SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
......................................
FORM 10Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended Commission file number 0-6355
December 31, 1995
COMNET Corporation
Incorporated in Delaware IRS EI No. 52-0852578
4200 Parliament Place, Suite 600, Lanham, MD 20706-1860
Telephone Number: (301) 918-0400
Indicate by check mark whether the registrant (1) has filed reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----------- -----------
Shares Outstanding Effective
Class February 12, 1996
Common Stock, $.50 par value 3,148,734
<PAGE>
<TABLE>
COMNET CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
December 31, March 31,
1995 1995
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,322 $ 1,939
Marketable securities 2,006 3,780
Trade and installment accounts receivable,
less allowance of $2,240 and $1,837 19,733 18,457
Income tax benefit 972 1,315
Deferred income taxes 1,903 1,489
Prepaid expenses and other assets 3,305 2,824
------- -------
Total current assets 29,241 29,804
Installment accounts receivable, long-term 3,208 3,657
Property and equipment, net 3,175 2,867
Computer software, net of accumulated
amortization of $16,122 and $12,487 21,038 18,726
Other assets 1,475 2,094
------- -------
Total assets $ 58,137 $ 57,148
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,459 $ 2,801
Current portion of long-term debt 655 652
Accrued expenses 4,167 4,861
Accrued compensation 1,998 3,803
Current deferred revenues 11,738 10,900
------- -------
Total current liabilities 21,017 23,017
Long-term debt, net of current portion 364 561
Long-term deferred revenues 3,933 3,714
Deferred income taxes 2,186 1,922
Minority interest in net earnings of
consolidated subsidiary 5,445 5,068
------- -------
Total liabilities 32,945 34,282
------- -------
Commitments and contingent liabilities
Convertible preferred stock 2,846 2,846
------- -------
Stockholders' equity:
Common Stock, $0.50 par value, 10,000
shares authorized, 3,424 and 3,384
shares, issued and outstanding 1,712 1,692
Capital contributed in excess of par value 16,701 15,739
Retained earnings 5,964 4,631
Unrealized loss on investments, net (12) (45)
Cumulative foreign currency translation (4) 18
------- -------
24,361 22,035
Less treasury stock at cost, 316 and 316 (2,015) (2,015)
shares
------- -------
Total stockholders' equity 22,346 20,020
------- -------
Total liabilities and stockholders' equity $ 58,137 $ 57,148
======= =======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
COMNET CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share data)
Unaudited
<CAPTION>
For the Three Month For the Nine Month
Period Ended Period Ended
December 31, December 31,
1995 1994 1995 1994
(FY96) (FY95) (FY96) (FY95)
<S> <C> <C> <C> <C>
Revenue:
Software license and related
revenue $ 6,045 $ 4,937 $ 15,846 $ 13,223
Maintenance and other revenue 4,808 4,395 14,472 12,718
------ ------ ------ ------
Total revenue 10,853 9,332 30,318 25,941
------ ------ ------ ------
Costs and expenses:
Software license expense 1,853 1,407 5,419 3,991
Maintenance and service expense 1,752 1,591 5,505 4,676
Research, development and
indirect support 648 569 1,745 1,407
Selling and marketing 4,027 3,009 10,442 8,588
General and administrative 1,203 979 3,438 3,098
Provision for doubtful accounts 520 400 1,114 1,160
------ ------ ------ ------
Total costs and expenses 10,003 7,955 27,663 22,920
------ ------ ------ ------
Operating earnings 850 1,377 2,655 3,021
Non-operating income (expense), net 55 (111) 268 (136)
------ ------ ------ ------
Earnings from continuing operations
before provision for income taxes 905 1,266 2,923 2,885
Provision for income taxes 340 475 1,084 1,104
Minority interest 121 150 376 465
------ ------ ------ ------
Earnings before discontinued
operations $ 444 $ 641 $ 1,463 $ 1,316
Discontinued Operations:
Loss from discontinued operations
(net of tax benefit) --- 100 --- 2
------ ------ ------ ------
Net earnings $ 444 $ 541 $ 1,463 $ 1,314
Preferred stock dividend
requirements 44 44 133 133
------ ------ ------ ------
Net earnings available to common
shareholders $ 400 $ 497 $ 1,330 $ 1,181
Earnings per share of common
stock from continuing operations $ 0.13 $ 0.19 $ 0.43 $ 0.36
Loss per share of common stock from
discontinued operations $ --- $ (0.03) $ --- $ ---
------ ------ ------ ------
Earnings per share of common stock $ 0.13 $ 0.16 $ 0.43 $ 0.36
====== ====== ====== ======
Weighted average number of common
and common equivalent shares
outstanding 3,143 3,723 3,108 3,832
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
COMNET CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
<CAPTION>
For the Nine Month
Period Ended December 31,
1995 1994
(FY96) (FY95)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,463 $ 1,314
Adjustments to reconcile earnings from
operations to net cash from operating
activities:
Amortization expense 3,875 2,836
Depreciation expense 630 570
Provision for doubtful accounts 1,114 1,185
Deferred income taxes 863 336
Gain on disposal of assets --- (7)
Minority interest in earnings of
consolidated subsidiary 377 379
Loss on sale of investments --- 83
Change in assets and liabilities:
Accounts receivable (1,941) (496)
Other current assets (481) 171
Notes receivable --- (1,590)
Taxes payable --- 2
Other assets (68) (4)
Accounts payable (342) (237)
Accrued expenses (2,539) (339)
Deferred revenues 1,057 (342)
------ ------
Net cash provided by operating activities: 4,025 3,847
------ ------
Cash flows from investing activities:
Purchase and development of computer software (6,162) (4,139)
Purchase of equipment and improvements (964) (531)
Purchase of marketable securities --- (4,183)
Sale of marketable securities 1,807 3,121
Acquisition of company, net of cash acquired --- (400)
------ ------
Net cash used in investing activities (5,316) (6,132)
------ ------
Cash flows from financing activities:
Proceeds from short-term borrowings 7,159 ---
Reduction of short-term borrowings (7,159) ---
Reduction of long-term debt (194) (541)
Proceeds from exercise of common stock options 982 28
Payment of preferred stock dividends (89) (88)
------ ------
Net cash provided by (used in) financing 699 (601)
activities
------ ------
Effect of exchange rate changes on cash (22) ---
------ ------
Net decrease in cash and cash equivalents (617) (2,886)
Cash and cash equivalents at beginning of period 1,939 5,834
------ ------
Cash and cash equivalents at end of period $ 1,322 $ 2,948
====== ======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
COMNET CORPORATION
Notes to Consolidated Financial Statements
1. The financial statements for the three and nine months ended December 31,
1995 and 1994, are unaudited. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Limited
footnote information is presented, in accordance with quarterly reporting
requirements. The results of operations for the three and nine months ended
December 31, 1995, are not necessarily indicative of the results for the year
ended March 31, 1996. The information contained in the audited financial
statements and the notes thereto for the year ended March 31, 1995, should be
read in connection with this unaudited interim financial information.
2. Research and development expense, before the capitalization of computer
software development costs, amounted to approximately $6,701,000 and $5,388,000
for the nine months ended December 31, 1995 and 1994, respectively.
3. Earnings per share of common stock is computed based on the weighted
average number of common and common equivalent shares outstanding divided into
the earnings available to common shareholders, which is modified, under the
aggregate method, for the effects of computed net earnings from the proceeds of
stock options assumed to have been exercised during the period.
4. In October, 1995, Statement of Financial Accounting Standard Number
123, "Accounting for Stock-based Compensation" was issued. This
pronouncement changes the financial accounting and reporting for stock
based employee compensation plans. The Company has yet to quantify the
impact of adopting the elective compensation recognition provisions of
this new standard.
5. Certain amounts have been reclassified to conform with the current
period presentation.
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
The Company sold its COM-MED Systems subsidiary as of March 31, 1995.
The Company's consolidated financial statements have been restated to report
separately, as a discontinued operation, the results of operations of COM-MED
Systems. The Company's remaining business unit is Group 1 Software, Inc. An
81% owned subsidiary, which develops, acquires, markets and supports
specialized marketing and mail management software. For the quarter ended
December 31, 1995, the Company's revenue was $10.9 million compared with $9.3
million the prior year. The Company's net earnings from continuing operations
for the three month period were $0.4 million or $0.13 per share compared with
$0.6 million or $0.19 per share the prior year. For the nine months ended
December 31, 1995, the Company's revenue was $30.3 million compared with $25.9
million the prior year. The Company's net earnings from continuing operations
for the nine month period were $1.5 million or $0.43 per share compared with
$1.3 million or $0.36 per share the prior year.
For the quarter ended December 31, 1995 (the third fiscal quarter),
Group 1's revenue of $10,854,000 increased 16% from the $9,371,000
reported for the comparable period in the prior year. For the nine month
period of fiscal 1996, revenue totaled $30,320,000 compared with
$25,980,000 for the first nine month period the prior year. Net earnings
for the quarter ended December 31, 1995 were $641,000 as compared with
$798,000 in fiscal 1995. For the nine month period of fiscal 1996, net
earnings were $1,988,000 compared with $2,017,000 the prior year.
Software license fees and related revenues of $6,045,000 for the
third fiscal quarter increased 21% from the same quarter the prior year.
For the nine month period, software license fees and related revenues of
$15,846,000 were 19% above the prior year. Sales of DataDesign, the
database marketing software, and WorldTrak, the sales and marketing
automation software, represented $301,000 and $330,000 for the three and
nine month periods, respectively; there was no revenue for these systems
in the prior year. License fees from all other large systems products,
including Open Systems, DOC1 and NADIS software, increased $898,000 for
the three month period, $2,820,000 for the nine month period over the
prior year. Licensing of PC software decreased $130,000 in the quarter
versus the same period the prior year, and decreased $533,000 for the
nine month period; these decreases were due to delays in new product
releases.
Maintenance and other revenues of $4,809,000 for the quarter
increased 9% over the prior year, and for the nine month period, at
$14,474,000, were 14% above the comparable period the prior year.
Maintenance contract revenue increased over the prior year by $407,000
for the three months and $1,139,000 for the nine months of 1996.
Professional service and other revenue increased in the third quarter and
nine month period ending December 31, 1995 by $7,000 and $617,000,
respectively. The increase in nine month revenue was due primarily to
professional services associated with the DOC1 system.
Revenues from international markets of $1,171,000 and $2,948,000 for
the quarter and nine month periods represented 11% and 10% of total
revenue, respectively, up from 3% in both comparable periods of the prior
year. A significant portion of the increase in international revenues in
the first nine months of fiscal 1996 arose from Group 1 Software Europe,
Ltd., a wholly-owned subsidiary of Group 1, acquired as of December 31,
1994, for which there was minimal revenue in the prior year period.
During the current quarter, total operating costs and expenses of
$10,003,000 amounted to 92% of total revenue as compared with $7,955,000
or 85% of total revenue during the comparable period in the prior year.
Total operating costs and expenses for the Company for the nine months
ended December 31, 1995 and 1994, were 91% and 88% of total revenue,
respectively. The current year operating costs and expenses versus the
prior year include Group 1 Software Europe, Ltd. for which there was
minimal cost and expense in the prior year period, as well as operating
costs and expenses for DataDesign and WorldTrak for which there is no
prior year comparison.
Software license expense increased to $1,853,000 for the three
months ended December 31, 1995, from $1,407,000 in the comparable prior
year period, representing 31% of software license and related revenue, in
the current period and 28% in the prior year period. For the nine months
ended December 31, 1995 and 1994, software license expense represented
34% and 30% of software license and related revenue, respectively.
Maintenance and service expense increased to $1,752,000 in the current
period from $1,591,000 in fiscal 1995, representing 36% of maintenance
and service revenue in both periods. For the nine months ended December
31, 1995 and 1994, maintenance and service expense represented 38% and
37% of maintenance and service revenue, respectively. The current year
expenses reflect increased staffing and support costs related to the
DOC1, NADIS, DataDesign and WorldTrak products and services for which
there was minimal cost in the prior year comparison. Additionally,
amortization expense for the current quarter increased $299,000 and for
the nine month period increased $904,000, reflecting new and enhanced
product releases for all computer platforms as well as the amortization
of acquired software. Amortization increased as a percent of total
revenue to 11% for the three month period and 12% for the nine month
period compared with 10% in both periods of the prior year. Group 1
expects amortization of software to continue to increase as a percent of
revenue due to continuing capitalization of internal software development
expenditures and the costs related to existing software acquisition
agreements. During the quarter, other direct costs associated with new
customer orders and existing customer updates as a percent of total
revenue were 10% and 11% for the three and nine month periods in the
current year versus 10% in the same periods the prior year. Other direct
costs are affected by the mix of products sold in each period which
directly affects fulfillment and distribution costs as well as royalty
expense. Group 1 expects the cost of maintenance and other services to
increase as the customer base expands.
Research, development and indirect support expenses totaled $648,000
in the third quarter of fiscal 1996, and $569,000 in the comparable
period of fiscal 1995, representing 6% of total revenue in both periods.
For the nine month period in both years, research development and
indirect support expenses were 5% of total revenue. These expenses are
primarily related to ongoing support requirements for Group 1's expanded
variety of computer platforms served, as well as its internal computer
network.
Selling and marketing expenses totaled $4,027,000, or 37% of total
revenue in the third quarter of fiscal 1996, as compared with $3,009,000,
or 32% of total revenue in the same period of the prior year. For the
nine month period, selling and marketing expenses were 34% and 33% of
total revenue for fiscal years 1996 and 1995, respectively. The increase
in expenses in the current quarter and for the nine month period compared
with the prior year reflects increased staffing and related costs to
support changing requirements in the selling of the highly technical
DOC1, NADIS, DataDesign and WorldTrak products.
General and administrative expenses increased $224,000 to $1,203,000
for the quarter and increased by $340,000 to $3,438,000 for the nine
month period ended December 31, 1995 versus the prior year. While
compensation expense decreased in both the quarter and the nine month
period ended December 31, 1995, these decreases were partially offset by
the addition of administrative support costs associated with Group 1
Software Europe, Ltd., for which there is no prior year comparison. The
provision for doubtful accounts was $520,000 and $1,114,000 in fiscal
year 1996 compared with $400,000 and $1,160,000 in fiscal year 1995, for
the three and nine month periods, respectively. The increase in the
provision for doubtful accounts reflects Group 1's lower experience to
date this year, offset by an increase in the provision for doubtful notes
associated with the sale of COM-MED System, Inc. in March, 1995.
Net non-operating income of $268,000 for the nine month period
includes gains on investments of $214,000 and net interest income of
$59,000, offset by other expenses of $5,000. For the prior year nine
month period, net non-operating expense of $136,000 was comprised of net
interest income of $16,000, a loss on investments of $169,000 and other
income items of $17,000.
The Company's effective tax rate was 38% in both fiscal 1996 and
1995, respectively. The current year reflects the net impact of lower
international taxes.
Liquidity and Capital Resources
The Company's working capital on December 31, 1995, was $8,224,000 as
compared with $6,787,000 at March 31, 1995. The current ratio was 1.4 to 1 on
December 31, 1995 and 1.3 to 1 on March 31, 1995.
The Company provides for its cash requirements through cash funds
generated from operations. Additionally, the Company maintains an
uncollateralized $5,000,000 line of credit arrangement with Signet Bank
(Maryland), a major Mid-Atlantic regional bank, with interest at the bank's
prime rate. At December 31, 1995, there were no borrowings under this
facility.
Net earnings of $1,463,000 plus non-cash expenses of $6,859,000 provided a
total of $8,322,000 cash from operating activities. The increase in accounts
receivable required cash of $1,941,000. Cash was decreased by a reduction in
accrued expenses and accounts payable of $2,881,000, a decrease in deferred
revenues provided cash of $1,057,000; all other working capital items decreased
cash provided by operating activities by $891,000. Expenditures for
investments in software development and capital equipment of $7,126,000 were
offset by proceeds from the sale of short-term investments of $1,807,000
resulting in cash flows used in investing activities of $5,316,000. Cash flows
from financing activities of $699,000 represent decreases of $283,000 in long-
term debt and payment of preferred stock dividends, offset by proceeds from the
exercise of stock options of $982,000.
Group 1's practice of accepting license agreements under installment
payment arrangements substantially increases its working capital requirements.
Generally, these arrangements are for a period from three to five years after a
down payment of 10% of the principal amount of the contract. Interest
typically ranges from 9.5% to 13%. Installment receivables included in
accounts receivable were $8,341,000 and $8,834,000 at December 31, 1995, and
March 31, 1995, respectively. The installment receivable balance, in addition
to the Company's policy of offering competitive trade terms of payment, makes
it difficult to accurately portray a relationship between the outstanding
accounts receivable balance and the current period revenues.
Group 1 continually evaluates the credit and market risks associated with
outstanding receivables. In the course of this review, Group 1 considers many
factors specific to the individual client as well as the concentration of
receivables within industry groups. Group 1's installment receivables are
predominately with clients (service bureaus) who provide computer services to
the direct marketing industry. Typically, these clients have limited capital
and insufficient assets to secure their liability to Group 1. The service
bureaus are highly dependent on Group 1's software and services to offer their
customers the economic benefits of postal discounts and mailing efficiency. To
qualify for the U. S. Postal Service and Canada Post Corporation postal
discounts, service bureaus require continuous regulatory product updates by
Group 1. The service bureau industry is also highly competitive and subject to
general economic cycles as they impact advertising and direct marketing
expenditures. Group 1 is aware of no current market risk associated with the
installment receivables. These clients represent approximately $6,015,000 or
72% of the installment receivables at December 31, 1995.
As of December 31, 1995, the Company's capital resource commitments
consisted primarily of non-cancelable operating lease commitments for office
space and equipment. The Company believes that its current debt services,
minimum lease obligations and other short-term and long-term liquidity needs
can be met from cash flows from operations. The Company believes that its long-
term liquidity needs are minimal and no large capital expenditures are
anticipated, except for the continuing investment in capitalized software
development costs which the Company believes can be funded from operations.
Historically, the Company has been able to negotiate capital leases for its
acquisition of equipment.
In November, 1995, Group 1 entered into a definitive agreement with
Premier One Consultants, Inc. of Minneapolis, Minnesota to acquire certain
assets including title to all of its software products. Group 1 paid $319,000
in cash at closing and will pay a percentage of Group 1's sales of these
products during the subsequent three years.
Recent Accounting Developments
In October, 1995, Statement of Financial Accounting Standard Number 123,
"Accounting for Stock-based Compensation" was issued. This pronouncement
changes the financial accounting and reporting for stock based employee
compensation plans. The Company has yet to quantify the impact of adopting the
elective compensation provisions of this new standard.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
On March 31, 1995, the assets of the Company's subsidiaries, COM-MED
Systems, Inc., and CMEDS, Inc., were sold for a payment stream of
from zero dollars to a maximum of $4,500,000, representing a
percentage of the acquiring company's future revenues. On September
22, 1995, the acquiring company ceased operations. The Company has
instituted legal proceedings against the acquiring company and its
principals. Management of the Company believes that it will prevail
in its attempt to recover, in these proceedings, the security that
has not already been received.
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. None
Item 5. Other information.
None
Item 6. Exhibits and reports on Form 8-K.
The Company filed Form 8-K on December 19, 1995 regarding the
resignation of Mr. Carl I. Kanter, as a Director and the permanent
relinquishing of any right MEDCO Containment Services, Inc. had to
designate nominees to COMNET's Board of Directors.
<PAGE>
PART IV
Listing of Exhibits
3.01 Articles of Incorporation and Bylaws, as amended - 1985,
(incorporated by reference to
Exhibit 3.7 to the Company's Annual Report on Form 10-K for
the year ended March 31, 1991).
3.02 Bylaws - Amended as of January 22 1992, (incorporated by
reference to Exhibit 3.8 to the Company's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1991).
3.03 Bylaws - Amended as of January 22, 1993.
3.04 Amendments to Certificate of Incorporation filed January 22,
1993.
3.05 Amendment to By-Laws.
4.01 Purchase Agreement between the Company and Medco Containment
Services, Inc., dated as of January 28, 1992 (incorporated by
reference to Exhibit 4.47 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
December 31, 1991).
4.02 Agreement Regarding Satisfaction of Debt, Release of Pledge
and Issuance of Stock between the Company and Robert S.
Bowen, dated as of January 28, 1992, (incorporated by
reference to Exhibit 4.48 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
December 31, 1991).
4.03 Agreement Regarding Satisfaction of Debt, Release of Pledge
and Issuance of Stock between the Company and Dr. Milton
Kaplan, dated as of January 28, 1992, (incorporated by
reference to Exhibit 4.49 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
December 31, 1991).
4.04 Agreement Regarding Satisfaction of Debt, Release of Pledge
and Issuance of Stock between the Company and John Spohler,
dated as of January 28, 1992, (incorporated by reference to
Exhibit 4.50 to the Company's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1991).
4.05 Agreement Regarding Satisfaction of Debt, Release of Pledge
and Issuance of Stock between the Company and Leonard J.
Smith, dated as of January 28, 1992, (incorporated by
reference to Exhibit 4.51 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
December 31, 1991).
4.06 Stock Option Agreement between the Company and James V.
Manning, dated as of August 16, 1991, (incorporated by
reference to exhibit 4.53 to the Company's Quarterly Report
on
Form 10-Q for the quarter ended December 31, 1991).
4.07 Stock Option Agreement between the Company and James Marden,
dated as of August 16, 1991, (incorporated by reference to
Exhibit 4.55 to the Company's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1991).
4.08 Stock Option Agreement between the Company and Robert S.
Bowen, dated as of August 16, 1991, (incorporated by
reference to Exhibit 4.56 to the Company's Quarterly Report
on
Form 10-Q for the quarter ended December 31, 1991).
4.09 Stock Option Agreement between the Company and Ronald F.
Friedman, dated as of August 16, 1991, (incorporated by
reference to Exhibit 4.57 to the Company's Quarterly Report
on
Form 10-Q for the quarter ended December 31, 1991).
4.10 Stock Option Agreement between the Company and Charles A.
Crew, dated as of August 16, 1991, (incorporated by reference
to Exhibit 4.58 to the Company's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1991).
4.11 Stock Option Agreement between the Company and Charles J.
Sindelar, dated as of August 16, 1991, (incorporated by
reference to Exhibit 4.59 to the Company's Quarterly Report
on
Form 10-Q for the quarter ended December 31, 1991).
4.12 Agreement among the Company and Robert S. Bowen, Milton
Kaplan, Leonard Smith and John Spohler regarding certain
registration rights, dated as of January 28, 1992,
(incorporated by reference to Exhibit 4.60 to the Company's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1991).
4.13 Certificate of Designation of 6% Convertible Preferred Stock,
filed January 22 1993.
10.01 Technology Purchase Agreement between COMNET Corporation and
Andy Bellinghieri - 1985, as amended and restated in May,
1994, (incorporated by reference to Exhibit 10.52 to the
Company's Annual Report on Form 10-K for the year ended March
31, 1991).
10.02 Revolving Line of Credit between Group 1 Software, Inc. as
Borrowers, and Signet Bank/Maryland as Lender, dated November
9, 1989, (incorporated by reference to Exhibit 10.88 to the
Company's Annual Report on Form 10-K for the year ended March
31, 1991).
10.03 Employment Agreement between Ronald F. Friedman and Group 1
Software, Inc. dated
October 31, 1990, (incorporated by reference to Exhibit 10.94
to the Company's Annual Report on Form 10-K for the year
ended March 31, 1991).
10.04 Management and Services Agreement between Group 1 Software,
Inc. and COMNET Corporation dated April 1, 1994.
10.05 Tax Sharing Agreement among Group 1 Software, Inc., COM-MED
Systems, Inc., ADMS, Inc. and COMNET Corporation, dated April
1, 1991, (incorporated by reference to Exhibit 10.97 to the
Company's Annual Report on Form 10-K for the year ended March
31, 1991).
10.06 First Amendment to Employment Agreement by and between Group
1 Software, Inc. and
Ronald F. Friedman dated June 24, 1991, (incorporated by
reference to Exhibit 10.96 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 3, 1991).
10.07 Amendment to the Management Services Agreement as of August
1, 1991 by and between Computer Network Systems, Inc. and
COMNET Corporation, (incorporated by reference to Exhibit
10.98 to the Company's Quarterly Report on Form 10-Q for the
quarter ended
September 31, 1991).
10.08 Fee Agreement between the Company and James B. Manning, dated
as of January 28, 1992, (incorporated by reference to Exhibit
10.100 to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1991).
10.09 Fee Agreement between the Company and Robert S. Bowen, dated
as of January 28, 1992, (incorporated by reference to Exhibit
10.102 to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1991).
10.10 Fee Agreement between the Company and Ronald F. Friedman,
dated as of January 28, 1992, (incorporated by reference to
Exhibit 10.103 to the Company's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1991).
10.11 Indemnification Agreement between the Company and James V.
Manning, (incorporated by reference to Exhibit 10.105 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1991).
10.12 Indemnification Agreement between the Company and James
Marden, (incorporated by reference to Exhibit 10.107 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1991.)
10.13 Indemnification Agreement between the Company and Ronald F.
Friedman ,(incorporated by reference to Exhibit 10.108 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1991).
10.14 Indemnification Agreement between the Company and Charles A.
Crew, (incorporated by reference to Exhibit 10.109 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1991).
10.15 Indemnification Agreement between the Company and Robert S.
Bowen, (incorporated by reference to Exhibit 10.110 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1991).
10.16 Stockholder Voting Agreement among Medco Containment
Services, Inc. and Robert S. Bowen, Charles A. Crew, Ronald
F. Friedman, Milton Kaplan, Perry E. Morrison, Leonard J.
Smith and John Spohler, dated as of January 28, 1992,
(incorporated by reference to Exhibit 10.111 to the Company's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1991).
10.17 Advisory Committee Agreement between the Company and Leonard
J. Smith, dated as of January 28, 1992, (incorporated by
reference to Exhibit 10.112 to the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1991).
10.18 Advisory Committee Agreement between the Company and Milton
Kaplan, dated as of
January 28, 1992, (incorporated by reference to Exhibit
10.113 to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1991).
10.19 Advisory Committee Agreement between the Company and Perry E.
Morrison, dated as of January 28, 1992, (incorporated by
reference to Exhibit 10.114 to the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1991).
10.20 Agreement between the Company and Robert S. Bowen, dated as
of January 23, 1992, (incorporated by reference to Exhibit
10.115 to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1991).
10.21 Loan Agreement and three notes in the amount of $78,334 each
between the Company as Holder and Robert S. Bowen as Maker,
dated as of January 23, 1992, (incorporated by reference to
Exhibit 10.117 to the Company's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1991).
10.22 Amended and Restated Employment Agreement between Robert S.
Bowen and the Company, dated as of January 28, 1992,
(incorporated by reference to Exhibit 10.118 to the Company's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1991).
10.23 Amended and Restated Employment Agreement between Robert S.
Bowen and Group 1 Software, Inc., dated as of January 28,
1992, (incorporated by reference to Exhibit 10.119 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1991).
10.24 Indemnification Agreement, dated January 22, 1993, between
COMNET Corporation and
Carl I. Kanter.
10.25 Loan Agreement, dated March 1, 1993, between COMNET
Corporation and
Ronald F. Friedman.
10.26 Indemnification Agreement, dated February 24, 1992, between
COMNET Corporation and Charles A. Mele.
10.27 Indemnification Agreement between COMNET Corporation and
Charles Sindelar.
10.28 Lease covering Company office facilities in Lanham, MD -
1993.
10.29 Letter of Intent between Group 1 Software, Inc. and Archetype
Systems, Ltd., dated as of
April 15, 1994.
10.30 Agreement between Group 1 Software, Inc. and Archetype
Systems, Ltd. for acquisition of the entire share capital of
Archetype Systems, Ltd., dated as of December 30, 1994.
10.31 Fourth Amendment to Employment Agreement, dated as of March
1, 1994, by and between Group 1 Software, Inc., and Ronald F.
Friedman.
10.32 Sublease, dated March 1, 1994, by and between COMNET
Corporation and Group 1 Software, Inc.
10.33 Agreement to Extend Management and Services Agreement, dated
April 1, 1994, by and between COMNET Corporation and Group 1
Software, Inc.
10.34 Sales agreement for COM-MED Systems, Inc.
10.35 Letter of Agreement between the Company and MEDCOM
Acquisition Corporation, dated
May 8, 1995.
10.36 Amended Letter of Agreement between the Company and MEDCOM
Acquisition Corporation, dated June 9, 1995.
10.37 Bill of Sale between the Company and MEDCOM Acquisition
Corporation, dated
March 31, 1995, for the sale of substantially all of the
assets of COM-MED Systems, Inc. and CMEDS, Inc.
10.38 Line of Credit between the Company and MEDCOM Acquisition
Corporation, dated
March 31, 1995.
10.39 Fifth Amendment to Employment Agreement, dated as of April 1,
1995, by and between
Group 1 Software, Inc. and Ronald F. Friedman.
10.40 COMNET Corporation, Deferred Compensation Plan.
10.41 COMNET Corporation, Deferred Compensation Plan.
10.42 Definitive Agreement for purchase of assets of DataDesigns,
Inc., dated August 23, 1995.
*10.43 Definitive Agreement for purchase of assets of Premier One
Consultants, Inc., dated November 22, 1995.
*11.0 Computation of earnings per share.
16.1 Change in Registrant's Independent Accountant on Form 8-K
dated January 26, 1990, (incorporated by reference to Exhibit
16.1 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991).
22. Subsidiaries of COMNET Corporation.
23. Consent of Independent Accountants.
_______________________________
* Filed herewith.
<PAGE>
<TABLE>
Exhibit 11
COMNET CORPORATION
Computation of Earnings Per Share
(in thousands, except per share data)
Unaudited
<CAPTION>
For the Three For the Nine
Month Period Ended Month Period Ended
December 31, December 31,
1995 1994 1995 1994
(FY96) (FY95) (FY96) (FY95)
<S> <C> <C> <C> <C>
Net earnings from continuing
operations $ 444 $ 641 $ 1,463 $ 1,316
Plus: Excess funding, net
of income taxes 92 203
Less: Preferred Stock dividend (44) (44) (133) (133)
------ ------ ------ ------
Primary earnings from continuing
operations $ 400 $ 689 $ 1,330 $ 1,386
====== ====== ====== ======
Preferred Stock Dividend 44 44 133 133
------ ------ ------ ------
Fully diluted earnings from
continuing operations $ 444 $ 733 $ 1,463 $ 1,519
Primary loss on discontinued
operations --- 100 --- 2
Fully diluted loss on
discontinued operations --- 100 --- 2
====== ====== ====== ======
Weighted average shares
outstanding 3,143 3,024 3,109 2,989
Dilutive common stock equivalents
for primary earnings per share
using the treasury stock method --- 699 --- 843
------ ------ ------ ------
Weighted average shares and
common equivalent shares
outstanding for primary
earnings per share 3,143 3,723 3,109 3,832
====== ====== ====== ======
Additional equivalent shares
assuming full dilution 148 148 148 148
------ ------ ------ ------
Weighted average shares and
common equivalent shares
outstanding for fully diluted
earnings per share 3,291 3,871 3,257 3,980
====== ====== ====== ======
Earnings per share
Primary
Continuing operations $ 0.13 $ 0.19 $ 0.43 $ 0.36
Discontinued operations --- (0.03) --- ---
------ ------ ------ ------
Net earnings per common share 0.13 0.16 0.43 0.36
====== ====== ====== ======
Fully diluted <F1>
Continuing operations $ 0.13 $ 0.19 $ 0.43 $ 0.36
Discontinued operations --- (0.03) --- ---
------ ------ ------ ------
Net earnings per common share 0.13 0.16 0.43 0.36
====== ====== ====== ======
<FN>
<F1> Not presented on the Consolidated Statements of Earnings
because fully diluted earnings per share had a differential
less than primary earnings share.
</TABLE>
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
COMNET Corporation
Date: February 14, 1996 /s/Charles A. Crew
Charles A. Crew
Executive Vice President
Chief Financial Officer
<PAGE>
Index of Exhibits
PAGE
NUMBER
*10.43 Definitive Agreement for purchase of assets
of Premier One Consultants, Inc., dated
November 22, 1995. 24
*10.44 Agreement between Sidco, Inc. and CMEDS, Inc. 141
dated November 14, 1995
*11.0 Computation of earnings per share. 20
<PAGE>
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR PURCHASE AND SALE OF ASSETS (the "Agreement") is made and
entered into this 22 day of November, 1995, by and between Premier One
Consultants, Inc., WorldTrak Corporation (P/K/A CRM Holdings, Inc.) both
Minnesota corporations, and their respective Affiliates (i.e. - business
entity under common ownership, owned by or owning another business
entity), (collectively "Premier one") and Group 1 Software, Inc., a
Delaware corporation ("Group l"), regarding the acquisition by Group 1 of
certain of the assets of Premier One and other transactions described
below.
In consideration of the premises and the mutual promises, representations,
warranties and covenants hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Premier One and Group 1 intending to be legally bound hereby
agree as follows:
1 . T h e A s s e t s .
a) Group 1 shall acquire at Closing sole and exclusive right, title and
interest, free and clear of any and all claims, liens, encumbrances,
security interests, pledges or any other clouds on title of any nature
whatsoever (except the liens expressly identified herein and assumed herein
by Group 1 at Closing pursuant to Section 4, below), to all of the assets
of Premier One including without limitation, the following:
(i) all computer programming and derivative works, customizations,
supplemental works, interim works, works in progress and all other
intellectual property rights, and portions thereof, whether or not fixed
in a tangible medium of expression (including without limitation all
copyrights and applications for such, rights with respect to patents and
applications for such, moral rights, inventions, original works of
authorship, discoveries, concepts, data, processes, ideas and know-how
contained therein or associated therewith), with respect to all computer
platforms and configurations (e.g., - PC, midrange, LAN, WAN, client
server, mini, mainframe) for all of the computer programs owned by Premier
one including without limitation the computer programs identified in
Exhibit 1.1, hereto, and all development tools for such software
(collectively the "Software") (excluding, however, any development tools to
which Premier One only has a license, as such licensed, development tools
are identified on Exhibit 1.1, hereto, together with all concomitant
installation, technical, functional or user documentation or specifications
(the "Documentation") regardless of the media on which the Documentation is
contained;
(ii) the list of all past, current and prospective (as of Closing) customers
of the Software and related professional services;
(iii) all trademarks, service marks or trade names related to the
Software, including without limitation those set out in Exhibit 1.2,
hereto (the "Trademarks"); and
(iv) copies of the financial, production, marketing and sales books and
records of Premier One related to the transactions contemplated herein
and the operations of the Business in its ordinary course (including
without limitation all notes, records and books regarding the
warranty/software performance, credit and payment history of all past,
current and prospective customers of any of the Software);
(v) the outstanding contracts identified in Exhibit 1.3, hereto,
including without limitation all contracts with employees or third
parties/contractors which grant to Premier One any rights with respect to
ownership (including license rights), confidentiality, non-disclosure or
other intellectual property rights with respect to the Software, the
Documentation, or portions thereof, or grant to Premier One any rights to
enforce any restrictive covenants (e.g. non-compete; no hire of
employees);
(vi) the cash and cash equivalents in the amounts set out in Exhibit 1.4,
hereto;
(vii) the accounts and notes receivable identified in Exhibit 1.5,
hereto, net, however, of all reserves for credits, allowances, collection
delinquencies and the like;
(viii) the equipment, furniture and fixtures as identified in Exhibit
1.6, hereto (which exhibit shall also identify the portion of the
Purchase Price allocated to these assets);
(ix) all prepaid items and deposits (including but not limited to
security deposits paid with respect to any leases) and all of the other
assets referenced or identified or included with respect to Premier One's
consolidated Financial Statements (as defined below but updated as of
Closing) provided to Group 1 at Closing;
(x) all inventory, including documentation and media used to supply
copies of the Software and Documentation to customers, computer hardware,
firmware, and ancillary third party software sold/licensed or used in
connection with the reselling of hardware pursuant to any Value Added
Reseller ("VAR")/OEM/ distributor agreement described herein, as such
assets are identified on Exhibit 1.7, hereto; and
(xi) all other assets of Premier One, whether real property or personnel
property, tangible or intangible ((i)-(xi), collectively, the "Assets")
used in the conduct of the Business (as defined below) as of Closing.
b) The Software shall be delivered at Closing in object code, and as
fully commented source code as exists. The Software includes without
limitation all definition of files, fields of files, variables, details,
parameters, installation and maintenance specifications, inputs and
outputs (including codes and acronyms), program descriptions, file
descriptions, formats and layouts, report descriptions and layouts, screen
descriptions and layouts, graphical and non-graphical user interfaces,
input documents, data elements, paper processing flowcharts, computer
processing flowcharts, processing narratives, editing rules, password
development and protection rules, telecommunications requirements,
glossaries and manual procedures with respect to the aforesaid computer
programming. The Documentation shall be delivered at Closing in hard copy
and electronic media to the extent recorded on each.
2. Purchase Price. The total purchase price for the Assets, and
consideration for the other transactions to be consummated hereunder,
shall be, subject to adjustments required as a result of due diligence
hereunder (including circumstances evidenced on Premier one's
consolidated Financial statements, updated at Closing)' as follows:
a) At Closing, Group l shall pay by federal wire transfer to Premier one,
in part on behalf of Clark Dircz ('Dircz"), Ronald Pederson ("Pederson"),
David Marsh ("Marsh"), and Michael Larson ("Larson"), (Dircz, Pederson,
Marsh and Larson, collectively, the "Principals"): (i) Fifty Thousand
Dollars ($50,000); and (ii) upon thirty-six months (36) from Closing an
additional One Hundred Thousand Dollars ($100,000). So much of the
foregoing payments are consideration, for the respective compliance by
Dircz ($40,000), Marsh ($30,000) and Larson ($30,000) of the restrictive
covenants described in Section 7, below. Both payments shall also be
considered for the purposes of this Agreement payments (prepaid in the
case of the $50,000) with respect to Revenue to be made pursuant to this
Section 2.
b) In addition, Group l shall pay, subject, inter alia, to Sections 2(c)
through (e), inclusive, and 3(a), below the revenue ( Revenue') recorded
by Group 1. Such payments shall be made to Premier One in accordance with
the following formula (the "Formula"):
LEVEL OF REVENUE UP TROUGH 36months % OF SUCH REVENUE
$0 to $2.5 million; plus 1% in this range;
above $2.5 million to $6 million; plus 4% in this range;
above $6 million to $15 million; 5% in this range;
above $15 million 7% above $15 million
c) Revenue shall be calculated on a cumulative basis and only over the
36-month period commencing with Closing. Thereafter, no payments
hereunder shall be due and owing by Group 1 to any party whatsoever for
payment of the Assets or otherwise hereunder. Payment shall be made with
respect to Revenue recorded by Group 1 quarterly during the thirty-six
month term of this payment obligation. Such payments shall be payable
within sixty (60) days of the end of the applicable measurement period.
Group 1 shall maintain books and records of all revenue recorded by Group
1 with respect to this Agreement for a period of not less than four (4)
years from Closing.
d) Revenue shall mean all amounts recorded and invoiced by Group 1 for
the licenses and other agreements by Group 1 for the WorldTrak product and
its derivative works (the "Product"), and the providing of professional
services directly related to the Product. (Invoices are Group 1's
procedure for collecting revenue). All calculations shall (i) be net of
payments made to third parties (e.g. VARS/OEMs) for their goods or
services delivered by Group 1 in conjunction with the Product, (ii) be
net of returns, refunds, discounts, and bad debts, (iii) shall exclude
freight, shipping and handling, and (iv) exclude taxes including income
taxes, customs and other charges imposed by any governmental authority
and directly related to the sale of license or other rights or the
providing of related services.
e) Group 1 agrees that Premier One shall have the right, upon reasonable
adequate prior notice to Group 1, to allow a third party to inspect the
relevant books and records of Group 1 with respect to the calculation of
Revenue and payments to be made as contemplated in this section 2. Any
such representative shall, at a minimum, be an independent certified
accountant. Group 1 agrees to maintain such books and records in
accordance with generally accepted accounting principles (GAAP),
consistently applied.
f) At Closing, Group 1 shall pay Premier One an additional amount of UP
to Thirty Thousand Dollars ($30,000) to defray legal fees and concomitant
costs of counsel and other expenses (such as fees for accountants)
incurred by Premier One directly in connection with negotiations and
Closing under this Agreement, and supported by pursuant to this Section
2(f), shall be payable upon submission of invoices.
g) Group 1 shall also pay such other sums to third parties as directed by
Premier One and identified on the settlement sheet agreed upon at Closing
by Premier one and Group 1 (the "Settlement Sheet").
3. Right of Offset: Cancellation of Warrants and Other Options Principals
As Guarantors.
a) Premier one and the Principals acknowledge and agree that Group 1 shall
have the right to withhold and to claim an offset with respect to any
payments otherwise to be made hereunder to the extent of any expenses,
costs, damages and the like arising out of or directly related to any
actual or threatened breach of any material representation, warranty,
covenant or agreement set out or referenced herein or any Exhibit or other
instrument executed pursuant to this Agreement.
b) As a condition of Closing, Premier one shall cause to be canceled all
of the warrants, options, and other securities identified in Exhibit 3.1,
hereto, which constitute, prior to Closing, all issued and outstanding
securities including without limitation direct or derivative or
convertible debentures issued by Premier One.
c) Dircz, Larson and Marsh hereby covenant and agree, jointly and
severally, that each and every representation, warranty, covenant and
agreement made or entered into by Premier One hereunder or pursuant hereto
shall be deemed a representation, warranty, covenant and agreement made,
jointly and severally, by each of them.
4. Liabilities of Premier One: Assigned Agreements.
a) Except as expressly assumed under Section 4(b), below, Group 1 shall
assume no liabilities or obligations whatsoever of Premier one, regardless
of whether such arise or are required to be performed before or after
Closing, including but not limited to, any obligations with respect to any
lease or tenancy of Premier One in the Chicago, Illinois area and any
obligation of any nature whatsoever with respect to Bulfinch or any
affiliate thereof. Except as expressly assumed under Section 4(b), below,
Premier one represents, warrants, covenants and agrees that Group 1 shall
not assume or be liable for, whether contractually, by operation of law,
or otherwise, any contracts, commitments, indebtedness, obligations or
liabilities of Premier one. For greater certainty, except as assumed
pursuant to Section 4(b), below, Group 1 shall not assume any
indebtedness, obligation or liability for any claim, demand or the like
arising from the conduct of Premier One's business, including but not
limited to activities directly or indirectly related to the Software and
professional services (the "Business"), or the business of any Affiliate,
or otherwise, which may exist, arise or be brought
prior to, on or after Closing regardless of whether such matter has been
disclosed to Group 1.
b) Premier One represents and warrants to Group 1 that Exhibit 4.1,
hereto, constitutes (i) all or substantially all of the license and other
agreements by which any rights to the Software have been granted to any
third party, (ii) all third party reseller agreements (VAR, OEM,
distributor and other agreements) of which Premier One is a party, (iii)
the lease for the premises located at 3800 West 80th Street, Suite 950,
Bloomington, Minnesota, 55431 - which Premier One represents to Group 1 is
its only current business location - together with the sublease to
Forevergreen Financial, Inc., with respect to such premises, and all
current leases for its equipment and (iv) all other obligations
(collectively the "Obligations") which shall be assumed by Group 1
hereunder, and (v) all of the agreements between Premier One, on the one
hand, and any employee or contractor (i.e. - any third party) on the
other hand, which grant to Premier One (A) any ownership, license or
other intellectual property right of any nature whatsoever in the
Software or the Documentation, or portions thereof and (B) any
restrictive covenants (e.g. - no hire, non-compete) including without
limitation the agreements referenced in Exhibit 6.3, hereto (all of such
agreements and leases identified in this Section 4(b), collectively, the
"Assigned Agreements"). At Closing, Premier One shall transfer and assign
to Group 1 all of the rights, title and interests of Premier One under
the Assigned Agreements and Group 1 shall accept such rights, title and
interests and assume only the Obligations; whereupon Group 1 shall
discharge such Obligations in a reasonable manner. With respect to any
software licenses or agreements included in the Assigned Agreements,
Group l's responsibility shall be to provide maintenance for the Product
agreed upon by Group 1 and the customer, and the outstanding services
identified on Exhibit 4.1.1. Among the other provisions set out hereby
for which Premier One agrees to indemnify and hold Group 1 harmless,
Premier One agrees to indemnify and hold Group 1 harmless against any
claim arising out of any of the Assigned Agreements other than claims
that Group 1 has failed to perform Maintenance or to discharge the other
Obligations, as described directly above.
c) Premier One represents and warrants to Group 1 that from the date
first written above until and including Closing, (i) it is not and shall
not be in default under any of the Assigned Agreements and the other
agreements described in Section l(a)(v), above, (ii) there is not and
shall not be any facts or circumstances which given only the passage of
time would become defaults under any of the Assigned Agreements and the
other agreements described in Section l(a)(v), above, (iii) all of the
computer programming and other deliverables and services to be provided
under any of the Assigned Agreements have been timely delivered in full
and have been fully accepted by the customer except as identified on
Exhibit 4.1.1, hereto, or in the estoppels provided pursuant to Section
5.2, hereto. Premier one agrees that any other representations, warranties,
covenants or agreements made in this Agreement shall not be diminished,
conditioned or otherwise limited by any provision in any of the Assigned
Agreements and the other agreements described in Section l(a)(v), above.
d) Premier one represents and warrants to Group 1 that, to the best
Premier One's knowledge, (i) no party to any Assigned Agreement is in
default under any of the Assigned Agreements and (ii) no facts or
circumstances exist which given only the passage of time would become
defaults by any party to any Assigned Agreement under any Assigned
Agreement.
e) Premier One warrants, represents, covenants and agrees that (i) there
is not, and there will not be through Closing, any liability, accrued or
accruable for federal, state, county or local income, sales, use, excise,
property, goods and services, ad valorem or other taxes, assessments or
charges arising out of or attributable to the licensing to end users,
prior to Closing, of the Software or the Documentation or providing
services related thereto; (ii) there are no stamp, sales, transfer or
other taxes imposed in respect to any of the transactions to be
consummated hereunder; (iii) it shall fully and timely comply with all of
the requirements and provisions of any applicable Bulk Sales Act, or
similar statute, ordinance or regulation including without limitation the
timely mailing of appropriate notices to all creditors to whom Premier
One has liabilities (both fixed and contingent) which shall not be
expressly assumed at Closing by Group 1 as described in Section 4(b),
above.
5. Estorpels, Releases, Consents.
a) Premier One represents and warrants to Group 1 that the only security
interests, liens or encumbrances (either perfected or otherwise) that
exist as to any of the Assets or the Business are, and shall be up until
Closing, those identified in Exhibit 5.1, hereto. Premier One represents
and warrants to Group 1 that other than the amount outstanding to Gupta,
as disclosed to Group 1, there are no, and at Closing shall be no,
amounts due and owing by Premier One under any VAR/OEM agreement, as
referenced in Section 5(b) below.
b) Premier One covenants and agrees, as a condition of Closing, to
deliver to Group 1 at Closing (i) releases, in forms reasonably
acceptable to Group 1 and forms suitable for filing in the appropriate
jurisdictions, with regard to any security interest in or lien on any of
the Assets, including without limitation the security interests
identified on Exhibit 5.1, hereto, and (ii) the consents, estoppels and
releases identified on Exhibit 5.2, hereto, or such other releases,
estoppels or consents otherwise reasonably determined necessary by Group
1; provided, however, that Group 1 shall, notwithstanding
Section l(a), above, accept at Closing the liens or security interests
with respect to the Assets to the extent expressly identified in Exhibit
5.1 hereto.
6. C o n d i t i o n o f t h e A s s e t s .
a) Premier One represents, warrants, covenants and agrees that: it has,
and at all times has had, the unqualified right to develop the Software,
Documentation and Trademarks; at Closing it shall have the unqualified
right to grant to Group 1 any and all rights it has in and to the
Software and Documentation and the Trademarks, as contemplated hereunder;
neither the rights granted to Group 1 hereunder, nor the exercise of such
rights by Group 1, do nor will infringe upon or conflict with the rights
held by any third party under any patent, trademark, copyright, license,
trade secret or other proprietary right.
b) Premier One agrees that Group l's rights to the Software and
Documentation and the Trademarks shall include the unrestricted right,
without payment of any additional consideration to any party whatsoever,
to own, make, use, sell, have made, rent, lease, lend, license, enhance,
modify, amend, copy and prepare derivative works and customizations
thereof, and to display publicly the Software, Documentation and
Trademarks and to otherwise exploit fully the processes, products,
software, and services derived from any discoveries, concepts, ideas and
improvements to existing technology, whether or not patentable or
copyrightable, which are within the scope of the Software or
Documentation.
c) Premier One represents and warrants that the Software, Documentation
and Trademarks are subject to no registrations or applications, including
registrations or applications Premier One has initiated, for registration
with respect to any governmental entity, except for the registrations and
applications identified on Exhibit 6.1, hereto. Premier One warrants and
represents to Group 1 that all copyright and trademark registrations with
respect to the Software, Documentation and the Trademarks are in full
force and effect.
d) Premier One represents and warrants to Group 1 that it has not
received any notice of any violations of, and is not violating, the rights
of others in any trademark, trade name, service mark, copyright, patent,
license, trade secret, know-how (application thereto, as applicable) or
other intangible asset arising out of its development, marketing,
licensing or sale of any of the Software, Documentation or Trademarks;
provided, however, that the foregoing representation and warranty shall
not diminish Premier One's obligation (i) to convey free and clear title
to the Software, Documentation and Trademarks as described herein, or
(ii) Group l's remedies against Premier One for failure to convey such
free and clear title.
e) Premier One represents and warrants to Group 1 that it has provided to
Group 1 (i) a record or copy of the substance of all material complaints
from any customer regarding the performance of the Software or
Documentation which have been received from January 1, 1992 through
Closing, and (ii) the complete, most current bug list and enhancement list
for the Software is attached hereto as Exhibit 6.2. Materiality for the
purposes of this Section 6(e), shall mean that the particular program
complained of does not conform to the applicable warrantee(s).
f) Premier One represents and warrants to Group 1 that at Closing each of
the Assets will be in good and operating condition, and as to the Software,
it shall perform its intended functions and shall perform in accordance
with its technical and published user documentation (subject to the bug
list and enhancement list attached as Exhibit 6.2, hereto) and its
technical documentation and written design specifications.
g) Premier One represents and warrants to Group 1 that the Software as
delivered to Group 1 shall be free of any remote or automatic disabling or
recapture devices, passwords, keys, security devices or trap doors and
Computer Viruses. For the purposes of this Agreement, Computer Viruses
means any computer instructions (including, but not limited to, computer
instructions commonly referred to as Trojan Horses, anomalies, worms,
self-destruct mechanisms or time/logic bombs) which do not provide the
functionality clearly described in the standard user documentation for the
Software and which interfere with the use of the Software, any portion
thereof, or other software, firmware or computer hardware.
h) Premier One represents and warrants to Group 1 that other than pursuant
to this Agreement, Premier One is not a party to any contract or obligation
whereby an absolute or contingent right to purchase, obtain or acquire any
rights in any of the Assets has been granted to anyone, except for end user
licenses granted in the ordinary course of Premier one's business.
i) Premier One represents and warrants that the Software and Documentation
(and all predecessor versions) and all portions thereof, and the
Trademarks, have been developed by Premier one exclusively by and through
the employees or subcontractors identified on Exhibit 6.3, hereto (the
"Development Personnel"); none of the Development Personnel has any
proprietary rights in the Software, Documentation or Trademarks; each so
performed for Premier one pursuant to the agreements or arrangements that
vest all rights in and to the Software and Documentation and Trademarks
exclusively in Premier One, with all such agreements in full force and
effect, Premier one represents and warrants that all Development Personnel
participated in the development of the Software, Documentation or
Trademarks while regularly employed/retained by Premier One and were fully
paid by for such services; all Development Personnel performed, at all
times, such development of the Software, Documentation and Trademarks
within the normal scope of their employment/retention with Premier One;
none of the Development Personnel has made any claim of ownership
(including without limitation copyrights or patent rights) regarding the
Software, Documentation or Trademarks, or any portion thereof, nor has
any Development Personnel a colorable claim of right to such.
j) Premier One represents and warrants to Group 1 that (i) no copies of
the source code for the Software have been provided to any third party
except as identified in Exhibit 6.4, hereto, (ii) no license or other
rights to use have been granted for any of the Trademarks (or variations
thereof) and (iii) no rights other than limited license rights in the
Software and Documentation are enjoyed by any party other than Premier
One.
k) Premier One represents and warrants to Group 1 that inventory conveyed
pursuant to this Agreement shall at Closing be in good operating order and
conform to all manufacturer's specifications, and otherwise shall be fit
and suitable for resale to third parties in arms-length transactions for
list price consideration.
l) Premier One acknowledges that Group 1 has relied materially on
representations and warranties from Premier One made or referenced in this
Agreement regarding matters relating to the development of the Software,
Documentation and Trademarks.
m) Premier One represents and warrants to Group 1 that no computer
programming or other intellectual property or professional services
delivered or provided to CAE Vanguard ("CAE") or America Guidance Services
("AGS") by Premier One shall in any way diminish any rights to be granted
to Group 1 hereunder or in any way diminish or adversely affect any other
representation or warranty made to Group 1 hereunder, and further, that
all services and programs provided to CAE have been provided
satisfactorily. In furtherance of the aforesaid representation, Premier
One, in addition to any other indemnification and hold harmless agreement
hereunder, agrees to indemnify and hold Group 1 harmless with respect to
any claim by CAE, AGS or any third party with respect to any software,
documentation or professional services provided by Premier One to CAE or
AGS.
n) Premier One represents and warrants to Group 1 that there are no third
parties whatsoever who are entitled to any proceeds with respect to the
sale, licensing, sublicensing or other granting of rights with respect to
the Software, the Documentation, the Trademarks or any portion thereof,
including without limitation royalties.
o) Premier One has provided to Group 1 true and complete copies of all
agreements entered into with any person or entity who contributed to the
development of the Software, the Documentation or the Trademarks.
p) Premier One represents and warrants to Group 1 that (i) no software
(other than operating systems software identified in the Software's
standard documentation, the SQL Windows Tools and the GUPTA software
database products and related tools collectively, the "Third Party
Software") as identified on Exhibit 6.5, hereto, is necessary or desirable
in order for the Software to perform in accordance with its standard
documentation and (ii) all Third Party Software is licensed to Premier One
for Premier's internal use". Premier one represents and warrants to Group
1 that Third Party Software is routinely provided to customers, at the
customer's additional expense in conjunction with a licensing of the
Software, for installation or use in accordance with the Software's
standard documentation. Premier one shall deliver to Group 1 at Closing
consents, in forms reasonably acceptable to Group 1, to the transfer to
Group 1 from Premier one of all of Premier One's rights to Third Party
Software.
q) Premier one represents and warrants to Group 1 that no claims have
been made with respect to the Software or Documentation under any
insurance coverage including, but not
limited to, errors and omission insurance.
r) Premier One represents and warrants to Group 1 that other than the VAM
/OEM/distributor agreements listed on Exhibit 1.7, hereto, all other such
third party agreements have been a terminated, without any residual
liability with respect to Premier one, the Assets or the business.
7. Covenants Not to Compete;Confidential Data; Employment
a) At Closing, Dircz, Larson, and Marsh shall each enter into and abide by
the terms of a covenant not to compete ( Covenant") in the form set out
in Exhibit 7.1, hereto, providing, inter alia, that each of them shall -
for the period from Closing through three (3) years following the date of
their respective dates of termination of employment with Group 1 refrain,
from engaging directly or indirectly in the following activities in any
state in the U.S. or province in Canada or any other country in which
Group 1 is conducting sales efforts: (i) competing with Group 1 in the
development, sale, licensing or other distribution of "sales and
marketing control" software or any related software developed by Premier
One prior to Closing or Group 1 after Closing, and (ii) hiring or
engaging or soliciting for employment or engagement as a contractor any of
Group l's employees or contractors, (including without limitation any such
employees or contractors who are former employees of Premier One.
b) Premier One shall cause Messrs. William Cross and Charles Schwartz, as
the only representatives of The Bulfinch Fund I, L.P., in Illinois
limited partnership ("Bulfinch") who had Confidential Information
regarding the Assets or the Business, to execute and deliver at Closing,
and abide by thereinafter, a confidentiality covenant in the form set out
in Exhibit 7.2, hereto.
c) Premier One, Dircz, Marsh and Larson acknowledge and agree that the
covenants and prohibitions against disclosure of Confidential Information
recited in the respective Covenants are in addition to, and not in lieu
of, any rights or remedies which Group 1 may have available, pursuant to
the laws of any jurisdiction or at common law, to prevent the disclosure
of trade secrets, and the enforcement by Group 1 of its rights and
remedies pursuant to this Agreement shall not be construed as a waiver of
any other rights or available remedies which it may possess in law or
equity absent this Agreement.
d) At the Closing, Dircz, Larson and Marsh shall each also enter into an
employment contract with Group 1, each for a three (3) year term
(renewable as provided in the employment agreement). With respect to
Dircz, his terms of employment shall include an annualized salary of One
Hundred and Twenty Thousand Dollars ($120,000), responsible as General
Manager (reporting to the Vice Presidential level) for general product
development of WorldTrak and strategic planning and sales support
therefor. With respect to Larson, his terms of employment shall include
an annualized salary of one Hundred Thousand Dollars ($100,000),
responsible as Director - Professional Services of WorldTrak and related
products and services for management and professional services, for
project management and management of professional services managers. With
respect to Marsh, his terms of employment shall include an annualized
salary of One Hundred Thousand Dollars ($100,000), responsible as
Director - Product Development of WorldTrak and related products and
services, for ongoing development for the Product and related products. A
form of the employment contract is set out in Exhibit 7.3, hereto. Dircz,
Larson and Marsh acknowledge and agree that other than the base salary
described in Section 4 of said employment contracts, all other payments
thereunder are subject to Group 1's right to withhold and to offset
payment in the event of any material breach by them of any
representation, warranty, convenant or agreement under this Agreement or
documents executed as contemplated hereunder.
e) Group 1 may also offer to employ at Closing such other Premier One
employees as Group 1 may choose, on terms reasonably acceptable to the
respective parties, including reasonable noncompete agreements. Such
terms of employment may, however, differ from those previously offered by
Premier One.
8. D u e D i l i g e n c e : E m ploy e e s .
a) Through November 17, 1995, Premier One has allowed Group 1, its
employees, consultants and other representatives (collectively referred to
as Group 1 in references to due diligence) full access to, and the right
to inspect all its financial, marketing, sales, support, maintenance and
enhancements documents and records and source and object code, software
documentation and logs, books, records, files, contracts, agreements and
other information relating to the Assets, the Business or the transactions
contemplated hereunder which may be reasonably requested. Group 1 shall
have the right to inspect, observe and test the operations of the
Software and Documentation. Group 1 shall conduct any investigation in a
manner which will not unreasonably interfere with Premier One's
operations.
b) If Group 1 reasonably determines, prior to the close of the due
diligence period, that it no longer desires to purchase the Assets pursuant
to the terms contained herein, Group 1 may terminate this Agreement by
prompt written notice to Premier One delivered prior to the Closing.
Neither Premier One nor Group 1 shall be obligated by this Section 8
following the Closing.
c) Group 1 represents, warrants, covenants and agrees that those of its
employees who have had access to valuable and necessary confidential,
trade secret and proprietary information related to the Assets are bound
by confidentiality agreements that prevent disclosure to third parties
except as directed by Premier one.
d) Group 1 shall have the right to notify employees and contractors of
Premier One that Group 1 may employ or retain them after Closing. Premier
one shall be solely responsible for payment, or causing the payment, of
all (i) wages, salary, other compensation and bonuses, (ii) compensation
claims, premiums and other payments, (iii) overtime or severance pay and
(iv) any other loans, obligations or liabilities, including without
limitation ERISA or other benefit plan liabilities (e.g.: 401(K)
salary/employee and sponsor contributions or payments), arising out of or
in connection with employment or retention by Premier One, before or after
Closing, of any Premier One employee or contractor. Group 1, however,
agrees to credit all former Premier One employees who have been retained
by Group 1 with respect to such employees' unpaid/untaken vacation or sick
leave accrued with Premier One while employed thereby. Up through Closing,
Premier one agrees to enforce agreements it has with any employees and
contractors with respect to covenants regarding confidentiality or
ownership of Software, Documentation or Trademarks, in accordance with the
terms of such agreements and the fullest extent permissible under law.
e) Premier One agrees to cause the release of all employees and
consultants from any contractual obligations, and terminate employment
agreements with respect to the employees identified on Exhibit 8.1,
hereto, which, in Group l's reasonable sole determination, would impair
the utility of such person's services to Group 1, or Group 1 obtaining
free and clear title to any of the Assets, or which would impose upon such
persons any monetary or other obligation to Premier One which otherwise
would be occasioned by the termination of such person's relationship with
Premier One including without limitation any agreements of non-competition
or confidentiality. Except for payments to the Principals identified in
Sections 2(a) and (b) or 4(b) above, Premier One shall be responsible for
the payment of all (i) loans and debts to any of the Principals and (ii)
all accrued wages, salary, benefits or severance pay and all other
obligations or liabilities including without limitation ERISA or other
benefit plan liabilities (e.g.: 401(K) salary/employee and sponsor
contributions or payments) arising out of or in connection with the
employment of any employees of Premier One under applicable federal, state
or municipal law whose employment is terminated or affected as a result of
or in connection with the transactions contemplated herein as such costs
and expenses are set out in the Closing schedule, in the form set out in
Exhibit 8.2, hereto, and in content acceptable to Group 1 in its
reasonable determination.
f) Premier One shall cause to be delivered at Closing a release, in the
form set out in Exhibit 8.3, from the individuals identified in Exhibit
8.4, hereto, by which each such person releases any rights he/she has or
may have with respect to the Software, Documentation, Trademarks or any
portion thereof.
9. Changes of Names. Within ten (10) days of Closing, Premier One shall
cause the corporate name of Premier one Consultants, Inc. and WorldTrak
Corporation and any Affiliate which has Premier One or WorldTrak in its
corporate name to be changed to a name which is not confusingly similar to
the name, Premier One or WorldTrak. Premier One agrees that it shall not
subsequently amend the Articles of Incorporation and shall prevent any
Affiliate from amending its Articles of Incorporation to change the name of
Premier One/WorldTrak to any corporate name which includes the term
"Premier One/WorldTrak" or any derivative of it, and Premier One agrees
that it will not organize or beneficially own any of the equity of any
entity whose name includes the term Premier One or WorldTrak or any
derivative of them.
10. Organization and Standing. Premier One warrants and represents to
Group 1 that at all times material hereto (including the 36-month period
over which Revenue is measured) it has been and shall be a corporation duly
incorporated and organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation, and has and will have
the full power and authority (corporate and otherwise) to carry on its
business as it is now being conducted, and to own and lease the properties
and assets which it now owns or leases. Premier One warrants and
represents that, at all times material hereto, it has been and shall be
duly qualified and/or licensed to transact business and in good standing
as a foreign corporation in all jurisdictions in which it is obligated to
so do, and the character of the property owned or leased by Premier one
and the nature of the business conducted by it do not require such
qualification and/or licensing in any other jurisdiction.
11. Premier One's Authority and Status: Other Representations and
Warranties.
a) Premier one and each of the Principals warrant and represent to Group 1
that at all times material hereto, each has had and shall have the capacity
and authority to execute and deliver this Agreement, to perform
respectively hereunder, and to consummate respectively the transactions
contemplated hereby without the necessity of any act or consent, in
addition to such consent as contemplated hereunder, of any other person
whomsoever; that the execution, delivery and performance by each under this
Agreement and each and every agreement, document and instrument applicable
to them, made in connection herewith shall be duly authorized and approved
by the applicable Board of Directors or other applicable governing body,
and by all of their respective shareholders/partners; and that this
Agreement and each and every agreement, document and instrument to be
executed, delivered and performed by Premier One and each of the Principals
1n connection herewith will, when executed and delivered, constitute the
valid and legally binding respective obligations of them, except as
enforceability may be limited by applicable equitable principles or
judicial discretion, or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws from time to time in effect affecting the
enforcement of creditors' rights generally.
b) Premier one represents and warrants to Group 1 that, there are no
authorizations, consents, approvals, licenses, exemptions from or filings
with, or registrations with any governmental, quasi-governmental or
non-governmental regulatory agency or authority, necessary on its part for,
or in connection with, the transactions contemplated hereunder. Premier One
covenants and agrees that if at any time any of the aforesaid
authorizations, consents, approvals, licenses, exemptions or filings shall
be required, Premier One shall take all such actions necessary to either
immediately obtain the appropriate authorization, consent, approval,
license, or exemptions, or take all actions necessary to cure the facts and
circumstances which prevent the issuance or obtaining of such
authorization, consent, approval, license or exemption.
c) Premier One represents and warrants to Group 1 that no officer or
director, and no employee or consultant of Premier One is known by it to
be, or is now expected to be, in violation of any term of any employment
contract, proprietary information agreement, non-disclosure agreement,
non-competition agreement, or any other contract or agreement or any
restrictive covenant.related to the right of any such officer, employee or
consultant to be employed by Premier One or relating to the use of the
Assets, trade secrets or proprietary information of Premier One or others.
d) Premier One represents and warrants to Group l that, except for Dircz,
Marsh and Larson, all officers and directors, and to the best of its
knowledge after diligent inquiry, all employees and consultants of Premier
one and Bulfinch having access to the trade secrets or proprietary
information of Premier one have executed an agreement relating to the
restricted use and disclosure of trade secrets or proprietary information
of Premier one, and that the parties to such agreements have abided by
them.
e) Premier One represents and warrants to Group l that the only holders at
closing of capital stock, warrants, options or other securities (direct,
derivative or convertible) issued by Premier One shall be the shareholders
identified in Exhibit ll.l, hereto; such holders (at Closing and
previously) shall have no dissenters' rights or other similar rights by
which any justiciable challenge could be made on their part, as
shareholders of Premier One, with respect to any or all of the
transactions contemplated in this Agreement. Premier One covenants and
agrees to cause each of these shareholders to execute and deliver at
Closing shareholder consents, in form and substance reasonably acceptable
to Group 1, authorizing and approving the transactions set forth herein.
f) Premier One has delivered to Group 1 a draft of the consolidated
Financial Statements (i e - balance sheet, and income statement) and notes
thereto, dated December 31, 1994 and unaudited Financial Statements, and
notes thereto, dated October 31, l995, for the ten months ended October
31, l995, as updated, (the "Financial statements")' copies of which are
attached hereto as Exhibit 11.2 (collectively, the "Financial
statements"). The Financial Statements fully and fairly set forth the
consolidated financial condition of Premier one as of the dates indicated,
and the results of its operations for the periods indicated, in accordance
with generally accepted accounting principles consistently applied, except
as expressly noted therein and in the related reports of independent
auditors. Premier one have no liabilities or obligations whatsoever,
either accrued, absolute, contingent or otherwise which are not clearly
and accurately reflected or provided for in the Financial Statements
except (A) those arising after the date of the September 30, l995 Balance
Sheet which are in the ordinary course of its business, in each case a
normal amount and none of which is materially adverse, and (B) as to the
extent specifically described in schedules thereto.
g) Premier one hereby represents, warrants and affirms that (i) fair
market value shall be received by it with respect to the sale of the
Assets and other transactions contemplated herein and (ii) it believes it
can satisfy its bon-fide creditors (except the liabilities expressly
assumed by Group 1 hereunder) in the ordinary course of Premier One's
business. In particular Premier One and the Principals have agreed amongst
themselves as to the fair and equitable payment of obligations due and owing
to the Principals by Premier One.
h) Premier One represents and warrants that Pederson has no Confidential
Information as such term is defined in section 2 of Exhibit 7.1, hereto.
Premier One covenants and agrees that in the event that Pederson has such
information and discloses it to any third party or uses it, such a
disclosure or use would constitute a breach of a material representation and
warranty by Premier One under this Agreement.
i) Premier One and the Principals hereby ratify and affirm that the
information set forth in the attachments to the opinion of counsel, Exhibit
12.1, hereto, is true and accurate as of the date first written above
through Closing.
12. Opinion of Counsel. At Closing, Premier One shall deliver to Group 1 an
opinion of its legal counsel, Courey, Albers, Kosanda & Zimmer, P.A., in the
form set out in Exhibit 12.1, hereto.
13. Confidentialitv. Except to the extent that information is or becomes
public knowledge or is required by law or accounting or reporting rules
applicable to Group 1 or Premier One to be disclosed, the parties hereto,
for themselves and their Affiliates and representatives, agree that any
secret or confidential information concerning or relating to the Assets,
which has been obtained in connection with this Agreement or in the course
of performing the obligations contemplated hereby, shall not be used by the
recipient party or disclosed, furnished or made accessible to third parties
by it except as allowed pursuant to the terms, and conditions set out here
or that certain Non-Disclosure Agreements between Premier one and Group 1
dated on or about February 8, 1995, which agreement is hereby incorporated
by reference.
14. Certain Taxes and Governmental Royalties. Premier One represents and
warrants that from December 31, 1994, until Closing it has filed and will
file all returns required of it with respect to any governmental entity as
to sales or licenses of the Assets or copies thereof, the filing of which
returns or the failure to do so may affect the Assets.
15. Absence of Changes. Premier One represents, warrants, covenants and
agrees that from the date first written above until Closing it shall not:
a) transfer, assign, convey or liquidate any of the Assets or enter into any
transaction or incurred any liability or obligation which affect the Assets
or the Business, other than transactions occurring in the ordinary course of
the Business; or performed by Premier One or which authorize others to
perform services for, through or on behalf of Premier One;
b) any contract or commitment not disclosed to Group 1 during due
diligence involving an obligation related to the Assets which cannot, or
in reasonable probability will not, be performed or terminated within
thirty (30) days from the date as of which these representations are made;
c) any contract or commitment providing for payments to third parties
based in any manner upon the sales, purchases, receipts, income or profits
of Premier One; and
d) any contract, agreement, understanding or arrangement, restricting
Group 1 from fully and duly enjoying sole and exclusive rights to the
Assets.
19. Intentionally Deleted .
20. Disclosure and Absence of Undisclosed Liabilities.
a) This Agreement, the Exhibits attached hereto, and the documentation
provided in the course of due diligence, disclose all facts material to
the Assets and the Business. Premier One represents and warrants that no
statement contained herein or in any certificate, schedule, list, exhibit
or other instrument or document furnished to Group 1 pursuant to the
provisions hereof intentionally contains or, to the best knowledge of
Premier One after diligent inquiry, shall contain any untrue statement of
a material fact, or intentionally omits or, to the best knowledge of
Premier One after diligent inquiry, shall omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
b) Premier One acknowledges and agrees that in addition to the
representations and warrantees set out herein, Group 1 has materially
relied upon the following disclosures made to it prior to Closing: (i) the
consolidated tax returns of Premier One filed with the Internal Revenue
Service with respect to 1993 and 1994; (ii) that certain Business Plan -
Winter 94-95; (iii) the 'audited financials of Premier One Consultants,
Inc. for 1992 and 1993; (iv) the draft" version of the consolidated
Financial Statements of Premier One dated December 31, 1994; (v) the
internal Financial Statements (balance sheet, income statement and cash
flow statement) for January through June of 1995; and (vi) the Financial
Projection of Premier One/WorldTrak" transmitted to Group 1 on or about
September 21, 1995. In the event there is any dispute as to what
constitutes true and correct copies of the foregoing documents, the copies
maintained in Group 1's files and attested to by an officer of Group 1 as
constituting true and correct and complete copies thereof, shall
conclusively be deemed true and correct copies of the foregoing documents.
With respect to the Business Plan and the Financial Projection [(ii) and
(vi), respectively], Group 1 acknowledges that in relying upon such, it
has taken into account the underlying assumptions of such, to the extent
that such assumptions have been clearly identified to Group 1.
c) Premier one represents and warrants to Group l that (i) with respect to
the accounts receivable shown on Premier One's Balance sheet as of
Closing, net of appropriate reserves, the Accounts Receivable described
therein will be collectible after Closing in the ordinary course of
business; and (ii) as of Closing, all accounts payable of Premier One
shall be appropriately represented on the Financial Statements dated as
of, and delivered to Group 1 at, Closing.
d) Premier One represents and warrants to Group l that there are no
development, marketing/distribution, materials supplier, professional
services or third party agreements to provide maintenance for software
licensed by Premier One other than the Grant Thorton oral marketing
arrangement.
21. Group l's Authority and Status. Group 1 represents and warrants that
it is a corporation in good standing under the laws of the state of its
incorporation and it has the capacity and authority to execute and deliver
this Agreement, to perform hereunder and to consummate the transactions
contemplated hereby without the necessity of any act or consent of any
other person whomsoever. The execution, delivery and performance by Group
1 of this Agreement and each and every agreement, document and instrument
provided for herein have been duly authorized and approved by its Board of
Directors. This Agreement, and each and every other agreement, document
and instrument to be executed, delivered and performed by Group 1 in
connection herewith, constitutes or will, when executed and delivered,
constitute the valid and legally binding obligation of Group 1,
enforceable against Group 1 in accordance with their respective terms,
except as enforceability may be limited by applicable equitable principles
or judicial discretion, or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws from time to time in effect affecting the
enforcement of creditors' rights generally.
22. Agreement Does Not Violate Other Instruments. Group 1 represents and
warrants that the execution and delivery of this Agreement by Group 1 does
not, and the consummation of the transactions contemplated hereby will
not, violate any provisions of the Certificate of Incorporation, as
amended, or Bylaws, as amended, of Group 1.
23. Conditions Precedent to Obligation of Group 1 to Close. The obligation
of Group l to consummate the transactions contemplated by this Agreement
shall be subject to the satisfaction, on or before the Closing, of each
and every one of the following conditions, all or any of which may be
waived in writing, in whole or in part, by Group l for purposes of
consummating such transactions, but without prejudice to any other right
or remedy which Group 1 may have hereunder as a result of any
misrepresentation by, or breach of any covenant, representation or
warranty of Premier One contained in this Agreement or any other
certificate or instrument furnished by Premier One hereunder:
a) The representations and warranties made by Premier One in this
Agreement, and the Exhibits hereto, and in the documents and instruments to
be delivered to Group 1 or its representatives pursuant to Section 26,
below, or otherwise at the Closing, shall be true and correct in all
material respects as of the Closing with the same force and effect as
though such representations and warranties have been made on and as of
such time, except for changes contemplated by this Agreement.
b) Premier One shall have duly performed all of the covenants, acts and
undertakings to be performed by it as of or prior to the Closing.
c) No action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, prohibit, or
obtain substantial damages in respect of, or which is related to, or
arises out of, this Agreement or the consummation of the transactions
contemplated hereby, or which is related to or arises out of the Assets or
the Business, if such action, proceeding, investigation, regulation or
legislation, in the reasonable judgment of Group 1, would make it
inadvisable to consummate such transactions.
d) Premier One shall have received consents, waivers, certifications,
estoppels and opinions required for the execution of this Agreement and the
consummation of the transactions contemplated hereby.
e) Satisfaction of the employment matters described in Section 7, above.
f) The execution and the delivery of this Agreement and the consummation
of the transactions contemplated hereby shall have been approved by all
regulatory authorities whose approvals are required by law.
g) Group 1 shall have completed, to Group l's reasonable satisfaction, its
due diligence examination of Premier One.
24. Conditions Precedent to the obligations of Premier One to Close. The
obligations of Premier One to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the
Closing, of each and every one of the following conditions, all or any of
which may be waived, in whole or in part, by Premier One but without
prejudice to any other right or remedy which it may have hereunder as a
result of any misrepresentation by, or breach of any covenant or warranty
of Group 1 contained in this Agreement, or any certificate or instrument
furnished by it hereunder.
a) The representations and warranties made by Group 1 in this Agreement,
and in the documents and instruments to be delivered to Premier One or its
representatives pursuant to Section 26, below, or otherwise at the
Closing, shall be true and correct in all material respects with the same
force and effect as though such representations and warranties had been
made on and as of such time.
b) Group i shall have duly performed all of the covenants, acts and
undertakings to be performed by it as of or prior to the Closing.
c) No action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, prohibit, or
obtain substantial damages in respect of, or which is related to, or
arises out of, this Agreement or the consummation of the transactions
contemplated hereby, if such action, proceeding, investigation, regulation
or legislation, in the reasonable judgment of Premier One would make it
inadvisable to consummate such transactions.
d) The execution and the delivery of this Agreement and the consummation
of the transactions contemplated hereby shall have been approved by all
authorities whose approvals are required by law.
25. Time and Place of Closing. Closing shall be completed no later than
November 22, 1995, and shall occur at the offices of Group l, 4200
Parliament Place, Suite 600, Lanham, Maryland 20706-1489.
26. Transactions at Closing. At the Closing, each of the following
transactions shall occur:
a) Premier One's Performance. At the Closing, Premier one shall deliver,
fully executed, notarized and attested to/witnessed where applicable, to
Purchaser, the following:
(i) such good and sufficient bill of sale (Exhibit 26.1, assignment of
copyright suitable for filing in the USA and Canada (in the form set out
in Exhibit 26.2), and assignment of trademarks suitable for filing in USA
and Canada (in the form set out in Exhibit 26.3) and other good and
sufficient instruments of sale, conveyance, transfer and assignment as
shall be required or as may be appropriate in order to effectively vest in
Group 1 good and marketable title to the Assets free and clear of all
liens, security interests and encumbrances of whatever nature, except as
expressly accepted by Group 1, as described in Section 4, above;
(ii) copies of all books and records of Premier One's accounts, excluding
minute and stock book of Premier One(iii), contracts and documents
pertaining to the Assets or the Business of Premier One and all records on
all current end user licenses, (iv) certified copies of resolutions of the
board of Directors of Premier One approving the transactions set out herein,
stockholders resolutions of the approving the transactions set out herein,
(vi) certificate of incumbency of the officers of Premier One who are
executing this Agreement and documents contemplated hereunder, and the
other Exhibits including the opinion of counsel in the form set out herein,
(viii) physical possession of the Assets; (ix) complete releases, in
forms suitable for filing in the appropriate jurisdiction and reasonable
acceptable to Group 1, from any holder of a security interest in the Assets,
(x) Certificate of Status or Good-Standing as of the most recent
practicable date from the secretary of State of Minnesota with respect to
Premier One; (xi) releases in forms described herein and referenced in
Exhibit 5..1, hereto; (xii) consents estoppels and assignments from
entities identified in Exhibit 5.2, hereto, in forms reasonably acceptable
to Group 1 and consents regarding the Third Party Software (xiii) employment
contracts from Dircz, Larson and Marsh in the form set out in Exhibit 7.3,
hereto; (xiv) covenants of noncompetition and non-disclosure from such of
the Principals and Messrs. Cross and Schwartz as set out in Exhibits 7.1
and 7.2 hereto, and (xv) releases in the form set out in Exhibit 8.3 from
those individuals identified in Exhibit 8.4, and (xvi) such other evidence
of the performance of all covenants and satisfaction of all conditions
required of parties to this Agreement, other than Group 1, at or prior to
the closing m g, as Group 1 or its counsel may reasonably require.
b) Performance of Group 1. At the Closing, Group 1 shall deliver payment
and documents to Premier One and others, fully executed, notarized and
attested to where applicable as follows:
(i) the payment to be made at Closing as required in Section 2(a), above;
(ii) employment contracts of Dicz, Larson and Marsh in the form set out in
Exhibit 7.2, hereto; and
(iii) such other evidence of the performance of all the covenants and
satisfaction of all the conditions required of Group 1 by this Agreement
at or before the Closing as Premier One may reasonably require.
27. . I n d e m n i f i c a t i o n .
a) Premier One, Dircz, Larson and Marsh (and Group 1 as to sections
27(a)(i), and (ii), below), each agrees to indemnify, defend and hold
harmless the other and their respective current and past officers,
directors, employees, agents and representatives from all losses, damages,
liabilities, costs (including reasonable attorneys' and experts' fees) and
expenses (collectively, the Losses") incurred by the party being
indemnified (the "indemnified Party") from any claim by the other party
hereto or any third party arising from or related to: (i) any actions
taken by the indemnifying party which constitute material breach,
misrepresentation in or material omission with respect to any provisions
of this Agreement including without limitation any certificate or other
instrument furnished or to be furnished hereunder; (ii) any suit, action or
investigation, pending or threatened, against or affecting the Assets, the
Business or other transactions contemplated herein, regardless of whether
it has been disclosed; based on actions of the indemnifying party; (iii)
any claim for a debt, obligation or liability which is not specifically
assumed by Group 1 pursuant to this Agreement including without
limitation any claim or right, or any alleged claim by Premier one
customer,. employee, contractor, former employee or former contractor
which might affect the transactions contemplated under this Agreement; and
(iv) representations or warranties as to the condition of the Assets, or
otherwise which may be asserted against or in relation to any of the
Assets, the Business and/or the transactions contemplated hereunder.
b) The Indemnified Party shall have the right to approve the selection of
any counsel selected by the indemnifying party to defend hereunder, which
approval shall not be unreasonably conditioned, delayed or denied. The
indemnifying party shall not enter into any settlement with respect to the
matters indemnified hereunder which may adversely affect any interest of
the Indemnified Party without first obtaining the written consent of the
Indemnified Party, which consent shall not be unreasonably conditioned,
delayed or denied. The indemnifying party agrees to reimburse the
Indemnified Party promptly for all such Losses as they are incurred by the
Indemnified Party; provided, however, that with respect to any expenses
reimbursed to the Indemnified Party in advance of the final disposition of
any such proceeding covered by this indemnification, the Indemnified Party
shall have delivered to the indemnifying party an undertaking to repay to
the indemnifying party the amounts so advanced if it shall ultimately be
determined that the Indemnified Party is not entitled to be indemnified
hereunder.
c) If the indemnification provided for in this Section 27 from the
indemnifying party is unavailable to an Indemnified Party, in respect of
any Losses referred to therein, the indemnifying party, in lieu of
indemnifying such persons, shall contribute to the amount paid or payable
by such persons as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
Indemnified Party in connection with the actions that resulted in such
Losses, as well as any other relative equitable considerations. The amount
paid or payable by a party as a result of the Losses shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation, lawsuit or legal or
administrative action or proceeding. Notwithstanding Section 28, below, the
obligations of the indemnifying party under this Section 27 shall survive
for ten (lO) years after Closing.
28. Survival of Representations and Warranties.
a) All representations, warranties, agreements, covenants and obligations
made or undertaken by Group 1 in this Agreement or in any document or
instrument executed and delivered pursuant hereto have been relied upon by
Premier One and shall survive the Closing hereunder and shall not merge in
the performance of any obligation by any party hereto.
b) All representations, warranties, agreements, indemnities and covenants
made or undertaken by Premier One or the Principals in this Agreement or
in any document or instrument executed and delivered pursuant hereto have
been relied upon by Group 1 and shall survive the Closing hereunder and
shall not merge in the performance of any obligations by any party hereto.
29. Payment of Fees and Expenses. Except as set forth in Sections 2(g),
27, above, 31 and 32, below, Premier One, its Affiliates and the
Principals, and Group 1 each agrees that regardless of whether the
transactions contemplated hereunder close, to pay its own fees and
expenses, including the fees and expenses of its respective counsel,
accountants, brokers advisors, employees and other agents, if any,
incurred in connection with the transactions contemplated here, unless
expressly agreed to otherwise in the Agreement.
30. Notices. A11 notices, requests, demands end other communications
hereunder shall be in writing and shall be delivered by hand or mailed by
registered or certified mail, return receipt requested, first class
postage prepaid, or telefax addressed as follows:
a) If to Premier one, Dircz, Larson and Marsh:
Premier One Consultants, Inc. 3800 West 50th Street Suite 950 Bloomington,
Minnesota 55431 Telefax: 612/835-3329 Attention: Mr. Clark Dircz , With
copy to: Courey; Albers, Cosanda & Zimmer, P.A. 100 Washington Square
Minneapolis, Minnesota 55401 Telefax : (612)339-2123 Attention: Paul
A. Zimmer, Esq.
I f to Group 1 :Group 1 Software, Inc., 4200 Parliament Place Suite 600
Lanham, Maryland 20706-1485 Telefax: (301) 731-0360 Attention: Ronald F.
Friedman, President b) If delivered personally or by telefax, the date on
which a notice, request, instruction or document is delivered shall be the
date on which such delivery is made and, if delivered by mall, the date on
which such notice, request, instruction or document 1S received shall be
the date of delivery.
c) Any party hereto may change its address specified for notices herein by
designating a new address by notice in accordance with this section 30.
31. . T e r m i n a t i o n .
a) This Agreement constitutes the binding and irrevocable agreement of the
parties to consummate the transactions contemplated hereby, the
consideration for which is, inter alia, the covenants set forth herein
and the expenditures and obligations incurred and to be incurred by
Premier One and Group 1 in respect of this Agreement. This Agreement may
be terminated and abandoned at any time prior to the Closing by mutual
written consent of Premier one and Group 1.
b) In the event of a termination of this Agreement pursuant to this
Section 31, each party shall pay the costs and expenses incurred by it in
connection with this Agreement, and no party (or any of its officers,
directors, employees, agents representatives or shareholders) shall be
liable to any other party for any costs, expenses, damage or loss of
anticipated profits hereunder; provided, however, if such termination is
due to the breach by any party of any covenant, agreement, warranty or
representation, or results from any party failing to use its best efforts
to fulfill any condition to which the Closing is subject (a "Breaching
Party'), then such Breaching Party shall be solely responsible for the
costs and expenses incurred by the other party in connection with this
Agreement and the transactions contemplated hereby.
32. Brokers. Group 1 represents and warrants to Premier one and Premier
One represents and warrants to Group 1, that no broker or finder has
acted for it or them or any entity controlling, controlled by or under
common control with it or them 1n connection with this Agreement.
33. Further Assurances. Each party covenants that at no additional
expense, at any time, and from time to time after the Closing, it will
execute and deliver (or cause to be so done) such additional instruments
and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and
purposes of this Agreement. Each party covenants and agrees to execute
and deliver (or cause to be so done) to Group 1, at no additional
expense to Group 1, any instruments or documents that Group 1 requests
in order to register or otherwise protect or preserve any rights
(patent, trademark, copyright or otherwise) that Group 1 has or shall
have in and to the Software or the Documentation.
34. No Third Party Beneficiaries. Nothing contained herein shall be
construed to afford any rights or benefits to any person or entity other
than the parties signatory' hereto. Any implication of rights grant to any
other party is hereby expressly disclaimed.
35. In t ent i onal l y Del ete d .
36. M i s c e l l a n e o u s .
a) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives,
executors and administrators, and permitted successors and assigns. No
delegation, transfer or assignment of any rights or obligations under this
Agreement is permitted, and any attempted transfer or assignment shall be
void, except as follows. Group 1's rights, title and interests hereunder
are freely assignable at any time to an Affiliate of Group 1 and to any
entity whatsoever once Group 1's payment obligations hereunder have been
satisfied, and earlier to any entity which purchases all or substantially
all of the assets or capital stock of Group 1 either through asset
acquisition or stock transaction (including without limitation a sale or
exchange of stock or a corporate merger wherein Group 1 is not the
surviving entity). Any other transaction in which the Assets (or portions
thereof) are transferred or assigned, either alone or together with other
assets of Group 1, shall require only that the entity buying or taking the
transfer or assignment: (I) shall as of Closing hereunder and the time of
the proposed assignment, transfer or sale, not offer computer programming
software or services which are functionally competitive with the Product
and related professional services and (ii) shall agree to assume Group 1's
obligations with respect to payments set out in Sections 2(a) and (b),
above.
b) The section and other headings in this Agreement are inserted solely as
a matter of convenience and for reference, and are not a part of this
Agreement.
c) This Agreement together with the documents executed concurrently
herewith or at the Closing constitute the entire agreement among the
parties hereto with respect to the transactions contemplated hereby and
supersedes and cancels any prior agreements representations, warranties,
or communications, whether oral or written, among the parties hereto
relating to the transactions contemplated hereby.
d) This Agreement shall be governed by and enforced in accordance with the
laws of the State of Maryland, principles of conflicts of law
notwithstanding.
e) Premier One and the Principals expressly agree that jurisdiction over
each of them with respect to any action brought under or in connection with
this Agreement by Group 1 shall appropriately lie in the State of Maryland
and that appropriate and convenient venue lies in Prince Georges county,
Maryland; Group 1 expressly agrees that jurisdiction over it in any action
brought under or in connection with this Agreement by Premier one, Dircz,
Larson and Marsh lies in the state of Minnesota, and that appropriate and
convenient venue lies in Hennepin County, Minnesota. The choice of law,
dispute resolution, jurisdiction or venue provisions set out in any
document executed as an Exhibit hereto shall supersede and control over
the provisions of this Section 36(e). The choice of law provisions set out
in section 36(d)), above, shall not be affected by this Section 36(e).
f) Any failure on the part of any party hereto to comply with any of its
obligations, agreements or conditions hereunder may be waived by any other
party to whom such compliance is owed. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated orally, but only by an
agreement in writing signed by the party against whom or which the
enforcement of such change, waiver, discharge or termination is sought.
g) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument.
h) All pronouns used herein shall be deemed to refer to the masculine,
feminine or neuter gender as the context requires. References herein to
the plural shall include the singular, or vice versa, as context
requires.
i) The Agreement shall be construed without reference to any presumption
or rules of construction operating against the "draftsman of the document,
the intent of the parties being that any such presumption or rule is
inapplicable in this instance because both parties have reviewed and
negotiated this document in the manner that each viewed as most
advantageous to its own interests.
j) All Exhibits attached hereto are incorporated herein by reference,
and all blanks in such Exhibits, if any, will be filled in as required in
order to consummate the transactions contemplated herein and in
accordance with this Agreement.
k) In the event that any provision of this Agreement or any word, phrase,
clause, sentence or other portion thereof shall be held to be
unenforceable or invalid for any reason, such provision or portion
thereof shall be modified or deleted in such a manner so as to effect the
agreement of the parties under this Agreement, as modified, to the
fullest extent permitted under law.
l) Premier One hereby grants to Group 1 the right to seek enforcement,
either in its own name, as a third party beneficiary, or in Premier One's
name as a designee or delegatee of Premier One, with respect to any
agreement with any Development Personnel (which agreements are
identified on Exhibit 6.3, hereto) by which any Development Personnel has
agreed to maintain the confidentiality of any information and/or has
agreed that the intellectual property rights to any works such agreement
are owned by Premier One.
IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first
above written.
A t t e s t :
Premier One Consultants, Inc.
By: /s/
Its:
On this 22 day of November,
1995, before me appeared
the person who signed this instrument, who acknowledged that he signed it
as a free act on behalf of the identified corporation with authority to do
so.
Notary Public
[Notarial seal] My Commission Expires:
Attest :
WorldTrak Corporation
By: /s/
Its:
On this 22, day of November, 1995, before me appeared , the person who
signed this this instrument, who acknowledged that he signed it as a
free act on behalf of the identified corporation with authority to do
so.
[Notarial Seal]
Notary Public
M y Commission Expires :
Attest
Group l Software, Inc.
By: /s/
Its: /s/
On this22 day of November, 1995, before
me appeared Ronald F. Friedman the person who signed this
instrument, who acknowledged that he signed it as a free act
on behalf of the identified corporation with authority to do
so.
Notary Public
[Notarial Seal] My commission
Expires:
By: Michael Larson, Individually
/s/
0n this 22 day of November, 1995,
before me appeared
Michael Larson the person who signed this instrument, who
acknowledged that he signed it as his free act and With full
authority to do so.
By: Clark Dircz, Individually
/s/
On this 22 day of
November, 1995, before
me appeared
Clark Dircz the person who signed this instrument, who
acknowledged that he signed it as his free act and with full
authority to do so.
By: David Marsh, Individually
/s/
On this 22 day of November,1995, before me appeared David Larson,
the person who signed this instrument, who acknowledged that he
signed it as his free act and with full authority to do so.
[Notarial Seal] My Commission Expires:
LIST OF EXHIBITS
1.1 Software
1.2 List of Trademarks
1.3 Outstanding Contracts
1.4 Cash and Cash Equivalents
1.5 Accounts and Notes Receivable to be Assigned
1.6 Equipment, Furnitures and Fixtures
1.7 OEM/VAR Agreements
3.1 Warrants, options, etc. to be cancelled at Closing
4.1 Assumed Agreements
4.1.1 Outstanding Services to be Performed after Closing
5.1 Security Interest Holders
5.2 Estoppels, Releases, Consents
6.1 Registrations, Applications and Oppositions Thereto
6.2 Current Enhancements List and Bug List
6.3 Development Personnel and Agreements
6.4 Source Code Recipients
6.5 Third Party Software
7.1 Form of Covenant Not to Compete
7.2 Form of Non-Disclosure Covenant
7.3 Form of Employment Agreement
8.1 List of Employees To Be Released By Premier One
8.2 Closing Statement as to Employment Related Costs
8.3 Form of Release of Copyrights, Inventions, Patents and
Trade Secrets
8.4 Persons From Whom I.P. Releases are Required at Closing
11.1 Shareholders at Closing
11.2 Financial Statements
12.1 Opinion of Counsel
16.1 List of Suits
26.1 Bill of Sale
26.2 Assignment of Copyrights
26.3 Assignment of Trademarks
EXHIBIT 1.1
The Software
WorldTrak Module List
1. WorldTrak AMC-Advance Mktg Control
2. WorldTrak SMA-Sales & Mktg Automation
3. WorldTrak Sales Order Processing
4. WorldTrak Inventory and Advanced Warehouse Management
5. WorldTrak Royalty
6. WorldTrak FSA-Field Sales Automation
7. WorldTrak PFSA:FSA, Pen-based
8. WorldTrak Bill of Material
9. WorldTrak Data Collection
Exclusion - Developmental Tools for Which Premier One
Has Only a License
1. Gupta SQL Windows Graphical Development Tool
2. Borland C++ Compiler
EXHIBIT 1.2
List of Trademarks
1. Premier One
2. WorldTrak
EXHIBIT 1.3
Additional Outstanding Contracts
1. Gupta Corporation
2. Great Plains Software
3. Lotus Notes
4. Novel
5. Sun Micro
6. XcellNet
7. Office Lease
8. Office Sub-Lease
EXHIBIT 1.4
Cash and Cash Equivalents
None
EXHIBIT 1.5
Accounts Receivable
Customers Total
1. CAE Vanguard $ 0.00
2. Ceridian Corporation 22,368.25
3. FSI International 4,831.68
4. Grant Thorton 3,000.00
5. Keomed, Inc. 2,437.05
6. The Laitren Corporation 30,059.80
7. Liberty Check Printers 331.06
8. Marvin Windows & Doors 4,405.00
9. Rex Distributing Co., Inc. 9,838.60
10. WAC Service Corporation 5,984.20
$83,255.64
Outstanding Work
Work In Progress $63,604.55
Allowance for realization (43,304.55)
Net Work In Progress $20,300.00
Prepaids
Prepaid Expenses 10,005.22
Prepaid Support 2,547.19
Additional Receivables
House et al. v. Dircz et al. 60,000.00
note receivable
Exhibit 1.6
Equipment, Furnitures and Fixtures
Exhibit 1.7
OEM/VAR Agreements
Grant Thorton (oral agreement)
Exhibit 3.1
Warrants, Options, etc. to be cancelled at Closing
Warrant Cancellation Agreement - Clark Dircz
Warrant Cancellation Agreement - Michael Larson
Warrant Cancellation Agreement - David Marsh
Warrant Cancellation Agreement - Ronald Pederson
Warrant Cancellation Agreement - Belles Berger Brightstone, Inc.
Warrant Cancellation Agreement - Ronald Berger
Stock Option Cancellation Agreement - Troy Fruetel
Stock Option Cancellation Agreement - Andrew Schmitz
Stock Option Cancellation Agreement - Steven Weimerskirch
Exhibit 4.1
Assigned Agreements and Obligations
A. Software License/Professional Services Agreements
1. American Guidance Services, Inc. (Letter of Agreement
with Premier One Consultants, Inc. dated August 26, 1993, as
amended on April 27, 1995.
2. AON Direct Group (Letter of Agreement with Premier One
Consultants, Inc. dated April 12, 1995 and Software License and
Support Agreement with WorldTrak, Inc. dated April 12, 1995.
3. CAE Vanguard (Letter of Agreement with Premier One
Consultants, Inc. dated March 31, 1994)
4. Ceridian Corporation (Letter of Agreement with Premier
One Consultants, Inc. dated November 10, 1994, and Software
License and Support Agreement with CRM Holdings, Inc. dated
November 15, 1994)
5. FSI International (Letter of Agreement with Premier One
Consultants, Inc. dated October 11, 1994 and Software License and
Support Agreement with CRM Holdings, Inc. dated October 11, 1995)
6. KeoTech, Inc. (Software License and Support Agreement
with CRM Holdings, Inc., dated June 14, 1994)
7. The Laitram Corporation (Software License and Support
Agreement with CRM Holdings, Inc. dated February 8, 1995)
8. Liberty Share Draft and Check Printers, Inc. (Letter of
Agreement with Premier One Consultants, Inc. dated April 18, 1995
and Software License and Support Agreement with WorldTrak, Inc.
dated May 5, 1995).
9. Marvin Windows and Doors/Marvin Lumber and Cedar
Company (Letter of Agreement with Premier One Consultants, Inc.
dated June 10, 1994 and Software License and Support Agreement
with CRM Holdings, Inc. dated September 8, 1994).
10. Rex Distributing Co., Inc. (Letter of Agreement with
Premier One Consultants, Inc. dated August 8, 1994).
11. Wisconsin Manufacturers & Commerce (Letter of Agreement
with Premier One Consultants, Inc. dated March 24, 1994).
B. Third Party Re-seller Agreements
1. Gupta Corporation (Business Partner, December 14, 1994)
2. Great Plains Software (Reseller, May 16, 1994)
3. Lotus Notes (VAR with SSC corporation dated
September 1, 1992)
4. Novell (Authorized Reseller, July 22, 1991)
5. Sun Micro (Catalyst, April 6, 1993)
6. XcellNet (Remoteware Integration Partner Agreement,
dated October 1, 1994)
7. Borland C++ Compiler
C. Lease/Sublease
1. Office lease for Northland Plaza, by and between
Hartford Underwriters Insurance Company and Premier One
Consultants, Inc., dated June 21, 1991, as amended by Amendments
1-4.
2. Sublease, by and between Premier One Consultants, Inc.
and Forevergreen Financial, Inc., dated May 1, 1995.
D. Employee Agreements
1. Brewer, Daniel (Dated December 27, 1994)
2. Fruetel, Troy (Dated December 28, 1993)
3. Hiltunen, Paul (Dated October 1, 1994)
4. Lipetzky, Joel (Dated February 1, 1995)
5. Marsh, David (Dated December 1, 1994)
6. Murphy, Michael Patrick (Dated April 25, 1994)
7. Schmitz, Andrew (Dated July 1, 1994)
8. Viegut, Todd (Dated August 1, 1995)
9. Wiemerskirch, Steve (Dated December 1, 1994)
E. Additional Assumed Liabilities
ADP of Minneapolis $214.78
AFCO 281.55
ABI/Acordia 925.00
American Express 3,088.12
American Technology 3,400.01
Corporation
Berry Coffee Company 552.98
Business Essentials, Inc. 305.97
Central Telephone Co 1,836.13
Cheyenne Software, Inc. 99.00
Compuserve 253.79
Courey, Albers, Gilbert & Rile 3,465.75
VisionTek 17.00
Dircz & Hysjulien, P.A. 3,259.50
Express Messenger Systems 104.60
Fairchild Communications 1,572.82
Federal Express 172.80
Gupta Corporation 9,990.92
Ingram Micro 2,594.27
Johnson & Sends 228.75
Lands' End 276.45
Larson Allen Weishair & Co. 4,002.00
National Information Data Cntr 46.90
Pinnacle Publishing, Inc. 199.00
Pitney Bowes Credit 729.16
Corporation
Ramsley Printing 5,379.36
Secretary of State 562.52
Simon Prop. Grp (IL) LP 5,500.00
Software Quality Automation 1,812.00
Stringer Business Systems, 543.39
Inc.
Tech Data Corporation 1,797.00
Trinzic Corporation 1,593.50
United Van Lines, Inc. 4,524.43
United Parcel Service 93.16
Commissions associated with 14,394.50
that certain sublease
The Vanguard Group - 27 1,872.50
The Vanguard Group - 73 1,872.50
Unknown items (estimate) 1,000.00
A/P listing 77,562.11
Profit sharing contribution 7,600.81
1994
Cafeteria plan withholding 83.22
Employee travel expenses 2,056.66
Employee production bonuses 15,782.96
Accrued vacation 3,776.41
Capital leases 171,797.78
Note payable bank (estimate) 243,000.00
Closing expenses of attorney's 30,000.00
& accountants
Total liabilities assumed $521,659.95
Exhibit 4.1.1
Outstanding (As of Closing) Services To Be
Performed By Group 1 After Closing Under
License or Consulting Arrangements
Hours
1. American Guidance Services, Inc. 12
2. Rex Distributing Company, Inc. 40
3. Wisconsin Manufacturers & Commerce 120-180
Exhibit 5.1
Security Interest Holders
Secured Party File Number Description of Collateral
1. AmeriBank 1596907 Office equipment, furniture
computer hardware and software
2. Argyle State 1685549 PC equipment and office
Bank furniture
3. Bulfinch Fund 1660848 Equipment, inventory, AR's,
I, L.P. general intangibles, all
property - To Be Released At
Closing
1662111 Equipment, inventory, AR's,
general intangibles, all
property - To Be Released At
Closing
1099654 Equipment, inventory, AR's,
(Hennepin Co.) general intangibles, all
property - To Be Released At
Closing
1099767 Equipment, inventory, AR's,
(Hennepin Co.) general intangibles, all
property - To Be Released At
Closing
4. Commerce Leasing 1570720 PC equipment and software
a division of
Commerce Financial
Group, Inc.
1612090 PC equipment and software
1621195 PC equipment
1690816 PC equipment
5. Fidelity Bank 1386184 All assets - To Be Released At
Closing
6. Stutsman County 1497369 Office equipment and furniture
State Bank
1497370 Office furniture
7. Minnwest Bank 1649976 PC equipment and office
equipment
Exhibit 5.2
Estoppels, Releases, Consents
A.
1. Hartford Underwriters Insurance Company, as Landlord,
under that certain Office Lease for Northland Plaza by and
between Hartford Underwriters Insurance Company and Premier One
Consultants, Inc., dated June 21, 1991, as amended.
2. Oracle Corporation (Reseller Agreement, dated
February 1, 1994)
3. Novell Notes (Reseller Marketing Agreement, dated
July 22, 1991)
4. XcellNet (Remoteware Integration Partner Agreement,
dated October 1, 1994)
5. Gupta Agreement (Business Partner Agreement, dated
December 14, 1994)
B.
1. American Guidance Services, Inc.
2. Keo Tech, Inc.
3. Marvin Windows & Doors
4. Rex Distributing Co., Inc.
5. Laitram
6. Forevergreen Financial Services as Subtenant
7. Fidelity Bank
8. Todd Hysjulien
C.
1. Bulfinch Fund I, L.P.
2. Fidelity Bank - letter
3. Commerce Leasing Corp., a division of Commercial Financial
Group, Inc. - letter
4. Belles, Berger, Brightstone, Inc.
5. Ronald Berger
6. Officers
D.
Capital leases - listed in Exhibit 5.1 (1), (2), (4), (6),
and (7)
Exhibit 6.1
Registrations, Applications and Oppositions Thereto
1. Certificate of Registration, United States Patent and
Trademark Office) Reg. No. 1,841,728, (June 28, 1994), for the
trademark, WORLDTRAK.
2. Certificate of Registration, United States Patent and
Trademark Office) Reg. No. 1,674,684 (Feb. 4, 1992), for the
service mark, PREMIER ONE.
Exhibit 6.2
Current Enhancements List and Bug List
Exhibit 6.3
Development Personnel Agreements
1. Bigelow, Stephanie
2. Brewer, Daniel
3. Bridges, Mark
4. Chen, Lan
5. Chen, Yan
6. Fruetel, Troy
7. Jensen, Jahn
8. Johnson, Terry
9. Laufer, Scott
10. Lipetsky, Joel
11. Marsh, David
12. Murphy, Michael Patrick
13. Schmitz, Andrew
14. Viegut, Todd
15. Weimerskirch, Steve
Exhibit 6.4
Source Code Recipients
1. Laitram, Inc.
2. Keotech, Inc.
3. Rex, Inc.
4. FSI, Inc.
5. Marvin Windows & Doors, Inc.
6. Liberty Check, Inc.
7. American Guidance Services, Inc.
8. CAE Industries, Inc. (Decision Support only)
Exhibit 6.5
Third Party Software
The following list represents the third party software needed to
greater the WorldTrak suite of software modules:
1. Client Operating System*: Microsoft Windows 3.11 or
Microsoft Windows for Workgroups or Microsoft Windows95
2. Supported Database*: Gupta SQWLBase or Oracle 7 or
Microsoft SQLServer 4.21
3. Server Operating System*: An operating system and
hardware platform for which the databases listed in point 2 above
are supported.
4. Connectivity*: Appropriate routers for the database
chosen in point 2 above.
5. Communications (remote access): Optionally, if a remote
user wishes to replicate his/her database with corporate, a third
party communications product will be needed. This might include
products such as Xcellenet, Lotus Notes, or PCANYWhere.
* All of these items are not included in the base price
of WorldTrak software. It is the responsibility of the customer
to purchase these items.
Exhibit 7.1
COVENANT NOT TO COMPETE
THIS COVENANT NOT TO COMPETE (this "Agreement") is made and
entered into this ___ day of November, 1995, by and between Clark
Dircz ("Dircz") and Group 1 Software, Inc., a Delaware
corporation ("Group 1").
Preliminary Statement. Simultaneous with the execution of
this Covenant, Premier One Consultants, Inc. ("Premier One") and
Group 1, have entered into an Agreement for Purchase and Sale of
Assets (the "Agreement") which provides for the sale of certain
of the assets of Premier One (including the "Software" as defined
therein) to Group 1 and other transactions described therein.
Under the Agreement, Dircz, as principal shareholder of Premier
One, shall receive direct and substantial benefits from such
transactions and his concomitant entry into and compliance with
the terms and conditions of this Covenant. A material inducement
for Group 1 to enter into such transactions is Dircz's entry into
and compliance with the terms and conditions of this Covenant.
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged Dircz and Group 1
agree as follows:
1. Noncompetition.
a) From the date first written above through three (3)
years after the date of termination of his employment with
Group 1 (or any subsidiary or affiliate thereof) (the
"Restrictive Period"), Dircz covenants and agrees to refrain,
directly or indirectly, from engaging in any activity
("Activity") in any state of the USA or any province of Canada or
any other country in which Group 1 is conducting sales efforts,
which Activity involves the development, sale, licensing,
provision of professional services or other distribution related
to "sales and marketing control" software or any related software
developed by Premier One or any affiliate of Premier One (as such
term is defined in the Agreement) or any sales and marketing
control software developed by Group 1 or an affiliate, regardless
of the computer platform, PC, midrange, mini, client server or
mainframe and so on.
b) For the purposes of this Agreement, the words "directly
or indirectly" shall include actions that include without
limitation principal-to-principal transactions and arrangements
by, through or with agents, representatives, consultants,
officers, directors, independent contractors or employees of any,
subsidiary, affiliate or any other entity or enterprise.
c) Dircz shall also refrain directly or indirectly from
hiring or engaging or soliciting for employment or engagement any
of Group 1's employees or contractors, (including without
limitation any such employees or contractors who are former
employees of Premier One) for the Restrictive Period.
2. Confidential Data.
a) The parties hereto agree that Dircz shall keep
confidential and not, directly or indirectly, divulge to anyone
nor use or otherwise appropriate Confidential Information.
Confidential Information means all information (whether or not
reduced to writing and whether or not patentable or protectable
by copyright) with respect to the Assets and the Business (as
defined in the Agreement) even if developed by Premier One or
others and obtained by Group 1, or otherwise, including: (i)
customer lists and details of agreements with customers,
acquisition, expansion, marketing, financial and other business
information and plans with respect to Group 1 or its customers
confidential records, client and customer lists, information
about client requirements, terms of contracts with clients and
customers, planning and financial information, (ii) research and
development information, information as to sources of supply,
including identity of special sources of supply, specialized
consultants and contractors and Confidential Information
developed by them for a party hereto or Group 1, purchasing,
operating and other cost data, special customer needs and cost
and pricing data, (iii) application, operating system, database
communication and other computer software, including without
limitation the Software whether now or hereafter existing, all
modifications, enhancements and versions and all options
available with respect thereto, and all future products developed
or derivative works therefrom, (iv) source and object codes,
flowcharts, algorithms, coding sheets, routines, sub-routines,
compilers, assemblers, design concepts and related documentation
and manuals of the Software, (v) production processes, marketing
techniques and arrangements, mailing lists, purchasing
information, pricing policies, quoting procedures, financial
information, customer and prospect names and requirements,
distributor data and other materials or information relating to
the business of Group 1, (vi) discoveries, concepts, and ideas
including, without limitation, the nature and results of research
and other product development activities, processes, formulas,
inventions, computer-related equipment or technology, techniques,
designs, drawings, and specifications related to the Assets (as
defined in the Agreement which definition is incorporated herein
by reference) which are not known to others and are of commercial
value, and (viii) all ideas which are derived from access to or
knowledge of any of the above-enumerated materials and
information.
b) The restrictions in Section 2(a), above, shall not
prevent the disclosure of Confidential Information which the
party disclosing such information can clearly demonstrate (A) is
known at the time of disclosure by the public other than as a
result of disclosure by the disclosing party or (B) was obtained
by the party receiving such information from a source other than
Group 1, provided that such source is not bound by a duty of
confidentiality to Group 1 regarding furnishing such information
or another person or entity with respect to such information or
(C) is required pursuant to an order of a court of competent
jurisdiction.
3. Enforcement.
a) The parties hereto agree that any material breach of
these non-compete, non-solicitation and confidentiality
restrictions may cause immediate and irreparable harm to Group 1
for which money damages or other remedies at law may prove to be
inadequate. Accordingly, the parties agree that any material
breach of such provisions shall, in addition to other available
remedies, entitle Group 1 to appropriate injunctive relief
without the need to prove that money damages or other remedies at
law are inadequate or the posting of a bond.
b) Dircz acknowledges and agrees that he will be fully
able to earn an adequate livelihood for himself and his
dependents if any of the terms of this Covenant should be
specifically enforced against him. Neither this provision or the
exercise by Group 1 of any of its rights hereunder will
constitute a waiver by Group 1 of any other rights which it may
have to damages or to any other remedy.
4. Further Agreements. The parties hereto acknowledge and
agree that the restrictive covenants and prohibitions against
disclosure of Confidential Information recited herein are in
addition to, and not in lieu of, any rights or remedies which
Group 1 may have available, pursuant to the laws of any
jurisdiction or at common law, to prevent the disclosure of trade
secrets, and the enforcement by Group 1 of its rights and
remedies pursuant to this Covenant shall not be construed as a
waiver of any other rights or available remedies which it may
possess in law or equity absent this Covenant.
5. Severability. In the event that any provision of this
Agreement or any word, phrase, clause, sentence or other portion
thereof (including without limitation the geographical and
temporal restrictions contained herein) shall be held to be
unenforceable or invalid for any reason, such provision or
portion thereof shall be modified or deleted in such a manner so
as to make this Covenant as modified legal and enforceable to the
fullest extent permitted under applicable laws.
6. Successors and Assigns. The terms set forth herein
shall inure to the benefit of and be enforceable by the parties
hereto, and their permitted successors and assigns. This
Covenant is freely assignable by Group 1 to any entity to whom
the Assets or the Product (as defined in the Agreement) may be
sold, transferred or assigned pursuant to the Agreement. Dircz
may not transfer, assign or delegate any rights or obligations
hereunder without the prior written consent of Group 1.
7. Counterparts. This Covenant may be executed in
counterparts, each of which will take effect as an original and
both of which shall evidence one and the same interest.
8. Governing Law; Jurisdiction and Venue. The terms of
this Covenant shall be governed by and construed in accordance
with the laws of the State of Maryland, without reference to the
conflict of laws thereof. The parties expressly agree that
jurisdiction over any action brought under or in connection with
this Agreement lies in the State of Maryland, and that
appropriate and convenient venue lies in Prince George's County,
Maryland. The parties hereto hereby consent to the assertion
over them of personal jurisdiction in accordance with the
immediately preceding sentence.
9. Miscellaneous.
a) Any failure on the part of any party hereto to comply
with any of its obligations, agreements or conditions hereunder
may be waived by any other party to whom such compliance is owed.
No waiver of any provision of this Covenant shall be deemed, or
shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver.
Neither this Covenant nor any provision hereof may be changed,
waived, discharged or terminated orally, but only by an agreement
in writing signed by the party against whom or which the
enforcement of such change, waiver, discharge or termination is
sought.
b) The Covenant shall be construed without reference to
any presumption or rules of construction operating against the
"draftsman" of the document, the intent of the parties being that
any such presumption or rule is inapplicable in this instance
because both parties have reviewed and negotiated this document
in the manner that each viewed as most advantageous to its own
interests.
c) In the event that any provision of this Covenant or any
word, phrase, clause, sentence or other portion thereof shall be
held to be unenforceable or invalid for any reason, such
provision or portion thereof shall be modified or deleted in such
a manner to effect the agreement of the parties to the fullest
extent enforceable under law.
IN WITNESS WHEREOF, the parties hereto have executed this
Covenant as of the date first written above.
GROUP 1 SOFTWARE, INC.
By: ________________________ BY:_________________________
Clark Dircz, Individually
Title ______________________
City of _________________)
) ss
State of_________________)
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as his free act
with full authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as a free act on
behalf of the identified corporation with full authority to do
so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
Exhibit 7.2
COVENANT NOT TO DISCLOSE
THIS COVENANT NOT TO DISCLOSE (this "Agreement") is made and
entered into this ___ day of November, 1995, by and between Mr.
Charles Schwartz, a Minnesota resident ("Schwartz") and Group 1
Software, Inc., a Delaware corporation ("Group 1").
Preliminary Statement. Simultaneous with the execution of
this Agreement, Premier One Consultants, Inc., a Minnesota
corporation ("Premier One"), and Group 1, have entered into an
Agreement for Purchase and Sale of Assets (the "Agreement") which
provides for the sale of certain of the assets of Premier One
(including the "Software" as defined therein) to Group 1.
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged Schwartz and Group 1
agree as follows:
1. Confidential Data.
a) Schwartz agrees that, for a period of ten (10) years
from the date of this Covenant, he shall keep confidential and
not, directly or indirectly, divulge to anyone nor use or
otherwise appropriate Confidential Information. Confidential
Information means all information (whether or not reduced to
writing and whether or not patentable or protectable by
copyright) with respect to the Assets and the Business (as
defined in the Agreement) including: (i) customer lists and
details of agreements with customers, acquisition, expansion,
marketing, financial and other business information and plans
with respect Group 1 or its customers confidential records,
client and customer lists, information about client requirements,
terms of contracts with clients and customers, planning and
financial information, (ii) research and development information,
information as to sources of supply, including identity of
special sources of supply, specialized consultants and
contractors and Confidential Information developed by them for a
party hereto or Group 1, purchasing, operating and other cost
data, special customer needs and cost and pricing data, (iii)
application, operating system, database communication and other
computer software, including without limitation the Software
whether now or hereafter existing, all modifications,
enhancements and versions and all options available with respect
thereto, and all future products developed or derivative works
therefrom, (iv) source and object codes, flowcharts, algorithms,
coding sheets, routines, sub-routines, compilers, assemblers,
design concepts and related documentation and manuals of the
Software, (v) production processes, marketing techniques and
arrangements, mailing lists, purchasing information, pricing
policies, quoting procedures, financial information, customer and
prospect names and requirements, distributor data and other
materials or information relating to the business of Group 1,
(vi) discoveries, concepts, and ideas including, without
limitation, the nature and results of research and other product
development activities, processes, formulas, inventions, computer-
related equipment or technology, techniques, designs, drawings,
and specifications related to the Assets (as defined in the
Agreement which definition is incorporated herein by reference)
which are not known to others and are of commercial value, and
(viii) all ideas which are derived from access to or knowledge of
any of the above-enumerated materials and information.
b) The foregoing restrictions shall not prevent the
disclosure of Confidential Information which the party disclosing
such information can clearly demonstrate (A) is known at the time
of disclosure by the public other than as a result of disclosure
by the disclosing party or (B) was obtained by the party
receiving such information from a source other than Group 1,
provided that such source is not bound by a duty of
confidentiality to Group 1 regarding furnishing such information
or another person or entity with respect to such information or
(C) is required pursuant to an order of a court of competent
jurisdiction.
2. Enforcement. The parties hereto agree that any
material breach of these confidentiality restrictions may cause
immediate and irreparable harm to Group 1 for which money damages
or other remedies at law may prove to be inadequate.
Accordingly, the parties agree that any material breach of such
provisions shall, in addition to other available remedies,
entitle Group 1 to appropriate injunctive relief without the need
to prove that money damages or other remedies at law are
inadequate.
3. Further Agreements. The parties hereto acknowledge and
agree that the prohibitions against disclosure of Confidential
Information recited herein are in addition to, and not in lieu
of, any rights or remedies which Group 1 may have available,
pursuant to the laws of any jurisdiction or at common law, to
prevent the disclosure of trade secrets, and the enforcement by
Group 1 of its rights and remedies pursuant to this Covenant
shall not be construed as a waiver of any other rights or
available remedies which it may possess in law or equity absent
this Covenant.
4. Severability. In the event that any provision of this
Agreement or any word, phrase, clause, sentence or other portion
thereof (including without limitation the geographical and
temporal restrictions contained herein) shall be held to be
unenforceable or invalid for any reason, such provision or
portion thereof shall be modified or deleted in such a manner so
as to make this Covenant as modified legal and enforceable to the
fullest extent permitted under applicable laws.
5. Successors and Assigns. The terms set forth herein
shall inure to the benefit of and be enforceable by the parties
hereto, and their permitted successors and assigns. This
Covenant is freely assignable by Group 1 but not assignable by
Schwartz.
6. Counterparts. This Covenant may be executed in
counterparts, each of which will take effect as an original and
both of which shall evidence one and the same interest.
7. Governing Law; Jurisdiction and Venue. The terms of
this Covenant shall be governed by and construed in accordance
with the laws of the State of Maryland, without reference to the
conflict of laws thereof. The parties expressly agree that
jurisdiction over any action brought under or in connection with
this Agreement lies in the State of Maryland, and that
appropriate and convenient venue lies in Prince George's County,
Maryland. The parties hereto hereby consent to the assertion
over them of personal jurisdiction in accordance with the
immediately preceding sentence.
8. Miscellaneous.
a) Any failure on the part of any party hereto to comply
with any of its obligations, agreements or conditions hereunder
may be waived by any other party to whom such compliance is owed.
No waiver of any provision of this Covenant shall be deemed, or
shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver.
Neither this Covenant nor any provision hereof may be changed,
waived, discharged or terminated orally, but only by an agreement
in writing signed by the party against whom or which the
enforcement of such change, waiver, discharge or termination is
sought.
b) The Covenant shall be construed without reference to
any presumption or rules of construction operating against the
"draftsman" of the document, the intent of the parties being that
any such presumption or rule is inapplicable in this instance
because both parties have reviewed and negotiated this document
in the manner that each viewed as most advantageous to its own
interests.
c) In the event that any provision of this Covenant or any
word, phrase, clause, sentence or other portion thereof shall be
held to be unenforceable or invalid for any reason, such
provision or portion thereof shall be modified or deleted in such
a manner to effect the agreement of the parties to the fullest
extent enforceable under law.
IN WITNESS WHEREOF, the parties hereto have executed this
Covenant as of the date first written above.
GROUP 1 SOFTWARE, INC.
By: ________________________ ______________________
Mr. Charles Schwartz
Title: _____________________
City of _________________)
) ss
State of _____________ )
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as his free act on
with full authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as a free act on
behalf of the identified corporation with full authority to do
so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
EXHIBIT 7.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into
this ____ day of November, 1995, by and between Group 1 Software,
Inc., a Delaware corporation ("Group 1"), and Mr. _______,
("Employee"), a Minnesota resident.
WITNESSETH:
WHEREAS, concomitant with this Agreement and the date first
written above, Group 1 and Premier One Consultants, Inc., a
Minnesota corporation ("Premier One"), have entered into that
certain Agreement for the Purchase and Sale of Assets (the "Sale
Agreement"), whereby Group 1 purchased certain assets of Premier
One; and
WHEREAS, as a material inducement for Group 1 to enter into
and perform under the Sale Agreement, Employee agreed to perform
in accordance with the terms and conditions set out herein; and
WHEREAS, Employee wishes to enter into an employment
relationship upon the terms and conditions set out herein.
NOW THEREFORE, in consideration of the mutual promises
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Group 1
hereby agrees to employ Employee, and Employee hereby agrees to
accept employment by Group 1 and perform hereunder, upon the
following terms and conditions:
1. Term of Employment. Employment will begin the date
first written above and continue for a period of thirty-six (36)
months, unless terminated hereunder. The Term of Employment may
be extended for additional one (1) year renewals upon the consent
of the parties.
2. Title and Duties.
a) Employee shall assume the title of ________ of Group 1.
b) Employee's duties shall include _________________.
c) Employee shall report to appropriate senior management
of Group 1.
3. Compliance With Group 1 Policies. Employee agrees that
in all aspects of his employment, he shall comply with Group 1's
policies, standards and regulations.
4. Salary. As compensation for performance of the duties
described in Section 2, above, Group 1 agrees to pay Employee an
initial annualized salary of ______ Thousand Dollars ($_____),
payable in equal biweekly installments. Salary increases shall
be determined pursuant to Group 1's standard policies and
procedures.
5. Expenses. Employee shall be authorized to incur, in
accordance with Group 1's standard travel guidelines, such
expenses as are ordinary and necessary for his reasonable and
proper performance hereunder. Group 1 shall reimburse Employee
for such expenses upon submission of a Group 1 travel expense
form, supported by required and appropriate substantiation, and
approved by an authorized Group 1 officer.
6. Benefits. Employee shall be provided Group 1's then
current standard employee benefits. Any payments made to
Employee under any Group 1 disability or salary continuation
programs (including any Group 1 paid disability or salary
continuation insurance policies) shall be in complete
satisfaction of Group 1's obligations to Employee pursuant to
Section 4, above.
7. Other Positions. Employee agrees that, during his
employment with Group 1, he shall not hold any position as
managing shareholder, director or other officer with respect to
any other business entity, including but not limited to Dircz,
Pederson & Larson; excluding however, serving as an officer
and/or director of Premier One Consultants, Inc., but only if
Premier One Consultants, Inc., shall be an inactive business
(i.e. - does not conduct commercial activity).
8. Non-Compete.
a) Employee acknowledges that, in fulfilling his duties
under this Agreement, he shall become privy to Confidential
Information, as defined below, and shall become identified in the
minds of customers with Group 1's goodwill and business
reputation. Accordingly, to avoid any possible misuse of the
Confidential Information or misappropriation of that goodwill,
and as a material inducement for Group 1 to enter into and
perform under this Agreement, Employee covenants and agrees that
he shall not, as principal, employee, agent, officer, director,
consultant or otherwise, engage in any activities that are
restricted under that certain Covenant Not to Compete by and
between Employee and Group 1, of even date herewith, the terms
and conditions of which are hereby incorporated herein by
reference.
b) These restrictive covenants and agreements shall be
construed as an agreement independent of any other provision in
this Agreement, and the existence of any claim or cause of action
of Employee against Group 1, whether predicated on this Agreement
or otherwise, shall not constitute a defense to the enforcement
by Group 1 of said restrictive covenants and agreements.
9. Confidential Information.
a) Employee acknowledges that the Confidential Information
(as defined below) is valuable and proprietary to Group 1 (or to
third parties which have entrusted Confidential Information to
Group 1). Employee covenants and agrees that during the Term of
Employment, and for a period of Ten (10) years thereafter, he
shall (i) not (except after first having obtained written
permission from Group 1) use, reveal, divulge or disclose (or
cause another person to do such) any Confidential Information,
regardless of whether or not for pay or other consideration, (ii)
maintain all Confidential Information in strict confidence and
(iii) not use any of the Confidential Information for any purpose
other than to perform his work for Group 1.
b) Confidential Information means all information (whether
or not reduced to writing and whether or not patentable or
protectible by copyright) which Employee receives, has access to,
conceives or develops, in whole or in part, in connection with
his employment with Group 1 or through the use of any of
Group 1's facilities or resources, including: (i) discoveries,
concepts and ideas including the nature and results of research
and other product development activities, processes, formulas,
inventions, computer-related equipment or technology, techniques,
designs, drawings, and specifications; (ii) source and object
codes, flowcharts, algorithms, coding sheets, routines, sub-
routines, compilers, assemblers, design concepts and related
documentation and manuals; (iii) research and development
information, information as to sources of supply, including
identity of special sources of supply, specialized consultants
and contractors and Confidential Information developed by them
for Group 1, purchasing, operating and other cost data, special
customer needs, cost and pricing data; (iv) application,
operating system, database communication and other computer
software, whether now or hereafter existing, and all
modifications, enhancements and versions and all options
available with respect thereto, and all future products developed
or derived therefrom; (v) production processes, marketing
techniques and arrangements, mailing lists, purchasing
information, pricing policies, quoting procedures, financial
information, customer and prospect names and requirements,
distributor data and other materials or information relating to
Group 1's business; (vi) customer lists and details of agreements
with customers, acquisition, expansion, marketing, financial and
other business information and plans of Group 1 and its
customers; (vii) employee compensation and effectiveness
information; (viii) other materials or information related to the
business of Group 1 which are not generally known to others
engaged in similar businesses and are of commercial value to
Group 1; and (ix) all ideas which are derived from Employee's
access to or knowledge of any of the above-enumerated materials
and information.
c) Notwithstanding the provisions of Section 9(b), above,
Employee's obligations of non-disclosure and non-use hereunder
shall not apply to any Confidential Information which Employee
can clearly and convincingly demonstrate is, at the time of
Employee's disclosure/use, through no act or fault of Employee,
known on a non-confidential basis by the public generally.
d) Breach of any of these confidentiality provisions may
result in, inter alia, immediate dismissal of Employee for cause.
e) Employee acknowledges that Group 1 will be irreparably
harmed if any of the obligations or responsibilities set out in
this Section 9 are breached and that Group 1 will not have an
adequate remedy at law in the event of any actual or threatened
breach. Employee agrees that Group 1 shall be entitled to
injunctive or other equitable relief in any court of competent
jurisdiction to prevent the violation or further violation of any
of the provision of this Section 9, without the need for Group 1
to post bond or to demonstrate the inadequacy of remedies at law.
Employee further represents and warrants that he expects to be
fully able to earn an adequate livelihood for himself and his
dependents if this Section 9 is specifically enforced against
him. Neither this provision nor the exercise by Group 1 of any
of its rights hereunder shall constitute a waiver by Group 1 of
any other rights which it may have for damages or any other
remedy.
10. Inventions. Employee agrees to disclose promptly to
Group 1 in writing all inventions, know-how, procedures,
processes and other intellectual/industrial property rights which
Employee has made, conceived, or reduced to practice, whether by
himself or with others, within the period of his employment by
Group 1 and which involve: (i) the use of Group 1's time,
material, or facilities, or (ii) resulted from or were suggested
by Employee's work for Group 1 (collectively, the "Inventions").
11. Proprietary Rights.
a) Employee agrees that all right, title, and interest in
the Confidential Information and the Inventions shall be and
shall remain the solely and exclusive property of Group 1.
b) All Inventions shall automatically become the property
of Group 1 as soon as they are made, conceived, or reduced to
practice, as the case may be. Without charge to Group 1,
Employee agrees to assign all Inventions and all patent or
copyright applications and patents and copyrights applicable to
them to Group 1 at any time, on demand, and to execute all
documents that Group 1 may reasonably consider necessary to
secure all rights to the Inventions, and applicable patent or
copyright applications and patents or copyrights. Employee's
obligations to assign the rights to the Inventions shall survive
indefinitely the Term of Employment. The intent of the parties
hereto is to consider all Inventions to be "work(s) made for
hire", with all rights and interests thereto owned solely and
exclusively by Group 1. If any Inventions are not considered to
be "work(s) made for hire" or Employee is deemed to have any
right or interest thereunto, Employee agrees to immediately
assign to Group 1 all of such rights and interests thereto, at no
additional expense to Group 1.
12. Restriction of Alienation. The payments which shall
become due and payable to Employee pursuant to this Agreement
shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, or charge, and
any attempt to so anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge the same shall be void. Such
payments shall not in any manner be subject to seizure for the
payments of any debts or judgments of Shalaby.
13. Return of Materials. Employee agrees that at the end
of the Term of Employment, regardless of the reason for
termination, he shall immediately return to Group 1 and purge
from his computers and records, all books, records, documents,
computer tapes, notebooks, and other materials containing or
pertaining to the Confidential Information and the Inventions,
without copying, reproducing or otherwise retaining such
information.
14. Termination.
a) This Agreement may be terminated by Group 1 with cause
and in accordance with Group 1's standard disciplinary policy,
upon five (5) days written notice or immediately upon the death
of Employee. If the Agreement is terminated because of
Employee's death, resignation, or it is not renewed as provided
hereunder, compensation described in Section 4, above, shall be
paid through the last day of employment.
b) If employee is terminated for cause or resigns under
circumstances which would justify termination for cause, he shall
not be entitled to any payment hereunder of any nature whatsoever
and all such payments shall be forfeited and shall no longer be
due and payable, to maximum extent permissible under applicable
law.
c) For the purposes of this Agreement, Group 1 may
determine that Employee's employment has been terminated or he
has resigned for cause if Employee, in relation to his
employment: (i) deliberately acts or conducts himself in a manner
which clearly injures or is likely to injure the definable
business interests of Group 1, or (ii) knowingly engages in any
conduct which violates or reasonably appears to violate any
criminal law of the United States or any state (whether or not
such conduct is or becomes the subject of criminal prosecution),
or (iii) refuses to perform any reasonable and proper duty or
assignment after being requested to do so, or (iv) engages in any
conduct contrary to any established policy of Group 1, or (v)
fails to fully perform any of his material duties as contemplated
by this Agreement unless such failure is due to illness,
disability or authorized vacation, or (vi) fails to maintain in
good standing his current professional certifications or licenses
or (vii) violates any other material term of this Agreement. All
determinations hereunder shall be made in accordance with
standard policies and procedures of Group 1, whose decision shall
be final.
e) Notwithstanding any provision herein, Sections 8-11,
16, 18 and 19, inclusive shall survive the termination of this
Agreement and Employee's employment with Group 1 to the extent
expressly set out in the particular provision.
15. Assignment.
a) This Agreement and all rights and obligations hereunder
are personal to Employee and may not be delegated, transferred or
assigned.
b) This Agreement may be assigned by Group 1 to any entity
which is, at the time of such assignment, a subsidiary or
affiliate of Group 1. In the event of any such assignment, all
rights and obligations of Group 1 under this Agreement shall be
binding upon the assignee.
c) This Agreement shall inure to the benefit of, and be
binding upon the heirs, executors, administrators and personal
representatives of Employee and the successors and assigns of
Group 1.
16. Further Assurances. Each party agrees at any time, and
from time to time, to execute, acknowledge, deliver and perform,
and/or cause to be executed, acknowledged, delivered and
performed, all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and/or assurances that may be
necessary and/or proper to carry out the provisions and/or intent
of this Agreement.
17. Notices.
a) Any notices or other communications contemplated by
this Agreement shall be in writing and shall be deemed to have
been duly given if personally delivered or mailed by certified or
registered mail, postage prepaid with return receipt requested:
(i) if to Group 1, directed to:
Group 1 Software, Inc.
4200 Parliament Place
Suite 600
Lanham, MD 20706-1844
Attn: President
(ii) if to Employee, directed to:
_________
_________
_________
b) Either party may change the address to which such
notices and communications shall be sent by written notice to the
other party.
c) Notices delivered personally or by mail shall be deemed
to have been given as of actual receipt.
18. Arbitration. Except for remedies referenced in
Sections 8-11 inclusive, above, any claim, controversy, or
dispute concerning questions of fact or law arising out of or
relating to this Agreement, its performance or alleged breach
shall be submitted to arbitration by a single arbitrator in the
Washington, D.C. Metropolitan Area in accordance with the then-
existing rules of the American Arbitration Association. The
arbitrator may award any relief that shall seem just and proper
in the circumstances, including the relief of specific
performance. The decision of the arbitrator shall be final and
binding upon the parties, and judgment upon an award rendered by
the arbitrator may be entered in any court of competent
jurisdiction. The costs and expenses of such arbitration shall
be paid in accordance with the determination of the arbitrator.
Until the decision of the arbitrator has been rendered, no action
taken by either party hereto shall be binding upon the other if
such action is the subject of an arbitration hereunder. Nothing
contained herein shall in any way deprive Group 1 of its right to
obtain injunctive or other equitable relief.
19. Miscellaneous.
a) The headings contained in this Agreement are used as a
matter of convenience to the parties and shall not affect the
construction of this Agreement.
b) This Agreement supersedes all prior agreements, either
oral or written, with respect to the employment of Employee by
Group 1 and, together with the compensation plan and standard
personnel policies and the procedures applicable to Employee and
referenced herein contain all of the convenants and agreements
between the parties with respect to such employment. No
modification of this Agreement shall be binding unless made in
writing and signed by both parties.
c) The failure of either party at any time to require
performance by the other party of any provision hereof shall not
affect that party's right thereafter to enforce the same, nor
shall the waiver by either party of any breach of any provision
hereof be taken or held to be a waiver of any succeeding breach
of any provision or as a waiver of the provision itself.
d) If any provision herein shall be found void or
unenforceable, that provision shall be severed herefrom and the
remainder hereof shall remain in full force and effect. If any
provision hereof shall be found to be unreasonable, said
provision shall be automatically reduced to the extent necessary,
to make such provision reasonable.
e) This Agreement shall be construed and enforced in
accordance with the laws of the State of Maryland, conflicts of
laws principles notwithstanding.
f) This Agreement may be executed in counterparts, each of
which shall be deemed an original, and together shall constitute
one fully executed Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
Attest: Group 1 Software, Inc.
___________________________ By: _________________________
Name: _______________________
Title: ______________________
Witness:
___________________________
_________________________
Mr.
City of Lanham )
) ss
State of Maryland )
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as his free act on
with full authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as a free act on
behalf of the identified corporation with full authority to do
so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
EXHIBIT 8.1
Persons Who Will Be Released
By Premier One at Closing
1. Bergstron, Colleen
2. Brewer, Daniel
3. Dircz, Clark
4. Fruetel, Troy
5. Hiltunen, Paul
6. Larson, Mike
7. Lipetzky, Joel
8. Lundquist, Lou Ann
9. Marsh, David
10. Murphy, Michael Patrick
11. Schmitz, Andrew
12. Viegut, Todd
13. Wiemerskirch, Steve
Exhibit 8.2
Closing Statement as to Employment Related Costs
EXHIBIT 8.3
RELEASE OF COPYRIGHTS, INVENTIONS, PATENTS
AND TRADE SECRETS
THIS RELEASE OF COPYRIGHTS, INVENTIONS, PATENTS AND TRADE
SECRETS (hereinafter "Release") is made and entered into this
____ day of November, 1995, by and between Premier One
Consultants, Inc., a Minnesota corporation (hereinafter "Premier
One") and Mr. ________ (hereinafter "Mr. _______").
RECITALS
1. The parties acknowledge that Mr. _______ has been an
employee or contractor of Premier One or an affiliate
thereof; and
2. Group 1 Software, Inc., a Delaware corporation, and Premier
One have requested that Mr. ________ release to Premier One
any rights he may have or may have had in and to the
material described below; and
3. Mr. _____ is willing to do so.
COVENANTS
Now, therefore, in consideration of the premises, the intent
of the parties, the sum of $10.00 cash in hand paid by each of
the parties to the other and other good and valuable
consideration, the receipt and sufficiency are hereby
acknowledged, the parties intending to be legally bound hereby
agree as follows:
Mr. ______ hereby acknowledges and agrees that all of his
works of authorship or other works, including without limitation
the Trademarks and the Software, as defined in Attachment 1,
hereto and incorporated herein by reference, and any support
documentation produced, developed or authored by Mr. _____, in
whole or in part, whether during the course of developing and
producing the Trademarks or Software for Premier One or not, were
and are the sole and exclusive property of Premier One,
including, without limitation, any copyrights, rights to patents
and trade secret rights pertaining thereto.
In the event it is ever determined that any of these works
are the property of Mr. _____, he hereby agrees, at no additional
cost to Premier One, to assign to Premier One all of Mr. _____'s
right, title and interest, including all rights of copyrights,
rights to patents and trade secret rights, in such works. Mr.
_____ also agrees to cooperate with Premier One, at no additional
cost to Premier One, in perfecting any such assignment of rights,
including without limitation, the identification of the works and
supporting documentation and the execution of any instruments
required to register trademarks copyrights or patent rights.
In addition, Mr. _____ will and hereby does assign to
Premier One, to the extent not previously assigned, his entire
right, title and interest in any invention, patentable or not,
which is directly related to the Software or the Trademarks, and
made or conceived solely or jointly by Mr. _____ during the
course of developing and producing the Software or the
Trademarks.
In connection with any such invention, Mr. _____ will
disclose promptly to Premier One and Mr. _____ will, on request,
promptly execute a specific assignment of title to Premier One,
including, without limitation any rights of patent or trade
secret, and do anything else reasonably necessary to enable
Premier One to secure patent or trade secret protection in the
United States or foreign countries.
This Release shall be binding upon, and shall inure to the
benefit of Premier One and Mr. _____, and their respective heirs,
personal and legal representatives, successors and permitted
assigns.
Premier One may freely assign its rights hereunder.
This Release contains the entire agreement and understanding
between the parties hereto, and no modification hereof shall be
binding unless in writing and signed by the parties hereto.
This Release is executed in, and it is the intention of the
parties hereto that it shall be governed by the laws of the State
of Maryland.
IN WITNESS WHEREOF, Premier One has caused this Release to
be executed by a duly authorized officer and Mr. _____ has duly
executed this Agreement on the date first written above.
Premier One Consultants, Inc.
By:______________________________ By:______________________
Its:_____________________________ Mr. __________________
City of _________________)
) ss
State of ________________)
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as free act with
full authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as a free act on
behalf of the identified corporation with full authority to do
so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
Exhibit 8.4
Employees From Whom I.P. Releases
Will Be Delivered At Closing
1. Brewer, Daniel
2. Fruetel, Troy
3. Hiltunen, Paul
4. Lipetsky, Joel
5. Marsh, David
6. Murphy, Michael Patrick
7. Schmitz, Andrew
8. Viegut, Todd
9. Weimerskirch, Steve
Exhibit 11.1
List of Shareholders at Closing
1. Dircz, Clark
2. Larson, Michael
3. Marsh, David
4. Pederson, Ronald
Exhibit 11.2
Financial Statements
Exhibit 16.1
List of Suits
1. House et al. v. Dircz et al.
Exhibit 26.1
BILL OF SALE
For Good and Valuable Consideration, the receipt and
sufficiency of which are hereby acknowledged, Premier One
Consultants, Inc. and WorldTrak Corporation, (collectively
"Seller") does hereby grant, sell, bargain, convey, transfer,
assign and set over to Group 1 Software, Inc., ("Purchaser") all
of Seller's rights, title and interests in and to, free and clear
of all liens and encumbrances, the tangible and intangible
personal property to be conveyed and transferred pursuant to that
certain Agreement for the Purchase and Sale of Assets, dated
November ___, 1995, by and between the Seller and Purchaser, as
such property is more fully described in Exhibit A, hereto.
Seller agrees to execute and deliver such other documents
and instruments as may be necessary in order to effectuate the
purpose of this instrument at Closing or from time to time
thereafter.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as
of this ___ day of November, 1995.
SELLER:
Premier One Consultants, Inc.
ATTEST: ___________________ By: __________________________
Its: ________________________
City of _________________)
) ss
State of ________________)
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as a free act on
behalf of the identified corporation with authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
ATTEST: ___________________ WorldTrak Corporation
By: __________________________
Its: ________________________
City of _________________)
) ss
State of ________________)
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as a free act on
behalf of the identified corporation with authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
PURCHASER:
Group 1 Software, Inc.
ATTEST: ___________________ By: __________________________
Its: _______________________
City of _________________)
) ss
State of ________________)
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as a free act on
behalf of the identified corporation with authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
Exhibit 26.2
ASSIGNMENT OF COPYRIGHTS
Premier One Consultants, Inc. and WorldTrak Corporation,
each a Minnesota corporation having their principal office at
3800 West 80th Street, Suite 95, Minneapolis, Minnesota, 55431,
herein referred to as Assignor, for good and valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, paid by Group 1 Software, Inc. a Delaware
corporation with its principal office at 4200 Parliament Place,
Suite 600, Lanham, Maryland 20706-1844, herein referred to as
Assignee, assigns to Assignee, its successors and assigns, all
Assignor's rights, title, and interests in and to the copyrights
of certain software identified in Schedule 1, attached hereto and
incorporated herein by reference.
IN WITNESS WHEREOF, the Assignor, through its duly
authorized officer below, has executed this Agreement at Lanham,
MD, on November __, 1995.
Premier One Consultants, Inc.
By: ___________________________
Its:
City of _________________)
) ss
State of ________________)
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as a free act on
behalf of the identified corporation with authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
WorldTrak Corporation
By: ___________________________
Its:
City of _________________)
) ss
State of ________________)
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this
instrument, who acknowledged that he signed it as a free act on
behalf of the identified corporation with authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
Schedule 1
Title of Work Registration No.
Exhibit 26.3
ASSIGNMENT OF TRADEMARKS
WHEREAS, Premier One Consultants, Inc. a Minnesota corporation
whose address is 3800 West 80th Street, Suite 95, Minneapolis,
Minnesota, 55431, has used and is using the following mark: _______,
(certificate number ________, registered date ________, Int. Cl.
_________); and
WHEREAS, Premier One Consultants, Inc. wishes to assign said mark;
and
WHEREAS, Group 1 Software, Inc., (a Delaware corporation) of 4200
Parliament Place, Suite 600, Lanham, Maryland 20706-1844 is desirous of
acquiring said trademarks.
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, said Premier One
Consultants, Inc. does hereby assign unto said Group 1 Software, Inc.,
all right, title and interest in and to the said mark, together with the
goodwill symbolized by the mark and the right to sue for past
infringement.
Premier One Consultants, Inc.
By: __________________________
Its: President
City of __________ )
) ss
State of Maryland )
On this _____ day of November, 1995, before me appeared
__________________________, the person who signed this instrument, who
acknowledged that he signed it as a free act on behalf of the identified
corporation with authority to do so.
______________________________
Notary Public
[Notarial Seal] My Commission Expires:
November 22, 1995
Group 1 Software, Inc.
4200 Parliament Place, Suite 600
Lanham, MD 20706-1844
Re: Sale of Assets of Premier One Consultants, Inc.
to Group 1 Software, inc.
Gentlemen:
This law firm has acted as legal counsel to Premier One Consultants,
inc., and WorldTrak Corporation, ("WorldTrak"), both Minnesota
corporations (Premier One and WorldTrak shall be collectively referred
to as the "Seller"), in connection with the sale of assets to Group 1
Software, inc. (the "Purchaser"), pursuant to that certain Agreement for
Purchase and Sale of Assets dated November 22, 1995 ("Purchase
Agreement"). This opinion is furnished to the Purchaser as required by
Section 12 of the Purchase Agreement. The terms used herein, unless
otherwise defined herein, shall have the meanings assigned to such terms
in tile Purchase Agreement.
In connection with our representation of the Seller, we have assisted
the Seller with the review, revision, execution and delivery of the
Purchase Agreement and the exhibits attached thereto, and we are
familiar with the actions undertaken by the Seller in connection
therewith.
We have made such inquiry of the officers, directors and shareholders of
the Seller and have examined such corporate and other records,
documents, agreements and instruments and have examined such questions
of law as we have deemed necessary for the purposes of this opinion
and we have previously provided Purchaser with our findings of such
corporate records pursuant to the letters dated September 19, 1995 and
October 9, 1995, attached hereto as Exhibits A and B respectively,
which exhibits are incorporated herein by reference.
In rendering our opinion, we have relied, as to all questions of fact
material to this opinion, upon the representations of the officers of
(he Seller. In addition, in rendering our opinion, we have reviewed and
are relying on the following (hereinafter collectively referred to as
the "Documents"):
A. The Purchase Agreement and all exhibits attached thereto ("Sale
Documents");
B. The Seller's corporate books and records, including the Seller's
Articles of Incorporation, Bylaws, Minutes of the Seller's board of
directors and shareholders and issued and outstanding stock
certificates, stock warrants and stock options contained therein;
C. All of the documents relating to Seller's financing transaction with
The Bulfinch Fund I, L.P., an Illinois limited partnership
("Bulfinch''), including but not limited to, the Note and Warrant
Purchase Agreement, the Promissory Note, Warrant Nos. I through 3, the
Security Agreement and the Consulting Agreement, an dated March 14,
1994;
D. All documents relating to Seller's financing transaction with
Fidelity Bank;
E. The Seller's existing Software License and Support Agreements;
F. All relevant documents in connection with the Premier One Trademark
Registration, Reg. No. 1,674,684, and the WorldTrak Trademark
Registration, Reg. No. 1,841,728;
G. Certificates of Good Standing issued by the office of the Minnesota
Secretary of State, indicating that the Seder is duly Incorporated and
validly existing as of October 11, 1995;
H. The Mutual Release Agreement by and between the Seller, Clark Dircz,
Michael Larson and David Marsh (collectively the "Principals'') and
Bulfinch dated November 22, 1995 ("Mutual Release");
I. The Warrant cancellation Agreement between Premier One and Belles
Berger Brightstone, inc., or its assigns ("Belles Berger") dated
November 7, 1995 ("Belles Berger Agreement") and the Warrant
Cancellation Agreement between Premier One and Ronald L. Berger
("Berger") dated November 20, 1995 ("Berger Agreement"); and
J. All documents referred to in Exhibits A and B attached hereto.
In rendering our opinion, we have assumed the following to be true:
i. The authenticity and completeness of ad Documents submitted to us as
originals and the conformity to original documents of all documents
submitted to us as copies; and in connection with the Sale Document
executed by Purchaser, that Purchaser has the corporate power to enter
into and perform ad obligations under such document and is duly
authorized by all requisite corporate action to execute and deliver the
same, and perform ad of the obligations set forth thereon.
The law governing the opinions expressed herein is limited to applicable
federal law and She law of the State of Minnesota.
Based on the foregoing, and in reliance on and subject to the
assumptions, qualifications, exceptions, and limitations set forth
herein, we are of the opinion that:
1. The Seller is a corporation duly organized and validly existing under
the laws of the State of Minnesota. The Seller has all requisite power
and authority to own and operate its business as presently conducted and
to own and hold the assets and properties used in connection wherewith
and to carry out its obligations under the Purchase Agreement.
2. To our knowledge, Seller owns all of The assets to be transferred by
means of the Sale Document, free and clear of all liens, claims and
encumbrances of any kind and nature and, upon the delivery thereof to
Purchaser, Purchaser will acquire good and valid title thereto, free and
clear of all liens, claims, and encumbrances of any kind and nature,
except for such liabilities, liens, claims, and encumbrances Purchaser
specifically agreed to assume pursuant to the terms and provisions of
the Purchase Agreement.
3. Upon the execution of The Mutual Release and The closing of the
transactions contemplated hereunder, all of Bulfinch's rights, title and
interest, as a creditor and shareholder of The Seller, in and to all of
the assets to be transferred by means of The Sale Documents, shall be
fully released and canceled, except for any right or interest provided
to Bulfinch in such assets under the terms and provisions of the
Purchase Agreement.
4. Upon the execution of the Belles Burger Agreement and the Berger
Agreement and upon the closing of The Transaction contemplated
hereunder, and of Belles Berger's and Berger's respective right, title
and Interest as a creditor and/or warrant holder of the Seller, in and
to all of the assets to be transferred by means of the Sale Documents,
shad be fully released and canceled.
5. Seller has the full right, power, and authority to enter into and
perform all obligations on its part to be performed as contained in the
Purchase Agreement.
6. The Seller is not required to be licensed or qualified as a foreign
corporation in any state or other jurisdiction in which it is not
presently so licensed or qualified.
7. To our knowledge and after requisite inquiry, there is no obligation
or legal proceeding pending or threatened or adversely affecting the
Seller or other transactions contemplated in the Purchase Agreement.
8. The execution, delivery and performance by the Seller of the Sale
Document have been duly authorized and approved by all necessary
corporate action on the part of the Seller and its shareholders; and the
Sale Documents constitute valid and binding obligations of The Seller
and each of The Principals and each is enforceable in accordance With
their respective terms. The signatures of Seller and the Principals set
forth on the Sale Documents are The authentic signatures of Seller and
each such Principal. In The event Purchaser requires Seller to establish
the authenticity of any such signature, we shall undertake to use our
reasonable best efforts to assist Seller in providing Purchaser with
such evidence as may be necessary to establish The authenticity of such
signatures. The execution, delivery and performance of The Sale Document
will not violate any existing provision of law and will not conflict
with, or result in a breach of any of The terms of, or constitute a
default under The Articles of Incorporation or Bylaws, each as amended
to date, of the Seller.
9. Except for The transfer of registered trademarks, no authorization,
consent or approval or other order of or filing with any governmental
agency or body or regulatory authority, is required for the valid
authorization, execution, delivery and performance by the Seller of the
Sale Documents.
10. After obtaining all necessary consents, if any, the execution,
delivery, and performance of the Sale Documents by the Seller will not
breach or constitute a default under, or grounds for acceleration of the
mahurny of, any agreement, undertaking, or other Instrument, known to us
after requisite inquiry, to which the Seller is a party or by which the
Seller or any of its property may be bound.
11. The execution, delivery, or performance of the Sale Documents by the
Seller will not conflict with or result in me violation of any judgment,
order, or decree of any court or arbiter, known to us, to which the
Seller is a party or by which the Seller or any of its property is
bound.
The opinions expressed hereon are qualified to The extent that the
validity, binding. effect, or enforceability of The Documents may be
limited or affected by me following:
a. Bankruptcy, insolvency, reorganization, arrangement, moratorium,
equity of redemption, or other similar statutes, laws, rules of law, or
court decisions now or hereafter in effect affecting the rights of
creditors generally; and
b. Procedural requirements to be complied with at the right of enforcement, not
otherwise set out in the Documents, that may restrict or condition rights and
remedies otherwise therein stated to be available.
Thus opinion is provided to the Purchaser as a legal opinion and not as a
guarantee of the makers set forth herein. Our opinion is in refereence to the
makers expressly stated herein, and no other opinions may be implied. Moreover,
regardless of the states in which members of this firm are licensed to
practice, we express no opinion as to the laws of any jurisdiction other than
applicable federal law and and the state of Minnesota.
This opinion is rendered as of the date set forth above. We expressly disclaim
any obligation to advise you of any changes in the circumstances, laws, or
evens that may occur subsequent to me date hereof or otherwise to update this
opinion.
This opinion shall only be relied upon by the Purchaser and its successors and
assigns, and their respective legal counsel, and only in connection with the
transactions contemplated by the Purchase Agreement, and this opinion may not be
used or relied upon by the Purchaser or any other person for any other
purpose whomsoever without in each instance our prior written consent.
Sincerely yours,
COUREY, ALBERS, KOSANDA & ZIMMER, P.A.
ByPAZ:jlb
September 19, 1995
Edward Weiss VIA FACSIMILE TRANSMISSION
Group 1 Software (301) 918-0430
4200 Parliament Place
Suite 600
Lanham, MD 20706
RE: Premier One Consultants, Inc.
Dear Ed:
There are currently two corporations in existence. Premier One
Consultant, inc. ("POCI") and WorldTrak Corporation ("WorldTrak"). POCI
is sometimes referred to, inadvertently, as Premier One, inc. or Premier
One, however, Al such references relate solely to POCI.
I have had an opportunity to review the corporate records of uhe
above-referenced corporation, and its related entites, and offer the
following observations:
POCI is a Minnesota corporation currently in good sts nding. The
corporation has the authority to issue up to 1,308,900 shares of common
capital stock, with a par value of $.01 per share. The following stock
is outstanding as of the date hereof:
SHAREHOLDER NAME NUMBER OF SHARES
Clark Dircz 427,450
Mike Larson 142,500
Ron Pederson 142,500
David Marsh 37,550
EXHIBIT X
The corporation issued the following warrants, none of which have been
exercised as of the date hereof:
WARRANT HOLDER NUMBER OF WARRANTS EXERCISE PRICE
Bulfinch Fund I, L.P. 327,225 $1.72
Belles Berger Brighhtone, Inc. 28,272 $0.424
Ronald L. Berger 7,068 $0.424
Clark Dircz 57,960 $2.58
Mike Larson 19,320 $2.58
Ron Pederson 19,320 $2.58
The corporation has issued the following stock options, none of which
have been exercised as of she date hereof:
OPTION HOLDER NUMBER OF WARRANTs EXERCISE PRICE
David Marsh 91,623 $2.58
Troy Fnuetel 13,089 $2.58
Andrew Schmidtz 13,098 $2.58
Steve Weimerskirch 13,098 $2.58
The foregoing warrant and Options do not have any voting rights nor do
whey entice the holders thereof to exercise any shareholder rights until
tile same are exercised.
The current officers of Premier are as follows:
Clark Dircz - President/CEO
Ron Pederson - Senior Vice President/Treasurer
Mike Larson - Senior Vice President/Secretary
David Marsh - Vice President
The current directors of POCI are as follows:
Clark Dircz
Ron Pederson
Mike Larson
William Cross
Charles Schwartz
The corporation has the authority to sell all or substantially all of
tsn assets upon the affirmative vote of the majority of the voting power
of all of the shareholders entitled to vote thereon.
WorldTrak is a Minnesota corporation currently in good standing. The
corporation has the authority to issue up to 2,500,000 shares of common
capital stock. There is currently 210 shares issued and outstanding and
owned entirely by POCI.
WorldTrak was organized as CRM Holdings incorporated. InimlOy, the
corporation was owned by Clark Dircz, 120 shares, Ron Pederson, 40
shares, Mike Larson, 40 shares, and David Marsh, 10 shares. On March 28,
1994, ad of the shareholders sold uheur shares in the corporation to
POCI for a purchase price of $1.00 per share. There is no purchase
agreement to represent dais transaction, however, Premier One did issue
checks to each shareholder and the shareholder's endorsed their
certificates and delivered the same to POCI.
On December 29, 1994 CRM Holdings incorporated changed in name to
WorldTrak Corporation.
The current of ricers of WorldTrak are as follows:
Clark Dircz - President/CEO
Ron Pederson - Treasurer/CFO
Mike Larson - Secretary
The current directors of WorldTrak are as follows:
Clark Dircz
Ron Pederson
Mike Larson
David Marsh
As of the date hereof, the only assets owned by WorldTrak are 8-10
Software License and Support Agreements (License agreement"), copies of
which have been provided to Group I for review. In essence, WorldTrak
has operated under an implied 'license from POCI to license the
WorldTrak software. AO royalties and revenues generated from the License
Agreements is passed direcdy from WorldTrak to POCI. WorldTrak does not
have a bank account or any other asset.
All other assets, including the WorldTrak trademark, are owned by POCI.
Accordingly, the purchase agreement could be structured as a purchase of
the assets owned by POCI and WorldTrak, or, WorldTrak could assign the
license agreements to POCI prior to the execution of the purchase
agreement.
I also reviewed various pleadings relative the House, Nezerka & Froelich
v. Dircz. et al. lawsuit ("Lawsuit"). The lawsuit primarily involved the
determination of the value of Clark Dircz's Interest in his former
accounting firm, House, Nezerka & Froehhch. The partners of the
accounting firm were shareholders of POCI. Upon see commencement of the
lawsuit, the partners assigned then shares in POCI to POCI, and the
parkas released their respective claims.
I reviewed the answer to the complaint, the defendants' third-party
complaint and the defendants answer to the third-party complaint. The
complaint was not available for my review. As we discussed on the phone,
I will request thatl Clark Dircz produce a copy of the complaint and the
other pleadings in this matter and forward the same to you for review.
Finally, I reviewed the agreement regarding Todd Hysjulien's purchase of
the accounting practice from Dircz, Pederson & Larson. Thus transaction
involved only the acquisition of the accounting practice. Todd Hysjuden
was never an employee, officer, shareholder or director of POCI, nor did
he have any involvement m the development of or any right, Jude or
interest in or to the WorldTrak software and, accordingly, the agreement
between Hysjuhnen and Dircz, Pederson and Larson did not address the
Worldtrak software or any other intellectual property rights. CLark
Dircz has indicated to me that Todd Hysjulien would be wining to execute
an agreement disclaiming any interest in the WorldTrak software.
Hopefully, the foregoing observations will resolve the corporate entity
and asset ownership issues you have raised. As I have indicated before,
our client would like to keep the transaction moving with the Intent of
closing this transaction as soon possible. Accordingly, please forward
the proposed purchase agreement for our review as soon as possible.
If you have any questions regarding the matter contained herein, please
feel free to can me.
Sincerely,
Paul A. Zimmer
PAZ:sab
October 9, 1995
Edward Weiss Via Federal Express
Group 1 Software
4200 Parliament Place
Suite 600
Lanham, MD 20706
RE: Premier One Consultants, Inc.
Dear Ed:
As you recall, I forwarded you a letter dated September 19, 1995, which
contained my observations after reviewing the relevant corporate records
of Premier One Consultants, Inc. and WorldTrak Corporation. In the
lever, I indicated that none of the outstanding warrants have been
exercised. I have now come to learn hat the Bulfmch Fund I, L.P.
(Bulfinch), alleges that on or about February 17, 1995, it exercised in
rights under in warrant and purchased 100 shares of the common stock of
Premier One Consultants, Inc. Obviously, if the transaction closes as
contemplated by the parsties, Bulfinch's alleged wan to exercise will
have no bearing on the transaction and, on Addison, Bulfinch will
consent to the transaction prior to closing.
On a rebated matter, I have discussed with Clark Dircz the use of any
other common Law trademarks or trade names and he indicated to me that
he is not aware of any such trademarks or trade names, other than
Premier One and WorldTrak.
Finally, I am enclosing, herewith, a proposed draft of our opinion
letter which is being simultaneously provided to the partners of this
Law firm for review and accordingly may be modified pending their
comment. Also enclosed are proposed authorizations by the Shareholders
and Directors of Premier One approving and consenting to the
transactions.
If you have any questions regarding the matters contained herein, please
feel free to call me.
Sincerely,
PAZ:jlt7 Paul A Zimmer
Enclosures
Outstanding Contracts
Exhibit 1.3
The following list represents all contracts outstanding
that Premier One Consultants, Inc. or any of it
affiliated companies have entered into. It further
describes the status of such contracts,
1. American Guidance Services, ("AGS")
(Letter of Agreement with Premier One Consultants, Inc.
dated August 26,
1993, as amended on April 27,1995.)
As further highlighted by the letter of estopel signed
by AGS this contract has been fulfilled with the
exception of Premier One owing AGS 12 hours consulting
services to be provided at AGS corporate offices in
Circle Circle Pines, MN.
2. AON Direct Group ("AN")
(Letter of Agreement with Premier One Consultants, Inc.
date April 12,1995 and Software License add Support
Agreement with WorldTrak, Inc. dated April 12, 1995)
The Letter of Agreement, stating that Premier One would
assist AON in the implementation of WorldTrak software
on a time & materials basis has been fulfilled to the
extent that AON has requested services.
The Software License and Support Agreement runs for a
period of one year from the date of the contract Premier
One's obligation will expire on April 11, 1996 if AON
does not renew the Agreement by remitting payment for an
additional year.
3. CAE Vanguard ("CAE")
All agreements with CAE related to custom software and
decision support systems specific to CAE's business. CAE
does not own my WorldTrak software. Premier One has
fulfilled its obligations under all agreements (both
verbal & written). Currently, Premier One is not engaged
by CAE to perform any development or professional
services.
Outstanding Corporation ("Ceridian") (Letter of
Agreement with Premier One Consultants, Inc. date
November 10, 1994 and Software License and Support
Agreement with CRM Holdings, Inc. November 15, 1994)
Under the Letter of Agreement, Premier One agreed to
provide WorldTrak software implementation assistance
(in excess of 150 hours) to Ceridian on a time and
material basis. As a condition of Ceridian purchasing
the WorldTrak Software, Premier One agreed to provide
150 hours of implementation services at no cost to
Ceridian. As of September 30, 1995, Premier One has
fulfilled this obligation. As future service will be
provide on a time and material basis.
The Software License and Support Agreement runs for a
period of one year from the date of the contract,
Premier One's obligation will expire on November 14,
1995 if Ceridian does not renew the Agreement by
remitting payment for an additional year
FSI International ("FSI") (Letter of Agreement with
Premier One Consultant, Inc. date October 11, l994 and
Software License and Support Agreement with CRM
Holdings, Inc. dated June 1, 1995)
The Letter of Agreement, stating that Premier One would
assist FSI in the implementation of WorldTrak software
on a time & materials basis has been fulfilled to the
extent that FSI has requested services.
The Software License and Support Agreement runs for a
period of one year from the date of the contract.
Premier One's obligation will expire on May 31, 1996 if
FSI does not renew the Agreement by remitting payment
for an additional year.
KeoTech, Inc. ("KeoTech") (Software License and Support
Agreement with CRM Holdings, Inc. dated June 14, 1994)
The Software License and Support Agreement runs for a
period of one year from the date of the contract
Although Premier One's obligation expired on June 13,
1995, KeoTech has been billed for the upcoming year
Premier One fully expects that KeoTech will remit the
fee to extend the Agreement until June 13, 1996
The Laitram Corporation ("Laitram" ) (Software License
and Support Agreement with CRM Holdings, Inc., dated
February 8, 1995)
The Software License and Support Agreement runs for a
period of one year from the date of the contract
Premier One's obligation will expire on February 1,
1996 if Laitram does not renew the Agreement by
remitting payment for an additional year.
Liberty Share Draft and Check Printer, Inc. ("Liberty")
(Letter of Agreement with Premier One Consultants, Inc.
dated April 18, 1995 and software License and Support
Agreement with WorldTrak, Inc. dated May 5, 1995)
Under the Letter of Agreement, Premier One agreed to
provide WorldTrak software implementation assistance
(in excess of 60 hours) to Liberty on a time and
material basis. As a condition of Liberty purchasing the
WorldTrak software, Premier One agreed to provide 60
hours of implementation services at no cost to Liberty
As of September 30, 1995, Premier One has fulfilled this
obligation. All future service will be provide on a time
and material basis.
The Software License and Support Agreement runs for a
period of one year from the date of the contract.
Premier One's obligation will expire on May 4, 1996 if
Liberty does not renew the Agreement by remitting
payment for an additional year.
Marvin Window & Doors / Marvin Lumber & Cedar Company
("Marvin") (Letter of Agreement with Premier One
Consultants, Inc. date June 10, 1994 and Software
License and support Agreement with CRM Holdings, Inc
date September 8, 1994)
Under the Letter of Agreement, the obligation to provide
300 hours of implementation assistance at $100 per hour
has been fulfilled.
The Software License and Support Agreement runs for a
period of one year from the date of the contract.
Although Premier One's obligation expired on September
7, 1995, Marvin has been billed for the upcoming year.
Premier One fully expects that Marvin will remit the
fee to extend the Agreement until September 7, 1996
As identified by the attachment to the estopel letter
received from Marvin, Premier One is obligated to
provide certain functionality within WorldTrak. These
items are included in the current "Bugs/Enhancements
Listing"
Rex Distributing Company, Inc. ("Rex") (Letter of
Agreement with Premier One Consultants, Inc. dated
August 8, 1994)
As further highlighted by the letter of estopel signed
by Rex this Agreement has been fulfilled with the
exception of Premier One owing Rex approximately 40
hours of WorldTrak training.
Wisconsin Manufacturers & Commerce ("WMC") (Letter of
Agreement with Premier One Consultants, Inc. date
March 24, 1994)
Under thus Agreement, Premier One agreed to develop five
custom
application for WMC These consisted of 1) Label
Printing, 2) Contribution, 3) Business World, 4)
Directory, and 5) insurance. WMC subsequently opted
not to have the Insurance application Written. The
status on the other applications are as follows
Application
Label Printing
Contributions
Business World
Directory
Time to Complete
Obligation fulfilled, future work done on a time and
materials basis
40 - 60 Hours
80 - 110 Hours
Obligation fulfilled
Premier One, Inc.
BALANCE SHEET
OCTOBER 31, 1995
ASSETS
CURRENT ASSETS
CASH IN CHECKING - FIDELITY $3,615.10
CASH IN COLLATERAL - FIDELITY 35,758 00
ACCOUNTS RECEIVABLE 122,797 26
ALLOWANCE FOR DOUBTFUL ACCTS (1,500.00)
WORK IN PROCESS 63,604.55
ALLOWANCE FOR REALIZATION (43,304.55)
PPD EXPENSES 10,005.22
PREPAID SUPPORT 2,547.19
NOTE RECEIVABLE-CURRENT 58,502.09
------------
TOTAL CURRENT ASSETS 252,024.86
FIXED ASSETS
OFFICE EQPT & COMPUTERS CY 2,001.55
SOFTWARE CY 9,147.77
WORLDTRAK SOFTWARE 1,276,296.32
SOFTWARE AMORTIZATION (164,514.69)
OFFICE EQUIPMENT 465,413.47
ACCUMULATED DEPRECIATION (226,589.25)
DEPOSITS 7,164.07
DEPOSIT - OFFICE 2,482.50
CRM INVESTMENT 210.00
INVESTMENT FEES 73,504.91
INFVESTMENT FEES AMORTIZATION (19,350.00)
------------
TOTAL FIXED ASSETS 1,425,766.65
-------------
TOTAL ASSETS 1;677,791.51
-------------
Premier One, Inc.
BALANCE SHEET
OCTOBER 31, 1995
LIABILITIES AND EQUITY
CURRENT LIABILITIES
NOTES PAYABLE 274,176.14
ACCOUNTS PAYABLE 70,927.36
OTHER WITWHOLDINGS (35.95)
401K WITHHOLDING 394.54
ACCRUED SALARIES/COMMISSIONS 15,782.96
ACCRUED VACATION 3,776.41
PREPAID SUPPORT TIME 30,626.25
TOTAL CURRENT LIABILITIES 395,647.71
NON-CURRENT LIABILITIES
COMMERCE GROUP #4 17,990.44
CQMMERCE GROUP #3 9,371.43
COMMERCE GROUP #2 6,777.04
NOTE PAYABLE - EQPT FIDELITY 4,193.05
COMMERCE GROUP #5 21,168.17
COMMERCE GROUP #6 4,287.04
COMMERCE GROUP #7 15,776.66
COMMERCE GROUP #8 73,065.63
COMMERCE GROUP #9 8,265.76
NOTE PAYABLE 500,000.00
SHAREHOLDER LOAN 20,500.00
DEFERRED COMPENSATION 74,484.16
ACCRUED INTEREST 67,825.00
CHICAGO PAYABLES 16,000.00
LOAN-CRM 125,000.00
964,704.38
TOTAL NON-CURRENT LIABILITIES 1,360,352.09
STOCKHOLDERS' EQUITY
COMMON STOCK 150.00
PAID IN CAPITAL 56,729.67
RETAINED EARNINGS 139,953.24
RETAINED EARNINGS - CURRENT YEAR 120,606.51
317,439.42
------------
TOTAL STOCKHOLDERS' EQUITY 1677791.51
------------
Premier One, Inc.
INCOME STATEMENT
FOR THE 10 PERIODS ENDED OCTOBER 31, 1995
PERIOD TO DATE YEAR TO DATE
ACTUAL PERCENT ACTUAL PERCENT
REVENUES
CONSULTING SERVICES $64,843 91 70.8 ~ 567,920.95 ~ 63.7
WORLDTRAK SALES 30,000 oo 32 E 293 500 00 35 2
PRODUCT SALES Co 688,393
TRAINING 0 9 570 00 ~
WORLDTRAK MAINT 5,000 oo S S 34 3 8
WIP CHANGE - NBT (8,000.00) (8.71 (41,919.09~/ (4.5)
PRODUCT COMMISSIONS .00 .0 996.20. .1
MISCELLANEOUS INCOME .00 .0 1,966.65 r .2
INTEREST FINC CHG INCOME (250 7 1 ( 31 (2 335 SSJ / (-3)
TOTAL REVENUE 91 593 21 100 0 923 636 42 100 o
GROSS PROPIT 91,593.21 100.0 923,636.42 100.0
OPERATING EXPENSES
PRODUCT COSTS 358.13 .4 44,936.45 ~ 4.9
PRODUCT COST-WTRAK 3RD PMTY . 00 .0 23,779.13 2.6
PAYROLL - CLERICAL 4,500.00 4.9 43,469.44) 4.7
PAYROLL - OFFICERS 7,850.01 8.6 66,724.97 ~ ~ 7.2
PAYROLL - PRODUCTION STAFF 35,108.36 38.3 372,751.08{ 40.4
PAYROLL - PRODUCTION STAFF: CR .00 .0 S,000.00J~ .S
SALES COMPENSATION .00 .o 1,692.00V/ .2
MARKETING COMMISSIONS lS9.87 .2 2,360.64 v/ 3
PRODUCTION BONUS 3,954.42 4.3 21,532.9 2
CAPITALIZED R&D (27,250.21J (29.BI (216,931.23) (23.7)
ADVERTISING 1,424.22 1.6 13,622.23 ~ 1.5
CONTRACT SERVICES .00 .0 1,680.20 y/ ,2
BAD DEBTS 6,838.00 7.5 8,969.92 ' 1 0
BANK SCERVICE CR M GE .O2 2 512.52 2
ADP Charges 157.1 . . .
TRAINING EXPENSE 1 TRAVEL .00 .0 2,181.02 .2
CONTINUING EDUCATION 368.00 .4 S,323.57 / .6
SEMINA /TRADE SHOW EXPENSES .00 0 8,186.26 / 9
DEPRECIATION 6,400.00 7.0 57,600.00 ~ 6.2
DUES 1 SUBSCRIPTIONS (65.00) t.1) 1,649 03 2
INSURANCE - GENERAL 2Bl.SS .3 6,314.70: .7
INSURANCE - GROUP 2.107 26 2.3 25,451 66 ~ 2.8
INSURANCE - LIPE 1,591 64 1 7 15,916,40/) 1 7
LEGAL 4,002 00 4 4 24,444.56 2 6
INTEREST 00 .0 a26~13 1
MISCELLANEOUS EXPENSE .00 .0 125.36 .0
6P-COFFEE SUPPLIES 215.48 .2 Z,047 41 2
OFFICE SUPPLIES 11 96 0 s,S08 68- .6
POSTAGE 233,12 .3 3,669.52. / .4
ROYALTY FEES .00 .0 3,250.00 ~ ,4
RENT 9.209.40 10.1 104'a64 oo / 11.i
RENT: CH 96.12 ~ .0
EDP MAINTENANCE 1,1Z1.37 1.2 12,213.22 }.3
STATE INCOME TAX 51.30 .1 510.30 1
'n4 t
Premier One, Inc.
INCOME STATEMENT
FOR THE 10 PERIODS ENDED OCTOBER 31, l995
+--- PERIOD TO DATE --+ .---- YEAR TO DATE ---+
ACTUAL PERCENT ACTUAL PERCENT
OPERATING EXPENSES (Continued)
PAYROLL TAXES 53 752 54 39 350 4S /
TELEPHONE 1 704 87 41 19 ~ 25 265 33> 2 37
TELEPHONE: CH .00 .0 1,959 20 .z
TRAVEL/ENTERTAINMENT 49.29 .1 36,466.14V 3.9
DPL Fee~ .00 .0 3,426.00 .4
DPL MANAGEMENT FEE .00 .o (13,628.70) (l.SI
CAPITALIZED R&D-OPERATING (19,979.781 (21.8) (176,813.02) (19.1)
.. . . .
TOTAL OPERATING EXPENSES 44,165.92 48.2 586,248.67 63.5
_ .. .
NET INCOME - ACCRUAL 47.427.29 51.8 337.387.75 36.5
OTHER INCOME 1 EXPENSES
OTHER INCOME 600.00 .7 17,064.22 1.8
INTBREST (4,505,48) (4.9) (53,194.62)/ (5 81
AMORT INVESTMENT FEES (1,2QO.00) (1.3) (12,000.00~>, (1 3)
DEFERRED OFFICER8 COMP OOo Oo (37,775 10) ~ (4 1)
CAPITALIZED R&D-OTHER 2,945.38 3.2 47,458.38 5.1
SOFTWARE AMORTIZATION (15,000.001 (16.4J (138,000.00) (li.9)
CHICAGO RESTRUCTURE .O0 0 (23,331.12) (2.5)
TOTAL OTHER INCOME 1 EXPENSES (17,160.10) (18.7) (216,781.241 (23.51
INCOME, PRE-TAX 30,267.19 33.0 120,606.51 13.1
. _ _
NET INCOME (LOSSJ S30,267.19 33.0 ~ 120,606.51 13.1
<PAGE>
BILL OF SALE AND PURCHASE AGREEMENT
THIS BILL OF SALE AND PURCHASE AGREEMENT (this "Agreement")
is made and entered into on this 14th day of November, 1995, by
and between CMEDS, Inc., a Delaware corporation ("CMEDS"), and
SIDCO, Inc., a New York corporation ("SIDCO").
WITNESSETH
WHEREAS, CMEDS, pursuant to a Letter Agreement dated May 8,
1995, as amended, and documents entered into and delivered
pursuant thereto (the "May Sale Documents"), sold all of its
rights, title and interests to certain software products
identified on Schedule A (the "Software"), to COM-MED, Systems,
Inc., (f/k/a MEDCOM Acquisition Corp., "COM-MED"); and
WHEREAS, pursuant to the May Sale Documents, as specifically
set forth in that certain Promissory Note in the principal amount
from $0.00 to $4,315,000.00, based on revenue (as defined
therein), as secured by that certain Security Agreement, COM-MED
granted to CMEDS a first priority security interest in and to the
Software; and
WHEREAS, as a result of the cessation of the business
operations by COM-MED, a default occurred under the May Sale
Document and CMEDS, as secured party filed suit in the Court of
Common Pleas, Montgomery County, Ohio (the "Court") to recover
possession of the Software; and
WHEREAS, by order dated October 10, 1995 the Court granted
CMEDS interim possession of the Software to enable CMEDS to
arrange to provide support and maintenance to existing users of
the Software; and
Whereas, the Sheriff of Montgomery County, Ohio took
possession of the Software and delivered it to CMEDS; and
WHEREAS, on October 24, 1995, CMEDS and SIDCO entered into
that certain Agreement for a Limited License (the "October
Agreement") , wherein CMEDS granted SIDCO a limited license to
maintain and support the Software on behalf of existing users of
the Software; and
WHEREAS, on November 14, 1995, the Court granted CMEDS the
right of possession of the Software, and ordered COM-MED to
deliver possession of the Software to CMEDS; and
WHEREAS COM-MED has delivered the remainder of the software
to CMEDS; and
WHEREAS, CMEDS desires to effect the sale of its rights,
title and interests in and to the Software to SIDCO and SIDCO
desires to purchase said rights, title and interests to the
Software pursuant to the terms and conditions set forth herein
and the October Agreement, which is hereby extended and made a
part hereof as if fully incorporated herein..
NOW, THEREFORE, in consideration of the foregoing, of the
mutual promises set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. SALE AND ACCEPTANCE.
1.1. CMEDS hereby sells, assigns, transfers and conveys to
SIDCO all of COM-MED's rights, title and interests in and to the
Software, including all modifications, enhancements and
derivative works thereto consistent with the October Agreement.
1.2, Acceptance. SIDCO hereby accepts and acquires all of
the aforementioned rights, title and interests in and to the
Software and agrees to pay CMEDS as provided in that certain
Promissory Note dated October 25, 1995 and delivered to CMEDS by
SIDCO. SIDCO agrees that the Security Agreement dated October
25, 1995 shall remain in full force and effect until the
Promissory Note expires or terminates according to its terms.
2. REPRESENTATON AND WARRANTIES OF CMEDS.
As a material inducement to SIDCO to enter into this
Agreement, CMEDS represents and warrants as follows:
2.1. Existence; Good Standing; Corporate Authority;
compliance with Law. CMEDS is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Delaware. CMEDS has all requisite corporate power and
authority to own its properties and carry on its business as now
conducted. CMEDS is not in default with respect to any order of
any court, governmental authority or arbitration board or
tribunal to which it is a party or is subject and is not in
violation of any laws, ordinances, governmental rules or
regulations to which it is subject.
2.2. Condition of Personal Property. The Software is being
sold "AS IS" and "WHERE IS." CMEDS PROVIDES NO WARRANTEES,
REGARDING THE USE, OR RESULTS OF USE, OF THE SOFTWARE. CMEDS
DISCLAIMS ALL WARRANTEES, INCLUDING ANY EXPRESS OR IMPLIED
WARRANTEES, OR ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR
PARTICULAR PURPOSE. Notwithstanding the foregoing, nothing
contained herein shall impair any warranty of title to the
Software, based on the sale described in Section 1. above.
2.3. No Brokers. CMEDS has not entered into any contract,
arrangement or understanding with any person or firm which may
result in the obligation of SIDCO to pay any finder's fees,
brokerage or agent's commissions or other like payments in
connection with this Agreement and CMEDS is not aware of any
claim or basis for any claim for payment of any finder's fees,
brokerage or agent's commissions or other like payments in
connection with this Agreement.
2.4. Validity and Effect of Agreements. The October
Agreement, that certain Security Agreement, dated October 25,
1995, that certain Promissory Note, dated October 25, 1995 and
this Agreement (collectively the "Sale Documents") constitute the
valid and legally binding obligations of CMEDS enforceable in
accordance with their terms, subject to enforcement and relief
pursuant to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors
rights and to general equity principles. The consummation of the
sale herein does not require the consent of any third party not
obtained, will not result in the breach of any term or provision
of, or constitute a default under, any order, judgment,
injunction, decree, indenture, mortgage, lease, lien, other
agreement or instrument to which CMEDS is a party or by which it
is bound, and will not violate or conflict with any provision of
the bylaws or charter of CMEDS.
2.5. Authorization. The execution and delivery of the Sale
Documents and all documents contemplated thereby and hereby by
CMEDS, and the consummation by it of the transactions hereunder,
have been duly authorized by all requisite corporate action,
2.6. No Misrepresentation or Omission. No representation or
warranty by CMEDS in this Section 2 or in any other Section of
this Agreement, or in any certificate or other document furnished
or to be furnished by CMEDS pursuant hereto, contains or will
contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make the statement
contained herein or therein not misleading.
3. REPRESENTATIONS, WARRANTIES AND CONVENANTS OF SIDCO
SIDCO represents, warrants and covenants to CMEDS as
follows:
3.1. Existence; Good Standing; Corporate Authority:
Compliance With Law. SIDCO is a corporation duly incorporated,
validly existing in good standing under the laws of the state of
New York. SIDCO has all requisite corporation power and
authority to own its properties and carry on its business as now
conducted. SIDCO is not in default with respect to any order of
any court, governmental authority or arbitration board or
tribunal to which SIDCO is a party or is subject, and SIDCO is
not in violation of any laws, ordinances, governmental rules or
regulations to which it is subject. SIDCO has obtained all
licenses, permits and other authorizations and has taken all
action required by applicable law or governmental regulations in
connection with its business as now conducted.
3.2. Best Efforts. SIDCO reaffirms that it has and shall
maintain during term of the Promissory Note the necessary
expertise to support and maintain end users of the Software to
the reasonable satisfaction of the end users. SIDCO further
reaffirms that it will use its best commercial efforts to
maintain and support the Software to the reasonable satisfaction
of the end users and to vigorously promote and market the
Software to potential additional end users.
3.3. Validity and Effect of Agreements. The Sale Documents
constitute, the valid and legally binding obligations of SIDCO,
enforceable in accordance with their terms, subject to
enforcement and relief pursuant to bankruptcy, insolvency,
reorganization and other laws of general applicability relating
to or Affecting creditors' rights and to general equity
principles. The consummation of the sale does not require the
consent of any third party not obtained, will not result in the
breach of any term or provision of, or constitute a default
under, any judgment, decree, indenture, mortgage, other agreement
or instrument to which SIDCO is a party or by which it is bound,
and will not violate or conflict with any provision of the bylaws
or Certificate of Incorporation of SIDCO.
3.4. Authorization. The execution and delivery of the Sale
Documents and all documents contemplated thereby and hereby by
SIDCO, and the consummation by it of the transactions hereunder,
have been duly authorized by all requisite corporate action.
3.5. No Misrepresentation or Omission. No representation or
warranty by SIDCO in this Section 3 or in any other section of
this Agreement, or in any certificate or other document
previously furnished by SIDCO or to be furnished by SIDCO
pursuant hereto, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not
misleading or will omit to state a material fact necessary in
order to provide seller with accurate And complete information as
to this transaction.
4. OTHER COVENANTS AND AGREEMENTS.
4.1. Further Assurances. CMEDS will do, execute,
acknowledge and deliver or will cause to be done, executed,
acknowledged and delivered all such further acts, deeds,
transfers, assignments, conveyances, powers of attorney and
assurances necessary to effectuate fully the Sale of the
Software. SIDCO will do, execute, acknowledge and deliver, or
will cause to be done, executed, acknowledged and delivered, all
such further acts, deeds, transfers, assignments, conveyances,
powers of attorney and assurances necessary to effectuate fully
the sale of the Software.
4.2. Payment of Fees and Expenses. Except as expressly
provided for herein, each party hereto agrees to pay its own fees
and expenses, including fees and expenses of its respective
lawyers, accountants, consultants, brokers advisors, employees
and other agents, incurred in connection with the negotiation and
documentation of the transaction contemplated herein.
4.3. Source Code Security Interest. SIDCO agrees to deliver
to CMEDS a copy of the source code to the Software to be held by
CMEDS until SIDCO has complied with all of the terms, provisions
and conditions of the Sale Documents, all of which have been
executed by SIDCO and delivered by CMEDS. SIDCO shall regularly,
but in no event less than once per calendar quarter, update the
source code and deliver a copy to CMEDS. SIDCO further agrees,
upon request by CMEDS, to provide existing customers of COM-MED a
copy of the applicable source code.
5. INDEMNIFICATION.
5.1. Indemnification by CMEDS. CMEDS agrees to indemnify
and bold SIDCO harmless against, and will reimburse SIDCO on
demand for any payment, loss, cost or expense (including
attorneys fees and costs of investigation incurred in defending
against such payment, loss, cost or expense or claim therefor)
made or incurred by SIDCO at any time after the date first set
forth above in respect of:
A. any and all liabilities or obligations of, or claims
against CMEDS, of any nature (whether accrued, absolute,
contingent or otherwise and whether a contractual, tax or other
type of liability, obligation or claim) not assumed by SIDCO
pursuant to the Sale Documents;
B. any and all damage or deficiency resulting from any
omission, misrepresentation, breach of warranty or nonfulfillment
of any term, provision, covenant or agreement on the part of
CMEDS contained in the Sale Documents, or from any
misrepresentation in, or omission from, any certificate or other
instrument furnished or to be furnished to SIDCO pursuant to the
Sale Documents; and
5.2. Indemnification by SIDCO. SIDCO agrees to indemnify and
hold CMEDS harmless against, and will reimburse CMEDS on demand
for, any payment, loss, cost or expense (including attorneys'
fees and costs of investigation incurred in defending against
such payment, loss, cost or expense or claim therefor) made or
incurred by CMEDS at any time after the date first set forth
above in respect of any omission, misrepresentation, breach of
warranty, or nonfulfillment of any term, provision, covenant or
agreement on the part of SIDCO contained in this Agreement, or
from any misrepresentation in, or omission from, any certificate
or other instrument previously furnished or to be furnished to
CMEDS pursuant to this Agreement.
6. GENERAL.
6.1. Binding Effect. The Sale Documents shall be binding
upon, and shall inure to the benefit of, CMEDS and SIDCO and
their respective successors and assigns. SIDCO may not assign or
transfer any rights or obligations without the prior consent of
CMEDS. If there is a conflict between this Agreement or any
other Sale Documents, this Agreement shall govern.
6.2. Audit Rights. In addition to any other audit or review
rights granted to CMEDS hereunder or otherwise, CMEDS shall, upon
at least twenty (20) days notice to SIDCO have the right, to
review and verify, at CMEDS sole expense, those books and records
of SIDCO reasonably necessary to verify SIDCO's performance of
its obligations under the Sale Documents.
6.3. Indemnification Under Other Agreements. Nothing in
this Agreement shall affect the obligations of the parties hereto
with respect to indemnification under any other agreement to
which the parties are party.
6.4. Independent Contractors. SIDCO and CMEDS shall at all
times be independent contractors for the purposes of this
Agreement, and not agents, employees, co-venturers or partners
with respect to the transactions contemplated hereunder. Each
party shall so represent itself to all other parties. Except as
provided herein, no party has granted to the other the right to
bind it in any manner whatsoever.
6.5. Governing Law. The construction and performance of the
Sale Documents shall be governed by the laws of the State of
Maryland, without regard to the conflict of laws provisions
thereof.
6.6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same
instrument.
6.7. Closing. Closing shall be deemed to occur at the
offices of CMEDS, Inc., 3513 Concord Pike, Suite 3000,
Wilmington, Delaware 19801, on the date set forth above.
6.8. Notices. All notices consents and other communications
which are required or may be given hereunder shall be made in
writing and shall be deemed to have been duly given if delivered
in person, or by regular United States mail or by telegram, telex
or telegraphic means.
If to CMEDS, to:
CMEDS, Inc.
3513 Concord Pike
Suite 3000
Wilmington, DE 19803
If to SIDCO, to:
SIDCO, Inc.
529 Windsor Park Drive
Dayton, OH 45427
or to such other person or persons at such address or addresses
as may be designated by written notice to the other parties
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed effective as of the day and year first
set forth above.
ATTEST: CMEDS, Inc.
a Delaware corporation
By: /s/ Charles A. Crew
Name: Charles A. Crew
Title: President
ATTEST: SIDCO, Inc.
a New York corporation
By: /s/ Deborah S. Voss
Name: Deborah S. Voss
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE THIRD
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 1,322
<SECURITIES> 2,006
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0
2,846
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