by
MMC, which are identified in Exhibit B to this Agreement. Each such site shal1
identify three (3) individuals,
3
<PAGE>
who shall act as support liaisons. IST will provide MMC phone support, which
sha11 include installation and operation assistance as well as guidelines and
suggestions on how to interpret the Software results or how to establish
procedures to effectively use the Software IST will maintain a telephone help
desk pursuant to Paragraph 3 of the Letter Agreement
(c) IST will also provide MMC support on a continuing basis through its web
site (www.ISTinfo.com. The web page will include FAQ's as well as an on-line
form for MMC to ask questions and request support.
(d) MMC acknowledges that IST will provide on-site assistance only in
special situations at S2K's request. If such request is necessary, MMC will pay
all travel, meal and lodging expenses for IST personnel used in the fulfillment
of such request, unless such on-site service is due to a defect under product
warranty. In Such case, IST has agreed to bear all costs associated with on-site
technical support.
(e) S2K will provide training to MMC and those of its companies listed on
Exhibit C. Such training will be provided on a time and materials basis at the
rate of one Thousand Five Hundred Dollars ($1,500) per day, plus travel, meal,
and lodging expenses.
Section 9. Term and Termination.
9.1 Term of Agreement. The term of this Agreement shal1 begin upon
execution and end on the earlier of January 15, 2000, or the termination of this
Agreement pursuant to this Section.
9.2 Termination for Cause. The parties may terminate this Agreement by
written notice given to the other party, in any of the following events:
(a) If either party fails to fulfill or perform any one or more of the
duties, obligations, or responsibilities undertaken pursuant to this
Agreement or breaches a provision of this Agreement in any way, and such
breach is not cured in all material respects within sixty (60} days after
written notice to the breaching party specifying the breach;
(b) If there is any assignment or attempted assignment by either party
of any interest in this Agreement without the other party's written
consent, and such breach is not cured in all material respects within sixty
(60) days after written notice to the breaching party;
(c) If either party fails for any reason to function in the ordinary
course of business, and such condition is not corrected within sixty (60)
days after written notice to the party;
(d) If the MMC breaches the terms of Section 7 of this Agreement, S2K
may terminate this Agreement upon the expiration of the time periods stated
therein; or
4
<PAGE>
(e) If the MMC fails to pay S2K on or before the date any payment is
due and such payment is not made within sixty (60) days after written
notice to MMC, S2K may terminate this Agreement immediately upon written
notice and pursue collection of all such amounts. MMC shall be responsible
for all reasonable costs incurred in such collection efforts including but
not limited to reasonable attorney's fees.
9.3 Effect off Termination on Software. Upon termination of this Agreement
pursuant to Section 9.2, User must return to S2K all copies of the Software.
Section 10. Confidentiality. MMC shall take reasonable steps to maintain the
confidentiality of the financial terms of this Agreement and, except as
otherwise required by law, shall disclose such terms only to employees or agents
of MMC with a need to know. The foregoing covenant shall expire and be of no
further force or effect two years from the date of the execution this Agreement.
Section 11. Miscellaneous.
11.1 Notice. Notices, requests and other communications required pursuant
to this Agreement shall be in writing and sent by first-class mail to the
parties at the following address:
To S2K: Synergy 2000, Inc.
2815 Cox Neck Road
Chester, MD 21619
Attention: Eli Dabich, Jr., President
To MMC: Marsh & Mclennan Companies, Inc
1166 Avenue of The Americas
New York, New York 10036
Att: General Counsel
11.2 Dispute Mechanism.
(a) Any dispute which, in the judgment of a party to this Contract may
materially affect the performance of such party shall be reduced to writing and
delivered to the other party. The parties shall promptly meet face to face at
the MMC's offices to negotiate in good faith and use every reasonable effort to
resolve such difficulty in a mutually satisfactory manner. Prior to the
institution of any formal proceeding, the parties must meet in this manner at
least twice to attempt to resolve the dispute in question. These initial two (2)
meetings shall take place within 15 business days after service of the written
statement of the dispute. During the pendency of such negotiations, the parties
shall act in good faith to perform their respective duties described herein.
5
<PAGE>
(b) If the negotiations set forth in subparagraph (a) are not successful
any remaining controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be settled by binding arbitration in Baltimore,
Maryland before three arbitrators, in accordance with the rules of the American
Arbitration Association then in effect. The parties may alternatively agree to
use one mutually acceptable arbitrator. Each party shall select one arbitrator
from a list provided by the American Arbitration Association, and those two
arbitrators shall then select a third arbitrator from a list provided by the
American Arbitration Association. The decision of the arbitrators shall be by
majority vote. Judgment upon the award rendered may be entered in any court
having jurisdiction thereof. The costs of arbitration shal1 be shared equally
between the parties.
11.3 Entire Agreement. It is expressly agreed that the provisions set forth
herein and the Letter Agreement constitute al1 the understandings and agreements
between the parties. Any prior agreements, promises, negotiations, or
representations not expressly set forth in this Agreement or the Letter
Agreement are of no force and effect
11.4 Severability. Any terms or provisions of this Agreement which shall
prove to be invalid, void or illegal shall in no way effect, impair or
invalidate any, other term or provision herein and such remaining terms and
provisions shall remain in full force and effect.
11.5 Statue of Limitations. Any claim which MMC may have shall be barred
unless brought within two years after delivery of the Software to MMC.
11.6 Assignment. This Agreement shall be binding on the parties and their
respective successors and assigns. Neither party shall assign this Agreement
without the prior written consent of the other party.
11.7 Amendment. This Agreement shal1 not be amended or modified other than
in writing signed by both parties.
11.8 Waiver. Unless otherwise agreed to in writing, the failure of any
party to require the performance by the other party of any provision hereof
shall in no way affect the full right to require such performance at any time
thereafter, nor shall the waiver of any provision hereof be taken or held to be
a waiver of the provision itself.
11.9 Survival of Representations and Warranties. Except as otherwise
provided in this Agreement, representations and warranties contained in this
Agreement shall survive the termination of this Agreement for two (2) years.
11.10 Laws Governing and Venue. The existence, validity and construction
of this Agreement shall be governed by the laws of the State of Maryland. This
Agreement shall be deemed entered into in the State of Maryland upon execution
by S2K
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<PAGE>
11.11 Authorization. Each person who signs this Agreement warrants that he
or she does so with the full and legal authority to execute this Agreement on
behalf of the respective parties to this Agreement.
11.12 Force Majeure. Neither party shall be liable for any delays in
performance or failure to perform any of its obligations hereunder (other than
an obligation to make payments) where such delay or failure arises due to
reasons beyond the part's control, including but not limited to, acts of God,
flood, fire, war, court order, labor dispute, or public enemy.
11.13. Counterparts. This Agreement may be executed in several
counterparts, all of which taken together shall constitute one single agreement
between the parties.
11.14. Headings and Interpretation. The Section headings used in this
agreement are for reference and convenience only, and shall no enter into the
interpretation of this agreement.
11.15. Conflict With Letter Agreement. If any provision of this agreement
is found to be in conflict with any provision of the Letter Agreement, the terms
of this agreement shall control.
WITNESS:
Illegible By: /s/ Eli Dabich Jr
- --------------------------- --------------------------------
Eli Dabich Jr., President
SYNERGY 2000, INC.
Illegible By: /s/ Michael Waskoff
- --------------------------- --------------------------------
Name: Michael Waskoff
Title: Vice President
MARSH & MCLENNAN COMPANIES, INC.
Illegible By: /s/ Allen B Fallon
- --------------------------- --------------------------------
Name: Allen B Fallon
Title: Executive Vice President
IST DEVELOPMENT, INC.
7
INTERNATIONAL [SYMBOL OMITTED] PAPER
PROFESSIONAL SERVICE AGREEMENT
This service agreement sets forth the terms and conditions whereby synergy 2000,
Inc., a provider of contract Programming services and having its principle place
of business at 2815 Cox Neck Rd., Chester, MD 21619 ("Contractor"), will provide
professional services to International Paper Company, Decorative Products
division having an office at 7240 Parkway Drive, Hanover, MD 21076
("International Paper").
DESCRIPTION OF WORK
Contractor will perform this agreement by providing to International Paper one
or more experienced technical specialists ("Subcontractor Employee(s)"), to work
on a specific project during the term of this Agreement. Project work will be
described in a work order in the form of schedule A to this agreement ("Work
Order"). The scope of the work to be performed on a project and the
Contractor/Subcontractor assigned to perform such work shall be set forth in the
Work Order. The services shall be performed at the location set forth in the
Work Order, or at such other locations as the parties agree. The Work Orders
shall be made a part of and incorporated in this Agreement upon execution by
both parties. All Work Orders shall include a complete description of all
required labor qualifications/experience levels that Contractor is required to
staff.
When Subcontractor's Employees are working on the premises of International
Paper, such subcontractors shall observe the working hours, working rules, and
holiday policy of International Paper. International Paper will not be charged
for holiday pay for contractor's personnel.
COMPENSATION
International Paper agrees to pay Contractor based on the amounts and schedule
set forth in Schedule "A". Contractor will submit invoices to International
Paper monthly. International Paper shall pay the net amount within thirty (30)
calendar days of the date of its receipt of each monthly invoice. Any payment or
portion thereof made after this thirty (30) day period shall be subject to a
late charge of one and one half percent per month (1.5%) per month, i.e.,
eighteen percent (18%) per annum. International Paper shall also be responsible
for reasonable administrative, legal and court costs incurred by Contractor in
collecting late payments and late payment charges. TRAVEL EXPENSES
In the event that Contractor is requested by International Paper to travel
outside the work areas set forth in the Work Order in connection with the
project. Contractor's out-of-pocket travel expenses (transportation, hotels, and
food) will be reimbursed by International Paper, provided that:
THE EXPENSES ARE IN ACCORDANCE WITH International Paper's
customary practices, reasonable, and adequately documented;
and
air travel shall be by coach or economy class, subject to
availability.
REPLACEMENT OF SUBCONTRACTOR'S EMPLOYEES
It is understood that from time to time, it may become necessary for Contractor
to replace working as a Subcontractor Employee on site at International Paper.
International Paper agrees to allow such removal and replacements, if upon prior
consultation Contractor and International Paper mutually agree that it is in the
best interest of the Contractor and International Paper. It is further
understood that International Paper reserves the right to approve any
replacement individual who will be working on-site at International Paper. Such
approval shall not be unreasonably withheld. Contractor agrees that
International Paper may at any time with cause notify Contractor that it should
immediately remove an on-site individual provided by Contractor.
HIRING OF CONTRACTOR EMPLOYEES
Unless otherwise mutually agreed to by the parties in writing, neither Party
shall knowingly solicit, recruit, hire or otherwise employ or retain any
1
<PAGE>
employee of the other or employee of a subcontractor of the other directly or
indirectly associated with the Services provided hereunder during the term of
the agreement and for a period of six (6) consecutive months thereafter. The
forgoing provision shall not restrict in any way the right of either party from
hiring an employee of the other who answers any advertisement or who otherwise
voluntarily applies for hire without having been personally solicited or
recruited by the hiring party.
INDEPENDENT CONTRACTOR-COMPLIANCE WITH LAWS
It is understood and agreed that Contractor will perform the services under this
agreement as an independent contractor. It is also agreed that Contractor will
comply with all applicable federal, state, and local laws and regulations
relating to the employment, insurance, and taxation of employees who perform
services under this Agreement. No agency or employment relationship is intended
nor shall be construed to exist between International Paper and Contractor or
between International paper and any employee of Contractor who performs services
under this agreement, and neither Contractor nor any employee of Contractor
shall be entitled to participate in any of International Paper's pension or
employee welfare benefit plans. Contractor agrees that any employee of
Contractor who is assigned to perform services under this agreement on a
substantially full-time basis and who comes within the definition of a "leased
employee" set forth in section 414(n) of the Internal Revenue Code will be
covered by a pension plan maintained by Contractor which satisfies the
requirements of IRC section 414(n) for periods after December 31, 1983.
Contractor agrees to indemnify and hold International Paper harmless against any
and all claims asserted by Contractor's employees or agents under this section.
Unless such claims are based upon the willful misconduct or gross negligence of
International Paper, and against any and all damages arising as a direct
consequence of misconduct or negligence on the part of Contractor's employees or
agents.
INDEMNIFICATION AGREEMENT
Contractor represents that it has the legal right to enter into this agreement,
and to perform hereunder, without breaching any prior confidentiality agreement,
employment contract, or legal duty owed to a former client or employer, and
Contractor agrees to indemnify and hold International paper harmless from and
against any costs or liability, whatsoever, including attorney's fees, resulting
from any such claim.
Each party shall defend, indemnify, and hold harmless the other party from any
and all liability, claims, and expenses of whatever kind and nature for injury
to or death of any person or persons and for loss of or damage to any real or
tangible personal property occurring in connection with or in any way incident
to or arising under this agreement, resulting in whole or in part from the acts
or omissions of the indemnifying party, or its employees, agents, and/or
Subcontractors. The indemnified party shall promptly notify indemnifying party,
in writing, of any such claim and shall reasonably cooperate with the
indemnifying party in the defense and settlement thereof.
LIMITATION OF LIABILITY
Circumstances may arise where, because of a default on Contractor's part or
other liability, International Paper is entitled to recover damages. In each
circumstances, regardless of the basis on which International Paper is entitled
to claim damages, Contractor will be liable only for bodily injury (including
death), and damages to real property and tangible personal property.
Notwithstanding the foregoing, the amount of any actual loss or damage shall be
limited in all cases to the amount paid by International Paper to Contractor in
the six (6) month period prior to the accrual of the action or claim for the
specific service that is the subject of the action of claim. The limit also
applies to any of Contractor's subcontractors. It is the maximum for which
Contractor and its subcontractors are collectively responsible.
UNDER NO CIRCUMSTANCES IS CONTRACTOR OR ITS SUBCONTRACTORS LIABLE FOR:
a. THIRD PARTY CLAIMS AGAINST INTERNATIONAL PAPER FOR LOSSES OR DAMAGES (OTHER
THAN THOSE TORT CLAIMS RESULTING FROM BODILY INJURY OR REAL OR TANGIBLE
PERSONAL PROPERTY DAMAGE);
b. LOSS OF, OR DAMAGE TO, YOUR RECORDS OR DATA, OR
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c. ANY ANTICIPATORY OR LOST PROFIT, SPECIAL, CONSEQUENTIAL, PUNITIVE,
EXEMPLARY, INCIDENTAL, OR INDIRECT DAMAGES OF ANY KIND (COLLECTIVELY
"NON-DIRECT DAMAGES") RESULTING FROM ITS PERFORMANCE OR NON-DIRECT DAMAGES
ARE ATTRIBUTED TO BREACH OF THIS AGREEMENT, TORT, NEGLIGENCE, OR OTHER
CAUSE OF ACTION. INTERNATIONAL PAPER HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH NON-DIRECT DAMAGES.
INSURANCE
During the term of this agreement, Contractor shall, at its sole cost and
expense, secure and maintain Workers' Compensation insurance in amounts as
required by the applicable statutes, Employer's Liability Insurance in a minimum
amount of $500,000; Commercial General Liability insurance (including Premises
operations; Independent Contractor's Protective; Products and Completed
Operations and Broad Form Property Damage) in a minimum amount of $1,0000,000
bodily injury and property damage combined single limit per occurrence; Public
Liability insurance shall include "contractual" coverage to specifically
acknowledge the provisions of the section entitled "Indemnification"; and
Automobile Liability insurance for owned, non-owned, and hired vehicles in a
minimum amount of $1,000,000 bodily injury and property damage combined single
limited per occurrence. Contractor shall provide for or require any
subcontractor to maintain similar coverage for the subcontractor's employees
employed in connection with this agreement.
All insurance maintained by Contractor shall be in form and substance
satisfactory to International Paper and must contain a clause reading in
substance as follows:
"The Insurance Company will notify International Paper Company, in
writing, at the site of the work, at least thirty (30) days prior to
any cancellation, or any changes in or reduction of the coverages shown
herein."
All liability insurance policies maintained by Contractor pursuant to this
agreement, except Workers' Compensation, shall be endorsed to name International
Paper Company as "Additional Insured", and all property damage insurance shall
be endorsed with a waiver of subrogation by the insurer as to International
Paper Company. Contractor shall furnish to International Paper Company
certificates of insurance reflecting policies in force before commencing the
services under this agreement. In the event of failure to furnish such
certificate(s) or endorsement(s), or the cancellation of any required insurance,
without prejudice to any other remedy International Paper Company may have,
International Paper Company may terminate this agreement.
SUBCONTRACTORS
To the extent that Contractor engages any subcontractor to perform any part or
all of the services hereunder, Contractor agrees to have the subcontractor agree
to the terms hereunder and will remain primarily liable for the actions of such
subcontractor.
LIENS
Contractor shall, at International Paper's request, deliver to International
Paper a certificate that all claims for labor arising under this agreement have
been satisfied and that all bills for any materials or equipment which may have
been furnished by Contractor have been paid. Contractor shall, at the request of
International Paper, furnish on a monthly basis: (a) a complete release, or
receipts in full in lieu thereof all liens which may arise out of this Agreement
for which Contractor has been reimbursed by International Paper, and (b) a
certificate that such releases and receipts include all labor and materials for
which a lien could be filed. If requested by International Paper prior to
commencing work under this agreement, Contractor shall execute a waiver of
mechanics' and/or materialmen's liens in a form acceptable to International
Paper.
INTELLECTUAL PROPERTY
Without limitation, any know-how, inventions, data, sketches, drawings, notebook
or work sheet entries, whether or not of technical, operational, or economic
nature, and any United States and foreign patent applications directed thereto,
which is developed jointly with an International Paper employee, and arising out
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<PAGE>
of Contractor's services shall be the sole property of International Paper, and
Contractor shall perform such acts and execute such papers as are reasonably
necessary to perfect International Paper's title therein. It is also agreed that
any and all written materials (including without limitation all sketches,
drawings, blueprints, reports and memoranda) which Contractor prepares pursuant
to this Agreement, or produced by Contractor in the performance of the services
shall be the sole, exclusive and entire property of International Paper. As to
any such materials subject to the protection of the Copyright act of 1976, all
rights to copyright and reproduction shall be the property of International
Paper, and the Contractor agrees to execute any papers necessary to perfect
title and copyright to International Paper. If Contractor produces anything for
International Paper in which Contractor or third parties have or claim rights,
Contractor shall promptly notify International Paper of the subject matter and
the claimed ownership. Further, if Contractor utilizes any subcontractor or
non-employee in connection with the performance of the services, he or she shall
in writing, indicate his or her consent to be bound hereby.
CONFIDENTIAL INFORMATION
It is understood that in the course of this work, International Paper may
disclose to Contractor various confidential and proprietary information relating
to International Paper's business, facilities, and plans, and that the data,
findings and conclusions resulting from Contractor's work on this project will
be valuable confidential information belonging to International Paper.
Accordingly, Contractor agrees that all persons employed by Contractor will keep
confidential all such information relating to International Paper and all such
information relating to this project, and that upon completion or termination of
this agreement. Contractor and its employees: (a) will continue to treat all
such information confidentially, and (b) will promptly return to International
Paper any and all confidential information and documents belonging to
International Paper (including any copies, extracts, summaries, or statements of
such confidential information which may have been made). The Contractor shall
not use the name of or make reference to International Paper Company for any
purpose in any releases for public or private dissemination, nor shall the
Contractor divulge or use in any advertisement or publication any
specifications, data, or other information pertaining to or relating to this
agreement without prior written approval of an officer of International Paper.
The terms of this Section shall also apply reciprocally to all confidential or
proprietary information disclosed to International Paper by Contractor.
ACCEPTANCE TESTING FOR DELIVERABLES
If the work to be performed under any Work Order requires the delivery by
Contractor of deliverables to International Paper, upon delivery of each
deliverable required to be delivered. International Paper shall perform
acceptance testing to confirm that the deliverable is free from defects and
deficiencies and otherwise conforms to any published specifications or
specifications previously agreed to by the parties, whether in the form of an
application development document or otherwise. International Paper agrees to not
unreasonably delay the commencement or completion of such acceptance testing. In
the event the deliverable fails to pass any of International Paper's testing
procedures, Contractor shall have fourteen (14) days in which to correct the
defect or deficiency and cause the deliverable to successfully pass all such
tests, failing which International Paper may elect to cancel the Work Order
applicable to such deliverable and Contractor shall immediately refund all sums
previously paid to it by International Paper under such Work Order provided that
the acceptance testing procedures and requirements are clearly defined in the
applicable Work Order. Notwithstanding the foregoing, Contractor shall have the
right to review and accept all inspection and acceptance requirements prior to
acceptance of any Work Order.
The final deliverable, or the system as a whole, as applicable, shall be deemed
accepted by International Paper upon the conclusion of successful acceptance
testing as described above, and if it has performed during the last forty-five
(45) continuous business days after such acceptance testing without any "Major
Error" (as defined below) as certified by International Paper in writing ("final
Acceptance"). A "Major Error" shall mean for the purposes of this Agreement an
error or non-conformance that constitutes a material departure from the
specifications or the applicable Work Order, or which is causing or threatening
to cause a disruption in the normal course of business or operations of
International Paper. Notwithstanding the foregoing, Final Acceptance shall occur
upon the latter of forty five (45) days after completion of the Work Order, or
fourteen (14) days after Contractor last corrects any deficiency or defect as
defined in this Section.
Any claim which International Paper may have under any provision of this
agreement shall be barred unless brought within one (1) year after Final
Acceptance.
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MILLENNIUM WARRANTY AND COMPLIANCE
Contractor represents and warrants that any software, products, systems or
deliverable(s) produced or delivered to International Paper hereunder (the
"deliverable") shall be "Millennium Compliant" (as defined below). For purposes
of this Agreement "Millennium Compliant" means:
(i) the functions, calculations and other computing processes of
the deliverable (collectively, "Processes") perform in a
consistent manner regardless of the date in time on which the
Processes are actually performed and regardless of the date
input to the deliverable, whether before, on or after January
1, 2000 and whether or not the dates are affected by leap
years;
(ii) the deliverable accepts, calculates, compares, sorts,
extracts, stores, sequences and otherwise processes date
inputs and date values, and returns and displays date values
in a consistent manner regardless of the dates used, whether
before, on or after January 1, 2000.
(iii) the deliverable will function without interruptions caused by
the date in time on which the Processes are actually performed
or by the date input to the deliverable, whether before, on or
after January 1, 2000;
Contractor represents and warrants that the deliverable will be tested by
contractor to ensure that such is Millennium Compliant. Upon International
Paper's written request, Contractor shall deliver its test plans used to
determine Millennium Compliance and the results of such tests on the
deliverable. Notwithstanding the foregoing, Contractor shall notify
International Paper immediately of any information, test results, or claims that
the deliverable is not Millennium Compliant. To the extent that International
Paper determines in its reasonable discretion that the deliverable is not
Millennium Compliant prior to Final Acceptance, Contractor agrees to immediately
formulate and implement a written plan of action to modify the deliverable so
that it is Millennium Compliant. Contractor shall provide International Paper
with a copy of such plan within (10) business days of completion of the same.
Contractor undertakes no responsibility under this agreement for Millennium
Compliance of International Paper's hardware. International Paper shall have no
claim against Contractor for non-compliance of its hardware, and Contractor
shall have no duty to disclose any non-compliant hardware to International
Paper.
LIMITED WARRANTY
Contractor warrants that it will perform each Service required in this Agreement
in a workmanlike manner and according to its current description, including any
completion criteria. EXCEPT AS SET FORTH UNDER THE PROVISIONS OF THE MILLENNIUM
WARRANTY PROVISION OF THIS AGREEMENT, CONTRACTORS DISCLAIMS ALL OTHER
WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE OR ARISING FORM A COURSE OF DEALING, USAGE, OR
TRADE PRACTICE.
INFORMATION SERVICES RESOURCES
Contractor's employees shall not misuse International Paper information
resources. Misuse includes, but is not limited to, unauthorized access to data
files; use of information processing hardware; use of International Paper's
telecommunications network; use of office supplies and other materials and use
of clerical support staff members. Contractor Employees who misuse International
paper's information processing resources are subject to dismissal, without cost
to International Paper. Contractor agrees to reimburse International Paper for
the cost of the misused resources. At the expiration of a Contractor Employee's
Work Order, the Contractor shall return the International Paper Contractor badge
used to enter the international paper facility to International Paper.
RIGHT TO AUDIT
Contractor shall make available to International paper, as may be requested upon
reasonable notification, billing records supporting Contractor charges,
submitted expenses and other information required to substantiate invoices
submitted by Contractor, in order to ensure Contractor's compliance with this
Agreement and that all amounts charged to International Paper hereunder are
proper and accurate. Contractor's records pertaining to the performance of this
Agreement shall be available for audit by International Paper during the term of
this Agreement and until (1) year after completion of the work or earlier
termination of this Agreement, whichever occurs first.
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NON-EXCLUSIVE
This agreement is not an exclusive agreement and nothing herein shall be
construed so as to prevent International Paper from entering in to the same or
similar agreements with other contractors or third parties.
ASSIGNMENT
This agreement for services shall not be assignable except by mutual agreement
in writing.
GOVERNING LAW AND VENUE
The existence, validity, and construction of this Agreement shall be governed by
the laws of the State of Maryland. This Agreement shall be deemed entered into
in the State of Maryland, upon execution by Contractor. Anne Arundel, County,
Maryland, shall be the proper venue for any litigation arising out of this
Agreement.
DISPUTE MECHANISM
Any dispute which, in the judgment of a party to this contract may materially
affect the performance of such party shall be reduced to writing and delivered
to the other party. The parties shall promptly meet face to fact at the
contractor's offices to negotiate in good faith and use every reasonable effort
to resolve such difficulty in a mutually satisfactory manner. Prior to the
institution of any formal proceeding, the parties must meet in this manner at
least twice to attempt to resolve the dispute in question. These initial (2)
meetings shall take place within 15 business days after service of the written
statement of the dispute. During the pendency of such negotiations, the parties
shall act in good faith to perform their respective duties described herein.
If the negotiations set forth in the previous paragraph are not successful, any
remaining controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by binding arbitration in Maryland before
three arbitrators, in accordance with the rules of the American Arbitration
Association then in effect. Each party shall select one arbitrator, and those
two arbitrators shall then select a third arbitrator. The parties may
alternatively elect to use one mutually acceptable arbitrator. The decision of
the arbitrator(s) shall be by majority vote. Judgment upon the award rendered
may be entered in any court having jurisdiction thereof. The costs of
arbitration shall be shared equally between the parties.
TERM OF AGREEMENT
The term of this agreement shall commence upon execution of this Agreement and
shall continue thereafter until terminated by either party upon thirty (30) days
prior written notice; provided, however, in no event will Contractor be
permitted to terminate the agreement prior to completion of all Work Orders in
progress. It is understood that International Paper shall have the right to
terminate any Work Order pertaining to this agreement at any time upon ten (10)
working days prior written notice to Contractor. International Paper shall pay
Contractor all sums due Contractor for all work actually performed up to the
date of termination.
In the event either Party defaults in the performance of any of its duties or
obligations under this Agreement and does not cure such default within ten (10)
days after being given written notice specifying the default, or with respect to
those defaults that cannot be reasonable cured within ten (10) days, if the
defaulting Party fails to proceed promptly after being given such notice to
commence correction of the default and thereafter to proceed to cure the same,
then the non-defaulting Party (reserving cumulatively all other rights and
remedies at law or in equity unless expressly stated herein) may, by giving
written notice thereof to the defaulting party, terminate this Agreement as of a
date specified in such notice of termination. Each party agrees to continue
performing its obligations under this Agreement while any default is being cured
except to the extent the default precludes performance.
Neither party shall be liable for any delays in performance or failure to
perform any of its obligations hereunder (other than obligations to make
payments) where such delay or failure arises due to reasons beyond the party's
reasonable control, including but not limited to, acts of God, flood, fire, war,
court order, labor dispute, or public enemy.
SOLE AGREEMENT
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This agreement constitutes the entire agreement between the parties and shall
supersede any and all prior agreements and understandings between the parties
and may not be changed except by mutual agreement in writing.
SURVIVAL OF OBLIGATIONS
The provisions of this agreement relating to "Intellectual Property,"
"Independent Contractor-Compliance with Laws," "Confidential Information,"
"Millennium Warranty and Compliance," "Indemnification Agreement," and "Hiring
of Contractor Employees" shall survive any expiration or termination of this
Agreement.
Agreed to as of this 27 day of March, 1995
CONTRACTOR NAME: Synergy 2000 Inc.
By: /s/ Eli Dabich Jr.
-------------------
NAME: Eli Dabich Jr.
TITLE: President
TAX IDENTIFICATION NUMBER: 64-0872630
INTERNATIONAL PAPER COMPANY
BY: /s/ Arch Blocher
-------------------
NAME: Arch Blocher
TITLE: Manager Information Systems Decorative Products Division
SCHEDULE A
ATTACHMENT TO PROFESSIONAL SERVICE AGREEMENT
Between Synergy 2000, Inc and International Paper Company
WORK ORDER
VENDOR ADDRESS: 2815 Cox Neck Road
Chester, Maryland 21619
VENDOR CONTACT: Bob Reiners
PHONE #: 410-721-0840
DESCRIPTION OF WORK
Contractor is to perform Year 2000 conversion work for a defined set of programs
and associated data files as identified in Synergy 2000 proposal dated November
4, 1997/ Contractor is to modify/update these programs and data files to
correctly process all dates whether before, on or after January 1, 2000. Work
includes the following activities: 1) reformating and updating of data files and
databases including current, historical and backup files, 2) updating/testing of
COBOL programs including source code, copy books and data file descriptions, 3)
unit testing of all modified programs with updated data files to ensure proper
functionality, 4) assist International Paper in acceptance testing process.
Contractor deliverables include all updated data files/databases, revised
program source and object code, and detail documentation of changes made. To
meet contract work requirements, all deliverables will be Millennium compliant
as defined in the base agreement.
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DETAILED PROJECT DESCRIPTION
The scope of effort and pricing for the International Paper Year 2000 conversion
are based on the following information provided by International Paper,
1. Year 2000 program inventory compiled by the International Paper Year
2000 Project Team.
-Total number of files 787
-Total active COBOL programs 630
-Total lines of code to be converted 475,074
2. Synergy 2000's strategic partner computer Information Analysts, Inc.
will execute the following tasks based on the above criteria.
Phase 1: Data Purification
This Phase provides an analysis of existing data files and
databases. The procedure generates file/database update
specifications and programs that will be applied to the existing
files to generate the updated an reformatted data files and
databases.
Step 1: Existing file definitions and database structures are
translated into the CAS Data Dictionary (Repository)
Step 2: A Master Search File (MDF) Database is created from
everything in the International Paper Data dictionary. The MSF
program will ask questions about International Paper databases
and then create a new MSF. This new MSF will contain all elements
meeting the criteria of dates. CAS-2000 WILL ALSO CREATE AN
Impact Analysis Report which will outline the conversion process
to be undertaken.
Step 3: data from the new MSF is used to generate Certification
Specifications. Certification Programs are generated for each
database from these specs. Each of these programs will
automatically generate discrepancy files which will be used to
purify the search database.
Statistical information will be returned for each element in your
database and will notify the user if data corruption exists. this
feature, Conflicting Discrepancy Identification, with the
Certification Process provides a thorough and accurate analysis
of your data.
Phase 2: Database Modification
During this Phase, file/database conversion specifications and
programs are processed against existing files and databases
resulting in the creation of new reformatted and updated files.
Step 4: Data from the new Purified MSF is then used to generate
Conversion Specifications. Conversion Programs are generated for
each database file from these specs. Each of these programs will
automatically create a new database on the targeted platform with
properly adjusted dates.
Phase 3: Application Modification
During this phase, application programs, copy books and data file
descriptions are modified to meet Year 2000 compliance
requirements. Programs are complied, compile errors are corrected
and unit testing is conducted. Deliverables include new source
and object code, documentation, unit test results. To be
substantially complete, Contractor must demonstrate that
application programs and data are successfully unit tested and
ready for final integration and acceptance testing.
Step 5: The applications on the targeted platform must be
modified to accept the newly formatted data. A Master Patch File
(MPF) Database is created. The MPF contains all the application
code that pertains to the dates in your database. With the CAS
2000 program you will be able to patch your existing software in
one location.
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Step 6: Release the patch file to your applications and run
database conversion programs.
Phase 4: Assist with International Paper Acceptance testing
During this Phase, Contractor will assist International Paper in
conducting integrated systems and data testing to ensure original
program functionality has been retained and Year 2000 Compliance
capability exists. Contractor will be responsible for correction
of any processing errors or YR2000 compliance failures identified
during testing.
COMPENSATION SCHEDULE
International Paper agrees to pay Contractor the $276,500, which will be
invoiced to International Paper in five (5) equal payments of $55,300 as
follows. International Paper will have the right to review results and
deliverables for each Phase for substantial completion of Phase deliverables
prior to invoice payment, such payments will not be unreasonably withheld.
Payment 1-Due on project start date.
Payment 2-Due upon completion of Phase 1 as defined later in
Schedule "A" of this Agreement.
Payment 3-Due upon completion of Phase 2 as defined later in
Schedule "A" of this Agreement.
Payment 4-Due upon completion of Phase 3 as defined later in
Schedule "A" of this Agreement.
Payment 5-Due upon completion of Phase 4 as defined later in
Schedule "A" of this agreement.
If the total number of lines of COBOL code processed under this Agreement
exceeds 500,000 the final invoice will reflect an additional charge of $.58 per
line of code processed over 500,000. International Paper will have the option of
electing not to convert certain sections of code in order to prevent exceeding
the 500,000 line threshold.
Contractor will submit invoices to International Paper as each payment criteria
is met. International Paper shall pay the net amount upon receipt of each
invoice.
INTELLECTUAL PROPERTY
International Paper acknowledges that the software to be utilized by Contractor
in performing services under this Agreement is owned by a third party who, in
licensing such software for use under this Agreement, has retained all
intellectual property rights without limitation.
LOCATION OF WORK TO BE PERFORMED
The majority of the work will be performed by our Strategic Business Partner,
CIA, Inc. at their Baltimore, Md. office. Some work will be required to be
completed on-site at the International Paper offices in Odenton, Md.
NAME OF INDIVIDUAL PERFORMING SERVICES: Rob Allen (CIA, Inc.)
START DATE: On or about 4/15/1998
END DATE: On or about 8/15/1998 (Excluding Acceptance test)
SKILLS REQUIRED: UNISYS Database Management and COBOL Programming, CAS 2000 and
other proprietary software expertise as required.
Contract Programming company INTERNATIONAL PAPER COMPANY
BY: /s/ Eli Dabich Jr BY: Arch Blocher
----------------------------- ---------------------
TITLE: President TITLE: illegible
-------------------------- ---------------------
DATE: 3/27/98 DATE: 3/27/98
-------------------------- ---------------------
9
"Year 2000" Conversion Agreement
THIS AGREEMENT is made as this 1st day of May l998 by and between Synergy
2000, Inc. ("Contractor") and Zenith Insurance Company ("User").
WHEREAS, User has a "System" as defined herein which it desires to make
"Millennium Compliant" as defined herein; and
WHEREAS, Contractor is in the business of, among other things, making such
software Millennium Compliant; and
WHEREAS, User desires Contractor to utilize one or more of its "Year 2000"
solutions on the System under the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, User hereby retains Contractor as an independent contractor to
provide the services as set out in the Scope of Work attached hereto as Exhibit
"A" ("Services") and Contractor hereby agrees to provide such services in
accordance with the terms and conditions as follows:
Section 1. Definitions.
For the purposes of this Agreement, the following terms shall have the following
meanings:
(a) "Conversion" shall mean those services provided by Contractor in
analyzing User's System and making it Millennium Compliant.
(b) "Millennium Compliant" shall mean that the System accurately and with
equivalent functionality records, stores, recognizes, interprets, processes and
presents dates in all centuries and operates at a programming interface level
with other programs for which it could reasonably be expected to operate without
causing the other programs to fail to accurately and with equivalent
functionality record, store, recognize, interpret, process, and present dates in
all centuries.
(c) "Project Plan" shall mean the detailed document setting forth the
manner in which the Conversion shall occur, the schedule for such Conversion,
and the milestones upon which payments are due.
(d) "Software" shall mean the proprietary software used for Millennium
Compliance as set forth and described in the Scope of Work and Project Plan and
shall include any updates,
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modifications or enhancements thereto and associated third party supplied
software and any all user's manuals, specifications or documentation
accompanying the Software.
(e) "Software Owner" shall mean the third party who currently owns all
rights to the Software.
(f) "Subcontractor" shall mean any third party with whom Contractor enters
into an agreement to provide any portion of the services under this Agreement.
(g) "System" shall mean those software applications set forth on the Scope
of Work, including all accompanying data files, but shall not include any
hardware.
Section 2. License and Warranty.
2.1. Third Party License. Contractor shall provide one (1) copy of the
Software to be used in the Conversion, as well as one (1) additional copy for
User's internal business purposes. Upon receipt of the additional copy, User
shall be a licensee of the Software and User acknowledges and agrees to abide by
the terms of the license agreement provided by such third party vendor with each
copy of the Software. User also acknowledges that its use of each copy of the
Software is limited to use on the physical premises of User or its corporate
affiliates, for their internal business purposes only, and is subject to the
following:
(a) Except as expressly provided herein or otherwise agreed between the
parties in writing, the Software shall not be operated directly or indirectly by
persons other than employees, subcontractors, or agents of Contractor, User, and
User's corporate affiliates and shall only be operated on hardware owned or
leased either by User or Contractor.
(b) Except with the prior written consent of Contractor or as otherwise
provided in this Section 2, only programs and files owned by or properly
licensed to User shall be processed by Contractor, User, and/or User's corporate
affiliates utilizing the Software.
(c) At no time may the Software or any of the various components thereof be
disclosed to third parties, sold, assigned, leased, or otherwise made available
or disposed of, or commercially exploited or marketed in any way with or without
charge without the prior written consent of Contractor. User, User's corporate
affiliates, and their employees and agents shall keep confidential the Software
and will take all reasonable precautions, but not less than those employed to
protect User's own proprietary information, to prevent the Software from being
copied or reproduced, in whole or in part, by any person, firm or corporation at
any time without the prior written consent of Contractor.
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(d) Violation of any provision in this Section not cured by User within ten
(10) business days after written notice from Contractor will entitle Contractor
at its discretion to terminate the license for the Software. In such event, User
shall within ten ( 10) days of written notice from Contractor return all
authorized and unauthorized copies of the Software for which User has knowledge
or certify in writing that the originals and all authorized and unauthorized
copies of the Software have been destroyed. User shall use its best efforts to
return or destroy those authorized or unauthorized copies of the Software of
which User has knowledge and which is in User's possession or in the possession
of User's affiliates. In the event User does not return the Software as
provided, above, or in the event User cannot provide such certification, User
shall be liable to Contractor and/or the Software Owner for all damages incurred
by either Contractor or the Software Owner arising out of any subsequent
unauthorized use of the Software by User or any other third party gaining access
to the Software through User. In addition, Contractor and the Software Owner
shall be entitled to preliminary injunctive relief and other injunctive relief
against any continued use of the Software. Such injunctive relief shall be in
addition to and in no way in limitation of any and all remedies or rights to
recover damages Contractor and the Software Owner may have at law or equity for
the enforcement of the above.
2.2 Third Party Warranties. User acknowledges that the Software to be
utilized for the Conversion is provided by third party vendors and that
Contractor makes no warranties either expressed or implied with respect to such
software. Contractor shall set forth in the Project Plan all such currently
available third party vendor's software warranties to Contractor's knowledge and
belief. Contractor shall give User the benefits of such warranties unless the
third party vendor refuses to give Contractor such warranties. Contractor's
warranties are the only warranties made by Contractor and will not be enlarged,
diminished or affected by, and no obligation or liability will arise out of
Contractor's rendering of technical, programming, or other advice or service in
connection with the Software licensed to Customer hereunder.
2.3 Hardware. User understands that this Agreement is for the conversion of
software only. User also understands that its hardware may not be Millennium
Compliant. Contractor undertakes no responsibility under this Agreement for
Millennium Compliance of User's hardware. User shall have no claim against
Contractor for non-compliance of its hardware and Contractor shall have no duty
to disclose any non-compliant hardware to User.
2.4 Disclaimer. THE WARRANTIES STATED IN THIS AGREEMENT ARE EXCLUSIVE AND
IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED, OR STATUTORY,
INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
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Section 3. Project Plan; Information to be Provided by User.
3.1 As soon as reasonably practicable, Contractor shall prepare and deliver
to User a draft of a detailed project plan. Such draft shall be delivered
sufficiently in advance of June 4, 1998 so that User has a reasonable amount of
time to review and comment on the draft and so that Contractor may make changes
thereto prior to June 4, 1998, on which date Contractor shall present to User a
final plan that is acceptable to, and approved by, the User at that time and
that (i) is consistent in all material respects with the Scope of Work attached
hereto as Exhibit A; (ii) contains detailed definitions for those payment
milestones that are based upon the occurrence of specific events by specific
dates; (iii) specifically identifies each element of the System to be converted,
the Software to be utilized and all third party vendor warranties and (iv) the
methodology to be employed in the Conversion. When the parties mutually agree to
a detailed project plan (the "Project Plan"), such plan shall become part of
this Agreement.
3.2 User shall provide Contractor all information reasonably necessary to
complete the Project Plan, as well as the Conversion. User shall also, upon
request, supply to Contractor for processing the required source code and data
in a form reasonably required by Contractor. User shall be solely responsible
for the accuracy of all data and the provision of complete source code and data.
During the Conversion, User agrees to provide all other cooperation reasonably
requested by Contractor to convert the System in a timely manner.
Section 4. Hiring of Employees.
4.1 Contractor's Employees. During the term of this Agreement and for a
period of one year thereafter, User shall not, directly or indirectly, solicit,
induce, hire, or employ any of Contractor's employees or any employee of a
Subcontractor working on the Conversion. In the event an employee of Contractor
or a Subcontractor leaves such employ during the term of this Agreement, the
prohibition on hiring set forth herein shall only apply for a period of six
months following termination of such employee's employment with Contractor or
Subcontractor.
4.2 User's Employees. During the term of this Agreement and for a period of
one year after its termination, Contractor will not, directly or indirectly,
solicit, induce, hire or employ any of User's employees. In the event an
employee of User leaves its employ during the term of this Agreement, the
prohibition on hiring set forth herein shall only apply for a period of six
months following termination of such employee's employment with User. Contractor
is prohibited from hiring other third party contractor's employees that are
working for User, unless the third party contractor and User agree to the hiring
in writing.
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Section 5. Operating Environment.
5.1 Installation Site and Operating Environment. User agrees to provide or
construct and maintain a suitable installation site and operating environment
for the hardware and software.
5.2 Damages to Hardware. All damages caused to a party's hardware by the
negligence of the other party, its employees and agents, or by unauthorized
attempts to service, repair or adjust any such hardware shall be the sole
responsibility of the other party.
5.3 Hours of Operation. Contractor shall observe the working hours, working
rules, and holiday policy of User. User will not be charged for holiday pay for
Contractor's personnel. Contractor's hours when working outside of User's
premises shall be established by Contractor.
5.4 Ownership of System. User represents and warrants that User is the
owner of the System (including software) covered under this Agreement, or, if
not, User has authority from the owner to include the System under this
Agreement.
5.5 Project Manager. Contractor shall provide a full-time project manager
to oversee the Conversion, as set forth in the Scope of Work attached hereto as
Exhibit A. User reserves the right to approve or reject such project manager,
which approval shall not be reasonably withheld.
Section 6. Payment
6.1 Payment and Payment Schedule.
(a) In consideration of the Contractor's performing the Services in
accordance with this Agreement, User shall pay Contractor within twenty (20)
calendar days after each of the following events and/or milestones the amounts
indicated below:
(i) upon execution of this Agreement, One Hundred Thousand Dollars
($100,000);
(ii) upon completion and approval by User of the detailed Project
Plan, in accordance with Section 3.1 hereof, Fifty Thousand Dollars
($50,000);
(iii) upon completion and delivery of a test plan ("Test Plan") as
required by the Project Plan, Fifty Thousand Dollars ($50,000);
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(iv) An amount equal to (a) the hours expended in the analysis, coding
and remediation, as called for in the Project Plan, by each of the
individuals identified by name, function or skills set in the Scope of Work
multiplied by (b) his or her respective hourly rate, such amount to be
invoiced every two weeks; provided, however, that the total of the amount
invoiced for such analysis, coding and remediation shall not be less than $
100,000 or more than $235,000. If the total amount for such analysis,
coding and remediation is less than $100,000, the difference shall be
invoiced at the conclusion of all the analysis, coding, and remediation
work. If such total amount is greater than $235,000, no amount over
$235,000 shall be invoiced to, or payable by, User, it being the intent of
the parties that any cost in excess of $235,000 for analysis, coding and
remediation, as specified in the Scope of Work and Project, be at the
expense of Contractor. If such total amount is less than $235,000, the
difference is only payable under the conditions specified in Subparagraph
6.1 (a)(vi) below.
(v) upon completion of systems testing, as required by the Project
Plan and/or the Test Plan, One Hundred Thousand Dollars ($100,000); and
(vi) upon Final Acceptance (as defined in Paragraph 12 hereof) by
User, One Hundred Thousand Dollars ($ 100,000).
In addition, only if both of the following occur:
(A) Final Acceptance is on or before October 1, 1998 and
(B) the amount invoiced under Section 6.1 (a)(iv) is less than
$235,000, then, User shall pay Contractor the difference between such
amount invoiced and $235,000.
(b) In connection with the above subparagraph (a), Contractor shall
invoice User upon the completion of each milestone as set forth in
Subparagraphs 6(a)(ii), (iii), (v) and (vi) and every two weeks with
respect to Subparagraph 6(a)(iv). Such invoices are payable in full upon
receipt by User provided, further, if all or any portion of said invoice
remains unpaid by User thirty (30) days after User's receipt of such
invoice, then Contractor may assess User a late charge with respect to any
such unpaid charges at the rate of the lower than one and one-half percent
(1 1/2%) per month or an interest rate not to exceed the maximum allowed by
law.
(c) The Compensation set out in Subparagraph 6.1 (a) consists of a
firm fixed flat fee for all phases, except the analysis, coding, and
remediation phase, as set out in Subparagraph 6.1 (a)(iv), which is based
on time. In any event the minimum aggregate compensation hereunder shall be
$500,000 and the maximum, $635,000.
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(d) Compensation set forth in Section 6.1 (a) has been determined
based upon a scope of work involving not more than 70 servers. Contractor
reserves the right to charge for additional services should the scope of
work expand beyond 70 servers.
(e) If Contractor must pursue collection of any invoice against User,
User shall be responsible for all reasonable attorneys' fees incurred in
such collection efforts.
(f) User shall not make any deduction from nor assert any right of
set-off against payments due to Contractor.
6.2 Taxes and Charges. User shall pay all applicable federal and state
taxes, assessments, charges and other taxes which are imposed by any
governmental authority by virtue of this Agreement, including but not limited to
any applicable state or local sales or use tax, exclusive of taxes based upon
revenues or gross income of Contractor.
6.3 Out-of-Pocket Expenses. User shall pay all actual and reasonable
out-of-pocket expenses of Contractor in providing services to User pursuant to
this Agreement. Such expenses shall include, but not be limited to travel to and
from User, meals, and local transportation expenses while at User but shall
exclude relocation and relocation related expenses of Contractor personnel.
Contractor shall use its best efforts to minimize out-of-pocket expenses by
traveling coach class and using discount air fares where possible and by
utilizing Contractor's or User's corporate discounts for transportation.
Expenses at any point of time shall not exceed twenty five per cent (25%) of the
aggregate of the then total fees earned or accrued.
Section 7. Conversion Schedule. Conversion shall be completed pursuant to the
timetable set forth in the Project Plan, and Contractor warrants its compliance
with this schedule with the exception of delays, if any, caused directly by the
act or omission of the User or any cause under Section 14.1 2.
Section 8. Indemnity and Insurance.
8.1. Insurance. During the term of this Agreement, Contractor shall, at its
sole cost and expense, secure and maintain the insurance coverages set out on
Exhibit "B" attached hereto.
8.2. Indemnity. Notwithstanding any other provision contained herein, each
party hereto shall be indemnified and held harmless by the other party hereto
from any and all liability(including reasonable attorneys' and experts' fees),
injury, loss or damage which is occasioned through such other party's negligent,
reckless or deliberate acts or omissions. This indemnity shall not apply unless
User or Contractor, as the case may be, shall inform the other as
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soon as practicable of any claim or action alleging such injury, loss, or
damage, and shall have given the other full opportunity to control the response
thereto and the defense thereof, including, without limitation, any agreement
relating to the settlement thereof.
8.3. Limitation of Liability. Contractor shall not, under any
circumstances, be liable to User, whether in contract or otherwise, for punitive
damages, consequential or indirect loss or damage arising from, but not limited
to, loss of profit, loss of contracts, loss of operation time, loss of use of
any equipment or process or any other form of loss whatsoever, whether suffered
directly or indirectly by User. The amount of Contractor's liability to User
shall in no case exceed the total compensation set forth in Section 6.1.
8.4 Statute of Limitations. Any claim which User may have shall be barred
unless brought within one year after acceptance of the services under the
Agreement pursuant to Section 12.
Section 9. Independent Contractor Relationship.
Contractor is an independent contractor and is not an employee, servant, partner
or joint venturer of User. User shall determine the work to be done by
Contractor, but Contractor shall determine the legal means by which it
accomplishes the work specified by User. Contractor shall retain the sole right
to control and/or direct the manner in which the services described herein are
to be performed. Contractor shall comply with all applicable federal, state, and
local laws and regulations relating to the employment, insurance, and taxation
of employees who perform services under this Agreement. Neither Contractor nor
any of Contractor's employees or Subcontractors shall be entitled to participate
in any of User's pension or employee welfare benefit programs.
Section 10. Intellectual Property.
Without limitation, Contractor, Subcontractor and/or the Software Owner retains
all intellectual property rights in any data, sketches, drawings, notebooks,
inventions, and program upgrades and/or patches arising out of Contractor's
performance of this Agreement. User shall not, under any circumstances, gain any
intellectual property rights through the performance of this Agreement.
Contractor shall indemnify and hold User harmless from any liability, loss, or
damage which results from the claim of a third party that the Software or any
program upgrade and/or patch infringes such third party's intellectual property
rights. This indemnity shall apply only if User informs Contractor as soon as
practicable of any such claim or action and only if User gives Contractor the
full opportunity to control the response thereto and the defense thereof,
including, without limitation, any agreement relating to the settlement thereof.
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Section 11. Confidential Information.
(a) Definition. "Confidential Information" as used herein shall include any
information which is used, developed, or obtained by either party relating to,
without limitation, the other party's services, products, pricing structure,
facilities and plans, customer lists and confidential information relating
thereto, and any copyrightable works. Confidential Information shall not include
any information which has been lawfully (and without a breach of any obligation
owed to Contractor or User) published by others in a form generally available to
the public prior to the date upon which disclosure is proposed.
(b) Acknowledgment. Each party acknowledges that Confidential Information
is proprietary and valuable to the other party and that any disclosure or
unauthorized use thereof will cause irreparable harm and loss.
(c) User's Contributions. In the event that User, during the term of this
Agreement or as part of any activities undertaken on behalf of User, generates,
authors, or contributes to any of Contractor's present or potential products or
other Confidential Information, User agrees that all such developments and
information shall be the exclusive property of Contractor. User hereby assigns
to Contractor all right, title and interest in and to such developments and
information. User shall promptly and fully disclose all such developments and
information to Contractor and shall cooperate with Contractor to protect
Contractor's interests in such developments and information, including but not
limited to providing reasonable assistance in securing patent and/or copyright
protection and signing all documents when reasonably requested by Contractor.
(d) Additional Obligations. Each party agrees to receive and to treat
Confidential Information on a confidential and restricted basis and to undertake
the following additional obligations with respect thereto;
(i) Not to duplicate, in whole or in part, without the other party's
express written consent, any Confidential Information;
(ii) Not to disclose Confidential Information to any entity,
individual, corporation, partnership, sole proprietorship, customer or
client without the prior express written consent of the other party;
(iii) To return all Confidential Information to the other party upon
request therefore and to destroy any additional notes or records made from
such Confidential Information. Upon termination of this Agreement for any
reason, whatsoever, each party shall promptly deliver to the other party
all correspondence, drawings, blue prints, manuals, letters,
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notes, notebooks, reports, flow-charts, programs, proposals, documents
concerning its customers/clients, documents concerning products or processes
used, and all other documents, writings, and materials utilized, together with
any copies or other reproductions thereof made by the party or in the possession
or control of the party. Each party understands that all such records, whether
developed by User or Contractor or others, are and shall remain the property of
the other party.
(iv) Each party shall immediately notify the other party of any
information which comes to its attention which does or might indicate that
there has been any loss of confidentiality of such trade secrets or breach
of such rights.
(v) Each party shall take all appropriate steps to safeguard
Confidential Information of the other and to protect such information
against disclosure, misuse, espionage, loss and theft.
guard C
(vi) Neither party shall use Confidential Information of the other for
the benefit of itself or a third party except as permitted by this
Agreement.
(e) The terms and obligations of this Section 11 shall under all
circumstances survive the termination of this Agreement.
Section 12. Acceptance Testing.
After Contractor has completed the Conversion of User's entire System and
installed all necessary software patches on the System and data files at User's
premises, Contractor shall test the Conversion on User's premises, utilizing
User's hardware. Once Contractor has completed its testing User's entire System,
Contractor shall notify User in writing that the Conversion of User's entire
System is completed and User may proceed with acceptance testing of the entire
System. User shall then perform its own acceptance testing at its site, and
shall have thirty (30) days to complete such testing and notify Contractor of
any Millennium Compliance problems in the converted System. Contractor shall
correct all such problems within fourteen (14) days of written notification.
Once Contractor has corrected any problem, User shall have seven (7) days in
which to do any additional testing regarding the correction of the problem. If
User discovers the problem is not corrected or discovers another problem within
the seven days, it shall give written notice of same to Contractor. Contractor
shall correct the problem within fourteen (14) days Thereafter, the process (of
additional testing by User within seven (7) days following correction of a
problem followed by the correction by Contractor of any further problems
discovered and reported by User) will iterate until the problem is corrected or
seven (7) days have elapsed from the last correction without any further notice
from User of problems. Final Acceptance of the entire System shall occur upon
the later of the initial thirty (30) days or the
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expiration of seven (7) days from the last correction of a problem made by
Contractor if no further notification had been given by User within such seven
(7) days. For a period of seven weeks after Final Acceptance of the Conversion,
Contractor will re-do or correct any defective work discovered and reported by
User. Any claims for defective work done by Contractor must be raised by User
within seven weeks after Final Acceptance; beyond this period the Conversion
will be deemed fully accepted by User and no claim for rework or the like will
be entertained after the expiration of such seven week period.
Section 13. Termination.
(a) Termination by Contractor. Contractor may terminate this
Agreement, effective immediately, by written notice given to the User, in
any of the following events:
(i) If the User materially breaches any material duty,
obligation, responsibility, representation or warranty under this
Agreement and such breach is not cured in all material respects within
ten (10) business days after written notice thereof;
(ii) If there is any assignment or attempted assignment by the
User of any interest in this Agreement without Contractors written
consent;
(iii) If the User fails for any reason to function in the
ordinary course of business;
(iv) If the User or an executive officer thereof is convicted in
a court of competent jurisdiction for any violation of law tending, in
the opinion of Contractor, to affect adversely the operation or
business of User; or
(v) If the User submits to Contractor any false or fraudulent
reports or statements, including, but not limited to, claims for any
refund, credit, rebate, incentive, allowance, discount, reimbursement,
or other payment by Contractor.
(b) Termination by User. User may terminate this Agreement, effective
immediately, by written notice given to Contractor, in any of the following
events:
(i) If the Contractor fails to deliver a Project Plan that is
acceptable to, and approved by User, on or before June 4, 1998 or if
the Contractor fails to meet any of the milestones identified as
"crucial" in the Project Plan.
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(ii) If the Contractor materially breaches any other material
duty, obligation or responsibility, representation or warranty under
this Agreement and such breach is not cured in all material respects
within ten (10) business days following written notice thereof.
(iii) If the identity of the Project Manager changes or if the
individuals assigned to User changes and such changes are determined
by User to create a material adverse impact on the Conversion.
(iv) If there is any assignment or attempted assignment by the
Contractor of any interest in this Agreement without User's written
consent;
(v) If there is a sale, transfer, relinquishment, voluntary or
involuntary, by operation of law or otherwise of any material interest
in the direct or indirect ownership or any change in the management of
the Contractor;
(vi) If the Contractor fails for any reason to function in the
ordinary course of business;
(vii) If the Contractor, or a manager, partner, principal, or
executive officer of Contractor is convicted in a court of competent
jurisdiction for any violation of law tending, in the opinion of User,
to affect adversely the ability of Contractor to provide the Services;
or
(viii) If the Contractor submits to User any false or fraudulent
invoice, reports or statements.
Section 14. Miscellaneous.
14.1 Notice. Notices, requests and other communications required pursuant
to this Agreement shall be in writing and serif by first-class mail to the
parties at the following address:
To Contractor: Synergy 2000, Inc.
2815 Cox Neck Road
Chester, MD 21619
Attention: Eli Dabich, Jr., President
Cc: Susan Marie Reiners, Esq.
Mason, Ketterman & Morgan
100 North Charles St., Suite 1700
Baltimore, MD 21201
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To User: Zenith Insurance Company
21255 Califa Street
Woodland Hills, CA 91367
Attention: Charles R. Cronin Jr.
Cc: Zenith Insurance Company
1255 Califa Street
Woodland Hills, CA 91367
Attention: H. J. Lee Jr.
14.2 Dispute Mechanism.
(a) Any dispute which, in the judgment of a party to this Contract, may
materially affect the performance of such party shall be reduced to writing and
delivered to the other party. Contractor designates Eli Dabich, Jr. as its
representative for purposes of this Section 14.2(a), and User designates Ira
Bland as its representative. The parties' representatives shall promptly meet
face to face at the User's offices to negotiate in good faith and use every
reasonable effort to resolve such difficulty in a mutually satisfactory manner.
Prior to the institution of any formal proceeding, the parties' representatives
must meet in this manner at least twice to attempt to resolve the dispute in
question. These initial two (2) meetings shall take place within 15 business
days after service of the written statement of the dispute. During the pendency
of such negotiations, the parties shall act in good faith to perform their
respective duties described herein.
(b) If the negotiations set forth in subparagraph (a) are not successful,
any remaining controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be settled by binding arbitration in Chicago before
three arbitrators, in accordance with the rules of the American Arbitration
Association then in effect. Each party shall select one arbitrator from a list
provided by the American Arbitration Association, and those two arbitrators
shall then select a third arbitrator from a list provided by the American
Arbitration Association. The decision of the arbitrators shall be by majority
vote. The parties may alternatively agree to use one mutually acceptable
arbitrator. Each arbitrator shall be an individual with at least ten (10) years
of experience in the software industry, as well as three (3) years of experience
with the "Year 2000" industry, if possible. Judgment upon the award rendered may
be entered in any court having jurisdiction thereof. The costs of arbitration
shall be shared equally between the parties.
14.3 Privacy. Contractor shall comply with the applicable privacy laws and
regulations affecting User and will not disclose any User proprietary records,
materials, or other data to any third party except as may be required by law.
Contractor shall not have the right to compile and distribute statistical
analyses and reports utilizing proprietary aggregated data derived from
information and data obtained from User without the prior written approval of
User. In the event
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such approval is given, any such reports published and distributed by Contractor
shall be furnished to User without charge. When accessing third party software
provided by User, Contractor agrees to abide by the terms of such third party's
license agreement with User, and further agrees to use such software only for
the purposes of performing services in accordance with this Agreement.
14.4 Entire Agreement. It is expressly agreed that the provisions set forth
herein constitute all the understandings and agreements between the parties. Any
prior agreements, promises, negotiations, or representations not expressly set
forth in this Agreement are of no force and effect.
14.5 Severability. Any terms or provisions of this Agreement which shall
prove to be invalid, void or illegal shall in no way effect, impair or
invalidate any other term or provision herein and such remaining terms and
provisions shall remain in full force and effect.
14.6 Assignment. Neither party shall assign this Agreement without the
prior written consent of the other party, but if such consent is obtained, and
an assignment effected, this Agreement shall be binding on the permitted
successor or assignee of the assigning party.
14.7 Amendment. This Agreement shall not be amended or modified other than
in writing signed by both parties.
14.8 Waiver. Unless otherwise agreed to in writing, the failure of any
party to require the performance by the other party of any provision hereof
shall in no way affect the full right to require such performance at any time
thereafter, nor shall the waiver of any provision hereof betaken or held to be a
waiver of the provision itself.
14.9 Survival of Representations and Warranties. Except as otherwise
provided in this Agreement, representations and warranties contained in this
Agreement shall survive the termination of this Agreement for any reason.
14.10 Laws Governing and Venue. The existence, validity and construction of
this Agreement shall be governed by the laws of the State of Florida. Venue for
any litigation necessary under this Agreement shall be proper only in any
Florida State or Federal Court having jurisdiction over the subject matter of
the dispute. Both parties consent to the exercise of personal jurisdiction by
any such court with respect to any such proceeding.
14.11 Authorization. Each person who signs this Agreement warrants that he
or she does so with the full and legal authority to execute this Agreement on
behalf of the respective parties to this Agreement.
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14.12 Force Majeure. Neither party shall be liable for any delays in
performance or failure to perform any of its obligations hereunder (other than
an obligation to make payments) where such delay or failure arises due to
reasons beyond the party's control, including but not limited to, acts of God,
flood, fire, war, court order, labor dispute, or public enemy.
14.13 Counterparts. This Agreement may be executed in several counterparts,
all of which taken together shall constitute one single agreement between the
parties.
14.14 Headings and Interpretation. The Section headings used in this
Agreement are for reference and convenience only, and shall no enter into the
interpretation of this Agreement.
14.15 Use of Trade Name, Trademark etc. Contractor shall not use any trade
name trademark, or service mark of Zenith Insurance Company or any successor to
this Agreement, nor shall Contractor use any such person or company as a
reference, without the express written consent of such person or company.
14.16 Audit Rights. Contractor agrees to keep records and books of account
for User in accordance with generally accepted accounting principles
consistently applied and in accordance with accepted industry practices, showing
the actual costs of all items of labor, materials, equipment, supplies, services
and other expenditures or whatever nature for which reimbursement or payment is
authorized under this Agreement or which may otherwise form the basis for fees
paid hereunder. User shall have the right to audit such books and records and
shall have access at all reasonable time to all books, records, correspondence,
instructions, plans, drawings, receipts, facilities and memoranda of every
description pertaining to the work for User. Contractor shall preserve such
records without additional compensation therefor for at least three years after
termination of this Agreement.
IN WITNESS WHEREOF, Contractor and User have duly executed this Agreement
on the date first written above.
Synergy 2000, Inc. Zenith Insurance Company
By: /s/ Eli Dabich Jr. By: /s/ Fredricka Taubitz
---------------------- -------------------------
Eli Dabich Jr. Fredricka Taubitz
Its President -------------------------
Its Exec Vice Pres & CFO
---------------------
15
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Exhibit "A"
Scope of Work
Reference is made to that "Year 2000" Conversion Agreement ("Agreement") dated
as of the 1st day of May 1998 between Synergy 2000 ("Contractor") and Zenith
Insurance Company ("User"). Pursuant to the Agreement, the parties hereby agree
upon the following as a scope of work.
Contractor is responsible for the following activities:
(a) Providing an on-site project manager to direct, management and oversee
project activities involving the Conversion of FoxPro, PowerBuilder,
Sybase, Excel, and Access programs of User (together, comprising the
"System" of User), to achieve Millennium Compliance of the System. (Note:
Contained in the Sybase database are stored procedures which must be
analyzed and remediated if necessary.)
Contractor's responsibilities shall also include directing, managing and
overseeing User's development of detailed test plans ("Test Plans"). The
Test Plans will include standards for ongoing, interim quality assurance
testing by the User of subsystems or components remediated by Contractor,
as well as standards for testing the entire System for Final Acceptance.
(It is contemplated that the Contractor will provide remediated code in
functional and logical modules or subsystems to the User on an ongoing
basis during the term of the Project so that User may conduct quality
assurance testing. Such testing, however, is not in lieu of testing of the
entire System for Final Acceptance.)
(b) Developing a comprehensive Project Plan that is acceptable to and
approved by User to achieve Millennium Compliance for the System. Included
in the comprehensive Project Plan shall be milestones, some of which will
be mutually identified by the Contractor and User as being "crucial" to
achieve by the stated date.
(c) Providing on-site technical resources trained in FoxPro, PowerBuilder,
and Sybase to remediate programs written in these languages such that
applications in these languages will support 20th and 21st century dates.
Source code is located in Sarasota, FL. The baseline source code shall be
that which is in production on the day the project commences. Program
remediation shall be in accordance with established Year 2000 programming
standards and current User's department programming standards.
(d) Providing weekly status reporting to Zenith management.
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(e) Supporting the testing process, including the development of test
strategies and plans, along with the coordinating the baseline and unit
test process. Testing must include the following basic rules: -- 20th
century dates will process correctly in the 20th century -- 20th century
dates will process correctly in the 21st century -- 21 st century dates
will process correctly in the 20th century -- 21 st century dates will
process correctly in the 21 st century -- Year 2000 is a leap year and the
date 2/29/2000 must be recognized and processed correctly.
(f) Developing and administering a process to handle any testing
discrepancies.
(g) Using the IST's Year 2000 Pack, analyze Excel and Access programs on 70
servers to identify possible millennium date problems. Data are that of the
former RISCORP organization with offices in: Sarasota, FL, Birmingham, AL,
Charlotte, NC, Orlando, FL, and the Third Coast operation in Rosemont, IL
(h) Performing Bios checking on 650 pc workstations.
(i) Reviewing the current remediation work being performed by User and if
deemed acceptable to technical resources (item 'c' above) such work may be
incorporated into the Project Plan.
The rates for the phase of the Project that is on a time basis are as follows:
Project Manager $150 per hour
Individuals with the
following skills in:
Excel $100 per hour
Access $100 per hour
PowerBuilder $115 per hour
FoxPro $115 per hour
Sybase $120 per hour
No other charges for time are allowed.
Contractor shall keep full, detailed and complete records on all time incurred
by the foregoing in the performance of their duties related to the time phrase,
showing tasks performed and time expended to be available for User's inspection,
audit, and verification.
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Contractor is only responsible for correcting date logic errors; Contractor is
not responsible for correcting non-Year 2000 errors found during testing that
also exist in the current production code set.
User is responsible for the following activities:
(a) Developing test plans under the direction, management and oversight of
the Contractor.
(b) Providing floor space, work area, desktop and basic office
equipment/supplies for Contractor staff. In addition, User must provide
access to the Sarasota office and access to program code that is to be
analyzed and remediated.
(c) Defining date logic rules as necessary.
(d) Providing business and application expertise to achieve project plan
tasks.
(e) Executing the system acceptance test plans in accordance with test plan
definitions and scripts.
(f) Modifying Excel and Access programs based on recommendations and
findings of the IST Year 2000 Pack Contractor.
(g) Providing testing environment allowing testing in both 20th and 21 st
centuries.
(h) Approving the methodology to be used by Contractor to ensure it does
not conflict with any existing project and/or application development
methodology.
(i) Assisting in resolution of issues which may arise in the Conversion.
(j) Reviewing, and if appropriate and acceptable, approve changes in the
scope of work.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Agreement.
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Exhibit B: Insurance Requirements
Before commencing work on-site, Contractor shall provide a certificate of
insurance acceptable to User, evidencing that the Contractor has in full force
and effect insurance issued by an insurance company having an A.M. Best Rating
of A-,VII or higher.
Such insurance shall provide Commercial General Liability with policy limits of
at least One Million Dollars per Occurrence with not less than Two Million
Dollars General Unimpaired Aggregate, covering the liability of Contractor and
User for Bodily Injury and Property Damage arising out of the performance of the
Services. The coverages shall include, but not be limited to:
o Owner's and Contractor's Protective Liability
o Premises Operations
o Blanket Contractual Liability
o Completed Operation
o Products/Completed Operations
o Broad Form Property Damage
o Personal and Advertising Injury with employees exclusion voided
User is to be an additional insured with respect to the foregoing insurance
pursuant to the attached form of endorsement.
In addition, Contractor shall maintain in full force policies for:
o Business Automobile insurance coverage with liability limits of
at least One Million Dollars per accident or loss and covering
Owned, Non-Owned and Hired Vehicles
o Worker's Compensation insurance as required by law and Employer's
Liability o Disability Benefits and other similar employee
benefits as required by law
o Employee Dishonesty Coverage providing a limit of insurance per
occurrence of not less than One Hundred Thousand Dollars.
In no event shall obtaining the coverages specified hereunder be considered as
limiting the liability of Contractor to indemnify and hold User harmless.
The policy(ies) shall be endorsed in the form as attached hereto so that User is
an additional insured thereunder ("Additional Insured Endorsement") and the
workers' compensation and employer liability insurance policy(ies) shall be
endorsed with a waiver of the insurance company's right to recover against User
("Waiver of Subrogation Rights"). Prior to commencing work on-site, Contractor
shall provide the following:
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(1) Certificate of insurance evidencing the foregoing coverages and
containing a provision that the policy or policies will not be canceled or
allowed to expire until at least 30 days' prior written notice to User;
(2) Original executed duplicate copy of Additional Insured Endorsement; and
(3) Original executed duplicate copy of Waiver of Subrogation Endorsement.
20
ARGOS TECHNOLOGIES, INC.
LICENSE AND MARKETING AGREEMENT
ARGOS TECHNOLOGIES, INC., a Delaware Corporation having its principal place of
business at 690 Knox Street, Suite 100, Torrance, Ca. 90502, ("LICENSOR") and
ARGOS 2000, INC. .a Delaware Corporation having its principal place of business
at 2815 Cox Neck Road, Chester, MD. 21619 ("LICENSEE"), in consideration of the
mutual promises herein contained, agree as follows:
1. APPOINTMENT
1.1 General. LICENSEE accepts, subject to all the terms and conditions of this
Agreement, an exclusive, non-transferable, License, throughout the world,
to market a fully automated policy administration system designed for the
auto insurance industry consistent with the document attached hereto and
referred to as Exhibit 1 ("System"). The System consists of certain
computer software, documentation, and associated information, which is year
2000 compatible.
The LICENSEE will be expected to attain a minimum sales commitment of ten (10)
units on or before June 30, 1999 and an additional ten (10) units on or before
June 30, 2000. If such total commitment is not satisfied within the time period
prescribed herein, the License the subject of this Agreement, shall continue to
be an exclusive, non-transferable License, subject to the additional
compensation provisions contained in paragraph 5.2 of this Agreement.
1.2 Sublicensing Agreements. The LICENSEE can appoint secondary LICENSEES
within the territory to market the System, with the written permission of
the LICENSOR, not to be unreasonably withheld, upon such terms and
conditions as LICENSOR shall specify. All Sublicensing Agreements will
terminate with the termination of this Agreement for any reason whatsoever.
2. LICENSES
In consideration of the sums payable by the LICENSEE pursuant to this Agreement
and specified in the exhibits attached hereto, LICENSOR grants to LICENSEE, and
LICENSEE, in consideration of such grant, hereby accepts, on the terms and
conditions set out in this Agreement, an exclusive license (I) to
<PAGE>
demonstrate, market, and promote the System and materials throughout the world,
and (2) to Sublicense the Licensed System and Materials to End-Users located
throughout the world for use solely in accordance with the terms and conditions
agreed to by LICENSOR.
3. THE LICENSEES OBLIGATION.
3.1 Basic Requirements/Best Efforts, etc. The LICENSEE shall use its best
efforts to promote vigorously and aggressively the System as well as the
Sublicensing opportunities in the territory.
3.2 Service. The LICENSEE shall provide primary service for End-Users,
including assistance in installation and use. The LICENSEE shall provide
this service to the customer, and such services are to be provided at the
LICENSEES sole cost and expense.
3.3 Financial Commitment. The LICENSEE shall employ, in connection with
fulfilling its obligation under this Agreement, such net worth and working
capital as may be required to perform its responsibilities.
The LICENSEE shall be solely responsible for all its costs, salaries and other
expenses incurred in connection with the performance of its obligations under
this Agreement. LICENSOR has no liability, obligation or responsibility thereof.
3.4 Minimum Sales Commitment. The LICENSEE must attain a minimum sales
commitment of ten (10) units on or before June 30, 1999 and an additional
ten (10) units on or before June 30, 2000. If such total commitment is not
satisfied within the time period prescribed herein, the License the subject
of this Agreement, shall continue to be an exclusive, non-transferable
License, subject to the additional compensation provisions contained in
paragraph 5.2 of this Agreement.
3.5 The rights, benefits, duties, and obligations granted to LICENSEE hereunder
are personal to LICENSEE, and the Agreement may not be sold, transferred or
assigned to any third party without the express written consent of
LICENSOR, such consent not to be unreasonably withheld. Any attempted sale,
transfer, or assignment without such consent shall be null, void, and of no
effect.
3.6 LICENSEE acknowledges that the System is a confidential and commercially
valuable proprietary product of LICENSOR, and agrees to keep the System
confidential and not to disclose it, in full or in part, to any third
party, except when such disclosure is necessary to the marketing,
exploitation and use of the System, for which rights are granted hereunder,
and only upon the execution of a Non-Disclosure Agreement between the
LICENSEE and the potential client or customer. LICENSEE agrees, in
furtherance of this provision, to exercise at least the same degree of care
with respect to the
<PAGE>
System as it exercises with respect to its own data, records, information,
materials and processes which it deems to be confidential and proprietary
in nature.
3.7 Pricing. The LICENSEE shall establish its own pricing so as to be
consistent and competitive with other such products in the market place.
However, in no event shall the price per unit for the System be less than
$150,000 on the first three (3) units sold, $175,000 on the next five (5)
units sold, and $200,000 on all subsequent sales.
3.8 LICENSEE hereby represents that it has performed the necessary, appropriate
and adequate due diligence and that the System, and all relevant
documentation, meets the specifications necessary for the use intended by
LICENSEE. LICENSEE acknowledges that LICENSOR does not warrant the result
of any services hereunder, nor does it warrant that any or all failure,
defects or errors in the System or Materials will be corrected, nor does it
warrant that the functions contained in the System will meet the LICENSEE'S
or Sub-Licensee's requirements.
3.9 LICENSEE shall make available to the LICENSOR any changes to the software
technology developed by the LICENSEE, at no cost to the LICENSOR. All
operating manuals and sales literature shall be provided by the LICENSEE at
no cost to the LICENSOR. Ownership of all changes made to the System shall
remain with the party paying for and making such changes.
4. LICENSOR'S OBLIGATIONS AND WARRANTIES
4.1 LICENSOR shall provide the System as delineated in paragraph 1.1 and all
associated software technology and completed documentation relative
thereto.
4.2 Warranties. For a period of thirty (30) days after delivery to the
LICENSEE, of the master programs, software, and all completed documentation
("Warranty Period"), all of which have been delivered, and are satisfactory
to LICENSEE. LICENSOR warrants to the LICENSEE that the System will
substantially conform to the specifications of the System set forth in the
relevant LICENSOR program documentation then in effect, when used in
accordance with the materials. The LICENSEE agrees that LICENSOR'S sole
liability and the LICENSEE'S sole remedy for defects in the System after
the date of this Agreement shall be that during the "Warranty Period"
provided for in this section, LICENSOR will use its most reasonable efforts
to correct any failure of the System to substantially conform to such
specifications, which LICENSOR'S diagnosis indicates is proximately caused
by a software "bug" in the code of the most recently issued unaltered
version of the System. After expiration of the "Warranty Period" set forth
in this section, LICENSOR will make available to the LICENSEE without
charge any bug fixes which it may develop.
<PAGE>
4.3 Exclusions. Except for the express warranty section in 4.2 above, LICENSOR
does not make any express or implied warranty with respect to the System or
Materials, including without limitation any implied warranty of
merchantability or fitness for a particular purpose; and the express
warranty stated above is in lieu of all liabilities or obligations of
LICENSOR for any damages arising out of or in connection with the delivery,
use or performance of the System or Materials.
LICENSOR does not warrant the result of any services provided by it hereunder,
nor does it warrant that any or all failure, defects or errors in the System or
Materials will be corrected, nor does it warrant that the functions contained in
the System will meet the LICENSEE'S or any End-User's requirements.
4.4 Limitations of Liability. The LICENSEE agrees that the liability of
LICENSOR, if any, including, but not limited to, liability arising out of
contract, negligence, strict liability in tort, or warranty, shall not
exceed the lesser of $25,000 or fifty (50.0%) percent of the royalty
amounts actually paid hereunder. Apart from the warranties expressly made
in this Agreement, LICENSOR makes no warranties, express or implied,
concerning the capabilities, performance, specifications or characteristics
of the System.
5. TIME AND PAYMENT BY LICENSEE.
5.1 In consideration of the mutual promises made by the parties, LICENSEE,
agrees to pay to LICENSOR a royalty equivalent to ten (10.0%) percent of
the gross revenue derived from the sale of the Licensed Property (The
System). Payment shall be made by LICENSEE within fifteen (15) days from
the collection of any monies from a third party as it relates to the sale
of the Licensed Property.
5.2 LICENSEE hereby warrants and represents that it will guarantee the minimum
sales performance contained in paragraphs 1.1 and 3.4 by providing LICENSOR
with collateral and a security interest in 150,000 shares of Synergy 2000
Inc. common stock. In the event LICENSEE does not sell ten (10) units of
the Licensed property prior to June 30, 1999, at a price consistent with
the terms and conditions of this Agreement, LICENSOR will receive as
additional compensation, 75,000 shares of Synergy 2000 Inc. common stock
currently being held as collateral. In the event LICENSEE does not sell ten
(10) additional units or a total of twenty (20) units prior to June 30,
2000, at a price consistent with the terms and conditions of this
Agreement, LICENSOR will receive as additional compensation, an additional
75,000 shares of Synergy 2000 Inc. common stock being held as collateral.
The stock being held as collateral will be issued in the name of ARGOS
TECHNOLOGIES, INC., within sixty (60) days from the execution of this
Agreement.
<PAGE>
LICENSEE and LICENSOR hereby agrees to execute the necessary paperwork and
perform the necessary duties to insure that LICENSOR'S security interest in the
150,000 shares is properly perfected. LICENSOR and LICENSEE shall designate a
party of their choosing to hold the collateral with the necessary letter of
instructions.
6. INTELLECTUAL PROPERTY RIGHTS
6.1 Title. Title to and ownership of the Licensed Programs (the System) and
Materials shall at all times remain with the LICENSOR.
6.2 Notices and Legends. The LICENSEE shall reproduce, in corresponding
locations on and in any partial or complete copies of the Licensed Programs
(The System) and Materials, any proprietary notice or legend which the
Licensed Programs or Materials contained when received by the LICENSEE.
6.3 Use of Trademarks and Trade Names. Each party acknowledges and agrees that
no right, title, or interest shall be acquired in the name, service marks,
or trademarks of the other party or any of its affliates, and that upon
termination of this Agreement, all use of same by each party shall cease,
except as may be otherwise expressly authorized in writing. LICENSEE
acknowledges that "ARGOS", and any other name having the reference of
"ARGOS" contained in its name, belongs exclusively to LICENSOR.
7. TERM AND TERMINATION
7.1 Term. This Agreement shall expire on the tenth anniversary of the Effective
date, unless it has been terminated earlier pursuant to any provisions of
this Agreement. Notwithstanding the preceding sentence, this Agreement may
be extended for successive one-year periods, on the same terms and
conditions then contained herein, by written agreement of the parties.
7.2 TERMINATION. This Agreement may be terminated, prior to the expiration of
its term:
By either party, if the other party has materially breached its obligations
under this Agreement and if the defaulting party has not cured such default
within thirty (30) days following the date of which the non-defaulting party has
given written notice specifying the facts constituting the default;
By LICENSOR, effective immediately and without any requirement of notice, if
LICENSEE files for or consents to an assignment for the benefit of creditors,
files a petition in bankruptcy or liquidation, or is adjudicated bankrupt or
insolvent, or takes similar actions under laws of any jurisdiction for the
general benefit of
<PAGE>
creditors or an insolvent or financially troubled debtor, or has sold its
business to a third party;
By LICENSOR, immediately upon the transfer of control of the LICENSEE, wherein
more than fifty (50.0%) percent of the outstanding common stock of LICENSEE
changes hands.
7.3 Effect of Termination. Upon the expiration or termination of this Agreement
for any reason, all rights and obligations of the parties under this
Agreement shall cease, except as follows:
The LICENSEE'S liability for royalties, fees, and other charges accrued prior to
the termination date shall not be extinguished by the expiration or termination
of this Agreement, and such amounts shall be immediately due and payable.
The LICENSEE shall have no further right to use the Licensed Programs or
Materials, or to use LICENSOR'S trademarks, and immediately after the
termination or expiration date, the LICENSEE shall return to LICENSOR, or
destroy, at LICENSOR'S discretion all originals and copies of the Licensed
Property and Materials, including all compilations, translations and partial
copies, whether or not modified or merged into other software documents.
The termination will not affect the right of the existing End-User Licensees to
use the Licensed Property and Materials pursuant to the terms of the Perpetual
License Agreement, if applicable.
The provisions of Sections 4.2, 4.3, 5, 5. 1, 5.2 6, and 8 shall survive the
termination of this Agreement. In addition, should this Agreement be terminated
for any reason other than the material breach by the LICENSOR, which has not
been cured pursuant to paragraph 7.2, the 150,000 shares being held as
collateral pursuant to paragraph 5, 5.1 and 5.2 of this Agreement, shall
immediately become the sole and exclusive property of the LICENSOR.
7.4 No Compensation Upon Termination. Upon the expiration or termination of
this Agreement in accordance with its terms, LICENSOR shall have no
obligation to the LICENSEE or to any employee, agent or representative of
the LICENSEE for compensation or for damages of any kind, whether on
account of the loss by the LICENSEE, or by such employee, agent or
representative of present of prospective sales, investment, compensation or
goodwill. The LICENSEE, for itself and on behalf of each of its employees,
agents and representatives, hereby waives any rights which may be granted
to it or them under the laws and regulations of the Territory or otherwise
which are not granted to it or them by this Agreement. The LICENSEE hereby
indemnifies and holds LICENSOR harmless from and against any and all
claims, costs, damages and liabilities whatsoever asserted by any employee,
agent or representative of the LICENSEE
<PAGE>
1 3. SEVERANCE
In the event of any provisions of this Agreement being declared by any judicial
or other competent authority to be void, voidable, illegal or otherwise
unenforceable or indications of the same are received by either parties from any
relevant authority, the parties shall amend that provision in such reasonable
manner as achieved the intention of the parties without illegality.
14. PROPER LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the laws of
the State of California, in every particular including formation and
interpretation and shall be deemed to have been made in California. Any
proceedings arising out of or in, connection with this Agreement may be brought
in any Court of competent jurisdiction in California.
15. NOTICES
Any notice to be served on either of the parties by the other shall be sent by a
pre-paid recorded delivery or registered mail or by telex or by telefax or by
electronic mail and shall be deemed to have been received by the addressee
within 72 hours of posting or 24 hours sent by telex or telefax or by electronic
mail to the correct number or address of the addressee.
16. HEADINGS
Headings contained in this Agreement are for reference purposes only and shall
not be incorporated into this Agreement and shall not be deemed to be any
indication of the meaning of the clauses and sub-clauses to which they relate.
17.RELATIONSHIP BETWEEN THE PARTIES
It is expressly understood and agreed that nothing contained herein shall
constitute either LICENSOR or LICENSEE as the partner, agent, or legal
representative of the other, for any purpose whatsoever.
18. ENTIRE AGREEMENT
This Agreement supersedes all prior communication and agreements between the
parties relating to the subject matter of this Agreement and constitutes the
full understanding between the parties with respect thereto. No waiver of any
provision of this Agreement or of any breach and no modification or supplement
hereto shall be binding, unless in writing and signed by both parties.
<PAGE>
IN WITNESS HEREOF, the parties have caused the signatures of their duly
authorized officers to be hereunto affixed on this the 25th day of June, 1998.
Accepted By:
ARGOS TECHNOLOGIES, INC. (LICENSOR)
BY:
(Authorized Officer)
Name :
Title:
Address: 690 Knox Street, Suite 100
Torrance Ca. 90502
ARGOS 2000, INC. (LICENSEE)
BY :
(Authorized Officer)
Name:
Title:
Address: 2815 Cox Neck Road
Chester, MD. 21619
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the number of shares
outstanding: 10,637,500.
