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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 10, 1998
DATA SYSTEMS & SOFTWARE INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-19771 22-2786081
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(State or Other Jurisdiction (Commission file Number) (IRS Employer
of Incorporation) Identification No.)
200 Route 17, Mahwah, New Jersey 07430
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (201) 529-2026
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 10, 1998, the Registarnt's wholly-owned International Data
Operations, Inc. subsidiary ("IDO"). completed the sale of substantially all the
assets of its PHD -TM- Professional Help Desk -TM- division ("PHD") to Computer
Associates International, Inc. ("CA"). The aggregate purchase price paid at
closing by CA in the transaction was $ 8.6 million, of which $ 7.0 million was
paid to IDO and the balance was paid to three senior managers of PHD with
certain equity participation rights. Other than certain installation and
maintenance service contract obligations which were assumed by CA, IDO remains
responsible for trade payables and other obligations related to PHD of
approximately $500,000.
The sales price and the other terms of the transaction were determined by
arms-length negotiations among the Registrant, CA and the senior managers of
PHD.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
Proforma financial statements for the Registrant excluding the operations
and assets of PHD in accordance with Article 11 of Regulation S-X will be
filed on or before June 9, 1998
(c) Exhibits.
99.1 Press release dated April 13, 1998
99.2 Asset Purchase Agreement dated as of April 10, 1998
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized, in the Township of
Mahwah, State of New Jersey, on April 20, 1998.
DATA SYSTEMS & SOFTWARE INC.
BY: /s/ George Morgenstern
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CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
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Exhibit 99.1
FOR IMMEDIATE RELEASE:
CONTACT:
Stephen D. Axelrod, CFA
George Morgenstern, CEO Susan T. Bolen (Media)
DATA SYSTEMS & SOFTWARE INC. WOLFE AXELROD ASSOCIATES
(201) 529-2026; (201) 529-3163 (Fax) (212)370-4500; (212)370-4505 (Fax)
e-mail:[email protected]
DATA SYSTEMS & SOFTWARE INC.
ANNOUNCES SALE OF PHD -TM- PROFESSIONAL HELP DESK
Mahwah, New Jersey -- April 13, 1998 -- Data Systems & Software Inc.
(NASDAQ/NNM: DSSI) and Computer Associates International, Inc. (NYSE:CA)
announced today that DSSI's International Data Operations, Inc.
("IDO") subsidiary, has sold the assets of its PHD,
Professional Help Desk division, to Computer Associates International, Inc.
DSSI received approximately $7.0 million in cash in connection with the sale.
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Data Systems & Software Inc. is a provider of computer consulting and
development services and packaged software products, and is an authorized direct
seller and value added reseller of computer hardware. Through its Powercom and
Comverge subsidiaries, DSSI provides automatic meter reading and related
products and services to utility customers. In addition, the Company, through
Tower Semiconductor Ltd., manufactures integrated circuits on silicon wafers
using its advanced production capability and the proprietary designs of its
customers.
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Exhibit 99.2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered into in
Islandia, New York as of April 10, 1998 by and between Data Systems & Software,
Inc. ("DSSI"), International Data Operations, Inc. ("IDO"), Isidore Sobkowski
("Sobkowski"), Frances Tischler ("Tischler") and Jacob Lamm ("Lamm") (IDO,
Sobkowski, Tischler and Lamm collectively are hereinafter the "Sellers"),
Computer Associates International, Inc., a Delaware corporation having its
principal place of business at One Computer Associates Plaza, Islandia, New York
11788-7000 ("CA") and its wholly-owned subsidiary, CA Think, Inc. ("CA Think").
RECITALS
WHEREAS IDO, Sobkowski, Tischler and Lamm have developed a professional help
desk product and business; and
WHEREAS, Sellers own and desire to sell and assign to CA Think the Assets
(as defined herein) constituting the foregoing business and CA Think desires to
purchase and acquire such Assets from Seller and, thereafter, to use, market,
license, sublicense, develop, maintain, collect and otherwise deal with the
Assets without restriction.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 "ASSETS" shall mean and include the following:
(a) The "PRODUCTS" which shall consist of all Source Code and
object code (in magnetic and hard copy form) to all current versions and
all existing prior versions, including any and all foreign language
versions, of all computer software programs of Sellers or DSSI related to
PHD - Professional Help Desk, including, without limitation, PHD and EBR
and the other programs described on EXHIBIT A attached hereto, whether now
in existence or in the development stage. "SOURCE CODE" shall mean the
source code version of the Products in the form of machine readable and
human readable listings
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together with associated flow charts, algorithms, comments and other
written instructions and technical documentation.
(b) The "PRODUCT DOCUMENTATION" which shall consist of all
technical documentation pertaining to the Products (including any end user
manuals, specifications, flow charts, design documentation, bug lists and
an electronic machine-readable version of such manuals), all lists of
prices for the Products, a summary of current promotional activity with
respect to the Products, any and all training or question and answer books
pertaining to the Products, and any and all notes, plans and other
documentation describing problems, future directions or other matters
related to the Products.
(c) The "BOOKS AND RECORDS" which shall consist of magnetic and
hard copy lists of all registered users of all past and current versions of
the Products as of the Closing Date ("USER LISTS") together with a copy of
all other books, records, files and papers, whether in hard copy or
computer format, used in the connection with the marketing, licensing and
support of the Products.
(d) The "PROPRIETARY RIGHTS" which shall consist of all
patents, patent rights, copyrights, trademarks, trademark rights, trade
names, trade name rights and patent, copyright or trademark applications
respecting the Products and all ideas, know-how, trade secrets, inventions,
technology, designs and any other proprietary rights which are owned or
licensed by Sellers or DSSI pertaining to the Products, the Product
Documentation and the User Lists. The Proprietary Rights shall include,
without limitation, the patents and the registered and unregistered
copyrights and trademarks listed on EXHIBIT B.
(e) The "INVENTORY" which shall consist of all raw materials
and all finished units of the Products in the possession or control of
Sellers or DSSI on the Closing Date.
(f) The "CUSTOMER AGREEMENTS" which shall consist of all license
and maintenance agreements whereby DSSI or Sellers have authorized any
third party to use the Products as of the Closing Date. All Customer
Agreements existing as of the Closing Date are listed on EXHIBIT D.
(g) The "DISTRIBUTOR AGREEMENTS" which shall consist of the
software distribution agreements relating to the Products existing as of
the Closing Date as described in EXHIBIT E.
(h) The "EQUIPMENT" which shall consist of all personal property
(other than cash) and interests therein, including machinery, equipment,
furniture, office equipment, communications equipment, vehicles, spare and
replacement parts and other tangible
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property used by Sellers or DSSI in connection with the Products but
excluding cash as set forth in EXHIBIT F.
(i) The "ACCOUNTS RECEIVABLE" which shall consist of all accounts
receivable, notes and amounts of money due or receivable by, or for the
account or credit of, Seller from Customers or pursuant to any license or
other agreement for periods prior to the Closing Date of this Agreement.
Accounts Receivable as of April 7, 1998 in the approximate amount of
$900,000 are set forth in Schedule1.1(i).
(j) The "OTHER ASSETS" which shall consist of the all other
assets of Seller used or generated in connection with the PHD .
1.2 "ANCILLARY AGREEMENTS" shall mean the Software Assignment Agreement,
the Trademark Assignment Agreement and the Lease Assignment Agreements in the
form attached hereto as EXHIBIT G.
1.3 "ASSIGNED LEASES" shall mean the existing leases for equipment and
real property described in Exhibit H that are to be assigned by IDO to CA under
this Agreement. The Assigned Leases shall only include the leases specifically
listed on Exhibit H and shall not include any other leases for real or personal
property of Sellers or DSSI.
1.4 "ASSUMED LIABILITIES" shall mean IDO's obligations under only the
Customer Agreements, the Assigned Leases and Other Assumed Agreements from and
after the Closing Date.
1.5 "CLOSING DATE" shall mean April 10, 1998 or such other date as
mutually agreed by the parties.
1.6 "EXCLUDED ASSETS" shall mean cash, bank depositsand security
deposits as set forth on Schedule 1.6.
1.7 "FINANCIAL STATEMENTS" shall mean the PHD statements of operations
for the years ended December 31, 1995, 1996 and 1997. The Financial Statements
are attached hereto as EXHIBIT I.
1.8 "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, claim or encumbrance of any kind in respect of such
asset.
1.9 "OTHER ASSUMED AGREEMENTS" shall mean the agreements and other
commitments listed on Schedule 1.9.
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1.10 "RESTRICTIVE COVENANTS" shall mean any provision, covenant or
obligation that limits or restricts in any manner (whether during any particular
period of time from and after the Closing Date, in certain geographic areas or
otherwise) the ability of CA, any subsidiary of CA or any employee of CA or its
subsidiaries to (a) engage in any line of business or to sell any products or
services; or (b) to compete with or obtain any products or services from any
other person or entity; in each case during any time after the Closing Date.
Restrictive Covenants shall include, without limitation, grants of exclusive
distribution rights relating to any of the Products or Proprietary Rights that
may be in effect at any time after the Closing Date.
1.11 "TRANSFERRED EMPLOYEES" shall mean the employees of IDO listed in
EXHIBIT J attached hereto, as may be amended by CA from time to time prior to
the Closing.
ARTICLE II
SALE AND PURCHASE; ASSIGNMENT
2.1 SALE AND PURCHASE. Subject to the terms and conditions contained
herein, Sellers hereby agree to sell, transfer, assign, convey and deliver to CA
Think on the Closing Date, and CA Think hereby agrees to purchase and accept on
the Closing Date, all right, title and interest in and to the Assets, free and
clear of all Liens of any kind. On the Closing Date Sellers shall execute and
deliver, or cause to be executed and delivered, to CA Think the following
documents and consummate the agreements set forth below:
(a) Each of the Ancillary Agreements in the form attached hereto as
EXHIBIT G assigning and transferring to CA Think the Products, the
Proprietary Rights and the Assigned Leases.
(b) A bill of sale transferring to CA Think the Assets.
2.2 ASSIGNMENTS OF AGREEMENTS. As of the Closing Date, Sellers hereby
assign to CA Think, and CA Think hereby accepts and assumes from Sellers, the
Customer Agreements, the Distributor Agreements, the Assigned Leases and the
Assumed Liabilities. Notwithstanding any of the foregoing provisions of this
Section 2.2, CA Think may, in its sole discretion, reject assignment and refuse
to assume and be bound by the terms and conditions any of the Customer
Agreements and Distributor Agreements that contain any Restrictive Covenants.
Sellers will obtain, at Sellers' own expense, any required consents necessary to
assign any of the Assigned Leases, Customer Agreements or Distributor Agreements
to CA and Sellers and DSSI shall jointly and severally indemnify CA from and
against any failure to obtain any such consent that may adversely affect the
rights of Seller to be assigned to CA hereunder.
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2.3 EXCLUDED LIABILITIES. The parties hereby agree that, except as hereby
specifically assigned by DSSI or Sellers and accepted and assumed by CA, no
other agreements, obligations or liabilities (actual or contingent) of DSSI or
Sellers are hereby transferred to, or accepted or assumed by, CA. All such
other liabilities and obligations of DSSI or Sellers shall be retained by and
remain obligations of DSSI or Sellers (the "Excluded Liabilities"), and CA shall
not assume, pay or discharge, and shall not be liable for, and the Sellers and
DSSI, jointly and severally, shall discharge, as well as indemnify and hold
harmless CA from and against any liability (actual or contingent), loss,
commitment, obligation or expense incident to or arising out of any Excluded
Liabilities. The Excluded Liabilities shall include, without limitation, any of
the following obligations, liabilities, commitments or expenses:
(a) incident to, or arising out of, any tax liabilities (or
penalties or interest thereon) of any nature whatsoever ( including any
sales, transfer or similar taxes which may arise as a result of the sale of
the Assets as contemplated by this Agreement) of Sellers or DSSI on account
of this Agreement or the operations of DSSI or Sellers up to and including
the Closing Date ("Tax Liabilities");
(b) incident to, or arising out of, the negotiation and
preparation of, or performance under this Agreement, including, without
limitation, the fees and expenses of Sellers' and DSSI's legal counsel,
accountants or other advisers in respect of the negotiation of this
Agreement and consummation of the transactions contemplated hereby and any
other costs incurred in connection herewith, and including, without
limitation, the fees and expenses of Oppenheimer & Co.;
(c) incident to, or arising out of, any claims, actions, suits,
proceedings, liabilities, fines, penalties, deficiencies or judgments
existing on the Closing Date as a result of, or in connection with,
Sellers' conduct of their business up to and including the Closing Date,
including, without limitation, the ownership or use of Assets by Sellers or
DSSI;
(d) relating to employee benefits or compensation arrangements
existing on or prior to the Closing Date, including, without limitation,
any liabilities or obligations under IDO's or DSSI's employee benefit
agreements and any salary, bonus, commission, severance or termination
payments, accrued vacation pay or other obligations to any employee or
consultant of IDO or DSSI;
(e) incident to, or arising out of, any failure by Sellers to
observe, perform or comply with the terms of any of the Customer Agreements
during any period prior to the Closing Date;
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(f) any contracts, commitments, obligations or agreements
relating to the development, marketing, support or licensing of any of the
Assets other than those expressly assumed by CA in writing as Assumed
Liabilities; or
(g) incident to, or arising out of, or relating to the Excluded
Assets.
2.4 THE PURCHASE PRICE. The total purchase price of the Assets to be sold
to CA as provided herein is as follows:
(a) a cash payment in the amount of $8,600,000 which shall be paid by CA
to Sellers on the Closing Date by wire transferring such funds to
Sellers' accounts as set forth on Schedule 2.4.
(b) A cash payment to be made on each of the first and second
anniversaries of the Closing Date as follows:
1st 2nd
Anniversary Anniversary
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Sobkowski $100,000 $100,000
Tischler $25,000 $25,000
Lamm $75,000 $75,000
provided, that in each case the individual to be paid is employed by
CA as of the date the payment is to be made; and further provided that
in the event that the employment by CA of any of the foregoing
individuals is terminated prior to the second anniversary of the
Closing by CA other than for cause, as defined in his employment
agreement, the foregoing cash payments which have theretofore not been
paid shall be made by CA to the individuals in question within thirty
days after the termination of their employment. If the individual's
employment by CA is terminated voluntarily by the individual other
than for Good Reason or by CA for cause, as defined in the respective
employment agreement of the individual, prior to the first or second
anniversary of the Closing as the case may be, then CA shall be
required to make the payments otherwise due to that individual under
this subsection to DSSI within thirty days after the termination of
their employment, provided that if it is subsequently determined that
the individual's employment was terminated by CA without cause and CA
is obliged to make the payment(s) required by this subsection (b) to
the individual in question, then DSSI will reimburse CA for the
corresponding amount previously paid by CA to DSSI.
2.6 ALLOCATION OF THE PURCHASE PRICE. The parties agree that $7,600,000
of the Purchase Price shall be allocated to the purchase of the software
technology, $700,000 shall be
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allocated to the purchase of the Accounts Receivable and $300,000 shall be
allocated the purchase of the Fixed Assets. The parties agree to act in
accordance with this allocation in the preparation of financial statements and
the filing of tax returns and in the course of any tax audit, tax review or tax
litigation relating thereto.
2.7 RIGHT OF OFFSET. Each Seller agrees that in the event that CA shall,
notwithstanding the terms and conditions of this Agreement, be required to make
any payments, discharge any Liens, settle any claims or otherwise incur any
obligation, expense, damage or other liability relating to any breach by any
Seller or DSSI of any of their representations and warranties set forth in
Section 4.3 or 4.4 of this Agreement, then CA will be entitled, in addition to
and not in limitation of its other rights and remedies under this Agreement, to
credit the full amount of such obligation, loss, expense, damage or other
liability incurred by CA against the Purchase Price otherwise payable by CA
under Section 2.5 of this Agreement.
ARTICLE III
CLOSING; DELIVERIES
3.1 CLOSING. The closing of this transaction (the "Closing") shall be
held on the Closing Date at or about 10:00 A.M. at CA's offices at One Computer
Associates Plaza, Islandia, New York 11788-7000 or at such other time and place
upon which the parties shall agree.
3.2 CONDITIONS TO CA'S OBLIGATIONS. CA's obligation hereunder to purchase
and pay for the Assets is subject to the satisfaction, on or before the Closing
Date, of the following conditions, any of which may be waived, in whole or in
part, by CA in its sole discretion, and Sellers and DSSI shall use their best
efforts to cause such conditions to be fulfilled:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE. The
rep-representations and warranties of each Seller and DSSI contained in
this Agreement (including the Exhibits and Schedules hereto) and those
otherwise made in writing by or on behalf of each Seller and DSSI in
connection with the transactions contemplated by this Agreement shall be
true, complete and accurate when made and on and as of the Closing Date as
though such representations and warranties were made at and as of such
date, and Sellers and DSSI shall have delivered to CA a certificate, dated
the Closing Date, to such effect (which in the case of DSSI and IDO shall
be signed by its President and Secretary). Sellers and DSSI shall have
duly and properly performed, complied with and observed each of its
covenants, agreements and obligations contained in this Agreement to be
performed, complied with and observed on or before the Closing Date, and
Sellers and DSSI shall have delivered to CA a certificate, dated the
Closing Date, to
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such effect (which in the case of DSSI and IDO shall be signed by its
President and Secretary).
(b) PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Assets to be purchased by CA hereunder shall not be
prohibited by any applicable law or governmental regulation and shall not
subject CA to any material penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental regulation.
(c) PROCEEDINGS; RECEIPT OF DOCUMENTS. All corporate and other
proceedings taken or required to be taken by IDO and DSSI (including the
obtaining of the approval of its stockholders) in connection with the
transactions contemplated hereby and all documents incident thereto shall
have been taken and shall be reasonably satisfactory in form and substance
to CA, and CA shall have received all such information and such counterpart
originals or certified or other copies of such documents as CA may
reasonably request. Such documentation shall include, without limitation,
adequate documentation in form and substance reasonably satisfactory to CA
evidencing that Sellers have sole and exclusive ownership of all of the
Products and Proprietary Rights and have sufficient right, title and
ownership interest in such Assets to convey them to CA in accordance with
the terms of this Agreement and the attached Ancillary Agreements.
(d) NO ADVERSE DECISION. There shall be no action, suit,
investigation or proceeding pending or threatened by or before any court,
arbitrator or administrative or governmental body which seeks to restrain,
enjoin, prevent the consummation of or otherwise affect the transactions
contemplated by this Agreement or questions the validity or legality of any
such transactions or seeks to recover damages or to obtain other relief in
connection with any such transactions.
(e) APPROVALS AND CONSENTS. Sellers and DSSI shall have duly obtained
all authorizations, consents, rulings, approvals, licenses, franchises,
permits and certificates, or exemptions therefrom, by or of all
governmental authorities and non-governmental administrative or regulatory
agencies having jurisdiction over the parties hereto, this Agreement, the
Assets or the transactions contemplated hereby, including, without
limitation, consents of all third parties pursuant to existing agreements
or instruments by which Sellers and/or DSSI may be bound, which are
required for the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, at no cost or
other adverse consequence to CA, and all thereof shall be in full force and
effect at the time of Closing.
(f) OMITTED INTENTIONALLY.
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(g) DELIVERY OF DOCUMENTS. The Sellers and DSSI shall have
delivered, or caused to be delivered, to CA the following:
(i) resolutions, certified by the Secretaries of each of the
Sellers and DSSI, with respect to the transaction contemplated by this
Agreement; and
(ii) all other consents, agreements, schedules, documents and
exhibits required by this Agreement or reasonably requested by CA to
be delivered at or before Closing.
(h) EMPLOYEE PROPRIETARY INFORMATION AGREEMENTS. Except as set forth
in Schedule 4.15, IDO and DSSI shall have delivered to CA copies of
agreements in the form attached as Schedule 3.2(h) signed by each current
employee or contractor of Seller involved in development of any of the
Products. Sellers shall have delivered to CA an Assignment and Assumption
Agreement assigning to CA all of its rights under such employee proprietary
information agreements insofar as such rights pertain to the Assets.
(i) ABSENCE OF CERTAIN CHANGES. Since the Closing Date there shall
not have occurred or arisen any change in, any event (including, without
limitation any damage, destruction or loss, whether or not covered by
insurance), condition or state of facts of any character that individually
or in the aggregate has or may be expected to have an effect on the Assets
of $10,000 or more, except such changes, events or conditions as are
disclosed to and accepted by CA in writing in accordance with the terms of
this Agreement.
3.3 CONDITIONS TO THE OBLIGATION OF SELLERS AND DSSI. The obligation of
Sellers and DSSI to consummate the transactions contemplated hereby are subject
to the fulfillment of the following conditions on or prior to the Closing Date,
any of which may be waived, in whole or in part, by Sellers and/or DSSI in their
sole discretion, and CA shall use its best efforts to cause such conditions to
be fulfilled:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE. The
representations and warranties of CA in this Agreement (including the
Exhibits hereto) and those otherwise made in writing by or on behalf of CA
in connection with the transactions contemplated by this Agreement shall be
true, complete and accurate when made and on and as of the Closing Date, as
though such representations and warranties were made at and as of such
date. CA shall have duly and properly performed, complied with and
observed each of their covenants, agreements and obligations contained in
this Agreement to be performed, complied with and observed on or before the
Closing Date.
(b) PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Assets to be purchased by CA hereunder shall not be
prohibited by any applicable law or
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governmental regulation and shall not subject Seller to any material
penalty, liability or other onerous condition under or pursuant to any
applicable law or governmental regulation.
(c) PROCEEDINGS. All corporate and other proceedings taken or
required to be taken by CA in connection with the transactions contemplated
hereby and all documents incident thereto shall have been taken.
(d) NO ADVERSE DECISION. There shall be no action, suit,
investigation or proceeding pending or threatened by or before any court,
arbitrator or administrative or governmental body which seeks to restrain,
enjoin, prevent the consummation of or otherwise affect the transactions
contemplated by this Agreement or questions the validity or legality of any
such transactions or seeks to recover damages or to obtain other relief in
connection with any such transactions.
3.4 DELIVERABLES. At the Closing, Sellers shall deliver or cause to be
delivered to CA those items listed on EXHIBITS A THROUGH J hereof, all
schedules hereto and such other documents and instruments of transfer as may be
necessary or appropriate to convey title to the Assets to CA, including, without
limitation, an assignment of Sellers' copyrights and trademark rights relating
to the Products. At the Closing, CA shall deliver to Sellers the Purchase Price
provided for in Section 2.5 (a).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLERS AND DSSI
Each of the Sellers and DSSI hereby jointly and severally represent and warrant
as follows, provided that the representations and warranties of Sobkowski,
Tischler and Lamm are limited to Sections 4.3(b), 4.4, 4.5, 4.6, 4.8 (4.8(a) to
the best of their knowledge), 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.17:
4.1 ORGANIZATION AND GOOD STANDING. Each of IDO and DDI is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals to carry on its
business as now conducted. Each of IDO and DSSI has delivered to CA true and
complete copies of the Certification of Incorporation and by-laws of IDO and
DSSI as currently in effect.
4.2 CORPORATE AUTHORITY. Each of IDO and DSSI full authority to execute,
deliver and perform this Agreement in accordance with its terms. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby does not and will not
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result in a breach, violation or default or give rise to an event which with the
giving of notice or after the passage of time, would result in a breach,
violation or default of any of the terms or provisions of IDO's or DSSI's
Certificate of Incorporation, as amended, or by-laws or of any indenture,
agreement, judgment, decree or other instrument or restriction to which IDO or
DSSI is a party or by which IDO or DSSI or any of the Assets may be bound or
affected. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of IDO or DSSI and no further authorization or
approval, whether of the stockholders or directors of IDO or DSSI or
governmental bodies or otherwise, is necessary in order to enable IDO or DSSI to
enter into and perform the same. The execution and delivery of this Agreement
and the transactions contemplated hereby will not result in the creation of any
encumbrance security interest or lien on any of the purchased Assets. This
Agreement constitutes a valid and binding obligation enforceable against IDO or
DSSI in accordance with its terms.
4.3 TITLE TO ASSETS. (a) IDO AND DSSI REPRESENTATION AND WARRANTY.
Sellers have good and marketable title to all of the Assets, including,
without limitation, the Products, the Product Documentation, User Lists and
the Proprietary Rights. None of the Assets, or the use thereof: (i) is
subject to any easements, restrictions, mortgages, liens, pledges, charges,
encumbrances, encroachments or rights of others of any kind or nature
whatsoever, (ii) encroaches or infringes on the property or rights of
another, or (iii) contravenes any applicable law or ordinance or any
administrative regulation or violates any restrictive covenant, the
enforcement of which would result in any liability to the owner of the
Assets or would in any respect interfere with or prevent the present and
continued use of the Assets for the purposes for which they are now being
used or would affect the value thereof. There are no agreements or
arrangements between either of IDO and DSSI and any third person (other
than any Seller) which have any effect upon Sellers' title to and other
rights respecting the Assets.
(b) SOBKOWSKI, TISCHLER AND LAMM REPRESENTATION AND WARRANTY. To the
knowledge of Sobkowski, Tischler and Lamm, Sellers have good and marketable
title to all of the Assets, including, without limitation, the Products,
the Product Documentation, User Lists and the Proprietary Rights. None of
the Assets, or the use thereof: (i) is subject to any easements,
restrictions, mortgages, liens, pledges, charges, encumbrances,
encroachments or rights of others of any kind or nature whatsoever, to the
knowledge of Sobkowski, Tischler and Lamm (ii) encroaches or infringes on
the property or rights of another, or (iii) to the knowledge of Sobkowski,
Tischler and Lamm, contravenes any applicable law or ordinance or any
administrative regulation or violates any restrictive covenant, the
enforcement of which would result in any liability to the owner of the
Assets or would in any respect interfere with or prevent the present and
continued use of the Assets for the purposes for which they are now being
used or would affect the value thereof. There are no agreements or
arrangements between any of Sobkowski, Tischler or
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Lamm and any third person (other than any Seller) which have any effect
upon Sellers' title to and other rights respecting the Assets.
4.4 PATENTS, TRADEMARKS, ETC. All inventions, patents, patent
applications, trademarks, copyrights, trademark or copyright applications or
registrations or other Proprietary Rights relating to the Products are described
in EXHIBIT B. No Seller or DSSI has received any notice that the Products or
Proprietary Rights infringe upon or violate the patents, trademarks, trade
names, trade secrets or copyrights of any third party. Sellers warrant that
the Products are all original work, that the Products are not in the public
domain and that no third party product or code was embedded in or included with
the Products or other Assets, except as set forth in Schedule 4.4. Sellers
also represent and warrant to CA that the Products and Proprietary Rights do not
infringe any intellectual property rights under any patent, copyright or
trademark or other intellectual property right anywhere in the world and that
the use and distribution of the Assets by CA (including use of the Products by
CA, third party distributors and customers) shall not infringe any patent,
copyright, trademark or other intellectual property right of any third party.
IDO and DSSI further warrant and Sobkowski, Tischler and Lamm warrant to the
best of their knowledge that Sellers and DSSI are under no obligation or
restriction, nor will they assume any obligation or restriction, which would in
any way interfere with, be inconsistent with, or present a conflict of interest
concerning Sellers' obligations under this Agreement. EXHIBIT A sets forth a
true and complete list of all of Sellers' computer software Products, whether
generally available or in the development stage.
4.5 COMPLIANCE WITH LAW. No Seller is in violation of any laws,
governmental orders, rules or regulations, whether federal, state or local, to
which the Assets are subject.
4.6 CUSTOMERS. Annexed hereto as EXHIBIT C is a true and complete list of
all contracts, commitments and agreements between IDO and any customers or
distributors of the Products or under which IDO has granted any licenses to use
or distribute the Products or under which IDO is performing any related support
or services.
4.7 FINANCIAL STATEMENTS. Attached hereto as EXHIBIT I are the Financial
Statements certified by the Chief Executive Officer and Chief Financial Officer
of DSSI. The Financial Statements fairly present the results of operation of
IDO's PHD business for the periods covered thereby. The Accounts Receivable
shall be collectable by CA within ninety (90) days after the Closing. In the
event that CA does not collect $600,000 cash from the Accounts Receivable within
ninety days after closing, DSSI shall reimburse CA for the difference between
$600,000 and the amount collected without regard to the $100,000 amount set
forth in Section 8.2(b), provided that CA shall use commercially reasonable
efforts to collect all such receivables. Upon DSSI's payment to CA hereunder,
DSSI shall be subrogated to the rights of CA, and CA shall assign to DSSI or its
designee CA's rights to collect the unpaid Accounts Receivable.
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4.8 MATERIAL AGREEMENTS. Except as set forth in SCHEDULE 4.8, no Seller
or DSSI or the Assets are subject to any agreement or obligation involving any
of the following:
(a) any plan, contract or arrangement evidencing or relating in any
way to: (i) liens, encumbrances or security interests on the Assets; or
(ii) guaranties with respect to the Assets;
(b) any contract containing provisions limiting the use of the Assets
in any line of business or in connection with the marketing of any
particular type of product in any geographic area;
(c) any joint venture contract or arrangement or other agreement
involving a sharing of profits or losses or any transfer or sharing of
title or ownership of the Products or Proprietary Rights; or
(d) any joint development or other technology development agreement
relating to any of the Products or Proprietary Rights.
True, correct and complete copies of any such contracts or agreements containing
any of the above provisions shall be listed on Schedule 4.8 and supplied to CA
prior to the Closing Date.
4.9 NON-COMPETE AND CONFIDENTIALITY AGREEMENTS. SCHEDULE 4.9 annexed
hereto lists all non-competition and confidentiality agreements with third
parties relating to the Products.
4.10 FUTURE COMMITMENTS. No Seller or DSSI has made any agreement or
commitment to perform any development work on the Products or otherwise enhance
or change the Products in any way.
4.11 CONFORMITY OF THE PRODUCT TO SPECIFICATION. The Products shall
substantially perform in accordance with their published documentation and that
there are currently no material claims pending or threatened alleging the
failure of the Products to perform properly except for complaints in the
ordinary course of business which are not material and routine requests for
customer support.
4.12 VALIDITY OF ASSIGNMENT. Sellers' rights and obligations under all
Customer Agreements and other agreements assigned to CA under this Agreement are
hereby duly and validly assigned to CA; that such assignment does not and will
not give rise to the ability of any other party to such agreements to terminate
such agreements or to otherwise modify the rights and obligations thereunder;
and that such assignments will not result in any liability being imposed on CA
other than to perform such agreements in the future.
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4.13 LITIGATION. There is no litigation currently pending or to the
knowledge of Sellers and DSSI, threatened that does or might affect Sellers'
interest in the Assets or its ability to convey to CA good, marketable and
unencumbered title to the Assets.
4.14 DISTRIBUTION AND ROYALTY OBLIGATIONS. Except for the Customer
Agreements listed on EXHIBIT C, there are no agreements pursuant to which any
third party has or claims any right to distribute, market, sell, license or
lease the Products or claims any right to participate, including by receipt of a
royalty, in the proceeds of any distribution, sale, license or lease of the
Products. Except as set forth on Schedule 4.14, no Seller or DSSI has any
royalty obligations for any portion of the Products to any third party and
attached hereto as SCHEDULE 4.14 is a true and correct copy of all agreements or
undertakings between Seller and any third party licensor under which any Seller
or DSSI is the licensee for any portion of the Products, including, without
limitation, any agreement granting Seller any rights to use internally, modify,
create derivative works and/or distribute any portion of the Products. There are
no agreements between any Seller or DSSI and any third party granting exclusive
distribution rights to any Product or Proprietary Right in any geographic or
market area.
4.15 Except as set forth on Schedule 4.15, IDO and DSSI have entered into
agreements with each current employee involved in development of the Products in
one of the forms attached as Schedule 3.2(h). There have been no third party
contractors who have been engaged by any Seller or DSSI in the development of
the Products.
4.16 OTHER AGREEMENTS OF OFFICERS AND EMPLOYEES. No officer or employee
of Seller is a party to or bound by any agreement, contract or commitment or
subject to any restrictions, including, without limitation, any restrictions in
connection with any previous employment of such person, which adversely affects,
or in the future may adversely affect the Assets or Seller's performance of its
obligations under this Agreement.
4.17 NO UNTRUE REPRESENTATION OR WARRANTY. No representation or warranty
contained in this Agreement or any attachment, statement, schedule, exhibit,
certificate or instrument furnished or to be furnished to CA by the Sellers or
DSSI pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CA
CA hereby represents and warrants to Seller as follows:
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5.1 ORGANIZATION AND GOOD STANDING. CA is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
5.2 CORPORATE AUTHORITY. CA has full authority to execute and to perform
this Agreement in accordance with its terms. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby does not
and will not result in a breach, violation or default or give rise to an event
which, with the giving of notice or after the passage of time, would result in a
breach, violation or default of any of the terms or provisions of CA's
Certificate of Incorporation, as amended, or by-laws or of any indenture,
agreement, judgment, decree or other instrument or restriction to which CA is a
party or by which CA may be bound or affected. The execution and delivery of
this Agreement and consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action on the part of CA and no
further authorization or approval, whether of the stockholders or directors of
CA or governmental bodies or otherwise, is necessary in order to enable CA to
enter into and perform the same. This Agreement constitutes a valid, binding
and enforceable obligation of CA in accordance with its terms.
5.3 CA is a sophisticated provider of software products. CA has had an
opportunity to ask the Sellers and DSSI any relevant question about the Assets
in connection with the execution of this Agreement.
ARTICLE VI
MUTUAL REPRESENTATIONS AND WARRANTY
6.1 BROKERAGE. CA and Sellers represent and warrant to each other that
each has not retained the services of a broker or finder in connection with the
transactions contemplated by this Agreement other than DSSI's agreement with
Oppenheimer & Co. and that all negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller directly with CA
and without the intervention of any broker or finder and each of the parties
agrees to indemnify the other party in the event of breach by such party of the
foregoing representation and warranty. Any obligation or amount owing to
Oppenheimer & Co. shall be the obligation and responsibility of the Seller.
ARTICLE VII
COVENANTS
7.1 COOPERATION. From and after the execution hereof and until the
Closing Date, Sellers shall:
(a) afford the officers, employees, attorneys, agents, engineers,
accountants and other representatives of CA free and full access at all
reasonable times and during normal
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business hours (except as so not to interfere with the business and
operations of Sellers), to the properties, books and records of Sellers
relating to Assets;
(b) permit CA and its representatives to make copies and extracts from
such books and records; and
(c) furnish CA and its representatives such financial data and other
information concerning the Assets as CA may reasonably request.
7.2 OPERATION OF BUSINESS. Except as otherwise contemplated by this
Agreement, from the execution hereof to the Closing Date, Sellers shall not do
any of the following with respect to the Assets without the prior written
consent of CA:
(a) enter into any contract or assume or acquire any obligation or
liability (contingent or otherwise) relating to the Assets except for
contracts and obligations of not more than $25,000 (aggregate for any
contract, obligation or series of related contracts or obligations)
incurred in the normal course of business consistent with past practices;
(b) mortgage, pledge or subject to any lien, charge, security
interest or encumbrance any of the Assets;
(c) sell, assign, transfer, convey or otherwise dispose or agree to
sell any of the Assets, including, without limitation, any of the Products
or Proprietary Rights or enter into any other contract or agreement
relating to the title, ownership, use or operation of the Products or
Proprietary Rights, except in the normal course of business consistent with
past practice;
(e) cancel, release or waive any debt, claim or right under or
relating to the Assets or any Customer Agreements, except for normal trade
adjustments make in the ordinary course of business consistent with past
practice;
(f) grant any rights or licenses with respect to the Products or
under the Proprietary Rights; except for non-exclusive software licenses of
a value of not more than $25,000 (aggregate for any contract, obligation or
series of related contracts or orders) to third parties on normal and
reasonable terms and conditions granted in the normal course of business
consistent with past practice. All licenses and contracts of a value of
$25,000 or more shall require CA's advance written approval; or
(i) otherwise conduct its business relating to Assets other than in
the ordinary course of business consistent with past practice.
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7.3 INSTALLATION OF THE SOURCE CODE. On the Closing Date of this
Agreement:
(a) Sellers and DSSI shall make the source code for the Products
available to CA for installation on CA's computers and shall deliver to CA
such other computer tapes, documentation, promotional materials and other
information Sellers and DSSI have which may comprise the Assets, including
all Customer Agreements and User Lists; and
(b) Sellers and DSSI shall deliver to CA copies of all Books and
Records of Sellers and relating to the Assets.
7.4 FURTHER ASSURANCES. Sellers and DSSI agree that, upon request by CA
from time to time, they will do, execute, acknowledge and deliver, or will cause
to be done, executed, acknowledged and delivered, all such further
acknowledgments, deeds, assignments, bills of sale, transfers, conveyances,
instruments, consents and assurances as may reasonably be required for the
better assigning, transferring, granting, conveying, assuring and confirming to
CA, its successors and assigns, the Assets to be sold or assigned to CA as
provided herein.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth herein shall survive through the third anniversary of the
Closing Date except that the representations and warranties in Sections 4.1,
4.2, 4.3, 4.4, 4.5, 4.8, 4.14 and 4.16 forever survive and remain in effect.
8.2 INDEMNITY AGAINST CLAIMS. Each Seller and DSSI hereby jointly and
severally agree to indemnify and hold CA harmless from and against the
following:
(a) Any and all liabilities, losses, damages, claims, costs and
expenses ("Damages") of Sellers and DSSI of any nature, whether
absolute, contingent or otherwise, which are not expressly assumed by
CA as herein provided;
(b) Any and all liabilities, losses, damages, claims and expenses of
any nature whatsoever, resulting from any misrepresentation, breach of
any warranty, or non-fulfillment of any covenant or agreement on the
part of Sellers and DSSI contained in this Agreement or in any
statement, attachment, schedule, exhibit or certificate furnished or
to be furnished by Sellers or DSSI to CA pursuant hereto or in
connection with the transactions contemplated hereby, but only if such
Damages exceed $100,000, in which case all of such Damages shall be
covered; and
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(c) Any and all actions, suits, proceedings, demands, assessments or
judgments, costs and expenses (including reasonable attorneys' fees)
incident to any of the foregoing.
8.3 INDEMNIFICATION BY CA. CA hereby agrees to indemnify and hold Sellers
and DSSI harmless from and against any liabilities, losses, damages, claims,
costs and expenses incurred after the Closing Date arising out of or resulting
from:
(a) CA's failure to perform its obligations under the Assumed
Liabilities of Sellers assigned to CA pursuant to Section 2.2 hereof for
periods after the Closing Date;
(b) liabilities for bugs or other errors in the Products resulting
from any alterations, enhancements or modifications to the Products made by
CA after the Closing Date; or
(c) any liabilities for claims of infringement of third party
intellectual property rights relating to any changes, alterations,
enhancements or modifications to the Products made by CA after the Closing
Date; provided, however, that above indemnification obligations of CA shall
not extend to any claims arising from any misrepresentation, breach of
warranty or non-fulfillment by the Sellers or DSSI of any covenant or
agreement on the part of the Sellers or DSSI contained in this Agreement or
in any statement, attachment, schedule, exhibit or certificate furnished or
to be furnished to CA pursuant hereto or in connection with the
transactions contemplated hereby of the terms and conditions of this
Agreement.
8.4 NOTICE OF CLAIM, ASSUMPTION OF DEFENSE AND SETTLEMENT OF CLAIMS. With
respect to any third party claims against either party (the "Indemnitee") made
subsequent to the Closing Date, the following procedures shall be observed:
(a) the Indemnitee shall promptly give notice to the Indemnifying
party (the "Indemnitor") after the Indemnitee has knowledge of any claim as
to which recovery may be sought against the Indemnitor because of the
Indemnity provisions set forth in Sections 8.2 and 8.3 above, or of the
commencement of any legal proceedings against the Indemnitee with respect
to such claim after the Indemnitee has knowledge or such proceedings,
whichever shall first occur, and shall permit the Indemnitor to assume the
defense of any such claim or any litigation resulting from such claim with
counsel reasonably satisfactory to the Indemnitee. Failure by the
Indemnitor to notify the Indemnitee of its election to defend any such
action within 20 days after notice thereof shall have been given, shall be
deemed a waiver by the Indemnitor of its right to defend and settle such
action.
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(b) If the Indemnitor assumes the defense of any such claim or
litigation resulting therefrom, its obligations hereunder as to such claim
shall be limited to taking all steps necessary in the defense or settlement
of such claim or litigation resulting therefrom and to holding the
Indemnitee harmless from and against any and all losses, damages and
liabilities awarded in any such proceeding or arising out of any settlement
approved by the Indemnitor or any judgment in connection with such claim or
litigation resulting therefrom. The Indemnitor shall not, in the defense
of such claim or any litigation resulting therefrom, consent to entry of
any judgment (except with the prior written consent of the Indemnitee) or
enter into any settlement (except with the prior written consent of the
Indemnitee) which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnitee of a release from
all liability in respect of such claim or litigation.
(c) If the Indemnitor does not assume the defense of any third party
claim or litigation resulting therefrom, the Indemnitee may defend against
or settle such claim or litigation in such manner as it may deem
appropriate, and the Indemnitor shall promptly reimburse the Indemnitee for
all expenses, legal or otherwise, incurred by the Indemnitee in connection
with the defense against and settlement of such claim or litigation, as and
when the same shall be incurred by the Indemnitee. If no settlement of
such claim or litigation is made, the Indemnitor shall promptly reimburse
the Indemnitee for the amount of any judgment rendered with respect to such
claim or in such litigation and of all expenses, legal or otherwise,
incurred by the Indemnitee in the defense against such claim or litigation.
ARTICLE IX
CONFIDENTIALITY
EMPLOYEE ARRANGEMENTS
9.1 CONFIDENTIALITY. At all times after the Closing Date, the Sellers and
DSSI shall retain in strictest confidence, and shall not use for their benefit
or for the benefit of others all confidential information comprising or related
to the Assets described in Section 1.1 hereof, including, without limitation,
the technology, know-how, trade secrets, customer lists transferred hereby to
CA, pricing policies, marketing plans or strategies, product development
techniques or plans, or technical processes, designs and design projects
respecting the Products.
9.2 OFFER OF EMPLOYMENT. On the Closing Date, CA shall offer to hire all
of the Transferred Employees of IDO identified in EXHIBIT J to this Agreement,
as may be amended from time to time, in CA's discretion prior to the Closing
Date. Such offer shall be subject to CA's standard terms and conditions of
employment in the applicable country in which such employees are located. The
compensation of such employees shall be determined by CA in its
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discretion based on comparable salaries and compensation paid to current CA
employees with similar job responsibilities. Transferred Employees shall be
eligible to participate in the same employee benefit plans that CA provides to
other employees in the same country beginning on the date of commencement of
employment with CA in accordance with the terms and conditions of such plans.
For purposes of calculating eligibility for applicable CA benefit programs and
other similar matters, CA agrees that it shall deem the hire date for each
Transferred Employee to be such employee's hire date as stated on IDO's records.
Transferred Employees shall be assigned positions as determined by CA. IDO
shall provide CA in a timely manner with all information regarding each
Transferred Employee, including, without limitation, hire dates and dates of
service, necessary by CA to credit such service on CA's records.
9.4 EMPLOYMENT OF HIRED EMPLOYEES BY CA. Effective as of 12:01 a.m. on
the day following the Closing Date, CA shall hire all Transferred Employees to
whom it has made an offer of employment in accordance with Section 9.1 and who
accept such offer in the time frame and the manner specified by CA ("Hired
Employees"). CA shall employ all Transferred Employees at will. A Hired
Employee who does not report to work on the designated first work day following
the Closing Date due to a leave of absence, but not vacation unless otherwise
specifically agreed by CA, approved under the policies of Seller prior to the
Closing Date shall be treated as a Hired Employee for purposes of this Article 9
as of 12:01 a.m. of the day after the last day of leave, provided that: (i) the
termination of leave is not caused by the misconduct of such Hired Employee;
(ii) as of the date the Hired Employee reports to work such Hired Employee has
met all conditions of employment; (iii) such Hired Employee, in the case of
disability leave, has been medically cleared to return to employment; and (iv)
the date of return to work is no more than 12 weeks after the Closing Date for
all leaves of absence. The foregoing provisions shall also apply to any absence
due to vacation or a medical condition approved by Seller prior to the Closing
Date, but not constituting a formal leave of absence under IDO's policies, but
such absences for vacations or medical conditions shall in no event exceed more
than five business days following the Closing Date.
9.5 IDO EMPLOYEES. During the period prior to the Closing Date, all
Transferred Employees, including Transferred Employees accepting offers of
employment from CA as set forth above, shall remain employees of Seller shall be
under the exclusive supervision of Seller and subject to their policies and
procedures. After the Closing Date, all Hired Employees will be under the
exclusive supervision of CA and subject to CA's policies and procedures. Any
Transferred Employees that do not accept CA's offer of employment or who
otherwise do not become Hired Employees of CA will remain under the exclusive
supervision of Seller and subject to their policies and procedures. IDO shall
remain responsible for all salaries, benefits, severance and other matters with
respect to all employees other than Hired Employees, including, without
limitation, Transferred Employees that do not accept employment with CA in
accordance with the terms of this Article 9. Except as otherwise agreed by IDO
and CA in writing, IDO shall also be responsible for all payments to, and claims
for benefits with respect to, all Hired Employees for all accrued but unpaid
vacation pay relating to periods prior to the Closing Date and all other accrued
compensation and benefits for periods prior the
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Closing Date under any medical, dental, defined contribution, defined benefit,
401 (k) or pension plan maintained by IDO. Notwithstanding the foregoing, CA
shall credit Transferred Employees for all accrued vacation subject to CA's
policies including the policy that accrued vacation may not exceed one year's
accrual; CA employees are not paid for accrued but unused vacation. IDO shall
not be liable to CA for accrued vacation credited to Transferred Employees
pursuant to the preceding sentence. All properly submitted requests by
Transferred Employees for reimbursement of valid expenses incurred prior to
Closing will be paid to Transferred Employees by IDO as of the Closing Date and
all Transferred Employees entitled to commissions will be paid by IDO as of the
Closing Date, for commissions which would be payable if the Accounts Receivable
were paid in full to IDO as of the Closing Date.
ARTICLE X
SPECIAL COVENANTS
10.1 COOPERATION. The parties shall cooperate with each other fully with
respect to actions required or requested to be undertaken with respect to tax
audits, administrative actions or proceedings, litigation and any other matters
that may occur after the Closing Date, and each party shall maintain and make
available to the other party upon request all corporate, tax and other record
required or requested in connection with such matters.
10.2 PUBLICITY. Each party agrees that no publicity release or
announcement concerning the transactions contemplated hereby shall be issued
without the advance approval of the form and substance thereof by CA.
10.3 NON-COMPETITION.
(a) In consideration of the purchase price payable by CA to Sellers
under this Agreement, each Seller and DSSI agree that they shall not, for a
period of four (4) years from the Closing Date, directly or indirectly (i)
engage in a business or enterprise (either as a proprietor, partner,
employee, agent, consultant, or controlling stockholder) in the development
or marketing of any Competing Computer Software (as defined in Section 10.3
(b) hereof) or (ii) solicit or attempt to solicit sales or licenses of any
Competing Computer Software, interfere with, or disrupt or attempt to
disrupt the relationship (contractual or otherwise) between CA and its
customers, suppliers, agents, consultants, officers or employees relating
to the Products.
(b) The phrase "Competing Computer Software" as used herein means any
software for use by help desks for the management, tracking and resolution
of technical support requests.
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(c) The provisions of this Section 10.3 shall not prevent Seller or
DSSI from investing in securities of any corporation or otherwise acquiring
an equity interest in any enterprise provided that during this period such
investments or interests shall not result in (i) the Sellers or DSSI owning
beneficially 10% or more of the equity securities of any enterprise,
engaged in a business offering products competitive to the Products, or
(ii) Sellers or DSSI being able to control or actively participate in the
policy decisions of such competing business.
(d) If any portion of the restrictions set forth in Section 10.3 (a)
should, for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(e) Sellers and DSSI declare that the foregoing territorial and time
limitations are reasonable and properly required for the adequate
protection of the business of CA. In the event any such territorial or
time limitation is deemed to be unreasonable by a court of competent
jurisdiction, the Sellers and DSSI agree to the reduction of either said
territorial or time limitation to such area or period which said court
shall have deemed reasonable.
(f) If there is a breach or threatened breach of the provisions of
this Section 10.3, CA shall be entitled to an injunction restraining the
Sellers or DSSI from such breach. Nothing herein shall be construed as
prohibiting CA from pursuing any other remedies for such breach or
threatened breach. The existence of any claim or cause of action by the
Sellers or DSSI against CA other than under this Agreement shall not
constitute a defense to the enforcement by CA or any subsidiary of the
foregoing restrictive covenants and any such claim or cause of action shall
be litigated separately.
ARTICLE XI
GENERAL PROVISIONS
11.1 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally, sent by telex
or facsimile transmission (if a confirmation of delivery is obtained), sent by
Federal Express or other private courier (if a confirmation of delivery is
obtained), or sent by certified or registered mail, return receipt requested and
postage prepaid. Any such notice shall be deemed given when so delivered
personally or when sent by facsimile transmission or, if mailed by certified or
registered mail, five (5) days after the date of deposit in the United States
mail, postage prepaid, if addressed:
(a) in the case of IDO and DSSI to: Data Systems & Software, Inc.
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200 Route 17
Mahway, New Jersey 07430-1296
Attn: George Morgenstern
with a copy to: Ehrenreich Eilenberg Krause & Zivian LLP
11 East 44th Street, 17th Fl.
New York, NY 10017
Attn: Sheldon Krause
(b)In the case of Sobkowski,
Tischler and Lamm: Isidore S. Sobkowski
Frances Tischler
Jacob Lamm
with a copy to: Hilary B. Miller, Esq.
112 Parsonage Road
Greenwich, CT 06830-3942
(b)in the case of CA to: Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York, 11788-7000
Attn: President
with a copy to: General Counsel
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York, 11788-7000
Attn: General Counsel
or to such other address or to such other person as CA or Seller shall have last
designated by written notice given as herein provided.
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11.2 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York (excluding its
conflict of laws provisions).
11.3 JURISDICTION AND VENUE. The parties agree that any action arising
under or relating to this Agreement or the Products shall lie within the
exclusive jurisdiction of the State and Federal Courts located in New York, New
York. Seller consents to the exercise of jurisdiction by any such court. If
either party is compelled to seek judicial enforcement of its rights under this
Agreement, the prevailing party in any such action shall be entitled to recover
its costs incurred in such action, including reasonable attorneys' fees.
11.4 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon the
parties and inure to the benefit of the successors and assigns of the respective
parties hereto; PROVIDED, HOWEVER, that this Agreement and all rights hereunder
may not be assigned by Seller except with the prior written consent of CA.
11.5 COUNTERPARTS; HEADINGS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
The paragraph headings in this Agreement are for convenience of reference only
and shall not be deemed to alter or affect any provision hereof.
11.6 TRANSACTION EXPENSES. Notwithstanding anything else in this
Agreement to the contrary, the parties hereto shall each be responsible for the
payment of (and shall indemnify and hold the other party or parties hereto
harmless against) any and all of its own expenses, including without limitation
the fees and expenses of counsel, accountants and other advisers, arising out of
or relating directly or indirectly to the transactions contemplated by this
Agreement, whether or not such transactions are consummated in whole or in part.
Any obligation or amount owing to Oppenheimer & Co. shall be the obligation and
responsibility of the Sellers.
11.7 WAIVER; SEVERABILITY. The waiver of one breach or default hereunder
shall not constitute the waiver of any other or subsequent breach or default.
If one or more of the provisions of this Agreement are deemed void by law, then
the remaining provisions will continue in full force and effect.
11.8 NO AGENCY. This Agreement shall not constitute either party the
legal representative or agent of the other, nor shall either party have the
right or authority to assume, create, or incur any liability or any obligation
of any kind, express or implied, against or in the name of or on behalf of the
other party.
11.9 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules annexed hereto and referenced herein) contains the entire agreement
between the parties hereto and there are no agreements, warranties or
representations which are not set forth herein. All prior negotiations,
agreements and understandings, whether written or oral, are superseded by this
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<PAGE>
Agreement. This Agreement may not be modified or amended except by an
instrument in writing duly executed by authorized officers of both parties.
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
DATA SYSTEMS & SOFTWARE, INC. COMPUTER ASSOCIATES
INTERNATIONAL, INC.
By: By:
---------------------------- ----------------------------
Title: Title:
------------------------- -------------------------
INTERNATIONAL DATA OPERATIONS, INC.
By:
-----------------------------
Title:
--------------------------
- --------------------------------- ---------------------------------
Isidore Sobkowski Frances Tischler
- ---------------------------------
Jacob Lamm
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