<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of report (Date of earliest event reported): August 25, 1998
SystemSoft Corporation
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(Exact name of Registrant as specified in Charter)
Delaware 0-24418 04-3121799
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
One Innovation Drive, Natick, Massachusetts 01760
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (508) 651-0088
--------------
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(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index Appears on Page 9.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 16, 1998, the Company and its wholly-owned subsidiary,
SystemSoft Taiwan Corporation, finalized an asset purchase and license agreement
(the "License Agreement) with InSyde Software, Inc., ("InSyde") a Delaware
corporation for the Company's BIOS business. The License Agreement, which is
effective as of September 1, 1998, calls for the Company to transfer to InSyde,
in exchange for royalty payments of up to $2.0 million, an exclusive (even as to
the Company) irrevocable, worldwide license to the Company's BIOS business.
Specific terms of the transaction call for InSyde to pay a 10% royalty
on all revenue derived from the BIOS business up to an aggregate royalty payment
of the aforementioned $2.0 million. Upon the closing of the License Agreement,
InSyde prepaid $500,000 of said royalties to the Company and will begin paying
the 10% royalty when BIOS revenue earned by InSyde exceeds $5.0 million.
Guaranteed minimum royalty payments for the remaining $1.5 million begin in the
quarter ended December 31, 1999 until such time as any or all of the remaining
$1.5 million in royalty payments is paid to the Company. In addition to the $2.0
million in royalties owed for the BIOS business, InSyde also paid $85,200 for
specific tangible personal property acquired from the Company and from a wholly
owned subsidiary of the Company, SystemSoft Taiwan Corporation, consisting of
computer, office and engineering equipment.
Once InSyde has paid the Company $2.0 million in royalties, InSyde will
have a fully paid-up license and the Company has agreed to assign all of its
right, title and interest in and to the BIOS products (as described in the
License Agreement) and all related documentation, including copyrights, patents
and trade secrets relating thereto. Until such time as InSyde has paid the $2.0
million, the Company has a security interest in all of the intellectual
property, patents and trademarks licensed as part of this License Agreement. The
Company has also agreed not to compete with InSyde in the worldwide BIOS-related
business (as defined in said License Agreement) for a period of ten years.
The Company and InSyde have also entered into a Representative
Agreement and License ("Representative Agreement") whereby InSyde will be a
representative, be it exclusive or non-exclusive as described below, for the
Company selling specific products in specific geographical regions of the world
( a copy of this Representative Agreement is attached as Exhibit 99.01). InSyde
will have the ability to sell the Company's PC Card and SystemWizard products in
the Asia-Pacific (exclusive of Japan) and Europe regions and receive a
commission from the Company. Whether the representative is exclusive or
non-exclusive for InSyde and the exact commission paid to InSyde depends upon
the particular product being sold and the particular geographic region in which
the customer resides. The Representative Agreement will remain in effect for a
period of three years.
The terms of the transaction and the consideration received by the
Company were the result of arms'-length negotiations between the representatives
of the Company and InSyde. The Company understands that Jonathan Joseph, a
former executive vice-president of the Company, became president of InSyde in
September, 1998.]
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS.
(b) Unaudited Pro Forma Financial Information.
(1) Unaudited pro forma consolidated balance sheet as of
July 31, 1998 and unaudited pro forma consolidated
income statements for the six months ending July 31,
1998 and the fiscal year ended January 31, 1998.
<PAGE> 3
(c) Exhibits
Exhibit No. Exhibit
- ----------- -------
2.01 Asset Purchase and License Agreement dated as of September 1,
1998 by and between SystemSoft Corporation, SystemSoft Taiwan
Corporation and InSyde Software, Inc.
99.01 Representative Agreement and License dated as of September 1,
1998 by and between SystemSoft Corporation and InSyde
Software, Inc.
99.02 Press Release of the Company dated October 22, 1998.
SYSTEMSOFT CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Balance Sheet as of July 31,
1998 and Unaudited Pro Forma Consolidated Statements of Income for the six
months ended July 31, 1998 and for the fiscal year ended January 31, 1998
illustrate: (i) the effect of the sale of the Company's BIOS business as if the
transaction had been consummated on July 31, 1998 for the Unaudited Pro Forma
Consolidated Balance Sheet (ii) the effect of the sale of the BIOS business as
if it had been consummated on January 31, 1998 for the Unaudited Pro Forma
Consolidated Statement of Income for the six months ended July 31, 1998 and
(iii) the effect of the sale of the BIOS business as if it had been consummated
on January 31, 1997 for the Unaudited Pro Forma Consolidated Statement of Income
for the fiscal year ended January 31, 1998.
The Unaudited Pro Forma Consolidated Financial Statements are presented
for comparative purposes only and are not intended to be indicative of actual
consolidated results of operations or consolidated financial position that
would have been achieved had the sale of the BIOS business been consummated as
of the dates indicated above nor do they purport to indicate results which may
be attained in the future.
<PAGE> 4
SYSTEMSOFT CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JULY 31, 1998
<TABLE>
<CAPTION>
BIOS SYSTEMSOFT
SYSTEMSOFT PRO FORMA CONSOLIDATED
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,240,110 $ 612,700 a $ 2,852,810
Restricted cash 1,000,000 1,000,000
Accounts receivable, net 3,082,612 (200,000)i 2,882,612
Related party note receivable 185,997 185,997
Prepaid royalties 2,632,105 2,632,105
Prepaid expenses and other current assets 1,693,374 (90,769)b 1,602,605
----------- --------- ------------
Total current assets 10,834,198 321,931 11,156,129
----------- --------- ------------
Property and equipment, net 6,207,944 (271,506)c 5,936,438
Purchased software and software development costs, net 2,597,526 2,597,526
Prepaid royalties, long-term portion 315,464 315,464
----------- --------- ------------
Total assets $19,955,132 $ 50,425 $ 20,005,557
=========== ========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,179,592 $ 1,179,592
Accrued expenses 904,841 904,841
Income taxes payable 90,081 90,081
Accrued compensation and benefits 1,368,980 $ 22,969 d 1,391,949
Accrued royalties 3,242,750 3,242,750
Deferred revenue 815,041 562,500 e 1,377,541
----------- --------- ------------
Total current liabilities 7,601,285 585,469 8,186,754
----------- --------- ------------
Other long-term liabilities 579,567 579,567
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock 268,838 268,838
Additional paid-in capital 83,452,521 83,452,521
Accumulated other comprehensive income (881,476) (881,476)
Less treasury stock, at cost (427,187) (427,187)
Accumulated deficit (70,638,416) (535,044)h (71,173,460)
----------- --------- ------------
Total stockholders' equity 11,774,280 (535,044) 11,239,236
----------- --------- ------------
Total liabilities and stockholders' equity $19,955,132 $ 50,425 $ 20,005,557
=========== ========= ============
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Financial Statements.
<PAGE> 5
SYSTEMSOFT CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JULY 31, 1998
<TABLE>
<CAPTION>
SYSTEMSOFT BIOS SYSTEMSOFT
SYSTEMSOFT BIOS PRO FORMA CONSOLIDATED
HISTORICAL BUSINESS ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES
Software license fees $ 5,602,051 $ 1,349,805 $ 4,252,246
Engineering services 1,006,689 123,358 883,331
------------ ----------- --------- -----------
Total revenues 6,608,740 1,473,163 -- 5,135,577
COST OF REVENUES
Software license fees 2,650,187 539,172 2,111,015
Engineering services 1,096,143 660,009 436,134
------------ ----------- --------- -----------
Total cost of revenues 3,746,330 1,199,181 -- 2,547,149
Gross profit 2,862,410 273,982 -- 2,588,428
OPERATING EXPENSES
Research and development 6,675,764 2,335,040 4,340,724
Sales and marketing 5,123,522 1,381,302 3,742,220
General and administrative 3,182,471 744,032 2,438,439
Restructuring and other -- $ 35,000 f
22,969 d
200,000 i
186,306 c
90,769 b 535,044
------------ ----------- --------- -----------
Total operating expenses 14,981,757 4,460,374 535,044 11,056,427
------------ ----------- --------- -----------
Loss from operations (12,119,347) (4,186,392) (535,044) (8,467,999)
Other, net (38,490) -- -- (38,490)
------------ ----------- --------- -----------
Loss before provision for income taxes (12,157,837) (4,186,392) (535,044) (8,506,489)
Provision for income taxes -- -- -- --
------------ ----------- --------- -----------
Net loss $(12,157,837) $(4,186,392) $(535,044) $(8,506,489)
============ =========== ========= ===========
BASIC PER SHARE NET LOSS $(.46) $(.32)
DILUTED PER SHARE NET LOSS $(.46) $(.32)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 26,695,701
Diluted 26,695,701
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Financial Statements.
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SYSTEMSOFT CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FISCAL YEAR ENDED JANUARY 31, 1998
<TABLE>
<CAPTION>
SYSTEMSOFT BIOS SYSTEMSOFT
SYSTEMSOFT BIOS PRO FORMA CONSOLIDATED
HISTORICAL BUSINESS ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES
Software license fees $ 37,072,095 $ 7,133,051 $ 29,939,044
Engineering services 5,550,537 2,075,627 3,474,910
------------ ----------- --------- ------------
Total revenues 42,622,632 9,208,678 -- 33,413,954
COST OF REVENUES
Software license fees 6,726,808 1,066,271 5,660,537
Engineering services 5,686,963 4,137,729 1,549,234
------------ ----------- --------- ------------
Total cost of revenues 12,413,771 5,204,000 -- 7,209,771
Gross profit 30,208,861 4,004,678 -- 26,204,183
OPERATING EXPENSES
Research and development 12,860,282 2,103,196 10,757,086
Sales and marketing 14,908,068 2,597,704 12,310,364
General and administrative 7,354,999 1,324,149 6,030,850
Restructuring and other charges 12,907,337 $ 35,000 f
22,969 d
200,000 i
186,306 c
90,769 b 13,442,381
------------ ----------- --------- ------------
Total operating expenses 48,030,686 6,025,049 535,044 42,540,681
------------ ----------- --------- ------------
Loss from operations (17,821,825) (2,020,371) (535,044) (16,336,498)
Other, net 127,193 127,193
------------ ----------- --------- ------------
Loss before provision for income taxes (17,694,632) (2,020,371) (535,044) (16,209,305)
Provision for income taxes 2,034,152 165,302 g -- 1,868,850
------------ ----------- --------- ------------
Net loss $(19,728,784) $(1,855,069) $(535,044) $(18,078,155)
============ =========== ========= ============
BASIC PER SHARE NET LOSS $(.76) $(.69)
DILUTED PER SHARE NET LOSS $(.76) $(.69)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 26,034,716
Diluted 26,034,716
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Financial Statements.
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NOTES TO SYSTEMSOFT PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
(a) Reflects the proceeds for the prepaid royalty payment and payment for
fixed assets per the License Agreement, less $35,000 withheld at
closing for transaction fees.
(b) Reflects the loss of the Company's security deposit for leased office
space in Taiwan due to the early termination of the lease.
(c) Reflects the disposal of fixed assets sold to InSyde.
(d) Reflects the accrual of employee severance costs in Taiwan.
(e) Reflects prepaid royalties received from InSyde.
(f) Transaction fees incurred by the Company.
(g) Reflects the foreign income taxes provided for at the foreign statutory
rate.
(h) Reflects the net loss due to exiting the BIOS line of business.
(i) Reflects additional accounts receivable reserve related to costs
due to InSyde for assistance in collecting Taiwan accounts receivable.
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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 hereunto duly authorized.
SYSTEMSOFT CORPORATION
Dated: November 9, 1998 By: /s/ Jeffrey R. Wakely
----------------------------------
Jeffrey R. Wakely,
Vice President, Finance and
Secretary
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EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
2.01 Asset Purchase and License Agreement dated as
of September 1, 1998 by and between
SystemSoft Corporation, SystemSoft Taiwan
Corporation and InSyde Software, Inc.
99.01 Representative Agreement and License dated as
of September 1, 1998 by and between
SystemSoft Corporation and InSyde Software,
Inc.
99.02 Press Release of the Company dated October 22, 1998.
<PAGE> 1
EXHIBIT 2.01
ASSET PURCHASE AND LICENSE AGREEMENT
THIS ASSET PURCHASE AND LICENSE AGREEMENT (THE "AGREEMENT"), dated and
made effective as of September 1, 1998, is by and among SYSTEMSOFT CORPORATION,
a Delaware corporation with its principal place of business at One Innovation
Drive, Natick, Massachusetts 01760 ("SystemSoft"), and SYSTEMSOFT TAIWAN
CORPORATION, a Massachusetts Corporation with its principal place of business at
Room A, 9F, No. 170 Tun Hwa N. Rd., Taipei, Taiwan, R.O.C. ("Taiwan")
(SystemSoft and Taiwan to be hereinafter the "Sellers", and individually a
"Seller"); and INSYDE SOFTWARE, INC., a Delaware corporation with its principal
place of business at One Innovation Drive, Natick, Massachusetts 01760
("Purchaser"). This Agreement may also be referred to as the "License
Agreement".
WHEREAS, Sellers are engaged in the business of designing, engineering,
writing, manufacturing and distributing low level computer software including
source code and object code (the "Sellers' Business"); and
WHEREAS, a portion of the Sellers' Business is the production and
distribution of BIOS software, Keyboard Controller/embedded controller software,
embedded and application-level power management software, system setup software,
VGA BIOS, and ACPI software, all in source code and object code format, (the
"BIOS Business"); and
WHEREAS, the Purchaser desires to acquire from Sellers and Sellers
desire to transfer to the Purchaser the BIOS Business and the assets used by
Sellers in operation of the BIOS Business upon the terms and conditions
contained in this Agreement; and
WHEREAS, Sellers will retain all right, title and interest to its other
businesses; and
WHEREAS, the Purchaser desires to license from Sellers and Sellers
desire to license to the Purchaser certain of its other software programs upon
the terms and conditions contained in this Agreement: and
WHEREAS, the principal terms and conditions of such transactions were
documented and agreed to in a binding Letter of Understanding Agreement (the
"Letter of Understanding") executed by representatives of the parties on August
25, 1998; and
WHEREAS, the parties desire that this Agreement and a Representative
Agreement shall supersede and replace all of the terms and conditions of the
Letter of Understanding.
NOW, THEREFORE, in consideration of the mutual promises set forth in
this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are acknowledged, Purchaser and Sellers agree as follows:
<PAGE> 2
2
1. DEFINED TERMS. In this Agreement, capitalized terms shall have
the following meanings:
(a) (i) "BIOS BUSINESS" shall mean the production
and distribution of BIOS software, Keyboard Controller/embedded controller
software, embedded and application-level power management software, system setup
software, VGA BIOS, and ACPI software, all in source code and object code
format.
(ii) "BOOKS AND RECORDS" shall mean each copy of
any book, computer disk, document, file, list, magnetic tape, record and other
tangible item relating solely to the BIOS Business or customers or suppliers of,
or any other Person having contracts or other business relationships with,
Sellers that relate solely to the BIOS Business including, but not limited to,
license labels, programmer reference material and programmer notebooks, machine
readable copies of all support materials such as datasheets, contracts, pricing
information, marketing materials, presentations, marketing plans, internet and
intranet documents, advertising, trade show support materials, news releases,
and pre-paid BIOS-related conference fees.
(b) "CUSTOMER CONTRACTS" shall mean each contract,
whether oral or written, between any Seller and any other Person pursuant to
which such Person has agreed to purchase or license Products, or be supplied
with services relating to the BIOS Business and which is listed on Schedule
1(b).
(c) "EARN-OUT AMOUNT" shall mean the amounts to be paid
by Purchaser to Sellers pursuant to Section 4(c) of this Agreement.
(d) "EARN-OUT LIMIT" shall mean $1,500,000 less any
offset as permitted by Section 16(a) of this Agreement.
(e) "EFFECTIVE DATE" shall mean September 1, 1998.
(f) "ENCUMBRANCES" shall mean any claim, lien, pledge,
option, charge, easement, security interest, right-of-way, encumbrance or other
right of any Person.
(g) "GOODWILL" shall mean the goodwill of Sellers
associated with the name "SYSTEMSOFT BIOS" in the BIOS Business.
(h) "GOVERNMENTAL AUTHORITY" shall mean any federal,
state, local or foreign government, or any political subdivision of any of the
foregoing, or any court, agency or other entity, body, organization or group,
exercising any executive, legislative, judicial, quasi-judicial, regulatory or
administrative function of government or any supernational body (including the
European Union).
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3
(i) "INTELLECTUAL PROPERTY RIGHTS" shall mean each
copyright, issued or applied for patent, license, service mark, brand name,
trademark, trade secret and other intellectual property right used by either
Seller to publish and distribute, or otherwise relating to, the Products or
other aspects of the BIOS Business as of the date of this Agreement, but not
including any intellectual property right of SystemSoft used both in conjunction
with the Products or the BIOS Business and with other SystemSoft products or
services.
(j) "LICENSED PRODUCTS" shall mean those software
products set out in Exhibit B.
(k) "LICENSED PROPERTY" shall mean each copyright,
patent, license, service mark, brand name, trademark, trade secret and other
intellectual property right used by either Seller both in conjunction with the
Purchased Products or the BIOS Business and with other SystemSoft products or
services.
(l) "PERMITS" shall mean each authorization, approval,
consent, license and permit of Sellers that relates solely to the BIOS Business.
(m) "PERSON" shall mean any corporation, governmental
authority, individual, limited liability company, partnership, trust or other
entity.
(n) "PRODUCTS" shall mean Purchased Products and Licensed
Products.
(o) "PURCHASED PRODUCTS" shall mean all source code,
object code and various software, owned by SystemSoft and described in
Exhibit A.
(p) "PURCHASE PRICE" shall mean the purchase price for
the Purchased Assets and shall equal $2,085,200 reduced by the documented legal
fees and disbursements of Purchaser's attorneys incurred in connection with the
transactions contemplated by this Agreement, up to a maximum of $35,000, and
shall be comprised of an initial payment of $585,200 PLUS (i) the Earn-Out
Amount, and (ii) the Stock Amount.
(q) "PURCHASED ASSETS" shall mean all right, title and
interest of Sellers in and to the following:
(1) the Books and Records;
(2) the Customer Contracts on Schedule 1(b);
(3) the Goodwill;
(4) the Intellectual Property Rights;
(5) the Purchased Products;
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(6) the Tangible Personal Property (as defined
in Section 1(w)); and
(7) the Permits.
(r) "PURCHASER RELATED AGREEMENTS" shall mean each
agreement, instrument and other writing listed in Section 12 or 13 of this
Agreement, or otherwise contemplated by this Agreement, to be executed by
Purchaser.
(s) "REPRESENTATIVE" shall mean, with respect to a
Person, any attorney, employee, officer, partner or other agent of such Person.
(t) "SELLER RELATED AGREEMENTS" shall mean each
agreement, instrument and other writing listed in Section 12 or 13 of this
Agreement, to be executed by Seller.
(u) "STOCK AMOUNT" shall mean that amount of the common
stock of Purchaser (or its assignee under this Agreement) that is equal to five
percent (5%) of all issued and outstanding common stock of Purchaser (or its
assignee), not subject to dilution (except for stock options or stock issued to
employees of Purchaser (and/or its assignee) in connection with the performance
of services) until the contributed equity capital of Purchaser (and/or its
assignee) exceeds $2 million.
(v) "SYSTEMSOFT CONTRACTS" shall mean the agreements with
customers, whether written or oral, listed on Schedule 1(v), entered into by
SystemSoft for certain non-recurring engineering work, support, maintenance and
product upgrades.
(w) "TANGIBLE PERSONAL PROPERTY" shall mean all of the
equipment, computers, telecommunication equipment, furniture and decoration
items which are listed on Schedule 1(w) to this Agreement, including all of the
equipment and physical assets of Taiwan.
(x) "THRESHOLD REVENUE AMOUNT" shall mean an amount equal
to $5,000,000.
(y) "VACATION PAY AMOUNTS" shall mean the accrued but
unpaid vacation pay due from Sellers to certain former employees of Sellers who
have become employees of Purchaser.
2. SALE OF ASSETS AND OPERATION OF BIOS BUSINESS. Subject to the
terms and conditions set forth in this Agreement, Sellers shall assign, convey,
deliver, sell and transfer to Purchaser, and Purchaser shall acquire from
Sellers, the Purchased Assets, free and clear of all Encumbrances, effective as
of the opening of business on the Effective Date. The parties agree that all
revenues and expenses accrued in connection with the BIOS Business on or after
the Effective Date shall be for the account of Purchaser, and that the BIOS
Business has been
<PAGE> 5
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operated for the benefit of Purchaser on and after the Effective Date.
3. GRANT OF LICENSES. Subject to the terms and conditions set
forth in this Agreement, Sellers do hereby (i) grant Purchaser a non-exclusive
license to use and sublicense the Licensed Products and the Licensed Property
for the sole purpose of facilitating the use, license, sublicense, and sale of
the Purchased Products perpetually and anywhere in the world, and (ii) assign to
Purchaser all of Sellers' right, title and interest in the Wang Laboratories
irrevocable, paid-up license pertaining to the SystemSoft VGA BIOS. Both Buyer
and Seller acknowledge that there is no retained copy of the agreement relating
to this license. Seller warrants and represents and Purchaser hereby accepts
such representation, that there has been no letter or other communication from
Wang which would have the effect of putting the existence and/or validity of
such a license in doubt. Purchaser hereby grants to Sellers a non-exclusive
license to use PowerProfiler Win 95, solely for developing derivative works of
PowerLast.
4. PURCHASE PRICE.
(a) GENERAL. Purchaser shall pay to Sellers, for the
assignment, sale and transfer of the Purchased Assets, and the grant of a
license to use the Licensed Products and the Licensed Property, an amount equal
to the Purchase Price.
(b) CLOSING PAYMENT. At the Closing, Purchaser shall
deliver to Sellers by certified check or wire transfer an amount equal to
$647,700 ($585,200 as provided in Section 1(p) and $62,500 as provided in
Section 5(c) of the Representative Agreement and License, as defined below),
plus applicable Massachusetts sales tax, less the amount of the legal expenses
of Purchaser to be reimbursed by Sellers under Section 16(e).
(c) PAYMENT OF EARN-OUT AMOUNT.
(i) The Earn-Out Amount to be paid by Purchaser
to the Sellers shall be equal to ten percent (10%) of the amount by which the
collected revenue of the BIOS Business (not including revenue attributable to
Licensed Products), not including taxes, insurance or shipping, received by the
Purchaser in the aggregate after the Effective Date, exceeds the Threshold
Revenue Amount. The amount due under this Paragraph (i) at any time shall be
reduced by the amount of any payments previously made under Paragraph (ii) of
this subsection.
(ii) Providing that SystemSoft or its successors
or assigns do not withdraw from the PC Card and MobileAssist products
marketplace, Purchaser shall pay Seller the following minimum earn-out payments
thirty days after the end of each calendar quarter ending as follows:
<PAGE> 6
6
December 31, 1999 Quarter $75,000 shall be paid
March 31, 2000 Quarter $75,000 shall be paid
June 30, 2000 Quarter $75,000 shall be paid
September 30, 2000 Quarter $75,000 shall be paid
December 31, 2000 Quarter $100,000 shall be paid
All remaining quarters $100,000 until balance is paid
If Purchaser fails to make a scheduled payment, then it can cure such failure by
making that payment within 90 days, unless Purchaser's payment has been more
than 15 days late in two successive quarters. The sole and exclusive remedy of
Sellers for Purchaser's failure to make any such scheduled payment within the
cure period shall be as specified in Section 2 of the Representative Agreement
and License. If following the end of any calendar quarter the amounts paid under
Paragraph (i) exceed, in the aggregate, the amount that would otherwise by
payable under this Paragraph (ii), no payment shall be due for such quarter
under this Paragraph (ii).
(iii) The incremental Earn-Out Amount due shall be
calculated quarterly and shall be remitted by the Purchaser to the Sellers no
later than thirty (30) days after the end of each calendar quarter. The Earn-Out
Amount shall be subject to the Purchaser's right to offset as provided for in
Section 16(a) of this Agreement.
(iv) Notwithstanding the provisions of Paragraph
(ii) of this subsection, the aggregate Earn-Out Amount payable shall not exceed
the Earn-Out Limit.
(d) ALLOCATION OF PURCHASE PRICE. The Purchase Price
shall be allocated as follows: $85,200 to the Tangible Personal Property with
the balance of the Purchase Price allocated to the Products, the Intellectual
Property Rights and the Books and Records.
(e) PAYMENT OF STOCK AMOUNT. The common stock
representing the Stock Amount shall be issued to SystemSoft as soon as
practicable following the Closing but not later than July 1, 1999, and in
compliance with the applicable rules and procedures of the jurisdiction or
jurisdictions to which the issuer is subject.
(f) Within thirty days of the end of each quarter,
Purchaser shall furnish the Seller with a report setting out each contract
executed for the licensing of the Purchased Products or Licensed Products, the
total revenue collected on such contracts, and the collected revenue allocated
to Seller, during such preceding quarter.
(g) During the term of this Agreement, Purchaser agrees
to keep all records and books of account and agrees to make all entries relating
to the allocation of revenue as may be necessary to comply with generally
accepted accounting principles and to accurately compute the allocation of
revenue. Licensee shall retain such books and records during the term of this
Agreement and for a period of three (3) years thereafter.
<PAGE> 7
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(h) Upon giving Purchaser fifteen (15) days prior written
notice, but not more often than semiannually, Seller may cause an audit to be
made of the applicable records and books of account in order to verify
statements issued by Purchaser and prompt adjustment shall be made to compensate
for any errors or omissions disclosed by such audit unless such audit is
disputed, in which case the dispute shall be resolved by arbitration. Any such
audit shall be conducted by an independent certified public accountant (but not
on a contingent fee basis) during regular business hours in such a manner as not
to interfere with Purchaser's normal business activities. Seller shall pay for
any such audit unless material discrepancies (underpayments in reported revenue
due Seller of more than ten percent (10%)) are disclosed. If such audit
discloses material discrepancies, Purchaser shall pay Seller the charges (fees
and expenses) associated with the audit and Seller shall be entitled to conduct
an additional audit within the same semiannual period.
5. ASSUMED LIABILITIES. Purchaser shall assume and be liable to
perform each of the Customer Contracts specified on Schedule 1(b) and the
SystemSoft Contracts specified on Schedule 1(v). Purchaser shall assume the sole
and complete responsibility for support of the BIOS Business required under such
assumed Customer Contracts, including any related support of Toyo Microsystems,
Inc. in Japan. Purchaser shall work with Seller both to terminate and resolve
all remaining BIOS contracts of the Seller and to resolve any issues relating
thereto. Other than such assumed Customer Contracts and SystemSoft Contracts,
Purchaser is not, pursuant to this Agreement, assuming any indebtedness,
liability or obligation of Sellers whatsoever.
6. TAXES. Sellers shall pay all applicable transfer or other
similar taxes, other than sales or use tax, imposed as a result of the transfer
of the Purchased Assets or the grant of a license to use the Licensed Products
or the Licensed Property pursuant to this Agreement, and any deficiency,
interest or penalty with respect to such taxes.
7. CLOSING. The closing of the transaction contemplated by this
Agreement shall be held, at a date and time mutually agreed to by the parties,
at the offices of SystemSoft, or any other place that Purchaser and Sellers
shall mutually agree (the "Closing").
8. REPRESENTATIONS AND WARRANTIES OF SELLERS. Each of the Sellers
hereby, jointly and severally, represents and warrants to Purchaser as follows:
(a) STATUS.
(i) SystemSoft (1) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, (2) has full power and authority to conduct its business as it is
currently being conducted and to own and lease its assets and (3) is duly
qualified to do business in, and in good standing under the laws of,
Massachusetts, and of each jurisdiction in which such qualification is necessary
under the applicable laws as a result of the conduct of its business and the
ownership of its properties, except where the failure to qualify would not have
a material adverse effect on the business or financial
<PAGE> 8
8
statements of SystemSoft; and
(ii) Taiwan (1) is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, (2) has full power and authority to conduct its
business as it is currently being conducted and to own and lease its assets and
(3) is duly qualified to do business in, and in good standing under the laws of,
The Republic of China, and each jurisdiction in which such qualification is
necessary under the applicable laws as a result of the conduct of its business
and the ownership of its properties, except where the failure to qualify would
not have a material adverse effect on the business or financial statements of
Taiwan.
(b) AUTHORIZATION. Sellers have all necessary power and
authority and have taken all action necessary to execute, deliver and perform
this Agreement and the Seller Related Agreements. The execution, delivery and
performance of this Agreement have been duly authorized by the boards of
directors and, if required, by the shareholders of Sellers.
(c) ENFORCEABLE. Each of this Agreement and the Seller
Related Agreements has been duly executed and delivered by Sellers and
constitutes a legal, valid and binding obligation of Sellers enforceable against
Sellers in accordance with its terms, except that the validity, binding effect
or enforceability of this Agreement or any of the Seller Related Agreements may
be limited or otherwise affected by (i) any bankruptcy, insolvency or other
similar law affecting the enforcement of creditors' rights and remedies
generally or (ii) principles of equity.
(d) TITLE. Sellers shall assign, deliver, convey, sell
and transfer to Purchaser at the Closing good and marketable title to the
Purchased Assets, free and clear of all Encumbrances.
(e) NO CONFLICT OR VIOLATION. The execution, delivery and
performance of this Agreement or any of the Seller Related Agreements shall not
result in (i) a violation of or a conflict with any provision of the articles or
certificate of incorporation or by-laws of Sellers, (ii) a breach of or a
default under any provision of, or result in the acceleration of any obligations
under any agreement, contract, indebtedness, encumbrance, commitment, license,
franchise, permit, authorization or consent to which Sellers are a party or by
which Sellers are bound, (iii) a violation by a Seller of any applicable law or
any rule, order or judgment of any court or other governmental authority or (iv)
the creation of any Encumbrance on any of the Purchased Assets.
(f) CONSENTS. No consent, approval or authorization of,
or declaration, filing or registration with, any governmental authority or any
other Person is required to be made or obtained by Sellers in connection with
the execution, delivery and performance of this Agreement or any of the Seller
Related Agreements.
<PAGE> 9
9
(g) PROCEEDINGS. There is no claim, demand, action, suit,
litigation, dispute, order, writ, injunction, judgment, assessment, decree,
grievance, arbitral action, investigation or proceeding pending or, to the
knowledge of either Seller, threatened against or relating to the transactions
contemplated by this Agreement or the Seller Related Agreement.
(h) TAXES. All taxes (including, but not limited to,
income, property, sales, use, franchise, added value, withholding and social
security taxes) imposed by any governmental authority or other taxing authority
that are due or payable by Sellers, and all interest and penalties on such
taxes, have been paid in full, except to the extent that a good faith dispute
exists. Such disputes are now limited to compensation due employees upon
termination and intercompany transfers of cash. All tax returns required to be
filed are correct in all material respects and have been duly and timely filed.
Neither Seller has received and no claim has been made within the last five (5)
years by any Governmental Authority in a jurisdiction where either Seller does
not file a tax return that it is or may be subject to taxation by that
jurisdiction. All taxes required to have been withheld in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or third-party have been withheld. There are no Encumbrances on any
of the Purchased Assets that arose in connection with any failure (or alleged
failure) to pay any tax.
(i) NO CHANGES. Sellers have not encumbered or disposed
of, or contracted to encumber or dispose of, any of the Purchased Assets.
(j) LITIGATION. To the Sellers' knowledge, except as
provided on Schedule 8(j), there is neither any claim, action, suit,
arbitration, investigation or other proceeding, nor any order, decree,
injunction, judgment or writ, pending, in effect or, to the knowledge of
Sellers, threatened, against or relating to the Purchased Assets, the BIOS
Business, this Agreement, or the transactions contemplated by this Agreement.
(k) TANGIBLE PERSONAL PROPERTY AND PRODUCTS. The Tangible
Personal Property is, taken as a whole, in reasonable working order and adequate
for its intended use, ordinary wear and tear accepted.
(l) COMPLIANCE WITH LAWS. To the Sellers' knowledge,
Sellers have complied with each law, rule, regulation, ordinance, order,
injunction, judgment, decree and writ applicable to the Purchased Assets.
Sellers have not received any notice to the effect that, or otherwise been
advised that, Sellers are not in compliance with any applicable law, rule,
regulation, ordinance, order, injunction, judgement, decree and writ applicable
to the Purchased Assets, and Sellers have no reason to anticipate that any
presently existing circumstances might result in any violation of any such law,
rule, regulation, ordinance, order, injunction, judgement, decree or writ.
(m) INTELLECTUAL PROPERTY RIGHTS. Sellers have all right,
title and interest (including, but not limited to, all copyrights, patents,
service marks, trademarks and other intellectual property rights) in all the
Intellectual Property Rights, Products, Licensed Products
<PAGE> 10
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(except that the Sellers have an irrevocable, paid-up license for the VGA BIOS,
and Licensed Property, and the design, manufacture, distribution or licensing of
the Intellectual Property Rights, Products, Licensed Products or Licensed
Property by Purchaser will not infringe any right, title or interest (including,
but not limited to, any copyright, patent, service mark, trademark or other
intellectual property right) of any Person in such Intellectual Property Rights,
Products, Licensed Products of Licensed Property or other items. Sellers have
delivered to Purchaser correct and complete copies of all patents,
registrations, applications, licenses and agreements and all other written
documentation evidencing ownership and prosecution (if applicable) of all the
Intellectual Property Rights listed on Schedule 8(m) and of the Licensed
Products and Licensed Property. Other than routine indemnities given to
distributors, sales representatives, dealers and customers, neither Seller has
any current obligation to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with any of the Intellectual
Property Rights, Licensed Products, or Licensed Property. All items of
Intellectual Property Rights are listed on Schedule 8(m).
(n) CUSTOMER CONTRACTS. To the best of Sellers'
knowledge, Sellers have delivered true and correct copies of the Customer
Contracts to Purchaser. Each of the Customer Contracts is enforceable against
either or both of the Sellers and, to the knowledge of Sellers, each other party
thereto, in accordance with its terms except as such enforcement may be limited
by such other parties (i) bankruptcy, insolvency, reorganization, moratorium or
similar law now or hereafter in effect relating to creditors' rights or (ii) the
discretion of the appropriate court with respect to specific performance,
injunctive relief or other terms of equitable remedies. Neither the Sellers nor,
to the knowledge of Sellers, any other party to a Customer Contract, is in
material default thereunder or in material breach thereof. To the knowledge of
Sellers, there exist no event, occurrence, condition or act which constitutes
or, with the giving of notice, the lapse of time or the happening of any future
event or condition, would be become a material default by either Seller, or to
the knowledge of Sellers, any other party under any Customer Contract.
(o) BUSINESS RECORDS. To Sellers' knowledge, no material
records of accounts or other business records for the past five years relating
to the BIOS business have been destroyed and all such records are available,
upon request, from Sellers subject to the applicable requirements of the
appropriate Governmental Authority and/or contractual prohibitions or
limitations.
(p) NO BROKERS. Sellers have not entered into any
agreement with any Person that will result in the obligation of Purchaser or
Sellers to pay any finder's fee, brokerage commission or similar payment in
connection with the transaction contemplated by this Agreement.
(q) MATERIAL MISSTATEMENTS OR OMISSIONS. None of the
representations or warranties by Sellers in this Agreement contains any material
untrue statement of fact or omits to state any fact necessary to make the
statements or facts contained therein not misleading.
<PAGE> 11
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(r) SECURITIES LAW MATTERS.
(i) SystemSoft is acquiring the stock
represented by the Stock Amount (the "Stock") pursuant to this Agreement for
investment, for its own account, and not with a view to the sale or distribution
of all or any part thereof. SystemSoft does not have any contract, agreement,
undertaking or arrangement with any Person to sell, transfer or grant
participations to such Person with respect to any of the Stock.
(ii) SystemSoft is an "accredited investor" (as
defined in Rule 501 of Regulation D as promulgated by the Securities and
Exchange Commission) and SystemSoft has such knowledge, skill and experience in
business, financial and investment matters so that it is capable of evaluating
the merits and risk of an investment in the Stock.
(iii) SystemSoft acknowledges that the Stock will
be "restricted securities" under applicable federal securities laws, and, as
such, that there are substantial restrictions on the transferability of the
Stock; the Stock will not be, and the holders of the Stock will have no rights
to require that the Stock be, registered under the Securities Act of 1933, as
amended, except in a registration where other stock of the Purchaser is
registered under the Securities Act of 1933, as amended; as a consequence,
SystemSoft acknowledges that it must bear the economic risk of the investment in
the Stock for an indefinite period of time.
9. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to Sellers as follows:
(a) STATUS. Purchaser (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and (ii) has full power and authority to conduct its business which
is presently being conducted and to own or lease its assets.
(b) AUTHORIZATION. Purchaser has all necessary corporate
power and authority and has taken all corporate action necessary to execute,
deliver and perform this Agreement and the Purchaser Related Agreements. The
execution, delivery and performance of this Agreement and the Purchaser Related
Agreements have been duly authorized by the board of directors of Purchaser.
(c) ENFORCEABLE. Each of this Agreement and the Purchaser
Related Agreements has been duly executed and delivered by Purchaser and is a
legal, valid and binding obligation of Purchaser, enforceable against Purchaser
in accordance with its terms, except that the validity, binding effect or
enforceability of this Agreement or any of the Purchaser Related Agreements may
be limited or otherwise affected by (i) any bankruptcy, insolvency or other
similar law affecting the enforcement of creditors' rights and remedies
generally or (ii) principles of equity.
<PAGE> 12
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(d) NO CONFLICT OR VIOLATION. The execution, delivery and
performance of this Agreement and each of the Purchaser Related Agreements shall
not result in (i) a violation of or a conflict with any provision of the
articles or certificate of incorporation or by-laws of Purchaser, (ii) a breach
of, or a default under, any term or provision of any agreement to which
Purchaser is a party or (iii) a violation of any applicable law, rule, order or
judgment of any court or other governmental authority.
(e) CONSENTS. No consent, approval or authorization of,
or declaration, filing or registration with, any governmental authority or any
other Person is required to be made or obtained by Purchaser in connection with
the execution, delivery and performance of this Agreement or any of the
Purchaser Related Agreements.
(f) LITIGATION. There is neither any claim, action, suit,
arbitration, investigation or other proceeding pending, nor any order, decree,
injunctions, judgment or writ, whether pending, in effect or, to the knowledge
of Purchaser, threatened, against or relating to Purchaser, this Agreement, any
of the Purchaser Related Agreements or the transaction contemplated by this
Agreement.
(g) NO BROKERS. Purchaser has not entered into any
agreement with any Person that will result in the obligation of Purchaser or
Sellers to pay any finder's fee, brokerage commission or similar payment in
connection with the transaction contemplated by this Agreement.
(h) MATERIAL MISSTATEMENTS OR OMISSIONS. None of the
representations or warranties by Purchaser in this Agreement contains any untrue
statement of a fact or omits to state any fact necessary to make the statements
or facts contained therein not misleading.
10. COVENANTS AND CONDUCT OF THE PARTIES PRIOR TO AND AT THE
CLOSING.
(a) OFFICE SPACE. Sellers shall take all necessary steps,
actions and measures to provide the Purchaser with approximately 6,150 square
feet of suitable and secure office space suitable for up to 30 people at
SystemSoft's current office location in Natick, Massachusetts. This office space
shall remain available to Purchaser until at least December 1, 1998, and on a
month-to-month basis thereafter with rental payments being due on or before the
first day of each month. Either party may terminate the use of this office space
on or after December 1, 1998 by giving the other party at least sixty days
written notice. Purchaser shall reimburse SystemSoft its actual lease costs for
the use of this office space. Sellers shall also make available to Purchaser
Taiwan's current location in Taiwan, on the same terms, except that Purchaser
may terminate the use of this office space at any time by giving Sellers at
least thirty days written notice.
(b) PRESS RELEASES. Except to the extent necessary to
comply with Securities and Exchange Commission regulations, neither party shall
issue any press release announcing,
<PAGE> 13
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describing or any way relating to the transactions contemplated by this
Agreement until such press release has been reviewed and consented to by the
other party, provided that such consent shall not be unreasonably withheld or
delayed.
(c) SECURITY INTEREST. At the Closing, Purchaser shall
grant to Sellers pursuant to such documents and instruments prepared by counsel
to Sellers as are reasonably acceptable to Purchaser a first position security
interest in the Products (and all cash and non-cash proceeds thereof) securing
payment by the Purchaser of the Earn-Out Amount, as such Earn-Out Amount may
become due and owing hereunder.
11. COVENANTS AND CONDUCT OF THE PARTIES AFTER THE EFFECTIVE DATE.
(a) EMPLOYMENT.
(i) Purchaser may choose to offer employment to
any employee in Taiwan and to employees terminated by Sellers on or before
August 31, 1998; provided, however, that Purchaser shall not have any obligation
to make any such offer of employment. Nothing contained in this Section shall be
construed to affect any right Purchaser may have after the Effective Date to
terminate the employment of, or change the salary or benefits of, any employee
at any time, whether or not covered by collective bargaining agreement, to the
extent consistent with applicable law.
(ii) Neither party shall solicit the employees of
the other party for a period of one year. Neither party shall disparage the
other party publicly or privately in any manner whatsoever.
(iii) Sellers shall be responsible for all accrued
but unpaid obligations to each employee of Sellers, and for providing all
notices and other communications to employees of Sellers, that may be required
under the Worker Adjustment and Retraining Notification Act or other applicable
law, including without limitation the laws of the Republic of China. Purchaser
shall assume no indebtedness, obligation or liability with respect to any
employee of Sellers (including, but not limited to, any severance obligation,
payroll or unemployment tax, or pension, profit-sharing, health insurance or
other employee benefit liabilities).
(iv) Sellers shall pay the Vacation Pay Amounts
due to each former employee of Sellers listed on Schedule 11(a)(iii), in the
amounts listed on that Schedule.
(v) No provision of this Agreement shall confer
upon any present or former employee of Sellers, any union, collective bargaining
agent or other Person any right or remedy (including, but not limited to, any
right to employment, or continued employment, for any specified period or any
right to any particular benefit in connection with any employment) of any nature
pursuant to or by reason of this Agreement.
<PAGE> 14
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(b) NONCOMPETITION AND NONDISCLOSURE.
(i) During the period beginning on the Effective
Date and ending ten (10) years after the Effective Date, except as a shareholder
of Purchaser or its assignee, each Seller shall not, directly or indirectly, for
its own account or as an agent, employee, officer, director, trustee, consultant
or member, partner, shareholder or other equity holder of any Person, engage in
any BIOS Business anywhere in the world, except that the parties recognize and
acknowledge that SystemSoft will continue to engage in the marketing of
application-level power management software. If SystemSoft is purchased by a
Person actively conducting a BIOS Business, then this Paragraph shall not apply
to such Person.
(ii) During the period beginning on the Effective
Date and ending five (5) years after the Effective date, Sellers shall not
disclose to any Person other than Purchaser any information concerning its
marketing plans or strategies, pricing, customers, suppliers, technical data,
development plans or strategies, or other business information pertaining to the
BIOS Business, except as required by law. During the period beginning on the
Effective Date and ending five (5) years after the Effective date, Purchaser
shall not disclose to any Person any information concerning Seller's marketing
plans or strategies, pricing, customers, suppliers, technical data, development
plans or strategies, or other business information not related to the BIOS
Business, except as required by law or by its duties under the Representative
Agreement and License.
(iii) Neither party shall disclose the financial
or business terms of this Agreement to any third party except under a
non-disclosure agreement which obligates the receiving party to keep the terms
of this Agreement confidential.
(c) COLLECTION OF ACCOUNTS RECEIVABLE. After the
Effective Date, the Purchaser shall exercise its commercially reasonable efforts
to cause the collection Sellers' accounts receivable as of the Effective Date
which arose in Taiwan ("Taiwan Accounts Receivable") listed on Schedule 11(c).
Sellers shall pay Purchaser 25% of the payments collected by the Sellers on any
Taiwan Accounts Receivable, except for (i) the account receivable for Clevo
wherefore the Sellers will pay Purchaser 40% of the payments collected in
satisfaction of such receivable, and (ii) the account receivable for Featron,
wherefore the Sellers will pay Purchaser 50% of the payments collected in
satisfaction of such receivable. SystemSoft shall notify its customers of
Purchaser's appointment as SystemSoft's agent for purposes of collecting the
Taiwan Accounts Receivable. Sellers shall pay Purchaser the amounts specified
under this Section 11(c) within five days of the receipt of the receivable
payment involved. Purchaser shall have reasonable access to the books and
records of Sellers to verify the payments due under this provision. Payments
shall be made directly by the Customer into a lock box managed by Coopers and
Lybrand or Seller's agent who shall have the authority to disperse such monies
to Purchaser and Seller in accordance with the applicable percentages specified
in this Section 11(c). Such disbursements shall take place within ten days of
receipt.
<PAGE> 15
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(d) PAYMENT FOR SERVICES ON SYSTEMSOFT CONTRACTS. After
the Effective Date, Purchaser shall invoice SystemSoft, on a monthly basis, for
Purchaser's services in carrying out the SystemSoft Contracts that Purchaser has
assumed in an aggregate amount equal to $152,200. Bills for all maintenance
services under the assumed SystemSoft Contracts shall be rendered in four (4)
equal monthly amounts, and payment of such bills shall be made in full by
SystemSoft within fifteen (15) days of SystemSoft's receipt of each such bill,
with payment of the final bill due no later than December 31, 1998. The
remaining services under the assumed SystemSoft Contracts shall be completed by
Purchaser and payment made in full by SystemSoft for such services on or as
reasonably close to December 31, 1998 as possible, and in any event within
fifteen (15) days of SystemSoft's receipt of each bill for such completed
services. Such bills shall be certified by an officer of Purchaser.
(e) TRANSITIONAL SERVICES.
(i) ADMINISTRATIVE SERVICES. For a period of not
less than three months following the Effective Date, Sellers will provide
Purchaser with such administrative and record keeping services as Purchaser may
reasonably request as being necessary to facilitate the operation of the BIOS
Business by Purchaser while Purchaser establishes its own administrative and
record keeping services. Such services shall be performed at the level currently
available.
(ii) FINANCIAL AND MIS SERVICES. For a period of
not less than three months following the Effective Date, Sellers will provide
Purchaser with such financial and management information system ("MIS") services
as Purchaser may reasonably request as being necessary to facilitate the
operation of the BIOS Business by Purchaser while Purchaser transitions to its
own financial and MIS. Such services shall include payroll and employee benefits
for the employees of Purchaser. Such services shall be performed at the level
currently available.
(iii) INFORMATION AND FILES. Sellers will provide
Purchaser with reasonable access to all information and files in Sellers's
possession relating to the administrative and record keeping functions and the
financial and MIS functions of the BIOS Business. Purchaser shall be permitted
to make and retain such copies of such records as it may choose. Such services
shall be performed at the level currently available.
(f) FURTHER ASSURANCES. After the Closing, the Purchaser
and the Sellers each agree to take whatever further reasonable action is
necessary and to execute whatever further documents, instruments of assignment,
transfer, conveyance or authorization and agreements as may be reasonably
requested by the Purchaser or by the Sellers in order to fulfill the intent of
this Agreement.
(g) ACCESS TO INFORMATION. After the Closing, the Sellers
agree to provide to Purchaser access at reasonable times (within 48 hours) and
places to all items that would
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constitute Books and Records but for the fact that such items do not relate
solely to the BIOS Business or to the associated items constituting Books and
Records.
12. CONDITIONS TO SELLERS OBLIGATIONS. The obligation of Sellers
to consummate the transaction contemplated by this Agreement is subject, in the
sole discretion of Sellers, to the satisfaction, on or prior to the Closing, of
each of the following conditions (any of which may, in the sole discretion of
Sellers, be waived in whole or in part):
(a) REPRESENTATIONS, WARRANTIES AND OBLIGATIONS. All
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all respects as of the Closing and Purchaser shall have
performed all obligations to be performed by it as of the Closing pursuant to
this Agreement.
(b) PERFORMANCE. All covenants, agreements and
obligations and all conditions precedent on the part of the Purchaser to be
performed hereunder or at or prior to the Closing shall have been dully
performed and comply with in all material respects.
(c) CONSENTS. All approvals, consents, permits and
waivers necessary for Purchasers to perform pursuant to this Agreement shall
have been obtained.
(d) PURCHASE PRICE. Purchaser shall have delivered to
Sellers the portion of the Purchase Price to be paid at the Closing pursuant to
Section 4(b) of this Agreement.
(e) ABSENCE OF INVESTIGATIONS AND PROCEEDINGS. No
investigation, proceeding or action is pending which purports to challenge the
validity of this Agreement or the consummation of the transactions contemplated
hereby. No investigation, proceeding or action shall have been initiated by any
government agency with respect to the acquisition or its legality under any
antitrust law.
13. CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligation of
Purchaser to consummate the transaction contemplated by this Agreement is
subject, in the sole discretion of Purchaser, to the satisfaction, on or prior
to the Closing, of each of the following conditions (any of which may, in the
sole discretion of Purchaser, be waived in whole or in part):
(a) REPRESENTATIONS, WARRANTIES AND OBLIGATIONS. All
representations and warranties of Sellers contained in this Agreement shall be
true and correct in all respects as of the Closing, and Sellers shall have
performed all obligations to be performed by them as of the Closing Date
pursuant to this Agreement.
(b) CONSENTS. All approvals, consents, permits and
waivers necessary for Sellers to transfer the Purchased Assets free and clear of
any Encumbrances, and to grant a license to use the Licensed Products and
Licensed Property, pursuant to this Agreement shall have been obtained.
<PAGE> 17
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(c) OPINION FROM COUNSEL. Purchaser shall receive a
favorable opinion from counsel for Sellers, dated the date of the Closing and
addressed to Purchaser.
(d) TRANSFER OF PURCHASED ASSETS AND GRANT OF LICENSE.
The Sellers shall have transferred, delivered and set over possession of all the
real and personal property (tangible and intangible) and records and other
assets constituting the Purchased Assets, Licensed Products and the Licensed
Property.
(e) ABSENCE OF INVESTIGATIONS AND PROCEEDINGS. No
investigation, proceeding or action is pending which purports to challenge the
validity of this Agreement or the consummation of the transactions contemplated
hereby. No investigation, proceeding or action shall have been initiated by any
government agency with respect to the acquisition or its legality under any
antitrust law.
(f) SYSTEMSOFT STOCK OPTIONS. Seller shall have granted
nonqualified options for the purchase of SystemSoft stock to the individuals and
in the amounts specified in the Unanimous Written Consent of the Compensation
Committee of SystemSoft dated August 31, 1998 which is attached hereto as
Schedule 13 (f). Such options shall contain the following provisions:
(i) The exercise price for each option shall be
$0.625 per share of SystemSoft stock.
(ii) The options shall be subject to a vesting
schedule pursuant to which twenty-five percent (25%) of each employee's options
shall vest on each of December 1, 1998, March 1, 1999, June 1, 1999, and
September 1, 1999, providing that the employee is employed full-time by
Purchaser throughout the calendar quarter ending on each such relevant vesting
date.
(iii) Vested options shall be exercisable at any
time until ninety (90) days after the earlier of (1) December 31, 1999 or (2)
the date on which the employee is no longer employed full-time by Purchaser, at
which time unexercised options shall expire.
(iv) All previously outstanding but unvested
SystemSoft options held by the affected employees shall be cancelled concurrent
with the issuance of the options specified in this Section 13(f). Previously
vested options shall remain exercisable until November 29, 1998.
(g) REPRESENTATIVE AGREEMENT AND LICENSE. Sellers shall
have entered into an agreement, in form and substance satisfactory to Purchaser,
pursuant to which Purchaser shall act as Sellers' sales representative in Asia,
the Pacific, and Europe (the "Representative Agreement and License").
14. SURVIVAL. All representations and warranties made by Sellers
and Purchaser in
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this Agreement shall be true as of the Closing and shall survive the Closing.
All obligations of Sellers and Purchaser pursuant to this Agreement shall
survive the Closing and remain in effect until performed (including, but not
limited to, the obligations of Sellers not to compete with Purchaser and to
indemnify Purchaser pursuant to this Agreement).
15. INDEMNIFICATIONS.
(a) INDEMNIFICATION BY SELLERS. Each party shall, jointly
and individually, indemnify and hold the other party harmless from and against
each cost, damage, expense, loss, indebtedness, liability, deficiency or damage
incurred by the other party (including, but not limited to, fees and
disbursements of counsel to a party) (i) by reason of any warranty or
representation given by a party in this Agreement being untrue or misleading in
any material respect, (ii) for the failure of the Sellers to comply with the
bulk sale transfer provisions of the Uniform Commercial Code, or (iii) arising
from actions or omissions of the Sellers prior to the Effective Date with
respect to the Customer Contracts, or with respect to any rule or requirement
pertaining to persons employed by the Sellers anywhere in the world. The
Purchaser's knowledge prior to the date of the Closing of any inaccuracy or
breach of any representation, warranty, or covenant made or to be performed by
either Seller under this Agreement shall not limit or affect Purchaser's right
to indemnification under this Section.
(b) CLAIMS. Except as otherwise set forth in this
Agreement, in order for Purchaser to be entitled to any indemnification provided
in this Section, in connection with a claim made by any Person other than
Purchaser, the Purchaser shall notify Sellers in writing of such claim promptly
after receipt by the Purchaser of written notice of such claim.
16. MISCELLANEOUS.
(a) RIGHTS OF SET OFF. In addition to any other rights or
remedies available to Purchaser or Sellers at law or in equity, (i) Purchaser
may set off against payment of the Earn-Out Amount and of any amounts of any
indebtedness, liability or obligation of Purchaser to Sellers, whether arising
pursuant to this Agreement or the Representative Agreement and License, or
otherwise, for any amount owing to Purchaser pursuant to this Agreement, the
Representative Agreement and License, or otherwise, and (ii) Sellers may set off
against payment of any indebtedness, liability or obligation of Sellers to
Purchaser, whether arising pursuant to this Agreement or the Representative
Agreement and License or otherwise, for any amount owing to Sellers pursuant to
this Agreement, the Representative Agreement and License, or otherwise.
(b) NOTICES. Unless otherwise provided in this Agreement,
any notice, request, instruction or other communication to be given pursuant to
this Agreement shall be in writing and (i) delivered personally, (ii) mailed by
certified mail, postage prepaid, return receipt requested or (iii) sent by
telecopy, with a confirmation sent via one of the methods described in clause
(i) or (ii) of this sentence, as follows:
<PAGE> 19
19
If to Purchaser, addressed to:
Insyde Software, Inc.
Attn: Jonathan Joseph
One Innovation Drive
Natick, Massachusetts 01760
With a copy to:
Hodgson, Russ, Andrews, Woods & Goodyear, LLP
Attn: Todd M. Joseph, Esq.
1800 One M & T Plaza
Buffalo, New York 14203
Telecopier: (716) 849-0349
If to Sellers, addressed to:
SystemSoft Corporation
One Innovation Drive
Natick, Massachusetts 01760
With a copy to:
------------------------------
------------------------------
------------------------------
------------------------------
Any party may designate in a writing to any other party any other address or
telecopy number to which, and any other Person to whom or which a copy of, any
such notice, request, instruction or other communication should be sent.
(c) APPLICABLE LAW. This Agreement shall be interpreted
and the rights of the parties determined in accordance with the laws of the
Commonwealth of Massachusetts, without regard to principles of conflicts of law.
(d) ASSIGNABILITY. This Agreement, and the rights and
liabilities created by or arising under this Agreement (including, without
limitation, the assets and BIOS Business acquired hereunder), shall be
assignable by the Purchaser without the consent of either of the Sellers. In the
event that within twelve months of the execution of this Agreement Purchaser
assigns this Agreement to any party other than (i) Insyde Software Corp. (the
Taiwan corporation that is the parent corporation of Purchaser) or (ii) a Person
in which Purchaser or Insyde Software Corp. owns at least fifty percent (50%) of
the capital or profits interests, then
<PAGE> 20
20
payment of any unpaid amount of the Earn-Out Amount, up to the Earn-Out Limit,
shall become immediately due and payable. Upon an assignment and the assumption
by the assignee of the Purchaser's obligations and liabilities hereunder, all of
the rights, title, and interest of, and the liabilities and obligations of, the
Purchaser created by or arising under this Agreement shall thereupon cease and
be of no further force and effect whatsoever with respect to the Purchaser, and
shall vest instead in Purchaser's assignee. This Agreement, and the rights and
obligations created by or arising under this Agreement, may be assigned by the
Sellers with the prior written approval of the Purchasers which approval shall
not be unreasonably withheld.
(e) EXPENSES. Sellers shall pay the documented legal fees
and disbursements of Purchaser's attorneys incurred in connection with the
transactions contemplated by this Agreement, up to a maximum of $35,000. Except
for such legal fees and disbursements of Purchaser's attorneys and as otherwise
set forth in this Agreement, each of Sellers and Purchaser shall pay its own
accounting and other expenses in connection with the transactions contemplated
by this Agreement.
(f) HEADINGS. The headings of the sections of this
Agreement are inserted for convenience of reference only and shall not affect
the interpretation of this Agreement.
(g) WAIVER. No failure of Sellers or Purchaser to
require, and no delay by Sellers or Purchaser in requiring, the other to comply
with any provision of this Agreement shall constitute a waiver of the right to
require such compliance. No failure of Sellers or Purchaser to exercise, and no
delay by Sellers or Purchaser in exercising, any right or remedy under this
Agreement shall constitute a waiver of such right or remedy. No waiver by
Sellers or Purchaser of any right or remedy under this Agreement shall be
effective unless made in writing. Any waiver by Sellers or Purchaser of any
right or remedy under this Agreement shall be limited to the specific instance
and shall not constitute a waiver of such right or remedy in the future.
(h) BINDING. This Agreement shall be binding upon Sellers
and Purchaser and upon each successor and assignee of Sellers and Purchaser and
shall inure to the benefit of, and be enforceable by, Sellers and Purchaser and
each successor and assignee of Sellers and Purchaser.
(i) ENTIRE AGREEMENT. This Agreement contains the entire
agreement among Sellers and Purchaser with respect to the subject of this
Agreement, and supersedes each course of conduct previously pursued, accepted or
acquiesced in, and each oral or written agreement and representation previously
made, by Sellers and Purchaser with respect thereto, whether or not relied or
acted upon.
(j) MODIFICATION. No course of performance or other
conduct hereafter pursued, accepted or acquiesced in, and no oral agreement or
representation made in the future, by Sellers or Purchaser whether or not relied
or acted upon, and no usage of trade,
<PAGE> 21
21
whether or not relied or acted upon, shall modify or terminate this Agreement,
impair or otherwise affect any obligation of Sellers or Purchaser pursuant to
this Agreement or otherwise operate as a waiver of any such right or remedy. No
modification of this Agreement or waiver of any such right or remedy shall be
effective unless made in writing duly executed by Sellers and Purchaser.
(k) EXECUTION. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same instrument. Any party may
execute this Agreement by facsimile signature and the other parties shall be
entitled to rely on such facsimile signature as evidence that this Agreement has
been duly executed by such party. Any party executing this Agreement by
facsimile signature shall immediately forward to the other parties an original
signature page by overnight mail; provided, however, that the failure to do so
will not affect the binding effect of this Agreement on such party.
IN WITNESS WHEREOF, Purchaser and Sellers have duly executed this
Agreement as of the date indicated at the beginning of this Agreement.
SYSTEMSOFT CORPORATION
By /s/ Frank A. Sola, CEO
--------------------------------------
Title
SYSTEMSOFT TAIWAN CORPORATION
By /s/ Frank A. Sola, President
--------------------------------------
Title
INSYDE SOFTWARE, INC.
By /s/ Jonathan Joseph, President
--------------------------------------
Title
<PAGE> 22
22
EXHIBIT A
PURCHASED PRODUCTS
1. All BIOS software, source code and object code, including
(without limitation) the VGA BIOS; all system set up software,
source code, and object code, except for the Licensed
Products.
2. All power management and smart battery software, source code
and object code, except for the Licensed Products.
3. All ACPI software, firmware and development tools, source
code, and object code, including ACPI Builder.
4. All keyboard controller/embedded controller software, source
code, and object code;
5. Source code and object code versions of SystemProfiler (Win
SCU) and Smart Battery Software System.
6. Source code and object code versions of PowerProfiler Win 95.
7. All tools, utilities, documentation and sales materials
directly related to or used with all of the items above.
<PAGE> 23
23
EXHIBIT B
LICENSED PRODUCTS
1. PowerProfiler II, Derivative of PowerLast, source code and
object code.
2. PowerProfiler for Win NT, source code and object code.
3. All CardBoot and flash disk BIOS extensions, source code and
object code.
4. All tools, utilities, documentation and sales materials
directly related to or used with all of the items above.
<PAGE> 24
24
SCHEDULE 1(b)
CUSTOMER CONTRACTS PURCHASED/ASSUMED
<PAGE> 25
25
SCHEDULE 1(v)
SYSTEMSOFT CONTRACTS
<PAGE> 26
26
SCHEDULE 1(w)
TANGIBLE PERSONAL PROPERTY
<PAGE> 27
27
SCHEDULE 8(j)
LITIGATION
There is no claim, demand, action, suit, litigation, dispute, order,
writ, injunction, judgment, assessment, decree, grievance, arbitral action,
investigation or proceeding pending or, to the knowledge of either Seller,
threatened against or relating to the transactions contemplated by this
Agreement and/or the Representative and License Agreeemnt.
<PAGE> 28
28
SCHEDULE 8(m)
INTELLECTUAL PROPERTY RIGHTS
Trademark, Copyright and Patent Summary
Copyrights Trademarks Patents
- ---------- ---------- -------
PNP BIOS DMIView System and Method for
PNP View PnP View Providing Secure Access
Pentium BIOS Battery Tracker to a computer and Peripheral
PMSoft Devices (Serial No. 08/823,859
PM View filed 25 Mar 97)
Smart Battery
Code
Interface
Core BIOS derivative
PCI BIOS
<PAGE> 29
29
SCHEDULE 11(a)(iii)
VACATION PAY AMOUNTS
<PAGE> 30
30
SCHEDULE 11(c)
TAIWAN ACCOUNTS RECEIVABLE
<PAGE> 31
31
SCHEDULE 13(f)
SYSTEMSOFT STOCK OPTIONS
<PAGE> 1
EXHIBIT 99.01
REPRESENTATIVE AGREEMENT AND LICENSE
THIS REPRESENTATIVE AGREEMENT AND LICENSE (the "Agreement") is entered
into and made effective as of September 1, 1998, (the "Effective Date") between
SystemSoft Corporation, a Delaware corporation with its principal place of
business at One Innovation Drive, Natick, Massachusetts 01760 ("SystemSoft") and
Insyde Software, Inc., a Delaware corporation with its principal place of
business at One Innovation Drive, Natick, Massachusetts 01760 (hereinafter
called the "Representative").
WHEREAS, SystemSoft is engaged in the development and marketing of
computer software and related services that it wishes to market to personal
computer manufacturers ("OEMs"), independent software vendors ("ISVs"),
independent hardware vendors ("IHVs"), and corporate accounts ("Corporate
Accounts"); and
WHEREAS, pursuant to the Asset Purchase and License Agreement (the
"Asset Purchase and License Agreement") being entered into contemporaneously
with this Agreement the Representative is acquiring the BIOS Business of
SystemSoft (as defined in the Asset Purchase and License Agreement); and
WHEREAS, the Representative will, as of the Effective Date, be engaged
in marketing computer software and related services to OEMs and wishes to
represent SystemSoft in a defined area of the world as provided for in this
Agreement;
NOW, THEREFORE, SystemSoft and the Representative agree as follows:
1. DEFINITIONS. In this Agreement:
(a) "Confidential Information" shall mean (i) all
information obtained by the Representative on or after the Effective Date
relating to the business of SystemSoft that is not generally available to the
public and includes, but is not limited to, confidential sales forecasts, sales
prospects information, marketing strategies and product information of
SystemSoft and actual and prospective customers of SystemSoft and (ii)
documents, models and other tangible items containing or relating to such
information.
(b) "Representative Licensed Products" shall mean
SystemSoft's Products set out in Exhibit B.
(c) "Person" shall mean any governmental authority,
individual, corporation, limited liability company, partnership, trust or other
entity.
(d) "Products" shall mean Representative Licensed
Products, Representative Products and Purchased Products.
(e) "Representative Products" shall mean any product,
good or service manufactured or provided by the Representative including, but
not limited to Purchased
<PAGE> 2
Products.
(f) "Purchased Products" shall mean the products set out
in Exhibit A.
(g) "Sales Territory" shall mean all of Europe, Asia and
the Pacific, excluding Japan and as may be further limited in Exhibit B of this
Agreement.
(h) "PC Card Products" shall mean the following products:
CardSoft DOS, CardWizard 3.1, CardWorks 95 and 98, CardWizard NT, and
PowerProfiler NT.
(i) "BIOS Product" shall mean a Representative Product
including a system BIOS.
2. APPOINTMENT OF REPRESENTATIVE.
SystemSoft hereby appoints the Representative as its sales
representative in various sales territories. The exclusive or non-exclusive
status of the Representative, the non-exclusive or exclusive status of each
Representative Licensed Product in each geographical territory of the world is
described in Exhibit B. Representative shall devote its diligent efforts to
market, promote, and license the Representative Licensed Products.
Representative hereby accepts such appointment and agrees to act as the
representative of SystemSoft in accordance with the terms of this Agreement. At
any time that the Representative has not made the payments required under
Section 4(c)(ii) of the Asset Purchase and License Agreement, the exclusive
status of Representative for the products specified in Exhibit B shall become
nonexclusive.
3. GRANT OF LICENSE.
(a) SystemSoft hereby grants to Representative a
non-transferable license to use the Representative Licensed Products, including
the limited right to modify the source code and distribute such modified code to
customers of SystemSoft, for the sole purpose of providing customization,
maintenance, support and services to SystemSoft's customers as specified in this
Agreement. All modified source code and derivatives thereof shall still be
deemed the sole property of SystemSoft and shall be provided to SystemSoft
within 5 days of their release to a customer.
(b) This Agreement is made expressly subject to the Exclusive
Representative Agreement currently in effect between SystemSoft and Pacific
SystemSoft KK for the territory of Japan.
2
<PAGE> 3
4. DUTIES OF THE REPRESENTATIVE.
(a) The Representative will solicit orders for the
pertinent Representative Licensed Products from OEMs, ISVs, and IHVs in the
Sales Territory, with the sole exception being that Representative shall be
authorized to solicit orders for SystemWizard and Aspen in the Sales Territory
only from OEMs. Representative shall license the Representative Licensed
Products in accordance with the license fees set forth in the SystemSoft's OEM
Price List then currently in effect. Representative is authorized to vary the
license fees a maximum of 20% from the SystemSoft OEM Price List then currently
in effect. Any variance of greater than 20% requires the advance written
authorization of SystemSoft, except that Representative also may vary the
license fee for a particular product to a particular customer by 10% from the
most recent price in effect for that product to that customer.
(b) In the case of the transactions specified in Section
5(a)(ii), and for all PC Card and MobileAssist products, Representative shall
act as the agent of SystemSoft and license the Representative Licensed Products.
In the case of PC Card Products licensed outside the Sales Territory, the
Representative shall not quote a price for a PC Card Product to any Person who
was an existing licensee of such product as of the Effective Date without the
prior approval of such price by SystemSoft. The preceding sentence shall not
apply following the sale of or the granting of a right to license with respect
to such PC Card Product to Phoenix Technologies Ltd., or American Megatrends,
Inc., or any subsidiary of either, by SystemSoft, or following any "Change of
Control" of SystemSoft. For purposes of Sections 4(b) and 4(c), a "Change of
Control" means any time at which fifty percent (50%) or more of the voting stock
of SystemSoft is held, legally or beneficially, by either Phoenix Technologies
Ltd., or American Megatrends, Inc., or any subsidiary of either.
(c) If at any time while this Agreement is in effect,
Phoenix Technologies Ltd., or American Megatrends, Inc., or any subsidiary of
either, shall come to have the right to license MobileAssist products in Asia
and the Pacific, or in the event of a Change of Control of SystemSoft,
SystemSoft shall immediately pay to the Representative in cash an amount equal
to twenty-five percent (25%) of the maximum remaining Earn-Out Amount to which
SystemSoft could be entitled under the Asset Purchase and License Agreement. If
at any time while this Agreement is in effect, Phoenix Technologies Ltd., or
American Megatrends, Inc., or any subsidiary of either, shall come to have the
right to license any PC Card Product, or in the event of a Change of Control of
SystemSoft, or if SystemSoft no longer supports one or more of the PC Card
Products, or if SystemSoft assigns this Agreement to Phoenix Technologies Ltd.,
or American Megatrends, Inc., or any subsidiary of either, the Representative
shall thereupon have an irrevocable license to continue sublicensing PC Card
Products until the license fees paid or payable to SystemSoft (or its assignee)
under Section 5(a) with respect to PC Card Products are equal, on a cumulative
basis, to $250,000, following which time this sentence shall no longer apply.
3
<PAGE> 4
(d) The Representative will diligently and in a
professional manner promote the licensing of, and attempt to stimulate interest
in, the Representative Licensed Products in the Sales Territory.
(e) The Representative will collect all payments due with
respect to the transactions described in Section 5(a)(ii).
5. COMMISSIONS.
(a) (i) For services performed under this Agreement,
the Representative shall be compensated according to the schedule set out in
Exhibit B and this subsection (a).
(ii) In the case of a license transaction that
includes a PC Card and/or MobileAssist product and a Representative Product, the
Representative shall price PC Card and MobileAssist separately from the
Representative Product and pay to SystemSoft for license transactions within the
Territory the amount set out in Exhibit B and for license transactions outside
of the Territory sixty percent (60%) of all payments collected by the
Representative for PC Card and/or MobileAssist, and shall be entitled to retain
the remaining forty percent (40%) as a commission, except that for sale or
license transactions involving embedded products combining CardSoft and a
Representative Product, a single combined price may apply, in which case
sixty-seven percent (67%) of the sale price or license fee for the transaction
shall be allocated to the Representative Product and thirty-three percent (33%)
shall be allocated to CardSoft.
(b) Amounts due to either party under this Section 5
shall be paid quarterly, within thirty (30) days following the end of each
calendar quarter (net of any withholding required by law), by wire transfer to a
bank designated in writing by the receiving party. All payments shall be made in
US dollars.
(c) The Representative hereby guarantees that the
aggregate amount payable by the Representative to SystemSoft under Section
5(a)(ii) by January 31, 1999 will be at least $125,000, of which $62,500 shall
be paid by the Representative at the Closing of the Asset Purchase and License
Agreement as specified in Section 4(b) thereof. In the event that the additional
amount payable by January 31, 1999 is less than $62,500, the Representative will
pay that shortfall amount to SystemSoft by January 31, 1999. All amounts paid
under this subsection (c) shall be credited against the payments next due from
the Representative to SystemSoft under this Agreement.
6. BUSINESS PLANNING AND REPORTING. Each month, Representative
shall provide SystemSoft with a sales forecast for the coming month in a
mutually agreeable format. At least once each calendar quarter, SystemSoft and
Representative will meet to discuss product development, marketing plans, joint
programs and customer service and support issues to facilitate the successful
implementation of this Agreement.
4
<PAGE> 5
7. NO AGENCY RELATIONSHIP.
(a) Except as provided in subsection (b) of this Section
7, nothing contained in this Agreement shall be deemed to constitute the
Representative as the agent of SystemSoft for any purpose, and the
Representative will not have, and will not hold itself out as having, authority
to create or incur any obligation or responsibility in the name or on behalf of
SystemSoft. The Representative acknowledges that it is, and shall remain, an
independent contractor and that SystemSoft and the Representative are not joint
venturers or partners.
(b) SystemSoft hereby designates Representative as its
agent, exclusively for purposes of licensing Representative Licensed Products on
behalf of SystemSoft, in the Sales Territory in the transactions described in
Section 5(a), and outside of the Sales Territory, on a nonexclusive basis, in
other license transactions that include both a PC Card product and a BIOS
product. Representative shall license the Representative Licensed Products,
except for SystemWizard and Aspen, using a form master license agreement
preapproved in advance by SystemSoft. Such agreement shall contain a provision
making SystemSoft a third party beneficiary for the purpose of enforcing all of
its rights in the Representative Licensed Products, including but not limited to
its right to collect payment of license fees. Representative hereby stipulates
that it will cooperate fully with SystemSoft in the enforcement of its right in
any agreement with any licensee of Representative Licensed Products.
8. EXPENSES OF REPRESENTATIVE. All expenses and disbursements
incurred by the Representative in carrying out this Agreement will be borne
wholly and completely by the Representative. The Representative will have the
right to appoint, and will solely be responsible for, its own sales persons,
employees, agents, and representatives, who will be at the Representative's own
risk, expense, and supervision, and who will not have any claim against
SystemSoft for compensation or reimbursement. Expenses incurred by the
Representative on behalf of SystemSoft such as translations, seminars, brochure
production and press releases which the Representative desires to be reimbursed
by SystemSoft shall be approved in advance by SystemSoft.
9. OBLIGATIONS OF THE PARTIES. SystemSoft will:
(a) Designate one employee as the primary contact with
the Representative for all business issues and designate one employee as the
primary contact with the Representative for all technical support.
(b) Provide written response to the Representative's
technical questions within two (2) business days.
(c) Provide the Representative with copies of
SystemSoft's current sales and marketing literature.
5
<PAGE> 6
(d) Provide personnel of the Representative with
semi-annual Product and SystemSoft policy training at SystemSoft's offices in
the United States. The Representative will pay its own expenses for travel to
and from, and accommodations for, training by SystemSoft.
(e) Provide the Representative with contact information
for all inquiries from prospective customers in the Sales Territory that contact
SystemSoft directly concerning the Products.
10. NONDISCLOSURE AND NONCOMPETITION.
(a) The Representative agrees that it will not disclose,
transfer or otherwise make available to any Person the Confidential Information
furnished to it by SystemSoft or any actual or prospective customer of
SystemSoft in connection with the performance of the Representative's duties
under this Agreement. The Representative will return to SystemSoft, promptly
after the expiration or termination of this Agreement, all written material,
including, without limitation, all Product source codes, furnished to the
Representative by SystemSoft in connection with the performance by the
Representative of its duties under this Agreement. The obligations of the
Representative under this Section 10 will survive the expiration or termination
with or without cause of this Agreement.
(b) While this Agreement is in effect, and except as
contemplated by this Agreement, Representative shall not, directly or
indirectly, for its own account or as an agent, employee, officer, director,
trustee, consultant or member, partner, shareholder or other equity holder of
any Person, engage in any business relating to any Representative Licensed
Products as to which Representative is SystemSoft's exclusive sales agent,
anywhere in the world.
11. TERM; TERMINATION.
(a) This Agreement will remain in effect for a term of
three (3) years ending August 31, 2001. Unless otherwise terminated pursuant to
subsection (c), this Agreement shall automatically renew each year thereafter
for an additional term of twelve (12) months.
(b) Either party shall, without prejudice to any other
remedies, have the right to terminate this Agreement for cause by notice in
writing to the other party at any time upon the occurrence of one or more of the
following events:
(i) Insolvency of the other party;
(ii) Filing of a voluntary or involuntary
petition by or against the other party in
bankruptcy or for reorganization or
arrangement;
6
<PAGE> 7
(iii) Appointment of a receiver or trustee for the
other party;
(iv) Execution by the other party of an
assignment for the benefit of creditors;
(v) Dissolution of the other party; or
(vi) The other party violates or fails to perform
any agreement, obligation, term or condition
of this Agreement and that violation or
failure to perform is not corrected within
thirty (30) days following receipt of
written notice thereof.
(c) Either party may terminate this Agreement at the
expiration of its current term by notifying the other party of its election to
terminate not later than ninety (90) days before such expiration date.
(d) Upon the termination of this Agreement, other than a
termination by SystemSoft for cause under Section 11(b), SystemSoft shall pay
thereafter to Representative the commissions specified in Section 5 with respect
to (i) all transactions for which contracts were executed prior to such
termination, and (ii) all transactions for which contracts are executed after
such termination, but in each case only to the extent that cash is received by
or for SystemSoft or any representative or agent or affiliate of SystemSoft on
account of such transactions within six (6) months following such termination.
12. GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by and construed in accordance with the substantive laws of The Commonwealth of
Massachusetts, U.S.A. The parties both hereby expressly submit themselves to the
non-exclusive jurisdiction of the federal and state courts in The Commonwealth
of Massachusetts for the determination of any controversy arising under or in
connection with the Agreement and hereby waive personal service of any summons,
complaint or other process in any action in any such court and agree that all
service thereof may be made by certified mail, return receipt requested. In the
event that any provision of this Agreement is violated, the breached party will
be entitled to injunctive relief from further or continued violation of any such
provision, and an order to that effect may be made pending litigation as well as
upon the final determination thereof.
13. NOTICES. All notices and other communications required or
permitted to be given hereunder shall be given in writing and addressed to a
party at its address set forth herein above or to such other address as such
party may specify by written notice to the other party and shall be delivered in
person or sent by facsimile transmission or other electronic means of written
communication and confirmed in writing via an internationally recognized courier
service. Notices and communications which are sent by facsimile transmission or
other electronic means of written communication shall be deemed effective on the
day the
7
<PAGE> 8
communication is sent, provided that if the communication is not sent during the
business hours of the addressee the communication shall be deemed effective on
the business day of the addressee next following the day on which the
communication was sent.
14. COMPLETE AGREEMENT; WAIVERS AND AMENDMENTS. This Agreement
contains the full understanding of the parties with respect to the subject
matter hereof and supersedes all prior understandings relating thereto. No
waiver or modification of any of the provisions hereof will be binding unless
made in writing and signed by the parties by their respective officers thereunto
duly authorized.
15. ASSIGNABILITY. This Agreement, and the rights and liabilities
created by or arising under this Agreement, shall be assignable by the
Representative with the prior written consent of SystemSoft, except that the
Representative may assign this Agreement, and the rights and liabilities created
by or arising under this Agreement, to Insyde Software Corp. (the Taiwan
corporation that is the parent corporation of the Representative) without the
consent of SystemSoft. Upon such assignment and the assumption by the assignee
of the Representative's obligations and liabilities hereunder, all of the
rights, title, and interest of, and the liabilities and obligations of, the
Representative created by or arising under this Agreement shall thereupon cease
and be of no further force and effect whatsoever with respect to the
Representative, and shall vest instead in the Representative's assignee. This
Agreement, and the rights and obligations created by or arising under this
Agreement, may be assigned by SystemSoft.
16. LANGUAGE. This Agreement is written and executed in the
English language. If this Agreement is translated into any other language, in
the event of a difference in meaning between the English and non-English text,
the English text shall govern.
In witness whereof, the parties have executed this Agreement as of the
date first above written.
INSYDE SOFTWARE, INC.
By /s/ Jonathan Joseph, President
--------------------------------------
Title
SYSTEMSOFT CORPORATION
By /s/ Frank A. Sola, CEO
--------------------------------------
Title
8
<PAGE> 9
EXHIBIT A
PURCHASED PRODUCTS
1. All BIOS software, source code and object code, including
(without limitation) the VGA BIOS; all system set up software,
source code, and object code, except for the Licensed
Products.
2. All power management and smart battery software, source code
and object code, except for the Licensed Products.
3. All ACPI software, firmware and development tools, source
code, and object code, including ACPI Builder.
4. All keyboard controller/embedded controller software, source
code, and object code.
5. Source code and object code versions of SystemProfiler (Win
SCU) and Smart Battery Software System.
6. Source code and object code versions of PowerProfiler Win 95.
7. All tools, utilities, documentation and sales materials
directly related to or used with all of the items above.
9
<PAGE> 10
EXHIBIT B
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
TERRITORY PRODUCT COM % COM % EXCLUSIVE NON SOURCE
ASIA PAC EUROPE IN TERRITORY EXCLUSIVE IN CODE
A = ASIAPAC TERRITORY INCLUDED
E = EUROPE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A and E CardSoft DOS 40 20 A E Yes
- ---------------------------------------------------------------------------------------------
A and E CardWizard 40 20 A E Yes
3.1
- ---------------------------------------------------------------------------------------------
A and E CardWorks 40 20 A E Yes
95 and 98
- ---------------------------------------------------------------------------------------------
A and E PowerProfiler 40 20 A E Yes
NT
- ---------------------------------------------------------------------------------------------
A and E CardWizard 40 20 A for 12 E Yes
NT Months A after 12
months
- ---------------------------------------------------------------------------------------------
A and E MobileAssist 40 40 A and E No
Products
- ---------------------------------------------------------------------------------------------
A and E SystemWizard 20 20 A and E No
- ---------------------------------------------------------------------------------------------
A and E Aspen 20 20 A and E No
- ---------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 1
EXHIBIT 99.02
SystemSoft Signs Definitive Agreement for the Sale and Licensing of BIOS
Products
Company Receives Initial Cash Payment of $612K
NATICK, Mass. - Oct. 22, 1998 - SystemSoft Corporation (NASDAQ: SYSF), today
announced that it has concluded a definitive Agreement with Insyde Software for
the sale of some BIOS assets and the licensing of others effective September 1,
1998. Insyde Software is a privately held software company with offices in
Natick, MA and Taipei, Taiwan.
In consideration of the Agreement, SystemSoft could receive payments of up to
$2.0 million. Under terms of the Agreement, SystemSoft received an initial cash
payment from Insyde of $612,000.
Additionally, SystemSoft and Insyde Software have implemented a joint-program
designed to individually transition previous SystemSoft BIOS customers.
"This transaction with Insyde helps strengthen our focus on our core business --
automated problem-resolution technologies such as SystemWizard, CardWizard and
MobileAssist," said Frank A. Sola, Chief Executive Officer of SystemSoft. "We
are confident in Insyde Software's ability to provide outstanding service and
products to the mobile BIOS industry."
About SystemSoft
SystemSoft is a leading provider of automated self-help technologies, including
SystemWizard, CardWizard for NT 4.0 and MobileAssist. SystemSoft licensees
include leading PC manufacturers such as Acer, Dell, Hewlett-Packard, Micron,
Packard Bell NEC, Quantex and Toshiba, as well as corporate partners such as
Computer Associates and Sykes Enterprises. Information on SystemSoft products
and services is available on the World Wide Web at http://www.systemsoft.com.
For more information contact:
John Ambrose Cynthia DeMonte
SystemSoft DeMonte Associates
(508) 651-0088 (212) 473-3700
Any statements that are not historical facts contained in this release are
forward looking statements. Those statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
anticipated, including but not limited to those relating to cash liquidity,
market acceptance, and other risks identified in the Company's Securities and
Exchange Commission filings. SystemWizard and SystemSoft are registered
trademarks of SystemSoft Corp. Other product names used in this publication are
for identification purposes only and may be trademarks of their respective
companies.
